Good afternoon. This is Anna Marie Wagner, SVP of Corporate Development at Ginkgo Bioworks. As usual, I'm joined by Jason Kelly, our Co-Founder and CEO; and Mark Dmytruk, our CFO. We thank you for joining us and look forward to providing you with an update on the last quarter and full year '22.

As a reminder, during the presentation today, we'll be making forward-looking statements, which involve risks and uncertainties. Please refer to our filings with the Securities and Exchange Commission to learn more about these risks and uncertainties.

We've got a packed agenda for today, but we'll follow our standard format, providing an update on our financial progress and guidance for the year while also taking the time to dig deeper on our strategic priorities.

In particular, as we alluded to in our last call, today we'll be providing more information on the downstream value potential we see at Ginkgo. We'll enter the Q&A session, and we'll take questions from analysts, investors and the public.

You can submit those questions to us in advance via Twitter, #Ginkgoresults or e-mail at investors at ginkgobioworks.com. All right. Over to you, Jason..

Thanks, Anna Marie. We always start with the slide because our mission drives much of our long-term strategy and even many day-to-day decisions in the company. Very simply, we want to make biology easier to engineer at Ginkgo, and we do that by scaling our platform for programming cells.

So how does that work? An easy way to think about Ginkgo is that companies are outsourcing their research to us. In the biopharma industry, that would be called a CRO, a Contract Research Organization. But for traditional CRO, biopharma companies aren't -- they're normally outsourcing simple research work that they really just don't want to do.

Think like running an animal study or synthesizing a chemical, whereas when they're coming to Ginkgo, it's really to outsource work that they can't do themselves internally. They want to access Ginkgo's automation scale, our data, other IP assets, again, that aren't available in-house.

You can see a comment here from one of our biopharma partners, Novo Nordisk, CFO, Marcus Schindler, saying they are open to external partners who bring new and complementary expertise and talking about our unique capabilities in Synbio.

That's a similar refrain we're hearing in discussions and mirrors what we saw in our large deals with Bayer last year as well. The most obvious example of an asset we have that our customers don't have internally is the scale of our automation.

So we've invested hundreds of millions of dollars to date to build out both physical hardware here in Boston. That's where I'm sitting today, as well as custom software to run our lab like a factory.

As you can see a video on the right here, of the newest technology that we're super excited to be integrating the software and automation that's coming in via our acquisition of Zymergen that closed in October of 2022. For the potential customers listening on this call, this infrastructure is all available quickly to you as a service.

I really like our no pipettes logo down here. Look, I spent five years during my PhD at MIT, working at the lab bench with a pipette in my hand. There are brilliant scientists at our customers who are instead spending their time designing experiments are instead really running ultra-low throughput experiments by hand with pipettes.

It's clear to me that the future will be total automation of the lab work associated with cell engineering and Ginkgo is really hoping to lead in making that happen. Biotech scientists should put down their pipettes and make use of Ginkgo's automated lab services to do their work.

The last point I'll make on the foundry is that it gets better with scale. In other words, unit costs fall as our output in the facility goes up. This is something you traditionally see in manufacturing of things like microchips or cars, but you don't normally see this in R&D.

So by using Ginkgo Services, we expect that year-over-year, the scientists at our customers will have more capacity unlike those pipettes they have that aren't getting any better. All of that automation generates something really important data.

We call this data, our code base and because we retain rights to reuse the data generated when we do projects for customers, this asset grows each year. I'm sure you've been hearing a lot this year about new AI algorithms. The big secret is that these algorithms are mostly commodities. Everyone has its access to larger the same tools.

And what's really proprietary is the data you use to train the model. And Ginkgo has built a very unique asset there in the biological space and is adding to it every day. And again, for our customers, these types of AI models are available to you as a service.

Most companies in the biopharma space would keep an asset like this to themselves to develop their own drug pipeline, but Ginkgo is a services company, not a product company, so you won't see a drug pipeline here. We want to make this available to our customers.

