Ginkgo Bioworks Holdings Inc
For the period ended Sep 30, 2024. Filed Nov 12, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 12, 2024
DNA$11.29+13.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001628280-24-036231
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-12.
0001628280-24-047284
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 197 previous paragraphs and 210 current paragraphs.
146 unchanged; 43 reworded; 19 added; 8 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 5 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
The initial non-refundable fair value of the equity received, totaling $65.1 million and considered non-cash consideration under ASC 606, was accounted for as material rights under ASC 606. The material rights pertained to Motif's license rights for a set of ingredients that Motif intended for us to develop within the first two years. This amount was recorded as deferred revenue for the future license rights and recognizable as revenue as we performed qualifying services for Motif, or when such rights expire upon termination of the agreements. As of December 31, 2023, we had a remaining deferred revenue balance of $45.4 million with Motif under this arrangement. Effective in August 2024, the Motif IPCA and the TDA agreements were mutually terminated with no adjustment to the original consideration. As a result, we have no further obligation to perform services for Motif and, accordingly, the remaining $45.4 million in deferred revenue under this arrangement has been recognized in full as revenue in the three and nine months ended September 30, 2024. We separately disclose all the non-cash portion of our revenue in the results of operations section below.
Current report
In the third quarter of 2024, we launched several new customer offerings, including Ginkgo Datapoints, an artificial intelligence (AI) model application programming interface (API), and lab automation solutions. Ginkgo Datapoints' data generation products provide large, biological datasets for customers to train their AI models. Our model API provides users with access to both publicly available models and Ginkgo’s own protein sequence large language model (LLM) trained on Ginkgo’s proprietary datasets. Our lab automation solutions combines modular hardware, control software and managed support to provide customers the ability to automate their own lab workflows in house.
Current report
Impairment of Lease Assets
Current report
Impairment of lease assets relates to impairment losses recognized on a right-of-use asset and the related leasehold improvements associated with an exited Zymergen leased facility.
Current report
Loss on Deconsolidation of Subsidiary
Current report
Loss on deconsolidation of subsidiary pertains to our deconsolidation of our former foreign subsidiary Altar SAS (“Altar”) in the third quarter of 2024 as a result of a sale.
Current report
(1)The following table presents the allocation of stock-based compensation expense, inclusive of employer payroll taxes. Stock-based compensation expense during the three months ended September 30, 2024, was partially offset by a $10.9 million expense reversal resulting from the forfeiture of RSUs related to our restructuring plan. Of the total reversal, $8.8 million was recorded to research and development expenses and $2.1 million was recorded to general and administrative expenses.
Current report
Cell Engineering revenue increased by $37.9 million and $22.6 million in the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. The increase was primarily attributable to the progress of Current Active Programs with existing and new customers, including 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 the third quarter of 2024. Additionally, revenue increased due to the launch of New Programs and was partially offset by the completion of certain programs.
Current report
Cost of Biosecurity product and service revenue increased $3.1 million in the three months ended September 30, 2024 compared to the same period in 2023. The increase was driven by growth in our expanded offerings of biomonitoring and bioinformatic support services since the conclusion of our COVID-19 testing in schools in the third quarter of 2023.
Current report
General and administrative expenses decreased $29.7 million in the three months ended September 30, 2024, compared to the same period in 2023. The decrease was primarily due to the deconsolidation of Zymergen ($17.4 million) and a reduction in stock-based compensation expense of $8.7 million (inclusive of employer payroll taxes). Additionally, there were decreases in professional fees of $8.8 million and temporary labor and contractors of $2.4 million. These decreases were partially offset by an increase in rent and related facilities costs of $8.3 million from a new facility lease that commenced in the second quarter of 2024.
Current report
Impairment of Lease Assets
Current report
In the three and nine months ended September 30, 2023, we recognized an impairment loss of $96.2 million related to a right-of-use asset and the associated leasehold improvements for an exited Zymergen leased facility. During the third quarter of 2023, Zymergen ceased use of and vacated the leased space, which triggered an impairment analysis and resulted in a write-down of the carrying value of the assets to their estimated fair value.
Current report
Loss on investments was $6.9 million and $36.3 million for the three months ended September 30, 2024 and 2023, respectively, and $16.3 million and $44.8 million for the nine months ended September 30, 2024 and 2023, respectively. In the 2023 periods, we recorded higher impairment losses on our non-marketable equity securities compared to the comparable 2024 periods.
Current report
Loss on Deconsolidation of Subsidiary
Current report
In the third quarter of 2024, we recorded a $7.0 million loss on our deconsolidation of our former foreign subsidiary Altar as a result of a sale.
