Joyn Bio plans to develop other disruptive agriculture tech, still unspecified, over time, but nitrogen fixation is its first target for a reason. Hundreds of millions of tons of fertilizer flow into the global agricultural market each year, generating sales of nitrogen fertilizer worth billions of dollars to the biggest companies, such as Nutrien and CF Industries.
The global fertilizer companies are acting as if their dominance will continue. Stephens analyst Mark Connelly said the major fertilizer companies continue to focus major capital expenditures, in the billions, on building traditional fertilizer plants, an indication they don't see a need to invest in heavily in potential disruptive technologies. The total global fertilizer market is expected to reach as high as $250 billion in the coming years, though potash-based fertilizers are also a significant component of supply in addition to nitrogen-based soil nutrients.
It's not entirely new to attempt to disrupt the nitrogen supply chain in agriculture. Monsanto, for example, created a venture with Evogene in 2007 to create a nitrogen gene technology that would increase crop yields. It never came to market.
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"In general, agricultural applications appear to be serving as testing grounds for many genetic engineering companies for whom the human market is years away," said John Prendergass, an associate director at Ben Franklin Technology Partners in Philadelphia. "Given lower regulatory barriers and potential for early revenue generation, partnerships like this make a lot of sense."
Connelly said these microbial start-ups that are working on ag replacement products, such as microbes rather than fertilizer to fix nitrogen, are a huge area of interest and activity. "There are thousands of companies trying to create agricultural breakthroughs, and one or more of these ideas could be huge one day, but it is also currently a huge space. It's the Wild West right now, but there will be some real prizes in there," he said.
Bayer's $100 million investment in Ginkgo is "a lot of money," Connelly said. "It is basically giving them the mezzanine financing now so they won't be forced to buy this start-up from a PE company in five years."
Synthetic biology is also being extended to consumer goods, like foods, fragrances and clothing. As a result, companies like Ginkgo are becoming increasingly attractive bets for investors. From 2012 to 2016, investment in synthetic biology start-ups increased from $374 million to $1.2 billion, according to data from CB Insights.
"Investors love platforms, and DNA is the ultimate platform," Prendergass said.
What remains challenging is generating profits, and that's a direct result of how tricky the concept of synthetic biology is. Composing sequences of genetic parts that effectively produce a new drug or can enable the microbes of the corn plant to produce its own fertilizer are complex problems.
"Inside of a living cell there are thousands of proteins that enable it to make more of itself and make your malaria drug, for instance. We don't understand those. We don't understand how they work together," Arnold said.
That's a challenge that Ginkgo Bioworks is tackling head-on in 2018. In addition to the money the start-up raised last year, it also acquired Gen9, a Boston company that prints DNA. Buying the company enabled Ginkgo to begin printing sequences of DNA very cheaply, Kelly said. Ginkgo has been building up what Kelly called a "code library of usable genetic code."
Again, think of it like software: When a programmer begins writing an app for the iPhone, they don't start that project from scratch. There are programming languages already available. The same is true for the synthetic biology projects of tomorrow, Kelly said.
"As the cost comes down, this technology can apply to other areas," Kelly said. "The whole idea behind Ginkgo is that it's the same kind of work regardless of what you're engineering."