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YoY shift: Lean +
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.22pp more bullish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.01pp
Flat
Net-tone change vs last year's 10-K.
MD&A
+0.44pp
Lean +
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
discontinue+4
unable+3
fail+2
exposed+2
unintended+2
Positive rising
achieve+3
collaborations+3
advances+2
opportunity+2
strengthen+2
Risk Factors (Item 1A)
44,066 words
Risk Factors Summary
Investing in our securities involves risks. You should carefully consider the risks described in “Risk Factors” beginning on page 20 before making a decision to invest in our Class A common stock. If any of these risks actually occur, our business, financial condition and results of operations would likely be materially adversely affected. Some of the risks related to Ginkgo’s business and industry are summarized below. References in the summary below to “we,” “us,” “our” and “the Company” generally refer to Ginkgo.
• We have a history of net losses. We expect to continue to incur losses for the foreseeable future, and we may never achieve or maintain profitability.
• Only our employees and directors are entitled to hold shares of Class B common stock (including shares of Class B common stock issued in the future), which have ten votes per share. This limits or precludes other stockholders’ ability to influence the outcome of matters submitted to stockholders for approval, including the election of directors, the approval of certain employee compensation plans, the adoption of certain amendments to our organizational documents and the approval of any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transactions requiring stockholder approval.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
terminated+3
shortfall+3
termination+2
against+1
risky+1
Positive rising
effective+4
success+3
enables+1
better+1
advantage+1
MD&A (Item 7)
8,549 words
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K. Further, this section of this Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. For discussion related to 2023 items and year-to-year comparisons between 2024 and 2023 that are not
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included in this Form 10-K, please refer to Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2024 Form 10-K, filed with the United States Securities and Exchange Commission on February 25, 2025. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs that involve risks and uncertainties. Actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed in Item 1A. “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” elsewhere in this Annual Report on Form 10-K.
Overview
Our mission is to make biology easier to engineer.
Ginkgo sells services to government and commercial customers in two business segments: cell engineering, where we provide tools and biological R&D services across a range of industries, and biosecurity, where we provide services to customers who are working to identify, monitor, prevent, mitigate, and ultimately protect humanity from biological . An overview of these two business segments is provided below.
• We may need substantial additional capital in the future in order to fund our business.
• We have experienced periods of significant organizational change, and if we fail to effectively manage these changes, then our business, results of operations, and financial condition could be adversely affected.
• Our limited operating history and evolving business makes it difficult to evaluate our current business and future prospects.
• We have exposure to the volatility and liquidity risks inherent in holding equity interests in other operating companies and other non-cash consideration.
• We have in the past, and in the future may continue to pursue strategic acquisitions and investments that are dilutive to our stockholders and that could have an adverse impact on our business if they are unsuccessful.
• We must continue to secure and maintain sufficient and stable supplies of laboratory reagents, consumables, equipment, and laboratory services. We depend on a limited number of suppliers, some of which are single-source suppliers, and contract manufacturers for critical supplies, equipment, and services for research, development, and manufacturing of our products and processes. Our reliance on these third parties exposes us to risks relating to costs, contractual terms, supply, and logistics, and the loss of any one or more of these suppliers or contract manufacturers or their failure to supply us with the necessary supplies, equipment, or services on a timely basis, could cause delays in our research, development, or production capacity and adversely affect our business.
• We use biological, hazardous, flammable and/or regulated materials that require considerable training, expertise and expense for handling, storage and disposal and may result in claimsagainst us.
• Third parties may use our engineered cells, materials, and organisms and accompanying production processes in ways that could damage our reputation.
• Our investments in and use of AI may result in reputational harm, liabilities, or other adverse consequences to our business operations.
• Our recent restructuring actions in connection with our plans to reduce operational expenditures may not result in anticipated savings, could result in total costs and expenses that are greater than expected and could disrupt our business.
• If our customers discontinue their development, production and manufacturing efforts using our engineered cells and/or biomanufacturing processes, our future financial position may be adversely impacted.
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• Further, because our revenue is concentrated in a limited number of customers, some of which are related parties, our revenue, results of operations, cash flows and reputation in the marketplace may suffer upon the loss of a significant customer.
• We are or could become involved in securities or shareholder litigation and other related matters, which could be expensive and time-consuming. Such litigation and related matters could harm our business.
• In certain cases, our business partners may have discretion in determining when and whether to make announcements about the status of our collaborations, including about developments and timelines for advancing programs, and the price of our common stock may decline as a result of announcements of unexpected results or developments.
• Uncertainty regarding the demand for passive monitoring programs and biosecurity services could materially adversely affect our business.
• Rapidly changing technology and emerging competition in the synthetic biology industry could make the platform, programs, services, tools and products we and our customers are developing obsolete or non-competitive unless we continue to develop our platform and pursue new market opportunities.
• Ethical, legal and social concerns about genetically modified organisms (“GMOs”) and genetically modified plant or animal cells and genetically modified proteins and biomaterials (collectively, “Genetically Modified Materials”) and their resulting products could limit or prevent the use of products or processes using our technologies, limit public acceptance of such products or processes and limit our revenues.
• If we are unable to obtain, maintain and defend patents protecting our intellectual property, our competitive position will be harmed. If we are unable to protect the confidentiality of our trade secrets, our business and competitive position will be harmed. We may become involved in lawsuits or other enforcement proceedings to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and potentially unsuccessful.
• We rely on our customers, joint venturers, equity investees and other third parties to deliver timely and accurate information in order to accurately report our financial results in the time frame and manner required by law.
• We had in the past identified a material weakness in our internal controls over financial reporting, and we may identify additional material weaknesses in the future. A failure to maintain an effective system of internal control over financial reporting may result in a failure to accurately report our financial results or prevent fraud. As a result, stockholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our common stock.
• Failure to comply with federal, state, local and international laws and regulations could expose us to significant liabilities or penalties and adversely affect our business, our financial condition and results of operations and we may incur significant costs complying with such laws and regulations
• We and our laboratory partners are subject to a variety of laboratory testing standards, compliance with which is an expensive and time-consuming process, and any failure to comply could result in substantial penalties and disruptions to our business.
• Significant disruptions to our and our service providers’ information technology systems or data security incidents could result in significant financial, legal, regulatory, business and reputational harm to us.
iii
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PART I
Item 1. Business.
Unless the context otherwise requires, all references in this section to the “Company,” “Ginkgo,” “we,” “us,” or “our” refer to the business of Ginkgo Bioworks Holdings, Inc. and our subsidiaries.
Overview: Our Mission is to Make Biology Easier to Engineer
Our mission is to make biology easier to engineer. That has never changed. Every choice we’ve made with respect to our business model, our platform, our people, and our culture is grounded in whether it will advance our mission.
Why? Because:
1. Biology is programmable. All living things run on the same DNA code.
2. Biology matters. The ability to engineer biology has had and will have a profound impact on how we develop new medicines and vaccines, grow our food, and manufacture many of the things we use every day.
3. Biology is hard. Today, it is still too difficult and too costly to engineer biology, preventingcriticalinnovations from reaching the market.
Ginkgo sells services to government and commercial customers in two business segments: cell engineering , where we provide tools and biological R&D services across a range of industries, and biosecurity , where we provide services to customers who are working to identify, monitor, prevent, mitigate, and ultimately protect humanity from biological threats. An overview of these two business segments is provided below.
Cell engineering
Our cell engineering customers work with biology to discover and manufacture new products that have transformative potential across industries:
• in medicine, developing innovative new therapeutics and vaccines;
• in agriculture, advancing the sustainability and security of our food systems;
• in industrial biotechnology, advancing the way we manufacture a wide range of products for better performance and lower environmental impact; and
• in government, advancing new R&D priorities of strategic importance to the United States and its allies.
Because engineering biology is difficult and unpredictable, biotech R&D is traditionally performed by in-house labs filled with highly trained scientists running lab experiments by hand over several years in the hope of ultimately developing a working product. Many cell engineering projects fail in development due to scientific challenges, and many are terminated because they are taking too long or are over budget.
Ginkgo does not make end products; instead, we offer biological R&D services on our platform to enable our customers to bring their products to market. Historically, Ginkgo’s primary service offering has been cell engineering R&D services ( solutions ) where Ginkgo performs technical activities. In 2024, Ginkgo expanded its service offering to include services that provide our customers cell engineering tools for biological R&D, where Ginkgo enables its customers to conduct certain in-house R&D activities themselves. Our services are designed to offer customers better results on the dimensions of probability of success, speed, or cost – and ideally on all three.
The fundamental advantage of our cell engineering platform over traditional cell engineering done by hand at our customers’ labs is that our platform improves with scale while in-house cell engineering in our customers' labs largely does not. Compounding and mutually reinforcing improvements of our laboratory automation and software infrastructure—our Autonomous Lab—and our reusable data assets enable us to improve our services with each successive project.
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Our Autonomous Lab is a flexible wet lab built from our Reconfigurable Automation Cart (“RAC”) systems capable of large scale data generation; it powers generative AI and machine learning (“ML”) tools that enable more successful biological R&D. We now offer services providing such data generation, AI and automation tools directly to Ginkgo customers. Our data assets comprise best practices for cell engineering, along with sequences and host cells that have been honed through dozens of programs and can be directly reusable for our cell engineering solutions. We now offer licenses to our host cells and other IP assets, such as our broad metagenomic library.
Cell engineering service offerings, depicted on a spectrum of customization and technical risk borne by Ginkgo on the vertical axis, and the mix of up-front service fees and downstream value we charge on the horizontal axis.
Biosecurity
In every technological revolution, reaping the benefits to the economy and society requires grappling with the corresponding risks. A critical part of making biology easier to engineer is creating robust biosecurity infrastructure to help manage the many accelerating and diversifying sources of biological risk, whether natural or engineered, accidental or malicious.
In the digital world, we’ve learned that we need to build comprehensive infrastructure to protect our digital systems —from financial markets to power grids—from harmful code. The modern cybersecurity industry offers tools to constantly identify, monitor, prevent, and mitigate cyber risk in near real-time. This is happening constantly, all around us. Our physical world demands the same type of widespread biosecurity infrastructure to detect, characterize, respond to, attribute, and prevent biological threats.
Building widespread biosecurity infrastructure is not easy, but the COVID-19 pandemic and subsequent biothreats (e.g., H5N1 and mpox) illustrate the growing risk and urgent need for a solution. During the COVID-19 pandemic, our healthcare infrastructure, the biomedical technology industry, and communities across the world mobilized in valiant and unprecedented ways, but millions of lives and trillions of dollars were still lost. Our current systems are overly reactive and remain insufficient to protect us from future biothreats, whether they come from Mother Nature, bioerror, or bioterror.
We need a fundamentally different approach to securing biology—one that starts with data. The genomic information that underlies the biological world is what allows us to program it like computers, and it’s what allows us to understand biology at a molecular level and learn to predict how it’s going to behave in the world. Our biosecurity platform is built on the premise that genetic information is a critical data asset that will form the foundation for next-generation biosecurity. By building services to help our customers monitor and analyze this data, we believe we are contributing to a step change in humanity's ability to rapidly and reliably identify, monitor, prevent, and mitigate biological threats.
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Because biosecurity is a matter of national and global security, our primary biosecurity customers are governments. Our biosecurity offering has evolved over the past several years. We currently provide biosecurity services via two core offerings:
• Canopy , which helps our customers generate high value genomic data from strategically-positioned nodes (like airports and border checkpoints) via end-to-end biomonitoring programs; and
• Horizon , our digital surveillance, analytics and insights platform that detects and monitors biothreats worldwide.
Like our cell engineering platform, our biosecurity platform gets better with scale. As we deploy more detection nodes, we can achieve earlier detection and develop deeper insights about biothreats as they originate and travel across the globe. We invest in our platform to build out our operational (e.g., new node types), lab (e.g., new target detection), and digital (e.g., better prediction) capabilities. Increasing scale substantially strengthens the efficacy of our platform, as global data from multiple sources provides insights beyond what any single country’s data could yield alone.
Cell Engineering: enabling the discovery, functional optimization and efficient manufacturing of biotechnology products
Biology runs on a digital code. It’s just A’s, T’s, C’s, and G’s rather than 0’s and 1’s. There are sequences that code for programming logic—turning genes on when certain conditions are met—and there are sequences that encode functions and behaviors—the physical structures of proteins and enzymes that create biological structures and materials or catalyze chemical reactions. Synthetic biologists build cell programs by writing new sequences combining regulatory and functional elements into a synthesized strand of DNA and booting them up in cells to perform useful tasks, usually producing a particular bioproduct such as RNA, protein, enzyme, or chemical.
Biological code programs the world of atoms, not bits. This is what makes the potential impact of cell engineering so great, and inspires us to work to make biology easier to engineer and secure. But it also posesincrediblechallenges that make cell programming so hard today. Our code is a physical object with chemical properties. It folds and binds and interacts in many complex ways. It produces proteins that catalyze chemical reactions that interact in a complex web of connections. Even the simplest cell programs encounter incredible complexity, emerging from all of the interactions of chemicals, DNA, RNA, and proteins inside of a cell.
Because all organisms run on the same DNA code, general-purpose cell programming can be applied across many different markets to enable the design of new innovative products as well as improve manufacturing cost and sustainability of existing ones. Given the breadth of application areas and the potential of biology, we believe that the end markets for bioengineered products will be enormous. As we develop a greater ability to program biology and direct it towards novel and more challenging applications, the spectrum of possibilities will undoubtedly grow.
Today, our services span markets and modalities to enable a wide range of biotech products, including, but not limited to, systems for the discovery, optimization, and manufacturing of:
• DNA sequences delivered as vaccines and gene therapies,
• RNA sequences for vaccines and therapeutics including mRNA, circular RNA, and other approaches,
• Proteins used in biologic medicines and antibodies, adeno-associated virus (“AAV”) capsids and other delivery methods for gene therapies, vaccines, plant traits for crop protection, and food and alternative meat and dairy,
• Enzymes used in biocatalysis, diagnostics, therapeutics, and RNA vaccine production,
• Small molecules and natural products that can be produced via pathways of multiple enzymes in engineered cells for pharmaceutical ingredients and adjuvants, agricultural biochemicals, cosmetics and food ingredients, and specialty or commodity chemicals,
• Microbial cells that can provide crop nutrition or crop protection in agriculture, impact soil carbon sequestration to help address climate change, and microbiome therapeutics, and
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• Mammalian cells for manufacturing of biologics, genomic medicines, and cell therapies.
Ginkgo provides these services using its platform for cell engineering. This platform brings together technology, data, biological assets and subject matter experts:
• proprietary automation technologies that enable flexibility and scale,
• in-house software, machine learning, and generative AI models for cell programming,
• massive databases of DNA sequences and labeled data on functional performance of engineered cells,
• reusable assets that enable faster and more predictable cell programming, and
• expert scientists that leverage platform tools and data to enable partners to achieve their desired results
Enabling customer success across markets
We sell engineering solutions and cell engineering tools offerings to customers across markets. Our customers bring incredible depth and expertise in their unique technical domains and market areas. Whether it’s their understanding of underlying disease biology or plant physiology, their experience with the performance of regulatory trials in animal studies, in the clinic, or in the field, or their knowledge of product formulation and functional testing, they have specialized deeply to be able to develop, manufacture, distribute, and market a product. Our role is to enable the customer's success: we provide R&D tools and solutions that help them access more biological design space in order to discover and optimize functionality and develop efficient manufacturing methods for their products.
Government
Ginkgo is a trusted partner to government agencies worldwide as they work to protect people, supply chains, and critical resources, all by leveraging the power of biology. We regularly serve as a prime contractor on major research awards, bringing together partners and integrating their diverse biological capabilities. We also often support projects and research consortia as an R&D subcontractor.
Pharmaceutical and Biotechnology
There is an urgent and critical need for new, better, and more accessible therapeutics and vaccines worldwide. There is also widespread realization across the pharmaceutical industry that research productivity must be enhanced in order to meet this need. Yet, even with hundreds of billions of dollars spent annually on pharmaceutical R&D, the cost to bring a new drug to market is only increasing.
The pharmaceutical industry today relies heavily on outsourced R&D, both to specialized, innovative small biotech, as well as to contract research organizations (“CROs”) that can perform specific common workflows at different stages of the R&D process for enhancedefficiency. These approaches enable access to both innovation and efficiency, but incur high switching costs both organizationally and technically.
At the same time, there is great promise in how AI tools may help uncover new disease biology and targets for therapeutics, as well as enable the programming of new medicines, in particular biologics and genomic medicines that are directly encoded in DNA and RNA sequences. Pharmaceutical R&D teams are looking for ways to generate and federate data to train better AI models, design and test more technical approaches, drive candidates at the preclinical stage to “fail fast” before costly clinical trials, and develop better leads by simultaneously optimizing along multiple dimensions important for therapeutic index as well as manufacturability and cost.
Our pharmaceutical and biotechnology customers use our services to develop new manufacturing methods for gene therapies, biologics, vaccines, and small molecule therapeutics and active pharmaceutical ingredients (“APIs”), and to discover new RNA therapeutics, natural products, and much more. They use our tools to generate high-quality data for training and validating AI models of cell and disease biology for use in target identification, target validation and drug discovery as well as for antibody developability.
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Agriculture
Agriculture likewise faces an urgent need for innovation to address growing pressure on growers and food systems. Worldwide, agricultural innovation struggles due to long timelines, complex regulatory paths, and siloed data and capabilities.
Innovators in agricultural technology tap into biological diversity to develop new crop protection strategies, to combat resistance, and to provide safer, low residue options for growers that meet consumer expectations and regulatory guidelines. These product developers need to understand mode of action and improve the performance and stability of innovative biologicals for crop nutrition and crop protection. And increasingly, they are also innovating in soil carbon sequestration and climate strategies.
Our customers in agriculture use our services to improve the performance and manufacturability of existing agricultural biologics, develop revolutionary new products for crop nutrition in nitrogen fixation, phosphate solubilization, or carbon sequestration, and design new insect control proteins and other crop protection products to protect food security. We also offer 3,000 liters of pilot plant capacity for efficacy trial material generation, as well as a network of growth chambers and an approximately 12,000 square foot greenhouse facility for screening engineered microbes and wild-type microbes in planta.
Industrial Biotechnology
There is an enormous breadth of products—chemicals, enzymes, and proteins—already produced via biotechnology today or being actively developed by companies across many markets, including food and nutritional ingredients, wellness, cosmetics, and personal care, industrial processes and chemicals, and materials innovation.
Our customers in industrial biotech use our services to achieve a variety of objectives, such as improve the manufacturing efficiency and cost of goods sold for their new and existing biotechnological products, innovate materials with enhanced performance, develop enzymes for breaking down harmful pollutants or cells and proteins optimized for capturing rare earth elements, or valorize waste streams into feedstocks for more valuable products.
Cell Engineering Tools
A selection of our cell engineering tools offerings are described below.
Reconfigurable Automation Cart (“RAC”) Systems
Ginkgo Automation’s capabilities build on years of internal expertise honed at Ginkgo and Zymergen, encompassing hardware design, software integration, and applications development, epitomized in our offering of RACs: our Reconfigurable Automation Cart systems. The modularity and flexibility of the RACs enables high walkway time, high uptime, reduced cycle times, and high throughput experimentation for high-mix biological workflows like the kinds performed in Ginkgo’s Autonomous Lab and in our partners’ labs. In addition to providing advanced automation hardware and software, Ginkgo Automation’s deployments to third party customers include access to our top-tier Apex Support, a fully remote, active error resolution and troubleshooting support service. Apex Support’s proactive monitoring is expected to enable Ginkgo’s support engineers to identify and resolve approximately 80-90% of system errors remotely, without the need for our customers to initiate tickets. We are actively developing, both internally and in collaboration with external partners, enhanced autonomous capabilities for our automation platform. These efforts are focused on enabling increasingly AI-driven, closed-loop experimentation, which has the potential to materially improve experimental efficiency, throughput, and decision-making for customers ranging from pharmaceutical companies to academic and government research institutions. We expect that, as these technologies mature, RAC systems deployed in customer environments could be upgraded through software updates to support higher levels of autonomous operation. We believe this software-upgradable architecture positions the RAC platform to incorporate future advances in autonomous science without requiring wholesale replacement of deployed systems.
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Datapoints
Recent advances in ML, molecular simulation, and other computational techniques hold great promise to improve our ability to program cells. We believe our Autonomous Lab is well-positioned to build the kind of large, well-structured datasets that such computational approaches need to succeed. In time, we believe computational approaches will reduce the need for certain kinds of experiments (for example, we already use ML to make protein and enzyme design projects more efficient).
To this end, we have introduced three new data generation services to provide high-quality data at the scale, price, and speed that AI-powered drug development demands:
a. Our Functional Genomics Datapoints services generate large, high fidelity transcriptomic and phenotypic datasets in the disease context of our customers’ choice to power AI models of cell and disease biology for use in target identification, target validation, and drug discovery.
b. Our Antibody Developability Datapoints services generate biophysical antibody characterization developability datasets for our customers to use in AI model training and validation.
c. Our Small Molecule Developability Datapoints service generates high-quality small-molecule characterization data spanning absorption, distribution, metabolism, and excretion (“ADME”). These datasets support human dose prediction and power AI-driven predictive medicinal chemistry campaigns.
AI models
As Ginkgo drives scalability through our models, we have heavily invested in the use and creation of AI foundational and fine-tuned models, which we believe can provide significant benefits to our customers. Because of our access to large amounts of data, which is critical to efficiently leverage AI, Ginkgo is well-positioned to build superior foundational models and from there, build fine-tuned models designed to cater to our customer needs, all powered by our partnership with Google Cloud. We have released a selection of these models on our Model API.
Cell Engineering Solutions
A selection of our end-to-end cell engineering solutions offerings are described below.
Protein engineering and production for biopharmaceutical applications
We provide a suite of microservices for product developers across industries that support bioengineers with protein engineering an enzyme variant library design service, access to our proprietary low-viscosity Aspergillus niger strains, the performance of proof-of-concept protein production studies to evaluate and optimize protein production in high-performance chassis, as well as access to our EncapS platform - a cutting-edge, ultra-high throughput screening service designed to rapidly identify strains with enhanced protein titers. These on-demand services balance flexibility and cost-effectiveness with access to powerful technologies that enhance R&D efficiency.
Genetic medicines
We provide comprehensive R&D services spanning the major genetic medicine modalities: gene therapy, cell therapy and gene editing, and RNA therapeutics. Our capabilities include developing precision delivery systems through viral and non-viral approaches, engineering payloads for targeted expression, and optimizing manufacturing processes at scale. For gene therapy, we provide AAV capsid design and optimization, payload engineering, and high-titer production solutions. In cell therapy and gene editing, we support CAR-T development, gene editor discovery, and immune cell engineering with our high-throughput screening platforms. For RNA therapeutics, our services are intended to help customers optimize mRNA and circular RNA sequences for improvedstability and expression, alongside lipid nanoparticle delivery system development. These services are complemented by our suite of licensable assets including capsids, promoters, untranslated regions (“UTRs”), internal ribosome entry sites (“IRESs”), and chimeric antigen receptor (“CAR”) components, validated through extensive in vitro and in vivo testing. Our integrated approach combines domain expertise in protein engineering,
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high-throughput experimentation, and advanced analytics to address key challenges in immunogenicity, off-target effects, and regulatory compliance.
Packaged solutions for biopharmaceutical applications
We provide standardized, ready-to-use solutions for accelerating biopharmaceutical R&D. We provide curated panels of enzymes for active pharmaceutical ingredient (API) manufacturing, including 192 Imine Reductase (IRED) enzymes and 384 2-Oxoglutarate Dependent Dioxygenases (2ODD) enzymes. Our EncapS platform for API production leverages ultra-high throughput screening technology to improve production strain productivity by 10-30%, screening libraries of over 1 million variants through nanoliter co-encapsulation. For genetic medicines, we provide licensable assets including promoters that surpass industry standards, optimized UTRs for enhanced RNA stability and protein expression, engineered AAV capsids with reduced antigenicity and improved tissue targeting, and synthetic immune receptors for cell therapies. These offerings are supported by easy-to-access fee-for-service programs, including our collaboration with Virica Biotech for AAV manufacturing optimization.
Small molecules & biologics for biopharmaceutical applications
We provide comprehensive R&D services spanning both small molecule therapeutics and biologics. For small molecules, we enable the discovery and production of diverse compounds including APIs, natural products, antibiotics, antifungals, antivirals, and antibody-drug conjugate (ADC) payloads through our strain engineering expertise and biosynthetic pathway discovery capabilities. Our biologics services support the development and optimization of therapeutic proteins, peptides, enzymes, and other biological products using AI-driven protein engineering and our proprietary production platforms, including high-output methanol-free Pichia pastoris strains. These complementary capabilities are supported by our integrated approach to strain design, high-throughput screening, fermentation optimization, and downstream processing, all focused on achieving economical and high-quality production outcomes for both chemical and biological therapeutics.
Crop nutrition
We provide comprehensive R&D services focused on advancing biological solutions for crop nutrition and plant health. Our services span three key areas: nutrient use efficiency, where we help develop products that optimize nutrient bioavailability; carbon fixation, where we work on biologicals that enhance soil health; and abiotic stress management, where we develop solutions to improve crop resilience against environmental stressors. These capabilities are supported by our extensive strain collection of over 315,000 agriculturally-relevant microorganisms, validated in vitro and in planta screening assays, and expertise in scaling up both whole-cell and biochemical active products. We offer both fee-for-service testing using our validated assay cascade from 384-well plates to greenhouse studies, as well as collaborative R&D partnerships spanning strain engineering through process development and formulation optimization. A flagship example of our capabilities is our partnership with Bayer Crop Sciences, where we are developing biological solutions for nitrogen fixation in non-legume crops to reduce reliance on industrial fertilizers.
Crop protection
We provide comprehensive R&D services to help partners develop and optimize biological crop protection products. Our capabilities include validated in vitro and in planta screening assays that enableconfident selection of lead candidates, extensive expertise in scaling up active ingredients including both Cry proteins and novel bioactives, and access to our proprietary collection of over 315,000 strains isolated from agriculturally relevant environments. We work with partners through both fee-for-service arrangements focused on generating rigorous data packages to inform decision-making, as well as collaborative R&D projects aimed at developing market-ready products. Our services span the full product development cycle from strain selection and screening through process optimization, formulation development, and field trial support. Partners can access our platform to expand their product portfolios with novel biocontrols, optimize the performance of existing products, reduce manufacturing costs, or generate reliable data to support their development programs. Throughout the development process, we focus on optimizing manufacturing costs and process efficiency to ensure products can be produced at commercially viable price points that meet market requirements for growers and product developers that market to them.
Plant traits
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We provide comprehensive R&D services for discovering and optimizing plant traits, leveraging our proprietary metagenomic library of over 2.7 billion genes (with less than 5% overlap with public databases). Our capabilities in this space combine machine learning-based protein engineering, informed by over 15 years of experimental data collection, with expertise in optimizing multi-gene-of-interest trait expression in complex eukaryotic systems. We provide services spanning the full development cycle, from early trait discovery using patented enrichment and amplification techniques, through lead optimization using iterative high-throughput screening approaches, to gene construct design with optimized codons and promoters for more reliable expression. Our pilot plant site allows us to leverage proprietary host strains optimized for protein and enzyme production to test out material generation capabilities through large-scale efficacy trials.
Protein engineering and production for industrial biotechnology
We provide R&D services that help our partners optimize production hosts for nutritional and functional protein manufacturing, and to develop effective enzymes and biocatalysts for industrial applications. Our industrial partners can access our enzyme discovery, enzyme optimization, assay development & high-throughput screening, and protein production expertise, taking advantage of our range of well-characterized and high-performance bacterial, fungal, and mammalian chassis strains, as well as our very wide range of experience designing and running scientific campaigns to engineer and improve these hosts. Our partners in the nutritional and functional protein space work with us to build research campaigns that leverage the above capabilities, as well as our investment into an in-house suite of host strains designed for glycoprotein, iron-bound, and structural protein production. Whether they are developing sweeteners, alternative dairy, alternative egg, thickeners, preservatives, or other exciting protein-based innovations, we can offer our partners in this space a mix of host evaluation and proof-of-concept studies, production host design and optimization campaigns, enzyme discovery and optimization research, and process development & scale-up (described further below) capabilities to help de-risk and accelerate their R&D and go-to-market timelines.
Small molecules for industrial biotechnology
We work with partners in the sustainable ingredients and chemical spaces, as well as across the flavors, fragrance, and colorant industries to support their R&D and manufacturing optimization efforts. Our particular expertise includes experience with microbial bio-production of many classes of natural products, including of terpenoids, esters, aromatics, organic acids, pigments, and bioactive alkaloids. We offer a range of custom R&D solutions that support our customers with molecule prototyping and pathway discovery, strain design and optimization for bioproduction, non-genetically modified strainimprovement technologies, and our bioprocess development and scale-up capabilities (described below). In the flavors, fragrances, and colorants industries, customers also often access our proprietary database of microbial chassis and specialized tailoring enzymes (like terpene synthases, glycosyl transferases (UGTs), O-methyltransferases, and cytochrome P450s) which supports their efforts to improve pathway optimization, byproduct reduction, and enhanced product safety.
Fermentation and scale-up
Our wet lab includes a fleet of Sartorius Ambr® 250 bioreactors, as well as a suite of colocated analytical instruments that our customers can leverage to deeply and widely explore strain performance across multiple fermentation and media conditions. We can pair this service with customized ML-enabled analysis to obtain and provide to our customers deep physiological, genetic, and chemical insight into strain performance.