Current report
(1)All periods include non-cash revenue when earned, including $45.4 million in the three and nine months ended September 30, 2024, recognized pursuant to the termination of revenue contracts with Motif (see Note 14 of our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q).
Current report
(3)For 2024, includes $47.9 million related to goodwill impairment. For the three months ended September 30, 2023, includes a $16.2 million impairment loss on lab equipment and a $96.2 million impairment loss on an operating lease right-of-use asset and related leasehold improvements associated with an exited Zymergen leased facility. For the nine months ended September 30, 2023, includes a $25.2 million impairment loss on lab equipment and a $96.2 million impairment loss on lease assets associated with the exited Zymergen leased facility.
Current report
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.
Current report
•continue our restructuring actions.
Removed paragraphs (8)
Previous report
(1)Total stock-based compensation expense, inclusive of employer payroll taxes, was allocated as follows (in thousands):
Previous report
Cell Engineering revenue decreased $9.1 million in the three months ended June 30, 2024 compared to the same period in 2023 and decreased $15.3 million in the six months ended June 30, 2024 compared to the same period in 2023. The decrease was primarily due to timing of programs completed prior to the current period partially offset by overall progress on Current Active Programs.
Previous report
General and administrative expenses decreased $36.1 million in the three months ended June 30, 2024 compared to the same period in 2023. The decrease was primarily attributable to the deconsolidation of Zymergen ($34.3 million) and a decrease in stock-based compensation expense of $3.7 million (inclusive of employer payroll taxes). Further, there was a decrease in professional fees of $5.6 million, partially offset by increases in personnel-related compensation and benefits expense of $5.1 million and depreciation and amortization expense of $1.6 million.
Previous report
Loss on investments was $6.8 million and $2.1 million in the three months ended June 30, 2024 and 2023, respectively. The change of $4.7 million was due to fluctuations in the stock prices of our marketable equity securities and a $4.9 million increase in impairment losses recognized on our non-marketable equity securities.
Previous report
Loss on investments was $9.4 million and $8.5 million in the six months ended June 30, 2024 and 2023, respectively. The change of $0.9 million was due to fluctuations in the stock prices of our marketable equity securities offset by an $8.3 million increase in impairment losses recognized on our non-marketable equity securities.
Previous report
Other income (expense), net decreased $4.9 million in the six months ended June 30, 2024 compared to the same period in 2023 primarily due to a $4.7 million decrease in sublease rent income primarily as a result of the deconsolidation of Zymergen and a $1.0 million increase in the net loss on the change in fair value of convertible notes.
Previous report
(2)Impairment expense includes $47.9 million related to goodwill impairment in the three and six months ended June 30, 2024 and $9.0 million related to lab equipment acquired as part of the Zymergen acquisition in the three and six months ended June 30, 2023.
Previous report
•implement our restructuring actions.
Reworded paragraphs (43)
Previous wording
Founded in 2018, Motif FoodWorks, Inc. (“Motif”) was formed to focus on the application of synthetic biology to reduce the reliance on animal products in the food industry. We entered into an intellectual property contribution agreement that granted Motif rights to our intellectual property, subject to mutually agreed upon technical development plans. In return for our contribution of intellectual property and access to our platform, we received shares of common stock in Motif. The initial fair value of our common stock investment in Motif was $65.1 million, which has subsequently been reduced to a carrying value of zero as a result of the allocation of losses under our accounting for equity method investments. Motif was capitalized through Series A preferred stock financings that raised approximately $119 million in gross proceeds from an investor group which included certain of our investors, Louis Dreyfus Company and Fonterra Co-operative Group Limited. In June 2021, Motif raised an additional $226 million through a Series B preferred stock financing. Ginkgo also entered into a Technical Development Agreement with Motif under which we provide R&D services in return for cash consideration on a fixed-fee or cost-plus basis.
Current wording
Founded in 2018, Motif FoodWorks, Inc. (“Motif”) was formed to focus on the application of synthetic biology to reduce the reliance on animal products in the food industry. We entered into (i) an Intellectual Property Contribution Agreement (“IPCA”) with Motif that granted Motif a license to certain of the our intellectual property and (ii) a Technical Development Agreement (“TDA”) that established the terms under which the we provided technical development services. In return for our contribution of intellectual property and access to our platform, we received shares of common stock in Motif. The initial fair value of the common stock investment in Motif was $65.1 million, which has subsequently been reduced to a carrying value of zero as a result of the allocation of losses under the accounting for equity method investments.
