Jason Kelly : Yes. So we’re working through those numbers now to get to the exact numbers because we don’t have exact numbers that we are paying to say 25% out of labor inclusive of the head count reduction, but that’s the process we’re going through in the coming weeks. I will say that type of biopharma work is our highest priority stuff, right? So those are important long-term customers for us. We know there’s a ton more business there. And so that’s an area where you’ll see us make sure that we can continue to serve those customers well.
Steve Mah : Okay. Got it. All right. And then maybe one for Mark. Can you give us your confidence level in your ability to sublease the foundry, real estate and consolidated above Biofab1. Just how confident are you able to do that? You put out a pretty big number of kind of reducing a particular percent of the cost of that facility.
Mark Dmytruk : Yes. So first of all, I’ll just make the comment that we’re committed to delivering the cost savings number even if we can’t get the lease savings that we’re expecting. So it is a fairly I would say, it’s a nontrivial task for us to do the sort of transformation of the foundry work, so we need to kind of make that happen. The opportunities for subleasing or similar to sort of mitigate the cost a bit at least. I mean there’s lots of those that will depend on market conditions once we’re ready to sort of make that move. So we’re not — I would say we’re not like just banking on that to make the number. That’s the way I would put it.
Steve Mah: Okay. That’s helpful. And if I could sneak one last quick one in, Mark. On the downstream value, I appreciate you guys pulling it because of lumpiness and lack of visibility. But are you going to add that back to guidance when you have good visibility and as you kind of approach maybe a milestone? Thank you.
Mark Dmytruk: Yes. So first of all, we do have a significant portfolio of potential downstream value share or royalty rights, milestone rights. We have not forgotten about that. And so that is the — I mean the short answer is, yes, Steve, once that becomes something that is more predictable and steady source. I think we would start talking about it like that and maybe adding it back into revenue guidance. We’re just not there sort of in this time horizon that we’re talking about. And so we’re — we’re, again, very focused on getting Ginkgo to that adjusted EBITDA breakeven level without relying on what might or might not happen in terms of downstream value share over the next 2 years.
Steve Mah: Okay. Thank you.
Megan LeDuc: Thanks, Steve. Next up, we have Edmond Chu [ph] at Morgan Stanley. Edmond, your line is now open.
Unidentified Analyst: Hi guys, can you hear me?
Mark Dmytruk: Yes.
Unidentified Analyst: Just a quick question from me on the implementation of your new ramp automation. How long do you think it will take to implement this new strategy? And will there be a wrap up time associated with reaching optimal efficiency here? And how much improvement to revenue conversion do you think you can drive this?
Mark Dmytruk: Yes. So maybe I’ll speak to some of the time lines. So one of the things that’s great is we’re already starting to do this, right? So in our current facility in Boston, we have a set up a branch in a counter to 15 or 20 of the parts. And so we’re able to start basically moving workflows onto the racks. Obviously, the team that is designing and programming and doing final manufacturers or access is based on Emeryville, California, but then they get shipped over here and we’re able to basically start to do the lab transfer and all that work, well in advance of that one being open mid-25.So all that work is — there’s something to slow that down other than how much attention we’re putting to it. What its priority is relative to other priorities in the company.
So I’m actually pretty excited that, that some of that can move quite a lot quicker. There is still then getting — doing like a wholesale move over into Biofab1. That’s part of our plan here for cost reduction just in terms of simplification of our facilities and so on. And that is more on Biofab1 time line, which is mid-25. Mark, I don’t know if you want to speak to some of the other stuff
Mark Dmytruk: So Evan, the question was what impact on revenue might we see from sort of reactor in foundry. Was that the question?
Unidentified Analyst: How much faster we can pull through. Yes
Mark Dmytruk: Yes. So I think the idea is significantly better. So if you really look at sort of how an end-to-end sale program today is both contracted for with a customer and then how we execute on it. Ginkgo it takes a lot of risk on both the technical success and the timing of that work performing. And it does take a long time to kind of plan it and onboard it. And I mean, these are just often very complex long cycle projects where Ginkgo is taking a lot of that timing and technical risk. We’re rewarded sort of along the way with these micro milestone-type payments, and it flows into revenue on a very laggy sort of basis. That’s just the way the revenue recognition rules work. So you take out a lot of that, like these would be shorter-cycle projects to begin with.
There’s going to be less need to take on technical or timing risk. The revenue recognition, I think, will be more evenly spread over — and more matched with the actual work that we’re doing over a much kind of tighter time frame. These are of months instead of years. And so — so like I can’t tell you that 50% faster than sort of equivalent size projects, we’ll have to see, but it will be materially faster, I think, from a revenue perspective than sort of the equivalent end-to-end cell engineering solutions type project.
Unidentified Analyst: Got it. Given my topics, and I’m going to keep it to one and I’ll ask the rest of the follow-up. Thank you for the time.
Jason Kelly: Thank, Edmond
Megan LeDuc: Thanks, Edmond. I’m not seeing any other questions in the queue. So Jason, do you have any closing thoughts for us?
Jason Kelly: No. As I mentioned, tough for us internally with the headcount reduction. I appreciate the support of the team. I think it is going to come out of this in a much stronger spot to make — easier to engineer. I think we have a chance to do that horizontal basis across the entire biotech industry. So excited to go forward and do that. Thanks, everyone, for your questions.
Megan LeDuc: Thanks all. We’ll talk to you all next quarter. Good day everyone.