On the larger scale, we also offer in-house pilot fermentation capacities at 5, 10, 30, and all the way up to 3,000 liters of pilot plant capacity for bioprocess development and scale-up. We can support our partners in proving out production processes with iterative and statistical approaches to develop robust fermentation process conditions, informed by automated sampling and standard analyses of secreted metabolites.
Biosecurity: scaling biological intelligence for securing lives and livelihoods
Addressing biosecurity starts with being clear-eyed about biological risks and threats. We hold at our core the tremendouspositive potential of biology, and we know that we’re facing a biological landscape with more frequent, more severe, and more varied threats through time.
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Our world is increasingly interconnected through travel and trade, giving pathogens and biological agents new opportunities to spread across the globe, impacting people’s health along with the complex global supply chains that our societies depend on to function. Climate change and habitat disruption are creating conditions for pathogens to emerge and spill over between animal populations and into humans more often and with more severe consequences. A global boom in investments into bio-laboratory capacity, designed to improve our tools to combat such pathogens, also comes with heightened risk of lab accidents—in spite of substantial efforts to improve biosafety. And unfortunately, there are those who seek to use biology for nefarious purposes, misusing its incredible potential to cause harm.
These trends are intertwined with geopolitical competition and destabilization, eroding buy-in and trust in institutions, and emerging technologies in both biotechnology and AI/ML, presenting a core security challenge for nations and the world. Our biosecurity platform is designed to help national and global leaders answer questions about and potentially protect from biological threats.
Governments around the world are currently our primary customers as they seek to protect their citizens, economies, and critical infrastructures from biothreats. We have worked extensively with the U.S. government across the federal, state, and regional levels, and maintain the lab, logistical, and local relationships necessary to work closely with partners across the country in the event of any large-scale biothreat response.
The biosecurity services that we sell
We serve these customers through two core offerings:
• Canopy helps our customers generate high value genomic data from strategically positioned nodes (e.g., airports and borders) via end-to-end biomonitoring programs including:
o Program services such as program design, lab enablement, procurement, collection, and lab support;
o Data services such as bioinformatics and epidemiological tools, data delivery and data visualization;
o Insights such as specialized reports and technical briefings specific to customers’ programs; and
o Products such as standard of procedures (SOPs) and specialized lab assays.
• Horizon is our data, analytics and insights platform that detects and monitors biothreats worldwide. It seeks to answer questions like:
o What biothreats are occurring? Where in the world do we see emerging biothreats?
o What is this new biothreat and how bad is it? How might it spread and evolve? Who (or what infrastructure) will be affected? How likely is the biothreat to result in a major outbreak?
o Where did a biothreat emerge and how? Is there evidence of misuse and if so, what can we learn about the perpetrators?
o What can I do about a biothreat? How effective will existing countermeasures be? Should we develop new countermeasures, and if so, what should they look like? What are my ideal response options given resource constraints and mitigation goals?
Ginkgo Biosecurity’s tailored Canopy product is a persistent, pervasive, locally-operated collection of environmental samples from strategic high-risk nodes—designed to detect and identify biothreats across a growing array of collection and sample types. The samples are analyzed through genomic sequencing of non-human DNA to turn the environment into data. Today, we are looking for a large and growing set of known threats, and we are developing methods that are threat agnostic and able to pick up on entirely novel genetic signatures.
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Our Canopy technologies are expanding, and our goal is to be able to sample from a wide variety of nodes where pathogens emerge or spread, such as those pictured below. Our network scales to be more efficient as we add greater volume and diversity of nodes. Our Canopy product scales primarily by driving efficiency through increased volume by better physical and lab operations including program learnings, lower overhead requirements, and purchasing power.
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(Note: nodes are illustrative and not necessarily indicative of current or past programs.)
Horizon is our data, analytics and insights platform that provides reporting of biothreat events worldwide, using three distinct data feeds: Early Detection, Genomic Surveillance, and Digital Biothreat Intelligence. The Canopy data from given programs or jurisdictions are integrated with other global data sources—from our monitoring network, open-source intelligence capability, and other sources—and analyzed using a suite of computational tools to help customers gain a more comprehensive picture of the biothreats they’re facing. Our Horizon business also scales as volume and node diversity increases as we have more information (e.g., via volumes) and more diverse data (e.g., via nodes), our insights across the system are further enhanced.
Our operations are anchored by Ginkgo’s headquarters in Boston which serves as a hub for managing our programs and analyzing data from our global network. Our network is increasingly bolstered by our operational and laboratory partners throughout the world. We will continue to enhance this network in the future through new partnerships.
How we make money
Cell engineering revenue
Cell engineering tools offerings
We charge customers fees for the services we provide in our cell engineering tools offerings. Fees for our automation solutions (RAC systems) are typically earned over a period that covers design, build, and deployment and range from six to twelve months. In addition, we offer support services for our RAC systems with fixed fees covering the support periods.
Fees for our Datapoints services are typically earned over a shorter period of time (weeks to months) than for cell engineering solutions, which may be multi-year programs. A typical deliverable for a Datapoints program is a data package. Fees for cell engineering solutions programs are typically structured as a fixed fee for a fixed scope of work.
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Cell engineering solutions
Our cell engineering solutions are typically scoped and delivered as a program ranging in duration from several months to several years. A typical deliverable for the program would comprise an enzyme sequence, or an engineered strain or cell line and its associated bioprocess. For each of these programs, we generate economic value in two primary ways.
First, we charge service fees for Autonomous Lab services, in much the same way that cloud computing companies charge usage fees for utilization of computing capacity or CROs charge for services. R&D is inherently risky and our customers recognize that this is a cost they will incur regardless of success and whether they are working on the program in-house or with a partner. Typically, service fees for a program include a fixed fee for a fixed scope of work and may also include payments contingent upon hitting certain technical milestones. If we are able to deliver program results with less work through the use of Codebase assets and/or generative AI tools, then we can achieve the same revenue with lower cost or in a shorter duration. Service fees provide a strong foundation of revenue that is independent of any commercialization efforts by our partners.
Second, as the key enabling technology for our customers’ products, we have historically negotiated a value share with our customers (in the form of royalties, milestones, and/or equity interests) in order to align our economics with the success of the programs enabled by our platform. Because we typically do not incur material downstream costs (e.g., manufacturing or product development, which our customers manage), these value share payments flow through with approximately 100% contribution margin. We have structured a variety of value sharing mechanisms, including royalties, lump-sum milestones, and equity payments. As Ginkgo has matured, we have shifted our downstream value towards milestone payments and commercial royalties rather than equity. In addition, commencing in the second quarter of 2024, we announced changes in prospective commercial terms, including the removal of downstream value share from certain program types.
This flexible business model allows for more predictable near-term revenue in up-front research fees and technical milestones without sacrificing our ability to create long-term value with asymmetric upside through downstream value share (typically in the form of a royalty stream, milestone, and/or equity share). As we add more programs to the platform over time, we expect downstream value share to contribute income, which could in turn grow our overall margins and cash flow profile for our cell engineering solutions. The realization of potential revenue related to downstream value in the form of potential future milestone payments and royalties and/or equity consideration is dependent upon a number of factors, including our ability to successfully develop engineered cells, bioprocesses, data packages, or other deliverables, and the product development and commercialization success of our customers.
Biosecurity revenue
Since the end of the COVID-19 public health emergency in May 2023, Ginkgo has transitioned its Biosecurity business to focus on building out scalable biosecurity infrastructure through our two offerings, Canopy and Horizon. Through our partnerships, Ginkgo operates Canopy programs for collections, testing, sequencing, and insights delivery on pathogen samples in different countries. Ginkgo is also investing in building our Horizon product, in consultation with our existing network and additional public and private partners, as we think it has the potential to significantly drive revenue in the future.
Our commitment to caring about how our platform is developed and used
Biotechnologies already touch nearly every part of society, and they will only grow in importance to our collective security and livelihoods in the future. Because of their far-reaching impacts on the world and because we are biological beings who are both dependent on and vulnerable to the capabilities we enable, we must take great care in the ways these technologies are developed and used.
We are cognizant that making biology easier to engineer won’t make the world better by default, but we believe these capabilities are essential to creating a better future where we can contend with both existing and emerging threats. To succeed in our long-term mission, we must avoid multiple failure modes. We must avoid creating capabilities that cause harm in ways that aren’t or can’t be mitigated. We must avoid reinforcing inequities in the uses of technologies and to
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whom their benefits accrue—thereby claiming to change the world but changing not much at all. We must avoid a loss in trust in biotechnologies and the motivations of their developers that limits our ability to bring solutions to global challenges from protecting against pandemics to feeding the planet. And so, we must chase, every day, the development of capabilities and partnerships that can lead to value generation undergirded by sustained attention to the values they reflect.
As our platform grows, so too does our power to enable and shape many impacts we care about. While we are proud of our direct impacts on making biology easier to engineer, most of the world cares about the impacts on the world that we indirectly enable through helping our customers with the products they deliver. We grow as a platform precisely because we help create more value for our customers and the world than we capture. Our position serving customers across many industries provides strategic insights into what issues need collective attention to ensure future products can deliver meaningful solutions. But as a platform we cannot anticipate and control all future uses of our technologies by our customers and those they work with.
Far from abdicating responsibility, we realize our power is to inspire and help enable others to carefully steward technologies with attention to their impacts over time. This is directly in line with our long-term value proposition, as we need our customers and the ecosystem to succeed in avoiding the failure models outlined above and build the collective biotechnology-enabled future we all can wish for. We believe that stewardship starts with our platform and the people within it. Just as we must build and inspire trust in our partners to steward our technologies with care, we build and inspire trust in all of our bioworker-owners to build our platform with care.
We must also pay special attention to the governance of leading capabilities for we have outsized ability to shape.
At a macroscopic level, building biosecurity capabilities is an example of where we assessed the need for complementary efforts that could safeguard future biotechnologies–including those developed on our platform. But this same philosophy applies across our platform including as we work to harness powerful new capabilities in AI. We believe that our platform design is a foundation for architecting security and access that can both enablepositive uses while better understanding and protecting against scenarios of misuse.
We see caring about how our platform is developed and used not as a net cost but as an enabler at multiple scales of impact aligned with long-term value. It builds trust and credibility not only in our capabilities but those of our customers. It motivates and enables our employee-owners to drive the platform towards the many diverse uses they co-envision with our platform. It also advances a framework to go beyond a reactive historical frame that has often positioned genetic engineering as a risk to the environment rather than a value.
We recognize that platforms across other industries have lessons—many negative—on how to steward their development and use. Our high-level commitment to care also comes with the expectation of needing to regularly revisit the approaches to realizing that commitment.
Our People & Culture
A company is made of people. We have sought to bring together a talented and multidisciplinary group of people who share our mission to make biology easier to engineer. Today, our extensive cross-functional team is collaborating to build our ecosystem, from organism designers to automation engineers, software developers to the people team, business development to facilities management, finance to molecular biology.
A culture built on care
We’ve strived to grow a culture based on care. As engineers, it is easy to fall into the trap of thinking of ourselves simply as tool builders. Tools can be used in many different ways, both good and bad, and engineers often discuss their tools as value neutral. But tools reflect the social beliefs and biases of the people who make them.
We are keenly aware of the need to care about how our platform is used. More significant than the impacts we have seen from digital platforms on our social world, biology is our health, our bodies, our food, and our environment. As we build
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the tools for programming biology, we must also care how those tools are used, and ensure that the risks and benefits are transparently and equitably shared.
A talented, world-class team
As of December 31, 2025 we had 485 employees. In addition to our employees, our success would not be possible without the collaboration and support of the network of partners, contractors, contingent workers and temporary staff who make up the Ginkgo team.
Technologies reflect the values of the people who build them. We believe that it is essential to have a talented team where people from different backgrounds are included and empowered to speak up and shape the growth of this technology. We are committed to having a team reflecting a broad range of viewpoints, backgrounds and skills and continuing to foster a culture with strong employee ownership and engagement.
Laying the groundwork for strong employee engagement in the future
As a founder-led company we have been able to infuse the organization with long-term strategic thinking from the start. We have continued to execute on programs, achieve milestones, and launch new products while navigating uncertainty. We have emerged from a restructuring with a strengthened focus on the long-term performance and sustainability of our business.
The individuals who work at Ginkgo and build our platform care deeply about how that platform is used and the impact our company will have in the world. We hope to strengthen the long-term mentality we have benefited from as a founder-led public company. We believe a workforce with strong equity ownership will make the wise decisions needed to build long-term value for our company and build a company whose long-term impacts make them proud. That is why we have implemented a multi-class stock structure that permits all employees (current and future), not just founders, to hold high-vote (10 votes per share) common stock, that we hope will help strengthen this long-term mentality and encourage long-term equity ownership by our employees. For more information, see “Risk Factors—Risks Related to Ginkgo’s Business—Risks Related to Our Organizational Structure and Governance—Only our employees and directors are entitled to hold shares of Class B common stock (including shares of Class B common stock granted or otherwise issued to our employees and directors in the future), which shares have ten votes per share. This limits or precludes other stockholders’ ability to influence the outcome of matters submitted to stockholders for approval, including the election of directors, the approval of certain employee compensation plans, the adoption of certain amendments to our organizational documents and the approval of any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval.”
Competition
To our knowledge, there are currently no other cell engineering companies that serve the same breadth of industries that we do. The services and products offered by potential competitors vary in size, breadth, and scope, and given our broad set of application areas, we could face competition in many different forms. We face competition from customers’ internal R&D departments and other research solution providers that largely conduct genetic engineering by-hand. We also compete against companies that seek to utilize synthetic biology technologies to develop specific products or target certain end markets. Additionally, with our expansion into tools offerings in 2024, we compete against life science tools companies and CROs as well as newer AI entrants in the emerging TechBio area. Finally, competing platforms may emerge from various sources, including from joint ventures and partnerships between well-capitalized technology and life sciences companies. We identify the following three groups as our principal set of competitors:
Cell Engineering competition
The Status Quo: “on prem” cell programming efforts
The main source of competition we encounter for our cell engineering solutions offerings is from potential customers choosing to build or maintain in-house cell engineering teams and capabilities. This status quo includes building out laboratory space and then hiring a team of highly trained scientists to conduct research, largely “by-hand” and with limited scale efficiencies. Some internal R&D operations maintain a full suite of capabilities and can design, build and test relatively complex pathways while others may have certain internal capabilities and need to outsource other elements to
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CROs. We believe this is far less efficient for the customer and likely to yield worse outcomes as customers get fewer shots on goal for a given program budget.
That said, it can still be very difficult for companies to choose to trust Ginkgo with their R&D efforts versus building more traditional “on prem” labs. Smaller companies may feel like they’re “betting the farm” on Ginkgo, while larger companies may be sensitive to displacing existing R&D teams. As such, a key focus area for us is reducing the barriers to adoption for the platform by decreasing the upfront investment for earlier-stage companies and by helping larger companies integrate their scientists closely into our workflows and empower their scientists to manage requests directly so we feel more like a resource and partner than a fully outsourced provider. Our Datapoints products in Functional Genomics, Antibody Developability, and more recently launched offerings in Small Molecule Developability, are key examples of new services designed with our customers’ scientists in mind.
The vast majority of therapeutics companies that are leveraging genetic engineering have in-house capabilities, including Biogen, Novo Nordisk, Vertex, Regeneron, Bayer, and many others. These companies may be viewed as competitors to Ginkgo because they are creating products, using cell programming, that may compete with the products Ginkgo is enabling for our customers. However, as a platform company, we view these companies not as competitors but as potential customers and focus not on “beating” them but rather on demonstrating our value proposition.
Verticalized cell engineering platforms
Within certain end markets, Ginkgo may compete against vertically-focused biotechnology companies providing cell engineering R&D capabilities to customers within a narrow set of end markets. While we believe the siloed nature of these companies limits their long-term potential, in the near-term, we may have a harder time penetrating those end markets given the incumbent vertical specialists in that space. The vast majority of these companies exist within therapeutic end markets given the history of cell engineering in that market segment. In theory, the expertise and learnings they develop from work in one field could be leveraged into neighboring end markets if these companies decided to adopt (and invest in) a more horizontal strategy. Examples of these vertically-focused platforms include AbCellera (antibody discovery), Codexis (enzymes), Senti Bio (cell therapy for oncology applications) and WuXi biologics (therapeutics).
Contract research organizations (CROs) and life science tools companies
With our expansion into cell engineering tools offerings, we now offer data generation services and RAC laboratory automation to our customers. These offerings appeal to customers who want to retain either scientific control and/or experimental execution of their biological R&D. As such, we now more directly compete with CROs that offer research services, though usually such services are not purpose-built for generating high quality, large datasets to train and validate AI/ML models. Examples of these CROs include Evotec, WuXi Biologics, and Charles River Laboratories. Similarly, we compete with integrated automation companies like HighRes Biosolutions, Automata, and Thermo Fisher Scientific with our RAC laboratory automation products.
Other possible entrants
We may also face competition from new entrants in the market, including well-capitalized technology companies with possible strategic interests in synthetic biology and its capabilities. Such companies may emerge as competitors given their access to capital, capacity to create multi-disciplinary teams across biology, chemistry, computer science and engineering, and flexibility to enter strategic ventures with life sciences companies.
Biosecurity competition
We’re unique in the global biosecurity market because our approach is global and comprehensively covers end-to-end biosecurity needs. We face competition from a small number of companies who operate in focused biosecurity verticals, such as wastewater monitoring (e.g., Verily and Biobot, both primarily in the U.S.) and digital biosurveillance and modeling (e.g., BlueDot, Airfinity, and the Public Health Company), as well as internationally from BGI, China’s national champion for sequencing and diagnostics. As we partner with national governments, we also face competition from homegrown public solutions to particular challenges, especially among high-income countries and large multilaterals with little history of engagement with the private sector.
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We have several important attributes that contribute to our competitive advantage:
• A comprehensive offering that allows customers to come to a single platform for multimodal physical and digital surveillance and integrated global insights, rather than fragmented approaches;
• A suite of technical capabilities across epidemiological, bioinformatics, and scientific R&D;
• Unique technological tools, like our ENDAR platform for engineering detection;
• Our prominent role as a thought-leader and talent-attractor in this market;
• A foundation of partnerships with countries across the globe and key multilaterals such as Africa CDC, African Risk Capacity, and the International Livestock Research Institute; and
• Our global leadership in the airport-based pathogen monitoring space.
Intellectual Property
Patents
Our general policy has been to seek patent protection for those inventions likely to be incorporated into our offerings and for which patent protection will provide value or competitive advantages to Ginkgo.
Our worldwide patent portfolio includes patents acquired in transactions over time. We may decide that it is in our interest to abandon, sell, or otherwise dispose of certain patents or patent applications that we determine are no longer relevant to our business.
Patents generally have a term of twenty years from the date they are filed. As our patent portfolio has been built over time, the remaining terms of the individual patents across our patent portfolio vary. No single patent or patent family is essential to Ginkgo as a whole or to any of Ginkgo’s subsidiaries. In addition to developing our patent portfolio, we license patents from third parties.
We intend to pursue additional patent protection to the extent that we believe that it would be beneficial and cost-effective. We cannot provide any assurance that any of our current or future patent applications will result in the issuance of patents. We also cannot assure the scope of any of our future issued patents or warrant that any of our patents will prevent others from commercializing infringing products or technology.
Trade secrets
Ginkgo’s technology-related intellectual property that is not patent-protected is maintained as trade secrets. We employ a variety of safeguards to protect our information and trade secrets, including contractual arrangements with our employees, consultants, contractors and other advisors that impose obligations of confidentiality, assignment of inventions, and security; digital security measures; and physical security precautions.
We require confidentiality and material transfer agreements from third parties that receive our confidential data or materials, and we also incorporate confidentiality and material transfer precautions into our collaboration agreements.
Trademarks and domain names
Although our business is directed at sophisticated corporate customers rather than end consumers, we have trademark rights and registrations in our name, logo, and other brand indicia in the United States and other jurisdictions around the world. We also have registered domain names for websites that we use in our business, such as www.ginkgobioworks.com.
Suppliers
Ginkgo’s suppliers for cell engineering operations comprise primarily manufacturers and distributors of life science tools, consumables and equipment as well as certain specific providers of contract research, development and manufacturing services. We will sometimes enter into long-term, strategic partnerships with innovative suppliers. Because of the scale of our operations, we believe we are often an early adopter and the largest customer at scale of certain new life science tools and technologies. We will also occasionally acquire technology or IP assets for strategic reasons, including integration into our platform.
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We utilize various third party software and information technology service providers for data storage and processing. We also routinely engage a variety of third parties for professional services, contract employment services and consulting services.
Government Contracts
We have entered into agreements with governmental entities and contractors in the past to serve as a U.S. government contractor or subcontractor and may do so again in the future. See “ Risk Factors—Risks Related to Governmental Regulation and Litigation—We have pursued in the past and may pursue additional U.S. Government contracting and subcontracting opportunities in the future and as a U.S. Government prime contractor and subcontractor, we are subject to a number of procurement rules and regulations. ”
Government Regulations
Our business, or the business of our customers, may be regulated by the FDA and other federal authorities in the United States, including the U.S. Federal Trade Commission (“FTC”), U.S. Department of Agriculture (“USDA”), U.S. Drug Enforcement Administration (“DEA”) and U.S. Environmental Protection Agency (“EPA”), as well as comparable authorities in foreign jurisdictions and various state and local authorities in the United States. Failure to comply with applicable regulations may result in enforcement actions, civil or criminal sanctions, and adverse publicity.
FDA regulation
We provide cell engineering and product discovery services to customers engaged in the manufacture of pharmaceutical, food, and cosmetic products. The FDA regulates the research, development, testing, quality control, import, export, safety, effectiveness, storage, recordkeeping, premarket review, approval or licensure, processing, formulation, manufacturing, packaging, labeling, advertising, promotion, marketing, distribution, sale, post-market monitoring and reporting of our customers’ pharmaceutical, food and cosmetic products, and the FTC also regulates the advertising and promotion of these products.
We have acted as a systems integrator and authorized distributor of certain COVID-19 over-the counter diagnostic tests manufactured by independent third parties. We worked with laboratory partners that provide surveillance testing services as part of the COVID-19 and other pathogen surveillance testing services we offer, and these tests and test kits may be subject to regulation by the FDA. In particular, the tests and test kits used in our testing services may be subject to regulation by the FDA as medical devices, and may be required to comply with the requirement that such products have obtained clearance, approval, or other marketing authorizations, before they can be commercialized, as well as post-market requirements such as adverse event reporting and restrictions on labeling, marketing, and distribution.
Laboratories must seek FDA marketing authorization and otherwise comply with FDA device regulations when marketing COVID-19 Laboratory Developed Tests (“LDTs”). An LDT is an in vitro diagnostic test that is intended for clinical use and is designed, manufactured, and used within a single laboratory. LDTs are classified as medical devices, but the FDA has historically exercised enforcement discretion and has generally not enforced FDA requirements, including premarket review, with respect to laboratories that offer LDTs. However, FDA intends to phase out its enforcement discretion for LDTs. While HHS and FDA have announced their intention to require premarket review of COVID-19 LDTs, either agency may change its position in the future.
Medical products, including COVID-19 tests, that are granted a clearance, Emergency Use Authorization (“EUA”), or other marketing authorization must comply fully with the terms and conditions provided in the clearance, EUA, or other marketing authorization. For example, EUAs for COVID-19 tests may include conditions of authorization applicable to the EUA holder, authorized distributors and authorized laboratories. Noncompliance with applicable requirements could result in negative consequences, including adverse publicity, judicial or administrative enforcement, warning letters or untitled letters from the FDA, mandated corrective promotional materials, advertising or communications with doctors, and civil or criminalpenalties, among others. The FDA can also withdraw marketing authorization for the applicable product, and in the case of a product subject to an EUA, the FDA may require EUA holders to transition to permanent marketing authorization which could impact some of the tests in our supply chain.
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DEA regulation
We are engaged in the research, development, and export of certain products that may be regulated as controlled substances. The Controlled Substances Act of 1970, as amended from time to time, establishes registration, security, recordkeeping, reporting, storage, distribution and other requirements administered by the DEA. The DEA is concerned with the control of handlers of controlled substances, and with the equipment and raw materials used in their manufacture and packaging, in order to prevent loss and diversion into illicit channels of commerce. The DEA regulates controlled substances as Schedule I, II, III, IV or V substances. Schedule I substances by definition have no established medicinal use, and may not be marketed or sold in the United States. Schedule I substances are considered to present the highest risk of abuse, and Schedule V substances the lowest relative risk of abuse among controlled substances. Marijuana is classified as a Schedule I controlled substance. However, the term does not include “hemp,” which means the cannabis plant and any part of that plant, including the seeds and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 THC concentration of not more than 0.3% on a dry weight basis.
Annual registration is required for any facility that manufactures, distributes, dispenses, imports or exports any controlled substance. The registration is specific to the particular location, business activity and controlled substance schedule. For example, separate registrations are needed for import and manufacturing, and each registration will specify which controlled substance schedule is authorized for that activity.
The DEA typically inspects a facility to review its security measures prior to issuing a registration. The DEA requires “effective controls and procedures” to guard against theft and diversion of controlled substances. Security requirements vary by controlled substance schedule (with the most stringent requirements applying to Schedule I and Schedule II substances), type of business activity conducted, quantity of substances handled, and a variety of other factors. Required security measures include background checks on employees and physical control of inventory. While the specific means by which effective controls and procedures are achieved may vary, security practices may include use of cages, surveillance cameras and inventory reconciliations. Records must be maintained for the handling of all controlled substances, and, in certain scenarios, periodic reports made to the DEA. Reports must also be made for thefts or losses of any controlled substance, and disposal of controlled substances must adhere to various methods authorized by the regulations. In addition, special authorization and notification requirements apply to imports and exports.
Failure by registered establishments to maintain compliance with applicable requirements, particularly as manifested in loss or diversion, can result in enforcement action. The DEA may seek civil penalties, refuse to renew necessary registrations, or initiate proceedings to revoke those registrations. In certain circumstances, violations could eventuate in criminal proceedings. Individual states also regulate controlled substances.
Laboratory Licensing and Certification Requirements
The clinical laboratories we partnered with for our COVID-19 testing program are subject to federal oversight under the Clinical Laboratory Improvement Amendment of 1988 (“CLIA”), which requires all clinical laboratories to meet certain quality assurance, quality control and personnel standards. Laboratories also must undergo proficiency testing and are subject to inspections. Standards for testing under CLIA are based on the complexity of the tests performed by the laboratory, with tests classified as “high complexity,” “moderate complexity,” or “waived.” Laboratories performing high complexity testing are required to meet more stringent requirements than moderate complexity laboratories. Certain of our partner laboratories must undergo on-site surveys at least every two years, which may be conducted by the Centers for Medicare and Medicaid Services (“CMS”) under the CLIA program or by a private CMS-approved accrediting agency. The sanction for failure to comply with CLIA requirements may be suspension, revocation or limitation of a laboratory’s CLIA certificate, which is necessary to conduct business, as well as significant fines and criminalpenalties.
The operations of our partner laboratories holding CLIA Certificates of Waiver are also subject to state and local laboratory regulation. CLIA provides that a state may adopt laboratory regulations different from or more stringent than those under federal law, and a number of states have implemented their own laboratory regulatory requirements. State laws may require that laboratory personnel meet certain qualifications, specify certain quality controls, or require maintenance of certain records. No assurances can be given that our partner laboratories will pass all future licensure or certification inspections.
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Our facilities and laboratories hold local, state and federal permits, licenses and registrations necessary for compliance in specific work and operations, including from the Massachusetts Water Resource Authority, Boston Fire Department, Massachusetts Department of Environmental Protection, Boston Public Health Commission, Cambridge Biosafety Committee, Massachusetts Department of Public Health, USDA and DEA.
Federal Select Agent Regulations
Our research facilities that synthesize DNA sequences or perform other activities could become subject to the FSAP, which involves rules administered by the CDC and the USDA Animal and Plant Health Inspection Service (“APHIS”). The FSAP regulates the possession, use, and transfer of biological select agents and toxins that have the potential to pose a severethreat to public health, animal or plant health, or animal or plant products. FSAP regulatory requirements include: (i) registration with the CDC and/or APHIS for research facilities that deal with the select agents and toxins; (ii) submission to periodic biosafety and security inspections; and (iii) reporting of theft, loss or release of select agents. Federal agency enforcement actions for violations of FSAP regulations can include the initiation of corrective actions, complete or partial suspension or revocation of select agent registrations or civil or criminal liability.
Genetically Modified Materials Regulations
Our technologies and the technologies of our customers involve the use of genetically modified cells, organisms and biomaterials, including, without limitation, GMOs and genetically modified microorganisms (“GMMs”), and their respective products. In the United States, the FDA, the USDA through its APHIS, and the EPA are the primary agencies that regulate the use of GMOs, GMMs and potential products derived from GMOs or GMMs or Genetically Modified Materials, pursuant to the Coordinated Framework for the Regulation of Biotechnology.
The FDA reviews the safety of food consumed by humans and of feed consumed by animals under the Federal Food, Drug and Cosmetic Act (“FDCA”). Under the FDCA, food and feed manufacturers are responsible for ensuring that the products they market, including those developed through genetic engineering, are safe and properly labeled. In addition, the FDA must approve the use of any food additives, including GMOs, before marketing.