So Mark will discuss our financial performance in a minute, but I want to emphasize how proud I am of the team for adding 20 new programs in Q4, which took us to 59 programs for the full year towards the high end of our guidance range. On the right, compared this to the first quarter of 2021, where we only added four programs. This is a huge deal.

Each new program at Ginkgo adds a combination of service revenue, downstream value, demand to drive the scale of our foundries and IP data assets, like I just mentioned. The bulk of that program growth was driven by our penetration into the biopharma and ag industries, which you can see on the left side, this is awesome to see.

These industries have large biotech R&D budgets, and they are some of the most valuable products in biotechnology. Overall, in 2022, we demonstrated diversification in both the markets we're signing up programs in and in the types of downstream and value share we're closing.

I think it's often underestimated how valuable that type of diversification is, especially for a services platform. This allows us shift to where the action is. So if there's a lot of demand in a certain area in pharmaceuticals, we can go there, certain area industrial biotech or ag, we can go there.

If the market conditions favor certain types of deals whether it's royalties or milestones or equity or whatnot, we can move. So I really am excited about the range of diversification we had in '22. I think it was really an amazing year for us that sets us up well.

Biosecurity had another solid quarter and we're very excited about that business transitioning towards longer term recurring monitoring contracts like we've been doing at airports. Mark will talk about some of the biosecurity financial highlights coming up, and I'll dig into that business in my strategic section as well.

Finally, we ended this year with over $1.3 billion of cash on the balance sheet, which provides us with a multiyear runway and is an important source of competitive advantage in this market environment. All right. I'll hand it off to Mark now to go through the numbers, and then we'll dig deeper into some of the things we're focused on..

one, the fact that we rely extensively on external resources and specialists to supplement our internal team; and two, the level of documentation we need to produce in order to evidence the operation of certain controls.

This is something we believe can be remedied in 2023 by expanding the team, further training and investing in more automation of our data flows. I'd like to thank the team for the tremendous work done to date.

SOX is not an easy lift for a new public company and the progress we've made from where we were in Q1 to Q4 has been substantial, all during a year in which we grew the business significantly and completed multiple acquisitions. Now I'd like to provide some commentary on our outlook for the full year 2023. We expect to add 100 programs in 2023.

This guidance reflects another year of strong growth, 69% year-over-year. We remain excited about our new program pipeline despite the macro environment. And in some cases, that environment might even work to our advantage as customers look to outsource their R&D environment efforts.

We expect total revenue for the full year 2023 to be at least $275 million. Our cell engineering revenue guidance is at least $175 million, which we expect to ramp meaningfully over the course of the year and excludes the impact of any downstream value share of revenue.

I want to pause here because our employees are listening -- our employees are listening to this call, and although, this represents 65% growth in services revenue from 2022, we know that we have even more aspirational goals and that our internal targets are higher than this.

However, maintaining credibility with the investment community is very important to us and we want to commit to an outlook that reasonably reflects the business as we see it today. And we'll continue to remain nimble with operating expenses and cash preservation in this environment.

I also want to be clear that we're still working towards the achievement of downstream value share in 2023, including additional Cronos milestones. But given the lumpiness of this potential revenue we are only prepared to give services guidance at this time.

To that point, our guidance of at least $175 million of cell engineering services revenue represents 65% growth over the full year 2022. And our fourth quarter 2022 performance is supportive of our growth expectations for that business in 2023. Our biosecurity guidance range is at least $100 million.

Importantly, we expect nearly half of this revenue to come from emerging product lines that are expected to be more recurring in nature, such as federal and international partnerships supporting pathogen monitoring and biosecurity infrastructure development beyond just COVID-19.

For the remaining half of the revenue, that primarily comprises our K-12 COVID testing businesses. We are approaching guidance similar to how we have during the past couple of years. Our guidance includes business that we have visibility into, specifically testing commitments that we expect to last through the remainder of this full year.

We have included only a marginal contribution from the K-12 COVID testing business in the second half of the year, although, we do have opportunities to continue working with state governments on testing services, and other biosecurity projects.

