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Ginkgo Gulps $100M to Build Synthetic Food, Fragrance Business

Xconomy Boston — 

Ginkgo Bioworks sits at the intersection of synthetic biology, software, robotics, and advanced manufacturing, making it one of the more intriguing startups in Boston. Now, a fresh round of $100 million in venture capital also makes it one of the area’s biggest technology bets.

Ginkgo has raised $154 million from investors since March 2015. The previous year, it participated in the Y Combinator program, the Silicon Valley startup accelerator known for investing in and nurturing software startups like Airbnb, Dropbox, and Reddit. Ginkgo was Y Combinator’s first biotech investment.

Ginkgo makes custom yeast and other microbes, which its customers use to make new products. Examples of the engineered products secreted by the microorganisms include rose-scented oil that goes into perfumes and sweeteners for beverages.

Its more speculative projects include developing probiotic bacteria intended to fight infections in humans. It also plans to supply active pharmaceutical ingredients and other tools to drug makers, co-founder and CEO Jason Kelly says.

Ginkgo is positioning itself to play a prominent role in new manufacturing methods across a variety of sectors—including, if synthetic biology plays out as Ginkgo and some industry experts predict, programming living organisms to create more sophisticated computing devices. (More on that later.)

“We see ourselves as creating a new industry—the organism industry—which we believe will ultimately serve a surprising breadth of markets,” Kelly says. “Our view on it is what’s coming in engineered biology is going to be as big as what you saw in information technology in the last century.”

Before such optimism comes true, the synthetic biology industry must first recover from huge bets made on biofuels in the past decade that didn’t pan out. Some companies in this sector, like Evolva and Amyris, are paring back ambitions—building businesses on less groundbreaking products like flavors and fragrances—while working their way up to bigger problems. That’s Ginkgo’s approach as well, which one of its investors defended in a Huffington Post op-ed last year.

“For now, there’s nothing wrong with focusing on startups that will generate revenue while moving up the complexity curve faster and more predictably than anyone else,” OS Fund founder Bryan Johnson wrote. “Along the way, they’ll make major contributions to how we do science.”

That’s not to say everyone has curtailed far-out, even controversial, ideas for synthetic biology. A group of scientists that include Harvard University genetics pioneer George Church are proposing the assembly of a synthetic human genome. Their closed-door meeting earlier this year, followed last week by a proposal (and a call for $100 million in funding), have stirred intense debate about the ethics and feasibility of such a project. (Church says he doesn’t have any direct ties to Ginkgo, but he holds equity stakes in San Francisco-based Twist Bioscience and Gen9 of Cambridge, MA, both suppliers of synthetic DNA material to Ginkgo.)

Ginkgo has signed deals with 15 customers to work on about 30 projects so far, Kelly says, but he declined to share revenues. (The company is privately held.) Its customers include Japanese food and pharmaceuticals manufacturer Ajinomoto and French fragrance and flavor company Robertet.

Customers pay Ginkgo an undisclosed amount of money up front, but the company will primarily generate revenue from royalties on its customers’ products, Kelly says. Its first royalty-generating product should hit the market this year, he adds—a fragrance ingredient made by Robertet.

Ginkgo will use the $100 million windfall to grow from 90 to at least 140 people over the next year, and it will expand into a second “foundry” in Boston’s Seaport district, where robotics and other automated technologies will help manufacture microorganisms more cheaply and quickly than scientists ever could working by hand at a lab bench.

That’s the world Kelly comes from. After earning a PhD in biological engineering from MIT in 2008, he started Ginkgo with computer scientist and synthetic biologist Tom Knight and fellow MIT PhDs Reshma Shetty, Barry Canton, and Austin Che.

The company spent the first few years honing its processes for designing and manufacturing microbes, surviving primarily on about $20 million in grants from DARPA, the U.S. Department of Energy, and others, Kelly says. By about 2013, Ginkgo was ready to take on projects for commercial customers and began raising equity funding, he says.

“It’s a scale business,” Kelly says. “It makes sense to make the place bigger and do a lot more work. That’s what the funding is for.”

Here’s a snapshot of what Ginkgo does: Staff members use software to design a sequence of DNA base pairs that will serve as the biological instructions for the engineered microbe, akin to writing software code. An outside supplier then ships the custom raw DNA material to Ginkgo. (Ginkgo has become one of the world’s largest purchasers of synthesized DNA—it ordered a batch of 100 million DNA base pairs last year from Twist, and this year it is ordering 300 million more from Twist and 300 million from Gen9, according to Twist and Ginkgo.)

At the time of the first Twist-Ginkgo deal last year, the companies said that the total synthetic DNA market was roughly 1 billion base pairs. To put that in perspective, a full set of human DNA has about 3 billion base pairs.

Once the DNA arrives at Ginkgo, it gets stitched together and inserted into living microbial cells by Ginkgo’s software-controlled robots. The microbe goes through a fermentation process to render the desired compound, like rose oil or a sweetener. Once Ginkgo hits upon a genetic design that yields the desired characteristics in the final product, it can start producing larger quantities of the organisms.

Ginkgo offers the ability to design new products with more creativity and flexibility, and to manufacture them more quickly and cheaply than with traditional methods, Kelly says. In creating novel rose oil for Robertet, for example, Ginkgo “can replace the land use and extraction and all these steps that you would have working with a crop.”

Biology is already “the world’s best manufacturing technology,” he says. “If you look at, for example, a protein in a cell, the atoms that build that little machine are placed with better precision than Intel can do when they’re building semiconductors.”

The big challenge is designing biology to grow anything we want, Kelly says. But he says it’s conceivable that, someday, even smartphones could be produced via synthetic biology.

It sounds like science fiction, but he’s not alone in thinking it’s possible. Harvard’s Church says he has made similar arguments in his book “Regenesis.”

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