Previous wording
Founded in 2019, Allonnia, LLC (“Allonnia”) was formed to focus on the application of synthetic biology in the waste bioremediation and biorecovery industries. We entered into an intellectual property contribution agreement that granted Allonnia rights to our intellectual property, subject to mutually agreed upon technical development plans. In return for our contribution of intellectual property and access to our platform, we received common units in Allonnia with a right to additional units subject to additional closings of Allonnia’s Series A preferred units. The initial fair value of our common units received in Allonnia was $24.5 million, subsequently increased by $12.7 million in 2021, all of which has been reduced to a carrying value of zero as a result of the allocation of losses under our accounting for equity method investments. Allonnia was capitalized through Series A preferred unit financings that raised approximately $52 million in gross proceeds from an investor group which included certain of our investors and Battelle Memorial Institute. In 2023, Allonnia raised an additional $30 million through a Series A extension. Ginkgo also entered into a Technical Development Agreement with Allonnia under which we provide R&D services in return for cash consideration on a fixed fee or cost-plus basis.
Current wording
Founded in 2019, Allonnia, LLC (“Allonnia”) was formed to focus on the application of synthetic biology in the waste bioremediation and biorecovery industries. We entered into an intellectual property contribution agreement that granted Allonnia rights to our intellectual property, subject to mutually agreed upon technical development plans. In return for our contribution of intellectual property and access to our platform, we received common units in Allonnia with a right to additional units subject to additional closings of Allonnia’s Series A preferred units. The initial fair value of our common units received in Allonnia was $24.5 million, subsequently increased by $12.7 million in 2021, all of which has been reduced to a carrying value of zero as a result of the allocation of losses under our accounting for equity method investments. Allonnia was capitalized through Series A preferred unit financings that raised approximately $52 million in gross proceeds from an investor group which included certain of our investors and Battelle Memorial Institute. In 2023, Allonnia raised an additional $30 million through a Series A extension. Ginkgo also entered into a Technical Development
Previous wording
Structured Partnerships allow Ginkgo to: (i) partner with early stage synthetic biology product companies to adopt our Foundry as their cell programming R&D platform, in which we offer flexible commercial terms on the service fees including the ability to pay a portion or all of such upfront fees in the form of non-cash consideration (convertible financial instruments and/or equity securities), in addition to downstream value share consideration (“Startup Structured Partnership”); and (ii) partner with existing entities with complementary assets for high potential synthetic biology applications in a large-scale, multi-program collaboration (“Legacy Structured Partnership”). In the three and six months ended June 30, 2023, we entered into two and six, respectively, Startup Structured Partnerships and received prepayments of service fees in the form of equity securities or convertible financial instruments totaling $1.1 million and $17.0 million, respectively, that is recognized as revenue over our period of performance. In the three and six months ended June 30, 2024, we did not enter into any new Startup Structured Partnerships. Our Legacy Structured Partnerships are described below:
Current wording
Structured Partnerships allow Ginkgo to: (i) partner with early stage synthetic biology product companies to adopt our Foundry as their cell programming R&D platform, in which we offer flexible commercial terms on the service fees including the ability to pay a portion or all of such upfront fees in the form of non-cash consideration (convertible financial instruments and/or equity securities), in addition to downstream value share consideration (“Startup Structured Partnership”); and (ii) partner with existing entities with complementary assets for high potential synthetic biology applications in a large-scale, multi-program collaboration (“Legacy Structured Partnership”). In the three and nine months ended September 30, 2023, we entered into zero and six, respectively, Startup Structured Partnerships and received prepayments of service fees in the form of equity securities or convertible financial instruments totaling $17.0 million that is recognized as revenue over our period of performance. In the three and nine months ended September 30, 2024, we did not enter into any new Startup Structured Partnerships. Our Legacy Structured Partnerships are described below:
Previous wording
We generate Cell Engineering revenue through the execution of license and collaboration agreements whereby customers obtain license rights to our proprietary technology and intellectual property for use in the development and commercialization of engineered organisms and derived products. Under these 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 (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.
Current wording
We generate Cell Engineering revenue through the execution of license and collaboration agreements whereby customers obtain license rights to our proprietary technology and intellectual property for use in the development and commercialization of engineered organisms and derived products. Under these 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.
Previous wording
Commencing in the second quarter of 2024, we announced changes in commercial terms, including new intellectual property terms in favor of customers, the removal of downstream value share from certain program types, and offering our Foundry capabilities on a lab-data-as-a-service (“LDaaS”) basis in addition to continuing our end-to-end Cell Engineering solutions offering where we will often maintain downstream value share. There has been no material impact on our revenue recognition policies to date from the announced changes in our new commercial terms and Cell Engineering offerings.
Current wording
Commencing in the second quarter of 2024, we announced changes in commercial terms applicable to some customer contracts, including new intellectual property terms in favor of customers and the removal of downstream value share from certain program types in many circumstances. Our end-to-end Cell Engineering solutions offering is expected to continue to maintain downstream value share.
