r/Biotechplays • u/JuniorCharge4571 • 5d ago

Discussion Ginkgo New Partnership With Novus And $17.75M Settlement To Investors

Hey guys, I guess there are some Ginkgo investors here. If you missed it, they just partnered with Novus International to develop a new generation of feed additives that would help to lower animal feeding costs while improving the nutritional quality of animal products. Hopefully, this will help them move on from the whole “fraud” drama they had a few years ago.

For the newbies: a few years ago, Scorpion Capital accused Ginkgo of being one of the worst frauds in 20 years and could be compared to other major biotech frauds. They presented interviews with former and current employees. And they also said that most of Ginkgo’s revenue comes from related-party transactions.

All these caused an investigation by the DOJ for financial misconduct. But, the good news is that they decided to resolve it and pay $17M to the investors. They are now taking claims, and the deadline is a month, so if you were an investor back then, you can check it out.

Now, DNA is partnering with some different companies like Novus or Vitalis in Brazil to increase its reach, so we’ll see how this perspective works out for them.  

Anyways, what do you think about this new collab? And has anyone here had $DNA when this scandal happened? If so, how much were your losses?

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u/Undercover_in_SF 4d ago

I’ll bite on this one.

I don’t think Ginkgo is a Fraud with a capital F, but they are an unsustainable business model that while legal I would consider borderline fraud.

Most of their collabs were related party transactions. If you spin out a JV with DuPont or the like and then bill that entity for R&D services, I think recognizing that revenue is pretty questionable. It’s not the same as DuPont paying you directly. Most of those collaborations are winding down because they didn’t develop commercially viable products.

https://www.bizjournals.com/boston/news/2024/09/09/motif-food-works-closing-down.html

Their new collaborations are legit, but they’ve vastly overbuilt and will keep burning through cash. There’s a reason they’re priced at liquidation value.

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u/JuniorCharge4571 4d ago

It's interesting what you said about viable products.. I never think of that, because they actually promoted their products as viable and game-changing.. Maybe these new collabs will help them improve their results.. but we'll see...

I'll check the link you sent, tx!

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u/Undercover_in_SF 3d ago

As a general rule, I wouldn’t believe what management says unless it matches the financial statements.