The impact of layoffs at Ginkgo Bioworks is coming into clearer focus. After announcing a plan to reduce “labor expenses” by at least 25% in early May, the synthetic biology company disclosed this week that will translate into the loss of more than a third of its workers.
The cutbacks are part of a broader restructuring strategy that aims to reduce operating expenses by $200 million within the next 12 months—including by consolidating its locations into a smaller number of core facilities and simplifying its customer programs, the company said during its first-quarter earnings release earlier this year.
Ginkgo reported that sales dropped by more than half year-over-year—down to $38 million from early 2023’s $81 million—as revenues from supplying COVID-19 tests to elementary and high school programs evaporated, resulting in a total quarterly loss of $178 million.
Around that same time, the company said it received a warning from the New York Stock Exchange that it was at risk of being delisted, due to its share price averaging below $1.
“This trend needs to change, and we are simplifying both what we sell to customers and how we do the work that drives revenue at Ginkgo,” co-founder and CEO Jason Kelly said at the time.
“Fortunately, we have the experience to know which types of programs are most efficient to run on our lab automation and can use this knowledge to further consolidate our Foundry operations and footprint into Biofab1, our new fully integrated lab data center, which is expected to open in mid-2025,” said Kelly.
“We are also simplifying our transaction terms in many instances as the benefits of our IP and downstream value terms were not worth the cost of slowing our commercial activity,” he added. “With these changes, we are targeting reaching adjusted EBITDA breakeven by the end of 2026, while seeking to reduce interim burn substantially to maintain a strong margin of safety throughout this transformation, supported by our $840 million cash balance and no bank debt.”
Earlier this month, the Boston-based company filed a WARN notice with the Massachusetts labor office, saying it was planning 158 layoffs in Cambridge by the end of this year, according to a report from STAT.
Ginkgo offered more clarity on the cuts’ larger scope within an SEC filing this week: Starting June 17, the company began reducing its workforce by at least 35%, across R&D and other divisions, with the layoff process expected to continue into 2025. Based on previous headcount estimates, as many as 400 employees could be let go.
Earlier this year, Ginkgo went on a spending spree with the acquisitions of three different molecular medicine startups—which aimed to support the company’s launch of a technology network compiling offerings from over 25 developer partners.
The February purchases included Proof Diagnostics, the Cambridge CRISPR test developer co-founded by Feng Zhang of the Broad Institute of MIT and Harvard, which has been working on a “future-proof” COVID-19 tabletop analyzer; New York’s Patch Biosciences, exploring computer-designed cargos for genetic medicines; and the AI drug discovery company Reverie Labs, also in Cambridge.
After that, in April, Ginkgo bought up a handful of cell therapy platform assets, including CAR libraries, from Modulus Therapeutics.
Regarding the layoffs, the company said it expects to log at least $12 million in severance and separation costs this quarter, with more details to be provided during its second-quarter earnings call.