Previous wording
We expense R&D expenses as incurred. We expect our R&D costs will be lowered as a result of 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 Foundry, Codebase, AI and new 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.
Current wording
We expense R&D expenses as incurred. We experienced lower R&D costs in the third quarter of 2024 compared to the first two quarters of 2024 and comparable 2023 periods primarily resulting from 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 Foundry, Codebase, AI and new 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.
Previous wording
We expect our G&A costs will be lowered as a result of our restructuring plan announced and commenced in the second quarter of 2024 as we begin to lower our operational overhead. Conversely, we intend to maintain a strategic and opportunistic approach regarding inorganic G&A expenses arising from mergers, acquisitions, and other inorganic growth initiatives.
Current wording
We experienced lower G&A costs in the third quarter of 2024 compared to the first two quarters of 2024 and comparable 2023 periods primarily resulting from our restructuring plan announced and commenced in the second quarter of 2024 as we commenced lowering our operational overhead. Conversely, we intend to maintain a strategic and opportunistic approach regarding inorganic G&A expenses arising from mergers, acquisitions, and other inorganic growth initiatives.
Previous wording
Restructuring charges relate to our restructuring plan announced and commenced in the second quarter of 2024 and consist primarily of severance and other employee termination costs resulting from a reduction in force that commenced in June 2024 and an impairment of a right-of-use asset relating to facilities consolidation and the related sublease of certain facilities.
Current wording
Restructuring charges are related to our restructuring plan, which was announced and initiated in the second quarter of 2024. These charges primarily consist of severance and other employee termination costs from a reduction in force that commenced in June 2024, as well as the impairment of a right-of-use asset due to facilities consolidation, including sublease of certain facilities.
Previous wording
Other income (expense), 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.
Current wording
Other 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.
Previous wording
Comparison of the Three and Six Months Ended June 30, 2024 and 2023
Current wording
Comparison of the Three and Nine Months Ended September 30, 2024 and 2023
Previous wording
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 $16.8 million in the three months ended June 30, 2023 to $8.2 million in the three months ended June 30, 2024, and from $29.7 million in the six months ended June 30, 2023 to $12.1 million in the six months ended June 30, 2024, primarily due to a shift in focus on signing new programs with cash consideration.
Current wording
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 increased from $16.9 million in the three months ended September 30, 2023 to $48.0 million in the three months ended September 30, 2024, and from $46.6 million in the nine months ended September 30, 2023 to $60.1 million in the nine months ended September 30, 2024. The increase was 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 the third quarter of 2024, partially offset by lower non-cash revenue from other customers.
Previous wording
In the three months ended June 30, 2024, 10 New Programs commenced, compared to 21 New Programs in the same period in 2023. The number of Current Active Programs rose to 140, compared to 105 in the prior year period. Cumulative Programs increased to 269 from 198 over the same period. Additionally, the number of customers grew to 82, up from 63 in the prior year period.
Current wording
In the three months ended September 30, 2024, 11 New Programs commenced, compared to 21 New Programs in the same period in 2023. The number of Current Active Programs rose to 136, compared to 116 in the prior year period. Cumulative Programs increased to 280 from 219 over the same period. Additionally, the number of customers grew to 81, up from 76 in the prior year period.
Previous wording
In the six months ended June 30, 2024, 27 New Programs commenced, compared to 34 New Programs in the same period in 2023. The number of Current Active Programs rose to 151, compared to 118 in the prior year period. Cumulative Programs increased to 269 from 198 over the same period. Additionally, the number of customers grew to 88, up from 68 in the prior year period.
Current wording
In the nine months ended September 30, 2024, 38 New Programs commenced, compared to 55 New Programs in the same period in 2023. The number of Current Active Programs rose to 162, compared to 139 in the prior year period. Cumulative Programs increased to 280 from 219 over the same period. Additionally, the number of customers grew to 91, up from 84 in the prior year period.
Previous wording
While the majority of Cell Engineering revenue today is made up of service fees, as we increase Cumulative Programs and to the extent our customers successfully commercialize products built on our platform, downstream value share is expected to comprise a larger proportion of Cell Engineering revenue. 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.
Current wording
While the majority of Cell Engineering revenue today is made up of service fees, as we increase Cumulative Programs and to the extent our customers successfully commercialize products built on our platform, downstream value share is expected to comprise a larger proportion of Cell Engineering revenue. 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 of these equity interests, 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.
Previous wording
Biosecurity revenue decreased $51.8 million in the six months ended June 30, 2024 compared to the same period in 2023 and was comprised of a decrease in product revenue of $22.5 million and a decrease in service revenue of $29.4 million.
