Q4 2021 Ginkgo Bioworks Holdings Inc Earnings Presentation

As usual, I'm joined by Jason Kelly, our co-founder and CEO, and Mark Dmytruk, our CFO.

Susan Kelley, our co founder and CEO and Mark <unk>, our CFO . We thank you for joining us and look forward to updating you on our tremendous progress in the past year now as a reminder, during the presentation today, we will be making forward looking statements, which involve risks and uncertainties.

We thank you for joining us and look forward to updating you on our tremendous progress in the past year.

Now, as a reminder, during the presentation today, we'll be making forward-looking statements which involve risks and uncertainties.

Refer to our filings with the Securities and Exchange Commission to learn more about these risks and uncertainties.

Please refer to our filings with the Securities and Exchange Commission to learn more about these risks and uncertainties.

As we've shared before during our quarterly earnings calls we will of course be updating you on our financial progress, but we will also use these opportunities to continue to build a deeper understanding of how <unk> works.

As we've shared before, during our quarterly earnings calls, we will of course be updating you on our financial progress, but we'll also use these opportunities to continue to build a deeper understanding of how Ginkgo works.

And so after our financial updates, we'll spend time talking to you about our strategic positioning in the current environment.

And so after our financial updates, we'll spend time talking to you about our strategic positioning in the current environment. If there are topics you'd like to see in a future deep dive. Please let us know.

If there are topics you'd like to see in a future deep dive, please let us know.

We'll end with a Q&A session, and I'll take questions from analysts, investors, and the public.

I'll end with a Q&A session and I will take questions from analysts investors and the public you can submit those questions to us in advance via Twitter Ashok ginkgo results or by email at investors at <unk> Dot Com and now without further Ado I'll hand, it over to Jason to kick things off thanks Annemarie.

You can submit those questions to us in advance via Twitter, hashtag Ginkgo Results, or by email at investors at GinkgoBioworks.com.

And now, without further ado, I'll hand it over to Jason to kick things off.

Thanks, Anna-Marie.

I'm going to hand, it off to Mark in a second to walk through the numbers, but I wanted to start us off by acknowledging that the world today looks very different than the one we were in just over six months ago. When we took the company public.

I'm going to hand it off to Mark in a second to walk through the numbers, but I wanted to start us off by acknowledging the world today looks very different than the one we were in just over six months ago when we took the company public.

Equity markets, especially for growth companies, have been hit hard from inflation and changes in interest rates. Ginkgo stock is down over 60 percent from when we went public and even more from our highs. As one of Ginkgo's largest shareholders, I can assure you it is not fun for me either.

Equity markets, especially for growth companies have been hit hard from inflation and changes in interest rates ginkgo stock is down over 60% from when we went public and even more from our highs as one of <unk> largest shareholders I can assure you. It is not fun for me either.

But when I step back, Ginkgo is in a stronger position by almost any measure than it has ever been. We've continued to grow and diversify our self-programming platform, and several of our customers have achieved important milestones with products that we have helped them develop. The platform is scaling well. We have deployed exciting new foundry technologies and packaged some of our key code based assets into what we're calling cell development.

When I step back <unk> is in a stronger position by almost any measure than it has ever been we've continued to grow and diversify our cell programming platform and several of our customers have achieved important milestones with products that we have helped them develop.

The platform is scaling well, we have deployed exciting new foundry technologies and package some of our key codebase assets into what we're calling cell development kits.

Our biosecurity initiative has scaled tremendously, growing from almost nothing in 2020 to over $200 million in revenue last year.

Our bio security initiative has scaled tremendously growing from almost nothing in 2020 to over $200 million in revenue last year and all of that has led to strong financial performance Ginkgo quadrupling, our revenue last year and perhaps more importantly from a strategic perspective, we are extremely well capitalized and the market environment.

And all that has led to strong financial performance, Ginkgo quadrupling our revenue last year.

And perhaps more importantly, from a strategic perspective, we are extremely well capitalized in a market environment that is making capital scarce.

That is making capital scarce this will give us opportunities coming up that many other growth stage companies simply won't have later in this session I'm going to spend more time talking about the importance of scale and of our capital position as we drive that scale in the market.

This will give us opportunities coming up that many other growth stage companies simply won't have.

Later in this session, I'm going to spend more time talking about the importance of scale and of our capital position as we drive that scale in the market. But just to ensure everyone is up to speed on the basics about Ginkgo, a quick reminder. So Ginkgo operates as a horizontal cell programming platform. With that model, scale drives everything we do. From the unit economics we can drive in our foundry, which is our automated labs that I'm in here in Boston, to the breadth and value of our code base, which is really our intellectual property assets that I'll talk about later.

But just to ensure everyone is up to speed on the basics about Ginkgo quick reminder, so ginkgo operates as a horizontal cell programming platform.

With that model scale drives everything we do from the unit economics, we can drive in our foundry, which is our automated labs that I've been here in Boston to the breadth and value of our code base, which is really our intellectual property assets, but I'll talk about later importantly scale allows us to not be tied to the success of any single cell program.

Importantly, scale allows us to not be tied to the success of any single cell program.

This diversification is critical in biotechnology and it's one of the ways that we differentiate as a platform for product based companies.

This diversification is critical in biotechnology, and it's one of the ways that we differentiate as a platform from product based companies.

Scaling's not easy.

<unk> is not easy I'm going to spend most of my time today, telling you how hard it is to achieve breakaway scale as our cell programming platform, but we have a solid shot I can go and if we're successful.

I believe it will have a global impact and with that I'm going to turn it over to mark to share our numbers with you.

I'm going to spend most of my time today telling you how hard it is to achieve breakaway scale as a self-programming platform.

But we have a solid shot at Ginkgo, and if we're successful, I believe it'll have a global impact.

Thanks, Jason our fourth quarter financial results reflect the continued progress we have been demonstrating in our business model over the past year with strong year over year growth in the foundry platform and an outsized contribution from our bio security offering.

And with that, I'm going to turn it over to Mark to share our numbers with you.

Thanks, Jason.

Total revenue in the fourth quarter of 2021 increased to $148 million.

Our fourth quarter financial results reflect the continued progress we've been demonstrating in our business model over the past year with strong year over year growth in the Foundry platform and an outsized contribution from our biosecurity offering. Total revenue in the fourth quarter of 2021 increased to $148 million, representing growth of over four times the fourth quarter of 2020.

Representing growth of over four times, the fourth quarter of 2020.

For the full year 2021, total revenue grew to $314 million, also four times the prior year.

Full year 2021 total revenue grew to $314 million also four times the prior year.

Now moving to self programming highlights.

Now moving to self-programming highlights.

We added 10 new cell programs to the Foundry platform in the fourth quarter of 2021, bringing the total number of new programs to 31 for the full year, well ahead of our original target of 23 programs for the year. As a reminder, our new cell program count is a KPI that we're particularly focused on as this metric drives both near-term Foundry revenue and potential future downstream value share. And we only count a program that has a certain expectation of scale and are often in addition doing several proof of concept programs as well, which can ultimately lead to larger paid programs.

We added 10, new cell programs to the foundry platform in the fourth quarter of 2021, bringing the total number of new programs to <unk> 31 for the full year well ahead of our original target of 23 programs for the year.

As a reminder, our cell program count as the Kpis that we're particularly focused on is this metric drives both near term foundry revenue and potential future downstream value share.

And we only count a program that has a certain expectation is still in our Austin. In addition, doing several proof of concept programs as well, which can ultimately lead to larger paid programs.

The 31, new programs, we added in the full year 2021 period compares to 18, new programs added in full year 2020, representing 72% growth. We supported a total of 71 active programs in the full year 2021 period across 33 customers on our foundry platform.

The 31 new programs we added in the full year 2021 period compares to 18 new programs added in full year 2020, representing 72% growth. We supported a total of 71 active programs in the full year 2021 period across 33 customers on our Foundry platform.

As you saw earlier these programs are running across the remarkably diverse set of end markets with strong growth in the past year coming from pharma and biotech, which is particularly encouraging given these are some of our most discerning customers often with their own strong internal R&D teams.

As you saw earlier, these programs are running across a remarkably diverse set of end markets with strong growth in the past year coming from pharma and biotech, which is particularly encouraging given these are some of our most discerning customers, often with their own strong internal R&D teams.

As a result of progress across our broad portfolio of customer programs foundry revenue increased to $34 million in the fourth quarter of 2021 from $16 million in the fourth quarter of 2020, representing 108% growth. Similarly.

As a result of progress across our broad portfolio of customer programs, Foundry revenue increased to $34 million in the fourth quarter of 2021, from $16 million in the fourth quarter of 2020, representing 108% growth. Similarly, Foundry revenue for full year 2021 increased to $113 million, exceeding our outlook of $100 million and representing growth of 91% over full year 2020. As a reminder, Foundry revenue included equity-based payments of approximately $12 million in each of the third and fourth quarter of 2021 that we received for achieving commercial milestones with Kronos.

Foundry revenue for full year, 2021 increased to $113 million exceeding our outlook of $100 million and representing growth of 91% over full year 2020.

As a reminder, foundry revenue included equity based payments of approximately $12 million in each of the third and fourth quarter of 2021.

We received for achieving commercial milestones with Kronos.

We have a number of related parties by virtue of our business model, where for some customers we take equity in lieu of royalties as compensation for downstream value and in some cases for upfront fees while.

We have a number of related parties by virtue of our business model where for some customers, we take equity in lieu of royalties as compensation for downstream value, and in some cases for upfront fees.

While we disclose related party revenues as required we do not manage the business around this fact and as such do not make judgment or set targets around increasing or decreasing the proportion of our revenue that is categorized as related party.

While we disclose related party revenues as required, we do not manage the business around this fact, and as such, do not make judgment or set targets around increasing or decreasing the proportion of our revenue that is categorized as related parties. That said, related party revenue represented a meaningfully smaller portion of our total revenue in 2021 as compared to 2020. Related parties represented 30% of foundry revenue in the fourth quarter of 2021 and 42% of full year 2021 foundry revenue. This compares to 78% of foundry revenue in the fourth quarter of 2020 and 72% of foundry revenue in the full year 2020.

That said related party revenue represented a meaningfully smaller portion of our total revenue in 2021 as compared to 2020 related party is represented 30% of foundry revenue in the fourth quarter of 2021, and 42% of full year 2021 foundry revenue. This compares to 78% of foundry.

In the fourth quarter of 2020, and 72% of foundry revenue in the full year 2020.

This shift toward more third party revenue is due to both the downstream value share received from Kronos, which is not a related party as well as continued diversification in the business.

This shift toward more third party revenue was due to both the downstream value share.

See from Chronos, which is not a related party as well as continued diversification in the business.

Now turning to the Biosecurity.

Now turning to biosecurity.

Our concentric offering had an extremely strong fourth quarter, generating $114 million of revenue in the quarter and bringing the full year 2021 revenue to $201 million. This result significantly exceeded our most recent expanded outlook of $110 million for the year from our Q3 earnings call. Biosecurity revenue consists primarily of product and service revenue from our end-to-end COVID testing offering, and the growth was driven primarily by K-12 pooled testing, which ramped significantly in Q4 following the many state contracts we had been awarded earlier in the year.

Our concentrix offering had an extremely strong fourth quarter generating $114 million of revenue in the quarter and bringing the full year 2021 revenue to $201 million.

This results significantly exceeded our most recent extended outlook of $110 million for the year from our Q3 earnings call.

Bio security revenue consists primarily of product and service revenue from our end to end Covid testing offering and the growth was driven primarily by K 12, well testing, which ramped significantly in Q4. Following the many state contracts, we had been awarded earlier in the year.

Bio security gross margin was 42% in the fourth quarter bio security gross margin in the second half of 2021 was significantly higher than in the first half of the year due to the maturation of the business and the benefits of larger scale.

Biosecurity gross margin was 42% in the fourth quarter. Biosecurity gross margin in the second half of 2021 was significantly higher than in the first half of the year due to maturation of the business and the benefits of larger scale.

When comparing the fourth quarter gross margin to the third quarter gross margin, the decline is primarily due to mixed shift in the composition of revenue as K-12 pool testing scaled significantly.

When comparing the fourth quarter gross margin in the third to the third quarter gross margin. The decline is primarily due to mix shifts in the composition of revenue as stated as well pool testing scaled significantly.

As we've stated in the past, we will maintain a healthy level of conservatism as we navigate the constantly changing world of bio security. Many COVID-19 testing operations shutdown last summer because everyone assumed COVID-19 was over we have a long term thesis on the importance of bio security, which has allowed us to continue to lean in when other.

As we've stated in the past, we will maintain a healthy level of conservatism as we navigate the constantly changing world of biosecurity.

Many COVID testing operations shut down last summer because everyone assumed COVID was over.

We have a long-term thesis on the importance of biosecurity, which has allowed us to continue to lean in when others lean out. But we also recognize that this market is shifting rapidly, and it is difficult to forecast more than a few months out.

Lean out, but we also recognize that this market is shifting rapidly and it is difficult to forecast more than a few months out.

As the biosecurity industry matures, we will be able to forecast this business with more precision.

<unk> security industry matures, we will be able to forecast this business with more precision, but for now we will provide regular updates as our positioning evolves.

But for now, we will provide regular updates as our positioning evolves.

And now I'll provide a little more commentary on the rest of the P&L. All figures discussed here exclude stock based compensation expense, which I will provide more details on in a moment.

And now I'll provide a little more commentary on the rest of the P&L.

All figures discussed here exclude stock-based compensation expense, which I'll provide more details on in a moment. R&D expense, excluding stock-based compensation, grew to $219 million in the full year 2021, driven by expansion of boundary capacity and increased breadth of capabilities to support both current and future collaborations, along with further development of our biosecurity, The slight decrease that you see in R&D expense when comparing the fourth quarter of 2021 with the prior year is due to a significant amount of R&D we incurred in late 2020 relating to our biosecurity offerings.

R&D expense, excluding stock based compensation grew to $219 million in the full year 2021, driven by expansion of foundry capacity and increased breadth of capabilities to support both current and future collaborations.

Long with further development of our bio security offering the slight decrease that you see in R&D expense when comparing the fourth quarter of 2021 with the prior year.

Due to a significant amount of R&D, we incurred in late 2020 relating to our bio security offering.

G&A G&A expense grew to $106 million and the full year 2021, as we invested in business development and all other G&A functions to support the growth of new customers and programs higher level of foundry activity and our bio security offering along with our extensive public company readiness efforts.

G&A expense grew to $106 million in the full year 2021 as we invested in business development and all other G&A functions to support the growth of new customers and programs, higher level of boundary activity, and our biosecurity offering, along with our extensive public company readiness effort.

Net loss. So it is important to note that our net loss includes a number of noncash expenses as detailed more fully in our financial statements, including one mark to market adjustments on equity investments, where we have elected the fair value option two reductions in the carrying value of those platform venture is accounted for as.

Net loss. It is important to note that our net loss includes a number of non-cash expenses, as detailed more fully in our financial statements, including one, mark-to-market adjustments on equity investments, where we have elected the fair value option.

Two, reductions in the carrying value of those platform ventures accounted for as equity method investments, which we typically record in the quarter that that equity is issued to us.

Equity method investments, which we typically recorded in the quarter that issue.

Equity is issued to us and three mark to market adjustments on public and private placement warrants inherited as part of the destock.

And three, mark-to-market adjustments on public and private placement warrants inherited as part of the DSPAC that are now classified as a liability on our balance sheet.

Now classified as a liability on our balance sheet because of these noncash items, we look to adjusted EBITDA is a more indicative measure of our profitability.

Because of these non-cash items, we look to adjust EBITDA as a more indicative measure of our profitability. Adjusted EBITDA in the quarter was positive $1 million and for the full year 2021 was negative $106 million. A full reconciliation of EBITDA is provided in the appendix to this presentation and in our earnings release.

Adjusted EBITDA in the quarter was positive $1 million and for the full year 2021 was negative $106 million a full reconciliation of EBITDA is provided in the appendix to this presentation.

In our earnings release adjusts.

Adjusted EBITDA was favorably impacted by the large increase in gross profit from biosecurity in the fourth quarter, and by downstream value share, which typically drops straight to the bottom line.

Adjusted EBITDA was favorably impacted by the large increase in gross profit from bio security in the fourth quarter and by downstream value share, which typically dropped straight to the bottom line.

And finally capex in the full year 2021 was $57 million, reflecting foundry capacity and capability investments. Examples of this include the completion of our new broad use boundary byword six located in our Boston headquarters as well as foundry space build out in Cambridge mass, we Havent AMT.

And finally, CapEx in the full year 2021 was $57 million, reflecting foundry capacity and capability investment. Examples of this include the completion of our new broad use foundry, Bioworks 6, located in our Boston headquarters, as well as foundry space build out in Cambridge, Mass.

We have an ambitious CapEx plan in 2022 and have already begun work on Bioworks 7.

This is capex plan in 2022 and have already begun work on <unk> seven.

I'd like to provide some additional information relating to stock based compensation expense.

I'd like to provide some additional information relating to stock-based compensation expense. This is a topic disclosed at length in our prior SEC filings.

As a reminder, we have historically not booked any stock comp expense relating to our restricted stock unit grants dating back to 2015. As prior to going public, the RSUs contained a performance condition that required a change in control or an IPO in order to vest, and the DSPAC event did not satisfy the performance condition as defined in the RSU plan. In the fourth quarter, the Board of Directors modified the vesting terms of the RSUs such that Ginkgo's business combination with Soaring Eagle was deemed to have met the performance condition for vesting.

This was a topic disclose at length in our prior SEC filings as a reminder, we.

We have historically not booked any stock comp expense relating to our restricted stock unit grants dating back to 2015.

As prior to going public the rsum contained a performance condition that required a change in control.

IPO in order to vest and the <unk> events did not satisfy the performance condition is defined in the RSV plan.

In the fourth quarter the board of directors modified the vesting terms of Crs use such <unk> business combination with soaring Eagle was deemed to have met the performance condition for vesting.

As is typical of new companies going public, this was accounted for as a modification and resulted in a one-time catch-up adjustment of approximately $1.5 billion of incremental stock-based compensation expense in the fourth quarter of 2021, which was calculated based on the total number of RSUs impacted, again, dating back to 2015, at the share price of $13.59 on November 17, 2021.

As is typical of new companies going public. This was accounted for as a modification and resulted in a onetime catch up adjustment of approximately $1 5 billion of incremental stock based compensation expense in the fourth quarter of 2021.

Which was calculated based on.

The total number of RSC is impacted again dating back to 2015.

At the share price of $13.59 on November 17th 2021.

Stock based compensation expense also increased by another $174 million.

Stock-based compensation expense also increased by another $174 million related to RSU earn-out shares, which were also subject to the same performance condition as the underlying RSUs. In total...

Related to our issue earn out shares which were also subject to the same performance condition as the underlying our issues.

In total.

In addition to the total catch-up entry in Q4, of over $1.7 billion.

In addition to the total catch up entry in Q4.

Of over $1 7 billion as part of the same calculation we.

Would expect to see approximately $2 2 billion of stock comp expense in 2022 and beyond relating to the service based vesting of these legacy RSC awards and earn out our issues.

As part of the same calculation, we would expect to see approximately $2.2 billion of stock comp expense in 2022 and beyond relating to the service-based vesting of these legacy RSU awards and earn out RSUs. The substantial majority of this amount will be booked in 2022.

The substantial majority of this amount will be booked in 2022.

Also just for further clarification of the underlying shares relating to all of these rfps have been accounted for in the pro forma financials that were included with all of our pre destock SEC filings.

Also, just for further clarification, the underlying shares relating to all of these RSCs have been accounted for in the pro forma financials that were included with all of our pre-DSPAC SEC filings.

And now I'd like to provide some commentary on our revenue outlook for 2022, we expect to add an incremental 60, new cell programs and full year 2022 based on our current pipeline. We would expect a reasonably balanced mix of these new cell programs to come from existing customers and new.

And now I'd like to provide some commentary on our revenue outlook for 2022. We expect to add an incremental 60 new cell programs in full year 2022. Based on our current pipeline, we would expect a reasonably balanced mix of these new cell programs to come from existing customers and new customers.

<unk>.

We expect total revenue of $325 million to $340 million in 2022 of that we are targeting foundry revenue to be in a range of $165 million to $180 million.

We expect total revenue of $325 to $340 million in 2022. Of that, we are targeting foundry revenue to be in a range of $165 to $180 million. We expect this growth to be driven both by increased usage fees from a growing number of programs on the platform, as well as increasing downstream value from completed programs.

We expect this growth to be driven both by increased usage fees from a growing number of programs on the platform as well as increasing downstream value from completed programs and.

And we expect biosecurity revenue to be at least $160 million for full year 2022.

And we expect bio security revenue to be at least $160 million for full year 2022.

We are incredibly pleased with the performance of our biosecurity offering in 2021 and thus far in 2022. However, as was the case throughout 2021, there still remains significant uncertainty in this market in general.

We are incredibly pleased with the performance of our bio security offering in 2021, and thus far in 2022. However, as was the case throughout 2021, there still remains significant uncertainty in this market in general many of the state K to 12 testing contracts. We are supporting our funded through the end of the school year and there is uncertainty.

Many of the state K-12 testing contracts we are supporting are funded through the end of this school year, and there is uncertainty about the funding available and level of testing in the next fiscal school year.

About the funding available and level of testing in the next fiscal school year. In addition, ginkgo is actively working on new opportunities in bio security, including internationally. However, the timing and amounts of revenue from these opportunities is uncertain.

In addition, Ginkgo is actively working on new opportunities in biosecurity, including internationally.

However, the timing and amount of revenue from these opportunities is uncertain.

And before I hand, it back to Jason and one final comment on 2022 outlook, while we don't provide guidance on adjusted EBITDA or cash flows we would like to provide some color on how we think about operating cash burn and managing our cash resources.

And before I hand it back to Jason, one final comment on 2022 Outlook.

While we don't provide guidance on adjusted EBITDA or cash flows, we would like to provide some color on how we think about operating cash burn and managing our cash resource. Particularly in these market conditions, and prior to us achieving consistent profitability, we view our cash balance as a critical resource to be managed with careful consideration, given to several objectives, such as the pace at which we're adding new programs and customers, advancing customer programs technically, improving the efficiency of our operations, investing in the right new tech, and internal R&D to fuel future Knights logins, and investing ahead in foundry capacity.

Particularly in these market conditions and prior to us achieving consistent profitability.

View, our cash balance as a critical resource to be managed with careful consideration given to several objectives, such as the pace at which we're adding new programs and customers advancing customer programs technically improving the efficiency of our operations investing in the right New Tech.

And internal R&D to fuel future nights logging.

And investing ahead in foundry capacity.

When we think about the range of adjusted EBITDA and potential operating cash burn, it will vary depending on how biosecurity plays out during the year.

When we think about the range of adjusted EBITDA and potential operating cash burn it will vary depending on how bio security plays out during the year. In addition, we may vary the level of planned foundry R&D expense and foundry capex, depending on both near term opportunities available to drive.

In addition, we may vary the level of planned Foundry R&D expense and Foundry CapEx depending on both near-term opportunities available to drive platform adoption and technical success, and then the longer term considerations of the many objectives I mentioned above.

Platform adoption and technical success, and then the longer term considerations of the many objectives I mentioned above with respect to M&A transactions. We generally expect that we would not use existing cash resources to fund those transactions.

With respect to M&A transactions, we generally expect that we would not use existing cash resources to fund those transactions.

So to sum up, when we think about our $1.5 billion cash balance at year end, our general approach in managing cash flow will be to advance company objectives as rapidly as we can while maintaining multiple years of cash runway.

So to sum up when we think about our $1 $5 billion cash balance at year end, our general approach in managing cash flow will be to advance company objectives as rapidly as we can while maintaining multiple years of cash runway.

In summary, then 2021 finished very strong financially across all dimensions, we have an ambitious growth plan in front of US and are very focused on continued execution as a new public company.

In summary then, 2021 finished very strong financially across all dimensions.

We have an ambitious growth plan in front of us and are very focused on continued execution as a new public company.

And now, Jason, back to you.

Now Jason back to you.

Thanks, Mark it's great to see all the numbers lined up like that and it was super exciting 2021 for us so.

Thanks, Mark.

Three topics I want to dive into today with you all.

First our.

Our stock price has declined substantially since we went public as the market has gotten really tougher growth companies and I want to share how I'm thinking about positioning ginkgo in this kind of an environment in particular relative to smaller scale platforms.

Second I want to talk to take a moment to help investors build a deeper understanding of what we're doing here at <unk> in terms of building a horizontal platform and how hard that is if.

If we don't pull it off these maybe some of the reasons why it hopefully what you see here will serve as a guide for what to watch as we build the business.

Finally, I want to make it clear that we've never been more excited about the potential here I didn't go biology is messy and it's hard but it's one of the most powerful forces on the planet and it can be used to do a lot of good right now.

It's great to see all the numbers lined up like that.

So let's dive in.

And it was a super exciting 2021 for us.

Alright so.

Giggle, we've taken business model lessons really from the horizontal tech platforms, and we're trying to bring that horizontal platform mindset into the biotech industry, which has historically really been very vertically organized.

And as part of doing that actually read several years ago now all the old Amazon shareholder letters.

And which I recommend people to do accident are incredible, but I was reminded of one from 2000 and Amazon was down about 80% for the year when Basil throughout this letter any quotes Ben Graham, who is sort of Warren Buffett mentor and kind of the value investing world.

So there are three topics I want to dive into today with you all.

Quote says.

First, you know, our stock price has declined substantially since we went public, as the market has gotten really tough for growth companies. And I want to share how I'm thinking about positioning, you know, Ginkgo in this kind of an environment, in particular relative to smaller scale platforms.

So if Amazon, but Amazon was better position today than it was a year ago why is the stock price so much lower than it was a year ago.

And of course, Ben Graham is that in the short term the stock market is a voting machine and in the long term, it's a weighing machine and what he means by that is sort of.

Week to week Youre going to see fluctuations in our stock price that can be influenced by many things out in the world outside of sort of the fundamental intrinsic value of the company, Okay and that intrinsic value Ben Graham would say is really tied to the future free cash flows of the company and so even if day to day that moves a lot in the long run what gets.

Wade is that intrinsic value and I think one of the things people get confused about is they think there's sort of a value investor crowd is sort of at odds with what kind of growth company crowd and investors and I don't think Thats true if you go back and read.

Certainly letters from the beginning the recognition is there that's fundamentally what Amazon in any company will be valued on is those future cash flows with different with a growth company is how youre going to get to them right. It just looks different when you are a mature company with existing revenue streams and everything else versus the company. That's trying to build a new industry build a new market you have a different strategy.

Apogee, but at the end of the day, you're going to get weighed on those free cash flows.

That's worth not losing the thread right I think that view on things is correct and we agree.

Ben Graham and bagels on this that that is how ultimately the company will be valued and what ginkgo is going to try to do is is build a heavier and heavier company.

And 2022 is a very opportune year for us to do that.

Okay. So how are we going to do that.

So I think the first thing and one of the things that Mark talked about is make sure you have the war chest.

Cash war cast in an environment like this to give you a long enough runway to pull off your strategies and then second is sort of keep testing that horizontal business model and make sure. It's working the way. We hope. It is also as Mark mentioned, we're in a great place that war chest. We ended the year with $1 5 billion in cash as several years of runway for us.

The business model front I am very happy with our performance in 2021, we exceeded our metrics on every dimension last year, even after raising them midway through the year. We recognize we're in the early stage of trust building with.

Public market investment community and we will work hard to keep earning that trust time, we shared our numbers for 2022 today.

Second diversification is one of the most powerful levers you can use to manage risk.

I Love. These charts that you see up here right. So you can see our sort of customer size across our programs are nicely split between early stage companies mid stage and more mature companies. The types of partnerships, we do and if youre interested in these I encourage you to watch the video from our last earnings call. We went through platform venture structured partnership.

Ups and third party partnerships again, we're seeing a nice mix of those and then on the industry side. I think this is something that's really pretty unique in the biotech sector. Again. This is an industry. That's very vertically organized and so to see us doing a range of program split between pharma food and AG industrials consumer tax government projects. This is this is a.

This is very nice future for us in terms of being able to.

Make sure we can survive if any one of these sectors has a hiccup.

Third we've shown we can move aggressively when new opportunities arise to say the least the growth of our bio security offering from almost nothing to just over $200 million in 2020 to just over $200 million.

In revenue last year speaks to this aspect of our culture at kimco to move quickly when theres opportunities for our platform I am proud of that and the positive impact it's been having especially in K 12 schools finally.

Finally, I will just state the obvious that that this kind of market environment favors two groups. Those that are our companies those that are cash flow positive, which we are not yet.

And those that are well capitalized and we are well capitalized that gives us a powerful strategic advantage over the coming months, which we plan to use to our advantage okay.

There's one other point and that Amazon later I'll touch on in this section that struck me. So beta says your online selling relative to the traditional retailing is a scale business characterized by high fixed costs and relatively low variable cost. This makes it difficult to be a medium sized E. Commerce company and then he goes on to talk about sort of pets dot com and living <unk>.

Com, which were like platforms focused in particular verticals and that when the capital markets closed the door on financing Internet companies. These companies had no choice, but to close their doors.

And at various points I think you can go and horizontal platforms and synthetic biology shared this feature sort of high fixed costs and low variable costs and I'll talk about that in a minute in the next section.

I've shared this fear of Hey, there is a narrow platform in a certain area.

It should be snapped up.

Bye bye accompany et cetera, ginkgo and.

But all of these businesses are.

<unk> like retail in the late 19th capital intensive.

So as the capital markets closed their doors, we expect to see many of these platform companies lean into products.

If theyre successful will pay off at scale more quickly I think it's a good decision for many of these companies and we will also see I think some of these companies closed their doors. So through this backdrop ginkgo was able to remain committed and focused on our platform horizontal business model and I want to take the next section here talk to talk about what makes it hard.

Second, I want to take a moment to help investors build a deeper understanding of what we're doing here at Ginkgo in terms of building a horizontal platform and how hard that is.

Hard to be a medium scale platform and these are some of the exact same barriers that ginkgo needs to overcome if we're going to be successful at becoming really a durably profitable.

Scale platform that sort of weighs a lot and intrinsic value. So if we go to.

You know, if we don't pull it off, these may be some of the reasons why.

Okay. So.

So I want to go through a set of things that make it hard to achieve scale as platforms. Again. These are barriers I think the other thing.

You should look for as you are watching this is this should give you a set of items to watch ginkgo on as we build the business. So I don't want to leave you with that today to to say Hey, if I'm worried about this particular aspect is oftentimes investors can have different views on what part of the rest of especially we think other most worried about this is the one that I want to keep an eye on and so I want to go through them.

You would give you some some of that background. Okay. So I want to start with what I think is really the root challenge across frankly, the entire biotech industry.

And hopefully, what you see here will serve as a guide for what to watch as we build the business.

Finally, I want to make it clear that we've never been more excited about the potential here at Ginkgo.

I'll call it a bit from our ginkgo founder's letter in the S. Four we said this is a unique moment in our relationship with biology, you talk about how the Covid pandemic demonstrates that a small bit of RNA code can sort of up in the whole world and it is a reminder, that while biology is programmable like a computer it is not predictable like a computer.

You know, biology is messy and it's hard, but it's one of the most powerful forces on the planet and it can be used to do a lot of good right now.

Okay, so let's dive in.

Okay, and I think we love the computer.

The computer's analogy all the time right.

All right.

We're talking a minute about I'll give you. Some examples from the semiconductor industry. We talk obviously about Amazon Web services and hosted data platform software development infrastructure things like software development kits. We've learned from so all of these things makes sense because fundamentally DNA is digital code right <unk>, not zeros and ones like a computer but it's digital.

So, you know, at Ginkgo, we've taken, you know, business model lessons really from the horizontal tech platforms.

And we're trying to bring that horizontal platform mindset into the biotech industry, which has historically really been been very vertically organized.

And as part of doing that, I actually read, you know, several years ago now all the old Amazon shareholder letters, and which I recommend people to do actually, they're incredible.

But I was reminded of one from 2000.

And, you know, Amazon was down about 80% for the year when Bezos wrote this letter.

And he quotes Ben Graham, who was who was sort of Warren Buffett's mentor in kind of the value investing world.

And, you know, the quote says, you know, So if, you know, if Amazon was in a better position today than it was a year ago, why is the stock price so much lower than it was?

And in the long term, it's a weighing machine.

And, you know, he quotes Ben Graham, he says, you know, in the short term, the stock market is a voting machine.

And, you know, what he means by that is sort of, you know, week to week, you're going to see fluctuations in a stock price that can be influenced by many things out in the world outside of sort of the fundamental intrinsic value of, Okay, and and that intrinsic value Ben Graham would say is really tied to the future free cash flows of the, And so even if day to day that moves a lot, in the long run, what gets weighed is that intrinsic value.

And I think one of the things people get confused about is they think, you know, this sort of value investor crowd is sort of at odds with kind of growth company crowd and investors. And I don't think that's true. If you go back and read, you know, Bezos' early letters, from the beginning, the recognition is there that fundamentally what Amazon and any company will be valued on is those future cash flows.

You can read and write it you can program it.

What's different with a growth company is how you're going to get to them.

But the difference with our computer is computers for things humans invented.

In other words, we understand them from the bottom up and that means it makes the programming of them very predictable biology, we did not and that we inherited it and so as a result, our programs are less predictable it's harder for us to get it right. The first time like you might be able to do in a computer program and so.

Right.

I'll talk in a minute now on the technology side of some of the implications, but also on the business model side. This has real implications for example, like I mentioned earlier around the value of diversification of projects. Okay. So on the technology side, we don't understand cells from the bottom up. So then the best strategy in that environment is to be able to test. Many many many genetic design.

It just looks different when you're a mature company with existing revenue streams and everything else versus a company that's trying to build a new industry, build a new market.

You have a different strategy.

But at the end of the day, you're going to get weighed on those free cash flows.

You know, that's worth not losing the thread.

Right.

Yeah.

Okay, and this means having a large enough scale of automation to drive down the cost per strained test in other words per strain that we're going to test in the lab to see the performance of other genetic design and this goes back to the comment I was making about those e-commerce companies.

This has a big fixed cost we spent.

$100 million over the years here I can go on on our infrastructure and low variable costs and Thats really demonstrated in what we call nights law named after my co founder here I think Khotan night, where we then roughly tripling the output of our automated labs and reducing cost by 50% annually so to state the RV.

I think that view on things is correct.

And we agree with Ben Graham and Bezos on this, that that is how ultimately a company will be valued.

Maintaining an exponential growth like that over long periods of time and you can see.

Okay, so how are we going to do that?

And what Ginkgo is going to try to do is build a heavier and heavier company.

And 2022 is a very opportune year for us.

So I think the first thing, and one of the things that Mark talked about, is make sure you have the war chest, you know, the cash war chest in an environment like this to give you a long enough runway to pull off your strategies.

Dating back to January 15th in this case, we would have had to shut labs down at various points for COVID-19 , but I think relatively smoothly over that period.

No.

That has some surprising effects right. So if you look.

Done more lab work in the last year of Ginkgo, then the first 10 years of Ginkgo combined right. So these are these are big numbers maintaining this scaling is the number one focus of being does senior technical leadership is very important.

And there are three key drivers to let you go onto the HUD a little bit on how we do that so the first is the development of new technologies. So for example, ultra high throughput screening techniques such as multiplex assay. So youll see a few dots on the chart here is the daily strained test volumes, where we get to $1 million or even more than 10 million strained tests in one day those are driven by <unk>.

Some of these newer technologies so.

What's the challenge.

And everyday like that well.

<unk>.

As you develop these new technologies, they're not immediately applicable to every project and in fact, how you do a cell programming project will shift based on what technologies are available to you and so there is a process.

You have to sort of onboard and adopt these into more of your programs to keep the numbers pushed off.

And then second, is sort of keep testing that horizontal business model and make sure it's working the way we hope it is.

And then additionally, you have kind of a little game of whack, a mole where.

So, you know, as Mark mentioned, we're in a great place with that war chest, we ended the year with $1.5 billion in cash, this is several years of runway for us.

So I love these charts that you see up here, right?

On the business model front, I'm very happy with our performance in 2021. We exceeded our metrics on every dimension last year, even after raising them midway through the year, we recognize we're in the early stage of trust building with public market investment community, and we will work hard to keep earning that trust.

So you can see our sort of customer size across our programs, nicely split between early stage companies, mid-stage and more mature companies, the types of partnerships we do, and if you're interested in these, I encourage you to watch the video from our last earnings call, where we went through platform ventures, structured partnerships, and third-party partnerships.

And we shared our numbers for 2022 today.

Again, we're seeing a nice mix of those.

Second, diversification is one of the most powerful levers you can use to manage risk.

Throughput in one part of the infrastructure goes up you can get a bottleneck in the next one and then the foundry team needs to work on driving that right. So so these are some of the challenges you faced with those new technologies. The other area and we spent a lot of time talking about this as improvements just fundamentally the automation of work that traditionally was done by folks with my sort of training Phd and bioengineering, which is working by.

And then on the industry side, I think this is something that's really pretty unique in the biotech sector.

Again, this is an industry that's very vertically organized.

And so to see us doing a range of programs split between pharma, food and ag, industrials, consumer tech, government projects, this is a very nice feature for us in terms of being able to make sure we can survive if any one of these sectors has a hiccup.

Hand, it a lab bench, we move that onto robotic automation.

Third, we've shown we can move aggressively when new opportunities arise, to say the least. The growth of our biosecurity offering from almost nothing in 2020 to just over $200 million in revenue last year speaks to this aspect of our culture at Ginkgo, to move quickly when there's opportunities for our platform.

I'm proud of that and the positive impact it's been having, especially in K-12 schools.

We drive scale by investing more and more and more sophisticated automation and then finally miniaturization and in particular miniaturization of the volume of liquid that can be managed in the lab and we recently acquired a company called <unk>. It's the technology in this category. It also helps with some of the multiplex assay.

Finally, I'll just state the obvious, that this kind of market environment favors two groups, those that are companies, those that are cash flow positive, which we are not yet, and those that are well-capitalized.

