Ginkgo Bioworks Holdings (DNA) risk factors, FY2024 10-K

Risks Related to Ginkgo’s Business

1. 01We have a history of net losses. We expect to continue to incur losses for the foreseeable future, and we may never achieve or maintain profitability
2. 02We have incurred significant operating losses since our inception. Our net loss attributable to our stockholders was approximately $547.0 million, $892.9 million, and $2.1 billion for the fiscal years ended December 31, 2024, 2023 and 2022, respectively
3. 03We may need substantial additional capital in the future in order to fund our business
4. 04We have experienced periods of significant organizational change and if we fail to effectively manage these changes, then our business, results of operations, and financial condition could be adversely affected
5. 05Our limited operating history and evolving business makes it difficult to evaluate our current business and future prospects
6. 06Uncertainty regarding the demand for biosecurity services could materially adversely affect our business
7. 07We are or could become involved in securities or shareholder litigation and other related matters, which could be expensive and time-consuming. Such litigation and related matters could harm our business
8. 08If we cannot maintain and expand current customer partnerships and enter into new customer partnerships, our cell engineering business could be adversely affected
9. 09We have exposure to the volatility and liquidity risks inherent in holding equity interests in other operating companies and other non-cash consideration
10. 10We leverage our own resources and partner with strategic and financial investors in order to help early stage companies and innovators secure funding and benefit from our platform, which exposes us to a number of risks
11. 11We may be unable to complete future strategic acquisitions or successfully integrate strategic acquisitions which could adversely affect our business and financial condition
12. 12We have in the past, and in the future may continue to pursue strategic acquisitions and investments that are dilutive to our stockholders, and such strategic acquisitions or investments could have an adverse impact on our business if they are unsuccessful
13. 13Our programs may not achieve milestones, earn royalties or complete other anticipated key events on the expected timelines or at all, which could have an adverse impact on our business and could cause the price of our common stock to decline
14. 14We use biological, hazardous, flammable and/or regulated materials that require considerable training, expertise and expense for handling, storage and disposal and may result in claims against us
15. 15The release of GMOs or Genetically Modified Materials, whether inadvertent or purposeful, into uncontrolled environments could have unintended consequences, which may result in increased regulatory scrutiny and otherwise harm our business and financial condition
16. 16Third parties may use our engineered cells, materials, and organisms and accompanying production processes in ways that could damage our reputation
17. 17International expansion of our business exposes us to business, regulatory, political, operational, financial, and economic risks associated with doing business outside of the United States
18. 18Our investments in and use of AI may result in reputational harm, liabilities, or other adverse consequences to our business operations
19. 19Our recent restructuring actions in connection with our plans to reduce operational expenditures may not result in anticipated savings, could result in total costs and expenses that are greater than expected and could disrupt our business

Risks Related to Our Customers

1. 20We are dependent on our customers’ willingness and ability to develop, produce and manufacture products using the engineered cells, other biological assets and/or biomanufacturing processes that we develop and on the success of our customers’ development, production, and manufacturing efforts
2. 21Our revenue is concentrated in a limited number of customers, some of which are related parties, and our revenue, results of operations, cash flows and reputation may suffer upon the loss of a significant customer

Risks Related to our Historic COVID-19 Testing Services

1. 22We may be subject to tort liability if the COVID-19 tests we utilized in our testing programs provided inaccurate results

Risks Related to the Synthetic Biology Industry

1. 23Rapidly changing technology and emerging competition in the synthetic biology industry could make the platform, programs, and products we and our customers are developing obsolete or non-competitive unless we continue to develop our platform and pursue new market opportunities
2. 24The market, including customers and potential investors, may be skeptical of our ability to deliver on programs because they are based on a relatively novel and complex technology
3. 25Ethical, legal and social concerns about GMOs and Genetically Modified Materials and their resulting products could limit or prevent the use of products or processes using our technologies, limit public acceptance of such products or processes and limit our revenues