Current wording
Biosecurity revenue decreased $4.3 million in the three months ended September 30, 2024 compared to the same period in 2023 and was comprised of a decrease in product revenue of $6.5 million offset by an increase in service revenue of $2.2 million.
Previous wording
Biosecurity revenue decreased $15.3 million in the three months ended June 30, 2024 compared to the same period in 2023 and was comprised of a decrease in product revenue of $10.8 million and a decrease in service revenue of $4.5 million.
Current wording
Biosecurity revenue decreased $56.1 million in the nine months ended September 30, 2024 compared to the same period in 2023 and was comprised of a decrease in product revenue of $28.9 million and a decrease in service revenue of $27.2 million.
Previous wording
Since the end of the COVID-19 public health emergency in May 2023, we shifted our Biosecurity business focus to developing scalable biosecurity infrastructure and delivering global surveillance programs and analytics services. Biosecurity revenue in the first half of 2024 was comprised of our expanded offerings of biomonitoring and bioinformatic support services. Through our partnerships, we operate programs for collections, testing, sequencing, and insights delivery on pathogen samples in different countries.
Current wording
Since the end of the COVID-19 public health emergency in May 2023, we shifted our Biosecurity business focus to developing scalable biosecurity infrastructure and delivering global surveillance programs and analytics services. Biosecurity revenue in the nine months ended September 30, 2024 was comprised of our expanded offerings of biomonitoring and bioinformatic support services. Through our partnerships, we operate programs for collections, testing, sequencing, and insights delivery on pathogen samples in different countries.
Previous wording
Cost of Biosecurity product and service revenue decreased $6.3 million and $19.5 million in the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023. The decrease was driven by the end of our COVID-19 testing in schools in the third quarter of 2023 and the transition of our Biosecurity business to global surveillance programs and analytic services.
Current wording
Cost of Biosecurity product and service revenue decreased $16.4 million in the nine months ended September 30, 2024 compared to the same period in 2023. The decrease was driven by the end of our COVID-19 testing in schools in the third quarter of 2023 and the transition of our Biosecurity business to global surveillance programs and analytic services.
Previous wording
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. Our research personnel costs, including stock-based compensation, is our largest expense, aggregating $37.6 million and $76.5 million for the three and six months ended June 30, 2024, respectively, and $38.5 million and $81.1 million for the three and six months ended June 30, 2023, respectively. We also acquired and expensed in-process research and development through the issuance of our equity, aggregating $3.0 million and $19.8 million for the three and six months ended June 30, 2024, respectively, and $4.0 million for the three and six months ended June 30, 2023. 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.
Current wording
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. Our research personnel costs, including stock-based compensation, is our largest expense, aggregating $31.2 million and $152.5 million for the three and nine months ended September 30, 2024, respectively, and $70.5 million and $239.8 million for the three and nine months ended September 30, 2023, respectively. We also acquired and expensed in-process research and development through the issuance of our equity, aggregating $19.8 million and $4.0 million for the nine months ended September 30, 2024 and 2023, 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.
Previous wording
Research and development expenses decreased $10.1 million in the three months ended June 30, 2024 compared to the same period in 2023. The decrease was primarily attributable to a decrease in stock-based compensation expense of $18.8 million (inclusive of employer payroll taxes) and the deconsolidation of our former subsidiary, Zymergen Inc. (“Zymergen”), in the fourth quarter of 2023 ($11.3 million). Further, there was a decrease in professional fees of $3.8 million and acquired in-process research and development costs of $1.0 million. This was partially offset by an increase in rent and related facilities costs of $10.5 million, software and technology expense of $5.2 million, laboratory supplies expense of $4.5 million, personnel-related compensation and benefits expense of $3.0 million, and non-capitalized equipment purchases and maintenance costs of $2.1 million. Increases in research and development expenses, excluding stock-based compensation expense and the Zymergen deconsolidation, supported the growth of Cell Engineering capabilities.
Current wording
Research and development expenses decreased by $79.7 million in the three months ended September 30, 2024, compared to the same period in 2023. This decrease was primarily due to a reduction in stock-based compensation expense of $29.7 million (inclusive of employer payroll taxes) and the deconsolidation of our former subsidiary, Zymergen Inc. (“Zymergen”), in the fourth quarter of 2023 ($20.5 million). Additionally, there were decreases in lab equipment impairment of $12.3 million, personnel-related compensation and benefits expense of $4.8 million, software and technology expense of $2.9 million, professional fees of $2.8 million, and laboratory supplies of $1.4 million.