USDA's APHIS examines whether a plant itself presents a “plant pest” risk under the Plant Protection Act (“PPA”). Specifically, APHIS is responsible for regulating the introduction (i.e., importation, interstate movement or release into the environment) of certain GMOs and plants under the plant pest provisions in the PPA to ensure that they do not pose a plant pest risk. APHIS finalized changes to the PPA’s implementing regulations with respect to certain GMOs in May 2020. A person or organization may request a regulatory status review from APHIS to determine whether a GMO is unlikely to pose a plant pest risk and, therefore, is not regulated under the plant pest provisions of the PPA or the regulations codified at 7 C.F.R. Part 340; requesting a regulatory status review tends to assume the GMO at issue does not otherwise fall within a regulatory exemption. If the GMO does not qualify for an exemption or if the APHIS regulatory status review process finds that the plant poses a plausible plant pest risk, then the GMO may require an APHIS permit, i.e., be a regulated article under Part 340. A regulated article may be subject to APHIS for the environmental release, importation, or interstate movement of the GMO or its progeny.
EPA regulates, under the Federal Insecticide, Fungicide and Rodenticide Act (“FIFRA”), the pesticides (including plant incorporated protectants) that are used with crops, including GMO herbicide-tolerant crops. FIFRA generally requires all pesticides to be registered before distribution or sale, unless they are exempted. Under FIFRA, a pesticide registrant must demonstrate that the pesticide at issue, when used pursuant to its specifications, “will not generally cause unreasonableadverse effects on the environment” to secure a registration. EPA must approve each distinct pesticide product, each distinct use pattern, and each distinct use site. In addition to EPA’s FIFRA authority, EPA also regulates potential human health impacts from pesticides under the FDCA. EPA does so by establishing “tolerance levels” (i.e., “the amount of pesticide that may remain on food products”) under the FDCA.
Certain genetically modified microorganisms that are not otherwise regulated under FIFRA and FDCA may be subject to EPA regulation under the Toxic Substances Control Act (“TSCA”). New microorganisms that are formed by combining genetic material from organisms in different genera (known as intergeneric microorganisms) may be subject to reporting requirements prior to production or distribution in commerce (Microbial Activity Commercial Activity Notice), or use in research and development (TSCA Experimental Release Application), unless the entity can meet all required criteria to obtain an exemption under TSCA.
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Federal and state data privacy and security regulations
Numerous state, federal and foreign laws, including consumer protection laws and regulations, govern the collection, dissemination, use, access to, confidentiality and security of personal information, including health-related information. In the United States, numerous federal and state laws and regulations, including data breach notification laws, health information privacy and security laws, including HIPAA, and federal and state consumer protection laws and regulations (e.g., Section 5 of the FTC Act), that govern the collection, use, disclosure, and protection of health-related and other personal information could apply to our operations or the operations of our partners. HIPAA, and its respective implementing regulations, imposes obligations on “covered entities,” including certain health care providers, health plans, and health care clearinghouses, and their respective “business associates” that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, as well as their covered subcontractors with respect to safeguarding the privacy, security and transmission of individually identifiable health information. Violations of the HIPAA privacy and security regulations may result in civil and criminalpenalties. HHS is required to conduct periodic compliance audits of covered entities and their business associates. HIPAA also authorizes state attorneys general to bring civil actions seeking either an injunction or damages in response to violations of HIPAA privacy and security regulations.
In addition, certain state laws, such as the California Confidentiality of Medical Information Act, govern the privacy and security of health-related information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts. States including California, Virginia, Colorado, Connecticut and Utah have also enacted comprehensive privacy laws that are currently in effect, and similar laws have been passed or are being considered in several other states, as well as at the federal and local levels. Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminalpenalties and private litigation. Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other (thus complicating compliance efforts), and can result in investigations, proceedings, or actions that lead to significant civil or criminalpenalties and restrictions on data processing.
Ginkgo Corporate Information
Ginkgo’s principal executive office is located at 27 Drydock Avenue, Boston, Massachusetts 02210, and Ginkgo’s telephone number is (877) 422-5362. Ginkgo’s corporate website address is www.ginkgobioworks.com. We make available on the Investor Relations section of our website, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and Forms 3, 4 and 5, and amendments to those reports as soon as reasonably practicable after filing such documents with, or furnishing such documents to, the U.S. Securities and Exchange Commission (the “SEC”). The SEC maintains a website ( www.sec.gov ) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.
The information contained on, or accessible through, our corporate website is not incorporated into this Annual Report and should not be considered part of this Annual Report. The inclusion of the corporate website address is an inactive textual reference only.
Item 1A. Risk Factors.
An investment in our securities involves a high degree of risk. You should carefully consider the following risk factors, together with all of the other information included in this Annual Report, before making an investment decision. Our business, prospects, financial condition or operating results could decline due to any of these risks and, as a result, you may lose all or part of your investment.
Unless the context otherwise requires, all references in this section to the “Company,” “we,” “us” or “our” refer to the business of Ginkgo and its subsidiaries .
Risks Related to Ginkgo’s Business
We have a history of net losses. We expect to continue to incur losses for the foreseeable future, and we may never achieve or maintain profitability.
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We have incurred significant operating losses since our inception. As of December 31, 2025, we had an accumulated deficit of approximately $6.2 billion. We may incur losses and negative cash flow from operating activities for the foreseeable future as we continue to invest significant additional funds toward further developing our platform and customer offerings, the cell engineering programs we perform on behalf of our customers and otherwise growing our business, including our Biosecurity and Automation business units. We have derived a significant portion of our revenues from fees and milestone payments from technical development services provided to customers to advance programs, as well as a significant portion of our revenues from Biosecurity. Historically, these fees have not been sufficient to cover the full cost of our operations. Additionally, if our customers terminate their agreements or development plans with us, our near-term revenues could be adversely affected. In addition, certain of our customer agreements provide for milestone payments, future royalties and other forms of contingent consideration, the payment of which are uncertain, as they are dependent on our ability to successfully develop engineered cells, bioprocesses, or other deliverables and our customers’ ability and willingness to successfully develop and commercialize products and processes.
Our expenses may continue to exceed revenues in the foreseeable future and we may not achieveprofitability. If we fail to achieveprofitability, or if the time required to achieveprofitability is longer than we anticipate, we may not be able to expand or continue our business, and the value of our common stock could be negatively impacted. Our ability to achieve or sustain profitability is based on numerous factors, many of which are beyond our control, including the development of our platform, the initiation of new programs with new and existing customers, the commercial terms of our programs, the realization of any potential downstream value from our programs, our ability to advance cell engineering programs in a timely and cost-effective manner, our ability to extend new offerings to customers, our customers’ ability to scale up bioprocesses, the ability of our customers to produce and sell products, the impact of market acceptance of our customers’ products, and our customers’ market penetration and margins. Even if we do achieveprofitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.
We may need substantial additional capital in the future in order to fund our business.
We have consumed considerable amounts of capital to date, and we expect to incur continued net losses for the foreseeable future as we continue to develop our business, advance our programs, expand and enhance our platform and customer offerings, perform on behalf of our customers, and make the capital investments necessary to scale up our business. We have used, and may continue to use, additional capital for Biosecurity, strategic investments and acquisitions. We believe that our cash and cash equivalents, short-term investments, and interest earnings will be sufficient to meet our projected operating requirements until we reach profitability. However, these assumptions may prove to be incorrect and we could exhaust our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with our programs, including risks and uncertainties that could impact the rate of progress of our programs, we are unable to estimate with certainty the amounts of capital outlays and operating expenditures associated with these activities.
We do not currently have any commitments for future funding. We may receive fees, milestones, and royalty payments under our customer agreements, but these are not guaranteed. We have received non-cash consideration in the past and we may receive additional non-cash consideration in the future where we may not be able to realize the eventual cash proceeds expected or at all such that the amount of cash proceeds eventually realized may be less than the revenue recognized and the costs incurred to perform those services. Additionally, we may wish to sell our equity interests in certain subsidiaries or collaborations but most of these equity stakes are in private companies and we may not be able to find a buyer due to contractual restrictions or otherwise, or may incur significant impairment if we sell these positions for liquidity. We may not receive any further funds or future non-cash consideration under those agreements, the funds or non-cash consideration we receive may be lower than projected and/or disclosed as potential downstream value, or our program costs may be higher than projected. In addition, we may not be able to sign new customer agreements or enter into new development plans with existing customers with adequate funds to cover program development expenses. As a result of these and other factors, we do not know whether additional financing will be available when needed, or, if available, whether such financing would be on terms favorable to our stockholders or us.
If additional future financings, including pursuant to our at-the-market program, involve the issuance of equity securities, our existing stockholders would suffer dilution. See “Management’s Discussion and Analysis – At-The-Market Program” for more information. If we raise debt financing in the future, we may be subject to restrictive covenants that limit our ability to conduct our business. Our ability to raise funds may be adversely impacted by current or future economic
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conditions. If we fail to raise sufficient funds and continue to incur losses, our ability to fund our operations, take advantage of strategic opportunities, or otherwise respond to competitive pressures could be significantly limited. If adequate funds are not available, we may not be able to successfully execute our business plan or continue our business.
We have experienced periods of significant organizational change and if we fail to effectively manage these changes, then our business, results of operations, and financial condition could be adversely affected.
We have experienced both rapid growth and recent periods of decline in our business since inception, which has placed and may continue to place significant demands on our company culture, operational infrastructure, and management. We believe that our culture has been a critical component of our success. We have invested substantial time and resources in our team and have continued to nurture a culture of empowerment of, and active engagement by, our employees. In addition, in order to manage through these periods of organizational change, we will need to continue to adapt our operational, financial, and management controls and processes, as well as our reporting systems and procedures. As we manage our business and mature as a public company, we may find it difficult to maintain our culture and adapt effectively. Any failure to manage our organizational changes in a manner that preserves the key aspects of our culture and allows us to effectively adapt could be detrimental to future success in pursuing our objectives, including our ability to recruit and retain personnel, maintain reliable service levels and offerings for our customers, and achieve the necessary level of capacity, quality and efficiency in performing services and other development activities, or the necessary level of efficiency in our organizational structures. This, in turn, could adversely affect our business, results of operations, and financial condition.
Our limited operating history and evolving business makes it difficult to evaluate our current business and future prospects.
We have a portfolio of cell engineering programs which vary in start date, duration, complexity, and revenue potential. Additionally, our downstream economics in the form of royalties, milestones, and/or equity interests add an additional level of uncertainty to our possible future performance. Consequently, predictions about our future success or viability are highly uncertain and may not be as accurate as they could be if we had a longer company history of successfully developing, commercializing and generating revenue from our programs and/or downstream economic participation.
Our long-term objective is to generate free cash flow from the commercialization of programs for customers across a variety of industries, as well as from our biosecurity-focused offerings. Our estimated costs and timelines for the completion of programs are based on our experiences to date and our expectations for each stage of the program in development. Given the variety of types of programs we support and the continued growth of our platform, there is variability in timelines and costs for launching and executing programs, and completion dates can change over the course of a customer engagement. Our costs and timelines may be greater or subject to variability where regulatory requirements lead to longer timelines, such as in agriculture, food, and therapeutics. In addition, we have equity interests in certain companies and there is and will continue to be variability in the financial performance of these other companies or future companies in which we may have equity interests.
We have encountered in the past, and will encounter in the future, risks and uncertainties frequently experienced by growing companies with limited operating histories in emerging and rapidly changing industries. If our assumptions regarding these risks and uncertainties, which we use to plan and operate our business, are incorrect or change, or if we do not address these risks successfully, our results of operations could differ materially from our expectations, and our business, financial condition, and results of operations could be adversely affected.
Uncertainty regarding the demand for biosecurity services could materially adversely affect our business.
Our Biosecurity offering consists of pathogen testing, sequencing, and insights delivery which are subject to inherent risks of commercial viability, such as demand for services and price or market share erosion due to competition. Our Biosecurity business is focused on global surveillance programs and analytic services. However, creating the commercial and technical infrastructure to provide Biosecurity services globally is expensive. We may also be limited in our ability to scale up based on expense or unavailability of the required materials, equipment, personnel and infrastructure necessary to deliver biosecurity on a large, international scale. We may not be able to recover our investment expenses with sufficient revenue generated by our Biosecurity efforts.
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Our ability to commercialize our Biosecurity offerings is also subject to available government, private, and multilateral funding. If governments decide that the Biosecurity offerings are not necessary or that they do not have the funds to support them, we may experience difficulty in expanding and growing the biosecurity business.
We are or could become involved in securities or shareholder litigation and other related matters, which could be expensive and time-consuming. Such litigation and related matters could harm our business.
We have been and may in the future be a target for securities and shareholder lawsuits. The outcome of such pending and potential litigation is uncertain. Such disputes, including any related governmental or regulatory investigations and the cost of defending such, could result in an adverse effect on our business, results of operations, financial condition, reputation and cash flows, and could adversely impact the market price of our common stock. Although the results of lawsuits and claims cannot be predicted with certainty, defendingagainst such claims could be costly and could impose a significant burden on management and employees. Any litigation to which we become a party may result in an onerous or unfavorable judgment, or may be resolved with a monetary payment.
If we cannot attract new customers, retain existing customers, and expand our relationships across both our cell engineering solutions and tools businesses, our business, financial condition, and results of operations could be adversely affected.
We generate revenue from our cell engineering solutions and cell engineering tools businesses. In our cell engineering solutions business, which has been our core business since inception and continues to be the primary driver of our revenues, we receive fees for performing R&D activities and, for some of our legacy arrangements, downstream value in the form of royalties, milestone payments and/or equity. In our more recently launched cell engineering tools business, we receive fees from performing data generation services and from the sale of our automation hardware, software and ongoing customer support services. Our ability to achieve our growth objectives depends in significant part on our success in attracting new customers to each of these businesses, retaining and expanding our relationships with existing customers, and driving broader adoption and utilization of both our solutions and tools offerings over time.
Our ability to win new business and expand existing relationships in both businesses depends on many factors, including our reputation in the market, the quality, reliability and performance of our service and product offerings, our pricing and commercial terms, the features and interoperability of our tools, the perceived and demonstrated return on investment for our customers, our technical and operational capabilities, the effectiveness of our sales, marketing and customer success organizations, and broader conditions in our customers’ industries. If we fail to maintain a position of strength in any of these areas, or if our offerings do not meet evolving customer expectations, we may be unable to acquire new customers, retain existing customers or increase the scope of work or level of spend with existing customers, which could adversely affect our business and prospects.
As a relatively new entrant in the cell engineering tools market, we face additional risks in establishing and expanding our customer base in this business. We compete with incumbent providers that have established brands, larger installed bases and longer operating histories, and whose hardware and software are often already deeply integrated into customers’ laboratories and IT environments. These factors can create significant barriers to adoption of our tools, as customers may be reluctant to incur the time, expense and operational disruption associated with evaluating, validating, integrating and maintaining new systems. In order to justify replacing or augmenting existing systems, customers must perceive our offerings as providing meaningful and durable advantages in functionality, performance, scalability, data quality, ease of use, support and total cost of ownership. Our sales cycles for tools can be long and resource-intensive, often involving proof-of-concept projects, technical integration work and customer-specific validation. If we are unable to effectively demonstrate the benefits of our tools, if initial deployments do not meet customer expectations, or if we are unable to provide high-quality implementation, training, maintenance and support, customers may decide not to adopt our tools, may limit their use to smaller-scale projects or may discontinue or fail to renew support, software or service contracts. Any of these outcomes could limit the growth of our tools business and could also negatively affect our reputation in the market.
In our cell engineering solutions business, we typically generate valuable know-how in the course of performing customer programs, such as onboarding of new high-throughput assays or the development of optimized proteins and chassis strains. This know-how not only advances our technical and operational capabilities, but also serves as an important product development engine for expanding and refining our tools offerings. As a result, the loss of one or more significant customer relationships, the failure to renew, extend or expand existing programs, delays in starting new programs, or our inability to
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attract new solutions customers or programs would not only reduce our revenues and potential downstream value, but could also slow our accumulation of know-how and data assets, thereby hindering our ability to advance our technological differentiation and improve our tools and services offerings.
We engage in conversations with prospective and existing customers regarding potential solutions and tools relationships on an ongoing basis. We may devote substantial time and resources to business development discussions, technical evaluations, feasibility assessments, pilot projects, proof-of-concept studies and legal and regulatory diligence that may not result in a commercial agreement or that may result in only limited scope relationships. Even where a commercial agreement is reached, the resulting relationship may not be successful for various reasons. For example, in the case of cell engineering solutions, our customers may be unsuccessful in developing or commercializing products or processes based on our work, may change their strategic priorities or budgets, or may experience internal or external challenges that limit the size or duration of their programs with us, which has in the past and may in the future materially reduce both our near-term revenues and our downstream value opportunity from such collaborations. Similarly, in the case of cell engineering tools, customers may fail to deploy our tools at the scale initially contemplated, may not expand to additional sites, use cases or workflows, or may discontinue use of our offerings if they do not meet expectations. Any such outcomes could adversely affect our revenues, our ability to scale our platform, and our prospects for long-term growth.
We have exposure to the volatility and liquidity risks inherent in holding equity interests in other operating companies and other non-cash consideration.
We currently own equity interests in several of our customers, and we may receive non-cash consideration for our services, which involves estimations of fair market value. The initial fair market value of the non-cash consideration we receive has decreased in the past with respect to certain of our holdings, and in the future may decrease after contract inception and the amount of cash proceeds eventually realized may be less than the revenue recognized, or may even be zero. In the future, we may also own equity interests in other companies. The process and timing by which we receive equity interests and the factors we consider in deciding whether to accept, hold or dispose of these equity positions may differ significantly from those that an independent investor would evaluate when considering equity interests in a company. Owning equity interests increases our exposure to the risks of the other company and, in the case of customers, beyond the products of our collaborations. Our equity ownership positions expose us to market volatility and the potential for negative returns. We may have restrictions on resale or limited markets to sell our equity ownership. In many cases, our equity position is a minority position which exposes us to further risk, as we are not able to exert control over the companies in which we hold securities.
In connection with future collaborations or joint ventures, we may, from time to time, receive warrants or options, all of which involve additional risks involving, for example, pricing differences between the market value of underlying securities and our exercise price for the warrants or options, a possible lack of liquidity, and the related inability to close a warrant or option position, all of which could ultimately have an adverse effect on our financial position.
We leverage our own resources and partner with strategic and financial investors in order to help early stage companies and innovators secure funding and benefit from our platform, which exposes us to a number of risks.
Since our founding, alongside strategic and financial investors, we have leveraged our own resources to help secure funding for early stage and small companies. Going forward, we may continue to leverage our own balance sheet and partner with investors to enable companies at all stages to benefit from our platform.
Partnering with and investing in early stage and small companies has exposed and may continue to expose us to losses on our invested capital and the loss of revenue from the inability to recover fees for our services from these companies. Such companies are exposed to a number of risks that could impair an early stage or small company’s financial condition, results of operation, or cash flow or result in other adverse events, such as bankruptcy.
We may be unable to complete future strategic acquisitions or successfully integrate strategic acquisitions which could adversely affect our business and financial condition.
Our inability to complete any future strategic acquisitions or to successfully integrate any new strategic acquisitions could have a material adverse effect on our business. Our business strategy includes the acquisition of technologies and businesses that complement or augment our existing products and services. We may continue to seek attractiveopportunities to acquire technologies or businesses, enter into joint ventures and make other investments that are
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complementary to our existing strengths. There are no assurances, however, that any strategic acquisition opportunities will arise or, if they do, that they will be consummated. Certain acquisitions may be difficult to complete for a number of reasons, including the need to satisfy customary closing conditions, the need for antitrust and/or other regulatory approvals, as well as disputes or litigation. In addition, any strategic acquisition we may complete may be made at a substantial premium over the fair value of the net identifiable assets in the acquisition and thus our realization of this value relies on successful integration and continued operations. We may not be able to successfully integrate acquired technologies, assets, products, operations or businesses , make acquired businesses profitable, retain key employees (or integrate employees) or realize anticipated revenues, cost savings, or synergies, if any, from these acquisitions, or do so in an effective, timely and non-disruptive manner, which could adversely affect our business and financial condition. Further, our ongoing business may be disrupted, and our management's attention may be diverted, by acquisitions, investments, transition and/or integration activities.
We have in the past, and in the future may continue to pursue strategic acquisitions and investments that are dilutive to our stockholders, and such strategic acquisitions or investments could have an adverse impact on our business if they are unsuccessful.
We have made acquisitions in the past and, as appropriate opportunities become available, we may acquire additional businesses, assets, technologies, or products to enhance our business or engage in other strategic transactions in the future, but our ability to do so successfully cannot be ensured. We have also made investments in companies that we view as synergistic with our business. Although we conduct due diligence on these acquisitions and investments, such processes may underestimate or fail to reveal significant liabilities and we could incur losses resulting from liabilities of the acquired business that are not covered by indemnification we may obtain from the seller. Even if we identify suitable opportunities, including pending transactions, we may not be able to complete such acquisitions on favorable terms or at all, which could damage our business.
Additionally, pursuing acquisitions or other strategic transactions, whether successful or unsuccessful, could result in civil litigation and regulatory penalties. Any acquisitions we make may not strengthen our competitive position, and these transactions may be viewed negatively by customers or investors. We may decide to incur debt or spend cash in connection with a strategic acquisition, which may cause us to face liquidity concerns or be subject to restrictive covenants in the future. We have issued, and in the future may issue, common stock or other equity securities to the stockholders of the acquired company, which, if such issuances were unregistered, we may be contractually required to register on Form S-3 and may be subject to piggyback registration rights. Such issuances could constitute a material portion of our then-outstanding shares of common stock and may reduce the percentage ownership of our existing stockholders.
Acquisitions or other strategic transactions may also increase our expenses and reduce our cash available for operations and other uses. In addition, we may not be able to fully recover the costs of such acquisitions or be successful in leveraging any such strategic transactions into increased business, revenue, or profitability. We also cannot predict the number, timing, or size of any future acquisitions or the effect that any such transactions might have on our operating results.
Accordingly, although there can be no assurance that we will undertake or successfully complete any future acquisitions, any transaction that we have completed, or in the future do complete, may not yield the anticipated benefits and may be subject to the foregoing or other risks and have a material and adverse effect on our business, financial condition, results of operations, and prospects. Conversely, any failure to pursue or delay in completing any acquisition or other strategic transaction that would be beneficial to us, including those caused by competing parties, could impact our ability to sign new programs, delay the development of our platform, or slow the advancement of our programs and, thus, potential commercialization of our customer’s products.
Our programs may not achieve milestones, earn royalties or complete other anticipated key events on the expected timelines or at all, which could have an adverse impact on our business and could cause the price of our common stock to decline.
We may adopt various technical, manufacturing, regulatory, commercial, and other objectives for our programs. These milestones may include our or our customers’ expectations regarding the commencement or completion of technical development, the achievement of manufacturing targets, the submission of regulatory filings, or the realization of other development, regulatory, or commercialization objectives by us or our customers. The achievement of many of these milestones may be outside of our control. All of these milestones are based on a variety of assumptions, including
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assumptions regarding capital resources, constraints, and priorities, progress of and results from R&D activities, and other factors, any of which may cause the timing of achievement of the milestones to vary considerably. If we, our collaborators, or our customers fail to achieve milestones in the expected timeframes, the commercialization of our programs may be delayed, our credibility may be undermined, our expectations with respect to potential future downstream value may be inaccurate, our ability to earn royalties may be impacted, our business and results of operations may be harmed, and the trading price of our common stock may decline.
We must continue to secure and maintain sufficient and stable supplies of laboratory reagents, consumables, equipment, and laboratory services. We depend on a limited number of suppliers, some of which are single-source suppliers, and contract manufacturers for critical supplies, equipment, and services for research, development, and manufacturing of our products and processes. Our reliance on these third parties exposes us to risks relating to costs, contractual terms, supply, and logistics, and the loss of any one or more of these suppliers or contract manufacturers or their failure to supply us with the necessary supplies, equipment, or services on a timely basis, could cause delays in our research, development, or production capacity and adversely affect our business.
Widespread inflationary pressures and other adverse macroeconomic pressures, such as tariffs, increased duties and taxes, international trade disputes, political instability, supply or raw material shortages, and labor disruptions, exist across global economies, resulting in disruptions or higher costs for disposable lab equipment, raw materials and synthetic biology materials and services, and significant increases in the future could adversely affect our results of operations. We have experienced shortages in some of our key equipment and supplies, including those required in our labs, as well as disruptions in services provided by third parties, and may do so in the future as a result of supply chain issues tied to global pandemics, conflicts, or otherwise. We may also experience price increases, quality issues and longer lead times due to unexpected material shortages, service disruptions, and other unanticipated events, which may adversely affect our supply of lab equipment, lab supplies, chemicals, reagents, supplies, and lab services. For some suppliers, we do not enter into long-term agreements and instead secure our materials and services on a purchase order basis. Our suppliers may reduce or cease their supply of materials or services to us at any time in the future. If the supply of materials or services is interrupted, our programs may be delayed.
We depend on a limited number of suppliers for critical items, including lab consumables and equipment, for the development of our programs. Some of these suppliers are single-source suppliers. We do not currently have the infrastructure or capability internally to manufacture these items at the necessary scale or at all. Although we have a reserve of supplies and although alternative suppliers exist for some of these critical products, services, and equipment, our existing processes used in our Autonomous Lab have been designed based on the functions, limitations, features, and specifications of the products, services, and equipment that we currently utilize. While we work with a variety of domestic and international suppliers, our suppliers may not be obligated to supply products or services or our arrangements may be terminated with relatively short notice periods. Additionally, we do not have any control over the process or timing of the acquisition or manufacture of materials by our manufacturers and cannot ensure that they will deliver to us the items we order on time, or at all.
In particular, we rely on Twist for custom DNA synthesis and Thermo Fisher Scientific Inc. and others for certain instruments and consumables. The price and availability of DNA, chemicals, reagents, equipment, consumables, and instruments have a material impact on our ability to provide Cell Engineering services.
The loss of the products, services, and equipment provided by one or more of our suppliers could require us to change the design of our research, development, and manufacturing processes based on the functions, limitations, features, and specifications of the replacement items or seek out a new supplier to provide these items. Additionally, as we grow, our existing suppliers may not be able to meet our increasing demand, and we may need to find additional suppliers. We may not be able to secure suppliers who provide lab supplies at, or equipment and services to, the specification, quantity, and quality levels that we demand (or at all) or be able to negotiate acceptable fees and terms of services with any such suppliers.
As described above, some lab equipment, lab consumables, and other services and materials that we purchase are purchased from single-source or preferred suppliers, which limits our negotiating leverage and our ability to rely on additional or alternative suppliers for these items. Our dependence on these single-source and preferred suppliers exposes us to certain risks, including the following:
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● our suppliers may cease or reduce production or deliveries, raise prices, or renegotiate terms;
● we may be unable to locate a suitable replacement on acceptable terms or on a timely basis, if at all;
● if there is a disruption to our single-source or preferred suppliers’ operations, and if we are unable to enter into arrangements with alternative suppliers, we will have no other means of continuing the relevant research, development, or manufacturing operations until they restore the affected facilities or we or they procure alternative sources of supply;
● delays caused by supply issues may harm our reputation, frustrate our customers, and cause them to turn to our competitors for future programs; and
● our ability to progress the development of existing programs and the expansion of our capacity to begin future programs could be materially and adversely impacted if the single-source or preferred suppliers upon which we rely were to experience a significant business challenge, disruption, or failure due to issues such as financial difficulties or bankruptcy, issues relating to other customers such as regulatory or quality compliance issues, or other financial, legal, regulatory, or reputational issues.
Moreover, to meet anticipated market demand, our suppliers may need to increase manufacturing capacity, which could involve significant challenges. This may require us and our suppliers to invest substantial additional funds and hire and retain the technical personnel who have the necessary experience. Neither we nor our suppliers may successfully complete any required increase to existing research, development, or manufacturing capacity in a timely manner, or at all.
For the year ended December 31, 2025, our cost of lab equipment, lab supplies, and lab services accounted for a significant portion of our total R&D expenses. In the event of price increases by suppliers, whether as a result of inflationary pressures, tariffs or otherwise, we may attempt to pass the increased costs to our customers. However, we may not be able to raise the prices of our Cell Engineering services sufficiently to cover increased costs resulting from increases in the cost of our materials and services, or the interruption of a sufficient supply of materials or services. As a result, materials and services costs, including any price increase for our materials and services, may negatively impact our business, financial condition, and results of operations.
Some of our suppliers and contract manufacturers are foreign entities. We may face disruptions due to the inability to obtain customs clearances in a timely manner or restrictions on shipping or international travel. As a result of ongoing global supply chain challenges resulting in very long lead times for certain products and equipment, we may order in larger volumes in order to secure the supplies we require for our future operations, which may negatively impact our financial conditions, especially if we are unable to use the supplies ordered.
We use biological, hazardous, flammable and/or regulated materials that require considerable training, expertise and expense for handling, storage and disposal and may result in claimsagainst us.
We work with biological and chemical materials that could be hazardous to human, animal, or plant health and safety or the environment. Our operations produce hazardous and biological waste products, and we largely contract with third parties for the disposal of these products. Federal, state, and local laws and regulations govern the use, generation, manufacture, storage, handling, and disposal of these materials and wastes. Compliance with applicable laws and regulations is expensive, and current or future laws and regulations may restrict our operations. If we do not comply with applicable laws and regulations, we may be subject to fines and penalties.
In addition, we cannot eliminate the risk of (a) accidental or intentionalinjury or (b) release, or contamination from these materials or wastes, which could expose us to liability. Furthermore, laws and regulations are complex, change frequently, and have tended to become more stringent. We cannot predict the impact of such changes and cannot be certain of our future compliance. Accordingly, in the event of release, contamination, or injury, we could be liable for the resulting harm or penalized with fines in an amount exceeding our resources and our operations could be suspended or otherwise adversely affected. These liabilities could also include regulatory actions, litigation, investigations, remediation obligations, damage to our reputation and brand, supplemental disclosure obligations, loss of customer, consumer, and partner confidence in the safety of our laboratory operations, impairment to our business, and corresponding fees, costs, expenses, loss of revenues, and other potential liabilities, as well as increased costs or loss of revenue or other harm to our business.
