Derik De Bruin: Got it. And then one final one, if I can. Significant expectations for more downstream value in 2024?
Jason Kelly: Sorry, I missed the beginning of the question. Would you mind….
Derik De Bruin: Yes. You had about $4 million that you’re including in terms of like downstream value this year. Does that number go up next year? There are more milestones. And sort of going back to Tejas’ question on trying to get a revenue number, which I know you’re not going to answer, but I got to try.
Jason Kelly: Yes. So we’re not guiding on downstream value share even in year you see us. We did say where we’re at right now, but we’re not even guiding for the rest of this year. And that’s in part because it’s really not a thing that’s under our control in a very direct way. It basically depends on those commercializing programs when they hit certain points for customers that can trigger downstream value share for us or, in the longer term, things like royalties. So I think we’re going to stick with that model. I know it’s not ideal, but we’re sharing more things like the program pipeline we shared today. And I think over time, as we get bigger numbers on stuff, hopefully, we can give you a little more to work with there, Derik.
But yes, I understand that, that’s something people want to see. Maybe the only thing I would add is a couple of things. On the — in part of the related party, if you look back in time, a lot of that was like, again, new companies getting started on the platform, things like that. And so I would highlight as venture capital has gotten tighter in other words, higher interest rates, that whole line of customers, like new company starts, we had entrepreneurs and residents at Ginkgo that were launching companies. That just isn’t there right now in the market we’re in today, which is why I’m — even though I know we’re up on our program counts, the ability for Ginkgo to have pivoted into selling from EIRs that are launching a company on the platform being a lot of our demand 3 years ago to Pfizer and Merck and Novo Nordisk and Boehringer as our customers — like that’s a pretty different sale.
And I think it also reflects the flexibility of having a platform business model. This is one of the reasons I like us our ability to survive in changing markets, especially in this earlier stage of the company, where we’re still spinning up scale. I like — strategically I like that flexibility. I think that was borne out this year. So I do want to just highlight that. And then on the cash point, obviously, were — at the end of quarter was $1 billion plus. The — we’re very sensitive to cash. And we appreciate that Ginkgo gets better with scale, and we also have all this downstream value share that we want to get to. But to get there, we have to not run out of money. And so that is internally really one of the big things that we do all our planning around.
So that’s not something we won’t pay attention to, I assure you.
Megan LeDuc: Thanks, Derik. Next up, we have Michael Freeman at Raymond James.
Michael Freeman: I really appreciate also the — you guys putting in that swimmers plot on project maturity. I think that casts — sheds a lot of light on what’s going on inside the Ginkgo platform. Now one blind spot in the data visualization and I trust for Ginkgo is what happens between 100% completion and commercial. So I wonder how — what sort of work Ginkgo can do to help its partners undertake whatever work needs to be done between 100% and commercialization?
Jason Kelly: Good question. I mean the sort of flipping answer is have enough programs that it like kind of comes out in the wash. In other words, like we can’t be responsible for animal-free meat go-to-market to cannabinoid to new pharmaceuticals to agricultural traits, like the range of products just makes it tough for us to really be a major player in ensuring that those steps downstream of the cell engineering are successful for our customers. So now that said, I mean, as Ginkgo gets bigger and more of the world is running on our platform, investments that generally help biotech products make it through that will pay off in big ways for us. But I would say today, I’m more focused on just getting more people on the platform and just kind of — it’s up to them to do that part.
I think realistically in terms of where Ginkgo needs to put our resources, it’s making the platform more efficient so that I can do better on fees versus our spending and make it through the downstream value share. So right now today, we’re not spending a lot on that, Michael.
Michael Freeman: Got you. Got you. Now another key feature of a biotech or a biopharma swimmers plot is how many patients die or how many programs die. You mentioned, of course, some programs don’t get to 100%. Curious how can we get a sense of how programs fail and what proportions — what proportion of programs might fail? I guess like what does it take for you and a partner to agree that a program is done?
Jason Kelly: Yes. So I would actually kind of like to share that over time. Right now, we just — I want to get like a little more out the pipeline so that I have like a better — like kind of a better set of data there, I would say, is like the major thing holding me back on that. But I think that is something ultimately we’ll be able to share with you. And what — in terms of what hits it, I mean, we set technical milestones negotiated with each customer because they’re going to pay us on hitting those typically. And so that is what sets is it a 100%, right? Ultimately, the — it’s some agreed upon technical target with the customer. Now the other obvious challenge is like it changes, right? Like in other words, like program to program, they’re different.
So it is also a little bit like certain programs are going to be harder than others, right? Like we’re not making widgets here. So I think that’s another thing that we’re probably just stuck with in terms of making it tougher to model. My long-term goal here is like be a utility, right? Like we really want as much of the world running on our platform as possible and it will be fine, right? But I appreciate that in this era. People are trying to handicap programs. And — but hopefully, as the numbers go up, it gets a little easier.
Megan LeDuc: Thanks, Michael. Next up, we have E.V. From Goldman Sachs.
E.V. Koslosky: Just filling in for Matt tonight. Following up on new programs, could you maybe just give an update on what you’re seeing in the sales funnel from customers. I think in the past, you said there’s a lot of potential of new programs in the funnel. Are you seeing some of these conversations being pushed out due to capital conservations as we’ve seen many headlines from pharma, R&D cuts? Is there anything else you’re hearing from customers on program cancellation?