Previous wording
Research and development expenses decreased $36.2 million in the six months ended June 30, 2024 compared to the same period in 2023. The decrease was primarily attributable to a decrease in stock-based compensation expense of $40.8 million (inclusive of employer payroll taxes) and the deconsolidation of Zymergen ($30.0 million). Further, there was a decrease in professional fees of $8.6 million and temporary labor and contractors of $1.4 million. This was partially offset by increases in acquired in-process research and development costs of $15.9 million, rent and related facilities costs of $11.0 million, software and technology expense of $8.9 million, laboratory supplies expense of $4.8 million, and personnel-related compensation and benefits expense of $4.4 million. Increases in research and development expenses, excluding stock-based compensation expense and the Zymergen deconsolidation, supported the growth of Cell Engineering capabilities.
Current wording
Research and development expenses decreased by $115.9 million in the nine months ended September 30, 2024, compared to the same period in 2023. This decrease was primarily due to a reduction in stock-based compensation expense of $70.4 million (inclusive of employer payroll taxes) and the deconsolidation of Zymergen ($50.5 million). Additionally, there were decreases in professional fees of $11.4 million, lab equipment impairment of $12.3 million, and temporary labor and contractors of $2.2 million. These decreases were partially offset by an increase in acquired in-process research and development costs of $15.9 million, rent and related facilities costs of $11.4 million, software and technology expense of $6.0 million, laboratory supplies of $3.3 million, and outside service costs of $3.1 million. Increases in research and development expenses supported the growth of Cell Engineering capabilities prior to the commencement of the restructuring.
Previous wording
General and administrative expenses decreased $77.2 million in the six months ended June 30, 2024 compared to the same period in 2023. The decrease was primarily attributable to the deconsolidation of Zymergen ($55.4 million) and a decrease in stock-based compensation expense of $12.1 million (inclusive of employer payroll taxes). Further, there were decreases in professional fees and litigation costs of $13.9 million and the change in fair value of contingent consideration liabilities resulting from acquisitions of $6.2 million, partially offset by an increase in personnel-related compensation and benefits expense of $10.1 million.
Current wording
General and administrative expenses decreased $106.9 million in the nine months ended September 30, 2024, compared to the same period in 2023. The decrease was primarily due to the deconsolidation of Zymergen ($72.8 million) and a reduction in stock-based compensation expense of $20.7 million (inclusive of employer payroll taxes). Additionally, there were decreases in professional fees of $22.7 million and the change in fair value of contingent consideration liabilities resulting from acquisitions of $6.5 million, partially offset by an increase in personnel-related compensation and benefits expense of $11.0 million and rent and related facilities costs of $8.3 million from a new facility lease that commenced in the second quarter of 2024.
Previous wording
During both the three and six months ended June 30, 2024, we recorded goodwill impairment expense of $47.9 million related to our Cell Engineering reporting unit, further discussed within “Critical Accounting Estimates” below.
Current wording
During the nine months ended September 30, 2024, we recorded goodwill impairment expense of $47.9 million related to our Cell Engineering reporting unit, further discussed within “Critical Accounting Estimates” below.
Previous wording
During both the three and six months ended June 30, 2024, we incurred restructuring charges of $17.1 million in connection with our restructuring plan announced and commenced in the second quarter of 2024, primarily in the Cell Engineering segment. These charges primarily consisted of $12.2 million in employee termination costs from the reduction in force commenced in June 2024 and $4.8 million in impairment of right-of-use asset relating to facilities consolidation.
Current wording
During the three and nine months ended September 30, 2024, we incurred restructuring charges of $2.9 million and $20.0 million, respectively, in connection with our restructuring plan announced and commenced in the second quarter of 2024, primarily in the Cell Engineering segment. These charges primarily consisted of employee termination costs from the reduction in force commenced in June 2024 and the impairment of a right-of-use asset relating to facilities consolidation. See Note 3 of our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further details.
Previous wording
Interest income, net decreased $4.0 million and $6.9 million in the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023. The decrease was primarily due to lower average cash balances in interest bearing accounts.
Current wording
Interest income, net decreased $5.8 million and $12.6 million in the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. The decrease was primarily due to lower average cash balances in interest bearing accounts.
Previous wording
Loss on equity method investments was $0.1 million and $1.5 million for the three and six months ended June 30, 2023, respectively. No loss on equity method investments was recognized in 2024.
Current wording
Loss on equity method investments was zero and $1.5 million for the three and nine months ended September 30, 2023, respectively. No loss on equity method investments was recognized in 2024.
Previous wording
In the six months ended June 30, 2023, we recorded a $1.5 million loss on our equity method investment in BiomEdit, representing our share of the investee’s losses under the HLBV method and the fair value of the additional equity we received in BiomEdit of $1.1 million in the first half of 2023, which was reduced to zero during the period as a result of the application of the HLBV method.