And we are well-capitalized, that gives us a powerful strategic advantage over the coming months, which we plan to use to our advantage.

Okay, so there's one other point in that Amazon letter I'll touch on in this section that struck me.

So Bezos says, you know, online selling relative to traditional retailing is a scale business. Characterized by high fixed costs and relatively low variable costs, this makes it difficult to be a medium-sized e-commerce.

And then he goes on to talk about sort of pets.com and living.com, which were like platforms focused in particular verticals, and that when the capital markets closed the door on financing internet companies, these companies had no choice but to close their, Uh, you know, and at various points, you know, I think Ginkgo and horizontal platforms and synthetic biology share this feature of sort of high fixed costs and low variable costs, and I'll talk about that in a minute in the next section.

And I've shared this fear of, hey, there's a narrow platform in a certain area, you know, might it be snapped up, you know, by a company, a competitor of Ginkgo.

And, you know, but all of these businesses are, I think, like retail in the late 90s, capital intensive.

And so as the capital markets close their doors, we expect to see many of these platform companies lean into products, which if they're successful, will pay off at scale more quickly.

I think it's a good decision for many of these companies.

And we will also see, I think, some of these companies close their doors.

So through this backdrop, you know, Ginkgo is able to remain committed and focused on our platform, horizontal business model.

Talked about at the beginning, but really where youre using very small droplets in order to do your testing and so that that's a very valuable in the area of miniaturization of it reduces cost per reaction in that in that droplet. Okay.

And I want to take the next section here of the talk to talk about what makes it hard to be a medium scale platform. And these are some of the exact same barriers that Ginkgo needs to overcome if we're going to be successful at becoming really a durably profitable, large scale platform that sort of weighs a lot in intrinsic value.

I'll just note all of this is very hard to do deploy all that foundry tech. It is a lot easier than trying to do it by hand, and like I said I have lived this.

So if we go to.

We took us a while just to get you about eight years to get to parity with our scientists at the lab bench versus using our automation and infrastructure and so if you are a smaller scale platform and automation one of the challenges you face is you may not be better than the status quo of doing the work by hand and Thats.

Okay, so all right, so I want to go through a set of things that make it hard to achieve scale as platforms.

Again, these are barriers.

That's one of the challenges to get through we move through that.

That challenge, but I think continuing to drive the scale is still very important.

Lastly, I will make on this sort of <unk> I want to show a couple of really interesting things from the semiconductor industry. So this is from the international technology roadmap for semiconductors, and I'll talk about the chart on the left in particular, which is from 2003 right. So it's pretty interesting to see it and you see here basically.

Design technology requirement, so where do they want.

Industry to get to in terms of.

Power reduction as an example, or.

And what I like about this chart as you can see in white manufacturing solutions exist and are being optimized.

Yellow manufacturing solutions are known and then in Red manufacturer of all solutions are not known.

So here is the semiconductor industry, saying, we have a set of design requirements that in 2009, we have no idea, how we're going to do them.

But we know we need to hit these types of targets. If we want to keep Moore's law going and so that sets in motion years in advance technology programs, ranging all the way back to academic scientists discovering new advances in photonics to various technology suppliers across the whole ecosystem developing those technologies and on the <unk>.

Lower right you can see very interesting patterns, which goes all the way back to the seventy's of different things coming online like higher numbers of logical quarters. For example in recent years.

To try to keep that this transistor count going so I think one thing to remember is youre going to see at a top level Moore's law, but beneath the surface new technologies blossoming, all the time and our whole ecosystem hundreds of companies and academic labs and so on that are needed to maintain that we expect that will be similar for <unk> and we think it goes well.

<unk> to play sort of a catalyst raw across industry and academia to keep it going.

Okay.

I think the other thing you should look for as you're watching this is this should give you a set of items to watch Ginkgo on as we build the business, right?

I want to leave you with that today, too, to say, hey, if I'm worried about this particular aspect, because often investors can have different views on what part of, you know, the risk associated with Ginkgo they're most worried about, this is the one that I want to keep an eye on.

The other thing I'll mention if we're successful at driving that scale and we talk.

And so I want to go through them with you to give you some of that background.

<unk> talked about we want to head for example, 60 programs this year double last year.

Other things adjacent to where we are in the infrastructure might start to break. So for example in the area of.

Okay, so I want to start with what I think is really the root challenge across, frankly, the entire biotech industry.

Animal proteins, you've had a lot of companies developing new programs in this space and there is a bottleneck in the industry today around sort of pilot scale fermentation right and so when those types of bottlenecks happened, we don't want to limit the amount of cell engineering going on so in some cases ginkgo could step in to try to help alleviate key bottlenecks across a lot of <unk>.

And I'll quote a bit from our Ginkgo founders letter in the S4.

We said, this is a unique moment in our relationship with biology.

We talk about how the COVID pandemic demonstrates that a small bit of RNA code can sort of offend the whole world.

And it is a reminder that while biology is programmable, like a computer, it is not predictable, like, Okay, and I think, you know, we love this computer, we use the computers analogy all the time, right?

We were talking a minute about, I'll give you some examples from the semiconductor industry, we talked, you know, obviously, about Amazon Web Services, and hosted data platforms, software development infrastructure, things like software development kits, we've learned.

<unk>, but one of the things I'm very hopeful for and some some good advice I got from sort of the tech venture community in the early days of Genco is an exponential improvement as hard to maintain that's your job keep that going and if it starts to create opportunity like suddenly a big market for pilot scale fermentation.

The market will grow in to fill that opportunity right and so I think we are also balancing watching what's out in the marketplace trying to see new entrants show up to do that.

On the web.

Whether it's on the manufacturing side or upstream in the areas of things like reagents and consumables.

We may break some things as well as our numbers go up.

Okay.

Final challenge on the technology side is intellectual property. So we have an asset at ginkgo that we call our code base and its really the genetic assets. The data of the learning that we have across all our projects that we make available to new customers for their cell programs. So I'll just state. This is very different from the traditional IP regime in biotechnology.

So all of these things make sense because fundamentally, DNA is digital code, right?

ATCs and Gs, not zeros and ones like a computer, but it's digital, you can read and write it, you can program.

But the difference with a computer is computers are things humans invent. In other words, we understand them from the bottom up.

And that means makes the programming of them very predictable.

So in traditional IV regime, each company has their own relatively small IP portfolio that they own across all use and theres very little cross licensing.

Companies and when there is there is an enormous amount of friction right big licensing deals takes forever and so on it's not as if it is readily available on the shelf to drop into your project.

From our perspective, if you had that big pool of intellectual property. It would be a net benefit across the entire industry. Because you would start to get more products to market, which would ultimately grow biotech as a sector.

But getting people to adopt a new scheme that is not the satisfy is hard.

Been getting easier for us I can go as we are able to offer access to more and our code base to customers to incentivize them to adopt our mode of thinking for the IP ecosystem offer and.

As an example of this we acquired Dutch DNA and.

And we quickly made that asset. This is a protein production asking you can see some of our charts both <unk>.

Document, we also developed a <unk> strain internally at Ginkgo, we made part of one of our cell development kits.

That in this case is showing sort of 5% to 20 stronger production them than what we consider best in class.

We made that immediately available to any customer on getting those platform right.

So this sort of this is our mental model for how youll see us either develop our own IP or acquiring other IP and then quickly make it available across the ecosystem.

Biology, we did not invent, we inherited.

Okay.

The other thing from a business model perspective, the unpredictability of biology in other words. The fact that we didn't design cells. We inherited them is that you have these longer development cycles and product.

And so as a result, our programs are less predictable.

It's harder for us to get it right the first time like you might be able to in a computer program.

Time to market just take a long time in biotech.

This is true for any company in our space, including Ginkgo one of the implications is that in a market like this.

Equity market like this where you have rising rates future cash flows are heavily discounted.

It reflected today in our equity stakes in our customers or simply from more aggressive discounting or expected future royalties. This drives a lower NPV for these future expected payments to ginkgo now with our balance sheet that doesn't bother us too much over the long term, but we recognize that this delayed aspect of our cash flows is going to press.

Our valuation in the near term.

So now one interesting feature that I would like to remind you about is our deals are actually with our customers are reasonably tunable right. So just like an investor would in a market like this we can we can sort of tune on the specific tradeoff is typically between.

Upfront fees like cash we're getting in from customers as part of doing the development of our cell versus the downstream value share how big of a royalty do we take or how much equity do we taken a part of our company just to state the obvious those can trade off against each other some of that will do based on what the customer wants but then kinko's interests could also affect the types.

The deals we want to do and so so I like this flexibility as like a general feature of being a platform biotech company versus a pure product company right, we're able to push a little more into the fees if that felt like the right thing to do from like a cash reserve standpoint, and so on okay. So something again I think it's a tool for us to use in the future I like that we have it.

And so I just wanted to highlight it but I like our position today again, because I think our war chest is good.

Okay next.

Anything that can be tough for platform companies.

The mall. So another is dependent on our customers to bring products to market. So we would argue I think though that our customers are actually better at bringing products to market than we would ever be right. So to state the obvious it would be hard to imagine me being good at getting a drug through an FDA clinical trial and also developing the next.

Great fragrance product that also putting at Ts.

Tasty chicken nugget on your plate right like the range of those.

End market applications are so broad that that for <unk> to be in all of them.

Ill stretch and so we've adopted a model where ultimately our customers are the ones that bring those products to market.

And if you're concerned about this aspect of our business, what you should be watching for or updates on the chart. We showed here in our last earning call in terms of customers, bringing products to scale, okay, and so and last year, we had nearly doubled the number of products that we had brought to scale with customers. This is an important thing for you to keep an eye on if you want to know if our platform strategy.

We are having our customers do this is working and that our view is the right one.

Okay. So.

So the upshot of that strategy, though is that it allows for diversification and I've touched on this earlier, but I will reiterate on this and this.

And so we'll talk in a minute now on the technology side of some of the implications, but also on the business model side, this has real implications, for example, like I mentioned earlier around the value of diversification of products.

OK, so on the technology side, we don't understand cells from the bottom up. So then the best strategy in that environment is to be able to test many, many, many genetic designs. Okay, and this means having a large enough scale of automation to drive down the cost per strain test. In other words, per strain that we're going to test in the lab to see the performance of a genetic design.

Slide.

When you look at consumer technical accumulative programs, you see us increasing programs across all of these different verticals consumer technology industrial environment food Nag.

Pharma and biotech apology I think overexposure in a single market and we've been down this road before isn't that biology with things like Biofuels is a real risk.

To our company I think <unk> is in a position and synthetic biology importantly, as a technology period across the whole industry is also I think diversified out of out of that situation. So I don't think any single market is going to trip the whole industry at this point, which is from my standpoint.

Bioengineering very very exciting because I think we're on a nice long road from here as an industry.

The last thing I wanted to mention was bio security hopefully it's obvious by now that bio security is key technology and ginkgo should be foundational in it but it's not clear how it will be maintained long term and there's even a history in bio security a funding falling off as an epidemic threat abates you hear a lot about mers Sars and then it falls off.

I mean, it's interesting.

To be fair.

Covid it was a dramatically bigger global impact that any of the epidemics any of US have lived through in our lives really since 1918, you haven't seen anything like it so.

There is opportunity for it to be different here, but we should we should be careful and keep an eye on it and we care deeply about this topic because as we try to make biology easier to engineer, we want to ensure we do that with care.

And developing the technologies that make sure that <unk> is not misused is an important part of that care I was recently asked to serve on the National Security Commission on emerging.

Biotechnology along side U S Senators.

And young Congresswoman, Stephanie bites and Congressman Rotana, along with a total of 12 people. This commission is similar to what a couple of years back that was created for cyber security Okay.

Asked about the implications for cyber security.

For National Security. This is a good indication that the U S. Government has a growing awareness of bio security as a key issue for public health and National Defense.

We've been running our biosecurity business at scale, but as Mark mentioned many of our contracts expire for at least the K 12 months at the end of the school year I, it's hard to predict how the business will evolve going forward, but we do know is that we're committed to this segment and to being a part of the long term solution, which will likely include a mix of sort of active testing.

Putting a swap and a nose.

But also always on monitoring technologies right.

Measuring what's happening in wastewater the air and so on to stay one step ahead of growing public health threats in the meantime, as the market evolves will be will continue to be conservative in our guidance just like we were last year, Here's what we know what we think and if we do better than that Thats, great, but we want to we want to make sure we're being conservative with you all okay, alright, So bill.

And this goes back to the comment I was making about those e-commerce companies.

<unk> biotech platforms is hard, but as I said at the beginning I've never been more excited about what we can do here at kimco.

This has a big fixed cost.

It's a reflection of the market environment, we've been living in the last 10 to 15 years that.

I've said that he was able to stay on one company is talking about Tesla that he described his idiocy squared and another in Spacex that is one of the dumbest been hardest ways to make money in the past decade.

You also saw just last year or two nuclear fusion companies able to raise a combined $4 billion. Okay. This is a technology that won't even know if it will work at all okay and in my opinion investments in these sort of breakthrough technologies are critical for U S competitiveness and for attacking the big global problems of our time.

Building a horizontal biotech platform is a similar sort of large investment needed long time to profitability challenge.

The higher interest rate environment, which I think we're moving into here you will see investors naturally turned to companies that are producing cash today and away from areas like electric vehicle space nuclear fusion and biotech that have longer time to profitability.

But what is exciting about companies like a tough loss base accurate helium is that if they're successful they become incredibly valuable and they make a big impact in the world.

Synthetic biology, as an industry deserves to be in that same category Mckinsey.

Mckinsey report on the bio Revolution estimated that 60% of the world's materials could be made by <unk>.

<unk> technology, a grow at all right and 45% of the world's disease burden could be addressed.

Biology is programmable, but it is hard to program. If we can make it easy to program I think we can change the world.

So all of that is going to take time, but there are a few things I'm, particularly excited about in the relatively near term over the next year and in particular, the first is that we are seeing stronger demand than ever I think.

We've spent hundreds of millions of dollars over the years here at Ginkgo on our infrastructure and low variable costs.

And that's really demonstrated in what we call Knight's Law named after my co-founder here at Ginkgo, Tom Knight, where we've been roughly tripling the output of our automated labs and reducing costs by 50% annually.

Now that's important because we're planning to double the number of new programs. Mark just said, we want to hit 60 programs. This year that is not an easy task, but we're starting to get inbound interest from potential customers.

So, to state the obvious, maintaining an exponential growth like that over long periods of time, and you can see this dating back to January 15th in this case, and we had to shut labs down at various points for COVID, but I think relatively smoothly over that period, that that has some surprising effects, right?

So if you look, you know, we've done more lab work in the last year of Ginkgo than the first 10 years of Ginkgo combined, right?

Frankly, we didn't give us the type of day three years ago, but as our platform scale is increase in code bases available. They now realize the difference in our capabilities versus what they might be able to do in their in house R&D I think youll see a healthy mix of both young companies and large established companies come on the platform in the coming months.

So these are these are big numbers.

Maintaining this scaling is the number one focus of Ginkgo's senior technical leadership is very important.

And there are three key drivers to like let you go under the hood a little bit on how we do that.

We've talked about M&A as a key driver for us going forward. We've done two small M&A deal. So far this year and we have a deep pipeline of opportunities at both smaller tuck ins as well as larger opportunities that could create exciting areas of growth.

So the first is the development of new technologies.

So for example, ultra high throughput screening techniques, such as multiplex assay, so you'll see a few dots on the chart here is that, you know, daily strain test volumes where we get to a million or even more than 10 million strain tests in one day.

Those are driven by some of these newer technologies.

So what's the challenge?

Finally, I'd like to stay humble about what the royal could throw at us in any given year I've developed some confidence in our ability to react quickly I think we can prove ourselves quite well last year, but we will see how bio security evolves.

And as that opportunity and others emerge I think culturally kimco is well positioned to grow into them.

I'd like to end on.

On this slide people forget that when they invest it influences how the world develops and so I mentioned those of us that want to see breakthrough technologies come into the world will need to be careful and look for companies that have the runway to make it to scale in other words, I think capital markets aren't going to be there as much for these types of breakthrough technologies coming up.

But.

With rising rates.

I think investors are going to have an opportunity to access the types of breakthrough technology companies and long dated growth companies that are discounting the near term.

So while I think we should be thoughtful.

We should invest in the world, we want to see exist and I'm happy to take your questions and I'm really excited for the sort of long term minded investors will see on our cap table I think they are coming out. Thanks, so much.

Why isn't every day like that?

Well, as you develop these new technologies, they're not immediately applicable to every project.

And in fact, how you do a cell programming project will shift based on what technologies are available to you.

Great. Thanks, Jason.

Q&A in a few moments and as usual I'll start with a question from the public and just reminding analysts on the line that if they'd like to ask a question. Please raise their hands on those in line and I'll call on you and your line can you ask your question. Thanks, so much everyone.

And so there's a process where you have to sort of onboard and adopt these into more of your programs to keep the numbers pushed up.

Alright.

So as I promised him and take the first question Bryan.

And then additionally, you have kind of a little game of whack-a-mole, where as throughput in one part of the infrastructure goes up, you can get a bottleneck in the next one.

One of our one of our public investors now into our inbox.

And then the founder team needs to work on driving that up.

How can we think of Eyeworks rapidly scale up itself programming operations over the next 10 years, it's been considerable human involvement is needed to bring each projects' completion.

And so these are some of the challenges you face with those new technologies.

Sure I can take that.

So there's sort of two pieces that again goes platform to understand how we do these projects for customers right. So there's the foundry, which is a highly automated set of infrastructure. You heard me talk about how thats exponentially improving with Knights law, and then sitting on top of the foundry or what we call program teams. These are teams of scientists there as it says here human beings doing this.

Work.

Engaging against the customers' targets, so trying to engineer a cell to do a certain thing using scientific discretion leveraging all of that automated infrastructure I think that will as we're trying to as Mark mentioned and try to get to 60 programs. This year.

We can hit that by basically improving our sort of like operational excellence across how we run programs in other words, we can become more efficient in how we launch programs that we build those program teams and so on.

As we get to hundreds of programs per year, I think you need to start to actually make the way we do the work more standardized which I expect will be pretty natural right. If you look at sort of the history of software development <unk> been able to program more and more sophisticated programs over the years because more of that process become standardized into say an existing software library.

As an example, so I think youll see that Youll see the codebase kind of come to the fore and make it easier to do a more complicated project or to have a single person maybe multiple projects by.

By leveraging sort of existing work.

That's been done before in the codebase. So that's one of the things I'm excited about but I think you'll see that play out over the next few years for now I feel quite good about scaling our program teams.

Thanks, Jason Alright. The next question is going to come from.

Laredo.

Asked a muted year alright allowed you to speak so you should be able to ask your question, Matt very familiar.

Okay. Thank you.

So Jason the the scale. Examples you gave make a lot of sense and your tangible data whether that stream tests per day cost it really points to improved efficiency, but all of those really speak to your ability to create more shots on goal more quickly I'm curious about the other side of that which is the quality of the shots on goal that we end up taking maybe thats where code based comes.

But I'm curious has your success rate improved has a time to results shortened over the same timeframe and maybe help us understand.

The other side of equation, which is how the outputs are coming more quickly and more efficiently.

The other area, and we spent a lot of time talking about this, is improvements just in fundamentally the automation of work that traditionally was done by folks with my sort of training, PhD, in bioengineering, which is working by hand at a lab bench. We moved that onto robotic automation.

Yes.

Nicole are.

A critical question Matt.

To restate it hey, it's great to have all this horsepower on the lab infrastructure, but does it improve the likelihood of success and the probability of success for a given project and by the way. This is the exact question we get from every potential customer we talk to to move them onto the platform because they are asking themselves. The same thing if I moved from my own science.

And we drive scale by investing more and more in more sophisticated automation.

And then finally, miniature. And in particular, miniaturization of the volume of liquid that can be managed in the lab.

<unk> R&D team onto again goes infrastructure I see there'll be able to do more lab work per dollar, but is that going to give me a better odds of success right.

And we recently acquired a company called FGen. It's a technology in this category. It also helps with some of the multiplexed assays I talked about at the beginning, but really where you're using very small droplets in order to do your testing. And so that's very valuable in the area of miniaturization. It reduces cost per reaction in that droplet.

OK.

And so the short answer is you can see this I think the number one way to see this is new programs on the platform because we are going through a filter of customers doing that diligence coming through talking to our scientific teams understanding it and then deciding to engage us on these projects. That's the first mill. So do I keep hitting high program numbers is a great indication.

I'll just note, all this is very hard to do, deploy all that foundry tech.

It is a lot easier than trying to do it by hand.

That is true that you get better output from our infrastructure not just more work obviously on a longer time scale. What you want to see is this program succeeding right. That's the ultimate proof in the putting I think the general challenge there like I mentioned is just the time. It takes for these programs to finish and so that will always lag.

The number of programs, we have on the platform and we will accumulate more data over time right now the challenge like to ask much like Oh, what's the probability of success right. The issue is for any given program. It varies dramatically also depending on how hard thing we're being asked to do right. So certain types of genetic engineering projects substantially more difficult than others and so.

That affects it so it does make that a little bit tough to like throw a specific number at you, but we do sit down with customers and talk through what we think our success and they know that going into the products.

Okay.

Matt.

The next question will be from Jeff on that Morgan Stanley is allowed.

Allows you to speak you cannot yet.

Okay.

Hey, guys. Thanks for the time here afternoon, two parter for you Jason So what does that mean.

On the comments you made about sort of tunable deal structures right, particularly in the context of existing startups and new goes.

Walk us through whether you are thinking.

Should we see you be a little bit more of a <unk>.

In terms of the kinds of customers you'll pursue in the near term, you're perhaps does it more towards larger companies with well capitalized balance sheets.

Or is it more that you will pursue the same customer constituencies as aggressively as before but you're just going to try and figure out new deal structures because the concern that we hear from investors that some of these new goes or startups might have difficulty to your point increasing funding in this environment and then my second question.

It is related to F. Gen can you just help us sort of over the long term quantify the impact that the platform could have on your efficiency and reducing the cost per program for your customers.

Sure and I'll take that second question, Diana variations, who heads up our Corp. Dev in M&A. Okay. So the first one on the tunable deal structure. So the key point I wanted to make there was look.

As far as I'm concerned because ginkgo is a platform. We do have this whole benefit of diversification and it means that the leadership at the company.

Has knobs available to us, but I don't think you have when you focus on a single product right. When you focus on a product a lot of it is just a game of estimating that particular success criteria is that drug going to go to market is that food going to go to market.

As a platform, we could say well right now I have a $1 $5 and markets looked like this I'll do deals that are more downstream value share driven and less fees, but oh markets have stayed the way. They are for three years, my cash balances lower and I want to do deals that have more fees and then the downstream value I can take I can take that trade.

It gives me a lot more certainty about our ability to succeed in the future that I have a knob like that to turn right I'm not locked into a particular strategy that that was the main point I was making.

I think in the near term.

Given our balance sheet.

Like you mentioned like startup companies I think right now is actually a great time for us to get startups on the platform and I've talked about this in the last earnings call. In my opinion. These are some of our best customers because if they start on getting those platform early they never build in house R&D.

Right when I go do a deal with Biogen when I go do a deal.

With bear I have to go and they have to decide that using our infrastructure would be better than using their own internal R&D infrastructure. If you built on me from the first day, you're on right now.

Grow with your business and this has been a.

For example that companies like stripe in the <unk>.

Software Tech platform industry have been hugely successful doing getting early stage startups, and then growing with them. So I love that so im not going to stop doing I'm going to keep doing that and we have the kind of cash balance today to keep that going we are at the same time seeing great interest from large companies.

And like I said, I've lived this.

That's mostly I've always lived this like enterprise selling was sort of the part of the company.

It took us a while just to get about eight years to get to parity with a scientist at the lab bench versus using our automation and infrastructure.

And so if you are a smaller scale platform in automation, one of the challenges you face is you may not be better than the status quo of doing the work by hand.

That's one of the challenges to get through.

We've moved through that challenge.

That I had focused on personally with big companies and it has changed tremendously I mean, I think it's a mix of us being public which makes us just more credible with the counterparty and then also just the scale of the infrastructure like we bring R&D leaders through now from large companies.

But I think continuing to drive the scale is still very important.

Last point I'll make on this sort of Knight's Law, I want to show what a couple of really interesting things from the semiconductor industry.

So this is from the International Technology Roadmap for Semiconductors, and I'll talk about the chart on the left in particular, which is from 2003, right?

So it's pretty interesting to see it.

And you see here, basically, design technology requirements.

So where do they want, you know, the industry to get to in terms of, you know, power reduction, as an example, or, you know, and, and you can, what I like about this chart, is you can see in white, manufacturing solutions exist and are being, In yellow, manufacturing solutions are known, and then in red, manufacturable solutions are not known.

So here's the semiconductor industry saying, you know, we have a set of, you know, design requirements that in 2009, we have no idea how we're going to do, right?

But we know we need to hit these types of targets if we want to keep Moore's Law going.

And so that sets in motion years in advance technology programs ranging all the way back to academic scientists discovering new advances in photonics to, you know, various technology suppliers across a whole ecosystem developing those technologies.

C infrastructure that they don't have back at their own R&D labs and so.

And on the lower right, you can see very interesting patterns, this goes all the way back to the 70s, of different things coming online, like, you know, higher numbers of logical cores, for example, in recent years, to try to keep that, you know, this transistor count going.

So I think one thing to remember is you're going to see at a top level Moore's Law, but beneath the surface, new technologies blossoming all the time, and a whole ecosystem, hundreds of companies, academic labs, and so on, that are needed to maintain that.

We expect that will be similar for Knight's Law.

And we think it goes well positioned to play sort of a catalyst role across industry and academia to keep it going.

Youll see Youll still see the same Max I don't we won't shy away from startups, even though I think it is a tougher funding environment for them right now.

But that could change in the future like I said, we would have the knob, if we needed it but not this year.

And then to the question on <unk> and <unk>.

Yeah, we're really excited about and we've worked with the company before.

Pacific program to have a lot of experience with their team and their capabilities I think one of the things Thats really unique about them and why we really are excited about them is the flexibility of the platform combined with the ability to dramatically increase throughput for certain types of experiments. So.

A pooled approach for for screening so rather than doing a raise where every sample is in its own its own little well you can effectively encapsulate. These technology that is stream and these designs and their own pump nano.

<unk> nano liter reactors.

He's effectively.

And then you can you can measure different types of.

<unk> production processes through there, whether it's accreted molecule or an intracellular molecule et cetera. So there's a lot of flexibility of the platform, which is important to us because we have such a wide variety of work and so we're really excited about John in particular and also I would say just more broadly about the ability for getting couch you leverage the relatively.

Narrowly applied technology is much more broadly where we can see that potential for broad applicability.

To date relatively small technologists.

Got it the perpetual customers listening in this is now a technology that we're going to make available at scale for anybody on the gecko platform. So if it if it's of interest to you give us a call.

Thank you.

All right.

Our next question will be from Pueblo started out there from.

From Raymond James.

The other thing I'll mention, if we're successful at driving that scale, and we, you know, and Mark talked about, we want to hit, for example, 60 programs this year, double last year, other things adjacent to where we are in the infrastructure might start to break.

Hi, Anne Marie Jason Mark Thanks, so much for taking our questions as always.

So just wanted to see if we can get an update on.

The NPV.

Of each of the projects is that something that you've been able to mark to market and get a sense of is that changing or will be.

Will that be reported at a later time and then just as a part b to that.

After 60 projects that Youre anticipating signing up this year do you have a sense of the distribution.

The different sectors that those will be in and in particular are you seeing kind of a reemergence of interest in biofuels given the shock in hydrocarbons hydrocarbon fuels, we are seeing recently.

So I can take the second part Mark do you want to take the first part.

So, for example, in the area of, you know, animal proteins, you've had a lot of companies developing new programs in this space.

And there's a bottleneck in the industry today around sort of pilot scale fermentation.

I don't know just start with.

So Rahul as Jason mentioned.

<unk> earlier, just given kind of market volatility and interest rates.

We don't think it makes sense to put a specific number on the NPV per program right now, but certainly directionally.

It is lower relative to where we were a year ago.

Over time, as we do complete where programs and as we see some of them commercializing, we'll get a better sense.

To sort of that portfolio and how to evaluate it but that's kind of where we are right.

Right.

Yes, Rahul if you remember during the strike we wanted to share what we knew historically based on what we've seen what we had seen at the time. So people had a number to wrap their arms around I think as mark saying is right.

More of these things getting out the door will ultimately give us a lot more data on it so.

The right way to think about it.

For the for the second point in terms of what sort of the.

Set of programs for the 60 that we're aiming for this year as new ones. Yes. It's a good question I mean like one of the one of our attitudes that ginkgo is not to be.

And so when those types of bottlenecks happen, we don't want to limit the amount of cell engineering going on. So, in some cases, Ginkgo could step in to try to help alleviate key bottlenecks across a lot of customers.

But one of the things I'm very hopeful for, and some good advice I got from sort of the tech venture community in the early days of Ginkgo is, hey, an exponential improvement is hard to maintain.

Sort of have some opinions about like what markets to go sell into but ultimately to be very flexible to where we see demand that's been a big success for us.

Three or four years ago in the cannabis industry as an example, as well sort of got hot that led to our project with Kronos that wasn't an area that we would have known ahead of time that we would be and this is one of the advantages of being a platform.

Mentioned Biofuels I do I do think so yes I think.

Particularly in the area of things like aviation fuels, where youre seeing mandates in Europe , and things like that driving renewables in that area. That's the thing that youre not going to really get going electric anytime soon so we do need to have renewable fuels in that area. Unlike say cars. So I think that you will see more demand there and also in the <unk>.

Large scale petrochemical replacements as well partners of ours like genome Attica. For example are in I think in a great position coming up with whats going on with oil.

That's your job.

Thanks Rommel.

Mark Massaro <unk>.

Yeah.

Keep that going.

Mark I think youll need to Aneel.

Sorry about that can you hear me now.

And if it starts to create opportunity, like suddenly a big market for pilot scale fermentation, you know, the market will grow in to fill that opportunity.

Great I wanted to give.

I'll give you guys an opportunity.

You did have a preliminary an informal inquiry from the Doj I haven't seen the Form 10-K , but I was just curious if you could maybe get in front of that 10-K and give us any type of update as possible and then if I can ask a second part.

Obviously.

There is a lot of opportunity to consolidate the space.

Have done some tuck in acquisitions, one of them was really COVID-19 related but can you just give us a sense for.

How do you think this decline in multiples could impact your strategy to do some M&A this year and how much of that would likely be using.

Using your existing cash versus exploring alternative ways to do the deals.

Right.

Sure.

And so I think we're also balancing watching what's out in the marketplace, trying to see new entrants show up to do that on the, whether it's on the manufacturing side or upstream in the areas of things like reagents and consumables, where we may break some things as well as our numbers go up.

Yeah, I'm not going to take over that.

And so there hasn't been any material updates since we provided the public update on the informal inquiry and the conclusion of our internal investigation in November .

Okay, final challenge on the technology side is intellectual property.

So we have an asset at Ginkgo that we call our code base, and it's really the genetic assets, the data, the learning that we have across all our projects that we make available to new customers for their cellphones.

So I'll just state this is very different from the traditional IP regime in biotech.

And when there is, there's an enormous amount of friction, right?

So in traditional IP regime, each company has their own relatively small IP portfolio that they own across all use, and there's very little cross-licensing among companies.

Big licensing deals takes forever and so on.

It's not as if it's like readily available on the shelf to drop into your project.

So nothing nothing much more to say there on M&A.

You know, from our perspective, if you had that big pool of intellectual property, it would be a net benefit across the entire industry because you would start to get more products to market, which would ultimately, you know, grow biotech as a sector.

As you can imagine I think the big the big change that we've seen over the last six months or so and it's really an openness to considering M&A as an exit opportunity for some of these companies. So certainly valuations have compressed and that but what that really create it as an opportunity for smaller companies to think about alternatives alternative.

But getting people to adopt a new scheme that is not the status quo is hard.

<unk> to kind of capitalize for their their growth.

It has been getting easier for us at Ginkgo as we are able to offer access to more in our code base to customers to incentivize them to adopt sort of our mode of thinking for the IP ecosystem.

And I think one of our <unk> and our M&A strategy is to establish ourselves.

As an example of this, we acquired Dutch DNA, and we quickly made that asset.

This is a protein production asset, and you can see some of our charts.

You can see Dutch, and then we also developed a Pichia pastoris strain internally at Ginkgo that we made part of one of our cell development kits that, in this case, is showing five to 20x stronger production than what we consider best in class.

Preferred acquirer for these companies were really strong technical teams can find the resources and support to develop and deploy the technology at scale.

We made that immediately available to any customer on Ginkgo's platform. And so this sort of, this is our mental model for how you'll see us either develop our own IP or acquire another IP, and then quickly make it available across.

Okay, the other thing from a business model perspective, you know, the unpredictability of biology, in other words, the fact that we didn't design cells, we inherited them, is that you have these longer development cycles and product, you know, times to market just take a long time in biotech.

This is true for any company in our space, including Ginkgo.

One of the implications is that in a market like this, you know, equity market like this, where you have rising rates, future cash flows are heavily discounted, whether reflected today in our equity stakes and our customers, or simply from more aggressive discounting or expected future royalties. This drives a lower NPV for these future expected payments to Ginkgo.

One of the best selling points not only for customers for potential acquisition targets is just walking them around the boundary and showing them the breadth of what we're able to do and the scale at which we attempt to do that and so we definitely see this market environment as being one that is ripe for M&A.

Now with our balance sheet, that doesn't bother us too much over the long term, but we recognize that this delayed aspect of our cash flows is gonna pressure our valuation in the near term.

Where we have an opportunity to use that you start to build our platform you asked about deal structuring and I think mark highlighted this earlier in the comments that we do and Thats kind of a market environment, we want to be thoughtful about maintaining multiple years of runway to ensure that we are.

So now one interesting feature that I'd like to remind you about is our deals are actually with our customers are reasonably tunable, right?

So just like an investor would in a market like this, we can sort of tune, you know, and the specific trade-off is typically between, you know, upfront fees, like cash we're getting in from customers as part of doing the development of a cell versus the downstream value share.

To continue to build the platform.

Appropriately.

And continuing to invest in our platform and so we still view our equity as a useful tool to acquire companies and to keep the teams really motivated to drive value with us.

Got it and just cashing out during a transaction. So we would intend to use equity for for M&A in the coming years.

Thank you.

How big of a royalty do we take or how much equity do we take in a partner company?

Alright.

Next question will be from Steve <unk> at Cowen.

You know, just to state the obvious, those can trade off against each other.

Steve I think you will need to go ahead and anemia.

Okay.

Okay.

Some of that we'll do based on what the customer wants, but then Ginkgo's interest could also affect the types of deals we wanna do.

I'm sorry about that.

Thanks for taking the questions.

Can you give us a sense if your recent successes have translated into being able to push new partners on higher downstream economic value.

And then a second part thank.

Thank you mentioned that the rate of new program adds in pharma biotech in the second half of 2021 was about 35%.

Can you confirm that's your fastest growing new program add segment and is 35% a sustainable rate for pharma and biotech going forward for new program ads.

Yes, so Steve I'll answer your first one ill ask amarin, so I'm going to check up on the second one.

Yeah.

Yes, it's a good question right. So as we become more successful on the platform I think you're in into a good into which it could be that obviously, we can demand better deals from customers I don't think thats wrong.

What I would say is we're also trying to add huge numbers of new customers.

And one of my lessons from looking at other horizontal technology platforms, all the way back to things like operating systems.

Is the more value you can give back to the app developers the easier it is to get them on your platform and so I think my mental model is it's your application I want you to have the lion's share of the value and us as the app developer to take a small piece of what ultimately is going to be sorry, as a platform to ultimately take a small piece of what is <unk>.

And so, you know, I like this flexibility as like a general feature of being a platform biotech company versus a pure product.

Right, we're able to push a little more into the feed if that felt like the right thing to do from like a cash reserve standpoint.

Okay, so something again, I think it's a tool for us to use in the future.

I like that we have it.

And so I just wanted to highlight it.

But I like our position today again, because I think our war, Okay, next, yes, many things can be tough for platform companies, so I just wanna outline them all.

So yeah, another is we're dependent on our customers to bring products.

To be a huge pie in other words I would like to be like a utility across the whole industry, providing what is ultimately a backbone service of cell engineering and so in that world I don't need to take a ton of everybody's applications right I can take a small amount and still do great and they will do great and so I just want you to know like the philosophy that we're <unk>.

So, you know, we would argue at Ginkgo that our customers are actually better at bringing products to market than we would ever be, right?

So to state the obvious, it would be hard to imagine me being good at getting a drug through an FDA clinical trial and also developing the next great fragrance product and also putting a, you know, a tasty chicken nugget on your plate, right?

Pushing that's very different than the intuition a lot of people have in the biotechnology industry. We're frequently they have kind of like a rifle shot technology that sort of got developed at an academic lab and it is very precious and when they license that they want to get all the value from problem whoever's, taking it because it only really works for one thing we do.

But, you know, like the range of those end market applications are so broad that for Ginkgo to be in all of them is a real stretch.

Don't really see cell programming platform like that ultimately we see it applying just with wild breadth and so that model, we favor is to take a rather small piece of a big pie.

And so we've adopted a model where ultimately our customers are the ones that bring those products to market.

And if you're concerned about this aspect of our business, what you should be watching for are updates on the chart, like we showed here in our last earning call in terms of customers bringing products to scale. And so, you know, in last year we had we doubled the number of products that we had brought to scale with customers. This is an important thing for you to keep an eye on if you want to know if our platform strategy of having our customers do this is working and that our view is the right one.

Okay, so the upshot of that strategy though is that it allows for diversification.

And I touched on this earlier, but I will reiterate on this in this slide.

Here, look at consumer tech, this is a cumulative programs.

Okay Andrew.

Thanks for that color.

Be happy to take the silver market.

You see us increasing programs across all these different verticals, consumer technology, industrial environment, food and ag, pharma and biotechnology.

Yes, so I am just looking Steve at the new program.