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The release of GMOs or Genetically Modified Materials, whether inadvertent or purposeful, into uncontrolled environments could have unintended consequences, which may result in increased regulatory scrutiny and otherwise harm our business and financial condition.
The genetically engineered organisms and materials that we develop may have significantly altered characteristics compared to those found in the wild, and the full effects of deployment or release of our genetically engineered organisms and materials into uncontrolled environments may be unknown. In particular, such deployment or release, including an unauthorized release, could impact the environment or community generally or the health and safety of our employees, our customers’ employees, and the consumers of our customers’ products.
In addition, if a high profile biosecurity breach or unauthorized release of a biological agent occurs within our industry, our customers and potential customers may lose trust in the security of the laboratory environments in which we produce GMOs, Genetically Modified Microorganisms (“GMMs”) and Genetically Modified Materials, even if we are not directly affected. Any adverse effect resulting from such a release, by us or others, could have a material adverse effect on the public acceptance of products from engineered cells and our business and financial condition. Such a release could result in increased regulatory scrutiny of our facilities, platform, and programs, and could require us to implement additional costly measures to maintain our regulatory permits, licenses, authorizations and approvals. To the extent such regulatory scrutiny or changes impact our ability to execute on existing or new programs for our customers, or make doing so more costly or difficult, our business, financial condition, or results of operations may be adversely affected. In addition, we could have exposure to liability for any resulting harm, as well as to regulatory actions, litigation, investigations, remediation obligations, damage to our reputation and brand, supplemental disclosure obligations, loss of customer, consumer, and partner confidence in the safety of engineered cells materials and organisms, impairment to our business, and corresponding fees, costs, expenses, loss of revenues, and other potential liabilities, as well as increased costs or loss of revenue or other harm to our business.
We could synthesize DNA sequences or engage in other activity that inadvertently contravenes biosecurity requirements, or regulatory authorities could promulgate more far-reaching biosecurity requirements that our standard business practices cannot accommodate, which could give rise to substantial legal liability, impede our business, and damage our reputation.
The Federal Select Agent Program (“FSAP”) involves rules administered by the Centers for Disease Control and Prevention and the USDA's APHIS that regulate possession, use, and transfer of biological select agents and toxins that have the potential to pose a severethreat to public, animal, or plant health or to animal or plant products. In accordance with the International Gene Synthesis Consortium’s (“IGSC”) Harmonized Screening Protocol for screening of synthetic DNA sequence orders, we follow biosafety and biosecurity industry practices and avoid DNA synthesis activities that implicate FSAP rules by screening synthetic DNA sequence orders against the IGSC’s Regulated Pathogen Database; however, we could err in our observance of compliance program requirements in a manner that leaves us in noncompliance with FSAP or other biosecurity rules. In addition, authorities could promulgate new biosecurity requirements that restrict our operations. One or more resulting legal penalties, restraints on our business or reputational damage could have material adverse effects on our business, financial condition, or results of operations.
Third parties may use our engineered cells, materials, and organisms and accompanying production processes in ways that could damage our reputation.
After our customers have received our engineered cells, materials, and organisms and accompanying production processes, we do not have any control over their use and our customers may use them in ways that are harmful to our reputation. In addition, while we have established biosecurity offerings designed to comply with biosafety and biosecurity requirements and export control requirements in an effort to ensure that third parties do not obtain our engineered cells or other biomaterials for malevolent purposes, we cannot guarantee that these preventative measures will eliminate or reduce the risk of the domestic and global opportunities for the misuse or negligent use of our engineered cells materials, organisms and production processes. Accordingly, in the event of such misuse or negligent use, our reputation, future revenue, and operating results may suffer.
International expansion of our business exposes us to business, regulatory, political, operational, financial, and economic risks associated with doing business outside of the United States.
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We currently market our services and deliver our programs, materials, and processes outside of the United States and may market future offerings outside of the United States. We, and our suppliers, collaborators, and customers, currently conduct business outside of the United States. From time to time, our services may include the hiring or secondment of our employees outside the United States at third party facilities or require the hiring or secondment of foreign persons within our facilities, including as a result of foreign acquisitions. Accordingly, we are subject to a variety of risks inherent in doing business internationally, and our exposure to these risks will increase as we continue to expand our operations and customer base. These risks include:
● political, social and economic instability;
● higher levels of credit risk, corruption, and payment fraud;
● enhanceddifficulties of integrating any foreign acquisitions;
● increased expenses and diversion of our management’s attention from advancing programs;
● regulations that might add difficulties in repatriating cash earned outside the United States and otherwise prevent us from freely moving cash;
● import and export controls and restrictions and changes in trade regulations;
● compliance with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and similar laws in other jurisdictions;
● multiple, conflicting and changing laws and regulations such as privacy, security and data use regulations, tax laws, tariffs, including tariffs announced by the Trump administration in 2025, trade regulations, economic sanctions and embargoes, employment laws, anti-corruption laws, regulatory requirements, reimbursement or payor regimes and other governmental approvals, permits and licenses;
● failure by us, our collaborators or our customers to obtain regulatory clearance, authorization or approval for the use of our services in various countries;
● complexities and difficulties in obtaining intellectual property protection and enforcing our intellectual property;
● difficulties in staffing and managing foreign operations, including difficulties related to the increased operations, travel, infrastructure and legal compliance costs associated with international locations;
● logistics and regulations associated with shipping chemicals, biomaterials and product samples, including infrastructure conditions and transportation delays;
● financial risks, such as longer payment cycles, difficulty collecting accounts receivable, widespread inflationary pressure, the impact of local and regional financial crises, on demand and payment for our products and exposure to foreign currency exchange rate fluctuations;
● natural disasters, political and economic instability, including wars, terrorism and political unrest, the outbreak of disease, or public health epidemics/pandemics, which could have an adverse impact on our employees, contractors, customers, partners, travel and the global economy;
● breakdowns in infrastructure, utilities and other services;
● boycotts, curtailment of trade and other business restrictions; and
● the other risks and uncertainties described in this Annual Report.
Additionally, as part of our growth strategy, we will continue to evaluate potential opportunities for international expansion. Operating in international markets requires significant resources and management attention and will subject us to regulatory, economic and political risks in addition to those we face in the United States. However, our international expansion efforts may not be successful, which could limit the size of our market or the ability to provide services or programs internationally.
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In addition, due to potential costs from any international expansion efforts and potentially higher supplier costs outside of the United States, our international operations may operate with a lower margin profile. As a result, our margins may fluctuate as we expand our operations and customer base internationally.
Any of these factors could significantly harm our future international expansion and operations and, consequently, our revenue and results of operations.
Our investments in and use of AI may result in reputational harm, liabilities, or other adverse consequences to our business operations.
In August 2023, we entered into a strategic partnership with Google Cloud to develop and deploy AI tools for biology and biosecurity, which included certain minimum annual commitment obligations that we must pay. Under the strategic partnership, Ginkgo has developed and will continue to develop new, state-of-the-art large language models (“LLMs”) running on Google Cloud's Vertex AI platform across genomics, protein function, and synthetic biology, helping Ginkgo's customers accelerate innovation and discovery in fields as diverse as drug discovery, agriculture, industrial manufacturing, and biosecurity. Effective October 3, 2025, we entered into an amendment to the partnership to reduce our annual commitment amounts, which required a one-time payment of $14 million to be released from the obligations of the original agreement. If we are not able to meet our minimum annual commitment obligations again in the future, additional shortfall liabilities may be incurred.
In September 2024, we launched our first model API, a tool aimed at making biological AI models accessible to researchers, developers, and machine learning scientists. However, our development and use of AI technology in our products and operations remains in the early phases. While we aim to develop and use AI responsibly and attempt to mitigate ethical and legal issues presented by its use, we may ultimately be unsuccessful in identifying or resolving issues before they arise. There is no guarantee that Ginkgo will be successful in developing or successfully deploying the use of commercially available AI tools and as with many innovations, the use of AI presents many risks and challenges, including misuse, intellectual property infringement or trade secret misappropriation, flawed algorithms, inadequate data provenance for datasets used to train models, and insufficient, flawed, and/or biased datasets.
Additionally, AI technologies, including current tools available for business use in the marketplace, are complex and rapidly evolving. Uncertainty around new and emerging AI technologies may require additional investment to remain commercially relevant and/or to develop appropriate protections and safeguards. These investments may be costly and could increase our expenses as we contemplate expanding the use of AI in our platform and services. In addition, perceived or actual technical, legal, compliance, privacy, security, ethical or other issues relating to the use of AI may cause public confidence in AI to be undermined, which could slow our customers’ adoption of our products and services that use AI. We may also face significant potential disruption as a result of rapidly evolving domestic and international laws and regulations, which could impose significant costs and obligations on the company. For example, in 2023, an executive order on safe, secure and trustworthy AI was issued; and a White House memorandum released in 2024 as a result of this executive order made specific recommendations for enhanced biosecurity screening and software for biofoundries using AI. The EU has similarly introduced the AI Act to establish rules for providers and users. Emerging regulations may pertain to data privacy, data protection, and the ethical use of AI, as well as clarifying intellectual property considerations.
Challenges inherent to the use of AI generally or specific to Google's AI systems could adversely impact the reliability of our data and subject us to delays and competitive harm, result in new or enhanced governmental or regulatory scrutiny, pose confidentiality or security risks, ethical concerns, or legal liability, as well as brand or reputational harm, and our business and results of operations may suffer. Our use of AI could result in cybersecurity incidents that implicate the personal data or confidential information of the Company or our customers, which could adversely affect our reputation and results of operations.
Our recent restructuring actions in connection with our plans to reduce operational expenditures may not result in anticipated savings, could result in total costs and expenses that are greater than expected and could disrupt our business.
In connection with our plans to reduce operational expenditures, we implemented a restructuring plan, including a reduction in workforce and a planned consolidation and subleasing of certain facilities. Initial workforce reductions commenced in June 2024 and continued throughout 2025. Our reductions in force were substantially completed in 2025, although certain reductions will continue into 2026, subject to compliance with applicable laws. Our restructuring actions
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may result in other disruptions to our business, including customer program delivery issues, loss of historical customer or technical knowledge, our ability to comply with applicable laws and regulations, and our ability to retain key employees. Our efforts to reduce the size of our patent portfolio may result in inadequate protection of our intellectual property assets. The Company has consolidated certain facilities through various actions, including combining office and laboratory operations into fewer locations, subleasing unused or underutilized facilities, and has taken or plans to take other related measures. While the Company completed the majority of its facility consolidation actions in 2025, we continue to look for opportunities for subleasing unused or underutilized facilities, which will extend beyond 2026 or may not occur prior to termination of such leases, depending on market conditions. Additionally, restructuring expenses related to potential asset impairments, contract amendments or terminations for any facilities no longer in use or underutilized could be material. For the years ended December 31, 2025 and 2024, the costs associated with our reductions in force was $11.4 million and $19.3 million, respectively, consisting of cash severance and related costs.
Risks Related to Our Customers
We are dependent on our customers’ willingness and ability to successfully develop, produce and commercialize products using the cell engineering solutions we deliver and to a lesser extent, on the successful adoption and use of our cell engineering tools.
We sell cell engineering solutions and cell engineering tools. Our solutions offering involves performing R&D services to engineer cells, biological assets and biomanufacturing processes for our customers which are intended to be scaled-up and deployed for commercialization. We rely on our customers to advance, manufacture, and commercialize products enabled by our work. A portion of the value from some of these customer collaborations has historically been earned through downstream value sharing in the form of royalty streams, milestone payments, and/or equity interests. If they are not successful in development, regulatory approval, manufacturing or commercialization, or if they choose to delay, deprioritize or discontinue such programs, the downstream value we expect to receive will be reduced or may not be realized at all. Because we do not control our customers’ development, regulatory, manufacturing or commercial activities, we have limited ability to influence these outcomes.
Our ability to secure new solutions business and expand existing programs also depends on our customers’ R&D budgets, strategic priorities and willingness to outsource cell engineering work. If customers reduce R&D spending, shift focus away from synthetic biology or biomanufacturing, decide to bring work in-house, or experience business, financial or operational difficulties, they may not initiate, renew or expand collaborations with us, which could reduce both our near-term services revenues and longer-term downstream value opportunity (in the collaborations where downstream value applies).
Our cell engineering tools business is generally less directly tied to customers’ product-level commercial outcomes because we earn revenue primarily from sales of hardware, software and related services. However, if customers do not achieve expected benefits from our tools, or if their internal R&D or manufacturing efforts are unsuccessful, they may reduce or discontinue use of our tools or limit further deployments, which could adversely affect the growth of our tools business.
Because many of the products pursued by our customers are at early stages of development and the markets and regulatory frameworks for bioengineered products and processes continue to evolve, we have limited historical information to accurately estimate the probability, timing and scale of commercial success. If we overestimate the probability or scale of commercial success, our actual future revenues and cash flows from customer collaborations may be lower than expected, which could adversely affect the market price of our common stock.
Our revenue is concentrated in a limited number of customers, some of which are related parties, and our revenue, results of operations, cash flows and reputation may suffer upon the loss of a significant customer.
We have derived, and may continue to derive, a significant portion of our revenue from a limited number of large customers. For the year ended December 31, 2025, one customer in the Cell Engineering segment accounted for 15% of the Company’s total revenue, while one customer in the Biosecurity segment accounted for 12% of the Company’s total revenue . Due to the significant time required to acquire new customers, to plan and develop new programs for customers, and to satisfactorily execute on existing programs, the loss of any of these customers, or the loss of any other significant customer or a significant reduction in the amount of demand from a significant customer would adversely affect our
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revenue, results of operations, cash flows and reputation in the marketplace. There is always a risk that existing customers will not elect to do business with us in the future or will experience financial difficulties. If our customers experience financial difficulties or business reversals which reduce or eliminate the need for our services, they may be unable or unwilling to fulfill their contracts with us. There is also the risk that our customers will attempt to impose new or additional requirements on us that reduce the profitability of the services performed by us. Our customer concentration also increases the concentration of our accounts receivable and our exposure to payment defaults by key customers, which could expose us to substantial and potentially unrecoverable costs if we do not receive payment from key customers. Additionally, the loss of any significant customer could pose reputational harm to us and make it more challenging to acquire new customers.
In addition, while our customer collaborations are typically multi-year, we generally do not require our customers to generate a minimum amount of annual demand and without such contracts, our customers are not obligated to use our services beyond the amounts they choose to incur. Our customers may choose to use fewer of our services depending on program progress, their own technological capabilities, market demand for their products and/or their own internal budget cycles. As a result, we cannot accurately predict our customers’ decisions to reduce or cease utilizing our services. Even where we enter into long-term contracts with our customers, there is no guarantee that such agreements will be negotiated on terms that are commercially favorable to us in the long-term. In addition, existing customers may choose to perform some or all of the services they expect from us internally, with another third-party partner or by using capabilities from acquisitions of assets.
In certain cases, our business partners may have discretion in determining when and whether to make announcements about the status of our collaborations, including about developments and timelines for advancing programs, and the price of our common stock may decline as a result of announcements of unexpected results or developments.
Generally, we and our customers must mutually agree on determining when and whether to make announcements about the status of our collaborations, including developments in our programs and timelines for commercialization of or improvements to products using engineered cells developed using our platform. However, in some cases our customers may report or otherwise may be obligated to disclose certain matters without our consent. Our partners may also wish to report such information more or less frequently than we intend to or may not wish to report such information at all. We or our partners may announce a collaboration or partnership even if there is no guarantee that we will recognize program fees. The price of our common stock may decline as a result of a public announcement of unexpected results or developments in our partnerships, or as a result of our partners not consenting to an announcement or withholding information.
Risks Related to the Synthetic Biology Industry
Rapidly changing technology and emerging competition in the synthetic biology industry could make the platform, programs, services, tools, and products we and our customers are developing obsolete or non-competitive unless we continue to develop our platform and pursue new market opportunities.
The synthetic biology industry is still emerging and is characterized by rapid and significant technological changes, frequent new product introductions and enhancements, and evolving industry demands and standards. We participate in this industry through both our R&D services (cell engineering solutions) and our cell engineering tools (including automation hardware, software and data-generation offerings). Our future success will depend on our ability to sign and initiate new programs and deploy tools that address the evolving needs of our customers on a timely and cost-effective basis, to advance existing programs, and to pursue new market opportunities that develop as a result of technological and scientific advances. Additionally, our customers may face significant competition or other risks in their own markets which may impact demand for our services and tools thereby adversely impacting our business and results of operations.
There are a number of companies in the broader synthetic biology industry, and our future success will depend on our ability to maintain a competitive position with respect to technological advances in both cell engineering solutions and tools. Technological developments, including emerging AI and machine learning technologies, may result in our platform, our service offerings or our hardware and software tools becoming less differentiated, obsolete or non-competitive. For example, competitors or customers could develop alternative cell engineering platforms, in silico design capabilities, or automation and analytics tools that reduce the need for, or attractiveness of, our R&D services or tools. Our ability to compete successfully will depend on our ability to develop and maintain proprietary technologies, such as our Autonomous Lab, that enable our customers to develop products using our platform in a manner that is less expensive, faster, superior or
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otherwise differentiated from what a competitor’s technologies and products might enable and to integrate our tools into customers’ existing laboratory and data environments. If we are unable to continue to successfully advance our platform or the services it provides at scale, or to keep our tools offerings current, effective, interoperable and cost-competitive, or if our customers are unable to commercialize the products or processes made or improved upon by using our R&D services and tools, our business and results of operations will be adversely impacted.
Due to the significant lead time involved in launching a new program or developing a new product or process using our platform, our customers are required to make a number of assumptions and estimates regarding the commercial feasibility of a new product, including assumptions and estimates regarding the size of an emerging product category and demand for those end-products and processes which will use our technology, the ability to scale-up manufacturing processes to produce a product on a commercial scale, the ability to penetrate that emerging product category, customer adoption of a downstream product, the existence or non-existence of products being simultaneously developed by competitors, potential market penetration and obsolescence, planned or unplanned. As a result, it is possible that we may commence a new program with a customer who wishes to develop a product or process that has been displaced by the time of launch, addresses a market that no longer exists or is smaller than previously thought, that end-consumers do not like or otherwise is not competitive at the time of launch, in each case, after the incurrence of significant opportunity costs on our part to develop such product.
The ultimate success of the products developed by our customers using our services and tools may be dependent on the success of other markets in which we or our customers do not operate in or have knowledge or expertise or which, in each case, may not reach the size anticipated by us or our customers or may be replaced by another emerging product category or eliminated entirely.
The market, including customers and potential investors, may be skeptical of our ability to deliver on programs because they are based on a relatively novel and complex technology.
The market, including customers and potential investors, may be skeptical of the viability and benefits of bioengineered products as well as our enabling abilities, including our platform and programs, because they are based on a relatively novel approach and the adoption of complex technology and because we are still demonstrating to the market the value of our platform. There can be no assurance that our platform and programs will be understood, approved, or accepted by customers, regulators and potential investors or that we will be able to sell our services profitably at competitive prices and with features sufficient to establish demand.
In addition, in order for novel products from our programs to be successfully commercialized, support from the entire relevant supply chain is needed. Relationships with all parts of the supply chain are important in order to gain visibility into market trends and feature and specification requirements and in order to ensure customers are able to successfully manufacture their products, obtain regulatory approval and gain access to key distribution channels. If we are unable to convince these potential customers, their suppliers, or the consumers who purchase products containing or made or developed using engineered cells and/or biomanufacturing processes, of the utility and value of such products or that such products are superior to the products they currently use, we will not be successful in entering these markets and our business and results of operations will be adversely affected. If potential investors are skeptical of the success of our platform or cell programs, our ability to raise capital and the value of our common stock may be adversely affected.
Ethical, legal and social concerns about GMOs and Genetically Modified Materials and their resulting products could limit or prevent the use of products or processes using our technologies, limit public acceptance of such products or processes and limit our revenues.
Our technologies and the technologies of our customers involve the use of genetically modified cells, organisms and biomaterials, including, without limitation, GMOs, GMMs, Genetically Modified Materials and their respective products. The use, production and marketing of Genetically Modified Materials are subject to laws and regulations in many countries, some of which are new and some of which are still evolving. In the United States, the FDA, the EPA and the USDA are the primary agencies that regulate the use of GMOs, GMMs and potential products derived from GMOs or GMMs. If regulatory approval of the Genetically Modified Materials or resulting products is not secured, our business operations, financial condition and our ability to grow as a business could be adversely affected. We expect to encounter regulations regarding Genetically Modified Materials in most, if not all, of the countries in which our customers may seek to establish production capabilities or sell their products and the scope and nature of these regulations will likely be
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different from country to country. Governmental authorities could, for safety, social or other purposes, impose limits on, or implement regulation of, the use, production or marketing of Genetically Modified Materials. If our customers cannot meet the applicable requirements in other countries in which they intend to produce or sell their products, or if it takes longer than anticipated to obtain such approvals, our business could be adversely affected.
In addition, public perception regarding the safety and environmental hazards of, and ethical concerns over, Genetically Modified Materials or the processes used to create them, including gene editing or gene regulating technologies, could influence public acceptance of our and our customers’ technologies, products, and processes. For instance, certain advocacy groups engage in efforts that include regulatory legal challenges and labeling campaigns for genetically modified products, as well as application of pressure to consumer retail outlets seeking a commitment not to carry genetically modified foods. These groups in the past have pressured retail food outlets and grocery store chains to publicly state that they will not carry genetically modified foods and have pressured food brands to publicly state that they will not use ingredients produced by genetically modified microbes. In addition, certain labeling-related initiatives have heightened consumer awareness of GMOs, which may make consumers less likely to purchase products containing GMO ingredients, and could have a negative impact on the commercial success of our customers’ products and programs. These concerns could result in increased expenses, regulatory scrutiny, delays or other impediments to our programs. The subject of Genetically Modified Materials has received negative publicity, which has aroused public debate. This adverse publicity has led to, and could continue to lead to, greater regulation and trade restrictions on imports of Genetically Modified Materials or their resulting products. In addition, we have expanded into the European Union market, which has increased government regulation and scrutiny over genetically modified products. There is a risk that products produced using our technologies could cause adverse health effects or other adverse events, which could also lead to negative publicity, regulatory action or private litigation. If we are unable to overcome the ethical, legal and social concerns relating to genetic engineering, our programs could face increased expenses, regulatory scrutiny, delays or other impediments to deliver our programs or the commercialization of resulting products and processes.
Risks Related to Intellectual Property
If we are unable to obtain, maintain and defend patents protecting our intellectual property, our competitive position could be harmed.
Our success depends in part on our ability to obtain and maintain intellectual property protection for our proprietary technologies. We protect our proprietary technologies through patents and trade secrets, both of which entail risk. If we are unable to obtain, maintain or protect intellectual property rights related to our technology, or if our intellectual property rights are inadequate, our competitive position, business, financial conditions, results of operations and prospects may be harmed.
Because of the volume and nature of our inventions, patent protection may not be practicable, available, or appropriate for some aspects of our proprietary technologies. While we own patents and pending patent applications in the United States and in foreign jurisdictions, these applications do not ensure the protection of our intellectual property. There may be prior art of which we are not aware. Additionally, obtaining, maintaining, defending and enforcing patents is costly, time consuming and complex, and we may not be able to file and prosecute all necessary or desirable patent applications, or maintain and enforce any patents that may issue from such patent applications at a reasonable cost or in a timely manner. As a result of our restructuring and cost-reduction efforts, we have determined to reduce the size of our patent portfolio and, therefore, some of our intellectual property assets may be inadequate protected. It is also possible that we will fail to identify patentable aspects of our technologies before it is too late to obtain patent protection. Although we enter into confidentiality agreements with parties who have access to confidential or patentable aspects of our R&D output, such as our employees, collaborators, consultants, advisors and other third parties, any of these parties may breach the agreements and disclose such output before a patent application is filed, thereby jeopardizing our ability to seek patent protection.
Further, pending applications may not be issued or may be issued with claims significantly narrower than we currently seek. Patents for which claims have been allowed may be successfullychallenged and invalidated. Unless and until our pending applications issue, their protective scope is impossible to determine and, even after issuance, their protective scope may be limited.
Changes in patent law may make patents covering life science inventions more difficult to obtain and enforce. Further legislative changes or changes in the interpretation of existing patent law could increase the uncertainty and cost
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surrounding the prosecution of our owned patent applications and the maintenance, enforcement or defense of our owned patents. In some cases, we develop inventions with the assistance of machine learning and other computational tools that may be considered to be AI, and we expect to use such tools, and to use generative AI, in future development. Because the law is in flux with respect to AI-assisted inventions, there is uncertainty and risk associated with patenting such inventions. Depending on future actions by the U.S. Congress, the federal courts and the USPTO, the laws and regulations governing patents could change in unpredictable ways that could have a further material adverse effect on our patent rights and our ability to protect, defend and enforce our patent rights in the future. It is also possible that disclosure requirements with respect to use of AI tools may be imposed by the patent office, which could increase the cost of patent prosecution and cause uncertainty and delay in the enforcement of patent rights.
In some cases, we use genetic sequence information from naturally occurring organisms. U.S. Supreme Court rulings have narrowed the scope of patent protection for naturally occurring sequences and for inventions based on the observation and exploitation of natural phenomena. These decisions have weakened the rights of patent owners in certain situations. The Federal Circuit and the Supreme Court have also issued a series of rulings that create obstacles to the patenting of groups of genetic sequences that share functional characteristics, making it more difficult to obtain claims to certain genetic constructs, particularly antibodies. These changes in the law have created uncertainty with respect to the validity and enforceability of patents covering natural and engineered sequences.
Further, the issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our patents may be challenged in the courts or patent offices in the United States and abroad. An adverse determination in any such challenge could result in loss of exclusivity, or patent claims being narrowed, invalidated or held unenforceable, in whole or in part. Any of these results could limit our ability to stop others from using or commercializing similar or identical technology to compete directly with us. In addition, if the breadth or strength of protection provided by our patents or patent applications is threatened, regardless of the outcome, it could dissuade companies from collaborating with us. Such proceedings also may result in substantial cost and require significant time from our scientists and management, even if the eventual outcome is favorable to us.
The laws of some countries do not protect intellectual property rights to the same extent as do the laws of the United States or may apply different rules concerning the assignment of intellectual property rights. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain jurisdictions. We may encounter similar difficulties, particularly as we expand to work with foreign employees and contractors and expand our collaboration activities into foreign markets. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents by foreign holders and, in some cases, do not favor the enforcement of patents at all, particularly patents in the life sciences. This could make it difficult for us to stop the infringement of our patents. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business and could be unsuccessful.
Reductions in the scope or enforceability of our patent protection may adversely affect our customers’ ability to commercialize their products and may thus reduce our downstream value from royalties, commercial milestone payments and/or equity.
If we are unable to protect the confidentiality of our trade secrets, our business and competitive position may be harmed.
Because patent protection may not be available or appropriate for significant aspects of the technology we are developing, our success may depend in large part on our proprietary information, including genetic and other chemical and biological data, processes, know-how, and other trade secrets developed over years of R&D, some of which are embodied in proprietary software. We rely heavily on trade secret protections, especially in cases where we believe patents or other forms of registered intellectual property protection may not be appropriate or obtainable. However, trade secrets are difficult to protect. The secrecy of the Company’s trade secrets must be maintained for them to retain their status and protection as trade secrets. While we strive to protect the secrecy of our trade secrets and other proprietary information, including by requiring our employees, customers, consultants, and contractors to enter into confidentiality agreements and instituting multilayered protections covering our digital environment and biomaterials, we may not be able to adequately protect our trade secrets or other proprietary information. We cannot guarantee that we have entered into such agreements with every party that may have or has had access to our trade secrets, biomaterials or proprietary technology and processes. Further, despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches.
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We seek to preserve the integrity and confidentiality of our information by maintaining physical security of our premises and physical and electronic security of our information technology systems, but it is possible that these security measures could be breached. We also rely on systems provided by third parties, which may suffer security breaches or incidents. Such security breaches may be inadvertent or may come about due to intentionalmisconduct or other malfeasance or by human error or technical malfunctions, including those caused by hackers, employees, contractors, or vendors. It may be difficult or impossible to recover trade secrets or other confidential information once it is hacked, and hackers may operate from jurisdictions that will not cooperate with such efforts. Enforcing any claim that a third party unlawfully obtained and is using any of our trade secrets is expensive and time consuming, and the outcome is unpredictable. In addition, courts in some jurisdictions are less willing or unwilling to protect trade secrets even when a hacker or thief can be identified.
Our competitors may lawfully obtain or independently develop knowledge that is equivalent to one or more of our trade secrets. Were they to do so, we would be unable to prevent them from using that independently developed knowledge. Such a competitor could claim that we had learned the trade secret from them and bring an action against us on that basis. If any of our trade secrets were to be disclosed to or independently developed by a competitor or other third party, our competitive position could be materially and adverselyharmed. Moreover, a competitor could file for patent protection covering intellectual property that we have chosen to protect as a trade secret. In such a case, we might be restricted or excluded from using that intellectual property even if we had developed it before our competitor did.