Current wording
In the nine months ended September 30, 2023, we recorded a $1.5 million loss on our equity method investment in BiomEdit, representing our share of the investee’s losses under the HLBV method and the fair value of the additional equity we received in BiomEdit of $1.1 million in the first half of 2023, which was reduced to zero during the period as a result of the application of the HLBV method.
Previous wording
The change in fair value of warrant liabilities was $3.2 million gain and $4.5 million loss in the three months ended June 30, 2024 and 2023, respectively, and $4.2 million gain and $3.3 million loss in the six months ended June 30, 2024 and 2023, respectively. The change in fair value of warrant liabilities is primarily driven by changes in the value of our common stock. Increases or decreases in the value of our common stock results in a loss or gain, respectively, on the change in fair value of warrant liabilities.
Current wording
The change in fair value of warrant liabilities was a gain of $1.5 million and $1.9 million for the three months ended September 30, 2024 and 2023, respectively, and a gain of $5.7 million and a loss of $1.4 million for the nine months ended September 30, 2024 and 2023, respectively. The change in fair value of warrant liabilities is primarily driven by fluctuations 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.
Previous wording
Other income (expense), net decreased $4.0 million in the three months ended June 30, 2024 compared to the same period in 2023 primarily due to a $2.3 million decrease in sublease rent income primarily as a result of the deconsolidation of Zymergen and a $2.3 million increase in the net loss on the change in fair value of convertible notes.
Current wording
Other income, net decreased by $1.3 million and $6.2 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023, primarily due to a decrease in sublease rent income as a result of the deconsolidation of Zymergen.
Previous wording
The following table reconciles net loss to EBITDA and Adjusted EBITDA for the three and six months ended June 30, 2024 and 2023:
Current wording
The following table reconciles net loss to EBITDA and Adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023:
Previous wording
(1)Includes $1.1 million and $1.0 million in employer payroll taxes for the three months ended June 30, 2024 and 2023, respectively, and $2.7 and $3.2 million for the six months ended June 30, 2024 and 2023, respectively.
Current wording
(2)Includes $0.2 million and $1.1 million in employer payroll taxes for the three months ended September 30, 2024 and 2023, respectively, and $2.9 million and $4.3 million for the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
(3)Restructuring charges include $12.2 million in employee termination costs from the reduction in force commenced in June 2024 and $4.8 million in impairment of right-of-use asset relating to facilities consolidation.
Current wording
(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.
Previous wording
(4)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, (iv) costs associated with the Zymergen Bankruptcy, as well as securities litigation costs, net of insurance recovery. Not included in this adjustment are non-cash charges for acquired in-process research and development expenses, which totaled $3.0 million and $4.0 million in the three months ended June 30, 2024 and 2023, respectively, and $19.8 million and $4.0 million in the six months ended June 30, 2024 and 2023, respectively.
Current wording
(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, (iv) costs associated with the Zymergen Bankruptcy, as well as securities litigation costs, net of insurance recovery. Not included in this adjustment are non-cash charges for acquired in-process research and development expenses, which totaled $19.8 million and $4.0 million in the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
Upon the closing of our merger with SRNG in September 2021, we received net proceeds totaling approximately $1,509.6 million, inclusive of $760.0 million from investments from certain accredited investors for 76 million shares of our Class A common stock. As of June 30, 2024, we had cash and cash equivalents of $730.4 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 Quarterly Report on Form 10-Q.
Current wording
Upon the closing of our merger with SRNG in September 2021, we received net proceeds totaling approximately $1,509.6 million, inclusive of $760.0 million from investments from certain accredited investors for 1.9 million shares of our Class A common stock. As of September 30, 2024, we had cash and cash equivalents of $616.2 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 Quarterly Report on Form 10-Q.
Previous wording
•acquire and integrate companies, assets or intellectual property that advance our company objectives;
Current wording
•potentially acquire and integrate companies, assets or intellectual property that advance our company objectives;
Previous wording
Net cash used in operating activities for the six months ended June 30, 2024 consisted of net loss of $383.1 million, adjusted for net change in operating assets and liabilities of $6.2 million and non-cash charges of $203.3 million. The net change in operating assets and liabilities was primarily due to a $10.9 million increase in accounts payable, accrued expenses and other current liabilities primarily due to restructuring-related accruals, a $14.4 million decrease in operating lease right-of-use assets from lease incentives received, partially offset by a $17.0 million decrease in deferred revenue and a $3.9 million decrease in operating lease liabilities from rent payments. Non-cash adjustments primarily consisted of $30.2 million of depreciation and amortization, $77.9 million of stock-based compensation expense, $9.4 million loss on investments, $13.1 million non-cash lease expense, $19.8 million in acquired in-process research and development expense, and $47.9 million of goodwill impairment.
