Commitments and Contingencies

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Purchase Obligations

On August 29, 2023, the Company entered into a five-year strategic cloud and artificial intelligence (“AI”) partnership with Google Cloud, intended to enable the Company to develop and deploy AI tools for biology and biosecurity. The partnership includes minimum annual commitments to purchase cloud hosting services in exchange for various discounts on such services. The minimum annual commitments are as follows: year 1, $8.0 million; year 2, $28.0 million; year 3, $54.0 million; year 4, $86.0 million; and year 5, $113.0 million. The minimum commitments may be terminated by the Company upon payment of a cancellation fee representing a percentage of the remaining purchase commitment. The Company also entered into an agreement pursuant to which Google Cloud will provide up to $56.3 million in cash funding upon the Company’s achievement of certain milestones, which are expected over the next three years. The net service costs under the arrangement are recorded as research and development expenses in the accompanying condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2023. As of September 30, 2023, the remaining aggregate commitment was $289.0 million.

Contingent Consideration Related to Asset Acquisitions

On April 5, 2023, the Company entered into an Asset Purchase Agreement (“APA”) with StrideBio to acquire StrideBio's adeno-associated virus capsid discovery and engineering platform assets, with a secondary close contingent upon the transfer of certain additional in-license agreements to Ginkgo. The Company accounted for the transaction as an asset acquisition as substantially all of the fair value of the assets acquired is concentrated in a single identifiable asset. The fair value of the consideration transferred totaled $4.0 million and consisted of 2.8 million shares of Ginkgo's Class A common stock valued at $3.6 million and a $0.4 million contingent holdback, all of which was expensed as in-process research and development during the nine months ended September 30, 2023. In October 2023, the Company completed the secondary closing for an additional purchase price of $3.8 million, which was paid by issuing 2.0 million shares of Class A common stock and remains subject to a $0.4 million contingent holdback. The APA, as amended, also provides for royalty payments of up to $21.3 million payable in cash or shares of Class A common stock at the Company's election until the earlier of the tenth anniversary date of the initial closing and the date on which the aggregate amount of the royalty payments equals the amount cap. The royalties are calculated based on 10% of the net licensing revenue and 40% of all consideration received for a license or sale of a product incorporating the acquired platform assets. No amounts for the royalty payments have been recorded during the three or nine months ended September 30, 2023.

The Company routinely acquires rights to intellectual property that may provide for payment of future contingent consideration, including royalties, should revenue be generated from the use of such.

Legal Proceedings

From time to time, the Company may in the ordinary course of business be named as a defendant in lawsuits, indemnity claims and other legal proceedings. Except as described below, the Company does not believe any pending litigation to be material, or that the outcome of any such pending litigation, in management’s judgment based on information currently available, would have a material adverse effect on the Company’s results of operations, cash flows or financial condition.

On August 4, 2021, a putative securities class action was filed on behalf of purchasers of the common stock of Zymergen, pursuant to or traceable to the registration statement for Zymergen’s initial public offering (“IPO”). The action is pending in the United States District Court for the Northern District of California, and is captioned Wang v. Zymergen Inc., et al., Case No. 3:21-cv-06028-VC. The action alleges violations of Sections 11 and 15 of the Securities Act of 1933, as amended (the “Securities Act”) in connection with Zymergen’s IPO, names Zymergen, certain of its former officers and directors, and its IPO underwriters as defendants and seeks damages in an unspecified amount, attorneys’ fees, and other remedies. On October 5, 2023, a Suggestion of Bankruptcy of Defendant Zymergen Inc. was filed in this action.

On November 9, 2021, one of Zymergen’s then purported shareholders filed a putative derivative lawsuit in the United States District Court for the Northern District of California that is captioned Mellor v. Hoffman, et al., Case No. 3:21-cv-08723-VC. The complaint names certain of Zymergen’s former officers and directors as defendants and Zymergen as nominal defendant based on allegations substantially similar to those in the securities class action. The complaint purports to assert claims on Zymergen’s behalf for breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, corporate waste, and contribution under the federal securities laws and seeks corporate reforms, unspecified damages and restitution, and fees and costs. On October 5, 2023, a Suggestion of Bankruptcy of Defendant Zymergen Inc. was filed in this action.

On or about February 7, 2023, a complaint was filed by Fortis Advisors LLC, solely in its capacity as Stockholders’ Representative for the holders of convertible promissory notes of Lodo Therapeutics Corporation (“Lodo”), against the Company's subsidiary, Zymergen, in Delaware Superior Court. The complaint purports to allege violations of California securities laws based on Zymergen’s exchange of its common stock for convertible promissory notes issued by Lodo in connection with Zymergen’s May 2021 acquisition of Lodo. The complaint seeks damages in an unspecified amount, attorneys’ fees, and other remedies. On October 5, 2023, a Suggestion of Bankruptcy of Defendant Zymergen Inc. was filed in this action.

In addition, certain government agencies, including the SEC, have requested information related to Zymergen’s August 3, 2021 disclosure. Zymergen is cooperating fully.