Our facilities hold large collections of microbial strains, cell lines and other biomaterials. Failure to implement adequate controls and protections, failure to implement adequate disposal procedures, unauthorized visitors in the labs, or customers’ failure to adequately protect biological materials can put us and our customers at risk of losingvaluable assets through negligence or theft and enabling the use of those lost materials by our competitors. While we believe that we take reasonable measures to protect the security of biomaterials owned by us or our customers, it is possible that our security controls and practices may not prevent unauthorized or other improper access to such genetic material. Any unauthorized access, acquisition, use, destruction, or release of the GMOs we engineer could result in our having exposure to significant liability under our contracts, as well as to regulatory actions, litigation, investigations, remediation obligations, damage to our reputation and brand, supplemental disclosure obligations, loss of customer, consumer, or partner confidence in the security of our platform, impairment to our business, and corresponding fees, costs, expenses, loss of revenues, and other potential liabilities.
Our customers sometimes provide organisms, genetic material and/or data to us in connection with our collaborations. In the event that we fail to protect customer materials or data or inadvertently use such materials or data for unauthorized purposes, we could be liable to our customers under trade secret laws or contractual provisions.
We may be subject to claimschallenging the inventorship or ownership of our patents, biomaterials and other intellectual property.
Certain of our employees, consultants and contractors were previously employed at universities or other software or biotechnology companies, including our competitors or potential competitors. Additionally, some of our consultants or contractors may have ongoing relationships with universities. Although we try to ensure that our employees, consultants and contractors do not use the intellectual property of others in their work for us, we may be subject to claims that these individuals or other contractors have used or disclosed intellectual property, including trade secrets or other proprietary information, of another. Litigation may result from these claims.
While it is our policy to require that our employees, consultants and contractors who may be involved in the development of intellectual property for us execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we regard as our own. Our intellectual property assignment agreements with them may not be self-executing or may be breached, and we may be forced to bring claimsagainst third parties, or defendclaims they may bring against us, to determine the ownership of what we regard as our intellectual property. Such claims could have a material adverse effect on our business, financial condition, results of operations and prospects.
If we are unsuccessful in litigating any such claims, in addition to paying monetary damages, we may losevaluable intellectual property rights or personnel, which could have a material adverse effect on our competitive business position and prospects. Such intellectual property rights could be awarded to a third party, and we could be required to obtain a license from such third party to use or commercialize our technology or products, which license might not be available on
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commercially reasonable terms, or at all. Even if we are successful in prosecuting or defendingagainst such claims, litigation could result in substantial costs and be a distraction to our management and employees.
The life science academic and research community has abided by norms of free exchange of biomaterials, but norms have begun to change so that parties may assert ownership and control over biomaterials that they permitted to be freely disseminated in the past. Thus, despite our best efforts to confirm our right to use biomaterials in our possession, we may use organisms that we believe to be free of encumbrance that are, in fact, subject to claims of title by others. In such a situation, litigation may be required to clear title, if it can be cleared at all. Similarly, we may be subject to claims that we have used biomaterials obtained from licensors or repositories for unauthorized purposes, or purposes not consistent with the licensing terms of the providing organization.
We may become involved in lawsuits or other enforcement proceedings to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and potentially unsuccessful.
Competitors and other third parties may infringe or otherwise violate our issued patents or other intellectual property. In addition, our patents may become involved in inventorship, ownership, or priority disputes. We may also become subject to claims by collaboration partners that intellectual property or biomaterials that we believe to be owned by us are actually owned by them. Any litigation concerning any of these issues would be expensive, time consuming and uncertain. There can be no assurances that we would prevail in any suit brought by us or against us by third parties, or successfully settle or otherwise resolve those claims. Significant litigation would have substantial costs, even if the eventual outcome were favorable to us, and would divert management’s attention from our business objectives.
Under certain circumstances, we may share or lose rights to intellectual property developed under U.S. federally funded research grants and contracts.
Some of our inventions, data, or other intellectual property have been or may be developed during the course of research funded by the U.S. government. The U.S. government may have the right to take title to government-funded inventions if we fail to disclose the inventions to the government in a timely manner or fail to file a patent for the intellectual property within specified time limits. Further, in consequence of our receiving government funding, the U.S. government may have certain rights to intellectual property that we use in our platform or programs pursuant to the Bayh-Dole Act of 1980, as amended (the “Bayh-Dole Act”). Under the Bayh-Dole Act, U.S. government rights in certain “subject inventions” developed under a government-funded program may include a non-exclusive, irrevocable worldwide license to use inventions for any governmental purpose. In some circumstances, the U.S. government may acquire unlimited rights in data we generate. In addition, the U.S. government has the right to require us, or an assignee or exclusive licensee to U.S. Government-funded inventions, to grant licenses to any of these inventions to the government or a third party if the government determines that: (i) adequate steps have not been taken to commercialize the invention; (ii) government action is necessary to meet public health or safety needs; (iii) government action is necessary to meet requirements for public use under federal regulations; or (iv) the right to use or sell such inventions is exclusively licensed to an entity within the United States and substantially manufactured outside the United States without the U.S. government’s prior approval. Additionally, we may be restricted from granting exclusive licenses for the right to use or sell such inventions unless the licensee agrees to comply with relevant Bayh-Dole Act restrictions (e.g., manufacturing substantially all of the invention in the United States) and reporting requirements. In addition, the U.S. government may acquire title in any country in which a patent application is not filed. Certain technology and inventions are also subject to transfer restrictions during the term of these agreements with the U.S. government and for a period thereafter. These restrictions may limit sales of products or components, transfers to foreign subsidiaries for the purpose of the relevant agreements, and transfers to certain foreign third parties. If any of our intellectual property becomes subject to any of the rights or remedies available to the U.S. government or third parties pursuant to the Bayh-Dole Act, this could impair the value of our intellectual property and could adversely affect our business.
The use of digital genetic sequence information may be subject to the Nagoya Protocol or other treaties or local legislation concerning biodiversity, which could increase our costs and adversely affect our business.
The Nagoya Protocol is a supplemental agreement to the Convention on Biological Diversity (“CBD”) that is designed to provide for equitable sharing of benefits arising from the utilization of genetic resources and traditional knowledge. There are other international treaties, as well as local legislation in many countries, with similar objectives. Under the Nagoya Protocol and many other treaties and laws, countries possessing genetic resources (“source countries”) are tasked with
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setting up procedures and institutional infrastructure for researchers to obtain prior informed consent, both from the source country and from any relevant indigenous or traditional communities, for biological research. Many have been slow to adopt workable institutions permitting the rational negotiation of benefit-sharing agreements. Many source countries are now asserting that the use of digital genetic sequence information is subject to the constraints of the Nagoya Protocol or similar national- or local-level benefit-sharing requirements. It is unclear whether this position will ultimately be adopted or what the implications of such adoption might be. It is unclear what a source country might assert if we used genetic sequences (i) extracted by a third party from a natural resource that was removed from its source country before that source country ratified the CBD or signed the Nagoya Protocol (ii) extracted by a third party and uploaded to public sequence databases after the source country ratified the CBD; (iii) in a heterologous host organism; or (iv) as a base for further engineering, so that the sequence we use no longer conforms to the natural sequence on which it was based.
We make extensive use of public and proprietary sequence databases to support our work. While we undertake efforts to identify and comply with laws and international protocols relating to the use of genetic resources, the uncertainty surrounding the use of digital sequence information and the lack of workable institutions in many source countries for the efficient negotiation of benefit-sharing agreements may limit our use or cause uncertainty in our use of certain sequences that we obtain from public access databases or natural sources. New financial obligations may arise regarding our use of sequence information. Customers that must certify their compliance with Nagoya Protocol obligations may be reluctant to do business with us unless we engage in expensive and time-consuming benefit-sharing negotiations with source countries of publicly available genetic sequences. Moreover, the World Intellectual Property Organization is considering requiring disclosures in patents of the origin of genetic resources, which may further increase uncertainty and the cost of patent prosecution. These changes could increase our R&D costs and adversely affect our business, financial condition, and results.
Third party patents may limit our freedom to operate in certain areas, which may adversely affect our business.
There may be patents that affect our freedom to operate in certain areas, and we may as a result choose to design around or license such patents from third parties. If we must spend significant time and money designing around or licensing patents held by others, our business and financial prospects may be harmed. We may be restricted from carrying out certain operations, or we may be limited in our ability to design new products for our customers. We may become subject to claims by third parties alleging that we are infringing, misappropriating, or otherwise violating their intellectual property rights.
If we are sued for infringing, misappropriating, or otherwise violating intellectual property rights of third parties, such litigation could be costly and time consuming and could prevent or delay us from using our platform and technologies.
Litigation arising from disputes relating to the intellectual property of third parties is expensive, time-consuming, and uncertain. There can be no assurance that we will prevail in such disputes. Parties making claimsagainst us might be able to obtain injunctive or other relief, which could block our or our customers’ ability to develop, commercialize and sell products or use our technologies, and could result in the award of substantial damagesagainst us, including treble damages, attorney’s fees, costs and expenses if we were found to have willfullyinfringed. In the event of a successful claim against us, we or our customers might be required to pay damages and ongoing royalties, and obtain licenses from third parties, or be prohibited from selling certain products or using certain technologies. We may not be able to obtain these licenses on acceptable or commercially reasonable terms, if at all. In addition, we or our customers could encounter delays in product or service introductions while we attempt to develop alternative designs or redesign existing products or technologies to avoid or resolve these claims. Our loss in any lawsuit or failure to obtain a license could prevent us from using our platform and technologies. Such a loss or failure could materially affect our business and reputation. Any litigation pertaining to these issues would have substantial costs, even if the eventual outcome were favorable to us, and would divert management’s attention from our business objectives.
If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.
Our registered or unregistered trademarks or trade names may be challenged, infringed, diluted, tarnished, circumvented or declared generic or determined to be infringing on other marks. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition among potential collaborators or customers in our markets of interest. At times, competitors may adopt trade names or trademarks similar to ours, thereby impeding our
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ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement, dilution or tarnishment claims brought by owners of other trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade names. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected. Our efforts to enforce or protect our proprietary rights related to trademarks, trade names, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could adversely affect our business, financial condition, results of operations and prospects.
Any claims or lawsuits relating to infringement of, misappropriating, or otherwise violating intellectual property rights brought by or against us will be costly and time consuming and may adversely affect our business, financial condition and results of operations.
Any of the risks identified above could result in significant litigation. In addition to the specific litigation-related risks identified above, litigation of any kind carries certain inherent risks. Because of the substantial amount of discovery required in connection with litigation in U.S. courts, there is a risk that some of our confidential information could be compromised in the discovery process. There could be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on our share price.
Further, our agreements with some of our customers, suppliers or other entities require us to defend or indemnify these parties if they become involved in infringementclaims that target our products, services or technologies, or in certain other situations. If we must defend or indemnify third parties, we could incur significant costs and expenses that could adversely affect our business, operating results or financial condition.
Intellectual property rights do not necessarily address all potential threats to our business.
The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business or permit us to maintain our competitive advantage. The following examples are illustrative:
● we may choose not to file a patent in order to maintain certain intellectual property as trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property;
● others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our owned or licensed intellectual property rights;
● the patents of others may harm our business;
● we might not have been the first to make the inventions covered by the issued patents or pending patent applications that we own;
● we might not have been the first to file patent applications covering certain of our inventions; and
● issued patents that we hold rights to may fail to provide us with any competitive advantage, or may be held invalid or unenforceable, including as a result of legal challenges by our competitors.
Should any of these events occur, they could harm our business, financial condition, results of operations and prospects.
Intellectual property disputes of third parties and customers could have a material adverse effect on our business, financial condition, and results.
We rely, and expect to continue to rely on, certain capital equipment, machinery, consumables, reagents, software, services and intellectual property that we purchase or license from third parties for use in our operations, platform, products, services and offerings. We cannot be certain that our vendors, suppliers, and licensors are not infringing upon the intellectual property rights of others or that they have sufficient rights to the third-party technology used in our business in all jurisdictions in which we may operate. Disputes with any of these third parties over uses or terms could result in the payment of additional royalties or penalties by us, cancellation or non-renewal of the underlying license, termination of supplies or rights to use, or litigation. In the event that we cannot resolve issues of this kind, we may be required to discontinue or limit our use of the operations, platform, products, services or offerings that include or incorporate the
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licensed intellectual property. Any such discontinuation or limitation could have a material and adverse impact on our business, financial condition and results of operation.
Our customers may become involved in intellectual property disputes with third parties that are related or unrelated to any products or services we have supplied or rendered to them. Such disputes could result in a customer being unable to market its products, thus depriving us of license, milestone, or other revenues. Such deprivation could have a material adverse impact on our financial condition and results.
Our use of “open-source” software could negatively affect our ability to market or provide our services and could subject us to possible litigation.
We have used “open-source” software in connection with the development and deployment of our software platform, and we expect to continue to use open-source software in the future. Open-source software is licensed by its authors or other third parties under open-source licenses, which in some instances may subject us to certain unfavorable conditions, including requirements that we offer our products that incorporate the open-source software for no cost, that we make publicly available all or part of the source code for any modifications or derivative works we create based upon, incorporating or using the open-source software, or that we license such modifications or derivative works under the terms of the particular open-source license.
Companies that incorporate open-source software into their products have, from time to time, faced claimschallenging the use of open-source software and compliance with open-source license terms. We could be subject to similar suits by parties claiming ownership of what we believe to be open-source software or claimingnoncompliance with open-source licensing terms. While we monitor our use of open-source software and try to ensure that none is used in a manner that would require us to disclose our proprietary source code or that would otherwise breach the terms of an open-source agreement, we cannot guarantee that we will be successful, that all open-source software is reviewed prior to use in our platform, that our developers have not incorporated open- source software into our products that we are unaware of or that they will not do so in the future.
Furthermore, there are an increasing number of open-source software license types, almost none of which have been interpreted by U.S. or foreign courts, resulting in a dearth of guidance regarding the proper legal interpretation of such licenses. As a result, there is a risk that open-source software licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to market or provide our products and services. If we are held to have breached or failed to fully comply with all the terms and conditions of an open-source software license, we could face infringementclaims or other liability, or be required to seek costly licenses from third parties to continue providing our offerings on terms that are not economically feasible, if at all, to re-engineer all or a portion of our platform, to discontinue or delay the provision of our offerings if re-engineering could not be accomplished on a timely basis or to make generally available, in source code form, our proprietary code. Further, in addition to risks related to license requirements, use of certain open-source software carries greater technical and legal risks than does the use of third-party commercial software. For example, open-source software is generally provided without any support or warranties or other contractual protections regarding infringement or the quality of the code, including the existence of security vulnerabilities. To the extent that our platform depends upon the successful operation of open-source software, any undetectederrors or defects in open-source software that we use could prevent the deployment or impair the functionality of our systems and injure our reputation. In addition, the public availability of such software may make it easier for others to compromise our platform. Any of the foregoing risks could materially and adversely affect our business, financial condition and results of operations.
Risks Related to Personnel, IT and Physical Infrastructure
Loss of key personnel, including our founders and senior executives, and/or failure to attract, train and retain additional key personnel , or unintended consequences caused by our workforce reduction, could delay our cell engineering programs, harm our platform development efforts, limit our biosecurity and public health offerings, and harm our ability to meet our business objectives, particularly given the substantial investment required to recruit, hire and train our employees.
Our business involves complex, global operations across a variety of markets and requires a management team and employee workforce that is knowledgeable in the many areas in which we operate. Our future success depends upon our ability to attract, train, retain and motivate highly qualified management, scientific, engineering, information technology, operations, business development and marketing personnel, among others. In addition, the market for qualified personnel is
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competitive because of (a) the limited number of people available who have the necessary technical skills and understanding of our technology and products and (b) the nature of our industry which requires certain of our technical personnel to be on-site in our facilities. We compete for qualified technical personnel with other life sciences and information technology companies, as well as academic institutions and research institutions in the markets in which we operate, including: Massachusetts, USA; California, USA; The Netherlands; and Switzerland. Our senior leadership team is critical to our vision, strategic direction, platform development, operations and commercial efforts. Our employees, including members of our leadership team, could leave our company with little or no prior notice and would be free to work for a competitor. We also do not maintain “key person” life insurance on any of our employees. The departure of one or more of our founders, senior leadership team members or other key employees could be disruptive to our business until we are able to hire qualified successors.
In addition, we implemented a workforce reduction of more than 50% of our employees, which was substantially completed in 2025. While we believe this workforce reduction was necessary to help realign the Company’s cost structure, this reduction may yield unintended consequences, such as the loss of certain institutional knowledge and technical expertise, as well as attrition beyond our intended reduction in workforce and reduced employee morale, which may cause our employees who were not affected by the reduction in workforce to seek alternate employment. Additional attrition could impede our ability to meet our operational goals, which could have a material adverse effect on our financial performance.
Our continued platform development, growth and commercial success depends, in part, on recruiting and retaining highly-trained personnel across our various target industries and markets with the necessary background and ability to develop and use our platform and to effectively identify and sell to current and new customers. New hires and employees onboarded as a result of any of our recent acquisitions may require significant training and, in most cases, take significant time before they achieve full productivity. Our failure to successfully hire and integrate these key personnel into our business could adversely affect our business. To attract top talent, we believe we will need to offer competitive compensation and benefits packages, including equity incentive programs, which may require significant investment. If we are unable to offer competitive compensation this may make it more difficult for us to attract and retain key employees. To the extent our compensation programs and workplace culture are not viewed as competitive, or changes in our workforce and related restructuring, reduction-in-force, or other initiatives are not viewed favorably, our ability to attract, retain and motivate employees can be weakened, which could harm our results of operations. Moreover, if the perceived value of our equity awards declines, it may adversely affect our ability to attract and retain key employees. If we do not maintain the necessary personnel to accomplish our business objectives, we may experience staffing constraints that adversely affect our ability to support our programs and operations.
In addition, some of our personnel are qualified foreign nationals whose ability to live and work in the U.S. is contingent upon the continued availability of appropriate visas and whose ability to work on some of our technologies may require the procurement of appropriate export licenses. Due to the competition for qualified personnel in the key markets in which we operate, we expect to continue to utilize foreign nationals to fill part of our recruiting needs. As a result, changes to United States immigration policies have restrained, and could further restrain, the flow of technical and professional talent into the United States and adversely affect our ability to hire and retain qualified personnel.
Our business and results of operations are dependent on adequate access to laboratory and office space and suitable physical infrastructure to conduct our operations. If we are unable to access enough space or we experience failures of our physical infrastructure, including due to natural disasters affecting us or our suppliers, our business and results of operations could be adversely affected.
Our business depends on providing customers with R&D services and tools. In order to properly conduct our business, we need access to sufficient laboratory space and equipment to perform the activities necessary to advance and complete our programs. Additionally, we need to ensure that our laboratories and corporate offices remain operational at all times, which includes maintaining suitable physical infrastructure, including electrical, waste management, plumbing and HVAC, logistics and transportation systems and network infrastructure. We own certain properties in California and lease most of our laboratories and office spaces. We rely on the landlords, as applicable, for basic maintenance of our leased laboratories and office buildings. If one of our landlords has not maintained a leased property sufficiently, we may be forced to stop working on a particular program or even exit early from the facility, which could be disruptive to our business. Furthermore, we may continue to acquire laboratories not built by us in order to sufficiently scale and expand our output
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capacity. If we discover that these buildings and their infrastructure assets are not in the condition we expected when they were acquired, we may be required to incur substantial additional costs to repair or upgrade the laboratories.
Problems in and around one or more of our laboratories or corporate offices, whether or not within our control, could result in service interruptions or significant infrastructure or equipment damage. These could result from numerous factors, including:
● human error;
● equipment failure;
● physical, electronic and cybersecurity breaches;
● fire, earthquake, hurricane, flood, tornado and other natural disasters;
● extreme temperatures;
● flood and/or water damage;
● fiber cuts;
● power loss;
● terrorist acts, including acts of bioterrorism;
● sabotage, vandalism and cyberattacks; and
● local epidemics or global pandemics.
Certain of our facilities are located in an active floor, earthquake and/or tsunami zone, and certain of our suppliers conduct their operations in the same region or in other locations that are susceptible to natural disasters. The occurrence of a natural or other disaster, such as an earthquake, tsunami, hurricane, drought, flood, fire, wildfire or any potential effects of climate change or localized extended outages of critical utilities or transportation systems, or any critical resource shortages affecting us or our suppliers or manufacturers could cause a significant interruption in our business, damage or destroy our facilities, production equipment or inventory or those of our suppliers and cause us to incur significant costs or result in limitations on the availability of our raw materials, any of which could harm our business, financial condition and results of operations.
We have timeline obligations to certain customers with respect to their programs. As a result, service interruptions or significant equipment damage in our laboratories could result in difficulty maintaining program timelines for these customers and potential claims related to such failures. Because the services we provide in our laboratories are critical to many of our customers’ businesses, service interruptions or significant equipment damage in our laboratories could also result in lost revenue or other indirect or consequential damages to our customers. We cannot guarantee that a court would enforce any contractual limitations on our liability in the event that one of our customers brings a lawsuit against us result of a problem at one of our laboratories and we may decide to reach settlements with affected customers irrespective of any such contractual limitations. In addition, any loss of service, equipment damage or inability to meet our service obligations could reduce the confidence of our customers and could consequently impair our ability to obtain and retain customers, which would adversely affect both our ability to generate revenues and our operating results.
Furthermore, we are dependent upon internet service providers, telecommunications carriers and other website operators, some of which have experienced significant system failures and electrical outages in the past.
Our customers may, in the future, experience difficulties due to system failures unrelated to our systems and offerings. If, for any reason, these providers fail to provide the required services, our business, financial condition and results of operations could be materially and adversely impacted.
Risks Related to Financial Reporting
We use estimates in determining the fair value of certain assets and liabilities. If our estimates prove to be incorrect, we may be required to write down the value of these assets or write up the value of these liabilities, which could adversely affect our financial position.
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Our ability to measure and report our financial position and operating results is influenced by the need to estimate the fair value of an asset or liability. Fair value is estimated based on a hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are inputs that reflect the assumptions that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. We estimate the impact or outcome of future events on the basis of information available at the time of the financial statements. An accounting estimate is considered critical if it requires that management make assumptions about matters that were highly uncertain at the time the accounting estimate was made. If actual results differ from management’s judgments and assumptions, then they may have an adverse impact on our results of operations and cash flows.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
We have incurred net losses since our inception and we may never achieve or sustain profitability. Generally, for U.S. federal income tax purposes, net operating losses incurred will carry forward. However, net operating loss carryforwards generated prior to January 1, 2018 are subject to expiration for U.S. federal income tax purposes. As of December 31, 2025, the Company had federal net operating loss carryforwards of approximately $1.8 billion, of which $139.2 million will begin to expire in 2029 and $1.6 billion can be carried forward indefinitely. As of December 31, 2025, the Company had state net operating loss carryforwards of approximately $1.5 billion, of which $1.2 billion will begin to expire in 2030 and $257.5 million can be carried forward indefinitely. The Company also had $3.9 million of foreign net operating losses as of December 31, 2025, of which $1.5 million will begin to expire in 2034 and $2.4 million can be carried forward indefinitely.
Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change by value in its equity ownership by certain stockholders over a three-year period, the corporation’s ability to use its pre-ownership change net operating loss carryforwards and other pre-ownership change tax attributes, such as research tax credits, to offset its post-ownership change income or taxes may be limited. Similar provisions of state tax law may also apply to limit the use of our state net operating loss carryforwards and other state tax attributes. We have not performed an analysis to determine whether our past issuances of stock and other changes in our stock ownership may have resulted in one or more ownership changes. If it is determined that we have in the past experienced an ownership change, or if we undergo one or more ownership changes as a result of future transactions in our stock, which may be outside our control, then our ability to utilize our net operating loss carryforwards and other tax attributes may be materially limited. As a result, even if we earn taxable income, we may be unable to use a material portion of our net operating loss carryforwards and other tax attributes, which could adversely affect our future cash flows. There is also a risk that regulatory changes, such as suspensions on the use of net operating losses or other unforeseen reasons, may result in our existing net operating loss carryforwards expiring or otherwise becoming unavailable to offset future taxable income. For these reasons, we may not be able to utilize a material portion of our net operating loss carryforwards and other tax attributes even if we attainprofitability.
We had in the past identified a material weakness in our internal controls over financial reporting, and we may identify additional material weaknesses in the future. A failure to maintain an effective system of internal control over financial reporting, may result in failure to accurately report our financial results or prevent fraud. As a result, stockholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our common stock.
SEC and New York Stock Exchange (“NYSE”) rules and regulations require, among other things, that we establish and periodically evaluate procedures with respect to our internal control over financial reporting. In addition, we are required to document and test our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 so that our management can certify as to the effectiveness of our internal control over financial reporting. Likewise, our independent registered public accounting firm is required to attest to the effectiveness of our internal control over financial reporting.
As previously disclosed in Part II-Item 9A, “Controls and Procedures”, of our Annual Report on Form 10-K for the year ended December 31, 2023, in connection with the audit of our financial statements for the year ended December 31, 2023, we concluded that there was a material weakness in our internal controls over financial reporting. The material weakness identified did not result in any material misstatement of our financial statements. The material weakness identified for the
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year ended December 31, 2023 was remediated as of December 31, 2024. However, we may in the future discover other areas of our internal controls that require remediation.
We cannot provide assurances that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition, or results of operations. Any material weaknesses or significant deficiencies in our internal control over financial reporting could cause investors to lose confidence in the accuracy and completeness of our financial reports, the market price of shares of our common stock to decline, and result in sanctions or investigations by NYSE, the SEC or other regulatory authorities. Failure to remedy material weaknesses in our internal control over financial reporting or to implement or maintain other effective control systems could also restrict our future access to the capital markets.
Adverse developments affecting the financial services industry could adversely affect our business operations, financial condition and results of operations.
Actual or rumored events involving reduced or limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions or other companies in the financial services industry or the financial services industry generally, have in the past and may in the future lead to market-wide liquidity problems. Future adverse developments with respect to specific financial institutions or the broader financial services industry may lead to market-wide liquidity shortages, impair the ability of companies to access working capital needs, and create additional market and economic uncertainty.
We regularly maintain cash balances at third-party financial institutions in excess of the Federal Deposit Insurance Corporation insurance limit. Any failure of a depository institution to return our deposits, or if a depository institution is subject to other adverse conditions in the financial or credit markets, could further impact access to our invested cash or cash equivalents and could adversely impact our operating liquidity and financial performance.
In addition, widespread investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all. Any decline in available funding or access to our cash and liquidity resources could, among other risks, adversely impact our ability to meet our operating expenses, financial obligations or fulfill our other obligations, or result in breaches of our financial and/or contractual obligations. Any of these impacts, or any other impacts resulting from the factors described above or other related or similar factors not described above, could have material adverse impacts on our liquidity and our current and/or projected business operations and financial condition and results of operations.
Risks Related to Governmental Regulation and Litigation
Failure to comply with federal, state, local and international laws and regulations could adversely affect our business and our financial condition.
A variety of federal, state, local and international laws and regulations govern certain aspects of our business. For example, we maintain a registration from the DEA for the research of certain controlled substances and permits from the Boston Public Health Commission to conduct work with recombinant DNA. Some of our programs or products made or developed using our engineered cells and/or biomanufacturing processes are subject to regulations, including those promulgated by the FDA, DEA, EPA or USDA. In addition, we are subject to laws relating to, among other things, anti-bribery, insider trading, sourcing of biological materials and data privacy. The legal and regulatory requirements that apply to our business may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another or may conflict with other rules or our practices. As a result, our practices may not comply, or may not comply in the future with all such laws, regulations, requirements and obligations. Any failure, or perceived failure, by us to comply with any federal, state, local or international laws, regulations, industry self-regulatory principles, industry standards or codes of conduct, regulatory guidance, orders to which we may be subject or other legal obligations could adversely affect our reputation, brand and business, and may result in claims, proceedings or actions against us by governmental entities or others or other liabilities or require us to change our operations. We may also be contractually required to indemnify and hold harmless third parties from the costs or consequences of non-compliance with any laws, regulations or other legal obligations.
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We may also become subject to increasing regulation in the future as we expand our business. As we continue to expand our operations and offerings domestically and globally, we will have to expend significant management and financial resources to maintain compliant practices in those locations. Non-compliance could lead to litigation, which would require substantial management and financial resources.
We may incur significant costs complying with environmental, health and safety laws and regulations, and failure to comply with these laws and regulations could expose us to significant liabilities.
We use hazardous chemical and biological materials in our business and are subject to a variety of federal, state, local and international laws and regulations governing, among other matters, the use, generation, manufacture, transportation, storage, handling, disposal of, and human exposure to these materials, including regulation by governmental regulatory agencies, such as the Occupational Safety and Health Administration and the EPA. We have incurred, and will continue to incur, capital and operating expenditures and other costs in the ordinary course of our business in complying with these laws and regulations.
Although we have implemented safety procedures for storing, handling and disposing of these materials and waste products in an effort to comply with these laws and regulations, we cannot be sure that our safety measures will be compliant or capable of eliminating the risk of injury or contamination from the generation, manufacturing, use, storage, transportation, handling, disposal of and human exposure to hazardous materials and/or flammable chemicals. Failure to comply with environmental, health and safety laws could subject us to liability and resulting damages. There can be no assurance that violations of environmental, health and safety laws will not occur as a result of human error, accident, equipment failure, contamination, intentionalmisconduct or other causes. Compliance with applicable environmental laws and regulations may be expensive, and the failure to comply with past, present or future laws could result in the imposition of fines, regulatory oversight costs, third party property damage, product liability and personal injuryclaims, investigation and remediation costs, the suspension of production or a cessation of operations, and our liability may exceed our total assets. Liability under environmental laws can be imposed for the full amount of damages without regard to comparative fault for the investigation and cleanup of contamination and impacts to human health and for damages to natural resources. Contamination at properties we may own and operate and at properties to which we send hazardous materials, may result in liability for us under environmental laws and regulations.