Current wording
Net cash used in operating activities for the nine months ended September 30, 2024 consisted of a net loss of $439.5 million, adjusted for a net decrease in cash due to changes in operating assets and liabilities of $91.8 million and non-cash charges of $254.2 million. The net change in operating assets and liabilities was primarily driven by a $31.1 million decrease in accounts payable, accrued expenses and other current liabilities primarily due to the payment or release of restructuring-related accruals and litigation costs, a $67.8 million decrease in deferred revenue primarily from a one-time release of a deferred revenue balance associated with a terminated customer contract, and a $11.4 million decrease in operating lease liabilities from rent payments, partially offset by a $19.2 million decrease in operating lease right-of-use assets from lease incentives received. Non-cash adjustments primarily consisted of $47.4 million in depreciation and amortization, $91.8 million in stock-based compensation expense, $16.3 million loss on investments, $20.6 million non-cash lease expense, $19.8 million in acquired in-process research and development expense, and $47.9 million in goodwill impairment.
Previous wording
Net cash used in operating activities for the six months ended June 30, 2023 consisted of net loss of $378.3 million, adjusted for net change in operating assets and liabilities of $10.4 million and non-cash charges of $224.6 million. The net change in operating assets and liabilities was primarily due to a $15.4 million decrease in accounts receivable, a $12.1 million decrease in prepaid expenses and other current assets, a $4.1 million decrease in operating lease right-of-use assets from lease incentives, partially offset by a $4.0 million decrease in accounts payable, accrued expenses and other current liabilities, a $21.4 million decrease in deferred revenue, and a $13.3 million decrease in operating lease liabilities from rent payments. Non-cash adjustments primarily consisted of $36.6 million of depreciation and amortization, $134.5 million of stock-based compensation expense, $10.0 million loss on investments including equity method investments, $8.5 million loss on the change in fair value of contingent consideration liabilities, $16.3 million non-cash lease expense, and $9.0 million impairment loss on assets held for sale.
Current wording
Net cash used in operating activities for the nine months ended September 30, 2023 consisted of a net loss of $681.2 million, adjusted for a net increase in cash due to changes in operating assets and liabilities of $12.2 million and non-cash charges of $455.7 million. The net change in operating assets and liabilities was primarily driven by a $21.2 million decrease in accounts receivable, a $13.6 million decrease in prepaid expenses and other current assets, and a $9.3 million decrease in operating lease right-of-use assets due to lease incentives received, partially offset by a $29.4 million decrease in deferred revenue and a $18.3 million decrease in operating lease liabilities from rent payments. Non-cash adjustments primarily consisted of $57.7 million in depreciation and amortization, $187.0 million in stock-based compensation, $46.3 million loss on investments including equity method investments, $10.2 million loss from the change in fair value of contingent consideration liabilities, $24.6 million in non-cash lease expense, and $121.4 million in impairments of long-lived assets.
Previous wording
Net cash used in investing activities for the six months ended June 30, 2024 primarily consisted of purchases of property and equipment of $33.7 million associated with Foundry capacity and capability investments and $5.4 million paid for the acquisition of Zymergen.
Current wording
Net cash used in investing activities for the nine months ended September 30, 2024 primarily consisted of $48.8 million in purchases of property and equipment related to Foundry capacity and capability investments, $5.4 million paid for the acquisition of certain Zymergen assets, and $4.0 million in proceeds from the sale of investment securities.
Previous wording
Net cash used in investing activities for the six months ended June 30, 2023 primarily consisted of purchases of property and equipment of $33.0 million associated with Foundry capacity and capability investments.
Current wording
Net cash used in investing activities for the nine months ended September 30, 2023 primarily consisted of $37.4 million in purchases of property and equipment related to Foundry capacity and capability investments and $3.0 million in proceeds from sale of equipment.
Previous wording
Net cash used in financing activities for the six months ended June 30, 2024 primarily consisted of principal payments on finance leases and payments of contingent consideration related to business acquisitions.
Current wording
Net cash used in financing activities for the nine months ended September 30, 2024 primarily consisted of principal payments on finance leases and payments of contingent consideration related to business acquisitions.
Showing the first 40 of 43 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Agreement with Allonnia under which we provide R&D services in return for cash consideration on a fixed fee or cost-plus basis.
Current report — wording carried from elsewhere
There has been no material impact on our revenue recognition policies to date from the announced changes in our new commercial terms and Cell Engineering offerings.