Opinion | The Synthetic Biology Ideology

One quarter through the "century of biology," we're great at building startups deemed successful by the vanity metrics of success, but terrible at building commercially successful businesses.

Founder's Blog articles are how Solt DB separates industry and stock analysis from platform updates and opinion pieces. Analysts often draw on the same insights and experiences.

As writer Austin Kleon once quipped, "lots of people want to be the noun without doing the verb." The U.S. Marines have a similar saying for the sorry souls traversing boot camp: "Everyone wants to go to heaven. Nobody wants to die."

Both succinctly describe the field of synthetic biology in 2024. Or 2014. The year hasn't mattered.

Synthetic biology is primarily used to sell conference tickets, hype shiny objects with little commercial viability, and carry the tune for the game of musical chairs called venture capital. It's an ideology, conveniently everything and everywhere even though it cannot be simply defined; conveniently reinventing its pitch to latch onto today's trends with little explanation for yesterday's regrettable flings.

If technology is what makes science real, as Daniel Sarewitz wrote in The New Atlantis, then it's telling living technologies usually drop any brand association with synthetic biology once they become commercially viable.

Building with biology isn't inherently a problem, and we ought to aspire to use living technology to improve our world. But we'd greatly increase the probability of success by swapping hubris for humility, building the courage to have blunt and uncomfortable conversations to reset our collective aim, and acknowledging the limitations of biology as technology.

Need more finch? Here's our newsletter.

An icon graphic of an envelope.
Welcome to The Voyage!
Oops! Something went wrong while submitting the form.

Hype is Debt

The storytelling and perception of synthetic biology companies often deviate from the realities of the underlying businesses. Synthetic biology ideologues often make analogies between biology and coding, such as likening DNA to the programming language of life – until the same level of financial analysis and scrutiny applied to information technology comes rolling in. That's one sign of the field's immaturity.

Consider the publicly-traded companies with financials that can be interrogated, which includes Codexis, Ginkgo Bioworks, LanzaTech, and Twist Bioscience. I'll spare poor Amyris this time.

The group of four had a combined full-year 2023 operating loss of $820 million, at an operating margin of negative 230%, and operating cash burn of $588 million.

Only Twist Bioscience has enough cash on hand to fund itself to breakeven operations. Codexis or Twist Bioscience could be the first among this group to achieve that milestone, perhaps as soon as 2027. Ginkgo Bioworks and LanzaTech are services companies (which can be solidly profitable) with the operating structure of technology companies (a questionable mix), except LanzaTech sells itself as a products company and Ginkgo hasn't realized it's a services company yet.

And these are the companies that have survived the public markets, so far. Many more weren't so lucky.

This graveyard isn't too surprising. We too often build companies chasing shiny objects without regard for an intelligent cost structure, the competitiveness of the solution, or whether we're solving a real problem in the market to begin with. High failure rates are then conveniently shrugged off with empty, throwaway statements. "Business is hard." "Nine in 10 startups fail." "Something, something, interest rates."

Business is difficult, but we often make it much more difficult than it ever has to be.

When we fail to properly analyze the business of biotech because we're too wrapped up in the storytelling, we're doomed to misinterpret why our collective efforts fall short of goals and repeat the same mistakes.

Outcomes are the Antidote to Hype

If technology is what makes science real, then it's important to remember technology must be economically-viable for science to have an impact. There often appears to be frustratingly little interest in building commercially-viable products and businesses among early-stage startups. Doing so requires acknowledging the current limitations of biology, especially with respect to walking down the cost curve with services offered or ingredients manufactured.

A technology platform that leverages biology to make lipids or fatty acids tends to be thrown at the 317th animal-free dairy product. It makes a great story.

But what market problem is solved by animal-free dairy products? More important, how can every company succeed in the market? My grocery store only has so much shelf space.

Photo by Cory Woodward on Unsplash

The best applications of new technologies tend to be relatively boring and sometimes obscure. For example, lipids and fatty acids could be engineered to make an improved transformer fluid that actually deserves a premium price. We're usually within a few hundred feet of transformer fluids at all times, which represent a 700 million gallon per year market in the United States with significantly less competition than foods and better margins to boot. A good swath of the market is already served by vegetable oils. We just never talk about it. Transformer fluids and Patagonia vests aren't a great match, apparently.

There's a herd mentality when selecting applications for biologically-advantaged ingredients. That's how we get the 317th animal-free dairy product when protecting the grid from cyber attacks and climate events with more thermally stable transformer fluids might solve a real problem. Same science, different application – and a higher probability of success for the overall business.

We Still Need to Try

Building a synthetic biology startup is not like a poster in a middle school cafeteria. If you reach for the moon, then you don't actually land among the stars. You fall into space, which is mostly empty, really cold, and pretty unforgiving for doughy, self-aware bags of flesh.

And yet.

We should still try. Let's just do so more intelligently, eh?

Here's a handful of early-stage companies with intelligent efforts in specific verticals, presented in alphabetical order:

  • Antheia is an awesome example of using biology to meet an urgent market need: making drug manufacturing supply chains more resilient. The industry's complex supply chains were exposed during the pandemic, but ongoing shortages of chemotherapy and ADHD drug products are a reminder of lingering challenges. If living technology can stabilize supply of key intermediates and help onshore (or at least nearshore) supply chains, then it would be a welcomed solution.
  • Bluestem Biosciences is the earliest-stage company on this list, but its approach to biomanufacturing deserves more attention. Rather than build brand new facilities (greenfield), the company aims to repurpose (brownfield) some of the nation's 17 billion gallons of annual ethanol capacity. The industry might need other options as transportation electrifies in the next decade, so tapping its commercial-scale facilities with utilities and river / rail barge access could help accelerate biomanufacturing's buildout.
  • Solugen is a great reminder that it's okay to combine biology and non-biology solutions. The company's BioForge facilities use enzymes and nanoparticles to manufacture commercial volumes of green chemicals at an efficiency fermentation can only have wet mill dreams of. That's similar to Covation Biomaterials making polymers with partial bio-based content, or LanzaTech and Braskem (separately) upgrading ethanol into ethylene using thermocatalytic processes. Fermentation isn't the only way to make green chemicals and reduce carbon emissions.

Solugen deserves a second callout. Not only has the company been pragmatic in developing its technology platform, but it's been strategic in building commercial infrastructure – the boring stuff that doesn't get discussed enough. Like integrating into chemical supply chains in the Gulf Coast, where in-spec chemicals are generally the only chemicals.

Or going so far as buying a fax machine to win the business of an early customer who could only process invoices that way. That's true. That actually happened.

That's also what doing the verb to become the noun looks like. Many synthetic biology startups would be well-served reorienting to similar metrics of success.

(free stuff and recent articles below)
An icon graphic of Gouldy the Finch.

Is that biotech stock a buy?

Solt DB is a public benefit company exploring the business of biotech. Subscriptions to investment research fund our mission to build a high-quality, open-source global biotech company database. For $25 per month or $225 per year, we help you identify attractive prices for the top biotech stocks in real time.

Free Stuff