So yes, so pharma biotech it was the biggest contributor to new programs last year, but the industrial environmental and the food and AG.

I think overexposure in a single market, and we've been down this road before with synthetic biology with things like biofuels, is a real risk to a company.

I think Ginkgo is in a position, and synthetic biology, importantly, as a technology period across the whole industry is also, I think, diversified out of that situation.

So I don't think any single market is gonna trip the whole industry at this point, which is from my standpoint as a bioengineering nerd, very exciting, because I think we're on a nice long road from here as an industry.

Okay, the last thing I wanted to mention was biosecurity.

Hopefully it's obvious by now that biosecurity is key technology and Ginkgo should be foundational in it, but it's not clear how it will be maintained long-term.

And there's even a history in biosecurity of funding falling off as an epidemic threat abates. You hear a lot about MERS or SARS, and then it falls off.

I mean, it's interesting, like, just, you know, to be fair, you know, COVID, it was a dramatically bigger global impact than any of the any of the epidemics any of us have lived through in our lives, you know, really, since 1918, you haven't seen anything like it.

We're sort of very close behind and.

And in fact, those latter two categories also saw pretty good growth relative to the first half of the year. So I wouldn't really I don't think theres anything to read into kind of like the quarterly trending on new programs I think.

So, so I, you know, I think there's opportunity for it to be different here.

But we should we should be careful and keep an eye on it.

And we care deeply about this topic. Because as we try to make biology easier to engineer, we want to ensure we do that with care, and developing the technologies that make sure that bio is not misused is an important part of that care.

I was recently asked to serve on the National Security Commission on Emerging Biotechnology alongside U.S. Senators Padilla and Young, Congresswoman Stephanie Bice and Congressman Ro Khanna, along with a total of 12 people.

This commission is similar to one a couple of years back that was created for cybersecurity, OK, to ask about the implications for cybersecurity, for national security.

This is a good indication that the U.S. government has a growing awareness of biosecurity as a key issue for public health and national defense.

We've been running our biosecurity business at scale, but as Mark mentioned, many of our contracts expire for at least the K-12 ones at the end of the school year.

Were and are still small enough.

Even just adding a couple of programs in the category in the quarter is going to drive a high growth rates. So I don't think like 100% basis.

It's hard to predict how the business will evolve going forward.

What we do know is that we're committed to this segment and to being a part of the long-term solution, which will likely include a mix of sort of active testing. You know, putting a swab in a nose, but also always on monitoring technologies, measuring what's happening in wastewater, the air, and so on, to stay one step ahead of growing public health threats.

In the meantime, as the market evolves, we'll continue to be conservative in our guidance, just like we were last year.

You know, here's what we know, what we think, and if we do better than that, that's great.

But we want to make sure we're being conservative with you all.

Whether it's 35% or higher or lower.

I don't think were constrained in any way, we still see the size of our pipeline and the opportunity which is still very.

Very significant relative to these numbers.

Okay.

Okay. Thanks for the color.

All right.

Thanks, Steve Alright next question will be from Derik de Bruin at Bofa, Erica allowed you to Chuck.

So building biotech platforms is hard, but as I said at the beginning, I've never been more excited about what we can do here at Ginkgo.

You know, it's a reflection of the market environment we've been living in the last 10 to 15 years that, you know, Elon said that he was able to scale one company, he's talking about Tesla, that he described as idiocy squared, and another in SpaceX that was one of the dumbest and hardest ways to make money in the past decade.

And, you know, you also saw just last year two nuclear fusion companies able to raise a combined $4 billion.

Okay.

Okay, this is a technology that we don't even know if it'll work at all.

Great Hi, can you hear me and Eric Hi, So a few questions. So what do you think your related party revenues will be even 22 any I mean it is.

Going down, which is nice to see but any sort of sense on where that could be.

Okay.

So Mark did you want to if you could speak to what sort of I don't think we give any guidance I'm trying to I can add a little bit of extra color there.

And in my opinion, investments in these sort of breakthrough technologies are critical for US competitiveness, and for attacking the big global problems of our time.

You know, building a horizontal biotech platform is a similar sort of large investment needed long time to profitability challenge.

In a higher interest rate environment, which I think we're moving into here, you will see investors naturally turn to companies that are producing cash today and away from areas like, you know, electric vehicle space, nuclear fusion, and biotech that have longer time to profitability.

Derek.

But what is exciting about companies like a Tesla, SpaceX, or a Helion is that if they're successful, they become incredibly valuable, and they make a big impact in the world.

Synthetic biology, as an industry, deserves to be in that same category.

So the the related parties were not a significant source of revenue growth.

McKinsey's report on the biorevolution estimated that 60% of the world's materials could be made by biotechnology, grow it all.

And 45% of the world's disease burden could be addressed.

Biology is programmable, but it is hard to program.

If we can make it easy to program, I think we can change the world.

So, you know, all of that is going to take time, but there are a few things I'm particularly excited about in the relatively near term, you know, over the next year in particular. The first is that we're seeing stronger demand than ever at Ginkgo. Now, that's important because we're planning to double the number of new programs.

In 2021, so it's a while we don't sort of carve out.

We're not providing guidance on sort of like subcategories within 2022.

You know, Mark just said we want to hit 60 programs this year. That's not an easy task, but we're starting to get inbound interest from potential customers who, frankly, wouldn't give us the time of day three years ago. But as our platform scale has increased and codebase is available, you know, they now realize the difference in our capabilities versus what they might be able to do in their in-house R&D. I think you'll see a healthy mix of both young companies and large established companies come on the platform in the coming months.

I would say.

Comfortable saying that the growth that we're guiding to in 2022.

We talked about M&A as a key driver for us going forward. We've done two small M&A deals so far this year, and we have a deep pipeline of opportunities of both smaller tuck-ins as well as larger opportunities that could create exciting areas of growth.

Now it can be driven in some substantial way by related party growth.

Yes.

One other just small point on that though so I don't want to lose that their AD that I mentioned on the last earnings call that I think sort of startups and new company is that launch on getting those platform are often some of the best any of those companies that can depending on the details and up as it related parties on our platform and these are some of our best potential future.

Customers as I said before or at least they can be born foundry native and really we get to grow with them in terms of add their R&D budget grows as they grow as a company that's coming back to ginkgo, because they're really built on top of our platform. So you will still see us engaging with startup.

The details of the transaction are such that it makes it a related party that could happen.

Wanted to flag that but sorry go ahead there.

Got it Thats helpful.

We're three days from the end of the quarter.

Any sort of commentary on Q1 and quarterly pacings I mean.

Core foundry revenues were essentially flattish Q3 Q4.

Q1 trend just some color since we do have to.

I know, it's a long tail story, but we've got a yes. It always had refocused on the short term models.

Yeah.

Yes, So let me take that in terms of let's talk first about foundry revenues in terms of kind of the when you back out the Kronos a flattish trend that you saw last year. So first of all we are guiding to a 2022 overall foundry revenue number which does represent significant growth.

Yes.

You will see that more it does ramp during the course of the year.

<unk>.

<unk>.

There is that sort of factor to consider.

And again, we're very actively managing the trade offs in our contracts between downstream value share in foundry usage fees, that's something that we're thinking about all the time.

And then some of the downstream value share that can be in terms of where that lands in a particular quarter.

We are anticipating downstream value share and our guidance for 2022, but in terms of which quarter. It lands that can be.

Lumpy that can be a function of a whole bunch of factors that either to line up for a particular quarter or otherwise.

We're focused on hitting this number for the year.

And.

And we're very comfortable that we'll be able to do that just based on kind of current trends on the bio security side.

<unk>.

<unk> guided to a number that we're comfortable lift in light of the momentum that we have seen in Q1 and also cognizant that as a business kind of 60 days out we don't necessarily have great visibility on and because the lot of the state contracts are funded only through the end.

The school semester, we don't have great visibility in the second half of the year. So you should assume that.

We considered all of that when we when we put forth a guidance on bio security great.

Great.

Do you sort of segue into my next question is like do you have any downstream value baked into your <unk> guide and.

And basically if we start to see royalties coming through on products such as <unk> for example, anything coming through.

So yes, we do have downstream value share of baked into the 2022 guide.

<unk> is a component of the growth over 2021.

The service revenue is also a component of growth both of those.

<unk> are expected to grow and for reasons that we had discussed before we're not breaking them out partly because of customer confidentiality issues with the relatively small number of <unk>.

Products, where we would be getting kind of near term downstream value sure. So I think that's sort of where we are still out in terms of getting more specific on that.

Got it and then just one final one just.

The overall fully diluted.

All in share count is basically we just still the same right to two point over $1 billion of that just nothing changes with all the but that's a big number the stock comp number by the way.

Just making sure that there's nothing the shares don't go off there is no big change that we have to sort of like further factor in.

That is correct.

The stock comp expense number.

Is entirely consistent with the 2 billion fully diluted share count number.

<unk>.

Yes, yes, so theres nothing different the only sort of.

Footnote Eric of course in.

In 2022, we will issue a new RF used.

Two employees or to new employees or two existing employees. So obviously that would have been in the.

2 billion also youll have like forfeitures things like so there are some puts and takes that happened during the course of the year, but.

But you are right that the $2 million is that still the relevant number.

And as a reminder.

$150 million of shares our earn out shares price targets about $15 and another $50 million of those shares are underlying warrants with a price target of about $11.

Just to make sure it's clear that all of that $2 billion number.

Great.

Thank you.

Okay Alright.

Alright.

Last question looks like it's coming from that site from Goldman Sachs.

Great can you hear me.

Great. Thank you for taking my question and I. Appreciate you squeezing me in I'll just ask a quick one.

Just on Biosecurity as you think about the difficulty in predicting the testing environment, which we completely appreciate.

But then also the long term opportunity of surveillance.

If testing were to fall off what's the level of kind of internal funds funds that you would commit to that longer term by our security revenue opportunity, meaning would it require a level of funding over a certain period of time. If there was no testing revenue coming through and what is your level of commitment to that sort of long term vision of our security in terms of dollar amount.

So I don't think we've shared the specific dollar amount or correct me if I'm wrong.

Mark or Annemarie.

I won't say, we are committed to bio security over the long term and I do think it's.

Basically it's a volatile environment around what's happening with cash wellness political questions is how the fundings that orange is going to be extended a lot of these things.

And so that's why we want to do just what we did last year, which is sort of tell you. What we know right now right. Ultimately last year, we ended up beating that at various points throughout the year, but I just wanted to we're going to keep with that policy. It worked well for us last year.

And then in terms of long term, yes, I mean look.

We need to monitor biology, like we monitor the weather or like we monitor intelligence signals right like it is both important for public health and for National Security and we believe that strongly we will invest to make sure we are.

A clear leader in providing that sort of technology.

Great. Thanks, very much appreciate it.

Thanks, Matt.

Alright.

That wraps up the questions that we got from the analyst community and so thank you all for joining I know that we ran a little bit over time today and I. Appreciate you sticking with US this afternoon answering showing the results presentation webcast.

Well see you next quarter.

Like everyone.

Yeah.

Finally, I'd like to stay humble about what the world could throw at us in any given year. I've developed some confidence in our ability to react quickly.

Good morning, everyone. This is <unk> SVP of corporate development at <unk> I'm joined today by Jason Kelley, our co founder and CEO and Mark <unk> our CFO .

I think we did prove ourselves quite well last year.

We're honored that you chose to start your week with us and we're looking forward to updating you on our tremendous progress so far this year.

Needless to say, it's been an exciting quarter and help warm up the crowd I just wanted to remind you that during the presentation today, we'll be making forward looking statements that involve risks and uncertainties. So please refer to our filings with the securities and Exchange Commission to learn more about those risks and uncertainties.

But we will see how biosecurity evolves.

During our quarterly earnings call, we will of course be updating you on our financial progress, but we also want to use these opportunities to continue to build a deeper understanding of what we're doing.

But and as that opportunity and others emerge, I think culturally, Ginkgo's well positioned to grow.

And so after our financial updates will always feature of strategic deep dive each quarter, which today will be led by Jason if theyre topics you'd like to see at a future deep dive. Please let us know well.

We'll end with a Q&A session and I will take questions from analysts investors and the public you can submit those questions to us in advance via Twitter is the hashtag income result, or via email at Investor <unk> Dot com.

And so I'd like to end on this slide.

And now without further Ado I'll hand, it over to Jason we can kick things off.

You know, people forget that when they invest, it influences how the world develops.

Thanks Anne Marie.

So to do a quick answer on you'll hear from me later in the deep dive. So our mission here again goes to make biology easier to engineer.

We do that by operating as a horizontal platform and I think the key idea about can go we want a program sells for customers across a range of industries on this common platform and then we monetize that platform similar to how a tech company, but by capturing a portion of the value of the applications that are develop on top of that platform.

And so I mentioned, you know, those of us that want to see breakthrough technologies come into the world will need to be careful and look for companies that have the runway to make it to scale.

And myself and the founders that ginkgo had been working on this mission since we met at M. D. Almost 20 years ago, now and the technical progress and tangible results that we've seen over the past year feels like a real inflection point add ginkgo, but honestly across the synthetic biology industry in general and I could not be more excited.

In other words, I think capital markets aren't going to be there as much for these types of breakthrough technologies coming up.

But, you know, with rising rates, you know, I think investors are going to have an opportunity to access these types of breakthrough technology companies and long dated growth companies at a discount in the near term.

And so while I think we should be thoughtful, we should invest in the world we want to see.

Share our results with you today.

And I'm happy to take your questions.

One of the most important thing for US is new program additions on the platform.

It's one of our most important kpis and you might remember this summer we updated our expectation for the year from 23 to 30 of those new programs. We remain on pace to hit that in fact, we added 10 new programs in Q3.

And I'm really excited for the sort of long-term minded investors we'll see on our cap table at Ginkgo coming up.

Ultimately ginkgo success is measured by our customer success right and we saw some awesome progress and our customer sell programs and I'm excited to be able to announce today that just last week Kronos confirm the performance of our second strain.

Thanks.

Great, thanks, Jason.

I will switch to q&a in a few moments.

Following on from one we announced earlier this year. This one will be producing <unk>.

We deliver that strain and has paid a second equity milestone in that program, which will be included in our Q4 financials. So again, it's one of the things I get the most excited about is seeing organisms go out the door to customers customers excited to be commercializing those and then value flowing back to Ingo.

As usual, I'll start with a question from the public and reminding analysts on the line that if they'd like to ask a question to please raise their hands on the zoom line, and I'll call on you and unmute your line so you can ask your question.

Thanks so much, everyone.

All right.

Additionally, <unk> has commercial has commenced commercial operations for vaccinia capping enzyme BCE. So this is one of the ingredients used in the manufacturing process for mrna vaccines and it's produced from a strain that we delivered in Q3 that yielded an over 10 fold improvement in yield compared to <unk> previous process.

So really excited about this as the opportunity for an impact in the world and also a chance to see value come back again go again from our customers' success.

And finally, just last week and logic announced that its a big week that they are advancing our ginkgo engineered strain for the treatment of Homo assistant just in area two IND, enabling studies.

So excited about this right you've seen kinko's organisms on a path to.

Going to patients in therapeutics, it's been a long time goal for the company to be honest and it's something we hope to see a lot more of in the future on the bio security side. This has really picked up steam with now 10 state sponsored case, while contracts over 500 schools being served by our bio security brand concentric as of the week of November one.

We were collecting over 220000 samples per week.

Could not be prouder of how the team came together to respond to a crisis here and it is truly a privilege to be building really part of the world Bio security infrastructure and I think this is.

I've talked about this previously this is I think it is absolutely critical thing in a post COVID-19 world as we are building out the tools to make it easier and easier to program and engineer ourselves. We have to build this type of security posture to globally and I'm proud that ginkgo is a part of that.

Ali we capped off the quarter with our official listing on the New York stock exchange with the ticker DNA, we stand on the shoulder of Giants with that take care of that.

We hope to do the prior owners.

Proud and finally, we are thrilled to be able to see many of you at our conference annual our annual meeting for meant just a couple of weeks ago over 700 people that was a real thrilled to see everyone and were hopeful that more view will come back and join US next year.

So now I'm going to hand off to mark to share the details on our financial performance this quarter.

And so as I promised, I'm going to take the first question from one of our one of our public investors who sent an email into our inbox. They write how can Ginkgo Bioworks rapidly scale up its cell programming operations over the next 10 years when considerable human involvement is needed to bring each project to completion?

Great. Thank you Jason before we get into the financials slides for some context. We are very pleased to report a strong quarter in terms of revenue.

Sure, I can take that.

Total revenue in the third quarter of 2021 increased to $78 million representing growth of nearly six times. The third quarter of 2020 year to date total revenue grew to $165 million.

So there's sort of two pieces that Ginkgo's platform to understand how we do these projects for customers, right.

Up from $45 million in the comparable prior year period.

So there's the foundry, which is a highly automated set of infrastructure.

This quarter's financial results highlight the tremendous progress in growing diversity in our business model as we received significant revenue contributions from foundry services downstream value share and Biosecurity.

You heard me talk about how that's exponentially improving with Knight's Law.

So now moving to sell programming highlights.

And then sitting on top of the foundry are what we call program teams.

These are teams of scientists, they are, as it says here, human beings doing this work, who are engaging against the customer's targets.

We added 10, new cell programs to the foundry platform in the third quarter of 2021, bringing the total number of new programs to 21 year to date as a reminder, our new cell program count as a key kpis that we're focused on is this metric drives both near term foundry revenue and potential future downstream value share we only can.

So trying to engineer a cell to do a certain thing, using scientific discretion, leveraging all that automated infrastructure.

And I think that will, you know, as we're trying to, you know, as Mark mentioned, try to get to 60 programs this year, I think we can hit that by basically improving our sort of like operational excellence across how we run programs. In other words, we can become more efficient in how we launch programs, how we build those program teams, and so on.

As we get to hundreds of programs per year, I think you need to start to actually make the way we do the work more standardized, which I expect will be pretty natural, right?

A program that has a certain expectation of scale and they're typically doing several proof of concept programs. In addition to the reported numbers, which can ultimately lead to larger pay programs.

If you look at sort of the history of software development, you've been able to program more and more sophisticated programs over the years because more of that process becomes standardized into, say, an existing software library. So I think you'll see that you'll see the code base kind of come to the fore and make it easier to do a more complicated project or to have a single person maybe do multiple projects by leveraging sort of existing work that's been done before in the code base.

That's one of the things I'm excited about.

For now, I feel quite good about scaling our program team.

But I think you'll see that play out over the next few years.

Jason.

All right, the next question is going to come from Matt Larew.

The 21, new programs, we added year to date compares to 15, new programs added in the comparable period last year, representing 40% growth. We supported a total of 61 active programs in the year to date period across 30 customers on a battery platform.

We continue to see good industry diversification and new programs as well as further proof points in therapeutics and your field for us with six of the 21, new customer programs being from the pharma and biotech industry and the rest of versa lite across many other industries in which we participate.

Matt, I just unmuted you or I allowed you to speak.

Foundry revenue increased to $35 million in the third quarter of 2021 from $12 billion in the third quarter of 2020, representing over 200% growth. Similarly foundry revenue for the year to date period increased to $79 million representing growth of 84% over the comparable period last year.

So you should be able to unmute and ask your question.

Matt Larew from William, Okay, thank you.

So Jason, the scale examples you gave, you know, make a lot of sense and you have tangible data, whether that's strain test per day cost, it really points to your improved efficiency.

But you know, all those really speak to your ability to create more shots on goal more quickly.

I'm curious about the other side of that, which is the quality of the shots on goal that you end up taking.

Maybe that's where codebase comes in.

Sure.

But I'm curious, you know, has your success rate improved?

Importantly foundry revenue in the third quarter includes an equity payment we received for achieving a commercial milestone with Kronos. The first time that ginkgo has received significant downstream value share.

Has the time to result shortened over the same timeframes and maybe help us understand maybe the other side of the equation, which is how the outputs are coming more quickly and more efficiently?

Yeah, so I think it's a critical, critical question, Matt.

So again, to restate it, hey, it's great to have all this horsepower on the lab infrastructure, but but does it improve the likelihood of success and the probability of success for a given project?

And by the way, this is the exact question we get from every potential customer we talked to, to move them onto the platform, because they're asking themselves the same thing.

If I move from my own scientific R&D team onto Ginkgo's infrastructure, I see what they'll be able to do more lab work per dollar, but is that going to give me a better odds of success?

Right.

And as Jason mentioned Kronos, but also just confirm that we hit their stuff for a second molecule, which triggers the payment of a second equity milestone, which will be reflected in our Q4 financials.

And so the short answer is you can see this, I think the number one way to see this is new programs on the platform.

And then finally just to make a comment on related party revenue. So related party is represented 38% of foundry revenue in Q3 of 2021.

47% of year to date foundry revenue.

This compares to 63% of foundry revenue in Q3, 2020, and 70% of foundry revenue in the 2020 year to date period. So this mix shift toward more third party revenue.

Due to both the downstream value of shares received from Chronos, which is not a related party as well as just general diversification in the business.

Because we are going through a filter of customers doing that diligence coming through talking to our scientific teams, understanding it and then deciding to engage us on these projects.

So if we could now turn to Biosecurity.

That's the first bill.

Our bio security offering generated $43 million of revenue in the third quarter.

So do I keep hitting my program numbers is a great indication that that that that is true that you get better output from our infrastructure, not just more work.

And $86 million of revenue year to date. This tremendous growth has now exceeded our recently expanded full year target in just the first nine months of the year.

Security revenue.

Consist primarily of product and service revenue from our end to end Covid testing offering and the growth is being driven primarily by a K 12 school testing. We have now been awarded state sponsored tier 12 testing programs and 10 stage.

And as of last week are collecting over 200000 samples weekly Bios.

Bio security gross margin was 48% in the quarter, a significant improvement versus prior quarters and this was primarily due to the maturation of the business and the benefits of larger scale.

Obviously, on a longer time scale, what you want to see is just programs.

Yes, if we could turn to the detailed P&L I'm going to provide a little bit more commentary on the other line items. So starting with R&D expense R&D expense grew to $53 million in the quarter driven by expansion of foundry capacity and increased breadth of capabilities to support both current and future collaborations.

Right, that's that's the ultimate proof in the pudding.

I think the general challenge there, like I mentioned, is just the time it takes for these programs to finish.

And so that will always lag, right, the number of programs we have on the platform, and we will accumulate more data over time.

<unk> along with further development of our bio security offerings.

Right now, the challenge like to ask questions like, Oh, what's the probability of success?

G&A expense grew to $29 million in the quarter as we invested significantly in business development and all other G&A functions to support the higher level of foundry activity and our bio security offerings, along with our very extensive public company readiness upwards.

Right?

Now to provide a quick comment on the net loss line item. It is important to note that our net loss includes a number of non cash expenses as detailed more fully in our financial statements and these include just by way of example, mark to market adjustments on equity method investments, where we have elected the fair value option.

It includes reductions in the carrying value of.

Those platform ventures that we account for under the equity method and we take those reductions in the quarter that the equity issued to us.

Then thirdly. It also includes mark to market adjustments on these storing ego of public and private placement warrants that came onto our balance sheet. As a result of the merger those are all reflected as a liability.

Because of these noncash expenses, we look to adjusted EBITDA is a more accurate measure of our profitability.

Adjusted EBITDA in the quarter was negative $18 million and for the year to date period was negative $107 million.

A full reconciliation of EBITDA is provided in the appendix to this presentation and in our MD&A.

Adjusted EBITDA was favorably impacted by gross profits in bio security this quarter and by downstream value share, which typically dropped straight to the bottom line.

Kathy.

In the year to date period was $51 million, reflecting foundry capacity and capability investments. Examples of this include the substantial completion of our new broad use foundry.

<unk> six which is located in our Boston headquarters as well as battery space build out in Cambridge, Massachusetts.

The issue is for any given program, it varies dramatically also depending on how hard a thing we're being asked.

And so now if we could turn to outlook I'd like to provide some brief commentary on revenue.

Outlook for the rest of the year, we expect to add an incremental nine yourself programs in Q4.

For a total of 30 new programs in 2021.

We expect foundry revenue to exceed $100 million for the full year of 2021 inclusive of both downstream value share and services revenue.

Right, so certain types of genetic engineering projects substantially more difficult than others. And so that affects it.

And then with respect your bias security as a reminder, in August we updated our bio security revenue outlook to be at least $75 million for the full year.

So it does make that a little bit tough to like throw a specific number at you.

Given our strong third quarter results, we expect to significantly achieve this revenue target for the full year, while we're not providing a point estimate on revenues there is still significant uncertainty.

Indicated 12 testing market in general and the facts and circumstances of the pandemic change regularly we are confident that ginkgo is positioned well in this market.

But we do sit down with customers and talk through what we think are success and they know that going into the project.

We expect our security revenue of at least $110 million for the full year.

Thanks, Matt.

Further we believe our performance in building an offering of this scale from scratch in such a rapid timeframe is indicative of a strong execution capability on future opportunities as the bio security market further evolves.

And the next question will be from Tejas Savant at Morgan Stanley.

And before I wrap up I'd like to make a comment on how we're thinking about guidance and breaking out of foundry revenue in future time periods. We are internally evaluating this.

Tejas, I've allowed you to speak, you can unmute.

Right now, but we do not anticipate that it will make sense for us to either guide to or breakout foundry services revenue and downstream value share revenue as separate components as.

As we are now reaching the phase of company maturity, where youre seeing downstream value sure. It hit the top line.

We are seeing in real time, but there are customer confidentiality considerations as well as situations.

And which it will be a smart business decision for us to make tradeoffs between the two.

Hey, guys.

And so just to conclude in summary, we think this quarter demonstrates the strength and the business model, we're seeing an increase in diversity of customers operating in many industries developing a wide array of different products on the platform.

Downstream value share.

As a tangible commercial proof points and it's typically drops straight to the bottom line.

And the progress in our Biosecurity offering is truly impressive.

Thanks for the time here this afternoon.

And so now Jason back to you.

Thanks Mark.

Great to see I was going to say I am continually impressed by the get go team. So just in the last three months, we took the company public posted a 700 person plus annual meeting manage launching logic cage, while it's happening at the start of the school year.

Two-parter for you, Jason.

Parents on the call know is a slightly stressful time in general for parents.

Across 18 states and continued to deliver steady successes in cell programs for our customers.

The team at Ginkgo did not Blink and it has been awesome to watch.

So first, I mean, on the comment you made about sort of tunable deal structures, right, particularly in the context of existing startups and newcos, walk us through whether you're thinking, you know, should we see you be a little bit more reticent in terms of the kinds of customers you'll pursue at, you know, in the near term here, perhaps pivot more towards larger companies with, you know, well-capitalized balance sheets?

In addition to reading out our financial performance I want to use these quarterly earning calls to give a deep dive on aspects of the business that we are hearing questions on from investors, both institutional and retail. So please keep those questions coming it will help inform what we put in this section in the future.

We also had a short report.

Otis.

Come out about a month back and while the guy that did it wasn't especially serious he did make a bunch of serious claims publicly about kinko's financial practices.

Not surprisingly given the nature of the claims we also received an informal inquiry from regulators at the Doj and commenced an independent investigation led by our audit Committee and supported by an independent law firm and forensic accounting firm.

Im happy to report that the investigation found the claims were baseless and I'm going to give you a readout on that as well today.

Or is it more that you'll pursue the same customer constituencies as aggressively as before, but you're just going to try and figure out new deal structures?

Okay, so going to cover three topics in the deep dive first I want to talk about our horizontal business model as we are really pioneering that model in biotech bring it over from the tech industry.

So the silver lining to a bunch of baseless claims being made about the business is that it gave us a chance to make sure. Our house was in order. So I wanted to give a few comments from my seat here on that and then finally I want to dig a little deeper into the financial structures and motivations of the types of deals we do for our three major customer types.

Sort of first the large and mid sized companies second these existing startups out in the world and in third new startups that launch day one on the platform. These deals are designed based on what works best for each customer type I don't want to outline how they work and the progress we've been seeing across all three categories.

Okay, So let's dive in.

Number one.

Because the concern that we hear from investors is some of these newcos or, you know, startups might have difficulty, you know, to your point, raising funding in this environment.

And then my second question is related to FGen.

We're bringing a horizontal business model common attack into the biotech space and the key ideas, we're going to serve customers in any market Batman vertical that need cell programming. So it's obvious today for say Amazon Web services. It doesn't matter what market. Your website is to go use their services.

Can you just help us sort of over the long term, quantify the impact that the platform could have on your efficiency and reducing the cost per program for your customers?

Sure.

And I'll kick that second question to Anna-Marie, since she heads up our Corp Dev and M&A.

Okay, so, but to the first one on the tunable deal structure.

And in my view it will eventually be equally obvious that doesn't matter what market you're in who you would use for your cell programming platform, we independent of that and so we don't want to organize our customers that can go by market vertical.

Okay, we want to organize them really by the stage of the company there and that's a much better predictor of the type of commercial arrangement preferred buyback customer so with the larger mid sized companies such as our deals this year with Cortez Biogen Aldebaran and select the.

Customers are often paying foundry service fees in cash and downstream value share by our royalties or milestone payments.

And as a reminder, this is kind of the value share payments or kind of similar to like an app store model right. So we get a piece of the downstream value of the products that we enable so in our deals with these startups both the deals.

The deals with startups now both the existing and newly formed those companies often prefer to offer ginkgo equity in their company.

As for either of these service fees or for the downstream value share and in those cases is often create related parties in our filings, but it's a great structure for startup customers and so ultimately that's what matters as we have been creating these deal structure is what is going to be worth work best for customers what creates the least friction to get them on the platform and so that's really what we've oriented.

It around because startups frankly are one of the most important parts of our business while their key customer segment, because they haven't invested already in large R&D labs. They don't have that sunk cost that the big companies do where they already have.

Big labs, and all of that equipment and infrastructure. So they can.

In many cases start boundary native right like they can be born on our platform and this is something that happened.

With like cloud computing, we had cloud native companies come along Youll talk about this 10 years ago.

That's really exciting it really speeds up the launch of a company and can save them a lot of upfront cash and so I'll talk about these in more detail coming up I wanted to highlight how all three types of these deals are important for ginkgo, how why why are the horizontal platform. That's the right way to approach the market and that we plan to do more deals of all of these types just like we've done in 2020.

So, yeah, the key point I wanted to make there was, look, As far as I'm concerned, because Ginkgo is a platform, we do have this whole benefit of diversification.

And it means that the leadership at the company has knobs available to us that I don't think you have when you're focused on a single product, right?

When you're focused on a product, a lot of it is just a game of estimating that particular success criteria.

Like, is that drug going to go to market?

You know, is that food going to go to market?

One in the future.

This slide here just to flag it is from our pipe back. So for those of you who are kind of engage with us during that process I think it nicely highlights that we've been planning for awhile here to really develop an ecosystem of services around our platform and developer community, Okay and that ranges from things like capital access like we see with our structured partnerships and platform venture.

As a platform, we could say, well, right now I have a billion and a half dollars and markets look like this.

I'll do deals that are more downstream value share driven and less fees.

But, oh, markets have stayed the way they are for three years.

<unk> to manufacturing access like we worked with Kronos to help them bring their facility online in Canada, We do community building like our ferment event and so on and you have seen this be key in the Tech World you have to bring together a community of people that are going to build on your platform. We are doing that very deliberately and we wanted to keep offering the more ways to get value.

By engaging with ginkgo alongside our technology platform Okay.

Number two alright, so yeah as I mentioned the short report made a number of claims publicly about financial misconduct. We're lucky to have a very strong leadership on our board and this triggered an internal investigation that concluded there was no basis in those plans.

And look I'll give you a little more context on our board we have two sitting Ceos enrichment you all Romani at vertex and Christian Henry at Backfile, John Saunders, the sitting President COO at Pearland here, we are three former CRC.

And marine and Harry in RNA from bear at MGM and tight right.

<unk> heads up our audit committee and he followed following these claims in the short report the audit committee called for an independent investigation and the audit Committee brought in as part of that Mill Bank as an independent Council. The team was led by former Doj prosecutors engaged Ankara as forensic accountants to support their investigation.

Sure how extensive this process was the team reviewed thousands of pages of documents following an examination of electronic record, putting email slack messages financial internal and external documents. They also conducted extensive interviews and so I'd like to take a moment to thank the audit committee and the milbank and encourage teams for their diligence their care and their time.

In this process.

I'd also like to express my admiration for the Ginkgo team, particularly our finance and legal teams have had to do all this on top of their day jobs keeping.

Keeping kinko's ordinary operations humming just as you heard from Marc during a very busy time for the company.

And as I mentioned it is also not surprising in the case of public claims of financial misconduct to hear from regulators and shortly after the report came out we received an informal inquiry from the Doj.

Is why Im very happy to report today that based on the independent investigation. The audit committee found that any suggestion of broad reporting violations accounting errors or other wrongdoing contained in the short sellers report were unfounded.

And importantly that no restatement of our financials was needed.

I will say as CEO . It is very very rewarding to see so many parts of the company and so many people on the team strenuously pressure tested like this and see them passed with flying colors.

It is a testament to the culture, we've been building our ginkgo the last 13 years now.

And I'm not going to call the process following up on the short report, particularly fun.

But it was rewarding and <unk> growth.

Number three.

My cash balance is lower and I want to do deals that have more fees in them than downstream value.

I'm Super excited to use this opportunity on the deep dive.

Here are some of the financial structures and motivations for the types of deals we do for our three major customer types larger mid sized companies existing startups, and then new startups that launch they want on the platform and as I said. These deals are designed to fit each type so let's dive in with large companies first so it's worth noting I think it was <unk>.

I can take I can take that trade.

And it gives me a lot more certainty about our ability to succeed in the future that I have a knob like that to turn.

Right.

I'm not locked into a particular strategy.

Doing large enterprise sales right.

I did it myself.

That was the main point I was making.

Commercial team is always rolled up to me I did a lot of hands on enterprise selling frequently early days of ginkgo. It really helps to be able to tailor those deals to a particular customer what worked for bear might be different than what would work for rush and so.

You know, I think in the near term, you know, given our balance sheet and where like you're mentioning, like startup companies, you know, I think right now is actually a great time for us to get startups on the platform.

But in general the larger midsize company customers preferred deals where the fees are paid in cash in the downstream value is in the form of royalties or milestones three good examples of those sorts of deals you can see here. So our collaboration with our Dev Ron there are the fees, we did pro bono as part of our COVID-19 work, but for the upfront fees, but then.

And I talked about this in the last earnings call.

In my opinion, these are some of our best customers, because if they start on Ginkgo's platform early, they never build in-house R&D.

<unk> incorporated royalties on sales with the product and our Kronos collaboration we negotiated largely fixed R&D fees with commercial milestones downstream upon completion in other words like the amount we're getting paid as we did the process was fixed over time, rather than a function of.

The work we did here and then our collaboration with Jim at on the service fees are based on the amount of work, we do and we get a royalty.

As the downstream value share mechanism. Okay. So you can see even with the big companies a little bit of variability.

On the existing startups.

The reality of startup companies that theyre more cash sensitive than large companies and by the way.

I know this right we started ginkgo, we bootstrap for six years right.

Cash cash is king right and so our platform. However, like offers tremendous value to these companies.

Because they can forgo completely building out that in house cell programming R&D infrastructure and instead focus all their R&D efforts on the product related things. So if you take a company.

Right, when I go do a deal with Biogen, when I go do you know, a deal with Bayer, I have to go and they have to decide that using our infrastructure would be better than using their own internal R&D, If you built on me from the first day, you're on, right?

I'm going to grow with your business.

And this has been a thing, for example, that companies like Stripe in the software tech platform industry have been hugely successful doing, getting early-stage startups and then growing with them.

So I love that, and so I'm not going to stop doing that.

Like like <unk> for example, they would they would invest in food scientists rather than biotech scientists right and so.

That's a that's a big leveling.

What opportunity for a lot of leverage for those companies and so the opportunity afforded by getting those companies on our platform. When they're small also has very good forgive me like this is well understood intact. Amazon gives free credits on AWS to why they use due to Y combinator companies stripe payments. They got shopify when they were pretty small, it's our $200 billion Mark cap company and so.

So our approach is not to offer for free services to.

So those companies bite to take equity in place of cash for foundry service fees and this aligns us with the investors on their cap table and it also helps the startups conserve that cash is quite precious about so we've done a number of deals like this would start ups recently with Hughes on X <unk> and can't do.

I think we've already well youre doing in the future.

So I will say I think we've hit on something with this.

Startup biotech companies.

We hosted our first cell develop our virtual conference last week, and we had over 500 people registered with US right. So if I look back I can go five years ago.

We put up a flag like this in 500 people would sign up.

Certainly not not how things used to be so startup and entrepreneurs are really hungry for access that can go platform.

And not having to build those labs themselves I get this you can see the kind of timeline on the left here from Kinko's history right. We spent a long time trying to scrounge, Joe to get the money to build out the labs to do the work here and it's not easy we wanted someday to be as easy to launch a biotech as it is to launch a website.

That day is not yet right and so everything we can keep adding to make that easier I think creates new opportunity for <unk> and our customers.

I'm going to keep doing that.

Okay. So what is really exciting is companies that don't already exist that haven't even built any R&D lab infrastructure, but on day one that this newly formed startup can just be born on our platform.

And we have the kind of cash balance today to keep that going.

We are, at the same time, seeing great interest from large companies.

That's mostly, I've always lived this, enterprise selling was sort of the part of the company that I focused on personally with big companies.

And it's changed tremendously. I mean, I think it's a mix of us being public, which makes us just more credible as a counterparty, and then also just the scale of the infrastructure. Like we bring R&D leaders through now from large companies and they see infrastructure that they don't have back at their own R&D labs.

And so I think you'll still see the same mix.

We won't shy away from startups, even though I think it is a tougher funding environment for them.

But that could change in the future.

Like I said, you know, we would have the knob if we needed it, but not, And then to the question on FGen.

FGen's a deal we're really excited about. We've worked with the company before on some specific programs, so have a lot of experience with their team and their capabilities. I think one of the things that's really unique about them and why we were so excited about them is the flexibility of the platform combined with the ability to dramatically increase throughput for certain types of experiments.

