Ginkgo Bioworks (DNA) Stock: Why The Price Increased Over 1.7% Today

By Amit Chowdhry ● Apr 22, 2022
  • The stock price of Ginkgo Bioworks Holdings Inc (NYSE: DNA) increased by over 1.7% during intraday trading today. This is why.

The stock price of Ginkgo Bioworks Holdings Inc (NYSE: DNA) increased by over 1.7% during intraday trading today. Investors are responding positively to Ginkgo Bioworks announcing plans to significantly expand its platform capabilities in agricultural biologicals, from discovery to field. 

These capabilities are going to be built through a series of transactions, in which Ginkgo will acquire Bayer’s 175,000-square-foot West Sacramento Biologics Research & Development site, team, and internal discovery and lead optimization platform as well as integrate the R&D platform assets from Joyn Bio, a joint-venture between Ginkgo and Leaps by Bayer formed in 2017. 

Bayer is going to be the anchor agricultural customer of Ginkgo’s expanded platform, entering into a significant new multi-year collaboration which will focus on the advancement of Joyn’s marquee nitrogen fixation program, as well as new programs in areas such as crop protection and carbon sequestration. And while Ginkgo will continue to evaluate the operating expenditures required to launch and scale its expanded agricultural capabilities following these transactions, it is expected that the cash proceeds from this multi-year collaboration with Bayer may significantly offset such anticipated expenditures. These proposed transactions are projected to close before the end of 2022, pending the finalization of definitive agreements and subject to regulatory approvals.

Agricultural biologicals are known as a rapidly growing category of solutions that offer tremendous sustainability and performance benefits. And against the backdrop of rising fertilizer costs and novel pest and disease threats, growers are calling for new agriculture solutions that can increase yields while decreasing their environmental footprint. While chemical and plant trait solutions have long been the dominant solutions on the market, the demand for biologicals has increased dramatically.

In recent years, Bayer has made a strategic decision to focus on becoming the preferred research, development, and commercial partner in the biologicals segment, while utilizing an “open innovation” model to be able to partner broadly with disruptive discovery companies. Through this agreement, Bayer is committing to a significant multi-year collaboration, advancing multiple programs including a marquee nitrogen fixation program as well as a suite of other programs in areas such as next-generation crop protection and carbon sequestration.

Over the last 5 years, Joyn has developed a new class of microbial solutions in partnership with Bayer and Ginkgo. And through this transaction, Joyn’s product concepts will be advanced by Bayer, with a particular focus on its nitrogen fixation program, while the platform assets and supporting team members will be integrated into Ginkgo as the company expands its support for agricultural biologicals. Ginkgo is also going to offer these capabilities to a wide variety of customers in agriculture as it expects to provide a full stack of services in this field, allowing companies of all sizes to access best-in-class lab-to-field translation expertise, greenhouse capacity, formulation capabilities, and pilot fermentation.

The parties are expecting to sign a definitive agreement and proceed toward an efficient close, supported by ongoing integration planning efforts.

KEY QUOTES:

“Bayer, Ginkgo, and Joyn share a common vision, which is to enable biological products to be a critical part of the solution to the world’s greatest agricultural and environmental challenges. We are incredibly impressed by the success of the Joyn team and the deep expertise of Bayer’s West Sacramento R&D team, and are thrilled to have them join Ginkgo as we build deep end-to-end capabilities in ag biologicals on top of our large scale horizontal platform. We believe we’re bringing together the most innovative minds in agriculture with the experience of a team that has brought several effective biological products to market for Bayer – opening this platform up to the world has the potential to truly revolutionize the field.”

— Jason Kelly, CEO and cofounder of Ginkgo Bioworks

“Biological solutions will play a critical role in the agricultural innovation ecosystem, and we see tremendous opportunity for biologicals to add even more value for agriculture in the future because they are effective, and offer environmental benefits that producers want. Bayer is moving to strengthen its product development and commercial positioning through strategic research partnerships for new product development, and we are excited to deepen our relationship with Ginkgo, which we expect to be a key partner for many years to come.”

— Bob Reiter, Head of R&D for Bayer Crop Science

“With support from Ginkgo and Bayer, Joyn Bio has made groundbreaking discoveries across a number of programs that will be foundational for future work in biologicals. We are excited to take this platform to the next stage, with Bayer advancing key programs to the next level and working with Ginkgo to open our capabilities up to a broader set of commercial partners.”

— Michael Miille, CEO of Joyn Bio

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.