Our business and operations may be affected by other new environmental, health and safety laws and regulations, which may require us to change our operations, or result in greater compliance costs and increasing risks and penalties associated with violations, which could impair our research, development or production efforts and harm our business.
If we fail to comply with healthcare and other governmental regulations, we could face substantial penalties and our business, financial condition and results of operations could be adversely affected.
Our business activities may be subject to regulation and enforcement by the FDA, U.S. Department of Justice, HHS, Office of Inspector General, and other federal and state governmental authorities. Although our offerings are not currently billed to any third-party payor, including any commercial payor or government healthcare program, we may, in the future, submit claims for our services to third-party payors, including government healthcare programs. If we submit claims to third-party payors, such activity will expand the scope of federal and state healthcare laws applicable to us.
Federal and state healthcare laws and regulations that may affect our ability to conduct business include, without limitation:
● the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting, offering, receiving or paying any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, lease, order, or arranging for or recommending the purchase, lease or order of, any item or service, for which payment may be made, in whole or in part, under federal healthcare programs such as Medicare and Medicaid. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;
● the federal physician self-referral prohibition, commonly known as the Stark Law, which prohibits a physician, in the absence of an applicable exception, from making a referral for certain designated health services covered by the Medicare or Medicaid program, including clinical laboratory services, if the physician or an immediate family member of the physician has a financial relationship with the entity providing the designated health services. The
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Stark Law also prohibits the entity furnishing the designated health services from billing, presenting or causing to be presented a claim for the designated health services furnished pursuant to the prohibited referral;
● the federal civil falseclaims laws, including without limitation the federal FalseClaims Act (which can be enforced through “qui tam,” or whistleblower actions, by private citizens on behalf of the federal government), and civil monetary penalties laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, false or fraudulentclaims for payment of government funds, or knowingly making, using or causing to be made or used, a false record or statement material to an obligation to pay money to the government or knowingly and improperly avoiding, decreasing or concealing an obligation to pay money to the federal government. In addition, the government may assert that a claim including items and services resulting from a violation of the federal Anti-Kickback Statute or Stark Law constitutes a false or fraudulent claim for purposes of the civil FalseClaims Act;
● the EKRA, which created a new federal crime for knowingly and willfully: (1) soliciting or receiving any remuneration in return for referring a patient to a recovery home, clinical treatment facility, or laboratory; or (2) paying or offering any remuneration to induce such a referral or in exchange for an individual using the services of a recovery home, clinical treatment facility, or laboratory. Unlike the Anti-Kickback Statute, EKRA is not limited to services reimbursable under a government health care program, but instead extends to all services reimbursed by “health care benefit programs”;
● the healthcare fraud statutes under HIPAA, which impose criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfullyfalsifying, concealing or covering up a material fact or making any materially false statement, in connection with the delivery of, or payment for healthcare benefits, items or services by a healthcare benefit program, which includes both government and privately funded benefits programs. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;
● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”) enacted as part of the American Recovery and Reinvestment Act of 2009, and its implementing regulations, and as amended again by the Modifications to the HIPAA Privacy, Security, Enforcement and Breach Notification Rules Under HITECH and the Genetic Information Nondiscrimination Act; Other Modifications to the HIPAA Rules, commonly referred to as the Final HIPAA Omnibus Rule, published in January 2013, which imposes certain obligations, including mandatory contractual terms, on covered entities subject to HIPAA (i.e., health plans, healthcare clearinghouses and certain healthcare providers), as well as their business associates that perform certain services for or on their behalf involving the use or disclosure of individually identifiable health information, to safeguard the privacy, security and transmission of individually identifiable health information from any unauthorized use or disclosure;
● the U.S. Food, Drug, and Cosmetic Act (“FDCA”) which imposes civil and criminal liability for engaging in any of a number of Prohibited acts, including distributing drugs, devices and foods that are adulterated or misbranded. To charge a criminalmisdemeanorviolation of the FDCA, no intent need be shown;
● federal consumer protection and unfair competition laws, which broadly regulate platform activities and activities that potentially harm consumers; and
● state law equivalents of each of the above federal laws, such as anti-kickback, self-referral, and fee-splitting, and falseclaims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers and self-pay patients.
Because of the breadth of these laws and the narrowness of available statutory and regulatory exemptions, exceptions, and safe harbors, it is possible that some of our activities could be subject to challenge under one or more of such laws. We may face claims and proceedings by private parties, and claims, investigations and other proceedings by governmental authorities, relating to allegations that our business practices do not comply with current or future laws or regulations involving applicable fraud and abuse or other healthcare laws and regulations, and it is possible that courts or governmental authorities may conclude that we or any of our partners have not complied with them, or that we may find it necessary or appropriate to settle any such claims or other proceedings. Any action brought against us for violation of these or other
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laws or regulations, even if we successfullydefendagainst it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business. If our operations are found to be in violation of any federal or state laws described above or any other current or future fraud and abuse or other healthcare laws and regulations that apply to us, we may be subject to claims and proceedings by private parties, investigations and other proceedings by governmental authorities, as well as penalties, including significant criminal, civil and administrative penalties, damages and fines, disgorgement, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolveallegations of noncompliance with these laws or regulations, imprisonment for individuals and exclusion from participation in government programs, such as Medicare and Medicaid, as well as contractual damages and reputational harm. We could also be required to curtail or cease our operations. In addition, if any customers, healthcare professionals we engage, laboratory partners or other entities with whom we do business are found not to be in compliance with applicable laws, they may be subject to the same criminal, civil or administrative sanctions, including exclusion from government-funded healthcare programs. Any of the foregoing could seriouslyharm our business and financial results.
We and our laboratory partners are subject to a variety of laboratory testing standards, compliance with which is an expensive and time-consuming process, and any failure to comply could result in substantial penalties and disruptions to our business.
We and the third-party laboratories that we partner with are subject to the CLIA. CLIA is a federal law that regulates clinical laboratories that perform testing on specimens derived from humans for the purpose of providing information for the diagnosis, prevention or treatment of disease. CLIA requires certain clinical laboratories to be certified by the federal government and mandates compliance with various operational, personnel, facilities administration, quality and proficiency testing requirements depending on the level of complexity for which the laboratory is certified. CLIA certification is also a prerequisite to be eligible to bill state and federal healthcare programs, as well as many private third-party payors, for laboratory testing services. Our partner laboratories hold CLIA certifications for high complexity testing, which mandate compliance with various operational, personnel, facilities administration, quality and proficiency testing requirements depending on the level of complexity for which the laboratory is certified. Sanctions for failure to comply with CLIA requirements may include suspension, revocation, or limitation of a laboratory’s CLIA certificate, as well as the imposition of significant fines or criminalpenalties. Any sanction imposed under CLIA, its implementing regulations, or state or foreign laws or regulations governing licensure, or our partner laboratories’ failure to renew a CLIA certificate, a state or foreign license, or accreditation, could have a material adverse effect on our business.
In addition, our partner laboratories are subject to state laws and regulations governing laboratory licensure. Some states have enacted state licensure laws that are more stringent than CLIA. In certain markets such as California, New York, and Pennsylvania, we or our partner laboratories may also need to obtain and maintain additional licensure from such states. It is uncertain that our partner laboratories will be granted such licensure and, in such cases, we cannot offer testing to patients located in those states, which could limit our ability to offer testing on a wide scale.
It is possible that additional states may enact laboratory licensure requirements in the future, which could further limit our ability to expand our services.
We rely on third-party laboratories in the conduct of our biosecurity and public health business offerings. If any of our partners cease working with us, or face supply chain disruptions or other difficulties, our business could be harmed.
The testing industry is subject to complex and costly regulation and if government regulations are interpreted or enforced in a manner adverse to us, we may be subject to enforcement actions, penalties, exclusion, and other material limitations on our operations.
In connection with our previous offering of COVID-19 testing services, we partnered with third-party laboratories, diagnostic test manufacturers and manufacturers of collection kits, which are subject to extensive and frequently changing federal, state and local laws and regulations governing various aspects of our business, including significant governmental certification and licensing regulations. Additionally, new laws, regulations and judicial decisions, or new interpretations of existing laws, regulations and decisions, may limit potential revenues, and we may need to revise our R&D or commercialization programs. The costs of defendingclaims associated with violations, as well as any sanctions imposed, could significantly adversely affect our financial performance.
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Our testing does not identify nor sequence any individual human DNA or RNA nor can results be tied to any individual. As a result, we do not collect informed consents from any individual participating in our programs. However, our approach could be challenged in the future based on the claims or privacy considerations and searches governed by the 4th Amendment of the U.S. Constitution. Any legal challenges could consume our management and financial resources.
Current regulations governing the testing services we offer are shifting and in some cases unclear. In addition, our laboratory partners may be unsuccessful in validating, or obtaining or maintaining authorizations for, the tests we relied on to provide our prior COVID-19 testing services. If any third-party manufacturers or laboratories offering tests that we use in our testing services are deemed by the FDA or other regulatory authorities to have violated applicable law or if the tests or test components are marketed, processed or distributed in violation of applicable law, we may be subject to enforcement action or litigation, or we may be required to find alternative tests to support our testing services, which could increase our costs.
In addition, we are required to comply with applicable FDA regulations with respect to distribution of certain COVID-19 diagnostic test kits and collection kits, including, for certain kits, compliance with applicable terms and conditions of an EUA. Such conditions may include requirements related to collection of information on the performance of the product, reporting of adverse events, recordkeeping requirements, and labeling and promotional activities. To the extent that we marketed or promoted third-party tests or test kits outside of the uses authorized for these products or in a false or misleading manner, the tests or collection kits could be considered misbranded or adulterated and distributing them in interstate commerce could violate the FDCA. Violations of applicable FDA requirements could result in enforcement actions, such as warning or “untitled” letters, revocation of EUAs, seizures, injunctions, civil penalties and criminalprosecutions and fines, and violation of the FTC Act could result in injunctions and other associated remedies, all of which could have a material adverse effect on our business. Most states also have similar regulatory and enforcement authority for laboratory testing and distribution of related collection kits. For example, many state laws require us to hold a specific form of license to distribute COVID-19 diagnostic test kits and collection kits into such states. These requirements vary from one state to another and frequently change. Complying with state laws and regulations may subject us to similar risks and delays as those we could experience under federal regulation.
Our surveillance testing efforts do not collect identifying individual data and do not return a diagnostic result, but some surveillance methods, such as double collection, require samples from individuals. Regulatory authorities could take issue with our characterization of such testing as surveillance and/or impose additional requirements or restrictions.
Advertising for any of the tests or collection kits we distribute or the testing services we offer is also subject to regulation by the Federal Trade Commission (“FTC”), under the Federal Trade Commission Act (“FTC Act”). The FTC may take enforcement action for advertising claims that are not adequately substantiated or that are false or misleading.
We are subject to federal and state laws and regulations governing the protection, use, and disclosure of health information and other types of personal information, and our failure to comply with those laws and regulations or to adequately secure the information we hold could result in significant liability or reputational harm.
Numerous state and federal laws, regulations, standards and other legal obligations, including consumer protection laws and regulations, which govern the collection, dissemination, use, access to, confidentiality, security and processing of personal information, including health-related information, could apply to our operations or the operations of our partners. For example, HIPAA imposes privacy, security and breach notification obligations on certain healthcare providers, health plans, and healthcare clearinghouses, known as covered entities, as well as their business associates that perform certain services that involve creating, receiving, maintaining or transmitting individually identifiable health information for or on behalf of such covered entities, and their covered subcontractors. HIPAA requires covered entities and business associates to develop and maintain policies with respect to the protection of, use and disclosure of protected health information (“PHI”), including the adoption of administrative, physical and technical safeguards to protect such information, and certain notification requirements in the event of a breach of unsecured PHI. If in the future we engage in certain types of standard electronic transactions involving payors, including billing the Medicare or Medicaid programs or commercial health plans, we will be subject to HIPAA as a “covered entity.” We are currently subject to HIPAA as a “business associate” because we performed certain services involving the use or disclosure of PHI on behalf of covered entity customers with respect to our prior COVID-19 testing service offerings. Implementation of the infrastructure necessary to
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meet HIPAA standards requires substantial investment. Being subject to HIPAA as a covered entity or business associate exposes us to significant fines and penalties, including criminalfines and penalties.
Entities that are found to be in violation of HIPAA as the result of a breach of unsecured PHI, a complaint about privacy practices or an audit by HHS, may be subject to significant civil, criminal and administrative fines and penalties and/or additional reporting and oversight obligations if required to enter into a resolution agreement and corrective action plan with HHS to settle allegations of HIPAA non-compliance. HIPAA also authorizes state attorneys general to file suit on behalf of their residents. Courts may award damages, costs and attorneys’ fees related to violations of HIPAA in such cases. While HIPAA does not create a private right of action allowing individuals to sue us in civil court for violations of HIPAA, its standards have been used as the basis for duty of care in state civil suits such as those for negligence or recklessness in the misuse or breach of PHI.
Even when HIPAA or a state law does not apply, according to the FTC, violating consumers’ privacy rights or failing to take appropriate steps to keep consumers’ personal information secure may constitute unfair and/or deceptive acts or practices in violation of Section 5(a) of the FTC Act. The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.
Several states have enacted privacy laws governing the use and disclosure of health information, such as the California Confidentiality of Medical Information Act; these laws are not preempted by HIPAA to the extent they are more stringent than HIPAA. Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our partners. Further, in recent years, there have been a number of well-publicized data breaches involving the improper dissemination of personal information of individuals both within and outside of the healthcare industry. Laws in all 50 states require businesses to provide notice to individuals whose personally identifiable information has been disclosed as a result of a data breach. The laws are not consistent, and compliance in the event of a widespread data breach is costly. States are also constantly amending existing laws, and creating new data privacy and security laws, requiring attention to frequently changing regulatory requirements. For example, the California Consumer Privacy Act of 2018 (“CCPA”) went into effect on January 1, 2020. The CCPA creates new transparency requirements and grants California residents several new rights with respect to their personal information. Failure to comply with the CCPA may result in, among other things, significant civil penalties and injunctive relief, or potential statutory or actual damages. On November 3, 2020, California voters passed a ballot initiative for the California Privacy Rights Act (“CPRA”), which significantly expands the CCPA. The CPRA imposes additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data, such as the right to opt out of the sale of personal information or the sharing of personal information for purposes of cross-context behavioral advertising. The CPRA also provides for a private right of action for certain data breaches. It also creates a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement. Additional compliance investment and potential business process changes may be required to remain compliant with similar laws that have been proposed or passed in other states. For example, comprehensive privacy laws akin to the CPRA have recently gone into effect in twelve other states, and several other states have passed similar laws that will go into effect in the next two years. It is possible that other states, federal agencies or local governments will follow suit. The data privacy laws under consideration by federal and state legislators also include sector-specific laws. The My Health My Data Act, which recently became effective in Washington, contains new notice and consent requirements for the processing of “consumer health data” with the potential for large penalties enforceable through private lawsuits. The FTC and other authorities are likewise imposing standards for the collection, use, dissemination and security of personal information under consumer protection laws. Additionally, in the United States, laws in all 50 states require businesses to provide notice to individuals whose personally identifiable information has been disclosed as a result of a data breach. The laws are not consistent, and compliance in the event of a widespread data breach is costly. In addition, laws, regulations, and standards covering marketing and advertising activities conducted by telephone, email, mobile devices and the internet are applicable to our business, including the Telephone Consumer Protection Act (the “TCPA”) and the Controlling the Assault of Non‑Solicited Pornography and Marketing Act (“CAN-SPAM Act”). The TCPA places certain restrictions on making certain outbound calls, faxes, and text messages to consumers. The CAN-SPAM Act imposes penalties for the
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transmission of commercial emails that do not comply with certain requirements, such as providing an opt-out mechanism for stopping future emails from the sender. Further, state and federal auto-renewal laws continue to evolve, which may require us to make changes to our processes in order to comply with such laws. The evolving patchwork of differing state and federal privacy and data security laws increases the cost and complexity of operating our business and increases our exposure to liability, including from third-party litigation and regulatory investigations, enforcement, fines, and penalties.
Through our wholly owned subsidiaries with established offices in the European Union, parts of our business are subject to the European Union General Data Protection Regulation (“GDPR”), which went into effect in May 2018, and imposes strict requirements for processing the personal data of individuals within the European Economic Area. Companies that must comply with the GDPR face increased compliance obligations and risk, including more robust regulatory enforcement of data protection requirements and potential fines for noncompliance of up to €20 million or 4% of the annual global revenues of the noncompliant company, whichever is greater. Among other requirements, the GDPR regulates transfers of personal data subject to the GDPR to third countries that have not been found to provide adequate protection to such personal data, including the United States. Further, from January 1, 2021, companies that process the personal information of UK residents have to comply with the United Kingdom GDPR (the “UK GDPR”), which, together with the amended UK Data Protection Act 2018, retains the GDPR in UK national law. The UK GDPR mirrors the fines under the GDPR, i.e., fines up to the greater of €20 million (£17.5 million) or 4% of global turnover. Enforcement uncertainty and the costs associated with ensuring compliance may be onerous and adversely affect our business, operating results, prospects and financial condition.
Although we work to comply with applicable laws, regulations and standards, contractual obligations and other legal obligations relating to data privacy, protection and security, these requirements are evolving and may be modified, interpreted and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another or other legal obligations with which Ginkgo must comply. Monitoring, preparing for and complying with these obligations requires us to devote significant resources (including, without limitation, financial and time-related resources). And as our operations and business grow, we may become subject to or affected by new or additional data protection laws and regulations and face increased scrutiny or attention from regulatory authorities. There is also increased public awareness of privacy issues in the wake of revelations about the data-collection activities of various government agencies and in the number of private privacy-related lawsuits filed against companies. Any failure or perceived failure by us or our employees, representatives, contractors, consultants, collaborators, or other third parties to comply with such requirements or adequately address privacy and security concerns, even if unfounded, could result in fines, legal claims, or proceedings, including regulatory investigations and actions, or liability for failure to comply with privacy and information security laws, which could disrupt our operations, damage our reputation, and expose us to claims from impacted individuals, any of which could have a material adverse effect on our business, financial condition, and results of operations.
Our employees, agents, contractors, research partners, consultants or vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.
We are exposed to the risk that our employees, agents, contractors, research partners, consultants or vendors may engage in fraudulent or other illegal activity or misconduct. Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that causes us to breach our contracts and/or violates applicable laws and regulations, including but not limited to laws:
● applicable to the provision of health care services;
● governing the storage and handling of controlled substances;
● requiring the reporting of true, complete and accurate information to the FDA, USDA, and other government agencies;
● specifying vendor qualification standards and recordkeeping requirements;
● international, federal and state fraud and abuse laws and regulations;
● protecting the privacy and security of personally identifiable information and requiring breach notification;
● relating to anti-corruption, anti-bribery, and anti-money laundering; and
● requiring the true, complete and accurate reporting of services, financial information, or data.
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Specifically, the health care industry and government contractors are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, and other business arrangements. Additionally, activities that involve the improper use or misrepresentation of information obtained in the course of research or creating fraudulent data could result in breach of contract, regulatory sanctions, and seriousharm to our reputation. It is not always possible to identify and determisconduct by our employees and other third parties, and the precautions we take to detect and prevent this kind of activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations, other actions, or lawsuits stemming from a failure to be in compliance with such laws or regulations. Additionally, we are subject to the risk that a person could allege such fraud or other misconduct, even if none occurred. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal health care programs, debarment under 21 U.S.C. § 335a or a comparable foreign law, contractual damages, reputational harm, diminished potential profits and future earnings, and curtailment of our operations, any of which could adversely affect our business, financial condition, results of operations or prospects.
Distribution and use of screening and/or diagnostic tests marketed under an EUA from the FDA are subject to certain limitations, and the continued availability of such authorizations is subject to government discretion.
Screening and/or diagnostic tests used in the testing programs and services of our Biosecurity business are subject to EUAs granted by the FDA to the manufacturers or laboratories marketing such tests. Each EUA requires compliance with certain conditions, including specific workflow requirements, and imposes other limitations on the test’s marketing, distribution, and use. The FDA has signaled that, while there will be a grace period for EUA holders to transition their devices, not all of the EUA products we distribute may apply for or be approved by the FDA and may need to withdraw from the market. Sourcing and finding products that transition from EUA to FDA cleared status may increase our costs of sourcing these products and may impact our profitability.
We have pursued in the past and may pursue additional U.S. government contracting and subcontracting opportunities in the future and as a U.S. government prime contractor and subcontractor, we are subject to a number of procurement rules and regulations.
We have entered into agreements with governmental entities and contractors in the past to serve as a U.S. government prime contractor or subcontractor and may do so again in the future. U.S. government procurement contractors and subcontractors must comply with specific procurement regulations and other requirements. These requirements, although customary in U.S. government contracts, could impact our performance and compliance costs, including by limiting or delaying our ability to share information with business partners, customers and investors. The U.S. government has in the past and may in the future demand contract terms that are less favorable than standard arrangements with private sector customers, including certain financial requirements obligating the Company to hold surety bonds which restrict our cash, and may have statutory, contractual, or other legal rights to terminate contracts with us for convenience or for other reasons. Generally, U.S. government contracts contain provisions permitting unilateral termination or modification, in whole or in part, at the government’s convenience. Under general principles of government contracting law, if the government terminates a contract for convenience, the government contractor may recover only its incurred or committed costs, settlement expenses and profit on work completed prior to the termination. If the government terminates a contract for default, the government contractor is entitled to recover costs incurred and associated profits on accepted items only and may be liable for excess costs incurred by the government in procuring undelivered items from another source. Any termination for default may also adversely affect our ability to contract with other government customers and agencies, as well as our reputation, business, financial condition and results of operations. In addition, changes in U.S. government administration and budgetary priorities, including with respect to funding allocated to government agencies, could affect the availability of U.S. government contracting, subcontracting, or funding opportunities, which could lead to modification, reduction, or termination of our U.S. government contracts or subcontracts. If and to the extent such changes occur, they could impact our results and potential growth opportunities, and there can be no assurance that we will be able to derive further revenue from the public sector or our government contracts.
Furthermore, our U.S. government contracts grant the government the right to use technologies developed by us under the government contract or the right to share data related to our technologies, for or on behalf of the government. Under our
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government contracts, we may not be able to limit third parties, including our competitors, from accessing certain of these technology or data rights, including intellectual property, in providing products and services to the government.
In addition, failure by us, our employees, representatives, contractors, partners, agents, intermediaries, other customers or other third parties to comply with these regulations and requirements could result in reductions of the value of contracts, contract modifications or termination, claims for damages, refund obligations, the assessment of civil or criminalpenalties and fines, loss of rights in our intellectual property and temporary suspension or permanent debarment from government contracting, all of which could negatively impact our results of operations and financial condition. Any such damages, penalties, disruptions or limitations in our ability to do business with the public sector could result in reduced sales of our products, reputational damage, penalties and other sanctions, any of which could harm our business, reputation and results of operations.
We are engaged in certain research activities involving controlled substances which may be subject to significant regulation by the DEA, FDA, and other regulatory agencies.
We are engaged in certain research activities involving the development of microbes designed to generate precursors and other chemical intermediaries which may be regulated as controlled substances in the United States. Controlled substances are subject to state, federal, and foreign laws and regulations regarding their manufacture, use, sale, importation, exportation, and distribution. Among other laws, controlled substances are regulated under the federal Controlled Substances Act of 1970 and implementing regulations of the DEA. The DEA regulates controlled substances as Schedule I, II, III, IV or V substances. Schedule I substances by definition have no established medicinal use and may generally not be marketed or sold in the United States. Schedule I substances are subject to the most stringent controls and Schedule V the least controls of the five schedules, based on their relative risk of abuse.
Regulations associated with controlled substances govern manufacturing, labeling, packaging, testing, dispensing, production and procurement quotas, recordkeeping, reporting, handling, shipment and disposal. These regulations include required security measures, such as background checks on employees and physical control of inventory and increase the personnel needs and the expense associated with development and commercialization of products or product candidates including controlled substances. Regulators conduct periodic inspections of entities involved in handling, manufacturing, or otherwise distributing controlled substances, and have broad enforcement authorities. If we are found to be non-compliant with applicable controlled substance registrations and related requirements, we may need to modify its business activities and/or stop handling or producing the products regulated as controlled substances, and could be subject to enforcement action, significant fines or penalties, and/or adverse publicity, among other consequences.
Various states also independently regulate controlled substances. Though state-controlled substances laws often mirror federal law, because the states are separate jurisdictions, they may separately schedule substances, as well. The failure to comply with applicable regulatory requirements could lead to enforcement actions and sanctions from the states in addition to those from the DEA or otherwise arising under federal law.
Changes in government regulations may materially and adversely affect our sales and results of operations.
The markets where we provide our services are heavily influenced by foreign, federal, state and local government regulations and policies. The U.S. or foreign governments may take administrative, legislative, or regulatory action that could materially interfere with our customer’s ability to sell products derived from engineered cells in certain countries and/or to certain customers. The uncertainty regarding future standards and policies may also affect our ability to develop our programs or to license engineered cells to customers and to initiate new programs with our customers, which could have a material adverse effect on our business, financial condition and results of operations.
Changes in U.S. trade policy more generally could trigger retaliatory actions by affected countries, which could impose restrictions on our ability to do business in or with affected countries or prohibit, reduce or discourage purchases of our services by foreign customers, leading to increased program costs, increased costs of developing or manufacturing our customers’ products and higher prices for their products in foreign markets. Changes in, and responses to, U.S. trade policy could reduce the competitiveness of our services or our customers’ products, cause our services to be less in demand and our sales to decline and adversely impact our ability to compete, which could materially and adversely impact our business, financial condition and results of operations.
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We are subject to certain U.S. and foreign anti-corruption, anti-bribery and anti-money laundering laws and regulations. We can face serious consequences for violations.
We are subject to the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the U.K. Bribery Act and possibly other anti-corruption, anti-bribery and anti-money laundering laws and regulations in the jurisdictions in which we do business, both domestic and abroad. Anti-corruption and anti-bribery laws have been enforced aggressively in recent years. The FCPA and other anti-corruption laws generally prohibit companies, their employees, agents, representatives, business partners and third-party intermediaries from corruptly promising, authorizing, offering, or providing, directly or indirectly, anything of value to government officials, political parties, or candidates for public office for the purpose of obtaining or retaining business or securing an improper business advantage. The UK Bribery Act and other anti-corruption laws also prohibit commercial bribery not involving government officials, and requesting or accepting bribes; and anti-money laundering laws prohibit engaging in certain transactions involving criminally-derived property or the proceeds of criminal activity.
We and our third-party business partners, representatives and agents may have direct or indirect interactions with officials and employees of government agencies or state-owned or -affiliated universities or other entities (for example, to obtain necessary permits, licenses, patent registrations and other regulatory approvals), which increases our risks under the FCPA and other anti-corruption laws. We also engage contractors, consultants and other third parties from time to time to conduct business development activities abroad. We may be held liable for the corrupt or other illegal activities of our employees or third parties even if we do not explicitly authorize such activities. We have increased and, in the future, expect our non-U.S. activities to increase over time, which may also increase our exposure under these laws.
The FCPA also requires that we keep accurate books and records and maintain a system of adequate internal controls. While we have controls to address compliance with such laws and will continue to review and enhance our compliance program, we cannot assure you that our employees, agents, representatives, business partners or third-party intermediaries will always comply with our policies and applicable law, for which we may be ultimately held responsible.
Any allegations or violation of the FCPA or other applicable anti-bribery, anti-corruption laws and anti-money laundering laws may result in whistleblower complaints, sanctions, settlements, investigations, prosecution, enforcement actions, substantial criminalfines and civil penalties, disgorgement of profits, imprisonment, debarment, tax reassessments, breach of contract and fraudlitigation, loss of export privileges, suspension or debarment from U.S. government contracts, adverse media coverage, reputational harm and other consequences, all of which may have an adverse effect on our reputation, business, financial condition, results of operations and prospects. Responding to an investigation or action can also result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees.
Significant disruptions to our and our service providers’ information technology systems or data security incidents could result in significant financial, legal, regulatory, business and reputational harm to us.