And so with this approach I think this moves the needle almost the most to solve this problem because it saves completely those upfront fees for the customer and these companies.

So this is a pooled approach for screening. So rather than doing arrays where every sample is in its own little well, you can effectively encapsulate these strains, these designs in their own, they're called nanoliter reactors, these little beads effectively.

And then you can measure different types of production processes through there, whether it's a secreted molecule or an intracellular molecule, etc.

So there's a lot of flexibility with the platform, which is important to us because we have such a wide variety of work.

So we're really excited about FGen in particular, and also I'd say just more broadly about the ability for Ginkgo to leverage these relatively narrowly applied technologies much more broadly, where we can see that potential for broad applicability of, to date, relatively small.

For potential customers listening in, you know, this is now a technology that we're going to make available at scale for anybody on the Ginkgo platform, of interest to you, give us a call.

Hopefully, we'll never need to build it in Gainesville also helps connect strategic and financial investors.

Thank you.

<unk> amazing entrepreneurs to get these companies off the ground. So we're getting a lot more interest here because of the success of some of our earliest platform ventures for example, like motif and like most recently Arcadia as an example of a platform venture where ginkgo did does not invest any cash okay, but were paid in cash revenue over time as we perform the R&D services.

All right, next question will be from Rahul Sarugaser from, Hi, Anne-Marie, Jason, Mark, thanks so much for taking our questions as always.

So just wanted to see if we can get an update on, you know, the NPV of each of the projects.

But in lieu of like a royalty on the downstream value share we get equity in the company and so we've got an equity position for that downstream value share by importantly, we're getting cash for foundry services. Today. So now now that initial equity grants does need to be accounted for under GAAP. Okay. In other words, we have to earn it.

Is that something that you know, you've been able to mark to market and get a sense of?

Is that changing?

Or will that be reported at a later time?

And then just as a Part B to that, of the 60 projects that you're anticipating signing up this year, do you have a sense of the distribution of, you know, of the different sectors that those will be in?

And in particular, are you seeing a kind of a reemergence of interest in biofuels given the shock in hydrocarbons, hydrocarbon fuels?

I can take the second part.

Mark, do you want to take the first part?

Yeah.

And while I encourage you to read our public filings for the precise detail and accounting treatment. The end result is that we book a deferred revenue liability on our balance sheet. When we do these sorts of deals and we plan to do many more of these <unk> type deals. They are great for our customers. They are great for ginkgo answer we'd love to do more of them.

Why don't I just start with the first part?

So, yeah.

So, Rahul, as Jason mentioned earlier, just given kind of market volatility and interest rates, we don't think it makes sense to put a specific number on the NPV per program right now, but certainly directionally, it is lower relative to where we were a year ago.

Over time, as we do complete more programs, and as we see some of them commercializing, we'll get a better sense, as to sort of that portfolio and how to value it.

But that's kind of where we are right now.

I will say one of the thing Thats really exciting when you launch these platform native type companies as you can recruit Ceos that are expert in the specific product vertical the company rather than bioengineering phds right and not.

That there's anything wrong with bioengineering Phd Ceos.

Yeah, and Rahul, if you remember during the SPAC, we wanted to share what we knew sort of historically based on what we seen, what we had seen at the time.

Like this we've seen this attack nowadays right like the people who've launched companies are often they might be experts in product design or in some particular vertical they don't no longer need to be necessarily a software engineer right and so for example, John Mcintyre the CEO at Matchy Matchy. If he was a senior executive at Pepsico in both number of food companies before that jazz Mina <unk>.

So people had a number to wrap their arms around.

I think, as Mark saying is right, like, more of these things getting out the door will ultimately give us a lot more data on it.

Previously ran and launched.

Beauty brand mother dirt, Mike Miller CEO of join with previously they had a biologics at fair and CEO of a company called Agra Quest in the biologic space, Nicole probably being the CEO of alone yet we've had a long career at Dupont water solutions and saw that this is really enabling like lag. There is a lot of people out there who could launch cell programming apps, but don't have that kind of base.

So that that's the right way to think about it.

For the for the second point in terms of what sort of the, set of programs for the for the 60 that we're aiming for this year, the new ones.

Yeah, it's a good question.

I mean, like one of the one of our attitudes at Ginkgo is not to be to sort of have some opinions about like what markets to go sell into, but ultimately to be very flexible to where we see demand.

You know, that's been a big success for us, you know, three or four years ago when the cannabis industry, as an example, I know you know this well, sort of got hot that led to our project with Kronos.

You know, that wasn't an area that we would have known ahead of time that we would be in.

This is one of the advantages of being a platform.

So you mentioned biofuels.

I do.

Bioengineering and experience they make for excellent CEO as we've seen that success already and you can see it also in the type of investors that are then showing up alongside these companies Reits, we have great financial investors like Blackrock, and Ontario teachers coming into these companies. We've also been fortunate to get vertical specific strategic investors that want to stay close to.

<unk> technology is emerging in their industry, so Jim or Don Chanel Bear are companies that have participated in these on so it's really it's a cool ecosystem to be building.

I do think so.

I'll give you a few highlights so theres a lot to be proud of promote.

Yeah, I think particularly in the area of things like aviation fuels, where you're seeing mandates in Europe and things like that, driving renewables in that area, that is the thing that you're not going to really get going electric anytime soon.

So we do need to have renewable fuels in that area, unlike, say, cars.

Which launched it just a couple of years ago that they raised $226 million series B. This summer they are.

Launching their first couple of products, but look through the coolest thing was that for men. We had 700 people there and everyone's got to eat motif media animal free meat balls at which we had a lot of computer the event, but those are by far the best.

So so I think that's that you will see more demand there.

And as I mentioned earlier are Super exciting New company and <unk> built that while she was an entrepreneur and resident here at Kimco and publicly launched it with $7 million to $8 million in funding.

And also in the large scale petrochemical replacements as well.

Partners of ours like Genomatica, for example, are, I think, in a great position coming up with what's going on with oil.

The data formats or day before and they haven't again, Chanel, Javan and others coming in there really thrilled to see her apply biotechnology in the beauty industry.

Rahul.

<unk> started trials of its new.

Mark Massaro at BTI.

Nitrogen fixation disease pest solutions. This is one of those areas that gets me. So excited so it can be hard.

Really appreciate how massive and resource intensive the AG industry is 4% of global energy consumption, 5% of global greenhouse gas nitrogen fertilizer alone is $70 billion industry.

We need to do better in this space and I'm really excited to join <unk> has the potential to do that.

And along the same lines biology is a whole new approach and waste remediation. So the complex chemical pathways that allow biology to break things down can be applied in areas like Remediated tox.

Toxic source waste and things like that so I think alone yes.

It is really.

A great area to be expanding biotech into super.

Super excited to see what they do there alright, so I talked a little bit about the G. But I'd love you to take a minute to hear it from John the CEO of our chief himself about the impact of <unk> platform. Following their recent $226 billion fundraising.

Mark, I think you'll need to unmute.

Sorry about that.

Right.

Can you hear me now?

Thank you so much.

Great.

Well so a trial also have salute that's the best way.

I wanted to give you guys an opportunity.

You have done some tuck-in acquisitions.

You know, you did have a preliminary and informal inquiry from the DOJ.

You know, one of them was really COVID-related, but can you just give us a sense for how you think this decline in multiples could impact your strategy to do some M&A this year?

And how much of that would likely be using your existing cash versus exploring alternate ways to do the deal?

I haven't seen the Form 10-K, but I was just curious if you could maybe get in front of that 10-K and give us any type of update if possible.

And then if I can ask a second part, obviously, you know, there is a lot of opportunity to consolidate the space.

Sure.

Good.

Gregory for sure that has that like them.

On the chart and all that.

The bike quality is much better I would say that old generations of plant based meat.

The first bite you might get this crust on the outside you like you see here.

But the second bucket would be more motion the inside would not have texture. So look at all the effort I mean that pretty much looks like what you might see in a burger.

The pieces the way it crumbles the other thing I notice, there's definitely that remind me kind of.

I'll note, our ingredient we call home Mommy and it's essentially the molecule in the muscle of a cow that makes beef red. It makes it gives you that beautiful serum blood a unique flavor catalyze us a whole bunch of the chemistry in there and that is an amazing piece of technology that can co bioware.

<unk> created for us.

Ginkgo was able to look at 300 different muscle proteins from different species, many sperm whales when it comes to mind.

Tuna.

Pork chicken a whole series of different birds and Theyre already sequence. So it wasn't like we took any animal materials. When they did the secrets is it was it was for specific muscle protein a class called myoglobin, Okay Ginkgo got us the ability to look at all the different properties stability taste flavor color.

And then once we honed in on the ones. We wanted we ask them to optimize the use to kind of turn that into a mini factory. So that we can make it and so we can have the great taste of.

Beef without using any animals.

That's great.

Goodbye.

Yeah, I'm happy to take hold of those, Mark.

Yeah, I have to say that that project.

So there hasn't been any material update since we provided the public update on the informal inquiry and the conclusion of our internal investigation in November.

John looking at all the different species.

Sort of like Noah's Ark situations are out here I was really fun to Paul.

And from all those different organisms. So yes.

Yes, we're working with the team at <unk> has been great working with John has been awesome and he's got amazing stacks. So.

So nothing much more to say there.

On M&A, I'm very excited about that, as you can imagine. You know, I think the big change that we've seen over the last six months or so, is really an openness to considering M&A as an exit opportunity for some of these companies.

Really excited to be working with them alright, So I really have this I love this picture for <unk>.

So certainly valuations have compressed.

But what that's really created is an opportunity for smaller companies to think about alternative ways to kind of capitalize for their growth.

Had over 700 people turn out just a couple of weeks ago in Boston. It was really really great to get the community back together in person after not seeing each other for a long time, the diversity and strength of the ecosystem developing around <unk>.

And I think Ginkgo, one of our real goals in our M&A strategy is to establish ourselves as a, preferred acquirer for these companies where really strong technical teams can find the resources and the support to develop and deploy this technology at scale.

And I think, you know, one of the best selling points, not only for customers, but for potential acquisition targets is just walking them around the foundry, and showing them the breadth of what we're able to do and the scale at which we we attempt to do it.

And so we definitely see this market environment as being one that is is right for M&A.

It's so exciting and we look forward to continuing to welcome new partners and potential partners in the future. This is a lesson we've learned from the tech companies Apple Microsoft others, you have to nourish this ecosystem of developers. So they can get the most out of your platform.

And where we have an opportunity to use that use that to, to build our platform.

You asked about deal structuring.

Everyone wins, when that happens right and I think we're at this moment where for our community, they're starting to say hey, if.

And I think Mark highlighted this earlier in the comments that, you know, we do in this kind of a market environment want to be thoughtful about maintaining multiple years of runway to ensure that we are able to continue to build the platform.

Ginkgo develops more stuff thats good for me right and so that's a really exciting moment and we're really thrilled to play that role in the community.

All right.

I want to show slide here are some of the products.

At the end of the day the success of <unk> platform is written in the success of our customers and so you look at products from El Deveroy, Kronos and motif I mentioned that I think a format that the exponential growth in our platform output right like what's coming out of the foundry means that we did more lab work in the last year of <unk> in the first 10 years.

The next question will be from Steve Mah at Kelly.

Combined right.

It's not surprising that we're seeing the rate of cell programming program, finishing in going to market for customers, increasing and you can see in this chart one of the things that makes inco's platform. So unique there.

Our <unk> for end market three product types six different customers represented just in the eight products shown here right. So that breadth of work on one common platform has really been our vision for ginkgo since day, one of the company. So it is rewarding to see that that is that is a.

Difficult technological challenge to pull off and I'm really proud of the progress we've made there.

So I'll end on this one of the things that comes with being the leader serving in an emerging technology area, whether it's electric cars or synthetic biology is that people are going to try to tell you.

Why what you're doing isn't going to work.

Right.

Honestly, it's worth it right we've been working for 20 years to be able to have an event like for Matt a couple of weeks ago, and seeing the community and to die virology rally around the emerging technologies are getting excited about the leverage by our platform was incredible and it is especially incredible because the ginkgo platform improves with scale. So like the more excitement the battery.

We're going to get right and I haven't been this excited about synthetic biology since the day honestly I started my Phd at M. I T.

And I love that many of you listening have chosen to come on this ride with us.

You choose to invest in <unk>.

<unk> the world in that direction, right and ginkgo is going to strive to continue to be clear and transparent about the direction. We're heading and we hope you are as excited as we are about that direction. So thanks. So much for your time today and look forward to taking your questions.

Steve, I think you'll need to go ahead and unmute.

Thanks, Jason and then we're just going to switch over to Q&A in just a second here. So for the analysts who are on the call. Please chest.

Raise your hand, and we will allow you to on you and ask your question and then we'll also again be bringing in questions and from both Twitter and email that Twitter hashtag Kimco results and then the E. Mail address is investor that can cover <unk> dot com until the back in just a few seconds here to start Q&A, everyone. All right, we're going to kick off Q&A now.

I'm sorry about that.

Thanks for taking the questions.

Let's start with a question Fran from Twitter, just as everyone is getting and getting acquainted in raising their hands I see a bunch of hands raised there. So I'm occasionally asked it looks like you were the first to say youre looking at that first that you'll be the first question once that once we take one from Fedor here.

Can you give us a sense if your recent successes have translated into being able to push new partners on higher downstream economic value?

And then a second part, I think you mentioned that the rate of new program ads and pharma biotech in the second half of 2021 was about 35%.

So Jason I'm going to give it to you it's going to be easy unfair who by the way it came at <unk> and <unk>.

And so during the height of the pandemic pro Bono work with Dan leading to attend exit mrna capping enzymes and resulting in a great partnership without that Bryan what is ginkgo strategy for managing pro Bono work going forward.

Can you confirm that's your fastest growing new program ad segment and is 35% a sustainable rate for pharma and biotech going forward for new program ads?

Yeah, so Steve, I'll answer your first one.

Yes. This is a pretty cool experience for us because that project really cranked I mean, we did that in sort of around about a year kind of start to finish on the R&D side and.

I'll ask Anna-Marie or someone to check up on the second one.

So yes, it's a good question, right?

One of the takeaways for US was because we were doing a pro bono we like the team I think was just really controlling the <unk>.

So as we become more successful on the platform, I think a good intuition could be that obviously, we can demand better deals from customers.

Design of the project end to end.

I don't think that's wrong.

That's a process when we work with our customers that is very collaborative and so I think.

But what I would say is, we're also trying to add huge numbers of new, Right.

And one of my lessons from looking at other horizontal technology platforms all the way back to things like operating systems, is the more value you can give back to the app developers, the easier it is to get them on your And so I, you know, I think my mental model is, it's your application, I want you to have the lion's share of the value and us as the app developer to take a small piece of what ultimately is going to be a, or sorry, as a platform, to ultimately take a small piece of what's going to be a huge pie.

In other words, I would like to be like a utility across the whole industry, providing what is ultimately a backbone service of cell engineering.

And so in that world, I don't need to take a ton of everybody's, applications, right, I can take a small amount and still do great, and they'll do great.

And so that the model we favor is to take a rather small piece of a big pie.

And so I just want you to know, like the philosophy that we're pushing, that's very different than the intuition a lot of people have in the biotechnology industry, where frequently they have kind of like a rifle shot technology that sort of got developed in an academic lab, and it's very precious.

One of our takeaway here was we should really make sure we're like packaging projects like when we engage with.

And when they license it, they want to get all the value, you know, from from whoever's taking it, because it only really works for one thing.

We don't really see cell programming platform like that.

Ultimately, we see it applying just with wild breath.

Yeah.

Our customer on a project, where theyre going to get engaged from the first day, we should be a little more clear like here's exactly what we would do right and we can now Li on this experience of like look like this and maybe it would be a lot more effort in the facility that you would traditionally imagine doing but that that might be a function of well you've been kind of limited working at the lab bench with pipettes and so you don't actually design.

Those experiments at the same scale, our internal team would so there was actually a learning on.

Kind of program design, I would say that fell out of that.

And then I think it was also a pretty cool instance of hey, there's a global scale problem giggle cares how our platform is used sometimes that making sure. It's not used in a negative way, but sometimes it's also <unk>.

Sure it's used in a positive way right and we can put our foot on the scale at gingko to go do that when we feel it's the right thing and then it's a cool experience here with Covid that also turned out to be quite financially beneficial at the end, even though that wasn't really I would say the motivation when we first launched that pro Bono work. So so those are probably my to my two learnings, it's not a bad thing.

And an area if we if it's one we care about and then secondly.

Program design.

Okay. Thanks.

I'm going to allow you to attack anything you should be able to ask your question now that you will have to come back.

Yeah, I'd be happy to take this up.

Perfect Hey, guys. Thanks for taking the question.

Appreciate the color on the short report it certainly has been something on a lot of investors' minds. So appreciate you addressing that upfront.

Just a couple of quick follow ups there Mark I believe in your prepared remarks, you mentioned not breaking out sort of foundry versus downstream economics going forward.

Given given that sort of choice that you've made.

How should investors think about modeling the trajectory of foundry revenues in 'twenty, two and beyond and then you said you mentioned sort of getting getting.

Our clean chip from your internal inquiry with the auditors.

Is there anything that is remaining to be done in terms of the process that the Doj inbound at this stage right.

Yes, so I'm just looking, Steve, at the new program ads. And so yeah, so Pharma Biotech was the biggest contributor to new programs last year, but the industrial, environmental and the food and ag were sort of very close behind.

Why don't we start with the question on guidance and our plan there and then we can take the second question, yes. Thanks.

And, And in fact, those latter two categories also saw pretty good growth relative to the first half of the year.

So I wouldn't really, I don't think there's anything to read into kind of like the quarterly trending on new programs.

I think our ends are still small enough that even just adding a couple of programs in a category in a quarter is going to drive a high growth rate.

So I don't think that like on a percent basis.

I don't think we're constrained in any way.

We still see the size of our pipeline and the opportunity in front of us is still very significant relative to these numbers.

Okay, thanks for the call.

Thanks, Steve.

So the reason I made that comment is we are sort of learning in real time right now.

There are going to be situations, particularly in these early days, we are advancing very sure may only be attributed to a few customers where breaking that out may create confidentiality issues.

Good thing that we're realizing very much in real time.

It can make sense for us to make trade it will make sense for us to make tradeoffs between downstream value share.

And foundry services and to do that sometimes also very much in real time and the other <unk> is a great example, where we don't we didn't recognize any battery services revenue.

Or that at all in 2021 and yet it has.

Very significant potential to contribute.

Revenue to us and so so we're sort of in this kind of real time learning.

US where were evaluating this question.

And that's why we made that comment because the line is blurring.

I mean the two.

We would expect to be providing you with.

Guidance on on foundry revenue.

And to be held accountable to that we would expect to be providing you with guidance on new programs and to be held accountable for that but.

But sort of breaking out the two.

Like I said the line is blurring a bit and we.

We are very much kind of evaluating how best to do that going forward.

Yeah, and the only thing I would add on that front as you will occasionally I think it's going to vary by customer right, you'll see like in the case of our Kronos value share that is publicly disclose right.

Youll see publicly that in Q3 that was about $12 million for that.

Through that value share milestones, so there'll be some customers, it's not an issue, but we do have this challenge, particularly while the number of programs, giving value share is small that there'll be folks who don't want that information out there and so we need to be sensitive to that and so that's where it is.

A chunk of that comes from.

Yeah, and then Jason the second question from cash assets around any next steps or further.

Further process on the internal investigation.

Yeah right.

As I said in the earnings call. Shortly after the short seller report comes out and we've received a preliminary preliminary inquiry from the Doj and formal based on that on the independent investigation.

The audit committee found any suggestion of broad reporting violations accounting errors. Other wrongdoing contained in the short seller report were unbounded and importantly that no restatement of our financials is needed we are cooperating with regulators.

Not too much more I'd add at this point on it.

Okay got it thanks, Jason.

All right, next question will be from Derik DeBruin at BofA.

Alright.

Go ahead, Matt Larry I should have given you the warning that you and the next analyst I'm going to allow you to talk and so you can go ahead and ask your question.

Derik, I've allowed you to talk.

You'll have to Anita Tom.

Okay can you hear me.

Good deal.

So Jason you referenced that the recent ecosystem prevents you hosted with for mens and then the cell developer about last week. Just curious if you could share any feedback or data points in terms of the potential new partners that you engage with things are tracking internally really to determine the success of those events and then the second part if I could.

Just more broadly with a lots of CDK is now underway, maybe just remind us how the CDK and are able to break down barriers to entry for new partners in terms of the capital intensity and sophistication required by those partners.

Great.

Yes, that's a great question, though.

Hi, can you hear me?

Maybe just give a little extra context right like I mentioned, we AD format, which is our big in person event here in Boston, and that's really serving us well.

Hi, Derek.

Hi.

We highlight some of the developers on the platform. So you got to hear lightning talks.

A number of the companies that are that have been successful.

Developing our launching on the platform. So there's other companies in the room that got to hear that it also brings investors in that are interested in synthetic biology. Many of you the analyst community and others are there to join and some of the technology providers.

<unk> improved from 12 and folks like that right.

It's a broader turn the virtual or that was really launching our.

Our CDK and these are cell development kits and the analogy is.

Platform software company like an Apple would have a software development kit SDK and this is basically a set of tools given to app developers. So that they can more quickly launch apps on apples platform clearly in Apple's interest to have these out in the world and it's great for developers because it's now less friction for them to get a product built and so the same spirit as apply.

With our CDK is we want to make it easier and faster for someone launching a new company or a startup that already exists to come and say I can engage kinko's platform I can get a product bell quickly get it out in the world and start making money and then ginkgo does well again through our value share mechanism in that case. So that's why we're doing these things and that's the two different types of events are.

Metrics really tracking are entirely around follow ups with the commercial to him and the deal team.

So based on that.

We also have a funnel I'd like people sign up people attend and then how many real leads do we get on the backside of that and we haven't we haven't disclosed any of that specifically, but that would be the internal metrics, we'd be driving against my biggest motion on this is just.

Two years ago, there was almost no inbound to ginkgo right. Like this is just a new concept because of our profile going up and in particular the success of people who engaged our platform 253 years ago now showing progress people see that and like Bruce in the play and so so that is now driving for the first time really.

The opportunity for us to market like this.

That really all previously was largely outbound like kind of.

Sales and so.

That's what I would say on the last point I'll make briefly because I didn't touch on it much in the earnings call.

The idea behind the CDK and.

In the first ones, we launched our protein production is to give like a pretty defined box and say listen if you are trying to make in this case, a low cost protein we have some existing assets. We have post strains that produce proteins at low cost.

One of them is really well scaled up on the foundry the other ones that sort of beta and getting onto the foundry. You can you can deploy those in that area and we can move really fast and in our first engagement for phase one of the $100000. That's a low cost in the biotech world and so that's that.

That idea of making it less friction all just to get started with US is really the key idea there.

So a few questions.

That's a great question, Thanks, a lot Matt.

So what do you think your related party revenues will be, even 22?

And just to give everyone has that will probably go five to 10 minutes late since they started late so apologies for the late start but looking at that a little extra time here.

Any, I mean, it's going down, which is nice to see, but any sort of sense on where that could be?

You'll be next on the question list, but I'm going to go ahead and take one from our Investor Inbox in the meantime, as you get ready and so we got one entity inbox that as climate change and pollution or some of the most important challenges mankind is facing and what areas get synthetic biology at the greatest impact and as ginkgo planning to start any JV to accelerate the change.

So Mark, did you want to, you can speak to sort of, I don't think we have any guidance on 22.

I can add a little bit of extra color.

And its tax climate change.

Yeah, yeah, I guess, Derik.

Yes.

Ill move quick.

I mentioned that for Matt that in.

Lightning talks for next years from that I'd love to see a bunch that were about climate application specifically I do think this is.

Big opportunity right now because you have seen the success of companies like Tesla for example.

Passing a trillion dollars yet bill gates, just a few weeks ago say in climate there'll be eight to 10 tactical scale companies. So you have actually suddenly a lot of investor interest, but the big companies in the space. The big energy companies have been slower for variety of reasons to consider adopting biotechnology, that's a great opportunity for us in the platform ventures area right. That's why.

We do those things, it's like well, we have a lot of investor interest, but there is less existing partners and startups are just getting going let's do some and so folks that want to launch those types of things. We do think theres a great opportunity. There I will also point out join.

Joined bio what what you mentioned on the call focus in nitrogen fertilizer production does that have.

Nitrogen fertilize acute greenhouse gas meter. So that's already in that direction I think that's a wave that will support them and then when it comes to kind of environmental cleanup alone yet is working in that area. So we already have a few.

Folks customers on the platform, but I'd love to see more and I think we will see more hopefully.

Absolutely alright, and we're getting well do a few more analyst questions here and I would just ask one part question. So that everyone can get that get the chance and Rahul Im going to go ahead and allow you to Scott and then just any.

Great. Thanks, and Mike can you hear me Okay, yes.

<unk> payroll perfect. Thanks morning, Jason <unk> remark. Thank you for taking my question. So I'm just kind of follow up a little bit based on <unk> question.

Congratulations on getting a second milestone our current partnership with Russia.

<unk> carefully and that would be tied to book that in Q4, so with the first equity milestone booked in this quarter market. We heard you correctly you mentioned that this equity payment is attributed to foundry revenue.

So given that this upfront book value of the equity has now been booked to two foundry revenue how should we be thinking about treating book versus mark to market incremental value of that same equity going forward.

Yes.

We will do an evaluation on a mark to market adjustment at each reporting period end.

And.

We also because yes.

And there are some sort of GAAP adjustments that we made to that to account for.

Just the type of equity that we have.

So.

Gain or loss flowed through the other income expense line on the P&L.

Thanks.

And alright, I actually I should have given you that had that but you can probably see that you are next in line is I'm going to go ahead and allow you to attack and then you'll be next.

So the related parties were not a significant source of revenue growth, in 2021.

Hi can you hear me yes.

Yeah, Hi, guys, just a very quick one unrelated party revenues given given all of the recent focus on this topic could you perhaps talk a little bit about your plans when it comes to accelerating the pace of new editions of new programs and the platform via direct equity investments and what that might mean for near term share related party revenue. So I'm wondering as you deploy some of the captive right.

And as existing program scale should we actually expect related party revenue share to increase over the next year or so and how that mix shift.

So while we don't sort of carve out, or we're not providing guidance on sort of like subcategories within 2022, I would, you know, feel comfortable saying that the growth that we're guiding to in 2022 is not going to be driven in some substantial way by related party growth.

Sure Mark do you want to comment on how we're thinking about it from a projection standpoint that I can comment on some of why we think it's.

Great.

And one other small point on that, though.

Likely happen sort of philosophically.

Yes, so just kind of I guess, maybe just general trend and as I just generally.

Generally see the mix shifting towards more third parties versus.

Related parties.

And.

But we don't have a particular sort of bias.

Versus like we don't inherently think thats, a good mix shifts or a bad nature.

Actual one.

It is indicative of just the sheer number of new customers. We brought on this year I mean, the customer count was significant in the program count with significant and those are weighted to third parties and so that's just as a factual matter thats why the mix shift is happening.

And I'm not sure that we really think about it.

Reduction point of view per se. So so yes.

Yes, thanks Mark.

So what I would say is.

So I don't want to be able to lose the thread that, and I mentioned this at the last earnings call, that I think sort of startups and new companies that launch on Ginkgo's platform are often some of the best, and these are the companies that can, depending on the details, end up as related parties on our platform. And the, you know, these are some of our best potential future customers.

There's the three buckets of customers.

As I said before, these are, they can be born foundry native.

And really, we get to grow with them in terms of as their R&D budget grows, as they grow as companies, it's coming back to Ginkgo, because they're really built on top of our platform.

So you will still see us engaging with startups.

And I mentioned, the sort of the mid and large there are existing startups and then there are brand new startups on the platform I think we are seeing a lot of excitement in the startup category right.

And if the details of the transaction are such that it makes it a related party, that can happen.

So I just wanted to flag that, but sorry, go ahead, Derek.

No, got it.

That's helpful.

You know, we're three days from the end of the quarter.

Any sort of like commentary on Q1 and quarterly pacing?

I mean, you know, your core founding revenues were essentially flat-ish Q3, Q4.

Is that a Q1 trend?

We're seeing a lot of inbound I would say for the large companies.

I think the reality is that still going to be.

Solid enterprise sales right in other words, it's going to be like what we do every day around here is having meetings and going out in the business development team and getting deals done right and we're good at it but it does take time and so I think you're I think you're seeing a change in customer behavior on the startups and the startup tend to but not always tend to lead to more related parties.

Just some color, since we do have to...

I know it's a long tail story, but we've got to be focused on the short term models.

Yeah, so let me take that, Derik.

So in terms of, let's talk first about Foundry Revenue.

So first of all, we are guiding to a 2022 overall Foundry Revenue number, which does represent significant growth.

So in terms of kind of the, when you back out the chronos, the flattest trend that you saw last year.

Yeah, you will see that more, it does ramp during the course of the year.

And so there's, There's that sort of factor to consider.

And again, we're very actively managing the trade-offs in our contracts between downstream value share and those upfront foundry usage fees.

That's something that we're thinking about all the time.

I would agree with Mark.

We're not it's not like a certain thing we're trying to solve for in terms of our direction. Our strategic goal is as many new programs on the platform as quickly as possible and then delivering on those programs for customers. So we can realize value share how that ends up shaking out related or not is less about.

And then some of the downstream value share, that can be in terms of where that lands in a particular quarter.

Guidepost for us.

We are anticipating downstream value share in our guidance for 2022, but in terms of which quarter it lands, that can be, again, a bit lumpy, that can be a function of a whole bunch of factors that either do line up for a particular quarter or otherwise.

Yes, that's a good question alright.

So tonight, you know, we're focused on hitting this number for the year, and we're very comfortable that we'll be able to do that just based on current trends.

Alright, and Matt from Goldman I'm going to allow you to talk and then Rachel from Jpmorgan you will be next.

Hey, everybody. Thanks for taking my questions I. Appreciate it just one question for me on the Bio Security you mentioned released its an uncertain business I'm just wondering how youre thinking about the durability of Biosecurity revenues going forward as it relates to testing or <unk> infrastructure.

On the biosecurity side, we guided to a number that we're comfortable with in light of the momentum that we have seen in Q1 and also cognizant that that is a business that kind of 60 days out we don't necessarily have great visibility on.

And because a lot of the state contracts are funded only through the end of this school semester, we don't have great visibility in the second half of the year.

So you should assume that we considered all that when we when we put forth the guidance on biosecurity.

Yeah, So here's my here's how I think about it.

It is a super good question.

So the thing I think to think of.

<unk> is so like I'll give you an email it now gets a flu is an endemic disease right. So we know flu is not going away and we have a certain set of mitigation in place in society and by and large that's the flu vaccine that comes out and we have to make a new one every year because of the nature of that virus, but fine.

That's like our societal mitigation to get flu to a point where it is not.

Annoying and otherwise disruptive to society like we're comfortable with the level of mortality and we're comfortable with the amount of impact that has on our lives.

Great.

COVID-19 is going to become endemic.

So you sort of segued into my next question.

I think that you can speak to experts that's what youre hearing again and again, it's not going to just disappear on us I think thats widely appreciated now worldwide.

The question is what are the mitigation measures that society needs to put in place. So that this thing is not annoying.

And I would tell you that from quarantine that schools to math to everything else, we're not at a point, yet where we get to not think about this thing in the same way. We currently really by and large didn't think about the flu or other than certain public health folks that sort of take care of us there, but society at large is not a top of mind issue, we're not there yet with Covid and so the question is what will be.

Enough is it just the annual vaccines and then nothing else.

Certainly not yet right and so the question is where will these types of other bio security measures fit in and I think the big tools in that bucket are going to be.

Updated.

Vaccinations and boosters, it's going to be better therapeutics over time, and it's going to be monitoring surveillance basically testing for bio security purposes, not diagnostics and so we obviously have stuff going on in the vaccine space as a support role, but in that sort of monitoring whether mapping.

The new area of testing I would say we are definitely a leader.

Will that end up being part of the mitigation. That's why it's hard for US to guide you exactly what it's going to be next year, but I think if it does we're in a great spot right. So that's how I would try to frame out if that makes sense.

But I do think bio security in general worldwide is here to stay at some level and the question is just exactly what are the set of mitigation that may Covid go away, and we'll surveillance and monitoring and be one of them.

Great. Thank you.

Okay.

Alright, and we will take our last two analyst questions and then I haven't gotten any dinosaur questions on Twitter, yet, which is actually pretty disappointing.

Are there any good ones that comment I might ask one, but Rachel I'm going to go ahead and allow you to attack from JP Morgan.

The original.

Perfect. Good morning, you guys and say the two questions on the new sales programs and guidance for the air. So it's great to hear the launch 10 programs. This quarter. During your last call. During your last earnings call. You mentioned that it will be heavily weighted towards Fortunately. This year. So based on <unk> guidance implies nine programs in <unk>, which is a slight step down. So can you just talk about it.

Programs were pulled forward into <unk>, and then walk us through your approach to guidance and if there's any conservatism baked into that number. Thanks.

Hi, Mark.

I think Rachel at the time that we did.

Time that we did that first half updates.

Mentioned that.

Yes, I'm not sure that we were.

Necessarily trying to distinguish between how much of what was left with land in Q3 versus Q4 I will say.

That and we did say that we didn't expect a lot of revenue.

By Q4, just because of program starts homes et cetera.

That said I will say that we did make necessarily.

Aggressive push to bring those programs on as soon as we could and that was largely because you want to have.

The ability to hit the ground running for 2022.

And so there was sort of a very concerted effort in Q3.

To just not wait and to get programs on the foundry as soon as possible because there is a startup time and so.

Yes, I wouldn't I.

I think we are targeting the 30 programs I think we are.

Obviously have a pipeline.

Everything landed with achieved the 30 is the number that we're comfortable with right now.

Yes, the only thing I'd add I think.

It is a little tricky again, the enterprise sale nature of it you can have things move.

Or two here and there that's probably a little more true when we're engaging with a large company.

While our company, but if it's not all.

So I do think like we had I'm trying to have a big big bundle and then we know some are going to shake and move to next year or not right and trying to and trying to really got pushed the team to hit our annual number but I think you will it will be a little harder to predict quarter to quarter exactly how many programs.

And I'd say, it's not a big particular driver for us versus like trying to keep the overall number going up at a healthy clip annually.

Thanks, Rachel Alright, I can't leave just one person hanging on their questions I'm going to let Mike <unk> question, then we'll wrap up.

Hey can you hear me, yes, hi, Mark awesome. Thanks, So much for the question you guys have made good progress with with Kronos and also with food ingredients et cetera, I guess, how would you characterize your funnel in Biopharma, which particular areas are you most encouraged by especially as we.

We are about to turn into 2022.

Should we think about the potential for equity and milestones in 'twenty, two and 'twenty three.

Yes.

The Biopharma side.

We had.

David Chang from Allergan, and our <unk> and <unk>.

Our board now and for kite speak at <unk> on the area of cell and gene therapy.

Are you kind of brought up some of the history and.

In cell therapy, and how these are really the first like whole cell therapeutics that are getting developed that lag cell therapeutics at kite.

Yes. He was like that's also been a 25 year kind of talking about kind of a 20 year history of synthetic biology and.

So that's exciting that whole like living cells as therapies, I would say like SaaS our bucket.

Right and it would set logic, that's a bacteria with.

In the area of cell therapy, that's often T cells, but like that that's where you should think about ginkgo generally being excited but we're also going to be supporting engineered cells to produce various things as we always do but when it comes to like a new area I really think we can push into bye bye haven't done as much to date, it's sort of that general category of sort of live cells therapies, and so selling gene therapy tenths.

Where that shows up the most.

And then was there a second part there and I'm very sorry.

No no.

Alright, great.

That's great.

Well. Thank you everyone for joining us for our first official earnings call apologies again for the technical streaming difficulties at the beginning we'll make sure that our fall of video is uploaded and while distribute it to our folks in the first few minutes and as you are transferring over can catch up and then we'll try to try to work out there for.

Next time, but thanks again for spending your Monday morning, with us and have a great week.

Thanks, everybody.

It's like, do you have any downstream value baked into your 22 guide.

Thanks Scott.

So thrilled to have all of you here today before we get started I want to say we're here.

<unk> today really to talk about one global emergency.

In climate, we'd be remiss not to acknowledge the emergency that erupted in Ukraine last night our overnight.

We know we have folks from all over the world dialing in today. We hope you are all safe. Please take care of your family friends and team members today and in the coming weeks and what's going to be I think a disruptive times. So.

And, and basically, we start to see royalties coming through on products such as Aldebaran, for example, anything coming through.

Okay. So you know.

I think we had almost 1000 people registered for this today so.

I think one of the things that I wanted to mention is it is now obvious.

So, so yes, we do have downstream value share baked into the 2022 guide.

Obviously should have been obviously, a decade ago, but now it is very obvious that climate change is really the motivating problem.

And that is a component of the growth over 2021.

The service revenue is also a component of growth. So both of those, are expected to grow.

This generation.

I think theres been a couple of things that are that have happened in the last.

And you know, for reasons that we had discussed before, we're not breaking them out, partly because of customer confidentiality issues with the relatively small number of products where we would be getting kind of near-term downstream values here.

Five years, or so 10 years or so that have sparked this kind of obvious but I want to mention one in particular, which is the success of Tesla as a company.

So I think that's sort of where we're still at in terms of getting more specific on that.

Got it.

Is sort of open the eyes in the world too.

If you bet on certain changes that are going to.

Be inevitable in a decarbonize the economy and you pick the right winners early you're going to see trillion dollar companies get bill rate and Bill Gates, just said I think two or three months ago that he expect eight to 10 Tesla scale companies and climate, So 8% to 10 trillion dollar companies being built and some of those will be new companies like Tesla.

I hope you have some of those entrepreneurs on the call today and some of those are going to be existing companies that reinvent themselves right, let's say.

Decarbonize World. This is what my industry is going to look like and I'm going to bet on it before my competitors do I'm going to I'm going to remake my large company.

