7 months after announcing a pivot to drug discovery, Zymergen is acquired by Ginkgo

Zymergen aimed to leave its well-publicized woes behind through a new-year transformation into a biotech. Now, the company has been picked up by Ginkgo Bioworks, which will look for “strategic alternatives” for the new drug discovery business once the sale is complete.

The acquisition marks the latest twist in the tale of Zymergen. The SoftBank-backed synthetic biology company raised over $1 billion in VC funding before its $500 million IPO in April 2021. But by August, CEO Josh Hoffman had left the building, and shares plunged 75%, leaving the business with tricky questions to answer about when it would bring in any commercial revenue.

In early January, the company announced a new drug discovery business, leveraging its proprietary synthetic biology platform and what it claimed to be the world’s largest metagenomics database. Zymergen’s initial pipeline would be focused on precision medicines for high-value oncology targets, it said at the time.

Cell engineering company Ginkgo clearly spotted an opportunity, snapping up Zymergen for a market capitalization of $300 million—a reminder of how far the company has fallen since the heady days of spring 2021. The terms of the deal have already been agreed upon by the boards of both companies, with Zymergen stockholders receiving 0.9179 of a Ginkgo share for each Zymergen share.

Ginkgo plans to integrate Zymergen's core automation and software into its foundry for designing living cells, including Zymergen's machine learning and data science tools for exploring known and unknown genetic design space.

As Ginkgo doesn’t produce its own products, the company will support Zymergen's plans to evaluate strategic alternatives for its advanced materials and drug discovery businesses, which have "established valuable product pipelines and rapid prototyping capabilities."

The deal is unlikely to mean a reprieve for Zymergen staff worried about redundancy, with Ginkgo confirming that the biotech will continue its standalone cost restructuring initiatives, including a reduction in head count and program rationalization.

Meanwhile, the addition of Zymergen's core technical team is expected to plug some of the hiring gaps across Ginkgo’s cell engineering, automation, digital technology and data teams.

Ginkgo went public just a month after Zymergen as part of a $2.5 billion SPAC merger in May 2021. Formed in 2008 to develop a platform that makes it easier to engineer cells, Ginkgo’s early years were focused on a wide range of areas such as perfumes and pesticides. However, as the company raised more money privately, it began to further explore the use of its platform in the drug sector and now lists Moderna and Roche among collaborators.