Ginkgo Job Cuts Expected to Affect at Least 35% of Workforce, Eliminating Over 400 Jobs

Ginkgo Bioworks Holdings Inc., a Boston-based cell programming and biosecurity company, has revealed the scope of its recent layoffs, which began toward the end of June. According to a securities filing after market close, Ginkgo has shared that it planned to cut at least 35% of its workforce across R&D and other divisions, potentially affecting up to 426 of its 1,218 employees as of December 31, 2023.

Ginkgo Bioworks Slashes Workforce Amid Major Restructuring and Revenue Plunge

The impact of layoffs at Ginkgo Bioworks is becoming clear. After announcing plans to cut “labor expenses” by at least 25% in early May, the synthetic biology company has now disclosed that this will result in losing over a third of its employees. According to the filing, the Boston-based synthetic biology firm initiated its restructuring plan on June 17, with the goal of reducing its workforce by at least 35%. This involves laying off 158 employees in Cambridge, Massachusetts, by the end of the year, and 47 employees in Emeryville, California, by August, as confirmed by Worker Adjustment and Retraining Notifications (WARN) submitted to the respective states.

In the filing, the firm stated, “The aggregate expected costs and overall timing for completion of the restructuring plan are not fully known.” However, it anticipates that the initial headcount reductions will incur severance and related separation costs of at least $12 million. 

These layoffs are part of a larger restructuring strategy aimed at reducing operating expenses by $200 million within the next year. This strategy includes consolidating its locations into fewer core facilities and simplifying its customer programs. The company shared these details during its first-quarter earnings release. At the time, co-founder and CEO Jason Kelly commented, “This trend needs to change, and we are simplifying both what we sell to customers and how we perform the revenue-driving work at Ginkgo.” 

Revenue Plunges by 53% to US$38 Million Amid Operational Challenges

Following the announcement, Ginkgo Bioworks’ shares plummeted by 26% over three trading days. This decline compounds recent challenges highlighted in their Q1 2024 fiscal report, revealing a steep 53% drop in total revenue from $81 million in Q1 2023 to $38 million. Key factors included reduced income from K-12 testing and decreased sales of COVID-19 test supplies to schools in the Biosecurity segment. The Cell Engineering segment also experienced an 18% revenue decrease to $28 million, primarily due to lower earnings from early-stage clients, partially offset by gains from larger enterprises. Despite these setbacks, Ginkgo Bioworks reported a reduced quarterly loss of $178 million compared to $216 million in Q1 2023, driven by cuts in stock-based compensation expenses and overall operating costs.

However, Ginkgo’s adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) held steady year-over-year at $100 million. This suggests that despite efforts to reduce operational costs, the company continued to experience substantial financial challenges, as indicated by its earnings before accounting for non-operational expenses, which ultimately reveals the current financial position of the company. Concurrently the New York Stock Exchange warned the company that it risked being delisted because its share price had averaged below $1.

Ginkgo Bioworks’ 2024 Spending Sprees Promised Success: Current Position Demands Strategic Initiatives for Efficiency and Financial Stability

Earlier this year, Ginkgo Bioworks splurged in the acquisition of three molecular medicine startups to boost its technology network, which integrates offerings from over 25 developer partners. In February, Ginkgo acquired Proof Diagnostics, known for its “future-proof” COVID-19 tabletop analyzer developed by Feng Zhang of the Broad Institute, along with Patch Biosciences from New York, specializing in computer-designed cargos for genetic medicines, and Reverie Labs, an AI drug discovery company based in Cambridge. In April, Ginkgo expanded its portfolio by acquiring several assets related to cell therapy platforms, including CAR libraries, from Modulus Therapeutics.

Following the announcement of the layoffs, Kelly articulated strategic initiatives aimed at enhancing operational efficiency and financial performance. He emphasized simplifying customer offerings and operational processes to improve efficiency. The company plans to consolidate operations into Biofab1, a new, advanced lab data center set to open by mid-2025, which aims to optimize workflow and resource utilization.

Kelly also highlighted efforts to streamline transaction terms to better align with commercial goals, aiming to maximize the value of intellectual property while maintaining commercial agility. “We are also simplifying our transaction terms in many instances as the benefits of our IP and downstream value terms were not worth the cost of slowing our commercial activity,” he added. “With these changes, we are targeting reaching adjusted EBITDA breakeven by the end of 2026, while seeking to reduce interim burn substantially to maintain a strong margin of safety throughout this transformation, supported by our $840 million cash balance and no bank debt.” ukg layoff, cisco layoff, layoff website, fierce biotech layoff tracker, novant layoff, layoff news, google layoff, wells fargo layoff

Author

Bernice Lottering