In this way and I think I hope you have those types of folks on this call as well and.

From my perspective, synthetic biology, ultimately is going to be one of the enabling technologies for this revolution I expect.

Exploration will be about half of those eight to 10 sort of Tesla scale companies should be biotech companies.

And then just one final one, just, The overall fully diluted.

And youre going to hear from that three great panels today and so on the first one you're actually going to hear a little bit about why that is why is biotech such a good fit for the challenges in climate right and I think one of the big reasons is just by nature of how biology work is really really good at putting carbon together at forming carbon carbon bonds and I was a chemical engineer.

You know, all in share count is basically just still the same, right?

The 2.01 billion on that, just nothing changes with all the, that's a big number, the stock comp number, by the way.

Let me tell Ya and synthetic chemistry, we are not we are not good at this and so this is one of the superpowers of biology and biology also runs at global scale right. It makes the oxygen in our atmosphere to that right and so I think fundamentally biology has that youre going to hear from Patrick boiler Ginkgo, Dan good ones recently.

Sarah Spartech now at Voyager ventures, but previously working on climate, you're going to hear from them about some of those superpowers of biology.

Our next panel.

Cynthia Collins from here I can't go in Garden, Cakravartin saw Eugene and Nelson Barton at genome Attica.

<unk> consolidated our two companies that are bringing synthetic biology biotech solutions to scale in the renewable chemical space and so what can we learn from what they've learned right what's been hard and when you actually have to deploy biology and biotech at the kind of scales that are relevant in climate.

And then our third panel.

John Webb from here I can't go Matti Hall at living carbon Christine Ellis at lower carbon capital lots at Brent.

They're going to talk about who's funding this stuff right.

<unk>, new climate startups funded or their emerging businesses can you get paid as a new pump as a new startup company in climate to take carbon out of the atmosphere, how does that work without involving market look like right and so so I think these are some of the.

The panels, we wanted to showcase today, but really the main event is after those as we're going to have breakout sessions right. So we're going to get to hear from all of you you can have that as a carbon capture and sequestration and regenerative agriculture, and resilient ecosystems designing negative and low carbon products are just an opening open networking room, where you can go and try to find.

Learn more about ginkgo or also go find maybe a cofounder for your carbon.

Neutral startups so.

And we've had great success with that we held an event like this.

Probably six months ago wasn't about the people that buy those breakout rooms are really a big part of it.

Where you've got you've got a chance to get to know each other okay.

Last point I'll make giggled, putting this on so for those of you that are new to again guys wont explain briefly how we could help you and so we're really a platform for up for deploying synthetic biology for programming cells and the idea behind Google is very analogous to like Amazon Web services. If you wanted to start your website you wouldn't have today.

About how to build servers in Q.

Keep those up all the time and you would just pay Amazon web services to handle that sort of centralized infrastructure.

What we do here at Kimco, but first synthetic biology right here at our offices in Boston, We have about 200000 square feet of automated lab infrastructure, that's very very good at genetic engineering of cells.

So you don't have to build that if you have a climate application in mind, if you're a new startup and you don't want to have to have that big spend on R&D lab and all of that equipment and infrastructure don't bother right. You can just pay us to do that work and in fact customers of ours like motif food works, which is in the animal free meat space, which is a big carbon reduction space.

You had a thought us exactly just raised $250 million. This past summer they've never had to build a biotech R&D lab. They were able to just use <unk> infrastructure at the variable cost to do there to do there or biotech R&D, okay, and so so that's sort of the general idea, we're making it easier and easier for people to get on our platform. So for example, if you're a startup.

Company, we're able to take equity in your company.

<unk> of cash in order to pay for our services because we know that cash is particularly tight when you're a small company, especially in our environment. Today. So we will work with you to make it really easy and we've got folks on the platform in a matter of weeks.

A lot easier as well and so.

Really want to help us walk up a bit but if you're a large company today, we work with companies like Roche, we work with bear we have $100 million joint venture and nitrogen fertilizer.

Production by a biotechnology is another another big carbon project.

<unk> so some of the largest companies in the world that we've engaged with again to help them deploy synthetic biology without having to hire a whole R&D group will figure out.

Bring all that technology in house, they can just leverage us.

As infrastructure at a distance.

So.

Any of that is exciting to you. Please please don't hesitate on that Jason that ginkgo <unk> Dot com.

I will say.

Personally.

<unk>.

I have a couple of kids have a seven year old and a nine year old.

Look this is the problem of our generation right. If we if we fucked us up its a big.

It's a problem for the world.

It's not a problem, we made to be Frank but.

It's on us to fix that for the people that are coming after us.

So just making sure that there's nothing, the shares don't go up, there's no big change, we have to sort of like further factor in.

I'm so thrilled.

So many of you here today that are fired up to work on this problem. We're at gingko want to make you successful we want to make you. Those next Tesla that's your business Youre. The ops, we're really a platform to support you. So really thrilled today to get in and learn what you want to work on so thanks.

Yeah, no, that that is correct.

Thanks, everybody and enjoy the day to day.

Alright, Thanks, Jason Okay, well, let's dive in I'm going to bring out Patrick Dan and Sarah to talk about synthetic biology, and how it can play a role for climate action.

The stock comp expense number is entirely consistent with that 2 billion fully diluted share count number, and and so that yeah yeah so there's nothing different the only sort of quick footnote Derek of course in the new in 2022 we will issue new RSUs to employees or to new employees or to existing employees.

So obviously that would have been in the $2 billion.

Also, you'll have like forfeitures, things like, so there's some puts and takes that happen during the course of the year, but you're right that the $2 billion is, that's still the relevant number.

Thanks Scott.

Yes.

Hi, Dan Hi, Sarah.

So yes, thanks for that intro, Jason and cast.

I think for this session. We have a we have a tall order in front of US I think we have about 20 minutes to determine how synthetic biology, well sequester gigatons of carbon dioxide from the atmosphere. So let's see what we can do there.

But.

Seriously I think for then Sara I'd like.

Both of you to introduce yourselves.

But when you do I'd like to hear a little bit more about what drives you to tackle.

Tasks this large.

How did you get here in your career and what are you looking for today in terms of building the right teams that can make a dent.

And the climate challenge.

And as a reminder, about 150 million of those shares are earn out shares with price targets above $15. And another 50 million of those shares are underlying warrants with a price target above $11.50. Just to make sure it's clear that all of that is in the 2 billion, Great.

Before I launch into that.

Boyle I'm the head of code base here at Kimco.

Thank you.

I'm responsible for what we call our biological codebase. This is the reusable biological assets that we deploy for our programs to help program help our customers develop products more more quickly. So one example, being.

We have a product called the protein saw development kit. This is a way to help customers are interested in making recombinant proteins using synthetic biology get up and running faster and I'm also responsible for the folks who carry out our customer facing projects and would work with customers, who pinkos platform to help make our applications a reality so.

Great.

With that I'll throw it over to both of you to <unk>.

Give me a little bit of background on how you got into climate in the first place and so I'd like to start with you.

Thanks, Jack.

All right.

Thank you Patrick yes.

Yes.

I got my start actually as an entrepreneur. So building companies must be focused on litigation at least wanted to work on stuff that matters clearly lots of stuff matters in the world, but it became increasingly clear that in the in the timeframe of my working life that I haven't had any.

Last question looks like it's coming from Matt Bikes from Goldman.

Climate is the most important problem that I could possibly focus on really increasingly sending my career. There currently started presenting our car sharing company called get around also worked at the first five grams, and MACRA and leather company modern that out.

Great.

Can you hear me?

We can.

Great.

Realize that I should probably learned some more about the gaps in our de carbonization technology. So I.

Thank you for taking my question.

Joining graduate program in it.

<unk>.

It's working alongside Dan and other fantastic colleagues.

And really there I focused on.

Is it really.

The gap in our capability in terms of what we need to do to stabilize the climate on the timeframe, which is how do we get to gigaton scale atmospheric carbon renewable and I focused on.

Nothing pathways, we can tell that leveraged I'll engineering biology is the largest.

Mediator.

The global carbon cycle.

So that would might have there and then.

I also have the opportunity to support companies that are at the <unk> commercial scale and semi cofounded, an early stage venture firm called Voyager and where on the co managing partner and we back early stage teams building foundational products to Decarbonize the global economy.

Very cool.

Then how about you.

Appreciate you squeezing me in.

Hey, guys I Hope you don't mind me going on we have a one year old and the background about 30 feet away from me.

I'll just ask a quick one.

Just on biosecurity, as you think about the difficulty in predicting the testing environment, which we completely appreciate, but then also the long term opportunity of surveillance.

So I'm here because of Sarah actually because three years ago. She was the one just kind of like gateway drug into thinking about climate I think that's the way. She was talking reframe climate, that's something I avoided which was looking at photos at that polar bears and feeling like <expletive> .

If testing were to fall off, what's the level of kind of internal funds that you would commit to that longer term biosecurity revenue opportunity?

Or re farming climate as heck of a series of huge technical challenges that are worth working on both because it'll be funded by government point of view, but also because there's very large upside downstream for people that can nail it.

Meaning, would it require a level of funding over a certain period of time if there was no testing revenue coming through?

So the way how it got to that beachhead.

I was a software founder in Silicon Valley I dropped out of a Phd at Stanford I was an entrepreneur wasn't this idea of global Global product design Company started my company about 2012.

Microsoft end up buying it and I think very similar to what <unk>.

I was talking about I think like all my biggest heroes in life for the people, who pick one or two things and put decades and decades into it and by a mixture of luck and timing.

And all other external factors they end up doing something meaningful so for me.

And what is your level of commitment to that sort of long term vision of biosecurity in terms of dollar amounts?

So I don't think we've shared a specific dollar amount, correct me if I'm wrong, Mark or Anna-Marie, but I will say we are committed to biosecurity over the long term.

And I do think it's, you know, basically it's a volatile environment around what's happening with K-12.

In 2013, I thought okay, it's going to be neuroscience like neuroscience is the most important problems that we can do and that was the piece that originally dropped out of so it's kind of funny for me with computer Sciences, and Thats, each other neuroscience and neuroscience as might be servicing side. Its biology, which is nice each has hit the climate, but it was what got me. So excited about that is this from someone who was in the rapid growth of the computer science can you.

There's political questions, there's how the funding's gonna work, is it gonna be extended, you know, a lot of these things.

Great.

And so that's why we wanna do just what we did last year, which is sort of tell you what we know right now, right?

Ultimately last year, we ended up, you know, beating that at various points throughout the year, but I just wanted to, you know, we're gonna keep with that policy, it worked well for us last year.

Thanks very much.

And then in terms of the long term, yeah, I mean, look.

We need to monitor biology like we monitor the weather or like we monitor intelligence signals, right? Like it is both important for public health and for national security.

Appreciate it.

And we believe that strongly.

We will invest to make sure we are a clear leader in providing that sort of technology.

Thanks, Matt.

All right, that wraps up the questions that we got from the analyst community.

And so thank you all for joining.

I know that we ran a little bit over time today.

I'm so appreciate you sticking with us this afternoon and sharing, sharing the results presentation with us.

And so in 2009, 2011, and 2013, where we saw the mobilization of a bunch of scientific talent turn into fantastic founders.

We'll see you next quarter.

Thank you, everybody.

Morning, everyone.

This is Anna Marie Wagner.

I'm the SVP of corporate development at Ginkgo.

I'm joined today by Jason Kelly, our co founder and CEO and Mark Dmytruk, our CFO.

And then I started seeing the synthetic biology can you go through the same thing so concerning my Phd in 2015 to see the sophistication of the way synthetic biologists started talking they immediately start buying like this could be a science paper to like Oh My gosh like we saw this this is $1 billion health business and then now we're also seeing the same things like this could be a $1 billion materials company and so for me right.

We're honored that you chose to start your week with us and we're looking forward to updating you on our tremendous progress so far this, Needless to say, it's been an exciting quarter.

And to help warm up the crowd, I just wanted to remind you that during the presentation today, we'll be making forward looking statements.

Those involve risks and uncertainties.

So please refer to our filings with the Securities and Exchange Commission to learn more about those risks and, During our quarterly earnings call, we will, of course, be updating you on our financial progress.

What I.

I am currently working with independent scientists working on these exact problems specifically thinking about how we make and how we grow this.

This ecosystem of science and entrepreneurs really that's the earliest stage because if there's one thing that I think we can really do better in Mount Milligan Gingko to really help the nail in the community is how to make these problems were tangible in terms of like this is where you would start doing these problems and we can talk about Rockwell <unk> enhancing photosynthesis et cetera, but also articulate where the.

Frontier.

But we also want to use these opportunities to continue to build a deeper understanding of what we're doing at Ginkgo.

And I think this is going to be another tensions yes, there's a lot of things we might be able to work on but I also want to figure out what are the most important things and so for that I think there's a lot of ways to approach. This but I definitely think about what does the tangibilitate layer like how do we get people started working on this and there is other field have done this really well computer science health focused biotech, but also what does this frontier if like what are the highest leverage things.

And so after our financial updates, we'll always feature a strategic deep dive each quarter, which today will be led by Jason.

If there are topics you'd like to see in a future deep dive, please let us know.

We'll end with a q&a session and I'll take questions from analysts, investors and the public.

You can submit those questions to us in advance via Twitter, use the hashtag GinkgoResults, or via email at investors at ginkgobioworks.com.

And now without further ado, I'll hand it over to Jason to kick things off, Jason.

Thanks, Anna-Marie.

So to do a quick intro, and you'll hear from me later in the deep dive.

That's great.

Something I'd like to explore with both of you as you both talked about.

Basically identifying.

<unk> challenge in terms of climate training of the scientists and then working as an entrepreneur I just tried to bring.

Right folks together or anything.

One thing that I have kind of noted is that it's kind of a bit of a journey to get there. So I did my my Phd about about 10 years ago.

Our biofuel is what it was in Vogue at the time.

So our mission here at Ginkgo is to make biology easier to engineer.

Still is but.

A lot of the work that I was doing I remember feeling really limited by the tools they have.

At my disposal so.

Today, It ginkgo, we use a lot of software and automation too.

Do things at extremely high throughput.

We do that by operating as a horizontal platform.

When I did my Phd basically the amount of progress I can make on my metabolic engineering work for fuels was dictated by how quickly I could pipette and how many plasmids I can build.

Billed per day.

And I think that is a key idea about Ginkgo.

I bring that up not just to talk about synthetic biology tools, but I know both of you have been observing basic.

Basically the confluence of many different technologies that have been advancing over the last.

Daniel mentioned geology for example.

We want to program cells for customers across a range of industries, on this common platform.

So I'd be interested in hearing from.

And then we monetize that platform similar to how a tech company would but by capturing a portion of a value of the applications that are developed on top.

And myself and the founders at Ginkgo have been working on this mission since we met at MIT almost 20 years ago now.

Each of you with respect to.

What type of tools are being developed in adjacent industries to biology that are making us more practical today because the one hand, you have the urgency of climate on the other hand, it's a question of like Okay. What can we do about it and what are the fields that need to come together to make this happen.

And, you know, the technical progress and tangible results that we've seen over the past year feels like a real inflection point at Ginkgo, but honestly across the synthetic biology industry, and I could not be more excited to share our results with you today.

You know, one of the most important things for us is new program additions on the platform.

That's one of our most important KPIs.

Yes.

Happy to jump in there and there are specific technology technological tools, but I also want to highlight that markets are evolving in a way that is really transformative and powerful and critical here. So for companies pursuing solutions can say carbon removal right. The development of markets are actually pacing at carbon removal.

And you might remember, you know, this summer, we updated our expectation for the year from 23 to 30 of those new programs, we remain on pace. In fact, we added 10 new programs in Q3.

Ultimately, Ginkgo's success is measured by our, Right, you know, and we saw some awesome progress in our customer sale programs.

And so I'm excited to be able to announce today that just last week, Kronos confirmed the performance of a second strain, following on from one we announced earlier this year, this one will be producing CBGB.

And an ecosystem of additional partners that can do verification tracking that Ken facility sales and operate sequestration resources. They are all absolutely terrifically important.

We delivered that strain and has paid a second equity milestone in that program, which will be included in our, So again, this is one of things I get the most excited about is seeing organisms go out the door to customers, customers excited to be commercializing those and then value flowing back.

Additionally, Aldebaran has commenced commercial operations for Vaccinia Capping Enzyme, VCE. You know, this is one of the ingredients used in the manufacturing process for mRNA vaccines. And it's produced from a strain that we delivered in Q3 that yielded an over tenfold improvement in yield compared to Aldebaran's previous process.

Really excited about this.

And that market has just really started to evolve I think we're going to see a lot of movement over the next decade everything from advances in the 45 Q federal tax credit risk.

We're seeing a carbon price in the EU as your past 100 years a ton for the first time in the 16 years that market has existed I mean, these are really important pricing signals that both Tao.

It's an opportunity for an impact in the world and also a chance to see value come back to Ginkgo again.

Startup entrepreneurs, hey, there's a real business TBD here I mean, there is.

And finally, just last week, StenLogic announced, that big week, that they are advancing a ginkgo engineered strain for the treatment of homocystinuria to INDNA.

I'm so excited about this, right?

So seeing Ginkgo's organisms on a path to going to patients in therapeutics has been a long time goal for the company, to be honest, and it's something we hope to see a lot.

On the biosecurity side, this has really picked up steam with now 10 state-sponsored K-12 contracts, over 1,500 schools being served by our biosecurity.

Centric.

As of the week of November 1, we were collecting over 220,000, I could not be prouder of how the team came together to respond really to a crisis here, and it's truly a privilege to be building really part of the world's biosecurity infrastructure, and I think this I've talked about this previously, this I think is an absolutely critical thing in a post COVID world, as we are building out the tools to make it easier and easier to program, We have to build this type of security, biosecurity globally, and I'm proud that Ginkgo is here.

Potentially a chilean business to be here and it also is a signal to partners that were BV.

Finally, we capped off the quarter with our official listing on the New York Stock Exchange with the ticker DNA.

We stand on the shoulder of giants.

We hope to do the prior owners, Genentech, proud.

And finally, we are thrilled to be able to see many of you at our conference, our annual meeting for MENT, just a couple of weeks ago, over 700 people.

Facilitators and the ultimate buyers of that carbon strange.

And then I can take the other side of that which means the technical growth that we're seeing.

<unk>.

I think that we're going to.

Well, we're going to see a lot of computer science, obviously coming in right, that's kind of like a throw away.

Because it would even feel for obvious but there is this opportunity to look at synthetic biology as engineering Molecularly precise machines.

So when you think about that you start bringing in a lot of the existing infrastructure like the you've got the Facebooks like Facebooks got approaching group Koukiadis protein group sales force has its protein group.

It's great.

But then you've got the other sides too which is that anything like as I mentioned there is also like heavy industry that has a lot of role to play here.

The way I think about a lot is like what are the most productive communities in terms of.

Founders growth of businesses et cetera, and then how do you replicate that and so you know I mentioned computer science biotech for health. The other one that I say, which is so funny, but like I think it's really informative actually its Egyptian community because it gets in this world where people can all tests their stuff because there's everyone's got mats and then there's this way of disseminating ideas, which is through Youtube and then that's that's highlighting that.

People, who have become really good at for submitting good ideas end up becoming very well rewarded and so I think we're going to see a lot of obvious things happening.

Is I think like.

Scalable approach engineering for specific molecular scale problems, so rock, whether it's something that we have a community working on but then it gets the next part which is that okay. Like lets say you can design something for molecular biology perspective, we've got the Super Fancy protein you've got across the valley of death, and the valley of death exists and one and people who work in therapeutics will speak about that normally like.

At the translation stage, maybe the humans the valley of death, I think in climate relevant companies ends up a lot of like I think it happens a lot earlier in terms of like yes, you can do something that works in a subtlety coli and this puts you dish, but now show with this shows.

Kilogram scale problem and I think what does it mean to be like what skills and industries that we have to bring in.

We would be crossing that I once again, I think ginkgo hasnt been all to play out the chemical industry hasn't been able to play our part.

People like the mining industry petroleum industry, I think those guys have actually been really active and as much as.

Some part of punk parts of the climate can do you want to talk <expletive> on the big heavy industries I'm sure. Some of you said there is also a different way of looking at it like these people actually there's a lot of good people. There that are actively trying to contribute and as they represent very big levers.

So I would just urge if there's anyone out there is excellent and we have to drop the purity and really think more pragmatic and has kept people that want to add value.

Okay.

Yeah, that was a real thrill to see everyone.

Yes.

And we're hopeful that more of you will come back and join us next year.

And.

And so now I'm gonna hand off to Mark to share the details on our.

In terms of you mentioned like crossing in crossing the valley of death, and sorry, I know you.

Your master's basis looking into basically road mapping.

Engineering is as a solution for climate and now as a as an investor how do you work with companies and how do you think about.

What kind of the right scale of demonstration is to really build conviction in a particular particular technology right.

Massive climate is a massive problem, but how do you find like the minimum viable product for these companies to develop that convinces you to invest and to bring other folks into the into the company.

Great, thank you, Jason.

Now before we get into the financial slides for some context, we are very pleased to report a strong quarter in terms of revenue. Total revenue in the third quarter of 2021 increased to $78 million, representing growth of nearly six times the third quarter of 2020. Year-to-date, total revenue grew to $165 million, up from $45 million in the comparable prior year.

This quarter's financial results highlight the tremendous progress in growing diversity in our business model, as we receive significant revenue contributions from foundry services, downstream value share and biosecurity.

So now moving to self-programming highlights.

Yeah.

We added 10 new cell programs to the Foundry platform in the third quarter of 2021, bringing the total number of new programs to 21 year to date. As a reminder, our new cell program count is a key KPI that we're focused on as this metric drives both near-term Foundry revenue and potential future downstream value.

Probably the most critical challenge for any really keeps company usually by the time you were out seeking.

We only count a program that has a certain expectation of scale and are typically doing several proof of concept programs in addition to the reported, which can ultimately lead to larger page, The 21 new programs we added here today compares to 15 new programs added in the comparable period last year representing 40% growth, supported a total of 61 active programs in the year to date period across 30 customers on our Foundry platform.

We continue to see good industry diversification in new programs, as well as further proof points in therapeutics and newer field for us, with six of the 21 new customer programs being from the pharma and biotech industry, and the rest diversified across the many other industries in which we participate.

Foundry revenue increased to $35 million in the third quarter of 2021 from $12 million in the third quarter of 2020, representing over 200% growth. Similarly, foundry revenue for the year to date period, to $79 million, representing growth of 84% over the comparable period. Importantly, foundry revenue in the third quarter includes an equity payment, for achieving a commercial milestone with Kronos.

The first time that Ginkgo has received significant downstream value.

And as Jason mentioned, Kronos has also just confirmed that we hit their spec for a second molecule, which triggers the payment of a second equity milestone, which will be reflected in our Q4 financials.

And then finally, just to make a comment on related party revenue.

And your first venture funding you've demonstrated something works from the lap like here's a proof of concept here is the proof of principle. We can engineer. This pathway. We can produce this molecule of interest.

So related parties represented 38% of boundary revenue in Q3 2021 and 47% of year to date boundary revenue.

This compares to 63% of battery revenue in Q3 2020 and 70% Foundry Revenue in the 2020 year-to-date period.

So this mixed shift toward more third-party revenue was due to both the downstream value share received from Kronos, which is not a related party as well as just general diversification in the business.

But what that's not business, what's going to be a business is can you do it at scale at a cost that's competitive or advantageous to the fossil fuel wont come in and you can do that right you've got a lever to change an entire industry, it's super Super exciting.

If we could now turn to biosecurity.

Our biosecurity offering generated $43 million of revenue in the third quarter and $86 million of revenue year to date. This tremendous growth has now exceeded our recently expanded full year target in just the first nine months of the year. Biosecurity revenue can consist primarily of product and service revenue from our end-to-end COVID testing offering and the growth is being driven primarily by K-12 pooled. We have now been awarded state-sponsored PSWEL testing programs in 10 states, and as of last week are collecting over 200,000 samples, biosecurity gross margin was 48% in the quarter a significant improvement versus prior quarters.

And this is primarily due to maturation of the business and the benefits of larger, Now, if we could turn to the detailed P&L, I'm going to provide a little bit more commentary on the other line items.

And so.

So starting with R&D expense, R&D expense grew to $53 million in the quarter driven by expansion of foundry capacity and increased breadth of capabilities to support both current and future collaborations, along with further development of our biosecurity.

And before I wrap, I'd like to make a comment on how we're thinking about guidance and breaking out of foundry revenue in future time periods. We are internally evaluating, right now, but we do not anticipate that it will make sense for us to either guide to or break out foundry services revenue and downstream value share revenue as separate components.

Our G&A expense grew to $29 million in the quarter as we invested significantly in business development and all other G&A functions to support the higher level of foundry activity and our biosecurity offering, along with our very extensive public company readiness.

What we are very glad to do is to help founders.

As we are now reaching the phase of company maturity, where we are seeing downstream value share hit the top line, we are seeing in real time that there are customer confidentiality considerations, as well as situation, and in which it will be a smart business decision for us to make trade offs between the, And so just to conclude, in summary, we think this quarter demonstrates the strength in the business model, we're seeing an increase in diversity of customers operating in many industries, developing a wide array of different products on the platform.

Now, to provide a quick comment on the net loss line item, it is important to note that our net loss includes a number of non-cash expenses, as detailed more fully in our financial statements. And these include, just by way of example, mark-to-market adjustments on equity method of investments, where we have elected the fair value option. It includes reductions in the carrying value of those platform ventures that we account for under the equity method.

Downstream value share is a tangible commercial proof point, and it typically drops straight to the bottom line, and the progress in our biosecurity offering is truly.

And we take those reductions in the quarter that the equity is issued to us.

And then thirdly, it also includes mark-to-market adjustments on the storing EGLE public and private placement warrants that came onto our balance sheet as a result of the merger. Those are all reflected as a liability.

Because of these non-cash expenses, we look to adjust it even as a more accurate measure of our profit.

Clarify what that path looks like to help connect them with existing service providers.

Adjusted EBITDA in the quarter was negative $18 million and for the year-to-date period was negative $107 million.

A full reconciliation of EBIDTA is provided in the appendix to this presentation and in our MBA, just that he was I was favorably impacted by gross profits and biosecurity this quarter, and by downstream value share, which typically drops straight to the bottom line.

CapEx in the year to date period was $51 million, reflecting foundry capacity and capability and, Examples of this include the substantial completion of our new broad use foundry.

Bioworks 6, which is located in our Boston headquarters, as well as Boundary Space Buildout in Cambridge, Manhattan.

And so now if we could turn to Outlook, I'd like to provide some brief commentary on Revenue Outlook for the rest of the year. We expect to add an incremental nine new cell programs in Q4 for a total of 30 new programs in 2021.

We expect Foundry revenue to exceed $100 million for the full year 2021, inclusive of both downstream value share and services revenue.

The companies for example, like <unk> or other partners, depending on what what target. The company is looking at who can really help them map out how can geely techno economic analysis of what is scandalous look like for us and how does this become an excellent business and.

And then with respect to biosecurity, as a reminder, in August, we updated our biosecurity revenue outlook to be at least $75 million for the full year. Given our strong third quarter results, we expect to significantly exceed this revenue target for the full year.

While we're not providing a point estimate on revenues, there's still significant uncertain, in the K-12 testing market in general and the facts and circumstances of the pandemic change regularly, we are confident that Ginkgo is positioned well in this market.

We expect biosecurity revenue of at least $110 million for the full year.

We further believe our performance in building an offering of this scale from scratch in such a rapid timeframe is indicative of a strong execution capability on future opportunities as the biosecurity market further evolves.

If it doesn't pencil on paper now what can we do to change our process and push our thinking.

I had to do that a few times myself working at early stage companies and everybody has to go through that it's always going to be challenging you didn't anticipate.

It can be things that are sort of naturally advantageous to the processes and things that are a.

A battle and the best thing you can do this in early stage founder if you had a handle on that early guys in early.

Do the rigorous work bring in partners, telling people what youre doing so that you can point out they can maintain and I think you've pointed out.

Where you can put something differently, where there is a process from a completely different industry that you can look at adopting or repurposing.

And when companies do that.

Okay.

And so now, Jason, back to you.

So I love that fair and if I could just jump in with some of it I think.

I just want to say, I am continually impressed by the, You know, just in the last three months, we took the company public, hosted a 700 person plus annual meeting, managed launching, launching K-12 testing at the start of the school year, which, you know, parents on the call know is a slightly stressful time in general for parents across 18 states and continue to deliver steady successes in cell program, The team at Ginkgo did not blink, and it has been awesome.

You know, in addition to reading out on our financial performance, I want to use these quarterly earning calls to give a deep dive on aspects of the business that we are hearing questions on from investors, both institutional and, So please keep those questions coming.

One thing that we're really good at is workshop in startup I think that's a very mature idea that people now.

We could be workshop Ing science projects I think earlier stage right I like the Schwinn features.

Use the phrase they give true.

It will help inform what we put in this section.

And if youre going to start something really really early I love. The idea of really works shopping us like what's the biggest truth right. When you look at the scientist and telling me like Okay. How would you derisk if true, but then how do you how do you work with the people who can speak to the scale side of it to confirm that at stake and I think if you can work at the earliest certainly the stage two they confirm that hypothesis, yes, that's big.

We also had a short report, I noticed, come out about a month back.

And while the guy that did it wasn't especially serious, he did make a bunch of serious claims publicly about Ginkgo's financial, Not surprisingly, given the nature of the claims, we also received an informal inquiry from regulators at the DOJ and commenced an independent investigation led by our audit committee and supported by an independent law firm and forensic Happy to report that the investigation found the claims, And I'm going to give you a readout on that.

Okay, so I'm gonna cover three topics in the deep dive.

First, I wanna talk about our horizontal business model, as we're really pioneering that model in biotech, bringing it over from the tech.

The silver lining to a bunch of baseless claims being made about the business is that it gave us a chance to make sure our house...

So I want to give a few, you know, comments from my seat here.

And I think that's the way to actually start Kickstarting.

And then finally, I want to dig a little deeper into the financial structures and motivation, of the type of deals we do for our three major, The first, the large and mid-sized companies.

Kind of more productive science projects.

One thing when we signed him I spent a lot of time looking at the geological World right I'm actually Sachin you mentioned this briefly it felt like people who have geology background I think youre going to be like the next superstar is because so many important things that I think has been underappreciated in industry. So far.

But I look at all of these papers in our amazingly go nowhere.

Second, these existing startups out in the world.

And so how do you think superstar people that are working on the right problem, but theyre not working on it from a translational perspective, and they're not even risking ideas early and so I would love to see a culture change and science for the people that are working on the translation of like future translational side to Derisk that early and then the other follow up question is what does it mean to fund things with a translational and.

And then third, new startups that launch day one.

These deals are designed based on what works best for each customer type.

And I want to outline how they work and the progress we've been seeing across all three, Okay, so let's dive in.

So number one.

You know, we're bringing a horizontal business model, common in tech into the biotech space.

And the key idea is we are going to serve.

And with a de risking idea in mind to cancel them part of Derisking as answers like this is a bad idea, let's just kill it. So I think these are really kind of roofing on what Sam is saying I think theres a lot to solve here and I think this is like good industrial partners have a lot of volt.

Unknown Speaker 3, So it's obvious today, you know, for, say, Amazon Web Services, that it doesn't matter what market your website is to go use their services.

And in my view, it'll eventually be equally obvious that it doesn't matter what market you're in, who you would use for your cell programming platform.

And so we don't want to organize our customers at Ginkgo by market. Okay, we want to organize them really by the stage of the company they are in. That's a much better predictor of the type of commercial arrangement for Furry.

So with the larger mid-sized companies, such as our deals this year with Corteva, Biogen, Aldebaran, and Selecta, you know, the customers are often paying foundry service fees, and downstream value share via royalties or miles.

Yes.

I love the biggest true frame it because I think particularly for those of US who've worked in climate adjacent technologies for Awhile Theres, a fair amount of Jay Didnt. This I would say among the community right because some of these things have been tried and didn't work out and I think for me it's always okay.

The one barrier that is fundamental R. R.

As a physics right, but other than that there is actually a fairly large playground here to make make changes and when I think about what's changed over the last 20 years, certainly biological tools have gotten a lot better but like think of battery technology think of wind technology I think a lot of the.

As a reminder, this is kind of, you know, these value share payments are kind of similar to like an app store model, right? So we get a piece of the downstream value of the product. So in our deals with these startups, both the deals with startups now, both the existing and newly formed, those companies often prefer to offer Ginkgo equity in their, as for either the service fees or for the downstream value share.

The investments in all these different pieces of the puzzle are really starting to pay off over that time.

You mentioned that you mentioned breakweather and geology.

No.

And in those cases, this often create related parties in our filing.

What do you think needs to come together like let's say you have your.

I mean, he's upon here a rockstar geologists entrepreneur.

What do they need to know to bring their knowledge of <unk>.

<unk> together with other technologies to build a build a demonstrator.

I'll try to answer this quickly and then I'd love to hear service perspective on it.

So the reason we talked about geology at all in the context of <unk>.

Climate carbon capture is that the biggest process that naturally happens.

Or one of the biggest levers as the process of rocks weather and Thats thing where they are.

First of all silicon silicates over time, whether into carpet and so the carbonates are solid form of carbon and so certain silicates will convert better end to carbonate the thing.

That's really interesting about this from a biological perspective is that biology has evolved in certain situations to help speed up that process and if you want to say a good example of that you just go to a lava flow and you see that immediately these default maintenance. These lava flows degrade much faster than they would and when you go scrape that you see that there's a biological story that happens with these key.

Melissa trucks that come in to eat the rocket immediately it's not actually photosynthesis organisms that originally populate these fresh rock and then decades. Later then it comes in more complex clients. There's a lot of other examples like this but I think that one I think is really illustrative and there's great scientists that work on it but it's done from a spike in observational view, which means like.

Biology in 2005, right, where we're studying biology like we're studying geography right. It's just like Nobody's, but now we can look at biology is an engineering problem. They can go to these people and you can say great, but here's these populations how do we culture I'm happy to speed this up.

I think the number that you target is 1000 fold increase of this rate of weathering and you can do it well.

It does.

A bunch of people that have done great work on this Jennifer Wilcox don't run fourth Gordon cellphone, Greg simple just to name a few.

I think synthetic biology has a big role to go in and really start hammering on the rock weathering problems I.

I had a kind of answered your question pressures, let Sarah Ryan Yes.

Hopefully there are folks out there are looking at you have some idea as to send your way for driving that faster and we're about to wrap up here by let's.

Let me give you the last word here, particularly on the on the topic of how to work with.

Potential entrepreneurs to turn science into.

Action into build built companies any words of advice that you have for those folks.

But it's a great structure for startup customers.

Yeah.

And so ultimately, like, you know, that's what matters as we've been creating these deal structures is what is going to be worth work best for customers, what creates the least friction to get, And so that's really what we've oriented around because startups, frankly, are one of the most important parts of our business model.

This is the biggest challenge of our lifetimes and to paraphrase, but as I said, it's time to build I can't imagine anything more exciting even the biggest markets in the world I mean, we're talking all in agriculture.

They're key customer segment because they haven't invested already in large R&D labs. They don't have that sunk cost that the big companies do where they already have big labs and all that equipment and infrastructure.

So they can, in many cases, start foundry native, right? Like they can be born on our platform.

And this is something that happened with like cloud computing.

We had cloud native companies come along.

In a food and materials like mother.

Palm oil and we need to replace everything that we need to petrochemicals, it's fuels plastics industrial chemicals.

The operating it's a challenge it's also an opportunity.

That's really exciting.

All of those things are needless biology, potentially they could be doing better with biology.

And historically we've approach.

The carbon cycle and understanding how these products are made in instead of observational way just like.

Magic Human health observational.

We saw what happened with disease processes, we didn't engineer solutions, we didnt help people live healthier lives.

We're sort of have been in that place in observing what's happening in the natural world and in human.

Human focused ecosystems like agriculture with regard to carbon storage carbon drawdown, we just sort of looking at what's happening.

It's time to see how we can intervene because the alternative of doing nothing is really just not tenable. So let's put these tools to work on it couldnt be a better time to be an early season entrepreneur. If you've got an idea even if it has eight like we're glad to talk with you referred to workshop. It will help you figure out like what are the things the.

It really speeds up the launch of companies, a lot of upfront cash.

And the proof points, the EP knocked down to get to naturally in our business.

Sarah Please your DC dot com feel free to reach out.

And so I'll talk about these in more detail coming up.

Awesome, that's great, yes, Sarah Dan. Thanks, so much for joining us for this conversation.

20 minutes is not enough time, I'm, hoping that there is going to be ample follow up coming from from this workshop today, but thank you so much for joining us.

Thank you for the opportunity.

Thanks, everybody.

All right next up we're going to be talking scale up so I'm going to bring on Cynthia garage and Nelson to kick us off there.

I wanted to highlight how all three types of these deals are important for Ginkgo, how why as a horizontal platform, that's the right way to approach the market and that we plan to do more deals of all these types, just like we've done in 2021.

Good morning, everyone.

This slide here, just to flag it, is from our pipe deck.

So the next session is scaling carbon negative solutions and lucky for US we have grabbed chakravarty from solar Gen and Nelson Barton from genome Attica joining for this conversation this morning.

See you.

So for those of you who were kind of engaged with us during that process, I think it nicely highlights that we've been planning for a while here to really develop an ecosystem of services, around our platform and, Okay, and that ranges from things like capital access, like we see with our structured partnerships and platform ventures to manufacturing access.

So I just wanted to before we get started introduce myself. So I am a program director an organism engineering here at at Kimco I just celebrated my first year at <unk>.

Like, you know, we work with Kronos to help them, you know, bring their facility online in Canada.

We do community building like our ferment event and so on.

So.

Great place to be.

And before that I actually was.

Started out learning about synthetic biology to my Phd in the early two thousands on it when it was.

At the very beginning and.

And spent a long time.

As an academic and the chemical Engineering Department.

And then decided that synthetic biology to scale I really wanted to explore that in an industry setting. So made the jump about a year ago.

