Ginkgo plans a $17.5 billion merger with SPAC that took DraftKings public

Jason Kelly, cofounder and chief executive of Ginkgo Bioworks.Scott Eisen/Bloomberg

Ginkgo Bioworks, one of the hottest biotech startups in Massachusetts, said Tuesday that it plans to go public through a $17.5 billion merger with a so-called blank check company backed by Harry Sloan and Jeff Sagansky, the veteran media industry executives who helped take the Boston sports-betting company DraftKings public last year.

The deal values Ginkgo at $15 billion, making the merger one of the biggest of its kind. Ginkgo programs cells to produce new proteins, scents, antibiotics, cannabinoids, and other products for a growing array of industries. Launched in 2008 by five scientists from the Massachusetts Institute of Technology, it now employs about 500 people, most of them in Boston’s Seaport.

The merger with Soaring Eagle Acquisition, a special purpose acquisition company, or SPAC, is expected to fetch $2.5 billion for the combined entity, according to Ginkgo. A SPAC is a shell corporation listed on a stock exchange for the purpose of acquiring a private company, thus taking it public without all the paperwork of a traditional initial public offering.

Jason Kelly, Ginkgo’s cofounder and chief executive, said his firm was attractive because the world has seen the extraordinary potential of engineered biology, from the groundbreaking messenger RNA coronavirus vaccines made by Pfizer-BioNTech and Moderna to tasty animal-free proteins used in the latest generation of meatless burgers.

“From mRNA vaccines reaching people’s arms to combating climate change, the opportunity to work with programmed cells has never been more apparent,” he said. “Ginkgo’s platform makes it easier to program this code, and we are making this platform available to organizations working to solve our most pressing problems.”

Ginkgo has cut several multimillion-dollar deals in recent years, including one with Toronto-based Cronos Group for $122 million to produce cultured cannabinoids, another with the Swiss drug giant Roche that’s worth up to $160 million to discover novel antibiotics, and another with Cambridge-based Synlogic, in which Ginkgo invested $80 million to speed the development of living medicines. During the pandemic, Ginkgo created Concentric by Ginkgo, a COVID-19 testing program to help schools and businesses reopen.

Under the merger announced Tuesday, a number of investors have pledged $775 million, including Baillie Gifford, Putnam Investments, and accounts managed by Counterpoint Global.

Soaring Eagle, the blank check company that will merge with Ginkgo, was founded last year by former Hollywood executives Sloan, Sagansky, and Eli Baker of Eagle Equity Partners. They helped take DraftKings public last year in another SPAC merger. SPACs have long existed on the fringes of the financial world but have surged in popularity in the last year or two.

Although science and gambling would appear to have few things in common, Sloan said in a conference call Tuesday that he is attracted to companies like DraftKings and Ginkgo because they are in a “category of one.”

“These are companies that are not only leaders in their field but actually created the field themselves,” he said. “That is certainly the case with Ginkgo and synthetic biology.”

He said he learned about Ginkgo from a Soaring Eagle board member who works with Arie Belldegrun, a cell- and gene-therapy veteran and founder of Kite Pharma and Allogene Therapeutics, who saw Ginkgo’s potential to merge with a blank check company.

“It was Arie’s very deep knowledge in life science and his excitement about Ginkgo which caused us to decide to partner,” Sloan said.

Belldegrun and Soaring Eagle are cosponsoring the $1.73 billion SPAC investment and participating in a private investment round with other investors.

Kelly said during the conference call that he spoke with several SPACs about a possible merger, but viewed Belldegrun’s involvement with Ginkgo as a big plus, given the latter’s background in drug making. Both Sloan and Belldegrun will join Ginkgo’s board of directors.

“If you want to do the large, commercial partnerships that we do with pharma companies, you need breakthrough technology, and you also need credibility with that community,” said Kelly, who will lead the combined company.

Ginkgo makes money two ways, according to Kelly. It charges companies for research and development that it does in its foundry, and it licenses those findings, or the code it has written, back to the customer in exchange for royalties on the sale of a product or an equity stake in the firm.

Last year, Ginkgo generated $64 million in revenue from research and development, Kelly said, and it expects that number to top $1 billion in 2025. Ginkgo has worked on 54 programs since 2017. In 2025, Kelly said, Ginkgo expects to start more than 500 new programs.

Ginkgo was one of the first life-sciences companies to put down roots in the Seaport. It occupies about 200,000 square feet of research and cell-design facilities, some of it in the Innovation and Design Building. In April, it announced that it had agreed to lease an additional 150,000 square feet across the street in an eight-story lab building proposed by Marcus Partners, along Fid Kennedy Avenue in the Raymond L. Flynn Marine Industrial Park. Work on the building, which needs city approval, would start next year and be completed in 2024.

Ginkgo also occupies more than 63,000 square feet in two buildings in Cambridge, where it expects to have about 70 employees by the end of May, according to a spokesman.