We reiterate the usual caveat that even where we have known contracts, our K-12 COVID testing business is inherently uncertain. In summary, we are pleased with our overall progress and outlook. We had a solid quarter of cell engineering, execution and expect strong program growth and services revenue growth in 2023.

Biosecurity continues to perform well and evolve as we expect a meaningful contribution from more recurring revenue streams in the coming years and the company's total cash position of over $1.3 billion remains strong..

royalties, milestones and equity. Royalties are the most common and they cut across all of our verticals. In other words, all the different markets. Royalty rates will often reflect the margin structure of that industry. So in other words, we'll see higher royalty rates in higher margin industries and lower ones in lower.

Rates also vary by the program stage. They vary by our leverage in that industry and our role in the full value chain. So we'll show some illustrative numbers on the next slide, but it does vary program to program. And you'll notice on the right hand side, significant growth in the last year in programs that have milestones.

In other words, we're signing up more deals with milestones. We're increasingly pushing for these types of deals in order to be compensated for technical success and to pull forward value when a customer's product has a longer time to market. And you'll see that, particularly in the biopharma space and in ag.

Finally, equity has been a useful tool for us historically, but it's becoming a less common form of downstream value share for Ginkgo. It does give us some diversification benefit, we gain exposure to the whole company versus single product.

However, as our growth has been driven by third-party customers and traditional biotech customers, royalties and milestones have just become a much greater part of our portfolio. And that's really the big takeaway on this slide.

You'll see about 60% of our '22 -- 2022 new programs have some combination of those two structures, and that compares to less than a quarter of our programs two years ago. Okay.

So downstream value is hard to model even when you have perfect information, but it does have -- we think it has significant financial value, and we wanted to share more data on this than we have previously. So you all have better tools to model it.

So with royalties, you'll see a chart here showing how our royalty rates vary by industry and type of project in that industry, ranging from low-single digits to double-digits on product revenues. Milestones on the other hand, are actually much easier to quantify for you because we can just add up the dollar potential in all our contracts.

And so we've not done enough of these that we're not like kind of giving away individual contracts that don't want us to. So we were able to aggregate this. We added $2 billion of aggregate cash revenue potential from milestones in 2022 compared to about $200 million in 2021.

And I want to be clear, just over $1 billion of that comes from our partnership with Selecta, which we shared previously in a press release. So listen, we're not trying to convince you that we're going to get the full amount, that $2 billion or even a significant percentage of it.

You can think of this as a bit like modeling a drug pipeline where you have to factor in discounts for technical and commercial success for us to get those commercial milestones, in particular, the dark green ones. Though what I like about Ginkgo is that those 2022 milestones are across 23 programs.

So again, we are diversifying our portfolio in ways I think are healthy for the business.

Finally, we aren't going to attempt to provide valuations for our equity stakes in private companies, but we have received equity for downstream value from 14 companies in addition to others that we -- where we've been paid with equity for cell engineering service fees.

So that's all potential value, and we're excited about that because of the rate of new program growth, we're adding a lot of new potential value every quarter. However, eventually, that potential value needs to turn into realized value at Ginkgo. And that happens when programs complete, so the technical work has to finish.

And importantly, it needs to be commercially relevant to customers for us to really get big checks. And while we'd love to show you really flashy blockbuster examples of that, and we do believe those will come in time, we don't have them yet. What we do have is some singles and doubles already.

We've been able to stack up about $1 million of royalties and a couple of million of product revenue streams that are more recurring revenue that you can see on the left. And then we've achieved tens of millions of sort of one-time milestones through our Cronos partnership, which we've been discussing over the past several quarters.

Finally, although we haven't monetized our equity positions to date, we do expect in the next year or two, there will be liquidity opportunities in that portfolio. We're sometimes asked about our philosophy on this. And it ends up basically varying depending on how these programs play out. Okay.

So I want to bring it all together by laying out an illustrative biopharma discovery program. You can see the timing difference between fees, milestones and royalties and also the potential embedded in even a single-digit royalty rate in this market.