And I'm loving it and I think this is the place to be for synthetic biology being out in the real world and thinking about scaling and so on.

I'm happy to be talking today, with and with some leaders in that field.

And you have seen this be key in the tech world.

Headache, biology, and scaling and so I wanted to start out by inviting.

Thanks, Rob and Nelson I think I'll start with the garage to introduce yourself and maybe tell us a little bit about yourself and also about about collagen and.

How youre thinking about these things anything forward.

You have to bring together a community of people that are gonna build on your platform.

Great. Thanks, Tim Yes.

Pleasure to be here.

<unk> Chuck Verde.

Co founder at <unk>.

My background I'm actually a physician scientist MD Phd by training.

Did not think I would be touching synthetic biology in my career to be Frank with you.

My Phd work I was studying pancreatic cancer discovered some really interesting.

Mutations that lead to proteins that can withstand a really high oxidation environments E peroxide.

And.

What was fascinating was my co founders and best friend, Sean Hunt, who is it.

He is finishing up a Phd in chemical engineering on production of hydrogen peroxide using noble metal catalysts.

Gail really large scales and we kind of just started chatting and realize that if we marry some parts of an enzymatic process with some parts of the heterogeneous metal catalysis process. There are efficiencies that you can get with throughput and selectivity.

Either one either enzymes, where metal by itself can get and so the whole premise of <unk> from a technical perspective is to push the barriers of how.

How far can we take this chemo enzymatic Kimi enzymatic technology at scale.

And it turns out pretty far in terms of what we're going after and the scale that we can do that so we have.

Two production facilities now in Texas.

Making us hosted products, we have four products on the market today.

Business is going quite well for us and we're expanding we call. These <unk> and we're expanding them.

In the United States and internationally over the next couple of years. So obviously, we focus a lot on sustainability.

Fundamentally my mind is I come from a chemical family and I, just think about cost of goods and how it impacts sustainability and it turns out those two go hand in hand, so that's my.

Gotcha.

Great.

We are doing that very deliberately and we wanna keep offering them more ways to get value by engaging with Ginkgo alongside our technology platform.

Yeah, good morning, everyone.

Good to be here named Nelson, Martin and I run R&D here at genome Attica I've been here about 10 years.

Been in working in.

Development of sustainable products and processes for a little over 25 years.

And.

<unk>.

<unk> been developing the processes that genome Attica has we've been working at very large scale.

For a number of years <unk> is all about basically helping brands and suppliers to meet.

Okay.

Meet these aggressive sustainability goals that they have all come out with.

And essentially we work in a variety of different supply chains, we make everything from.

Bioprocess as for biodegradable plastics.

Most recently announced.

That we're working on both nylon and nylon 66.

As well as working on coatings and.

So we plug ourselves and who just.

Number of supply chains, wherein we developed bio processes too.

Essentially.

We come.

Essentially the sustainable source for a lot of these brands and suppliers and so currently we are working at very large scale, we are making an impact we are running.

We license our one for butane Dayal technology to no, Vermont and they've been running since 2016 of 30000 metric tons per year, and recently Cargill and held announced that they're going to build a 70000 metric ton per year, one for butane dayal plant investing over $300 million to do.

That so I think the BDO story for us has been.

Extremely exciting because to have your technology.

To scale once is interesting but to have cargill helm.

Put up $300 million and want to build a plant twice as big as what <unk> is doing.

<unk> is extremely exciting and really demonstrates that you can take.

Synthetic biology, and bio manufacturing to scale in a really interesting way and then most importantly, we continue to push into other markets and we recently announced that.

Lulu Lemon is partnering with us around nylons and we're trying to.

Push that process out into the market as quickly as we can taking that's a demo scale with Aqua Phil.

Who is who has been a very good partner in that field and so I think for us it genome Attica. It really is working at metric ton scale.

And pushing these large processes out there and we are.

Seeing that.

Increasingly that there is more and more acceptance from brands and suppliers to move towards bio manufacturing.

2.

Great. Thanks, Thanks, so much so.

Maybe let's start out with a question on both a year kind of spend thought a lot of time on that like what do you think are the key learnings that are available.

From your companies and other kind of things that you've observed in the field over a long time.

They're important for like Derisking, and really scaling synthetic biology from the lab to the market.

All right.

I'd love to hear Nelson's thoughts on this.

Yeah.

I think when it comes to when it comes to the scaling I think.

One you've got to get it right. The first time I think.

And for Us the <unk>.

<unk> story.

We were able to.

Take that process and actually run it at at commercial scale for a short period of time through a situation that we had become available to us through using the Dupont Tate and Lyle propane dial facility right and so once we were able to demonstrate that we could reproduce a blade.

Run at commercial scale than that was that was the first key to getting that Nova months onboard Nova month end.

They are real innovative company they had to take that Gamble and say, yes, we're going to go build a plant.

And they built it and it was an extremely.

Exciting time in 2016, because we fired up that plant and immediately started making salable product right and so we had gone through the rigorous process of taking this thing to scale. We have made product we put it in the hands of the.

End users so that they could validate that this is a.

Essentially drop in replacement for a petrochemical that.

Essentially the end users would see no difference between it and the Petro version, except now Youre doing it at a more than 50% reduction in greenhouse gases. So for us. The key was to get that first plant no Vermont to run and to run well and know that essentially is a sense of the plant.

All industries can take a look at and see that bio manufacturing can work at scale and very robustly and I think that was that's been the key for US is to really show that we've got that facility running and now other industries are looking at that and saying, yes biology can work at scale and it's getting them to it's freeing up a lot of capital.

To move in that direction.

So as I mentioned, this short report made a number of claims publicly about financial misconduct.

Yes, we took a scrap year approach.

We are lucky to have a very strong leadership on our board.

Yes.

So we are.

How did we start so we started with we went to home depot built our first little reactor from PBC parts.

And it was a small scale who is like.

102000 tons a year.

Really exciting.

But we didn't know if you were going to be able to raise another round of funding.

This was 2017, so it was like who.

The whole like capital structure around it since <unk>.

It didn't really exist at the scale it does today.

And this triggered an internal investigation that concluded there was no basis, And look, I'll give you a little more context on our board.

So what did we do we started a cleaning brand.

We have two sitting CEOs in Reshma Kiwa-Rahmani at Vertex and Christian Henry at PacBio.

Shyam Sankar is the sitting president COO at Palantir.

Many people know about called OS to clean.

And what we did with that brand as we made wipes and cleaning solutions with whatever product came out of the park.

It was a call it bioprocess side coming out of the plant.

We have three former CEOs in Merine and Harry and Arie from, you know, Bayer and MGM and Kite, right?

Christian heads up our audit committee and he followed following these claims in the short report, the audit committee called for an independent and the audit committee brought in as part of that, Mill Bank as an independent.

And the whole idea is not to be a cleaning company, but to use it to leverage and use as a.

The team was led by former DOJ prosecutors engaged in Cura as forensic accountants to support their investigation. This year, how extensive this process was, the team reviewed thousands of pages of documents following an examination of electronic records, including email, Slack messages, financial, internal and external documents. They also conducted extensive interviews.

And so I'd like to take a moment to thank the Audit, and the Milbank and encourage teams for their diligence, their care and, I'd also like to express my admiration for the Ginkgo.

Execution tool to show that Hey.

This team can execute from idea to some scale to market.

And so within three months of launching that brand got acquired by the biggest licensed manufacturer in the United States.

But what we negotiated with that contract was a supply agreement.

That basically committed the acquirer to a certain volume, which happens to be 80% of the next scale up that we'd want to do so we had the buyer for the chemistry.

Presets, so that allowed us to go and build the next plant with basically there was a prepayment that allowed us to do it.

And then we scaled up.

I would say to you 1000 metric tons, a year at that point and scalpers.

Fast and then at that point once we can demonstrate that we are providing value to these customers even in a small scale.

And we then scaled up again to 20000 metric ton for your plants and the way we ended up doing it was we always just had our critical customers prepay for it to.

To the point, where we didn't have to worry about the capital requirements to some degree and so.

Much more much more scrappy I'd say we.

I wish we had the foresight to think about working with like thousands of dupont's, but honestly not many of them would take us seriously.

Particularly our finance and legal teams who had to do all this on top of their day jobs.

We had just started in 2017, so we decided to take our fate into our own hands and so for us to scale up story was well if we can't scale up beyond this can we make a solid business case out of this.

Keeping Ginkgo's Ordinary Operations Humming, just as you heard from Mark, during a very busy time.

As I mentioned, it is also not surprising in the case of public claims of financial misconduct to hear from regulators.

So many parts.

And shortly after the report came out, we received an informal inquiry from the DOJ.

Company, and so many people on the, Strenuously Pressure-Tested, inaccessible.

I'm very happy to report today that based on the independent investigation, the Audit Committee found that any suggestion of fraud, reporting violations, accounting errors, or other wrongdoing contained in the short sellers report were unfounded, importantly, that no restatement of our, I will say as CEO, it is very, very rewarding.

It is a... Culture, we've been building at Ginkgo the last 13 years, and I'm not gonna call the process following up on the short report particularly fun, but it was rewarding and I'm glad we're through it.

Okay, number three.

So that was our mentality from day one.

Great.

And so.

Just flashing a question on the bottom there and so on a scale front looking forward to any discussion. So how can we harness public capital for the massive public benefit that is decarbonising in building climate resilience.

I'm super excited to use this opportunity on the deep dive to share some of the financial structures and motivations for the types of deals we do for our three major, larger midsize companies, existing startups, and then new startups that launch day, And as I said, these deals are designed to fit each type.

So let's dive in with a large.

Rob do you want to kind of start.

So it's worth noting, you know, Ginkgo is doing large enterprise sales, right?

Start with that one.

Yes, honestly, we haven't taken any public capital obviously, we've done some R&D work with the government and Vod.

But like I said from our perspective we've.

<unk> been focused solely on getting.

<unk> costs.

Are we hitting the cogs with the customer needs and getting it to them in their hands and by the way the benefit of that is there is a.

Our sustainability upside to it so for US we are now starting to think about what the Doe could look like for many many more of these bio forgers loan programs, but largely we just let customers fund our work.

Yes.

Maybe kind of building on that one of the things that I think is.

<unk>.

Encouraging and exciting is that.

Customers of <unk> that are kind of helping push things into sustainability like I love hearing that you're working to help customers meet their sustainability goals.

And so can you.

Can you comment on how that's changed over the last few years and how you see that moving forward and really driving the impact in terms of climate that companies like yourselves like Geno can have.

Yeah, and I did this, you know, myself, you know, the commercial teams always rolled up to me, I did a lot of, you know, hands on enterprise selling, particularly in the early days of Ginkgo.

Yeah, no absolutely I think for a number of years.

We've been doing this for quite some time and I think earlier on.

It felt much more like a push right that we were having to push the technology in and go to the essentially what we initially did would go to the big petrochemical suppliers and show them that we've got a a greener way to make the products. They are currently making but then what <unk> seen is this huge transition essentially consumers now are much more educated.

Where everything they use everyday comes from I think there was sort of a lack of understanding of just how much of the things we use everyday come from petroleum right and as soon as people started to recognize that they started to raise that with brands and say look we want we want this to come from a more sustainable source, we don't want it.

It really helps to be able to tailor those deals to a particular customer.

To be petroleum, if it doesn't have to be and so.

How can we get our hands on something.

Friendly to the environment made in a way reduce greenhouse gases and a lower burden on the environment and so the brands that are picked us up and it's working its way up the supply chain right. So now the brands are that.

What works for Bayer might be different than what would work, And so, you know, but in general, the larger midsize company Unknown Attendee, Jason Kelly, Poon Mah, Rahul Sarugaser, Shyam Sankar, Megan LeDuc, Barry Canton, Iya Khalil, Deborah Marks, Ena Cratsenburg, Ginkgo Bioworks, Three good examples of those sorts of deals, you can see here.

So our collaboration with Aldebaran, there the fees were, we did pro bono as part of our COVID-19 work, but for the upfront fees, but then we incorporated royalties on sales.

In our Kronos collaboration, we negotiated largely fixed R&D fees with commercial milestones down, In other words, like the amount we were getting paid as we did the process was fixed over time rather, The work we did here and then our collaboration with Jibadon, the service fees are based on the amount of work we do and we get a royalty.

They're saying look at this can't happen quickly enough through our suppliers, we're going to go directly and work with.

Companies like genome Attica to poll on this and so we're seeing just a much much stronger pull from brands to get these bio manufacturing processes built and get the get these supply chains.

He made using bio manufacturing and so that's where we say this is how we feel that we can really become the sustainable source for a lot of these suppliers and brands by bringing these bio manufacturing processes to scale as quickly as we can.

Okay, so you can see even with the big companies, a little bit of variability.

Okay.

Are you seeing similar things that John .

Congrats.

Yes, I think.

Something has changed I will say that like when we started in 2017, there was very little.

<unk> I guess from our customers on the sustainability side.

It feels like something has completely shifted in the last couple of years that we didn't anticipated what happened as quickly and maybe Nelson you see it as well, but like all of a sudden.

Our argument on pace, all going to be about Cogs.

Well I think that's still true I think now there is still this idea that hey, maybe sustainability is really important.

So it's become more of a central point in a lot of our sales pitches and how we think about the technology.

So I think it's definitely changed I hope it lasts to be Frank with you.

For business.

Yes.

It seems like they were for a time it was very much like you can hit Cogs targets or you can be sustainable.

And it seems like those things aren't so far apart anymore and there has been.

Successes that show rate by manufacturing at scale as possible alright, so well.

What would you say is advice for you know new up and coming.

Entrepreneurs.

Startup space that want to have an impact and bio manufacturing, especially if they would like.

When it has a big impact in climate and sustainability.

Yeah.

Yes, I think.

Again, I'm, probably the boring and all of this but I think the way to think about it is like definitely think big start small act now so it's basically like what are the things that you can do with this technology that cruisers and actual business case for it maybe its sustainability driven maybe it's cogs driven it doesn't so much matter more so hey is there something.

Real here that can be a generational business that is going to drive a lot of cash flow for investors. While also doing good for humanity.

Even if it looks like a niche market or maybe not that big you have to just start and so I think a lot of especially scientist.

Guilty of this scientists entrepreneurs are thinking.

Thank a lot about hey, we have to like make this perfect. We have to get the business plan to be pristine and everything but the reality of the situation is I really don't think.

On the existing startups, you know, the reality of startup companies is they're more cash sensitive than large.

By the way, I know this, right?

<unk>.

We have time to just wait for the Big thing we have to be focused on what looks incremental can become very big very quickly.

Start now.

Okay.

You know, we started Ginkgo. We bootstrapped for six years, right? You know, when cash was tight, cash was tight. Right.

And so our platform, however, like offers tremendous value, right because they can forego, Building out that in-house cell programming R&D infrastructure and instead focus all their R&D efforts on the product related things.

I would say for us it's due that techno economic analysis right upfront if you've got an idea I mean, because we have the tools now in synthetic biology.

So if you take a company, you know, like Motif, for example, they would invest in food scientists rather than biotech.

It's a move away from the question of well what can I make this just like to what do I need to make right. I mean, you can really focus on what it is you want it.

Right. And so, you know, that's a that's a big leveling, you know, that's an opportunity for a lot of, And so the opportunity afforded by getting those companies on our platform when they're small, also is very good for Ginkgo.

Want to produce and then do that techno economic analysis, and then side by side due to do the the lifecycle analysis, because I think together you can get a really good handle on it if I'm if I'm successful.

<unk> process works as I as I dropped the entire process not just the organism, but by drop the whole process and I look at the economics of that cannot compete with with the petrochemical process and I think.

That's the way we look at it we don't get into any sort of wet work until we understand that if we are successful here's what the economics could look like and here's what a rough LCA could look like and the impacts that we can have in those.

Essentially that techno economic analysis drives everything we do once we do start to work and we can state and we stay focused on that and I think video is a great example of that technology is in the top quartile of any video production technology out there and it's and it's a very young process. There is still lots of room for improvement there. We're looking we're comparing ourselves to process.

That had been running for 50 years with continual improvement and right out of the box.

We're in the top quartile and so I think.

Thanks, Nick.

That do that techno economic analysis to understand what success could look like.

Yes, I do love that we have a phrase installation it's called math is free.

It really is.

So.

For me, it's always about like Hey, like.

Like this is well understood in tech.

You know, Amazon gives free credits on AWS to why, or at least they used to, to Y Combinator companies.

We've done a number of deals like this with startups, recently with Hue, Suponix, KMVM, and Tantu.

You know, Stripe famously got Shopify when they were pretty small.

You're right, though that's put into a lab on any of this until he can whiteboard out at least to some degree of accuracy.

And this is something, you know, I think we will.

It's now a $200 billion Mark Gap company.

And so, you know, our approach is not to offer free services yet to those companies, but to take equity in place of cash for founders. And this aligns us with the investors on their cap table. And it also helps the startups conserve that, you know, cap.

Ah, so I will say I think we've hit on something with this with these with these startup biotech companies.

What the cost basis is going to be what the mass balance is going to be just so funny I see like all these processes that people come up with Mike the mass balance is even close.

Yeah.

Yes, as you love that.

Don't forget about good Kenny basics.

Okay.

Yes, it's the boring stuff, but I feel like I actually get really excited by like all the boring stuff because like if you just consistently do those boring things really really well you just look back maybe 30 years, you've built a great business.

That's great.

I think James West we had a good question and I'm in the chat and he asked.

How painful with scaling from lab to commercial scale.

And then I really like the second part, which is what kind of novel hardware software, maybe even people need.

That are really essential to get these early stage ventures.

To scale up and be successful.

Okay.

Graham do you want to go with that first.

A lot of pain.

Yeah.

Yes.

You know, we we hosted our first cell developer virtual conference last week, and we had over 500 people register for this, right.

And I'd say the biggest pain for us was.

So So, you know, if I look back at Ginkgo five years ago, and said, like, yeah, we, we put up a flag like this, and 500 people would sign up, you know, it was certainly not not, So startup and entrepreneurs are really hungry for access to the Ginkgo platform, you know, and not having to build those labs themselves.

I get this.

It is.

I might get contact people here, but it was just really hard for us to predict the mass flow like the actual like there's a lot of our processes require air or oxygen.

You know, you can see the kind of timeline on the left here from Ginkgo's history, right?

It's a super hard to predict that because of the geometry of the actual vessel that youre going to make so that was like.

We were surprised sometimes in the good direction, Oh hit the wall effects on the tube and stuff, where we're not as bad as we thought and sometimes it's the exact opposite where it was like man. This is the way we're simply thought so a lot of the processes that we thought were great on paper and even at like a bigger scale just didn't make sense. When you believe scaled it up.

We spent a long time trying to scrounge to get You know, we want it someday to be as easy to launch a biotech as it is to launch a website.

So that was like ego crushing in the early days because you dislike this is such a beautiful elegant process, but.

That day is not yet, right.

And so everything we can keep adding to make that easier, I think, creates, Okay, so what is really exciting is companies that don't already exist and haven't even built any R&D lab infrastructure, but on day one, this newly formed startup can just be born.

Okay, and so, you know, with this approach, I think this moves the needle almost the most to solve this problem, because it saves completely, https://www.youtube.com Hopefully, we'll never need to build it.

And Ginkgo also helps connect strategic and financial, to get these companies off the ground.

And like most recently, Arkea is an example of a platform venture where Ginkgo does not invest any cash, okay, but we are paid in cash revenue over time as we perform the R&D. But in lieu of like a royalty on the downstream value share, we get equity, Okay, and so we get an equity position for that downstream value share, but importantly, we're getting cash for boundaries.

So now now that initial equity grant does need to be accounted for.

Okay, in other words, we have to earn it.

And while I encourage you to read our public filings for the precise detail and accounting treatment, the end result is that we book a deferred revenue liability on our balance sheet when we do.

It just didn't make sense from a physics perspective on this.

And we plan to do many more of these Archaea type deals.

They are great for our customers, they're great for Ginkgo.

You know, I will say one of the things that's really exciting when you launch these platform native type companies is you can recruit CEOs that are, in the specific product vertical of the company rather than bioengineering PhDs, right and not Yeah, but you know, like this is we've seen this in tech nowadays, right?

Like the people who launch companies are often they might be experts in product design or in some particular vertical, they don't no longer need to be necessarily a software, And so, for example, John McIntyre, the CEO at Motif, he was a senior executive at PepsiCo and a number of food companies before that.

Okay.

Jasmina, previously ran and launched a beauty brand, Mother Dirt.

Mike Milley, the CEO of Joying, was previously the head of Biologics at Fair, at AgRequest, and the biologic space, Nicole, being the CEO of Elona, had a long career at DuPont Water Solutions in Solvay.

Science that becomes our engineering, where are the thing that you think is easy it becomes harder when you really do it in real life, which.

This is really enabling.

Like, there's a lot of people out there who could launch cell programming apps, but don't have that kind of base bioengineering experience.

And you can see it also in the type of investors that are then showing up alongside these companies, right?

So we have, you know, great financial investors like BlackRock and Ontario Teachers coming in.

We've also been fortunate to get vertical specific strategic, that want to stay close to technologies emerging in their industry.

So you know, Givodon, Chanel, Bayer are companies that on so it's really it's a cool ecosystem to be building.

You know, I'll give you a few highlights.

The first bite you might get this crust on the outside like you see here, but the second bite would be more mushy.

So there's a lot to be proud of for Motif, which launched just a couple of years ago, that, you know, they raised $226 million, series B. , , , , , And as I mentioned earlier, Arkea is a super exciting new company, and Jasmina built that while she was an entrepreneur in residence here at Ginkgo, and publicly launched it with $78 million in funding just the day of ferment, or the day before.

The inside would not have texture.

As anyone who has been in a lab or trying to build something it has run into that at some point.

And they had, again, Chanel, Givadon, and others.

So look at all the effort.

Really thrilled to see her apply.

I mean, that pretty much looks like what you might see in a burger.

Beauty Industry.

You notice all the pieces, the way it crumbles.

JOIN has started trials of its nitrogen fixation, disease, pest solutions.

The other thing I noticed is there's definitely that umami kind of note on it.

This is one of those areas that gets me so excited.

Well, our ingredient, we call himami, and it's essentially the molecule in the muscle of a cow that makes beef red. It makes it give you that beautiful, serum-y, bloody flavor.

So it can be hard, really appreciate how massive and resource intensive the ag industry is, you know, 4% of global energy.

It catalyzes a whole bunch of the chemistry in there.

It sounds like I'm hearing in.

Consumption 5% of global greenhouse gas, nitrogen fertilizer alone is a $70 billion industry.

And that is an amazing piece of technology that Ginkgo Bioworks created for us.

We need to do better, and I'm really excited that JOIN has the potential to do that.

Ginkgo was able to look at 300 different muscle proteins from different species.

And along the same lines, biology is a whole new approach in waste... So the complex chemical pathways that allow biology to break things down can be applied in areas like remediating, Source, Ways.

Mini sperm whales, one that comes to mind, tuna, pork, chicken, a whole series of different birds.

Empirical approaches you can figure out.

And so I think Ohlonia is really a great area to be expanding biotech into.

They were already sequenced, so it wasn't like we took any animal material.

All right, so I told you a little bit about Motif, but I'd love you to take a minute to hear from John, the CEO of Motif himself, about the impact of Ginkgo's platform following their recent, Voila.

When they did the sequences, it was for?

Thank you so much.

Specific muscle protein, a class called myoglobin.

I think there's a strong argument to be made about like once you understand like.

Well, should we try it while it's still hot? Absolutely, that's the best way. Okay.

Okay.

It's good.

Ginkgo got us the ability to look at all the different properties, stability, taste, flavor, color, and then once we honed in on the ones we wanted, we asked them to optimize the yeast to kind of turn that into a mini factory so that we can make it, and so we can have the great taste of beef, without using any animals.

It's burgery, for sure.

That was great.

And it has that, like, the, I mean, on the char and all that, you get that.

Voila.

The char?

The actual unit up then yes, you could do a lot of this stuff on paper in my opinion, but I think.

Yeah, yeah, I have to say that project with John looking at all the different, sort of like a like a Noah's Ark situation around here.

Yeah.

It was really fun to pull those.

The bite quality is much better.

Yeah, working with the team at Motif has been great, working with John has been awesome.

I would say that old generations of plant-based meat...

So, we're really excited.

All right, so I really have this.

I love this picture of Ferment.

You know, we had over 700 people turn out just a couple weeks ago in Boston.

Until you really understand the fluid dynamics of whatever you want to get at it is really hard to.

Predict what thats going to look like unless you've got really good computational tools, which goes to the second question whats going to make this better as well if you had really good.

Cfd parameters, yes, maybe you could actually predict a lot of these issues.

I haven't seen CFT simulators that are that good yet, but I'm sure it's not feasible for those two businesses.

It was really, really great to get, back together in person after not seeing each other for a long time, you know, the diversity and strength of the ecosystem.

Yes, I mean, I think for US. The key was just really developing really robust scaled down models. So that we could work at lab scale.

Developing around us here at Ginkgo, it's so exciting.

You know, we look forward to continuing to welcome new partners and potential partners in the future.

You know, this is a lesson we've learned from the tech companies, you know, Apple, Microsoft, others. You have to nourish this ecosystem of developers so they can get the most out of your platform.

With essentially industrial conditions at scale and so as a result of that I mean, we've been able to take.

Everyone wins with them.

Multiple processes to multiple different facilities and scale them.

Very quickly and very successfully and I think it really is.

It's critical to have.

A lot of chemical engineers around and I think just you.

You can.

I hear still hear very frequently that going to scale is like a black box and no. It's not it's chemical engineering and you can develop robust scaled down models and you can get yourself very confident that youre going to be able to go to scale and it's going to and it's going to work as well as it has in your scale down model in the lab and I think.

That's where we put a lot of effort and I think the other thing to make sure you do as don't cut any corners.

Do that robustness testing trying to understand what are the what are the things that might happen at scale and how are you going to manage them. If they do and you can do all of that homework.

In the lab and be as prepared as you, possibly can when you take it to demo or take it to a taller.

So that if there are surprises you've already thought about that I had and you understand how your micro organism is kind of respond and how youre going to deal with it I think a lot of companies getting a finding that their timelines get pinched and so what gets pinched the backend and before they go to scale and you can't shortcut that part you have to you have to take the time to make sure you are ready.

To go to scale and I say organism developments of longer than you thought or process development took longer than we thought okay. That's fine, but you still have to give your scale down and Youre robustness testing the time it needs before you go to scale. So that you are ready when you do bill.

That's great.

Seeing that there was like plus one technical economic analysis in that comment.

I know that.

Obviously hiring <unk> is a good thing we've talked about that but theres I think theres other workforce needs maybe for for companies in this space when Youre thinking about scale up do you think about those challenges and what youre looking for and is that different than it was.

Right, and I think we're at this, you know, moment where for our community, they're starting to say, hey, if, you know, Ginkgo develops more stuff, that's good for me. Right.

And so that's a really exciting moment.

And we're really thrilled to play that role in the community.

So that breadth of work on one common platform has really been our vision for Ginkgo since, you know, day one of the company, right?

I'm going to show a slide here of some of the products, you know, at the end of the day, the success of Ginkgo's platform is written, And so, you know, you look at products from Aldebaran, Kronos and Motif, you know, I mentioned that at Ginkgo Ferment that the exponential growth, platform output right like what's coming out of the foundry means that we did more lab work in the last year of Ginkgo than the first 10 years combined right so it's not surprising that we're seeing the rate of cell programming programs finishing and going to market, And you can see in this chart, one of the things that makes Ginkgo's platform so unique, you know, there are six species, four end markets, three product types, six different customers represented just in the eight products shown here, right?

So it is rewarding to see that, like that, that is, that is a difficult.

Five years ago 10 years ago.

So the question is on the Kemi talent is that what you're asking.

If you're if you're trying to hire for your companies do you are you now looking for people with different sets of backgrounds to do different so come either great.

Final engineers people with.

It's higher end hardware tool experience all of those things are things that you need or are there specific areas you know you'd love to see.

More people with some synthetic biology training plus something else, that's going to really help accelerate.

Companies like Yours go to scale.

Paul Offit, So, you know, I'll end on this, you know, one of the things that comes with being the leader, sort of in an emerging technology area, Cars, or Synthetic Biology is that people are going to try to tell you why what you're doing isn't going to work.

Got it.

Right?

But honestly, it's worth it, right?

I'm a physician scientist.

You know, we've been working for 20 years to be able to have an event like Ferment.

And seeing the community and synthetic biology rally around the emerging technologies, getting excited about the leverage by our platform was incredible. And it's especially incredible because the Ginkgo platform improves with scale.

Not even.

So like the more excitement, the better we're going to get, right.

The idea of an underground, but by no means like going down it's in bio path way.

And I haven't been this excited about synthetic biology since the day, honestly, I started my PhD at MIT.

And I think I got really really good at detecting economic side and really understanding.

And I love that many of you listening have chosen to come on this ride with us.

You know, what you choose to invest in, moves the world in that direction, right?

And Ginkgo's gonna strive to continue to be clear and transparent about the direction we're heading.

And we hope you're as excited as we are about.

Engineering side of the accretion I think that those things can be taught but I think there is like.

So thanks so much for your time today, and look forward to, Thanks, Jason.

Just a baseline so a lot of people like Oh, that's not my that's not my area of expertise, so I'm not going to dive into it I think it's more about how quickly you can adapt into okay. I do have to be it can be for for this to succeed and so like I'm going to learn everything I can about it and get towards to help me run through it.

So we're just going to switch over to Q&A in just a second here.

So for the analysts who are on the call, please just raise your hand and we will allow you to unmute and ask your question.

And then we'll also again be bringing in questions from both Twitter and email that Twitter hashtag is Ginkgo Results.

And then the email address is investors at ginkgobioworks.com.

So we'll be back in just a few seconds here to start Q&A.

All right, we're going to kick off Q&A now.

Hi, everyone.

I'm going to start with a question from from Twitter, just as everyone is getting getting acquainted and raising their hands.

I see a bunch of hands raised there.

So Tejas, it looks like you are the first.

So you'll be the first.

You'll be the first question once once we take one from Twitter here.

So Jason, I'm going to give this one to you.

I think on the flip side of that is also the commercial team is.

It's from BeEasy on Twitter, who by the way, came to ferment.

So during the height of the pandemic, pro bono work was done, leading to a 10x of mRNA capping enzymes and resulting in a great partnership with Aldebaran.

What is Ginkgo's strategy for managing pro bono work going forward?

In the chemical space, you don't necessarily have.

Maybe in the high end you do have really technical salespeople, but it isn't like low end specialty border like commodity chemicals.

All these guys are just used to selling based off of just price or supply chain issue.

Now, we're having to train them on how to think about telling the narrative of a process and why the fundamental process is better and more important for the customer and how it is going to reap benefits for them and long run. So I would say it's for me. It was just like yeah. The technical understanding its important but its more of how quickly you are able to really learn.

Some of this stuff and how rigorously.

And I think Thats whats separated people at least not company people, who have been hyper successful versus people who have been.

Moderately successful.

Yes.

Yeah, so this is a pretty cool experience for us.

Yes, I think a lot of people I know that have been really successful in synthetic biology.

Because, you know, that project really cranked.

Right.

I mean, we did that in in sort of around about a year, kind of start to finish on the R&D side.

And the one of the takeaways for us was because we were doing it pro bono, we like the team, I think, was just really controlling the kind of design of the project end to end.

Come from a broad range of expertise.

It's been coach engineer then microbiologist then kept me until you bring all of those things together.

Now and then.

More industry settings, Im trying to understand those commercial and BD side of things and so.

I think that's why that's why we always have a lot of fun.

I don't know now Cindy do you have anything to add on on that kind of top out.

We do I would say.

I mentioned <unk> as I say it.

Roughly 45% of my R&D team as companies, but then we have a very diverse backgrounds and perspectives and I think that's one of the things that makes us successful is bringing.

People with different skill sets and different perspectives to the problem and they all have it.

Our take on it and that's how we.

And then solve these very challenging problems, we need to solve in order to develop these large scale processes and so I think.

Right now it's very helpful for us because we're trying to deploy to have that chemical engineer push and rigor that we need but I think.

Biology has been doing extremely efficient bio manufacturing for a long time and I think there's still a lot for us to learn out there so more bringing on people who understand microbial physiology more because I think there is many more opportunities out there potentially too does that help these bioprocess as an EBIT or more.

Carbon conservative way, because I think <unk>.

Organisms that figured out.

Very very creative ways to get things produced and I think we've only scratched the surface of the ways that they have.

Figure things out and there's a lot more to discover there that we can then harness and take the scale.

Okay.

We probably have time for maybe one more question and I guess, maybe the <unk>.

Place to wrap it up would be like a forward thinking like where do you think bio manufacturing with climate is going to be in 10 years.

As we harness these.

Not yet harnessed processes.

And biology.

Hum.

Bias as always but I think where a lot of innovation is going to come is how we figure out how to integrate biology with the more traditional.

Chemical engineering processes and technologies.

Let's be Frank Petrochemistry exist because for so many years, because it's efficient and can scale really well. The question for me becomes well how do we take some of the learnings from Petrochemistry in myriad into a lot of the learnings into biology.

And I think that's where a lot of innovation is going to happen I'm, not all or nothing kind of guy when it comes to this I think there is going to be some marriage of the two that's going to make us hyper successful in 10 years and it's not going to look just like Oh, It's a fermenter thats doing youre, saying, maybe its a fermenter married with the metal catalysts or aforementioned merit.

Some downstream process, where all of a sudden yes, we can call. It <unk>, we can call. It whatever we want but the reality is it's going to be a fusion of multiple different principles that have worked in the past so.

Yes, it's not like a amazing like inspirational statements I think thats the reality of what we're going to see in 10 years.

Yes, I think that that's to some extent the essence of synthetic biology has always been like let's put the modules together from biology or not biology.

Right that work in order to do things that we couldnt do before.

Nothing John as a last word on that yeah, no I think we're going to we're going to move to this.

The vision of circular economy, right I mean, I think some of the things we're going to talk about we're going to we're going to get to carbon capture we're going to use renewable energy, we're going to be able to take things from materials and products from end of life and recycle them back in I think biology is going to be the key catalysts that will help us take those materials.

Materials and feedstocks.

Right now not accessible very easily but I think we're going to be able to grab those feedstocks at end of life pushed them back in through of bio manufacturing process in a full circular economy and I think that's going to happen increasingly and it's going to go to scale and I think that's all out in front of us and Theres a lot of in different industries that are going to come together to me.

Make that happen.

That's great.

Well. Thank you guys. So much this has been a great great talk I think and really inspiring and lots of stuff to do.

Any big impacts we're going to have.

Amazing as.

It's much Cynthia thanks, very much guys. Thanks, everyone. Okay, Cynthia Thanks, Kara and thanks all for me.

Alright.

Great Yeah, and I think one of those last ones is often that we love it can get I'm talking about about like workforce development. So sorry, adjourn loved the children.

Down in Mexico industry people down there they know what they're doing so really close let's talk more about other systematic changes that we need or systemic changes we need to bring on Gen Christian and Matti.

Okay.

Hi, everyone welcome to our Sascha non startups of stomach change, we're going to talk a little bit today about sort of not too.

But also the market forces that are needed.

We all kind of actual real so I'm joined by Tim.

In women.

Chris and Alice and lower carbon capital and Matti half carbon go I'll, let them introduce themselves in just a moment.

And that's a process when we work with our customers that is very collaborative.

I'm, Jim Webb, Iran. Our commercial team, making so I wake up every day thinking about how we can make our platform more accessible and really drive improvements with our customers to help them achieve their psychosis outcomes that they're hoping to you.

And certainly Marty and Christian our boats out there in the ecosystem training and change change happens so.

And so I think, you know, one of our takeaways here was, we should really make sure we're like, packaging projects, like when we engage with a customer on a project where they're going to get engaged from the first day, we should be a little more clear, like, here's exactly what we would do, right.

And we can now lean on this experience of like, look, like this maybe would be a lot more effort in the facility than you would traditionally imagine doing.

Christian maybe we'll start with you why don't you talk a little bit about yourself and what you are working on adding archiving.

But that that might be a function of, well, you've been kind of limited working at the lab bench with pipettes.

Sure.

Hi, everyone. So excited to be here.

Coming in hanging out with ginkgo always feels like coming home.

And so you don't actually design those experiments at the same scale our internal team would.

So my background is in biotechnology I've been working in an adjacent to biotech for the last 10 years I started in therapeutics and diagnostics as you scale and after getting a degree in biochemistry from the University of Alabama at Birmingham.

So there was actually a learning on, kind of program design, I would say that fell out of that.

And then I think it was also a pretty cool instance of, hey, there's a global scale problem.

You know, Ginkgo cares how our platform is used.

What's trying to take a gap year that has turned into a GAAP decades. So I never went back and got a Phd, but I've spent a long time working through different places in industry from therapeutics and diagnostics to high growth start ups and that was an early employee at open trends thinking about.

Sometimes that's making sure it's not used in a negative way, but sometimes it's also, hey, make sure it's used in a positive way, right?

And we can put our foot on the scale at Ginkgo to go do that when we feel it's the right thing.

And then it's a cool experience here with COVID that also turned out to be quite, you know, financially beneficial at the end, even though that wasn't really, I would say the motivation when we first launched that pro bono work.

So those are probably my two learnings.

It's not a bad thing to push in an area if it's one we care about.

Okay. If if we actually do want to build a world.

And then secondly, the program.

On a biological platform, whether that's bioengineering or nature based systems, what are the pieces that need to be put into place to make that happen and so that is that has driven a lot of my career.

Thanks.

I transitioned into working on climate full time in 2018, the IPCC report came out.

I'm going to allow you to talk.

And so you should be able to ask your question now, but you will have to come on mute.

Scared scared the living daylights out of me.

There you, Perfect.

And it was basically the part where they said.

Hey, guys, thanks for taking the question.

Going to need to reduce emissions and do carbon removal. They may as well have been saying in my mind, we need magic right, but I could think of the technology that already carbon.

Jason, appreciate the color on the short report.