We are increasingly dependent on information technology systems and infrastructure, including services licensed, leased or purchased from third parties such as cloud computing infrastructure and operating systems, to operate our business. In the ordinary course of business, we collect, store, process and transmit large amounts of sensitive information, including intellectual property, proprietary business information, personal information and other confidential information. It is critical that we do so in a secure manner to maintain the confidentiality, integrity and availability of such sensitive information. We have also outsourced elements of our operations (including elements of our information technology infrastructure) to third parties, and as a result, we manage a number of third-party vendors who may have access to our networks or our confidential information. While we take measures to safeguard and protect this information, threats to network and data security are constantly evolving and growing in frequency and sophistication. We may also face increased cybersecurity risks due to our reliance on internet technology and the number of our employees working remotely, which may create additional opportunities for cybercriminals to exploitvulnerabilities. We are required to expend significant resources in an effort to protect against security incidents, and may be required or choose to spend additional resources or modify our business activities, particularly where required by applicable data privacy and security laws or regulations or industry standards. Security incidents result from the actions of a wide variety of actors with a wide range of motives and expertise, such as traditional hackers, personnel or the personnel of third parties, sophisticated nation-states and nation-state-supported actors. While we have developed systems and processes designed to protect the integrity, confidentiality and security of the confidential and personal information under our control, we cannot guarantee that any security measures that
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we or our third-party service providers implement will be effective in preventing security breaches and incidents, cyberattacks or similar events such as viruses and worms, phishing attacks and other forms of social engineering, denial-of-service attacks, ransomware attacks, physical or electronic break-ins, third-party or employee theft or misuse, and other negligent actions, errors or malfeasance by employees or other third parties, and similar disruptions from unauthorized tampering with our servers and computer systems or those of third parties that we use in our operations. These incidents could lead to interruptions, delays, loss or corruption of critical data, and unauthorized access to or acquisition of health-related and other personal information. In addition, we may be the target of email scams and other social engineering attacks that attempt to acquire personal information or company assets or access to our systems. Additionally, future or past business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies. Despite our efforts to create security barriers to such threats, we may not be able to entirely mitigate these risks. Our third-party service providers face similar risks. Any cyberattack that attempts to obtain our data or assets, including data that we maintain on behalf of our customers, disrupt our service, or otherwise access our systems, or those of third parties we use, or any other security breach or incident, could adversely affect our business, financial condition and operating results, be expensive to remedy, and damage our reputation. We and our third-party service providers may be unable to anticipate or detect attempted security incidents or face difficulties or delays in identifying or otherwise responding to any attacks or actual or potential security breaches or security incidents. We may incur significant costs and operational consequences of investigating, remediating, eliminating and putting in place additional tools and devices designed to prevent actual or perceived security breaches and other security incidents, including in response to any actual or perceived incident we may suffer, and substantial costs to comply with any notification or other legal obligations resulting from any security breaches or other security incidents. In addition, any such breaches or incidents, or the perception that they have occurred, may result in substantial remediation costs and expose us to litigation (including class claims), regulatory enforcement action (for example, investigations, fines, penalties, audits, and inspections), liability under laws that protect the privacy of personal information, additional reporting requirements and/or oversight, indemnification obligations, negative publicity, reputational harm, and interruptions in our operations (including availability of data), any of which could have a material adverse effect on our business, financial condition, and operating results.
Although we maintain insurance coverage that may cover certain liabilities in connection with security breaches and other security incidents, we cannot be certain our insurance coverage will be adequate for liabilities actually incurred, that insurance will continue to be available to us on commercially reasonable terms (if at all) or that any insurer will not deny coverage as to any future claim.
Governmental trade controls, including export and import controls, sanctions, customs requirements and related regimes, could subject us to liability or loss of contracting privileges or limit our ability to compete in certain markets.
Our programs and technologies are subject to U.S. and non-U.S. export controls. Export authorizations may be required for biotechnology products, technologies, or services to be exported outside of the United States, to a foreign person, or outside of a foreign jurisdiction. Our current or future programs or technologies are, and may in the future, be subject to the Export Administration Regulations (“EAR”). If a program, technology, or service meets certain criteria for control under the EAR, then that engineered cell, production process, resulting product, technology, or service would be exportable outside the United States or to a foreign person or from one foreign jurisdiction to another foreign jurisdiction only if we obtain the applicable export license or other applicable authorization including qualifying for a license exception, if required. Compliance with the U.S. and foreign export laws and regulations and other applicable regulatory requirements regarding the sales, shipment and use of our engineering cells, bioprocesses and other technology may affect our ability to work with foreign partners, affect the speed at which we can introduce new products into non-U.S. markets, or limit our ability to sell programs or services or license technologies into some countries.
Additionally, certain materials that we use in our programs are subject to U.S. import controls. We currently have, and may in the course of business need to procure, certain import authorizations, for example, related to plant pests, chemicals, biological agents and other controlled materials, including from the USDA, EPA and CDC. Compliance with applicable regulatory requirements regarding the import of such materials may limit our access to materials critical to our development activities or affect the speed at which we can advance new programs.
Our activities are also subject to the economic sanctions, laws and regulations of the United States and other jurisdictions. Such controls prohibit certain transactions, potentially including financial transactions and the transfer of products,
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technologies and services, to sanctioned countries, governments and persons, without a license or other appropriate authorization. U.S. sanctions policy changes could affect our or our customers’ ability to interact, directly and indirectly, with targeted companies or companies in sanctioned countries.
While we take precautions to comply with U.S. and non-U.S. export control, import control and economic sanctions laws and regulations, we cannot guarantee that such precautions will prevent violations of such laws, including transfers to unauthorized persons or destinations, and including inadvertentviolations as a result of a misclassification of a product, technology or service under export control laws. Violations could result in our business being subject to government investigations, denial of export or import privileges, significant fines or penalties, denial of government contracts and reputational harm. Any limitation on our ability to export our engineered cells, production processes, resulting products, technology, or services, or import materials critical to our programs would likely adversely affect our business and financial condition.
Changes in U.S. and foreign tax laws could have a material adverse effect on our business, cash flow, results of operations or financial condition.
We are subject to income and non-income based taxes in the U.S. and foreign jurisdictions. Changes in tax laws, regulations and policies, or their interpretation and application, in the jurisdictions where we are subject to tax, could have a material adverse effect on our business, cash flow, results of operations or financial condition. The U.S. Congress frequently debates changes to U.S. corporate income tax laws and the Group of Twenty (G20), the Organization for Economic Co-operation and Development (OECD), the European Commission (EC) and individual taxing jurisdictions have published proposals covering various international tax-related issues, including country-by-country reporting, permanent establishment rules, transfer pricing and tax treaties. It is possible that any future tax legislation which may be enacted could materially impact our effective tax rate and cash tax liability as well as tax credits and incentives.
We may become subject to lawsuits or indemnity claims in the ordinary course of business, which could materially and adversely affect our business and results of operations.
From time to time, we may in the ordinary course of business be named as a defendant in lawsuits, indemnity claims and other legal proceedings. These actions may seek, among other things, compensation for alleged product liability, personal injury, employment discrimination, breach of contract, property damage and other losses or injunctive or declaratory relief.
The marketing, sale and use of our services, engineered cells, production processes and resulting products could lead to the filing of product liability claims were someone to allege that our services, engineered cells, production processes or resulting products failed to perform as designed or intended or caused injury or other harms. A product liability claim could result in substantial damages and be costly and time-consuming for us to defend.
Regardless of merit or eventual outcome, product liability claims may result in:
● decreased demand for programs and resulting products;
● loss of revenue;
● substantial monetary payments;
● significant time and costs to defend related litigation;
● the inability to commercialize any products from our programs; and
● injury to our reputation and significant negative media attention.
In the event that such actions, claims or proceedings are ultimately resolved unfavorably to us at amounts exceeding our accrued liability, or at material amounts, the outcome could materially and adversely affect our business and results of operations. In addition, payments of significant amounts, even if reserved, could adversely affect our liquidity position. We maintain product liability insurance, but this insurance may not fully protect us from the financial impact of defendingagainst product liability claims. Any product liability claim brought against us, with or without merit, could increase our insurance rates or prevent us from securing insurance coverage in the future. Additionally, any product liability lawsuit could cause current collaborators to terminate existing agreements or potential collaborators to seek other companies, any of which could impact our business and results of operations.
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Risks Related to our Common Stock, Organizational Structure and Governance
Only our employees and directors are entitled to hold shares of Class B common stock (including shares of Class B common stock granted or otherwise issued to our employees and directors in the future), which shares have ten votes per share. This limits or precludes other stockholders’ ability to influence the outcome of matters submitted to stockholders for approval, including the election of directors, the approval of certain employee compensation plans, the adoption of certain amendments to our organizational documents and the approval of any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval.
Shares of our Class B common stock have ten votes per share, whereas shares of our Class A common stock have one vote per share and shares of our Class C common stock have no voting rights (except as otherwise expressly provided in our amended and restated certificate of incorporation (the “Charter”) or required by applicable law). As of December 31, 2025, our directors and executive officers hold in the aggregate almost half of the total voting power of our outstanding capital stock, and our directors, founders and executive officers hold in the aggregate more than half of the total voting power of our outstanding capital stock. Accordingly, holders of shares of Class B common stock are able to significantly influence the outcome of matters submitted to our stockholders for approval, including the election of directors, the approval of certain employee compensation plans, the adoption of amendments to our organizational documents and the approval of any merger, consolidation, sale of all or substantially all of our assets or other major corporate transaction requiring stockholder approval. This concentrated voting power limits or precludes other stockholders’ ability to influence the outcome of these matters. Holders of Class B common stock may have interests that differ from holders of Class A common stock and may vote in a way with which holders of Class A common stock disagree and which may be adverse to the interests of holders of Class A common stock. This concentrated voting power is likely to have the effect of limiting the likelihood of an unsolicited merger proposal, unsolicited tender offer or proxy contest for the removal of directors. As a result, our governance structure and Charter may have the effect of depriving our stockholders of an opportunity to sell their shares at a premium over prevailing market prices and make it more difficult to replace our directors and management. Furthermore, this concentrated voting power could discourage a potential investor from acquiring Class A common stock due to the limited voting power of such stock relative to Class B common stock, which could also adversely affect the trading price of Class A common stock.
Our multi-class stock structure is intended to preserve our existing founder-led governance structure, to promote employee retention and engagement, to facilitate continued innovation and the risk-taking that it requires, to permit us to continue to prioritize our long-term goals rather than short-term results, to enhance the likelihood of continued stability in the composition of our board of directors and its policies, and to discourage certain types of transactions that may involve an actual or threatened acquisition of the company, all of which we believe are essential to the long-term success of our company and to long-term stockholder value. We expect to maintain this concentrated voting power among our founders and employees for the foreseeable future, including by issuing additional shares of Class B common stock to our employees pursuant to our equity compensation plans and allowing our employees and directors to exchange shares of Class A common stock for shares of Class B common stock.
Future transfers of shares of Class B common stock to persons other than Ginkgo directors and employees, or trusts or legal entities through which the right to vote the shares of Class B common stock held thereby is exercised exclusively by one or more of Ginkgo’s directors or employees (any such director, employee, trust or legal entity, an “Eligible Holder”), or the holder of shares of Class B common stock ceasing to be an Eligible Holder, will generally result in those shares converting to shares of Class A common stock on a one-to-one basis, subject to certain exceptions and unless a majority of the independent directors of our board of directors determine that such transfer or event will not result in such automatic conversion. Each share of Class B common stock is also convertible at any time at the option of the holder into one share of Class A common stock. The conversion of Class B common stock to Class A common stock over time will have the effect of increasing the relative voting power of those holders of Class B common stock who retain their shares of Class B common stock in the long term. As a result, the relative voting power of holders of Class A common stock is expected to remain limited for a significant period of time, and it is possible that one or more of the persons or entities holding Class B common stock could gain significant voting control as other holders of Class B common stock sell or otherwise convert their shares into Class A common stock. In addition, the conversion of Class B common stock to Class A common stock would dilute holders of Class A common stock in terms of voting power within the Class A common stock. Because holders of Class C common stock have no voting rights (except as otherwise expressly provided in the Charter or required
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by applicable law), the holders of Class B common stock may be able to significantly influence the outcome of matters submitted to our stockholders for approval for a longer period of time than would be the case if we issued Class A common stock rather than Class C common stock in such transactions.
Our share price may change significantly over time, and you may not be able to resell our common stock at or above the price you paid or at all, and you could lose all or part of your investment as a result.
The trading price of our Class A common stock has been in the past and is likely to continue to be volatile. Such volatility may be, in part, attributable to:
● future sales of our common stock or other securities by us or our existing stockholders, or the perception of such future sales;
● results of operations of the company or our competitors that vary from the expectations of securities analysts and investors;
● changes in expectations as to our future financial performance and growth, including assessments of our business, prospects, financial estimates and investment recommendations by securities analysts, investors and short sellers;
● additions or departures of key management personnel or members of our board of directors;
● announcements by us or our competitors of significant contracts, new products, acquisitions, joint marketing relationships, joint ventures, other strategic relationships or capital commitments;
● announcements relating to actual or potential civil and non-civil litigation, as well as governmental or regulatory investigations or inquiries;
● guidance that we provide to the public, any changes in this guidance or our failure to meet this guidance;
● changes in the perception of our offerings or the synthetic biology industry more general including changes in regulatory conditions;
● the development and sustainability of an active trading market for our common stock;
● changes in accounting principles;
● changes in general economic or market conditions or trends in our industry or markets;
● other events or factors, including those resulting from natural disasters, pandemics, epidemics, war, acts of terrorism or responses to these events.
These factors among others may materially adversely affect the market price of our Class A common stock, regardless of our actual operating performance. In addition, price volatility may be greater if the public float and trading volume of our common stock are low.
In the past, following periods of market volatility, stockholders have instituted securities class action litigation. If we were involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation.
Future sales, or the perception of future sales, by us or our stockholders in the public market could cause the market price for our securities to decline.
The sale of our securities in the public market, including by entities to which we have issued shares in connection with transactions, or the perception that such sales could occur, could harm the prevailing market price of our securities. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.
There are up to approximately 5 million shares of common stock that may be earned if the trading price is greater than or equal to certain earnout price thresholds ranging from $500 to $800 for any point in a trading day during 20 trading days in a 30 consecutive trading day period, of which approximately 1.3 million shares were earned as of December 31, 2025. The vast majority of the shares that are part of the earnout will not be subject to lock-up once the earnout conditions are met.
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In connection with the SRNG Business Combination, in September 2021, Jason Kelly, Reshma Shetty, Austin Che and Bartholomew Canton were granted restricted stock units, which vested, along with certain related earnout shares that achieved the $500 price threshold, on October 1, 2022. Certain of such shares have been sold into the market, and any future sales could harm the prevailing market price of our securities.
We have also issued shares of our common stock in connection with certain of our acquisitions, which issuances dilute our existing shareholders. In addition, the shares of our common stock reserved for future issuance under our equity incentive plans will become eligible for sale in the public market once those shares are issued, subject to provisions relating to various vesting agreements and, in some cases, limitations on volume and manner of sale applicable to affiliates under Rule 144, as applicable. Our compensation committee of our board of directors may determine the exact number of shares to be reserved for future issuance under our equity incentive plans at its discretion. We have filed, and expect to file in the future, one or more registration statements on Form S-8 under the Securities Act of 1933, as amended (the “Securities Act”) to register shares of Class A common stock or securities convertible into or exchangeable for shares of Class A common stock issued pursuant to our equity incentive plans. Any such Form S-8 registration statements automatically become effective upon filing. Accordingly, shares registered under such registration statements will be available for sale in the open market.
Short sellers may engage in manipulative activity intended to drive down the market price of our Class A common stock, which could also result in related regulatory and governmental scrutiny, among other effects.
Short selling is the practice of selling securities that the seller does not own but rather has borrowed or intends to borrow from a third party with the intention of later buying lower priced identical securities to return to the lender. Accordingly, it is in the interest of a short seller of our Class A common stock for the price to decline. At any time, short sellers may publish, or arrange for the publication of, opinions or characterizations that are intended to create negative market momentum. Issuers, like us, whose securities have historically had limited trading history or volumes and/or have been susceptible to relatively high volatility levels can be vulnerable to such short seller attacks. Short selling reports can cause increased volatility in an issuer’s stock price, and result in regulatory and governmental inquiries. On October 6, 2021, such a report was published about us. Shortly after, we received a preliminary and informal inquiry from the U.S. Department of Justice related to this report. Any related inquiry or formal investigation from a governmental organization or other regulatory body, including any inquiry from the SEC, is not within the control of the Company. Although we have received confirmation from the SEC that it concluded its inquiry into Ginkgo Bioworks Holdings, Inc. begun in October 2021 or soon after with no recommendation of enforcement action, any inquiry or formal investigation by any governmental organization or regulatory body could result in a material diversion of our management’s time and could have a material adverse effect on our business and results of operations.
Our Charter authorizes a large number of shares of Class B common stock for issuance in the future. The future issuance of shares of Class B common stock may have the effect of further concentrating voting power with our employees and other Class B stockholders, and could have an adverse effect on the trading price of Class A common stock.
Under our Charter, we are authorized to issue 4,500.0 million shares of Class B common stock, which are entitled to ten votes per share. We currently intend to issue additional shares of Class B common stock in the future to existing and newly hired employees pursuant to our equity compensation plans. Our authorized but unissued shares of Class B common stock are available for issuance to Eligible Holders with the approval of our board of directors without stockholder approval, except as may be required by the Listing Rules of the NYSE. In addition, our authorized but unissued shares of Class B common stock are available for issuance to persons other than Eligible Holders only with the approval of a majority of our directors elected by the holders of Class B common stock, voting separately as a class. If we issue additional shares of Class B common stock in the future, holders of shares of Class A common stock, which are entitled to one vote per share, will experience disproportionate voting power dilution relative to economic dilution, and the holders of Class B common stock may be able to significantly influence the outcome of matters submitted to our stockholders for approval for a longer period of time than would be the case if we issued shares of Class A common stock.
See “Risk Factors-Risks Related to Our Common Stock Organizational Structure and Governance-Only our employees and directors are entitled to hold shares of Class B common stock (including shares of Class B common stock granted or otherwise issued to our employees and directors in the future), which shares have ten votes per share. This limits or precludes other stockholders’ ability to influence the outcome of matters submitted to stockholders for approval, including the election of directors, the approval of certain employee compensation plans, the adoption of amendments to our
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organizational documents and the approval of any merger, consolidation, sale of all or substantially all of our assets or other major corporate transaction requiring stockholder approval.”
Under our Charter, we are authorized to issue 800.0 million shares of Class C common stock, which have no voting rights (except as otherwise expressly provided in the Charter or required by applicable law). Outstanding Class C common stock may have the effect of extending voting power in Class B common stock, and may discourage potential acquisitions of our business and could have an adverse effect on the trading price of Class A common stock.
Under our Charter, we are authorized to issue 800.0 million shar es of Class C common stock, which have no voting rights (except as required by law). Class C common stock may be used for a variety of corporate purposes, including financings, acquisitions and investments. Our authorized but unissued shares of Class C common stock are available for issuance with the approval of our board of directors without stockholder approval, except as may be required by the Listing Rules of the NYSE. Because the Class C common stock carries no voting rights (except as otherwise expressly provided in the Charter or required by applicable law), is not convertible into any other capital stock, and is not listed for trading on an exchange or registered for sale with the SEC, shares of Class C common stock may be less liquid and less attractive to any future recipients of these shares than shares of Class A common stock, although we may seek to list the Class C common stock for trading and register shares of Class C common stock for sale in the future. In addition, because our Class C common stock has no voting rights (except as otherwise expressly provided in the Charter or required by applicable law), the holders of Class B common stock may be able to significantly influence the outcome of matters submitted to our stockholders for approval for a longer period of time than would be the case if we issued Class A common stock rather than Class C common stock in such transactions. In addition, further issuances of Class C common stock would have a dilutive effect on the economic interests of Class A common stock and Class B common stock. Any such issuance could also cause the trading price of Class A common stock to decline.
We cannot predict the effect the multi-class structure of our common stock may have on the trading price of our Class A common stock.
The holding of low-voting stock, such as Class A common stock, may not be permitted by the investment policies of certain institutional investors or may be less attractive to the portfolio managers of certain institutional investors. In addition, certain index providers have announced restrictions on including companies with multiple-class share structures in certain of their indices. Because of our multi-class stock structure, our Class A common stock will likely continue to be excluded from certain indices, and we cannot assure you that other stock indices will not take similar actions. Given the sustained flow of investment funds into passive strategies that seek to track certain indices, exclusion from stock indices would likely preclude investment by many of these funds in our Class A common stock and could make shares of our Class A common stock less attractive to other investors. As a result, the trading price of shares of our Class A common stock could be adversely affected.
Our focus on the long-term best interests of our company and our consideration of all of our stakeholders, including our stockholders, workforce, customers, suppliers, academic researchers, governments, communities and other stakeholders that we may identify from time to time, may conflict with short-term or medium-term financial interests and business performance, which may adversely impact the value of our common stock.
We believe that focusing on the long-term best interests of our company and our consideration of all of our stakeholders, including our stockholders, workforce, customers, suppliers, academic researchers, governments, communities and other stakeholders we may identify from time to time, is essential to the long-term success of our company and to long-term stockholder value. Therefore, we have made decisions, and may in the future make decisions, that we believe are in the long-term best interests of our company and our stockholders, even if such decisions may negatively impact the short- or medium-term performance of our business, results of operations, and financial condition or the short- or medium-term performance of our Class A common stock. Our commitment to pursuing long-term value for the company and its stockholders, potentially at the expense of short- or medium-term performance, may materially adversely affect the trading price of our Class A common stock, including by making owning our Class A common stock less appealing to investors who are focused on returns over a shorter time horizon. Our decisions and actions in pursuit of long-term success and long-term stockholder value, which may include our multi-class stock structure, making investments in R&D and our employees, and investing in and introducing new products and services, may not result in the long-term benefits that we expect, in which case our business, results of operations and financial condition, as well as the trading price of our Class A common stock, could be materially adversely affected.
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threats
Cell Engineering
Ginkgo does not make end products; instead, we offer biological R&D services on our platform to enable our customers to bring their products to market. Historically, Ginkgo’s primary service offering has been cell engineering R&D services (solutions) where Ginkgo performs technical activities. In 2024, Ginkgo expanded its service offering to include services that provide our customers cell engineering tools for biological R&D, where Ginkgo enables its customers to conduct certain in-house R&D activities themselves. Our services are designed to offer customers better results on the dimensions of probability of success, speed, or cost – and ideally on all three.
The fundamental advantage of our cell engineering platform over traditional cell engineering done by hand at our customers’ labs is that our platform improves with scale while in-house cell engineering in our customers' labs largely does not. Compounding and mutually reinforcing improvements of our laboratory automation and software infrastructure—our Autonomous Lab—and our reusable data assets enable us to improve our services with each successive project.
Our Autonomous Lab is a flexible wet lab built from our Reconfigurable Automation Cart (“RAC”) systems capable of large scale data generation; it powers generative AI and machine learning (“ML”) tools that enable more successful biological R&D. We now offer services providing such data generation, AI and automation tools directly to Ginkgo customers. Our data assets comprise best practices for cell engineering, along with sequences and host cells that have been honed through dozens of programs and can be directly reusable for our cell engineering solutions. We now offer licenses to our host cells and other IP assets, such as our broad metagenomic library.
Cell engineering tools offerings
We charge customers fees for the services we provide in our cell engineering tools offerings. Fees for our automation solutions (RAC systems) are typically earned over a period that covers design, build, and deployment and range from six to twelve months. In addition, we offer support services for our RAC systems with fixed fees covering the support periods.
Fees for our Datapoints services are typically earned over a shorter period of time (weeks to months) than for cell engineering solutions, which may be multi-year programs. A typical deliverable for a Datapoints program is a data package. Fees for cell engineering solutions programs are typically structured as a fixed fee for a fixed scope of work.
Cell engineering solutions
Our cell engineering solutions are typically scoped and delivered as a program ranging in duration from several months to several years. A typical deliverable for the program would comprise an enzyme sequence, or an engineered strain or cell line and its associated bioprocess. For each of these programs, we generate economic value in two primary ways.
First, we charge service fees for Autonomous Lab services, in much the same way that cloud computing companies charge usage fees for utilization of computing capacity or CROs charge for services. R&D is inherently risky and our customers recognize that this is a cost they will incur regardless of success and whether they are working on the program in-house or with a partner. Typically, service fees for a program include a fixed fee for a fixed scope of work and may also include payments contingent upon hitting certain technical milestones. If we are able to deliver program results with less work through the use of Codebase assets and/or generative AI tools, then we can achieve the same revenue with lower cost or in
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a shorter duration. Service fees provide a strong foundation of revenue that is independent of any commercialization efforts by our partners.
Second, as the key enabling technology for our customers’ products, we have historically negotiated a value share with our customers (in the form of royalties, milestones, and/or equity interests) in order to align our economics with the success of the programs enabled by our platform. Because we typically do not incur material downstream costs (e.g., manufacturing or product development, which our customers manage), these value share payments flow through with approximately 100% contribution margin. We have structured a variety of value sharing mechanisms, including royalties, lump-sum milestones, and equity payments. As Ginkgo has matured, we have shifted our downstream value towards milestone payments and commercial royalties rather than equity. In addition, commencing in the second quarter of 2024, we announced changes in prospective commercial terms, including the removal of downstream value share from certain program types.
This flexible business model allows for more predictable near-term revenue in up-front research fees and technical milestones without sacrificing our ability to create long-term value with asymmetric upside through downstream value share (typically in the form of a royalty stream, milestone, and/or equity share). As we add more programs to the platform over time, we expect downstream value share to contribute income, which could in turn grow our overall margins and cash flow profile for our cell engineering solutions. The realization of potential revenue related to downstream value in the form of potential future milestone payments and royalties and/or equity consideration is dependent upon a number of factors, including our ability to successfully develop engineered cells, bioprocesses, data packages, or other deliverables, and the product development and commercialization success of our customers.
Biosecurity
With a mission to make biology easier to engineer, we have always recognized the need to invest in biosecurity as a key component of our platform. We are building the future bioeconomy with our customers and partners, and we envision the future of biosecurity as a global immune system equipped with the capabilities to rapidly and reliably identify, monitor, prevent, and mitigate biological threats. The first, critical step in realizing this future is to build a robust early warning system for biological threats—this is the primary focus of Ginkgo’s Biosecurity business.
Our primary biosecurity customers are governments. We currently provide biosecurity services via two core offerings as introduced in early 2024:
• Canopy, which helps our customers generate high value genomic data from strategically positioned nodes (like airports and border checkpoints) via end-to-end biomonitoring programs; and
• Horizon, our digital surveillance, analytics and insights platform that detects and monitors biothreats worldwide.
Our recent strategic business and asset acquisitions are described in detail in Note 4 of our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Key Business Metrics
In the past, we reported New Programs, Current Active Programs and Cumulative Programs as our key business metrics. We have undertaken a strategic review of these metrics, including in light of our new service offerings and our restructuring plan announced and commenced in the second quarter of 2024, and, beginning with the three months ending December 31, 2024, we no longer rely on New Programs, Current Active Programs and Cumulative Programs as key business metrics. We may in the future report on key business metrics, which metrics may change or be substituted for additional or different metrics as our business develops.
Components of Results of Operations
Revenue
Cell Engineering Revenue
We generate Cell Engineering revenue primarily through service and license agreements for our tools and solutions offerings. Under our automation solutions agreements we typically provide services related to the design, build, and deployment of our RAC systems as well as ongoing support services. Datapoints agreements typically include fixed fees for services related to producing a data package for our customers and are earned over a shorter time period than legacy
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cell engineering solutions projects. Under our solutions agreements, we typically provide R&D services for cell programming with the goal of producing an engineered cell that meets a mutually agreed specification. Our customers obtain license rights to the output of our services, which are primarily the optimized strains or cell lines, in order to manufacture and commercialize products derived from that licensed strain or cell line. Generally, the terms of these agreements provide that we receive some combination of: (1) service fees in the form of (i) upfront payments upon consummation of the agreement or other fixed payments, (ii) reimbursement for costs incurred for R&D services and (iii) milestone payments upon the achievement of specified technical criteria, plus (2) downstream value share payments in the form of (i) milestone payments upon the achievement of specified commercial criteria, (ii) royalties on sales of products from or comprising engineered organisms arising from the collaboration or licensing agreement and/or (iii) royalties related to cost of goods sold reductions realized by our customers. Royalties did not comprise a material amount of our revenue during any of the periods presented.
Cell Engineering revenue has historically included transactions with Platform Ventures and Legacy Structured Partnerships where we received non-cash consideration in the form of equity interests and financial instruments that are convertible into equity upon a triggering event. We view the upfront non-cash consideration as prepayments for licenses which will be granted in the future as we complete mutually agreed upon technical development plans. In these instances, we also receive cash consideration for the R&D services performed by us on a fixed fee or cost-plus basis. We are not compensated through additional milestone or royalty payments under these arrangements. As we perform R&D services under the mutually agreed upon development plans, we recognize a reduction in the prefunded obligation on a cost-plus basis. In some cases we issued the customer a prepaid Cell Engineering services credit in exchange for the upfront non-cash consideration, which can and has been drawn down as payment for R&D services performed under mutually agreed upon development plans. These arrangements are further described in Notes 7 , 8 , and 17 of our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K..
Downstream value share in the form of equity interest appreciation is not recognized as revenue but is expected to contribute to future cash flows upon liquidation, the amount and timing of which is inherently unpredictable. The initial fair market value of the equity interests received may also decrease after contract inception and the amount of cash proceeds eventually realized may be less than the revenue recognized. Equity investments are accounted for under the equity method, cost method or are carried at fair value.
As Ginkgo has matured, we have shifted our downstream value towards milestone payments and commercial royalties rather than equity. In addition, commencing in the second quarter of 2024, we announced changes in prospective commercial terms, including the removal of downstream value share from certain program types.
Biosecurity Revenue
We offer biosecurity services through our two core offerings: Canopy and Horizon. We are currently offering biomonitoring and bioinformatics support services domestically through our partnerships with the CDC and XpresCheck, and internationally. We are also engaged in a series of smaller partnerships that generate revenues through biosecurity services and R&D.
We generate service revenue through the sale of our end-to-end biomonitoring and bioinformatics support services. These service offerings generally consist of goods and services including, but not limited to, sample collection, sample storage and transportation, outsourced laboratory analysis, access to results reported through a web-based portal, analytical reporting of results, and overall program management.
In general, these agreements stipulate that we are entitled to compensation for service revenue as services are performed, and for product revenue. The timing of revenue recognition depends on the identified performance obligations but is generally recognized over time or as results are reported to the customer.
Costs and Operating Expenses
Cost of Biosecurity Service Revenue
The cost of Biosecurity service revenue consists of costs related to our biomonitoring and bioinformatics support services. This includes costs incurred for sample collection equipment and materials, outsourced laboratory analysis, access to results reported through our proprietary web-based portal, and reporting of results to government and non-government customers. Additionally, the cost of Biosecurity service revenue includes direct labor cost associated with bioinformatics, lab network management, delivery logistics, and customer support.