Bottom line is, I'm really excited about the downstream value share potential that resides in our current program portfolio. The 100 programs we plan to add in 2023 should significantly strengthen our potential downstream value. So I look forward to updating you on our progress over time here. Okay. All right.

So let's talk about biopharma, which is one of the areas I'm excited to add a lot of downstream value share. So I'm going to continue to remind you about biopharma because it is the most valuable and fastest growing market for us in terms of new programs, but it's also the newest market for Ginkgo.

So the thing to understand about the biopharma industry is that therapeutics come in many different flavors. These are referred to in the industry as modalities, okay? So small molecules is one modality, and that's drugs like aspirin or statins, right? Biologics is another modality, and that's drugs like insulin or antibody therapies for cancer.

Then you have RNA therapeutics like the COVID vaccine and newer modalities like gene and cell therapies. So Ginkgo is very unique in the industry and that our platform can support both discovery, that's up at the top, and manufacturing programs in a wide variety of these modalities.

How do we know that? Because we have signed deals with very scientifically skeptical R&D leaders and companies across all these modalities. So really proud of all the logos you can see on the slide there. These are very sophisticated customers who typically have their own highly capable internal R&D teams that they can use for these projects.

So it means a lot to us when they choose to work with Ginkgo and stat. So why would a customer work with us? It's a question I frequently get asked if they could just hire their own scientists and do it in their own labs.

And as I said at the very start of the call today, it is because Ginkgo is offering things, automation, scale or data or IP that the customer simply can't access in-house. It is as simple as that. We have to have something differentiated or these customers won't sign up.

Importantly, biopharma customers often want to see scientific data that shows the application of our platform in their specific area of interest like, for example, their modality or whatnot.

I don't have time to review it all today, but I'd recommend you watch my talk from the JPMorgan Healthcare Conference, just back in January as it was largely focused on biopharma since there's a lot of potential customers in the room there. And you could see data I shared on the right here in gene editors and cell therapy.

And in fact, we had over 80 customer meetings at JPMorgan this year. So really a night and day difference from a couple of years ago for Ginkgo in our ability to sell in the biopharma market, and that's thanks to having all this new data demonstrated in these different modalities. Okay.

So the question I also get asked a lot is, if biopharma has such big R&D budgets to support near-term cell engineering service revenue and bigger downstream value share opportunity given the value of therapeutics like, why didn't Ginkgo just start in the biopharma market? Why do we start in the industrials market? And the reason for that comes back to our business model.

So I will remind you, we are a services business. So that means that in order to move into a market, customers have to choose to work with us. They have to sign up for a deal. Say, we cannot enter a market like a product company can just because the Board or management thinks they would be great at drug development or whatever the product is.

A customer has to tell us that our platform is good enough by signing up a deal. And simply enough five years ago, our platform wasn't differentiated enough to overcome the internal scale of biopharma R&D groups. I mean these groups are very scientifically excellent and very well resourced.

We could, on the other hand, overcome the scale of the smaller, less resourced industrial biotech R&D groups. So that's why we started in that market.

It was for sales reasons, right? And if you compare it to today, in industrial biotech, most companies have, as a result, either considered Ginkgo or know who we are, right? Like we've been operating there for a while.

But in biopharma, we are meeting potential customers that have literally never heard of us or who at a minimum, don't have any idea what our capabilities are. That's very exciting from like a sales potential perspective. And once we get a first deal with a biopharma company, we can often expand within that organization. We're seeing this.

We can cross-sell from a manufacturing deal and then go and sell a deal into the research groups or from a research group in one modality in the same company to a group with a different modality focus and so on. I personally really like doing enterprise sales. And this is the sort of thing that gets you really excited if you like doing these deals.

It's real -- they're really great tools. In industrial biotech on the other hand, we believe the market potential is enormous. So the application of biotechnology and things like chemicals and materials and so on -- energy, but it is much more nascent. Biotech hasn't penetrated into that market like it has in pharma or ag.