It certainly has been something on a lot of investors' minds.

So appreciate you addressing that upfront.

Just a couple of quick follow ups there.

Mark, I believe in your prepared remarks, you mentioned not breaking out sort of foundry versus downstream economics going forward.

Given that sort of choice that you've made, how should investors think about modeling the trajectory of foundry revenues in 22 and beyond?

And then, Jason, you mentioned sort of getting a clean chit from your internal inquiry with the auditors.

Is there anything that's remaining to be done in terms of the process with the DOJ inbound at this stage?

Why don't we start with the question on guidance and our plan there and then we can, Yeah, so the reason that I made that comment is we are sort of learning in real time, right now, that there are going to be situations, particularly in these early days, where dancing value share may only be attributed to a few customers, where breaking that out may create confidentiality issues.

Excitedly everyday and that biology, and so I started to think about what are the applications of synthetic biology biological systems or bioengineering to climate change.

The second thing that we're realizing very much in real time is that it can make sense for us to make trade, it will make sense for us to make trade offs between dancing value share and foundry services and to do that sometimes also very much in real time and where we don't recognize, we didn't recognize any foundry services revenue for that at all in 2021 and yet it has very significant potential to contribute revenue to us.

And so, so we're sort of in this kind of real time learning mode where we're evaluating this question.

And that's why we made that comment because the line is blurring between between the two.

You know, we would expect to be providing you with guidance on on on foundry revenue, and to be held accountable to that.

Hit a couple of fellowships one with an NGL called carbon 181, with the national renewable Energy Laboratory.

We would expect to be providing you with guidance on new programs and to be held accountable for that.

But but but sort of breaking out the two.

Like I said, the line is it's just blurring a bit.

And the joke I always tell as I successfully executed the failed entrepreneur to VC pipeline.

And lower carbon we're now I'm investing primarily in in sort of nature based solutions to climate change and thinking about areas, where we can apply.

Tools of synthetic biology.

Q2 sort of change the tide on climate change and Thats everything from companies like lifting carbon that Matt he's going to tell us about.

Enhanced the synthesis, but thats also chemicals, we invest and finally adjourn.

And a lot of other areas so yes.

Yes.

And we are very much kind of evaluating sort of how best to do that going forward.

Okay, and speaking of sort of harnessing the most obvious.

The answer to Soliris for capturing carbon matti tell us a little bit about living carbon and yourself on what you're talking about.

Yeah, and the only thing I would add on that front is you will occasionally, and it's going to vary by customer, right?

Yes, Chris and thanks, Jennifer.

You will see, like in the case of our Kronos value share, you know, that is publicly disclosed, right?

As CEO until center as living carbon.

We are climate change biotech company with a mission to utilize the inherent power plants to capture more carbon.

So you know, you'll see publicly that in Q3, that was, you know, about $12 million through that value share milestone.

So there'll be some customers, it's not an issue.

Our initial focus has been on genetically engineering trees, and specifically focused both on two things. So listen this is enhancement so improving the rate of carbon capture per tree.

A different alternative metabolic pathways.

Then also on storing that carbon underground for longer.

But we do have this challenge, particularly while the number of programs giving value share is small, that there'll be folks who don't want that information out there.

And so that's where the, you know.

And then Jason, the second question from Tejas was around any next steps or further further process on the internal investigation?

I think synthetic biology has a really unique opportunity to improve the durability of nature based carbon capture solutions, which I think it's very hard to do without some sort of combustion orphan bio my background is actually not in synthetic biology.

Yeah, right.

So sort of, as I said, in the earnings call, right, shortly after the short seller report comes in, we received a preliminary inquiry from the DOJ, informal. Based on that, on the independent investigation, the Audit Committee found any suggestion of fraud, reporting violations, accounting errors, other wrongdoing contained in the short sellers report were unfounded. And importantly, that no restatement of our financials was needed.

But my background is in a lot of Phd wranglings I worked at Lucent called open eye on.

Another ambitious ambitious company working on developing at.

Robots and neural networks that were as intelligent as people. So I'd like to think of my only scale as being wrangling phds pretty much all I've got them, but.

We are cooperating with regulators.

Did kind of go down a similar path to Christian we realized all of this talent was they are working on so many different problems like machine learning and AI with like the hit this thing you could do in 2018, and then we've got the opportunity and also spend some time and hard tech investing.

There's not too much more I'd add at this point.

Got it.

On like how many of their request for carbon sequestration and carbon neutral company.

Thanks, Jason.

Oh, My Gosh, I remember everything about climate change in 2014, and 2004 with inconvenient truth Nothing's changed this is terrible it doesn't it gotten worse and at that point, you know I Couldnt stop thinking about all of the plant biotech research that had gone into a model organisms.

All right, and I'm going to go ahead, Matt Larew, I should have given you the warning, but you're the next on the list.

I'm going to allow you to talk.

Tobacco rapid offsets crops and thinking like what if we oriented this entire industry back to be around a problem that I felt was even more important than increasing food yields, but really focus on carbon and climate resilient Atlantis efficiency.

So you can go ahead and ask your question.

Yes.

You'll have to unmute as well.

Yes, that's right I think a lot of people can relate to guys like nothing has changed kind of Ikea and we keep talking about a lot of the same problem that our technology has evolved quite a bit, but we haven't necessarily turns that into sort of meaningful change in the market.

Okay, can you hear me?

Yep.

Good deal.

So Jason, you referenced the recent ecosystem events you hosted with Ferment and then the Cell Developer event last week.

So I'm curious to hear maybe from both of you let's start with Christian.

What are some meaningful business models that can create change in the market and how do we kind of ensure that those businesses are supported and so that they can actually breached some goals or make the change we're trying to see what are you seeing.

Just curious if you could share any feedback or data points in terms of the potential new partners that you engaged with, things you're tracking internally really to determine the success of those events.

And then a second part, if I could, just more broadly, with a lot of CDKs now underway, maybe just remind us how the CDKs are able to break down barriers to entry for new partners in terms of the capital intensity and sophistication required by those partners.

Sure, yeah, this is a great question.

Okay.

So, yeah, maybe just to give a little extra context, right?

Where we are seeing a lot.

Don't necessarily think that's.

There is as much innovation in the business model as you might think.

Might be sort of looking at that sort of myopically focused from a venture capital lens right, but the things that we think about our.

Do you have a business model like do you have someone that wants to buy what you're selling.

Can you scale that really fast and panic get really big and when we talk about scale right. We're talking about.

Rebuilding entire systems in some aspects and some of the business model is we're talking about we're thinking sort of 10, and 20 and 30 and 40 years out from now and talking about rebuilding the Dow Industrial index right, we're talking about coming for behavior Bosch process, we're talking about coming for these.

Really big huge scale sort of commodity markets in systems and.

The business model there I mean, it goes back to some of what Carl was saying is if it is pretty straightforward right you have to do with your techno economic analysis analysis and built the model to see.

That's the thing that Youre building technically work are you breaking any laws of thermodynamics and is it actually going to scale to a point to have impact one of the top line things that we add into the business models that we consider from an impact perspective of course for catheter, which we want it to generate a lot of revenue and make a lot of money. We also think about we think in terms of Seo.

Two equivalents when I think about scale and impact I think how many millions or billions of tons of carbon emissions or cotr quibble answers is going to reduce from the supply chain and or if we're talking about carbon removal can this actually scale to hundreds of millions or billions of tonnes.

Our carbon removed long term.

Like I mentioned, we had Ferment, which is our big in-person event here in Boston, and that's really serving a, you know, we highlight some of the developers on the platform, so you got to hear lightning talks from a number of the companies that have been successful, you know, developing or launching on the platform.

We don't just think about those things right like I mentioned fertilizer I mentioned behavior Bosch process of course, we want fertilizers that can help us gratitude and are going to have a lower carbon footprint. We also think about for instance, okay. If we're talking about new ways of fertilizing. Our crops. We also have all of these extenuating ecosystem impacts like runoff.

So there's other companies in the room that get to hear that.

It also brings investors in that are interested in synthetic biology.

Many of you, folks in the analyst community and others, are there to join, and some of the technology providers, you know, like Emily LaProust from Twist and folks like that, right?

So it's a broader tent.

Youtube vacation is this technology also solving those problems are are we re enforcing them.

That might not have been an exact answer to your question, but I think the business models are fairly straightforward and I think one of the most interesting things is we're starting to see market, Poland market pressure, particularly around carbon removal and carbon emissions. There are a lot of volte.

The virtual event was really launching our CDKs, and these are cell development kits. And the analogy is, you know, a platform software company like an Apple would have a software development kit, an SDK.

And this is basically a set of tools given to app developers so that they can more quickly launch apps on Apple.

And so the same spirit is applying with our CDKs.

Clearly in Apple's interest to have these out in the world.

We want to make it easier and faster for someone launching a new company or a startup that already exists to come and say, I can engage Ginkgo's platform, I can get a product built quickly, get it out in the world and start making money.

And it's great for developers because it's now less friction for them to get a product built.

And then Ginkgo does well, again, through our value share mechanism.

So that's why we're doing these things.

And that's the two different types of events.

You know, our internal metrics really tracking are entirely around follow ups with the commercial team and the deal team.

Voluntary in compliance markets emerging that are actually putting a capitalist incentive arent changing those practices.

So based on the you know, that we basically have a funnel of like people sign up people attend and then how many real leads do we get on the backside of that we haven't we haven't disclosed any of that specifically, but that that would be the internal metrics we'd be driving against my biggest motion on this is just, you know, two years ago that there was almost no inbound to Ginkgo, right?

Like this is just a new concept because of our profile going up.

And in particular, the success of people who engaged our platform two and a half, three years ago now showing progress, people see that and like proof's in the pudding.

And so so that is now driving for the first time really the opportunity for us to market.

You know, that really all previously was largely outbound, like, kind of sales.

And so that's what I would say on the last point I'll make briefly, because I didn't touch on it much in the earnings call.

So I think those are some of the places where we're seeing people.

You know, the idea behind the CDK, you know, and the first ones we launched are for protein production, is to give like a pretty defined box and say, listen, if you're trying to make, in this case, a low cost protein, we have some existing assets. We have host strains that produce proteins at low cost.

And maybe like picking up on that is about sort of like building something like X gene like Yoga times scale is that sort of how you landed on three focused or how are you thinking about sort of building scale and the technology that you're working on.

They're all, you know, one of them is really well scaled up on the foundry.

Yes, I mean, I think like thinking about as you get timeframe is really inspiring both two founders, but also to the employees that were working with I think we initially focused on T cell system because.

The other ones, it's sort of beta and getting onto the foundry.

You can you can deploy those in that area and we can move really fast.

And then a first engagement for phase one is only one hundred thousand dollars.

Honestly late genetically engineering trees, and also like senile for direct carbon ruble. It wasn't it's not something that people are super familiar with unfortunately, and so for US. The reason was okay. Like we know that theres, a large existing market within the timber industry that already exist right and you don't have to create that so that was one.

That's a low cost in the biotech world.

And so that's the you know, that that idea of making it less frictional just to get started with us is really the key.

Yeah, it's a great question.

Thanks a lot.

Rahul, you'll be next on the question list, but I'm going to go ahead and take one from our investor inbox in the meantime as you get ready.

And just to give everyone a heads up, we'll probably go five to 10 minutes late since we started late.

So we got one into the inbox that says, climate change and pollution are some of the most important challenges mankind is facing.

So apologies for the late start, but we'll give a little extra time here.

In what areas could synthetic biology have the greatest impact?

That's a great opportunity for us in the platform ventures area, right?

And is Ginkgo planning to start any JVs to accelerate the change and attack climate?

Like that's why we do those things.

Yeah, so I'll move quick.

It's like, well, we have a lot of investor interest, but there's less existing partners and startups are just getting going.

So you know, I mentioned that for Matt, you know, that, in the lightning talks for next year's event.

I'd love to see a bunch that were about climate applications specifically.

One of the reason the other reason was really because of the fact that.

I do think this is A big opportunity right now because you have seen the success of companies like Tesla, for example, you know, passing a trillion dollars, you had Bill Gates just a few weeks ago, say, in climate, there'll be eight to 10 Tesla scale companies.

So you have actually suddenly a lot of investor, But the big companies in the space, the big energy companies, have been slower for a variety of reasons to consider adopting biotechnology.

You have increased permanent with like secondary growth from plant species.

And then if it's something that captures people's minds and Hearts and E.

Let's do some.

And so folks that want to launch those types of things, we do think there's a great opportunity there.

I will also point out, you know, JoinBio, which we mentioned on the call, focused on nitrogen fertilizer production, you know, synthetic nitrogen fertilizer is a huge green out there.

So that's already in that direction.

I think that's a wave that'll support them.

Absolutely.

I think for me that was really important because it shows like a proof of concept of the fact that like we can is the R&D platform that we should all get lifting carbon to work in multiple different so I definitely don't see trees as like the easy thing to do or is like the end all for us by any means.

And then when it comes to kind of environmental cleanup, Alonia is working in that area.

So we already have a few folks, customers on the platform, but I'd love to see more, and I think we will see more.

All right, we'll do a few more analyst questions here.

I would just ask one part question so that everyone gets a chance.

But Rahul, I'm going to go ahead and allow you to talk and then just unmute.

Great, thanks, Henry.

Can you hear me?

Okay.

Yeah, payroll.

Perfect.

Thanks.

Morning, Jason, Henry, Mark.

Thanks for taking my question.

So I'm just going to follow up a little bit based on Tejas' question.

Congratulations on hitting that second milestone on the Kronos Partnership.

But I think if it does, we're in a great spot, right?

Of course, that's something that, you know, we watched carefully, and that we expect to book that in Q4.

So that's how I would try to frame it, Matt, if that makes sense.

So with the first equity milestone booked in this quarter, Mark, if we heard you correctly, you mentioned that this equity payment was attributed to Foundry Rep.

But I do think biosecurity in general worldwide is here to stay at some level.

But I think it's an important part of the story to tell people.

So given that this upfront book value of the equity has now been booked to family revenue, how should we be thinking about treating book versus mark-to-market incremental value of that same equity going forward?

And the question is just exactly what are the set of mitigations that make COVID go away and will surveillance and monitoring?

Um, yeah, so we will do an evaluation, a mark to market adjustment at each reporting period end.

Tell people what you're doing so that they can point out, you know, they can red-team it, they can point out, you know, where you could approach something differently, where there is a process from a completely different industry that you could look at adopting or repurposing.

Great, thank you.

And we also because, yeah, and there are some sort of gap adjustments that we make to that to account for just the type of equity that we have.

And when companies do that well, right, that's where we take the lead.

All right, we'll take our last two analyst questions.

And so, and that gain or loss flows through the other income expense line on the P&L.

People have such an emotional connection to treat.

So I love that, Sarah.

And then I haven't gotten any dinosaur questions on Twitter yet, which is actually pretty disappointing.

All right, Harsha, I should have given you the heads up, but you can probably see that you're next in line, so I'm going to go ahead and allow you to talk, and then Matt Sykes, you'll be next.

And I could just jump in with something.

So if there any good ones that come in, I might ask one.

Yeah, hi, can you hear me?

I think one thing that we're really good at is workshopping startups, at least that's a very mature idea that people know.

But Rachel, I'm going to go ahead and allow you to talk from J.P.

Yeah.

Okay.

I think we could be workshopping science projects at the earliest stage, right?

Perfect.

Yeah.

People have such an emotional connection, and also like shameless plug for you I think

And also and.

I like the Schmidt teachers group, like use the phrase big if true.

Good morning, you guys.

Hi, guys.

And if you're going to start something really, really early, I love the idea of really workshopping this like what's the big if true, right?

I have a few questions on the new cell programs and guidance for the year.

Just a very quick one on related party revenues.

Shameless plug.

We look at the scientists and tell me like, okay, how would you do risk if true?

So it's great to hear that you launched 10 programs this quarter.

Given, given all of the recent focus on this topic, could you perhaps talk a little bit about your plans when it comes to accelerating the pace of new additions of new programs in the platform via direct equity investments?

But then how do you use?

During your last call, or during your last earnings call, you mentioned that it will be heavily rated towards 4Q this year.

And what that might mean for near term share of related party revenues?

How do you work with the people who can speak to the scale side of it to confirm that it's?

So based on 3Q, guidance implies nine programs and 4Q, which is a slight step down.

So I'm wondering, as you deploy some of the capital you've raised and is existing program scale, should we actually expect related party revenue share to increase over the next year or so?

And I think if you can work at the earliest, earliest stage to like confirm this hypothesis, that yes, that's big, then I think that's a way to actually start kickstarting kind of more productive science projects, because like one thing, when we spend a lot of time looking in the geological world, right, and actually, and Patrick, you've mentioned this briefly, but like people of geology background, I think are going to be like the next superstars, because they know so many important things that like, I think has been underappreciated in industry so far.

So can you just talk about if any programs were pulled forward into 3Q and then walk us through your approach to guidance and if there's any conservatism baked into that 4Q number.

And how that makes shift?

But I look at all these papers, and they're amazing, they go nowhere.

Thank, Yeah, so I think Rachel at the time that we did the time that we did that first half update, we mentioned that the, yeah, I'm not sure that we were necessarily trying to distinguish between how much of what was left would land in Q3 versus Q4.

Thanks.

Right.

I will say that, and we did say that we didn't expect a lot of revenue by Q4 just because of program start times, etc. But that said, I will say that we did make a fairly aggressive push to bring those programs on as soon as we could, and that was largely because you want to have the ability to hit the ground running for 2022. And so there was sort of a very concerted effort in Q3 to just not wait and to get programs on the boundary as soon as possible, because there is a startup time.

Sure, Mark, do you want to comment on how we're thinking about it from a projection standpoint, then I can comment on on some of why we what I think is likely to happen sort of philosophically.

And so how do you get these superstar people that are working on the right problem, but they're not working at it from a translational perspective, and they're not derisking the ideas early.

And so, yeah, I wouldn't, you know, I think we're targeting the 30 programs.

Um, yeah, so just kind of, I guess, maybe just general trending, as I discussed, we generally see the mix shifting towards more third parties versus, Related Parties.

And so I would love to see a culture change in science.

I think we obviously have a pipeline that if everything landed, it would exceed that.

And but we don't have a particular sort of bias, one versus the other.

For the people that are working on the future translational side, to de-risk that early.

But 30 is the number that we're comfortable with right now.

Like we don't inherently think that's a good makeshift or a bad makeshift.

And then the other follow-up question is, what does it mean to fund things with a translational end and with a de-risking idea in mind?

Yeah, the only thing I'd add, you know, I think, It is a little tricky.

It's just a factual one.

Because part of de-risking is the answer is like, this is a bad idea and let's just kill it.

Again, the enterprise sale nature of it, you can't have things move, you know, a month or two here and there.

It is indicative of just the sheer number of new customers we brought on this year. I mean, the customer count was significant and the program count was significant.

So I think these are kind of riffing on what Sarah was saying.

That's like probably a little more true when we're engaging with a large company, smaller company, but it's not always.

And those are weighted to third parties.

I think there's a lot to solve here.

And so I do think like, we end up trying to have a big, you know, big funnel.

And so that's just as a factual matter, that's why the makeshift is happening, and I'm not sure that we really think about it kind of from a projection point of view per se.

And I think this is where good industrial partners have a lot of role.

And then we know some are going to shake and move to next year or not, right, and try to and try to really got, you know, push the team to hit our annual number.

Yeah, yeah.

Yeah, I love the I love the big if true framing, because I think, you know, particularly for those of us who've worked in, you know, climate adjacent technologies for a while, like, there's a, you know, a fair amount of jadedness, I would say among the community, right? Because, you know, some of these things have have been tried and didn't work out.

But I think you will, it'll be a little harder to predict quarter to quarter exactly how many programs, And I'd say it's not like a big particular driver for us versus like trying to keep the overall number going up at a healthy clip.

Thanks, Mark.

And I think, you know, for, for me, it's always okay, like the, the one barrier that is fundamental are, you know, the laws of physics, right.

Thanks, Rachel.

So what I would say is, There's these three buckets of customers. And I mentioned there's sort of the mid and large, there are existing startups, and then there are brand new startups on the platform.

But other than that, there's actually a fairly large, you know, playground here to make, make changes.

All right.

I think we are seeing a lot of excitement in the startup category, right?

And when I think about, you know, what's changed over the last 20 years, certainly, biological tools have gotten a lot better.

I can't leave just one person hanging on their questions.

I think that, you know, we are seeing a lot of inbound.

But like, you know, think of battery technology, think of, you know, wind technology, I think a lot of the, you know, the investments and all these different kind of pieces of the puzzle are really starting to pay off, you know, over over that time.

I'm going to let Mark from BTIG ask his question, then we'll wrap up.

I would say for the large companies that, you know, that I think the reality is that's still gonna be, you know, solid enterprise sales, right?

You mentioned, you mentioned rock weathering and geology, you know, What do you think needs to come together?

Here you go, Mark.

In other words, it's gonna be like what we do every day around here.

Like, let's say you have your, you know, I'm gonna use a pun here, a rockstar geologist entrepreneur, you know, what do they need to know to bring their knowledge of geology together with other technologies to, you know, build a demonstration?

Hey, can you hear me?

It's having meetings and going out and the business development team and getting deals done, right? We're good at it, but it does take time.

Cool, I'll try to answer this quickly and then I'd love to hear Sarah's perspective on it.

Yeah.

And so I think you're seeing a change in customer behavior on the startups and the startups tend to, but not always, tend to lead to more related parties.

So the reason we talked about geology at all in the context of carbon capture is that the biggest process that naturally happens, or one of the biggest lovers, is the process of rocks weathering.

Hi, Mark.

I would agree with Mark.

And that's the thing where the Earth is full of silicates.

Awesome.

We're not it's not like a certain thing we're trying to solve for in terms of our direction.

Silicates, over time, weather into carbonates.

Thanks so much for the question.

Our strategic goal is as many new programs on the platform as quickly as possible and then delivering on those programs for customers so we can realize value share how that ends up shaking out related or not is less of a guidepost for us.

And so carbonates are a solid form of carbon.

You guys have made good progress with with Kronos and also with food ingredients, etc.

Okay, thanks.

And so certain silicates will convert better into carbonates.

I guess, how would you characterize your funnel in biopharma?

Thank you.

The thing that's really interesting about this, from a biological perspective, is that biology has evolved, in certain situations, to help speed up that process.

And in which particular areas are you most encouraged by, especially as we are about to turn into 2022?

Yeah, that's a good question.

And if you want to see a good example of that, you just go to a lava flow and and you see that immediately these lava flows degrade much faster than they would.

And how should we think about the potential for equity in milestones in 22 and 22?

All right, Matt from Goldman, I'm going to allow you to talk and then Rachel from JP Morgan, you'll be next.

And when you go scrape that, you see that there's a biological story that happens with these chemolithotropes that come in to eat the rock immediately.

Yeah, so I can speak to the biopharma side, you know, so we had David Chang from Allogene and Arie Belldegrun, who's on our board now, and from Kite speak at Ferment on the area of cell and gene therapy.

Everybody, thanks for taking my questions.

It's not actually photosynthetic organisms that originally populate these fresh rocks.

And, you know, Arie just kind of brought up some of the history in cell therapy and how these were really the first like, whole cell therapeutics that were getting developed, live cell therapeutics at Kite and like, you know, and that's, you know, he was like, that's also been a 25 year, I was talking about kind of, and other biology.

Appreciate it.

And then decades later, then it becomes a more complex.

And, you know, that's exciting, right?

Just one question for me on biosecurity.

There's a lot of other examples like this, but I think that one I think is really illustrative.

Like that whole, like living cells as therapies, I would say like, that's our Right, and you know, it would send logic that's a bacteria, you know, with, you know, in the area of cell therapy, that's often T cells, but like that, that's where you should think about Ginkgo, generally being cited, but we're also going to be supporting engineered cells to produce various things as we always do.

You know, you mentioned release, it's an uncertain business.

And there's great scientists that work on it.

But when it comes to like, a new area, I really think we can push into but I haven't done as much today, it's sort of that general category of sort of live cells as therapies.

I'm just wondering how you're thinking about the durability of biosecurity revenues going forward as it relates to testing or and or infrastructure.

But it's done from like an observational view, which to me is like, biology in 2005, right, where we studied biology, like we studied geography, right, it's just like memorized, but now we can look at biology as an engineering problem.

And so cell and gene therapy tends to be where that, And then there's a second part there, Anna-Marie.

Yeah, so here's my, here's how I think about it.

So you can go to these people and you can say, great, like, here's these populations, how do we culture them?

Nope, no, anything else you wanted to do?

It is a super good question.

How do we speed this up?

No, that's great.

So the thing I think to think of is so like, I'll give you an analogy.

You know, I think the number that we need to target is a thousandfold increase of this rate of weathering.

Thank you everyone for joining us for our first official earnings call.

So flu is an endemic disease, right? So we know flu is not going away. And we have a certain set of mitigations in place in society. And by and large, that's the flu vaccine that comes out. And by the way, I have to make a new one every year because the nature of that virus, but fine. That that's like our societal mitigation to get flu to a point where it is not, annoying and otherwise disruptive to society like we're comfortable with the level of mortality and we're comfortable with the amount of impact it has on our lives.

If you can do it, well, you can, there's, there's a bunch of people that have done great work on this, you know, Jennifer Wilcox, Dole Renforth, Jordan Southam, Greg Dippel, like just to name a few.

Apologies again for the technical streaming difficulties at the beginning.

COVID-19 is going to become indefinite.

I think synthetic biology has a big role to go in and really start hammering on the rock weathering problems.

We'll make sure that a full video is is uploaded and well distributed so folks who missed the first few minutes as you were transferring over can catch up.

Right, I think that you speak to experts, that's what you're hearing again.

I had, I kind of answered your question, but I should let Sarah run with it.

And we'll try to try to work out those those kinks for next time.

And again, it's not going to just disappear on us.

Yeah, well, yeah, well, and hopefully there are folks out there listening about some ideas to send your way for, for, for driving that, you know, faster.

But thanks again for spending your Monday morning with us and have a great week.

I think that's widely appreciated now worldwide.

And like, yeah, Sarah, we're about to wrap up here, but, you know, let me give you the last word here, you know, particularly on the, on the topic of, you know, how to work with, you know, potential entrepreneurs to turn science into, into, into action and to build, build companies, you know, any, any words of advice that you have for those.

Thank you, everybody.

The question is, what are the mitigation measures that society needs to put in place so that this thing is not?

Yeah, I mean, you know, this is the biggest challenge of our lifetime.

Thanks, Cass.

And I tell you that from quarantines at schools, to masks, to everything else, we're not at a point yet where we get to not think about this thing in the same way we currently really, by and large, didn't think about the flu, other than certain public health folks that sort of take care of us there, but society at large is not a top of mind issue.

And, you know, to paraphrase what others have said, it's time to build.

So thrilled to have all of you here today.

We're not there yet with COVID.

I can't imagine anything more exciting.

You know, before we get started, you know, I want to say we're here gathered today really to talk about, you know, one global emergency in climate.

And so the question is, what will be enough?

These are the biggest markets in the world.

We'd be remiss not to acknowledge the emergency that erupted in Ukraine last night, or overnight.

Is it just the annual vaccines and then nothing else?

I mean, we're talking all of agriculture, production of food, of materials, like leather, cotton, palm oil, meat, we need to replace everything that we make with petrochemicals, fuels, plastics, industrial chemicals.

We know we have folks from all over the world dialing in today.

Well, you know, like it's certainly not yet, right?

I mean, it's just it's endless.

We hope you're all safe.

And so the question is, where will these types of other biosecurity measures fit in?

The it's a challenge.

Please take care of your family, friends and team members today, you know, and in the coming weeks and what's going to be, I think, you know, disruptive times.

And I think, you know, the big tools in that bucket are going to be updated vaccinations and boosters.

It's also an opportunity.

So, okay, so, you know, I think we had almost 1000 people register for this today.

It's going to be better therapeutics over time.

You know, all of those things are made with biology. Potentially, they could be made better with biology.

So I think one of the things that I wanted to mention is, It is now obvious, and I think it's, you know, obviously should have been obvious a decade ago, but now it is very obvious that, you know, climate change is really the motivating problem of this generation.

And it's going to be monitoring surveillance, basically testing for biosecurity purposes, not diagnostics.

And historically, we've approached, you know, the carbon cycle and understanding how these products are made in a sort of observational way.

I think there's been a couple things that are that have happened in the last, you know, five years or so 10 years or so that have sparked this kind of obviousness.

And so, you know, we obviously have stuff going on in the vaccine space as a support role, but in that sort of monitoring, weather mapping type new area of testing, I'd say we are definitely at least, Will that end up being part of the mitigation?

Just like, you know, imagine human health was observational.

And I want to mention one in particular, which is, you know, the success of Tesla as a company has sort of opened the eyes in the world to if you bet on certain changes that are going to kind of be inevitable in a decarbonized economy, and you pick the right winners early, you're going to see trillion dollar companies.

That's why it's hard for us to guide you exactly what it's going to be next year.

We just saw what happened with disease processes.

Right.

We didn't engineer solutions.

And Bill Gates just said, you know, I think two or three months ago that he expects eight to ten Tesla scale companies in climate.

We didn't help people live healthier lives and be better.

So eight to ten trillion dollar companies being built.

We're sort of have been in that place in in observing what's happening in the natural world and in human, you know, human focused ecosystems, like agriculture, with regard to carbon storage and carbon drawdown, we've just been sort of looking at what's happening.

And some of those will be new companies like a Tesla.

It's time to see how we can intervene because the alternative of doing nothing is really just not tenable.

And I hope you have some of those entrepreneurs on the call today.

So let's put these tools to work.

And some of those are going to be existing companies that reinvent themselves.

It couldn't be a better time to be an early stage entrepreneur.

Right.

If you've got an idea, even if it's task based, like we're glad to talk with you, we're glad to workshop it, we'll help you figure out like what are the things, the proof points that you can knock down to get to that trillion dollar business.

Let's say, well, in a decarbonized world, this is what my industry is going to look like.

So, Sarah at voyagervc.com, feel free to reach out.

And I'm going to bet on it before my competitors do.

Awesome.

I'm going to I'm going to remake my large company, you know, in this way.

That's great.

And I think I hope we have those types of folks on this call as well.

Yeah, Sarah, Dan, thanks so much for joining us for this conversation.

And, you know, from my perspective, synthetic biology ultimately is going to be one of the enabling technologies for this revolution.

20 minutes is not enough time.

I expect, you know, my estimation would be about half of those eight to ten sort of Tesla scale companies should be biotech.

I'm hoping that there's going to be ample follow up coming from from this workshop today.

And you're going to hear from that, you know, we have three great panels today.

But thank you so much for joining.

And so on the first one, you're actually going to hear a little bit about why that is.

Thank you for the opportunity, guys.

Why is biotech, you know, such a good fit for the challenges in climate, right?

Take care.

And I think one of the big reasons is, just by nature of how biology works. It's really, really good at putting carbon together, at forming carbon-carbon bonds.

Thanks everybody.

And I was a chemical engineer.

All right, next up, we're going to be talking scale up.

Let me tell you, in synthetic chemistry, we are not good at this.

So I'm going to bring on Cynthia Garab and Nelson to kick us off there.

And so this is one of the superpowers of biology, and biology also runs at global scale, right?

All right, good morning, everyone.

It makes the oxygen in our atmosphere today, right?

So the next session is Scaling Carbon-Negative Solutions.

And so I think fundamentally, biology has that.

And luckily for us, we have Gaurav Chakrabarti from Cellogen and Nelson Barton from Genomatica joining for this conversation this morning.

You're gonna hear from Patrick Boyle at Ginkgo, Dan Goodwins, recently at MIT, and Sarah Sklarczyk, now at Voyager Ventures, but previously at MIT, working on climate.

Great to see you.

You're gonna hear from them about some of those superpowers of biology.

So I just wanted to, before we get started, introduce myself.

Our next panel with Cynthia Collins from here at Ginkgo and Gaurav Chakrabarty at Solugen and Nelson Barton at Genomatica. Genomatica and Solugen are two companies that are bringing synthetic biology biotech solutions to scale in the renewable chemical space.

So I am a Program Director in Organism Engineering here at Ginkgo.

And so, you know, what can we learn from what they've learned, right?

I just celebrated my first year at Ginkgo. So great place to be.

You know, what's been hard when you actually have to deploy biology and biotech at the kind of scales that are relevant in climate?

And before that, I actually was, I started out learning about synthetic biology doing my PhD in the early 2000s on it when it was, at the very beginning, and then spent a long time as an academic in a chemical engineering department, and then decided that synthetic biology to scale, I really wanted to explore that in an industry setting, and so made the jump about a year ago, and I'm loving it, and I think this is the place to be for synthetic biology, being out in the real world and thinking about scaling, and so I'm happy to be talking today with some leaders in this field in synthetic biology and scaling, and so I want to start out by inviting Iqraab and Nelson, maybe I'll start with Iqraab, to introduce yourself, and maybe tell us a little bit about yourself, and also about collagen, and how you're thinking about these things moving forward.

And then our third panel, you know, with Jen Whipp from here at Ginkgo, Maddie Hall at Living Carbon, Kristen Ellis at Lower Carbon Capital, a long-time friend.

Great.

You know, they're going to talk about who's funding this stuff, right?

Thanks, Ngif.

How do you get new climate startups funded?

Pleasure to be here.

Are there emerging businesses?

Gaurav Chakrabarty.

You know, can you get paid as a new startup company in climate to take carbon out of the, How does that work?

I'm a CEO and co-founder at Stolle.

What's that evolving market look like?

My background, I'm actually a physician scientist, MD PhD by training.

Right.

I did not think I would be touching synthetic biology in my career, to be frank with you. My PhD work, I was studying pancreatic cancer, discovered some really interesting, mutations that led to proteins that can withstand really high oxidation environments, i.e. peroxide.

And so I think these are some of the panels we wanted to showcase today.

And what was fascinating was my co-founder and best friend, Sean Hunt, he was at MIT, he was finishing up his PhD in chemical engineering on production of hydrogen peroxide using noble metal catalysts at scale, really large scales. And we kind of just started chatting and realized that if we marry some parts of an enzymatic process with some parts of a heterogeneous metal catalysis process, there are efficiencies that you can get with throughput and selectivity that either one, either enzymes or metal by itself couldn't get.

But really, the main event is after those is we're going to have breakouts.

And so the whole premise of SoluGEN from a technical perspective is to push the barriers of, well, how far can we take this chemo-enzymatic, chemi-enzymatic technology at scale? And it turns out pretty far in terms of what we're going after and the scale that we can go at.

Right, and so we're going to get to hear from all of you, you can have, there's a carbon capture and sequestration, regenerative agriculture and resilient ecosystems, designing negative and low carbon products, or just an open, open networking room where you can go and try to find, you know, learn more about Ginkgo or also go find, you know, maybe a co founder for your carbon neutral startups.

So we have, Production Facilities now in Texas making a host of products.

So, and we've had great success with that, we held an event like this, you know, probably six months ago, wasn't 1000 people, but but those breakout rooms are really a big part of where you get you get a chance to get to know each other.

We have four products on the market today.

Okay.

Businesses is going quite well for us and we're expanding.

Last point I'll make, you know, Ginkgo is putting this on.

We call these bioforges and we're expanding them in the United States and internationally.

So for those of you that are new to Ginkgo, I just want to explain briefly how we can help you.

So, obviously, we focus a lot on sustainability, but fundamentally, my mind is, I come from a chemical family, and I just think about cost of goods and how it impacts sustainability. And it turns out those two go pretty hand-in-hand.

And so we're really a platform for, for deploying synthetic biology for programming cells.

Good morning, everyone.

And the idea behind Ginkgo is very analogous to like Amazon Web Services.

Good to be here.

If you wanted to start your website, you wouldn't have to today think about how to build servers and run, you know, keep those up all the time.

My name is Nelson Barton, and I run R&D here at Genomatica.

And you just, you're gonna pay Amazon Web Services to handle that sort of centralized and, Well, that's what we do here at Ginkgo, but for synthetic biology, right?

I've been here about 10 years.

So I'm here in our offices in Boston, we have about 200,000 square feet of automated lab infrastructure, that's very, very good at genetic engineering.

I've been in, working in development of sustainable products and processes for a little over 25 years, and have, you know, been developing, you know, the processes that Genomatica has.

And so you don't have to build that.

We've been working at very large scale for a number of years.

If you have a, you know, climate application in mind, if you're a new startup and you don't want to have to have that big spend on an R&D lab and all that equipment and infrastructure, don't bother. Right?

Genomatica is all about basically helping brands and suppliers to meet these aggressive sustainability goals that they have all, you know, come out with.

You can just pay us to do that work.

And essentially, we work in a variety of different supply chains.

And in fact, customers of ours like Motif Foodworks, which is in the animal free meat space, which is a big carbon reduction space, you know, have had a ton of success. They just raised $250 million this past summer.

We make everything from, you know, bioprocesses for biodegradable plastics.

They've never had to build a biotech R&D lab.

Where I've most recently announced that we're working on both nylon and nylon 6-6, as well as working on coatings.

They were able to just use Ginkgo's infrastructure as a variable cost to do their, to do their biotech R&D.

And so we plug ourselves into just a number of supply chains, wherein we develop bioprocesses to, you know, essentially, Great, thanks.

Okay.

Thanks so much.

And so, so that's, that's sort of the general idea.

So maybe let's start out with a question on since both of you have kind of spent a lot of time on this, like, what do you think are the key learnings that are available, you know, that have come from your companies and other kind of things that you've observed in the field over a long time?

We are making it easier and easier for people to get on our platform.

that are important for like de-risking and really scaling synthetic biology from the lab to the market.

So for example, if you're a startup company, we're able to take equity in your company in lieu of cash to, in order to pay for our services.

I'd love to hear Nelson's thoughts on this.

We know that cash is particularly tight when you're a small company, especially in our environment today.

Yeah, I think you know, when it comes to when it comes to the scaling, I think, One, you've got to get it right that the first time, right, I think.

So we will, you know, work with you to make it really easy.