Risks Related to Intellectual Property

1. 26If we are unable to obtain, maintain and defend patents protecting our intellectual property, our competitive position could be harmed
2. 27If we are unable to protect the confidentiality of our trade secrets, our business and competitive position may be harmed
3. 28We may be subject to claims challenging the inventorship or ownership of our patents, biomaterials and other intellectual property
4. 29We may become involved in lawsuits or other enforcement proceedings to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and potentially unsuccessful
5. 30Under certain circumstances, we may share or lose rights to intellectual property developed under U.S. federally funded research grants and contracts
6. 31The use of digital genetic sequence information may be subject to the Nagoya Protocol or other treaties or local legislation concerning biodiversity, which could increase our costs and adversely affect our business
7. 32Third party patents may limit our freedom to operate in certain areas, which may adversely affect our business
8. 33If we are sued for infringing, misappropriating, or otherwise violating intellectual property rights of third parties, such litigation could be costly and time consuming and could prevent or delay us from using our platform and technologies
9. 34If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected
10. 35Any claims or lawsuits relating to infringement of, misappropriating, or otherwise violating intellectual property rights brought by or against us will be costly and time consuming and may adversely affect our business, financial condition and results of operations
11. 36Intellectual property rights do not necessarily address all potential threats to our business
12. 37Intellectual property disputes of third parties and customers could have a material adverse effect on our business, financial condition, and results
13. 38Our use of “open-source” software could negatively affect our ability to market or provide our services and could subject us to possible litigation
14. 39cannot guarantee that we will be successful, that all open-source software is reviewed prior to use in our platform, that our developers have not incorporated open- source software into our products that we are unaware of or that they will not do so in the future

Risks Related to Personnel, IT and Physical Infrastructure

1. 40do not maintain the necessary personnel to accomplish our business objectives, we may experience staffing constraints that adversely affect our ability to support our programs and operations
2. 41Furthermore, we are dependent upon internet service providers, telecommunications carriers and other website operators, some of which have experienced significant system failures and electrical outages in the past

Risks Related to Financial Reporting

1. 42We use estimates in determining the fair value of certain assets and liabilities. If our estimates prove to be incorrect, we may be required to write down the value of these assets or write up the value of these liabilities, which could adversely affect our financial position
2. 43Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited
3. 44to offset future taxable income. For these reasons, we may not be able to utilize a material portion of our net operating loss carryforwards and other tax attributes even if we attain profitability
4. 45Adverse developments affecting the financial services industry could adversely affect our business operations, financial condition and results of operations

Risks Related to Governmental Regulation and Litigation

1. 46Failure to comply with federal, state, local and international laws and regulations could adversely affect our business and our financial condition
2. 47We may incur significant costs complying with environmental, health and safety laws and regulations, and failure to comply with these laws and regulations could expose us to significant liabilities
3. 48If we fail to comply with healthcare and other governmental regulations, we could face substantial penalties and our business, financial condition and results of operations could be adversely affected
4. 49We and our laboratory partners are subject to a variety of laboratory testing standards, compliance with which is an expensive and time-consuming process, and any failure to comply could result in substantial penalties and disruptions to our business
5. 50The testing industry is subject to complex and costly regulation and if government regulations are interpreted or enforced in a manner adverse to us, we may be subject to enforcement actions, penalties, exclusion, and other material limitations on our operations
6. 51Our employees, agents, contractors, research partners, consultants or vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements
7. 52Distribution and use of screening and/or diagnostic tests marketed under an EUA from the FDA are subject to certain limitations, and the continued availability of such authorizations is subject to government discretion
8. 53We are engaged in certain research activities involving controlled substances which may be subject to significant regulation by the DEA, FDA, and other regulatory agencies
9. 54Changes in government regulations may materially and adversely affect our sales and results of operations
10. 55Significant disruptions to our and our service providers’ information technology systems or data security incidents could result in significant financial, legal, regulatory, business and reputational harm to us
11. 56Governmental trade controls, including export and import controls, sanctions, customs requirements and related regimes, could subject us to liability or loss of contracting privileges or limit our ability to compete in certain markets
12. 57Changes in U.S. and foreign tax laws could have a material adverse effect on our business, cash flow, results of operations or financial condition
13. 58We may become subject to lawsuits or indemnity claims in the ordinary course of business, which could materially and adversely affect our business and results of operations

Risks Related to our Common Stock, Organizational Structure and Governance

1. 59adoption of certain amendments to our organizational documents and the approval of any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval
2. 60Our share price may change significantly over time, and you may not be able to resell our common stock at or above the price you paid or at all, and you could lose all or part of your investment as a result
3. 61These factors among others may materially adversely affect the market price of our Class A common stock, regardless of our actual operating performance. In addition, price volatility may be greater if the public float and trading volume of our common stock are low
4. 62Future sales, or the perception of future sales, by us or our stockholders in the public market could cause the market price for our securities to decline
5. 63Short sellers may engage in manipulative activity intended to drive down the market price of our Class A common stock, which could also result in related regulatory and governmental scrutiny, among other effects
6. 64We cannot predict the effect the multi-class structure of our common stock may have on the trading price of our Class A common stock