So as that biotech market grows, I think we're so embedded with those companies in that space. We will grow alongside of that industry just as fast as it goes. Finally, in some ways, we actually have a lower hurdle to sell into biopharma customers because they're actually used to outsourcing some of their R&D.

Like I mentioned earlier, it tends to be more of the run of the mill stuff they outsource today to that contract, research CRO industry. In industrial biotech, we had to educate those companies on the sort of CRO model this outsourced services model. In biopharma, they already know it.

They just haven't been using it for things -- as much for things like discovery. So that's huge tailwinds for us, makes the deals a lot easier to do. Okay. So I want to finish on biosecurity. This business continues to develop nicely, and I want to dive into that a bit today.

Candidly, I think we're probably not getting enough credit from this today from investors, and I think that's a bit shortsighted. So I want to spend a little more time on it. Okay.

So I want to start with a reminder that COVID response efforts -- we're not simply a nice public service Ginkgo did during the pandemic or a transitory source of cash flow for Ginkgo. Our intent has always been to establish lasting biosecurity infrastructure. And the reason for this is that our mission at Ginkgo is to make biology easier to engineer.

And it is essential that we do that responsibly and with care. And so just like the -- if you think of like as a comparison, the expansion of kind of power and access to computers over decades, ultimately required robust cyber security to make sure we were using those tools safely.

The expansion of capacity and access to synthetic biology is going to require robust biosecurity tools to make sure we are approaching that safely. And importantly, this is not just conceptual.

As Mark discussed in his guidance, almost half of our 2023 revenue is expected to come from more recurring revenue contracts with federal and international entities. That represents a significant shift compared to this past year.

So we're now seeing our long-term intent, like our interest in long-term usage of biosecurity filter into our financial results and outlook. Okay.

So what does this evolution look like for our business? So our COVID monitoring programs, the programs that have comprised the vast majority of our biosecurity revenue to date primarily consists of a collection platform going out and sampling folks and then analysis and reporting to U.S. state departments of public health and school systems.

Those activities have been primarily volume based. In other words, our revenue correlates with the number of tests we collect and much of those have been in K-12 schools. Now there's still a path to sustainable revenue in domestic COVID monitoring, but it's not likely in K-12 schools.

As the end of the emergency order, I mentioned earlier in the U.S., this May, we will dry up the fund states have been using to do that monitoring. However, we've been working on new testing modalities such as wastewater and we'll continue to work on adding new nodes in our network domestically outside of schools.

Our longer-term biosecurity infrastructure business looks a bit different. Though it does make use of a lot of the muscles we built in both data analysis and logistics over the last two years. We wouldn't be able to move as quickly as we have been here, frankly, without the work we've been doing domestically.

The canonical example of this is our airports program. So you can see in that program, we're collecting wastewater from planes and also anonymous samples from passengers. And then we're -- when we get a positive, we sequence, we look at the DNA, and we look for new variants of COVID as well as other infectious diseases.

And this has been a really successful program. Early cases of Omicron and so on, we talk more about it. But we'll have collection platforms and sample analysis but also additional assays and add-on analytics services that we apply through that platform.

So for example, in partnership with IARPA in the U.S., we developed a tool called NDR, which can detect engineered DNA sequences. So in other words, okay, I just sequence this virus from an airplane, was it intentionally manipulated in a lab, okay? That's a true real biosecurity sort of application built on top of our platform.

The net of all that is a business that has significantly more service and subscription fees rather than volume-based revenue. The growth drivers in this business today are new nodes. So for example, new international contracts in airports as well as new analytics modules that can drive incremental service fees.

So we say this a lot, but biosecurity here in the U.S. requires global biosecurity because viruses do not respect borders, okay? We saw this with COVID. And you can see we've already begun operating our biosecurity services on multiple continents and plan to continue to expand.

Our goal here is to have the equivalent of what radar systems and satellites gave us for monitoring the weather. But instead, we want to be monitoring the movement and the evolution of the DNA of infectious diseases. It is simply irresponsible that the world didn't have a kind of bio radar network like this in place before COVID.