And for us, you know, the BDO story, you know, we were able to take that process and actually run it at at commercial scale for a short period of time through a situation that we had become available to us through using the DuPont-Tayton-Lisle propane dial facility, right.

And we get folks on the platform in a matter of weeks.

And so once we were able to demonstrate that we could reproducibly run at commercial scale, then, you know, that was the first key to getting then Novamont on board.

It's gotten a lot easier as well.

Novamont then, you know, a real innovative company, they had to take that gamble and say, yes, we're going to go build a plant. And they built it.

And so really want to help those small companies, but if you're a large company, you know, today we work with companies like Roche, you know, we work with Bayer, we have a hundred million dollar joint venture in, in nitrogen fertilizer production via biotechnology, which is another, another big carbon project.

And it was, you know, an extremely exciting time in 2016, because we fired up that plant and immediately started making saleable product, right.

We're from folks like Jividon.

And so, you know, we had gone through the rigorous process of taking this thing to scale, we had made product, we put it in the hands of the, you know, end users, so that they could validate that this is a, you know, essentially drop in replacement for a petrochemical that, you know, essentially, the end users would see no difference between it and the petro version, except now you're doing it at a more than 50% reduction in greenhouse gases.

So, so some of the really largest companies in the world that we've engaged with, again, to help them deploy synthetic biology without having to hire a whole R&D group or figure out, you know, you know, bring all that technology in house, they can just leverage us as infrastructure.

So for us, the key was to get that first plant, Novamont, to run and to run well.

Okay, so if you know, any of that's exciting to you, please, please don't hesitate.

And now that essentially, you know, is essentially the plant that, you know, all industries can take a look at and see that biomanufacturing can work at scale and very robustly.

I'm at Jason at ginkgobioworks.com.

And I think that was, you know, that's been the key for us is to really show that, you know, we've got that facility running.

You know, I will say, personally, that, you know, I have a couple kids of a seven year old and a nine year old.

And now other industries are looking in that and saying, yes, biology can work at scale.

Look, this is the problem of our generation, right?

And it's getting them to, you know, it's freeing up a lot of capital to move in that direction.

If we if we fuck this up, it's, You know, it's a problem for the world.

Yeah, we took a scrappier approach.

It's not a problem we made, you know, to be frank, but it's on us to fix it for the people that are coming after us.

I will say that.

And so I'm so thrilled, you know, to have so many of you here today that are fired up to work on this problem.

So we, How did we start?

We here at Ginkgo want to make you successful.

So we started with, we went to Home Depot, built our first little reactor from PVC parts. And it was a small scale, right?

We want to make you those next Teslas.

It was like a Unknown Attendee, Jason Kelly, Poon Mah, Rahul Sarugaser, Shyam Sankar, Megan LeDuc, Barry Canton, Iya Khalil, Deborah Marks, Ena Cratsenburg, Ginkgo Bioworks Unknown Attendee, Jason Kelly, Poon Mah, Rahul Sarugaser, Shyam Sankar, Megan LeDuc, Barry Canton, Iya Khalil, Deborah Marks, Ena Cratsenburg, Ginkgo Bioworks, So, what did we do?

That's your business.

We started a cleaning brand that not many people know about called Eau de Clean. And what we did with that brand is we made wipes and cleaning solutions with whatever product came out of the, it was a, we called it bioperoxide, coming out of the plant.

You're the apps.

And the whole idea was not to be a cleaning company, but to use it to leverage and use as an execution tool to show that, hey, this team can execute from idea to some scale to market.

You know, we're really a platform to support you.

And so within three months of launching that brand got acquired by the biggest wipes manufacturer in the United States. But what we negotiated with that contract was a supply agreement that basically committed the acquirer to a certain volume, which happened to be 80% of the next scale up that we'd want to do.

So really thrilled today to get in and learn what you want to work on.

So we had the buyer for the chemistry, kind of preset.

So thanks everybody and enjoy the day.

So that allowed us to go and build the next plant with, basically, there was a prepayment that allowed us to do it.

All right, thanks, Jason.

And then we scaled up, I would say, to 1000 metric tons a year at that point. And the scale was pretty fast. And then at that point, once we can demonstrate that we were providing value to these customers, even at a small scale, and we then scaled up again, to 20,000 metric tons per year plant.

Okay, well, let's dive in.

And the way we ended up doing it was, we always just had our critical customers prepay for it, to the point where we didn't have to worry about the capital requirements, So much more scrappy, I'd say.

I'm gonna bring up Patrick, Dan, and Sarah to talk about synthetic biology and how it can play a role for climate action.

I wish we had the foresight to think about working with the Dows and the DuPonts, but honestly, not many of them would take us seriously.

Thanks, Cass.

We had just started in 2017, so we decided to take our faith into our own hands.

Hi, Dan.

And so for us, the scale-up story was, well, if we can't scale up beyond this, can we make a solid business case out of it? So that was our mentality.

Hi, Sarah.

Um, so just flashing a question on on the bottom there.

So yeah, thanks for that intro, Jason and Cass.

And so on the scale front, looking forward to any discussion.

I think for this session, we have a tall order in front of us.

So how can we harness public capital for the massive public benefit that is decarbonizing and building climate resilience?

I think we have about 20 minutes to determine how synthetic biology will sequester gigatons of carbon dioxide from the atmosphere.

Rob, do you want to do you want to start with that one?

So yeah, let's see what we can do there.

Yeah, honestly, we haven't taken any public capital.

But seriously, I think for Dan, Sarah, I'd like both of you to introduce yourselves in a second.

Obviously, we've done some R&D work with the government and DOD.

But when you do, I'd like to hear a little bit more about what drives you to tackle a task this large.

But like I said, from our perspective, we've just been focused solely on getting, like are we hitting the Cougs that the customer needs and getting it to them in their hands?

How did you get here in your career?

And by the way, the benefit of that is hey, there's- Transcripts provided by Transcription Outsourcing, LLC.

And what are you looking for today in terms of building the right teams that can make a dent in the climate challenge?

Maybe kind of building on that, one of the things that I think is, encouraging and exciting is that, you know, it's customers of Genomatica that are kind of helping push things into sustainability.

Before I launch into that, I'm Patrick Boyle.

Like I love hearing that you're working to help customers meet their sustainability goals.

I'm the head of code base here at Ginkgo.

And so can you can you comment on how that's changed over the last few years and how you see that moving forward and really driving the impact in terms of climate that the companies like yourself like Gino can have?

I'm responsible for what we call our biological code base. This is the reusable biological assets that we deploy for our programs to help our customers develop products more quickly. So one example being we have a product called the Protein Cell Development Kit. This is a way to help customers that are interested in making recombinant proteins using synthetic biology get up and running faster.

Yeah, no, absolutely.

And I'm also responsible for the folks who carry out our customer-facing projects and would work with customers of Ginkgo's platform to help make their applications a reality.

I think, you know, yeah, for for a number of years, you know, that, you know, we've been doing this for quite some time. And I think earlier on, you know, it felt much more like a push, right, that we were having to push the technology and, and, and go to the, you know, essentially, what we initially did would go to the big, you know, petrochemical suppliers and show them that we've got a greener way to make the products they're currently making.

So with that, I'll throw it over to both of you to give me a little bit of background on how you got into climate in the first place.

But then, what you've seen is this huge transition, essentially, consumers now are much more educated about where everything, everything they use every day comes from.

And Sarah, I'd like to start.

I think there was sort of a lack of understanding of just how much of the things we use every day come from petroleum, right.

Thanks, Patrick.

And as soon as people started to recognize that, you know, they started to raise that with brands and say, look, we want this to come from a more sustainable source.

Yeah, so I got my start actually, as an entrepreneur.

We don't want it to be petroleum if it doesn't have to be.

So building companies mostly focused on mitigation, always wanted to work on stuff that matters. Clearly, lots of stuff matters in the world, but it became increasingly clear that, you know, in the in the timeframe of my working life that I have ahead of me, Climate is the most important problem that possibly focus on.

And so, you know, how can we get our hands on something that's, that's, that's, you know, friendlier to the environment made in a way with reduced greenhouse gas emissions and the lower burden on, on the environment.

So I've been really increasingly spending my career there.

And so, the brands then have picked this up and, and it's working its way up the supply chain, right?

Got my start co-founding a car sharing company called Getaround.

So now the brands are, you know, that they're saying, look, if this can't happen quickly enough through our suppliers, we're going to go directly and work with, you know, companies like Genomatica to, to pull on this.

Also worked at the first lab-grown meat and lab-grown leather company, Modern Meadow.

And so, we're seeing just a much, much stronger pull from brands to, to get these biomanufacturing processes built and get the, get these supply chains, you know, remade using biomanufacturing.

Realized that I should probably learn some more about the gaps in our decarbonization technology.

And so, that's where we say, you know, this is how we feel that, you know, we can really become the sustainable source for a lot of these suppliers and brands by bringing these biomanufacturing processes to scale, Are you seeing similar things at Sully Gingerab?

So I joined the graduate program at MIT, because I was working alongside Dan and other fantastic colleagues.

Yeah, I think something has changed.

And really there I focused on what I saw as a really big gap in our capability in terms of what we need to do to stabilize the climate on the timeframe we have, which, How do we get to gigaton-scale atmospheric carbon removal?

I will say that, like when we started in 2017, there was very little pull, I guess, from our customers on the sustainability side.

And I focused on assessing pathways we could build at leveraged bioengineering, since biology is the largest mediator of the global carbon cycle.

It feels like something has completely shifted in the last couple of years that we didn't anticipate it would happen this quickly, and maybe Nelson, you've seen it as well, but like all of a sudden... Our argument on hey, it's all going to be about cogs.

So that was my path there.

Well, I think that's still true.

And then I also saw the opportunity to support companies that are at the cusp of commercial scale.

I think now there is still this idea that hey, maybe sustainability is really, And so it's become more of a central point in a lot of our sales pitches and how we think about, Yeah, something's definitely changed.

And so I co-founded an early-stage venture firm called Voyager, where I'm the co-managing partner.

I hope it lasts, to be frank, because it's good for business, seems like they were for a time it was very much like you can hit COGS targets or you can be sustainable.

And we back early-stage teams building foundational products to decarbonize the global economy.

And it seems like those things aren't so far apart anymore.

Cool, very cool.

And there's been successes that show right biomanufacturing at scale is possible.

Dan, how about you?

Right, so, What would you say is advice for, you know, new up and coming entrepreneurs, you know, in the startup space that want to have an impact in biomanufacturing, especially if they would like to, you know, want to have a big impact in climate and sustainability.

Hey, guys, and I hope you don't mind me going on mute.

Yeah, I think, Again, I'm probably the boring guy in all of this.

We have a one year old in the background about 30 feet away from me.

But I think the way to think about it is like, definitely think big, but start, start small act now.

Hey, so I'm here because of Sarah, actually, because three years ago, she was the one, she was kind of my gateway drug into thinking about climate, because the way she was talking, reframed climate, as something I avoided, which was looking at photos of dead polar bears and feeling like shit, or reframing climate as hey, there's a series of huge technical challenges that are worth working on, both because it'll be funded by government philanthropy, but also because there's very large upside downstream for people that can nail it.

So it's basically like, what are the things that you can do with this technology that proves there's an actual business case for it?

So the way they how I got to that beachhead was formerly I was a software founder in Silicon Valley, I dropped out of a PhD at Stanford.

Maybe it's sustainability driven, maybe it's cost driven, it doesn't so much matter.

I was an entrepreneur residence IDEO global, global product design company started my company about 2012.

More so, hey, is there something real here that can be a generational business that is going to drive a lot of cash flow for investors while also doing good for humanity?

Microsoft ended up buying it.

I think even if it looks like a niche market or maybe not that big, you have to just start.

And I think very similar to what Sarah was talking about, I think all my biggest heroes in life are the people who pick one or two things and put decades and decades into it.

And so I think a lot of, especially scientists, I'm guilty of this, scientists, entrepreneurs are, think a lot about, hey, we have to like make this perfect, we have to get the business plan to be pristine and everything.

And by a mixture of luck and timing, and all other external factors, they end up.

But the reality of the situation is I really don't think that We have time to just wait for the big thing.

So for me, in 2013, I thought, okay, it's going to be neuroscience, like neuroscience is the most important problem that we can do.

We have to be focused on what looks incremental can become very big, very, Just start now.

And that was the PhD I'd originally dropped out of.

Yeah, and I would say, you know, for us, it's do that techno economic analysis right up front.

So it's kind of funny for me, where the computer sciences might be to the neuroscience and neurosciences might be to the synthetic biology, which is my beachhead into climate.

If you've got an idea, I mean, because we have the tools now in synthetic biology, just, you know, to move away from the question of, well, what can I make?

But it was a what got me so excited about that is that from someone who was in the rapid growth of the computer science community in say, 2009, 2011, 2013, where we saw the mobilization of a bunch of scientific talent turn into fantastic founders.

It's just like, to what do I need to make, right?

Then I started seeing the synthetic biology community go through the same thing. So from starting my PhD in 2015, to see the sophistication of the way synthetic biologists started talking, they immediately stopped talking like this could be a science paper to like, oh my gosh, like we solved this, this is a billion dollar health business.

I mean, you can really focus on, you know, what it is you want to what want to produce, and then do that techno economic analysis.

And then now, we're also seeing the same thing of like, this could be a billion dollar materials company or that.

And then side by side, do the you know, do the the lifecycle analysis, because I think together, you know, you can get a really good handle on it, if I'm, if I'm successful, if this process works, as I as I draw up the entire process, not just the organism, but if I draw out the whole process, and I, and I look at the economics of that, can I compete with with, you know, the petrochemical process?

And so, for me, like, what I'm currently just working as an independent scientist working on these exact problems, specifically thinking about how we make, how we grow this, ecosystem of science and entrepreneurs really at the earliest stage.

And I think, you know, that's, that's the way we look at it, we don't get into any sort of, you know, wet work until we understand that if we are successful, here's what the economics could look like.

Because if there's one thing that I think we can really do better, and why I'm really looking to Ginkgo to really help nail on the community, is how to make these problems both tangible in terms of like, this is where you would start doing these problems.

And here's what, you know, a rough LCA could look like, and the impacts that we can have.

And we can talk about rock weathering, etc.

And those then, you know, and essentially, that techno economic analysis drives everything we do once we do start to work, and we can stay and we stay focused, think BDO is a great example.

But then also to articulate where the frontiers So, and I think this is going to be another tension.

That technology, you know, is in the top quartile of any BDO production technology out there.

Like, yes, there's a lot of things we might be able to work on.

And it's, it's a very young process, there's still lots of room for improvement there.

But we also want to figure out what are the most, And so for that, I think there's a lot of ways to approach this.

You know, we're looking, we're comparing ourselves to processes that have been running for 50 years of, you know, with continual improvement, and right out of the box, we're, you know, we're in the top quartile.

But I definitely think about what is the tangibility layer?

And so I think, you know, think big, but do that, you know, techno economic analysis to understand, you know, what success could look like.

Like how do we get people started working on this?

Yeah, I do love that we have a phrase that's always in it's called math is free.

And there's other fields that have done this really well, computer science, health focus, biotech, then also what is this frontier of like, what are the highest levels?

It really is.

That's great.

So for me, it's always about like, hey, like, you're right, don't step foot into a lab on any of this until you can whiteboard out, at least to some degree of accuracy, what what the cost basis is going to be what the mass balance is going to be.

And yeah, something I'd like to explore with both of you is, you know, you both talked about, you know, basically identifying, you know, a large challenge in terms of climate training as a scientist, and then working as an entrepreneur to try to bring, you know, the right right folks together.

It's just so funny.

And I think, you know, one thing that I've kind of, you know, noted is that, you know, it's been a bit of a journey to get here.

I feel like all these processes that people come up with, like, the mass balance doesn't even close, like, where is this going?

So I did my my PhD about, about 10 years ago, you know, biofuels was in vogue at the time, at Ginkgo we use a lot of software and automation to do things in extremely high throughput. When I did my PhD, basically the amount of progress I could make on my metabolic engineering work for fuels was dictated by how quickly I could pipette and how many plasmids I could build per day.

Yeah, I do love that.

I bring that up not just to talk about synthetic biology tools, but I know both of you have been observing basically the confluence of many different technologies that have been advancing over the last decade.

Don't forget about Good Chemi-Basics.

Dan, you mentioned geology, for example.

Crabbe, do you want to go with that first?

So, you know, I'd be interested in hearing, you know, from each of you with respect to, you know, what type of tools are being developed in adjacent industries to biology that are making this more practical today?

There's a lot of pain.

Because, you know, on the one hand, you have the urgency of climate.

And I'd say the biggest pain for us was, It's, I might get kind of technical here.

On the other hand, it's a question of like, okay, what can we do about it?

But like, it was just really hard for us to predict the mass flow, like the actual like, a lot of our processes require air or um it's just super hard to predict that because of the geometry of the actual vessel that you're going to make so that was like We were surprised sometimes in the good direction.

And what are the fields that need to come together?

Oh, the you know, the wall effects on the tube and stuff were not as bad as we thought.

Yeah, so I'm happy to jump in there.

And sometimes it was the exact opposite where it was like, man, this is way worse than we thought.

There are specific technological tools, but I also want to highlight that markets are evolving in a way that's really transformative and powerful and critical here. So for companies pursuing solutions and say carbon removal, right, the development of markets that will actually pay for that carbon removal and an ecosystem of additional partners that can do verification, tracking that can facilitate sales, operate sequestration resources.

So a lot of the processes that we thought were great on paper and even at like a beaker scale just didn't make sense when you, So that was like just ego crushing in the early days, because you're just like, oh, this is such a beautiful, elegant process.

They're all absolutely like terrifically important.

It just didn't make sense from a physics, that's the science that becomes or engineering where the thing that you think is easy becomes hard when you really do it in real life.

That market has just really started to evolve.

I feel like anyone who's been in a lab or tried to build something has run into that.

I think we're going to see a lot of movement over the next decade. Everything from, you know, advances in the 45Q federal tax credit, you know, we're seeing a carbon price in the EU surpass 100 euros a ton for the first time in the 16 years that markets existed.

It sounds like interfering and, you know, empirical approaches you figure out.

I mean, these are really important pricing signals that both tell, startup entrepreneurs, hey, there's a real business to be made here.

I think there's a strong argument to be made about like, yeah, once you understand, like, The actual unit ops, then yeah, you could do a lot of this stuff on on paper, in my opinion, but I think Until you really understand the fluid dynamics of whatever skill you want to get at, it's really hard to predict what that's going to look like, you know, unless you've got really good computational tools, which goes to the second, What's going to make this better is, well, if you had really good, you know, CFD parameters, yeah, maybe you could actually predict a lot I haven't seen CFD simulators that are that good yet, but I'm sure it's not unfeasible for those, Yeah, I mean, I think for us, the key was just really developing really robust scale down models, so that, you know, we could, you know, work at lab scale, with essentially industrial conditions of scale.

I mean, there's potentially $1 trillion business to be made here.

And so, you know, as a result of that, I mean, we've been able to take, you know, multiple processes to multiple different facilities and scale them very, you know, very quickly and very successfully.

And it also is a signal to partners that will be the facilitators and the ultimate buyers of that carbon, And then I can take the other side of that, which is maybe like the technical growth that we're seeing.

And I think it really, you know, it's, it's critical to have, you know, a lot of chemical engineers around.

I think that we're gonna, Well, we're going to see a lot of computer science, obviously coming in, right?

And I think, you know, this, you can, you know, I think I hear, still hear very frequently that, you know, going to scale is like a black box.

That's kind of like a throwaway, but I hesitate to say because it even feels so obvious.

And no, it's not.

But there is this opportunity to look at synthetic biology as engineering molecularly precise.

It's, it's chemical engineering.

So once you think about that, you start bringing in a lot of the existing infrastructure, like the, you've got the Facebook, like Facebook's got its protein group, Google got its protein group, Salesforce has its protein group, is great.

And you can develop robust scale down models, and you can get yourself very confident that you're going to be able to go to scale, and it's going to, and it's going to work as well as it has in your scale down model in the lab.

But then you've got the other sides too, which is that, you know, like, as Sarah mentioned, there's also like heavy industry that has a lot of role.

And I think, you know, that's where we put a lot of effort.

The way I think about it a lot is like, what are the most productive communities in terms of founders, growth of businesses, et cetera, and then how do you replicate that?

And I think the other thing to make sure you do is don't cut any corners. I mean, you know, do that robustness testing, try to understand, you know, what are the, what are the things that might happen at scale?

And so I mentioned computer science, biotech for health.

And how are you going to manage them if they do?

The other one that I say, which is just so funny, but like, I think it's really informative actually, is the jiu-jitsu community, because like it's this world where people can all test their stuff, because everyone's got mats, and then there's this way of disseminating ideas, which is through YouTube.

And you can do all of that homework, you know, in the lab and be as prepared as you possibly can when you take it to demo or take it to a toller.

And then that's highlighting the people who have become really good at disseminating good ideas end up becoming very well-rewarded.

So that, you know, if there are surprises, you've already thought about them ahead, and you understand how your microorganism is going to respond and how you're going to deal with it.

And so I think we're gonna see a lot of obvious things happen, is, I think, like, scalable protein engineering for specific molecular scale problems.

I think a lot of companies get in a bind in that, you know, their timelines get pinched.

So rock weathering is something that we have a community working on.

And so what gets pinched, the backend, and, you know, before they go to scale, and you can't shortcut that part, you have to, you have to take the time to make sure you're ready to go to scale.

But then it gets to the next part, which is that, okay, like, let's say you can design something from a molecular bio perspective, you got the super fancy protein, you've got to cross the valley of death.

And I say, you know, if organism development took longer than you thought, or process development took longer than you thought, okay, that's fine, but you still have to give your scale down and your robustness testing the time it needs before you go to scale so that you're ready, seeing lots of like plus ones to techno economic analysis in the in the comments.

And the valley of death exists in one, you know, in people who work in therapeutics will speak about that normally, like, you know, at the translation stage, maybe the humans, the valley of death, I think, in climate relevant companies ends up a lot, like, I think happens a lot earlier, in terms of like, yes, you can do something that works in this little E. coli in this Petri dish, but now show us this, you know, show us a kilogram scale, like problem.

I know that, you know, Obviously, hiring chemies is a good thing.

And I think, what does it mean to be like, what skills and industries that we have to bring in to be rapidly be crossing that.

We've talked about that.

And once again, I think Ginkgo has a big role to play.

But there's I think there's other workforce needs, maybe for for companies in this space.

I think chemical industry has a big role to play.

When you're thinking about scale up, do you think about those challenges and what you're looking for?

I'd love to see people like the mining industry, petroleum industry, I think those guys have actually been really active.

And is that different than it was, you know, five years ago, 10 years ago?

And as much as I think, some part of parts of the climate community want to talk shit on the big heavy industries. And sure, somebody said, there's also a different way of looking at it, like these people, actually, there's a lot of good people there that are actively trying to contribute.

So the question is on the CHEMI talent, is that what you're asking?

And there's it's like, they represent very big lovers.

No, like if you're if you're trying to hire for your companies, do you are you now looking for people with different sets of backgrounds to do different?

So I would just urge if there's anyone out there, like sometimes you have to drop the purity and really think more pragmatic, and there's good people that want to add value.

So, you know, CHEMIs are great.

Yeah, that's great.

Bioengineers, people with, you know, software and hardware tool experience.

And, you know, in terms of, you know, you mentioned like, you know, crossing crossing the valley of death.

All of those things are things that you need or they're specific areas, you know, you'd love to see, more people with some synthetic biology training plus something else that's going to really help accelerate, you know, companies like yours go to scale.

And, you know, sir, I know you did your master's thesis looking into basically roadmapping, you know, bioengineering as a solution for climate.

Yeah, I mean, I'm a physician scientist who did not even, I mean, I did IGM in undergrad, but I was by no means like going down a synbiopathic path.

And now as an investor, how do you work with companies?

And I think I got really, really good at the technical economics side and really understanding the engineering side of the equation.

And how do you think about what kind of the right scale of demonstration is to really build conviction in a particular, particular technology, right?

I think that those things can be taught.

Because it's a, you know, massive climate is a massive problem.

But I think there is like, just the baseline.

But you know, how do you find like the minimum viable product for these companies to develop that convinces you to invest and to, you know, bring other folks into the into the company?

So a lot of people like, Oh, that's not my that's not my area of expertise.

Yeah, I mean, that's, that's a, you know, probably the most critical challenge for any early stage company, usually, by the time you're out, you know, seeking your first venture funding, you've demonstrated something works in the lab, like here's a proof of concept, here's a proof of principle, you know, we can engineer this pathway, we can produce this molecule of interest.

So I'm not going to dive into it.

But what that's not a business, what's going to be a business is can you do it at scale at a cost that's competitive or advantageous to the fossil fuel incumbent?

I think it's more about how quickly you can adapt into, okay, I do have to be a chemi for for this to succeed.

If you can do that, right, you've got a lever to change an entire industry.

And so like, I'm going to learn everything I can about it and get mentors to help me learn.

It's super, super exciting.

I think on the flip side of that is also the commercial team is, you know, in the chemical space, you don't necessarily have, maybe in the high end, you do have really technical salespeople, but in like, low end specialties, borderline commodity chemicals, a lot of you guys are just used to selling based off of just price, or supply chain issues.

And so, What we are very glad to do is to help founders, you know, clarify what that path looks like to help connect them with existing service providers, you know, big companies, for example, like Lanzatec or other partners, depending on what, you know, what target the company is looking at, who can really help them map out, help them do a techno-economic analysis of what is scale-up look like for us, and how does this become an excellent business?

Now we're having to train them on how to think about telling the narrative of a process and why the fundamental process is better and more important for the customer and how it's going to reap benefits.

And, you know, if it doesn't pencil out on paper now, what can we do to change our process and push our thinking?

So I'd say it's a for me, it was just like, yeah, the technical understanding is important, but it's more of how quickly you're able to really learn some of this stuff, and how rigorously you want to learn it.

You know, I've had to do that a few times myself working at early-stage companies, and everybody has to go through that.

And I think that's what separated people, at least in our company, people who have been hyper successful versus people who have been moderate.

There's always going to be challenges you didn't anticipate.

Yeah, I think a lot of the people I know that have been really successful in synthetic biology.

There are always going to be things that are sort of naturally advantageous to the process you've picked and things that are more of an uphill battle. And the best thing you can do as an early-stage founder is get a handle on that early.

Right, like, I come from a broad range of expertise.

Dive in early.

You know, I was a biochemist, then protein engineer, then microbiologist, then chem E. And so you bring all of those things together and, you know, now I'm in a more industry setting.

You know, do the rigorous work.

So I'm trying to understand those commercial and BD side of things.

Bring in partners.

And so I think that's why we always have a lot of fun.

I don't know.

Nelson, do you have anything to add on that kind of topic?

No, I mean, I think, you know, we do, you know, I'd say, you know, I mentioned chem E's, I'd say like roughly 25% of my R&D team is chem E's, but then we have a very diverse background of people and perspectives. And I think that's one of the things that makes us successful is bringing, you know, people with different skill sets and different perspectives to the problem. And they all have a, you know, a different take on it. And that's how we, you know, then solve these very challenging problems we need to solve in order to develop these large scale processes.

So I think, you know, right now it's very helpful for us because we're trying to deploy, to have that chemical engineer push and rigor that we need.

But I think, you know, biology has been doing, you know, extremely efficient biomanufacturing for a long time.

And I think there's still a lot for us to learn out there.

So more, you know, bringing on people who understand microbial physiology more, because I think there's many more opportunities out there potentially to develop these bioprocesses in even a more, you know, carbon conservative way.

Because I think, you know, organisms have figured out some, you know, very, very creative ways to get things produced.

And I think we only scratched the surface of the ways that they've figured things out.

And there's a lot more to discover there that we can then harness and take to scale.

We probably have time for maybe one more question.

And I guess maybe the, place to wrap it up would be like a forward thinking like, you know, where do you think biomanufacturing, you know, with climate is going to be in, you know, 10 years, you know, as we harness these not yet harnessed processes, and Biology.

Hmm, that's a, I'm a bit biased, as always.

But I think where a lot of innovation is going to come is how we figure out how to integrate biology with the more traditional chemical engineering processes and technologies.

Let's be frank, petrochemistry exists because for so many years, because it's efficient, it can scale really well.

The question for me becomes, well, how do we take some of the learnings from petrochemistry and marry it into a lot of learnings into biology?

And I think that's where a lot of innovation is going to happen.

I'm not a all or nothing kind of guy when it comes to this. I think there's going to be some marriage of the two that's going to make us hyper successful in 10 years.

And it's not going to look just like, oh, it's a fermenter that's doing their thing.

Maybe it's a fermenter married with a metal catalyst or a fermenter, you know, married with some downstream process, where all of a sudden, yeah, we can call it Symbio, we can call it whatever we want.

But the reality is, it's going to be a fusion of multiple different principles that have worked in the past.

So yeah, it's not like an amazing, like inspirational statement, it's just I think that's the reality of what we're going to do.

Yeah, I think that that's, to some extent, the essence of synthetic biology has always been like, let's put the modules together from biology or not biology. Right, that work in order to do things that we couldn't do before.

Do you want to have the last word on this one?

Yeah, no, I think I think we're gonna, you know, we're gonna move to this, you know, the vision of a circular economy, right? I mean, I think, you know, some of the things we're going to talk about, we're going to, you know, we're going to get to carbon capture, we're going to use renewable energy, we're going to be able to take things from, you know, materials and products from end of life and recycle them back in.

And I think biology is going to be the key catalyst that will help us take those, you know, materials and feedstocks, you know, much, you know, right now, not accessible very easily.

But I think we're going to be able to grab those feedstocks at end of life, push them back in through a biomanufacturing process in a full circular economy.

And I think that's going to, you know, happen increasingly, and it's going to go to scale.

And I think, you know, that that's all out in front of us.

And there's a lot of different industries that are going to come together to make that happen.

Well, thank you guys so much.

This has been a great, I think, great talk.

I think it's really inspiring and lots of stuff to do and big impacts we're going to have.

Amazing.

Thanks so much, Cynthia.

Oh, thanks very much, guys.

Thanks, everyone.

That was great.

Thanks, Cynthia.

Thanks, Gaurav.

Thanks, all, Cynthia.

Great.

Yeah, and I think one of those last points is awesome that we love Ginkgo talking about, about like workforce development.

So, saw you Jen, love the cellar, down in Texaco industry, people down there, they know what they're doing.

So really cool.

So let's talk more about other systematic changes that we need or systemic changes we need.

I'm gonna bring on Jen, Kristen, and.

Hi, everyone.

Welcome to our session on sort of systemic change.

We're going to talk a little bit today about sort of not just the technology, but also the market forces that are involved.

We all make these climate action real.

So I'm joined by two brilliant women today.

So I have Kristen Ellis from Lower Carbon Capital and Maddie Hall from Living Carbon who I'll let, moment.

I'm Jen Whipp.

I run our commercial team at Ginkgo. So I wake up every day thinking about how we can make our platform more accessible and really drive improvements with our customers to help them achieve the sort of business outcomes that they're they're hoping to.

And certainly, Maddie and Kristen are both out there in the ecosystem trying to make change, change happen.

So, Kristen, maybe we'll start with you.

Why don't you tell us a little bit about yourself and what you're working on at Sure.

Hi, everyone.

So excited to be here.

You know, coming and hanging out with Ginkgo always feels like coming home.

So my background is in biotechnology. I've been working in and adjacent to biotech for the last 10 years.

I started in therapeutics and diagnostics, as you do, after getting a degree in biochemistry from the University of Alabama at Birmingham.

Was trying to take a gap year that has turned into a gap decade.

So I never went back in and got a PhD. But I spent a long time working through different places in industry from therapeutics and diagnostics to high growth startups.

I was an early employee at Opentrons, thinking about, Okay, if, if we actually do want to build a world on a biological platform, whether that's bioengineering or nature based systems, what are the pieces that need to be put into place to make that happen?

And so that is that has driven a lot of my career.

I transitioned into working on climate full time.

In 2018, the IPCC report came out scared the living daylights out of me. And it was basically the part where they said, we're going to need to reduce emissions and do carbon removal.

They may as well have been saying in my mind, we need magic, right?

But I could think of a technology that already eats carbon excitedly every day, and that's biology.

And so I started to think about what are the applications of synthetic biology, biological systems or bioengineering to climate change.

Did a couple of fellowships, one with an NGO called Carbon 180, one with the National Renewable Energy Laboratory.

And the joke I always tell is I successfully executed the failed entrepreneur to VC pipeline, joined Lower Carbon where now I'm investing primarily in sort of nature-based solutions to climate change and thinking about areas where we can apply tools of synthetic biology to sort of change the tide on climate change.

And that's everything from companies like Living Carbon that Maddie's going to tell us about, enhanced photosynthesis, but that's also chemicals.

We invest in solution and a lot of other areas, so.

Great.

And speaking of sort of harnessing the most obvious, obvious sort of source for capturing carbon, Maddie, tell us a little bit about Living Carbon and yourself and what, Yeah, of course.

Thanks, Jennifer.

So I'm Maddie, I'm CEO and co founder of Living Carbon. And we are a climate change biotech company with a mission to utilize the inherent power of plants to capture more carbon.

Our initial focus has been on genetic daily engineering trees, specifically focused both on two things, photosynthesis enhancement, so improving the rate of carbon capture per tree, looking at different alternative metabolic pathways, and then also on storing that carbon underground for longer.

I think synthetic biology has a really unique opportunity to improve the durability of nature based carbon capture solutions, which I think it's very hard to do without some sort of combustion or symbiome.

My background is actually not in synthetic biology.

But my background is in a lot of PhD wrangling.

So I worked at a research lab called OpenAI.

That's another ambitious, ambitious company working on developing robots and neural networks that were as intelligent as people.

So I like to think of my only skill as being wrangling PhDs, pretty much all I've got.

But I did kind of go down a similar path to Kristen, where you realize all of this talent was there working on so many different problems, like machine learning and AI was like the hippest thing you could do in 2018.

And then I got the opportunity, I've also spent some time in hard tech investing, to work on Y Combinator's request for carbon sequestration and carbon removal.

Oh, my gosh, I remember reading about climate change in 2014, or in 2004 with The Inconvenient Truth.

Nothing's changed.

This is terrible.

It's only gotten worse.

And at that point, you know, I couldn't stop thinking about all of the plant biotech research that had gone into model organisms like tobacco, arabidopsis, crops and thinking, well, geez, like, what if we oriented this entire industry back to be around a problem that I felt was even more important than increasing food yields, but really focused on carbon removal and climate resilience.

Yeah, that's great.

I think a lot of people can relate to this, like nothing has changed kind of idea.

And we keep talking about a lot of the same problems.

And our technology has evolved quite a bit.

But we haven't necessarily turned that into sort of meaningful change in the market.

So I'm curious to hear, maybe from both of you, we'll start with Kristen, like, what are some meaningful business models that can create change in the market?

And, and how do we kind of ensure that those businesses are supported, so that they can actually, breach some goals or make the change we're trying to see?

What are you seeing?

Hmm.

I mean, we're we're seeing a lot.

And I don't necessarily think that, There is as much innovation in the business model as you might think, and I might be sort of looking at that sort of myopically focused from a venture capital lens, right?

But the things that we think about are, you know, do you have a business model, right?

Like, do you have someone that wants to buy what you're selling?

Can you scale that really fast?

And can it get really big?

And when we talk about scale, right, we're talking about, you know, rebuilding entire systems in some aspects, and some of the business models we're talking about, we're thinking sort of 10 and 20 and 30 and 40 years out from now and talking about rebuilding the Dow Industrial Index, right?

We're talking about coming for the Haber-Bosch process, we're talking about coming for these really big, huge scale sort of commodity markets and systems.

And the business model there, I mean, it goes back to some of what Gaurab was saying, is it's pretty straightforward, right?

You have to do your techno-economic analysis and build the model to see, does the thing that you're building technically work?

Are you breaking any laws of thermodynamics?

And is it actually going to scale to a point to have impact?

One of the top line things that we add into the business models that we consider from an impact perspective, of course, for capitalists, we want it to generate a lot of revenue and make a lot of money.

We also think about, we think in terms of CO2 equivalents.

When I think about scale and impact, I think how many millions or billions of tons of carbon emissions or CO2 equivalents is this going to reduce from the supply chain, and or if we're talking about carbon removal, can this actually scale to hundreds of millions or billions of tons of carbon removed long-term?

We don't just think about those things, right?

Like I mentioned fertilizer, I mentioned the Haber-Bosch process, of course, we want, you know, fertilizers that can help us grow food that are going to have a lower carbon footprint.

We also think about, for instance, okay, if we're talking about new ways of fertilizing our crops, we also have all of these extenuating ecosystem impacts like runoff and eutrophication.

Is this technology also solving those problems?

Or are we reinforcing, So that might not have been an exact answer to your question, but I think the business models are fairly straightforward.

And I think one of the most interesting things is we're starting to see market pull and market pressure, particularly around carbon removal and carbon emissions. There are a lot of voluntary and compliance markets emerging that are actually putting a capitalist incentive on changing those practices.

And so I think those are some of the places where we're seeing people aim.

And Maddy, like picking up on that about sort of like building something that gets to a gigaton scale.

Is that sort of how you landed on tree cell systems?

Or how are you thinking about sort of building scale and the technology?

Yeah, I mean, I think like thinking about a gigaton frame is really inspiring, both to founders, but also to the employees that we're working with.

I think we initially focused on tree cell systems because, honestly, like genetically engineering trees and also like symbio for direct carbon removal wasn't it's not something that people are super familiar with, unfortunately.

And so for us, the reason was, okay, like, we know that there's a large existing market within the timber industry that already exists, right?

We don't have to create that.

So that was one of the reasons.

The other reason was really because of the fact that, you know, you have increased permanence with like secondary growth from plant species.

And then it's something that captures people's minds and hearts.

And I think for me, that was really important, because it shows like a proof of concept of the fact that like, we can use the R&D platform that we've developed at Living Carbon to work in multiple different species.

So I definitely don't see trees is like the easiest thing to do, or it's like the end all for us by any means.

But I think it's an important part of the story to tell, right?