Bayer and Gingko Bioworks are creating a new company focused on improving the microbe’s ability to make nitrogen fertilizer available for plants. The deal provides a Series A investment of USD 100 million by its parent companies and Viking Global Investors LP.
The new company will focus on technologies to improve plant-associated microbes with a major focus on nitrogen fixation. While some crops such as soybeans, peas and other legumes can pair with specific microbes that live within the plant and fulfill their nitrogen needs, most other crops cannot. Nitrogen fertilizer is therefore an essential component in modern agriculture. It can however add cost to growers when used inefficiently.
In addition, use of nitrogen fertilizer is a major environmental concern, driving greenhouse gas emissions and water pollution. The endophytic microbes to be developed by the company aim to provide a platform to flexibly deliver new agronomic advantages. This is expected to have a profound positive benefit to growers, agriculture, and society alike.
The new biotech company is the fifth investment by the Bayer Lifescience Center (BLSC), which operates as a strategic innovation unit within Bayer and directly reports to Bayer’s Board of Management.
“Accessing the microbiome is part of Bayer’s innovation strategy. We are launching this enterprise to develop transformative agricultural products based on the latest synthetic biology technology,” said Kemal Malik, member of the Board of Management of Bayer AG and responsible for Innovation. “We have exclusively partnered with Ginkgo to build a leading player in this field.”
In addition to the the initial USD 100 million Series A investment by Bayer, Ginkgo, and Viking Global Investors LP, Ginkgo will provide exclusive access to its technology, laboratory, and office spaces, and will build a new facility exclusively for the new company. Bayer will also provide exclusive access to proprietary microbial strains and all necessary development know-how.
“Biology is changing industries as diverse as flavor and fragrance to consumer electronics. Agriculture is the original biological technology, and the more we can learn to work with the soil microbiome, the more we can discover new ways to add value to farmers and return to its biological, and more sustainable, roots,” said Jason Kelly, co-founder and CEO of Ginkgo Bioworks. “We’re thrilled to be working with Bayer to bring this transformational aspiration to life.”
“The plant microbiome is one of the next frontiers in sustainable agriculture,” said Axel Bouchon, Head of the Bayer Lifescience Center. “And it may enable us to take a major leap in plant physiology: producing nitrogen fertilizer directly in the plant. We are excited to combine state-of-the-art plant science and leading microbial technology to help tackle this challenge. With Ginkgo we have found the best-in-class partner to achieve this fundamental breakthrough.”
Closing of the transaction is subject to customary conditions and expected to occur in the fall of 2017. Hiring for the new company is currently underway.