You might notice we are still having tedious debates on where COVID even originated on. That would not happen if we had, had a robust bioradar system like this in place. But you know what, it is time to build this radar network now. And Ginkgo plans to be the leading provider of technology and services to build it.

As a final note, just the other day, CDC released a favorable report on our aircraft wastewater pilot as part of their public reporting. And they found that 81% of international flights into New York City that we tested this fall had SARSCOV2 genetics in their waste.

The CDC sponsorship of this work helps set us up as a real leader in this space around the world. And then our international work provides real value back to the U.S. government. It's a nice feedback loop there. We are honored to be supporting the CDC efforts here. It's a really important program, and it has a lot of utility in the long run.

I am really proud of the work the team has done in biosecurity in the last couple of years. Anyone who is directly involved in a very fast moving COVID response, knows it is a unique experience and provides credibility that you just frankly can't get any other way than living through it.

The biosecurity team and Ginkgo as a whole have that experience, keeping schools open across many states during the Omicron surge at the end of '21 and early '22 and -- and that is a real lasting brand value and credibility for Ginkgo as we now expand internationally with our biosecurity offerings and the team should really be proud of it. Okay.

So 2023 is shaping up to be an important year for Ginkgo. There are plenty of challenges in building a scaled cell engineering platform and our team is committed to pushing through the next level of operational efficiency to drive our mission.

We hope this has been a useful update and deep dive for you all, and I hope to see many of you in person at Ginkgo Ferment. Our annual conference in April. And if you'd like to join, please just reach out to us. All our welcome. I'm very excited about Ginkgo's position and outlook and look forward to updating you on our progress in the coming quarters.

Finally, before I hand it to Anna Marie to do our formal Q&A, I do want to just take a minute here and talk upfront about some topics that I know are top of mind for investors in Ginkgo right now.

Actually, Warren Buffett has a great quote about how if you're transparent about what sort of company you're building, then the investors who are aligned with that will find you. He actually gives us great analogy. He's like you can throw a dinner party or a rave. There's nothing wrong with either of those.

But just make sure you put what it is on the invitation. And so as a reminder, this is what we put on our invitation for Ginkgo. So from the founder letter in our S-4 filing, when we took Ginkgo public, we said to our stockholders. We are seeking to build a company with enduring long-term value.

We will not make decisions based on short-term market or accounting considerations, we'll make decisions to ensure Ginkgo is the long-term market leader. Advancing our mission is resource intensive.

We expect to continue to reinvest cash back into the business to scale our platform and expand into new markets with a focus on long-term value for the company and its stockholders. Market leadership will enable us to scale, which is critical for our platform's growth. Growth increases our future free cash flows and ultimately, stockholder value.

So to be clear, we're not here to make a quick buck or to manage the quarterly earnings, we're here to build a company of lasting value. That doesn't align with the time lines that some investors operate under, frankly. And there's nothing wrong with that. They're just -- they're not going to like our dinner party.

However, we are fortunate to have some terrific long-term minded investors on our cap table for many years that have been very happy and have live been very happy to see their continued growth alongside us.

We're also excited to see some new names at our party who have been able to take advantage of the current market environment to open new positions at Ginkgo.

However, the other group that I see our invitation speaking to is individual investors that are interested in Ginkgo's mission and in seeing Ginkgo accomplish our goals in cell programming and biosecurity for the impact it will have on the world. So I personally spend time keeping an eye on what these folks are concerned about.

It's a lot of it on social media. I wanted to chime in on a few topics. I saw coming up repeatedly from individual investors. So I'll read and respond to a couple here to give you a jest.

So this is one that came in from our e-mail, right? So I feel that your stock price is still undervalued based on the business opportunity that I believe exists and yet I see leadership selling shares in large amounts on a near daily basis. This is a concern for me since inside our ownership doesn't appear very large to begin with.