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Cost of Other Revenue
Cost of other revenue consists of costs related to our Cell Engineering tools offerings, including Datapoints and lab automation solutions. Such costs primarily include hardware, software, materials and labor.
Research and Development Expenses
The nature of our business, and primary focus of our activities, generates a significant amount of R&D expenses. R&D expenses represent costs incurred by us for the following:
• development, operation, expansion and enhancement of our Foundry and Codebase; and
• costs incurred to deliver our end-to-end cell engineering solutions offering to customers.
The activities above incur the following expenses:
• personnel compensation and benefits;
• rent, facilities, depreciation, software, professional fees and other direct and allocated overhead expenses; and
• laboratory supplies, consumables and related services provided under agreements with third parties and in-licensing arrangements.
We expense R&D expenses as incurred. We experienced lower R&D costs in 2025 compared to 2024 primarily due to our restructuring plan announced and commenced in the second quarter of 2024 as we rationalize our current development programs and prioritize our investments in our tools offerings. We expect that our R&D expenses will either remain consistent or decline in 2026 as compared to 2025, reflecting the stabilization of our operational overhead and the impact of our restructuring actions. However, our R&D expenses could increase in 2026 due to continued investment in our tools offerings. The nature, timing, and estimated costs required to support our growth will be dependent on advances in technology, our ability to attract new customers, and the rate of market penetration within our existing customer industries.
General and Administrative Expenses
General and administrative (“G&A”) expenses consist primarily of costs for personnel in executive, business development, finance, human resources, legal and other corporate administrative functions. G&A expenses also include professional legal services fees and costs incurred relating to litigation, corporate, intellectual property and patent matters, professional fees incurred for accounting, auditing, tax and administrative consulting services, insurance costs, facility-related costs not otherwise included in R&D expenses, and asset impairments.
We experienced lower G&A costs in 2025 compared to 2024 primarily due to our restructuring plan announced and commenced in the second quarter of 2024, as we began reducing our operational overhead. We expect that our G&A expenses will either remain consistent or decline in 2026 as compared to 2025, reflecting the stabilization of our operational overhead and the impact of our restructuring actions. Conversely, we intend to maintain a strategic and opportunistic approach regarding inorganic G&A expenses arising from mergers, acquisitions, and other inorganic growth initiatives.
Impairment of Lease Assets
Impairment of lease assets relates to impairmentlosses recognized on a right-of-use asset and the related leasehold improvements associated with exited leased facilities.
Goodwill Impairment
In the second quarter of 2024, we fully impaired the goodwill attributable to our Cell Engineering reporting unit.
Restructuring Charges
Restructuring charges are related to our restructuring plan, which was announced and commenced in the second quarter of 2024. These charges primarily include severance and other employee termination costs from a reduction in force that commenced in 2024, as well as the impairment of a right-of-use asset due to the subleasing of a facility as part of real estate consolidation. Reductions in force were substantially completed in 2025. While the company completed the majority of our facility consolidation actions in 2025, we continue to look for opportunities for subleasing unused or underutilized facilities, which will extend beyond 2026 or may not occur prior to termination of such lease, depending on market
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conditions. Additionally, restructuring expenses related to potential asset impairments or contract amendments or terminations for any facilities no longer in use or underutilized could be material.
Additional details are included in Note 3 , Restructuring, of our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Interest Income
Interest income consists primarily of interest earned on our cash, cash equivalents, and marketable debt securities.
Loss on Investments
Loss on investments includes the change in fair value of our marketable equity securities in publicly traded companies and impairmentlosses recognized on non-marketable equity securities in privately held companies.
Loss on Deconsolidation of Subsidiaries
Loss on deconsolidation of subsidiaries pertains to the deconsolidation of our former foreign subsidiary Altar SAS (“Altar”) in 2024 as a result of a sale and the deconsolidation of our former subsidiary Zymergen Inc. (“Zymergen”) in 2023.
Change in Fair Value of Warrant Liabilities
The change in fair value of warrant liabilities reflects adjustments to the fair value of private placement warrants (“Private Placement Warrants”) and warrants formerly publicly traded on the NYSE (“Public Warrants”). These warrants, classified as liabilities, were assumed as part of our merger with Soaring Eagle Acquisition Corp. (“SRNG”) on September 16, 2021, and were initially issued in connection with SRNG’s initial public offering. Warrant liabilities are remeasured at fair value at each balance sheet date and have substantially no value as of December 31, 2025.
Other (Expense) Income, Net
Other (expense) income, net primarily consists of sublease rent income and changes in fair value of notes receivable that we elected to account for under the fair value option.
Provision for Income Taxes
Income taxes are recorded in accordance with ASC 740 , Income Taxes , which provides for deferred taxes using an asset and liability approach. We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in our audited consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance against deferred tax assets is recorded if, based on the weight of the available evidence, it is more likely than not that some or all the deferred tax assets will not be realized. For all periods presented, we have recorded a valuation allowance against the deferred tax assets that are not expected to be realized.
We account for uncertain tax positions using a more-likely-than-not threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors, including, but not limited to, changes in the law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position.
As of December 31, 2025, we had federal net operating loss carryforwards of approximately $1.8 billion, of which $139.2 million will begin to expire in 2029 and $1.6 billion can be carried forward indefinitely. As of December 31, 2025, we had state net operating loss carryforwards of approximately $1.5 billion, of which $1.2 billion will begin to expire in 2030 and $257.5 million can be carried forward indefinitely. As of December 31, 2025, we had federal research and development tax credit carryforwards of approximately $38.8 million, which will begin to expire in 2029. As of December 31, 2025, we also had state research and development and investment tax credit carryforwards of approximately $31.4 million, which will begin to expire in 2030. The Company also had $3.9 million of foreign net operating losses as of December 31, 2025, of which $1.5 million will begin to expire in 2034 and $2.4 million can be carried forward indefinitely.
Income taxes are determined at the applicable tax rates adjusted for non-deductible expenses, R&D tax credits and other permanent differences. Our income tax provision may be affected by changes to our estimates.
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Results of Operations
Comparison of the Years Ended December 31, 2025 and 2024
The following table presents our result of operations for the periods indicated:
Year Ended December 31,
(in thousands)
Change
Cell Engineering revenue
Biosecurity revenue:
Service
Total revenue
Costs and operating expenses:
Cost of Biosecurity service revenue (1)
Cost of other revenue (1)
Research and development (1)
General and administrative (1)
Goodwill impairment
Restructuring charges
Total operating expenses
Loss from operations
Other income (expense):
Interest income
Interest expense
Loss on investments
Loss on deconsolidation of subsidiaries
Change in fair value of warrant liabilities
Other (expense) income, net
Total other income (expense)
Loss before income taxes
Income tax benefit
Net loss
(1) The following table presents the allocation of stock-based compensation expense, inclusive of employer payroll taxes.
Year Ended December 31,
(in thousands)
Research and development
General and administrative
Cost of Biosecurity revenue
Cost of other revenue
Total
Cell Engineering Revenue
Cell Engineering revenue was $132.7 million in 2025, compared to $174.0 million in 2024, a decrease of $41.2 million. The decrease was primarily due to the recognition of $45.4 million in non-cash revenue from the release of a deferred revenue balance associated with the terminated Motif FoodWorks, Inc. (“Motif”) contract in 2024, the recognition of $4.5 million in non-cash revenue from the release of a deferred revenue balance associated with the termination of contract with a related party in 2024, and decreases in revenue for certain programs with customers in the industrial biotechnology
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industry. These decreases were partially offset by the recognition of $7.5 million in non-cash revenue from the release of a deferred revenue balance associated with the terminated BiomEdit, Inc. (“BiomEdit”) contract in 2025 (see Note 17 of our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details) and an increase in revenue related to programs with large enterprise customers primarily in the pharmaceutical and biotechnology industries and with the U.S. government (healthcare and defense sectors).
As discussed above in Components of Results of Operations, Cell Engineering revenue comprises both cash and non-cash consideration. Cell Engineering revenue recognized relating to non-cash consideration decreased from $61.4 million in 2024 to $11.6 million in 2025. The decrease was primarily due to the recognition of $45.4 million in non-cash revenue from the release of the deferred revenue balance associated with the terminated Motif contract in 2024, partially offset by lower non-cash revenue from other customers.
Biosecurity Revenue
Biosecurity revenue was $37.4 million in 2025, compared to $53.1 million in 2024, a decrease of $15.7 million. This decrease was primarily due to lower revenue related to programs with the U.S. government and a foreign government.
Cost of Biosecurity Service Revenue
Cost of Biosecurity service revenue was $31.5 million in 2025, compared to $38.5 million in 2024, a decrease of $7.0 million. This decrease was primarily due to cost reductions implemented during 2025 as well as a reduction in activities supporting a program with the U.S. government.
Cost of Other Revenue
Cost of other revenue was $15.5 million in 2025 and $6.0 million in 2024. This increase was primarily due to an increase in activity to support Datapoints contracts. These costs relate to our cell engineering customer offerings, Datapoints and lab automation solutions, which commenced in the second quarter of 2024. Costs associated with our end-to-end cell engineering solutions offering are included in research and development expenses.
Research and Development Expenses
Our research and development expenses principally relate to the development of new offerings and the operation, expansion and enhancement of our existing service offerings utilizing our proprietary platform, which includes our Foundry and Codebase assets, to our cell engineering customers. Research personnel costs, including stock-based compensation, is our largest expense, aggregating to $97.6 million and $184.9 million for the years ended December 31, 2025 and 2024, respectively. We also acquired and expensed in-process research and development primarily through the issuance of our equity, aggregating to zero and $19.8 million for the years ended December 31, 2025 and 2024, respectively. Our remaining research and development costs are comprised primarily of rent and related facilities costs, information technology costs, depreciation pertaining to facilities and equipment, laboratory consumables, contract services and routine costs and fees.
Research and development expenses were $243.8 million in 2025, compared to $424.1 million in 2024, a decrease of $180.3 million. This decrease was primarily driven by reductions of $64.5 million in personnel-related compensation and benefits expenses (net of $2.6 million tax credit), $39.6 million in rent and facilities expenses, $22.9 million in stock-based compensation expense (inclusive of employer payroll taxes), $19.8 million in acquired in-process research and development expense, $16.7 million in laboratory supplies, $7.9 million in allocated overhead expenses (reclassified from R&D to G&A and cost of sales), $9.3 million in depreciation and amortization, $5.4 million in temporary labor and contractors, and $1.8 million increase in other operating expenses. These decreases were partially offset by an increase of $7.6 million in information technology expenses primarily due to a shortfall in contractually committed spending related to our strategic cloud and AI partnership with Google Cloud (see Note 12 of our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details).
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General and Administrative Expenses
General and administrative expenses were $183.3 million in 2025, compared to $246.2 million in 2024, a decrease of $62.9 million. This decrease was primarily driven by reductions of $28.8 million in personnel-related compensation and benefits expenses (net of $0.9 million tax credit), $23.0 million in professional fees, $14.6 million in stock-based compensation expense (inclusive of employer payroll taxes), $8.1 million in allocated overhead expenses (reclassified from R&D to G&A), $7.4 million in earnout remeasurement expenses, $5.8 million reduction in impairment of construction in progress assets, $4.7 million in temporary labor and contractors, $4.0 million in travel, and $1.2 million in other operating expenses. These decreases were partially offset by an increase of $34.7 million in rent and facilities expenses primarily due to a new lease that commenced in the second quarter of 2024 and remains unoccupied.
Goodwill Impairment
In 2024, we recorded goodwill impairment expense of $47.9 million related to our Cell Engineering reporting unit, further discussed within “Critical Accounting Estimates” below.
Restructuring Charges
Restructuring charges were $11.4 million in 2025, compared to $24.2 million in 2024, a decrease of $12.8 million. The change was primarily driven by lower employee termination costs. See Note 3 of our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.
Interest Income
Interest income was $22.6 million in 2025, compared to $38.6 million in 2024, a decrease of $16.0 million. This decrease was primarily due to lower average cash and investment balances.
Loss on Investments
Loss on investments was $16.4 million in 2025, compared to $28.8 million in 2024, a decrease of $12.4 million. The change was primarily driven by lower impairmentlosses on our non-marketable equity investments in privately held companies, partially offset by fluctuations in the stock prices of marketable equity securities, compared to 2024. We assess our non-marketable equity investments quarterly for potential impairment and remeasure them to fair value when events or changes in circumstances indicate that their carrying value may not be recoverable.
Loss on Deconsolidation of Subsidiaries
In 2024, we recorded a $7.0 million loss on the deconsolidation of our former foreign subsidiary Altar as a result of a sale of this business.
Change in Fair Value of Warrant Liabilities
There was substantially no value related to these warrant liabilities as of December 31, 2025 and 2024. The change in fair value of warrant liabilities was a gain of $5.7 million in 2024. The change in fair value of warrant liabilities is primarily driven by reductions in the value of our common stock. Increases or decreases in the value of our common stock result in a loss or gain, respectively, in the fair value of warrant liabilities.
Other (Expense) Income, Net
Other (expense) income, net was $(4.5) million in 2025, compared to $3.9 million in 2024, a decrease of $8.4 million. This decrease was primarily due to losses on the change in fair value of a note receivable accounted for under the fair value option recorded in 2025.
Non-GAAP Information
In addition to our results determined in accordance with GAAP, we use earnings before interest, taxes, depreciation and amortization (“EBITDA”) and Adjusted EBITDA internally to evaluate our performance and make financial and operational decisions. We believe these non-GAAP measures, when viewed with our GAAP results, may be helpful to investors in assessing our operating performance.
We define EBITDA as net loss attributable to Ginkgo Bioworks Holdings, Inc. stockholders before the impact of interest income, interest expense, provision for income taxes and depreciation and amortization.
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We define Adjusted EBITDA as EBITDA adjusted for stock-based compensation expense, gain or loss on equity method investments, gain or loss on investments, change in fair value of warrant liabilities, gain or loss on deconsolidation of subsidiaries, transaction and integration costs associated with planned, completed or terminated mergers and acquisitions, including related litigation costs, restructuring and impairment charges (inclusive of impairments of goodwill and long-lived assets), costs associated with the bankruptcy filing of our former subsidiary, Zymergen (the “Zymergen Bankruptcy”), and certain other income and expenses. We believe that the use of EBITDA and Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends because it eliminates the effect of financing activities, investing activities, and certain non-cash charges and other items that are not related to our core operating performance or affect comparability period over period.
Our non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for GAAP performance measures. These measures exclude significant expenses and income required by GAAP, which impacts their alignment with consolidated financial statements. They also rely on management's judgment to determine which items are included or excluded, making them inherently subjective. Additionally, non-GAAP measures lack uniform definitions and may differ from those used by other companies, limiting comparability. A reconciliation of EBITDA and Adjusted EBITDA to net loss, the most directly comparable GAAP financial measure, is presented below:
Year Ended December 31,
(in thousands)
Net loss (1)
Interest income
Interest expense
Income tax benefit
Depreciation and amortization
EBITDA
Stock-based compensation (2)
Impairment expense (3)
Restructuring charges (4)
Merger and acquisition related expenses (5)
Loss on investments
Loss on deconsolidation of subsidiaries
Change in fair value of warrant liabilities
Change in fair value of convertible notes
Adjusted EBITDA
(1) All periods include non-cash revenue when earned. For the year ended December 31, 2025 this included $7.5 million in non-cash revenue from the release of a deferred revenue balance associated with the terminated BiomEdit, Inc. (“BiomEdit”) contract. For the year ended December 31, 2024 this included $45.4 million recognized pursuant to the termination of revenue contracts with Motif and $4.5 million in non-cash revenue from the release of a deferred revenue balance associated with the termination of contract with a related party.
(2) For the years ended December 31, 2025 and 2024, includes $1.2 million and $3.0 million, respectively, in related employer payroll taxes.
(3) For 2024, includes $47.9 million related to goodwill impairment and $5.8 million related to lab equipment.
(4) Restructuring charges consist of employee termination costs from the reduction in force commenced in June 2024, as well as the impairment of a right-of-use asset relating to facilities consolidation.
(5) Represents transaction and integration costs directly related to mergers and acquisitions, including: (i) due diligence, legal, consulting and accounting fees associated with acquisitions, (ii) post-acquisition employee retention bonuses and severance payments, (iii) the fair value adjustments to contingent consideration liabilities resulting from acquisitions, and (iv) costs associated with the Zymergen Bankruptcy, as well as securities litigation costs, net of insurance recovery. Not included in this adjustment are acquired in-process research and
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development expenses, which totaled zero and $19.8 million for the years ended December 31, 2025 and 2024, respectively.
Liquidity and Capital Resources
On August 19, 2024, with the approval of our board of directors and shareholders, we effected a one-for-forty (1:40) reverse stock split for our common stock. Accordingly, all common shares presented herein have been retrospectively adjusted to reflect the reverse stock split.
Sources of Liquidity
As of December 31, 2025, we had cash and cash equivalents of $167.2 million and marketable securities of $255.4 million, which we believe will be sufficient to enable us to fund our projected operations through at least the next 12 months from the date of filing of this Annual Report on Form 10-K.
At-The-Market Program
On August 7, 2025, we filed a universal shelf registration statement on Form S-3, which was declared effective by the SEC on August 14, 2025, on which we registered for sale up to $500 million of any combination of our Class A common stock, preferred stock, warrants, and/or units from time to time and at prices and on terms that we may determine. On September 4, 2025, the Company entered into a Sales Agreement (the “Sales Agreement”) with Allen & Company LLC, who is acting as the sales agent (the “Agent”), pursuant to which the Company may sell shares of its Class A common stock from time to time at prices and on terms determined by market conditions at the time of offering, up to an aggregate offering price of $100.0 million through or directly to the Agent in one or more at-the-market (“ATM”) offerings. Since inception of the Sales Agreement through December 31, 2025, the Company has issued 1.9 million shares of Class A common stock under the Sales Agreement for net proceeds of $18.1 million. We currently intend to use the net proceeds from this offering for general corporate purposes, which may include, but are not limited to, financing our operations, technology development, working capital and capital expenditures.
Material Cash Requirements
We anticipate that our expenditures will exceed our revenue through at least the next 12 months from the date of filing of this Annual Report on Form 10-K, as we:
• continue our R&D activities under existing and new programs and further invest in and expand our tools offerings;
• upgrade, expand or adapt our operational, financial and management systems and support our operations;
• potentially acquire and integrate companies, assets or intellectual property that advance our company objectives; and
• maintain, expand, and protect our intellectual property.
Leases
We have various noncancelable operating leases for office and laboratory space, with significant leases expiring between 2030 and 2039. As of December 31, 2025 , we have fixed minimum rental commitments under noncancellable operating leases of $56.3 million in 2026 and $606.5 million thereafter, plus additional variable rents. See Note 10 to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for more information.
Purchase Obligations
In August 2023, the Company entered into a five-year strategic cloud and AI partnership with Google Cloud, which included minimum annual commitments to purchase cloud hosting services. The partnership previously included minimum annual commitments over the contract years ending August 27, 2027 to purchase cloud hosting services in exchange for various discounts on such services. The aggregate $289 million future purchase commitment included minimum annual commitments were as follows: year 1, $8.0 million; year 2, $28.0 million; year 3, $54.0 million; year 4, $86.0 million; and year 5, $113.0 million. Effective October 3, 2025, the Company entered into amendment that revised the total aggregate future purchase commitment to $110 million and reset the annual commitments as follows (each annual year is defined as October 3 to October 2): year 1 (starting on October 3, 2025), $6.0 million; year 2, $8.0 million; year 3, $12.0 million; year 4, $18.0 million; year 5, $28.0 million; year 6, $38.0 million. The Company recognized a contractual liability of $20.9 million during year ended December 31, 2025 as a result of shortfall in purchasing relative to its commitments under the original agreement. The Company is required to make a one-time payment of $14.0 million to be released from its
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minimum annual commitment obligations under the original agreement in January 2026. If the Company does not meet its minimum annual commitment obligations in the future, additional shortfall liabilities may be incurred and future contractual losses may be material.
Effective April 1, 2025, the Company entered into an amendment to its four-year supply agreement with Twist for the purchase of diverse products including synthetic DNA. The original agreement was effective as of April 1, 2022 and obligated the Company to spend a minimum of $58.0 million over the four-year term with the following minimum annual commitments (each annual year is defined as April 1 to March 31): year 1, $10.0 million; year 2, $13.0 million; year 3, $16.0 million; and year 4, $19.0 million. The amendment converts the remaining minimum annual commitments into non-refundable payments creditable against future purchases by the Company, with no expiration. The Company paid $4.0 million in April 2025 and is obligated to non-refundable payments of $5.0 million on April 1, 2026 and $6.0 million on April 1, 2027, respectively. A contractual loss of $8.7 million was recorded in the year ended December 31, 2025.
Surety Bond
In 2026, the Company will be required to fund a surety bond in the amount of $47.0 million to fulfill its obligations under a contract with a U.S. Government National Laboratory related to the sale of RAC automation equipment. The $47.0 million will be restricted until the Company completes all of its obligations under the contract. Currently the Company expects the cash to be restricted until 2029.
Cash Flows
The following table provides information regarding our cash flows for each period presented:
Year Ended December 31,
(in thousands)
Net cash (used in) provided by:
Operating activities
Investing activities
Financing activities
Effect of exchange rate changes
Net decrease in cash, cash equivalents and restricted cash
Operating Activities
Net cash used in operating activities for the year ended December 31, 2025 consisted of a net loss of $312.8 million, adjusted for a net decrease in cash due to changes in operating assets and liabilities of $44.1 million and non-cash charges of $185.8 million. The net change in operating assets and liabilities was primarily driven by a $32.4 million decrease in deferred revenue primarily from one-time releases of deferred revenue balances associated with terminated customer contracts and the recognition of previously deferred revenue, a $27.9 million decrease in operating lease liabilities from rent payments, and a $5.2 million increase in prepaid expenses and other current assets; partially offset by a $10.4 million increase in accrued expenses and other current liabilities and an $11.5 million increase in other non-current liabilities due to shortfalls in contractually committed spending related to our contracts with Twist and Google Cloud (see Note 12 of our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details), and a $3.8 million decrease in operating lease right-of-use assets from lease incentives received. Non-cash adjustments primarily consisted of $59.0 million in depreciation and amortization, $81.5 million in stock-based compensation expense, $16.4 million loss on investments, and $30.1 million non-cash lease expense.
Net cash used in operating activities for the year ended December 31, 2024 consisted of a net loss of $547.0 million, adjusted for a net decrease in cash due to changes in operating assets and liabilities of $89.7 million and non-cash charges of $317.1 million. The net change in operating assets and liabilities was primarily driven by a $40.4 million decrease in accrued expenses and other current liabilities primarily due to the payment or release of restructuring-related accruals and litigation costs, a $68.6 million decrease in deferred revenue primarily from a one-time release of a deferred revenue balance associated with a terminated customer contract, and a $14.9 million decrease in operating lease liabilities from rent payments, partially offset by a $23.5 million decrease in operating lease right-of-use assets from lease incentives received and a $10.1 million decrease in prepaid expenses and other current assets, primarily driven by the derecognition of an insurance receivable and a reduction in contract renewals resulting from our restructuring actions. Non-cash adjustments primarily consisted of $63.0 million in depreciation and amortization, $112.3 million in stock-based compensation
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expense, $28.8 million loss on investments, $28.1 million non-cash lease expense, $19.8 million in acquired in-process research and development expense, and $58.5 million in various asset impairment charges.
Investing Activities
Net cash used in investing activities for the year ended December 31, 2025 primarily consisted of purchases of marketable debt securities of $418.6 million, maturities of marketable debt securities of $159.5 million, and sales of marketable debt securities of $25.9 million, and $7.7 million in purchases of property and equipment related to the build-out of new office and laboratory space near our headquarters.
Net cash used in investing activities for the year ended December 31, 2024 primarily consisted of $62.5 million in purchases of property and equipment related to a build out of new office and laboratory space being developed near our headquarters, $5.4 million paid for the acquisition of certain Zymergen assets, offset by $4.5 million in proceeds from the sale of marketable securities.
Financing Activities
Net cash used in financing activities for the year ended December 31, 2025 primarily consisted of $18.1 million in net proceeds from the ATM offering and $0.4 million of principal payments on finance leases.
Net cash used in financing activities for the year ended December 31, 2024 primarily consisted of principal payments on finance leases and payments of contingent consideration related to business acquisitions.
Critical Accounting Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts and experience. The effects of material revisions in estimates, if any, are reflected in our consolidated financial statements prospectively from the date of change in estimates.
While our significant accounting policies are described in more detail in Note 2 to our audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe the following accounting policies used in the preparation of our consolidated financial statements require the most significant judgments and estimates.
Revenue Recognition
Cell Engineering Revenue
For certain Cell Engineering revenue contracts, we recognize revenue over the period of performance using a measure of progress based on costs incurred to date relative to total expected costs (i.e., cost-to-cost method). A significant level of judgment is involved in estimating the total expected costs. When estimating total expected costs, we make assumptions and estimates regarding the contracted scope of work, tasks required to complete each project, technical and schedule risks associated with the science, the expected duration of each project, and the total amount of internal and external resources required.
Our collaboration and licensing agreements often include multiple promises, such as (i) licenses and assignments of intellectual property and materials and (ii) research and development services. We assess whether each promise constitutes a distinct performance obligation based on the specific terms of each agreement. Determining whether the promises within a customer contract should be accounted for separately as distinct performance obligations requires significant judgment. Therefore, we review customer contracts to identify all individual promises to transfer goods and services that qualify as performance obligations.
Options to acquire additional goods and services are evaluated to determine whether they provide a material right to the customer that would not otherwise be available without entering into the contract. Judgment is required to assess whether a
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customer option constitutes a material right. If a material right is identified, the option is treated as a separate performance obligation, and the revenue allocated to the option is deferred until the option is either exercised or expires.
We also evaluate contract modifications and amendments to determine whether any changes should be accounted for as a separate contract, prospectively or on a cumulative catch-up basis.
Certain customer contracts include payment in the form of equity securities or other financial instruments that convert into equity upon a triggering event. Any non-cash consideration is measured at its estimated fair value at contract inception. For equity securities and financial instruments that are not actively traded, we generally determine the estimated fair value by referencing a recent financing round or utilizing a scenario-based valuation model. Significant unobservable inputs are used in these valuations, including expectations regarding future financings of the customer, scenario dates and probabilities, expected volatility, discount rates, and recovery rates. Changes in these assumptions can materially affect the fair value of the non-cash consideration and, consequently, the total revenue recognized for the contract.
Impairment of Long-Lived Assets
We review our long-lived assets and asset groups for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Recoverability is measured by comparing the carrying value of the long-lived assets to the future undiscounted cash flows expected to be generated by the assets. In determining the expected future cash flows, we use assumptions believed to be reasonable, but which are unpredictable and inherently uncertain. Actual future cash flows may differ from the estimates used in impairment testing. We recognize an impairmentloss when and to the extent that the estimated fair value of the long-lived assets is less than their carrying value.
Goodwill
During the year ended December 31, 2024, due to a sustained decrease in the market price of our Class A common stock and market capitalization, we identified that a possible indicator of impairment was present as of June 30, 2024. As such, we completed a quantitative impairment test related to our Cell Engineering reporting unit. To conduct the impairment test of goodwill, the estimated fair value of the reporting unit was compared to its carrying value. The estimated fair value of the Cell Engineering reporting unit was determined using a weighted approach that considered a discounted cash flow (“DCF”) model under the income approach and the guideline public company (“GPC”) method under the market approach. Inputs used in the DCF model included the projected future operating results of the reporting unit and the applicable discount rate, while inputs used in the GPC method consisted of a revenue multiple. The projected future operating results were based on historical experience and internal annual operating plans reviewed by management, extrapolated over the forecast period. The discount rate was determined using a weighted average cost of capital adjusted for risk factors specific to the reporting unit. The revenue multiple was based on the GPC method using comparable publicly traded company multiples of revenue for a group of benchmark companies. The DCF method was weighted 75% and the GPC 25%. We reconciled the resulting fair value of the reporting unit to our market capitalization to corroborate the fair value estimate used in the impairment test.
The interim impairment test indicated that the estimated fair value of the reporting unit was less than its carrying value. As a result, we fully impaired goodwill and recorded an impairmentloss of $47.9 million in the second quarter of 2024 and for the year ended December 31, 2024.
Investments in Non-Marketable Equity Securities
We account for our non-marketable equity securities using the measurement alternative, where the carrying value is measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Determining whether an observed transaction is similar to the security owned by us requires judgment based on the rights and obligations of the investments.
We evaluate non-marketable equity investments for impairment on a quarterly basis, considering both qualitative and quantitative factors that may have a significant effect on the investment’s fair value. Qualitative factors considered include the companies’ financial and liquidity position, access to capital resources, adverse changes in the economic environment of the investee, and adverse changes in the business prospects of the investee, among others. When indicators of impairment exist, we prepare quantitative assessments of the fair value of our non-marketable equity securities using market and income approaches that require judgment and the use of estimates, including discount rates, assumptions around the investees' expected time to exit event, investee revenues and expenses, and comparable market data of guideline public companies, among others. When our assessment indicates that an impairment exists, we write down the investment to its fair value.
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Recently Issued Accounting Pronouncements
See Note 2 , “Summary of Significant Accounting Policies,” of our consolidated financial statements contained in Part II, Item 8 of this Annual Report on Form 10-K for a discussion of recently issued accounting pronouncements.