And yet even when the stock is at near all-time lows, management doesn't appear to have the confidence to keep their shares. Why is this? Okay. So I'm very happy to speak to this. So Reshma, Austin, Barry, Tom and I have founded the company.

We started this company 15 years ago, and we bootstrapped it for about six years with no venture funding, buying equipment on eBay, the whole thing. Such that we know today, we still own over 400 million shares and over 20% of the company. So this is something I'm very proud of.

So the first point to make is, as a group, the founders are larger shareholders than any single institutional shareholder in the company. And so I hope it's very clear. I want to clear up that discrepancy that we make and lose money right alongside our investors. Okay. So why do folks selling now? Okay.

So first, we had some RSUs from before we went public that vested. And whenever an employee's RSUs are distributed, the company automatically executes a cell to cover transaction for the tax obligations that are owed when those shares are distributed to the employee. Those sales to cover tax application.

Sorry, those sales to cover tax obligations are now over. Second, about six months ago, when we've been public for about a year, we put in place 10b5-1 plans, which are now effective. As background, a 10b5-1 plan is set well in advance and can't be changed without a waiting period.

This is a way to ensure executives of companies aren't trading based on any near-term information that they have about the business. And you can see the sales from those plans and Form 4s that are filed publicly. So through the end of last week, my personal plan has sold 1.6 million shares.

So to give you context, this represents less than 2% of my total shareholdings of approximately 95 million shares. So you don't get to this level of ownership in a company by selling out over the years. And so the reality is, we really haven't had that much liquidity to date and have continued to pay ourselves under market salaries as well.

So in fact, if you look, I have the lowest salary, I think, I do out of the three folks on this call. But in any case, I do remain one of the largest shareholders in the company. And so hopefully, that's now clear to folks.

The other thing I've seen that we don't -- is that we don't care about the share price, right? So having it still confidence in investors when the CEOs don't value the stock, right, is from Biodazzles11 on Twitter. So as I mentioned, the founders as a block are the largest shareholders in the company.

And I promise you, we are not happy with how the stock performed in 2022. However, I also recognize that 2022 was a painful year for our investors.

So we felt that, like I said, our employees who are another large group of shareholders, they have felt it -- and what I can assure you is that we're all still showing up to work every day because we believe in this mission, this company and each other here at Ginkgo. And as founders and leaders of the company, we need to lead by example.

So we have requested the Board not grant me and Reshma and Barry and Austin any new equity this year in our compensation. So the idea is we'll only make more money this year if you do by growing the value of our existing shareholdings in Ginkgo. Okay. So I want to just cover that upfront.

And with that, I'm going to hand it off to Anna Marie for the formal Q&A. Thanks..

All right. Thanks, Jason. I appreciate that. So we'll switch to formal Q&A in a few moments. [Operator Instructions] All right. I think we're all back here. So one more question from retail. We always start there. This is from Twitter, Ryan and then a lot of numbers that I'm not going to be able to get through.

Is there more or less appetite from larger clients, the foundry services given the current economic climate..

Yeah, I can take that. So I think companies in this environment are basically focused on efficiency. And you have that affects small companies and large companies in two different ways. So the smaller companies, it does drive more interest for our services.

I think they're looking to cut fixed cost spending, move to more efficient outsourced providers like we do see that. Larger companies, I think it's more neutral.

It goes one of two ways, either similar to the small company, they're looking to drive efficiency, open their eyes to an external provider that is a variable cost option on the services side and so on or they say, actually, we're going to cut back our R&D budgets and just like maintain our internal stop and cut our external spending.

So the bigger companies that didn't come out in the wash a little bit, but the smaller companies, it is driving more interest..

Thanks, Jason. All right. Let's cover to analysts now. We'll take the first question from Matt Sykes from Goldman Sachs. Matt, I've opened your line if you just want to unmute..

Great.

Can you hear me?.

Yeah..

Yeah. Hey, Matt. All right..

Good afternoon, everybody. Thanks for taking my questions. We really appreciate the rationale for not including on downstream in the forecast.

I guess I just wanted to ask in terms of behind that rationale, the inherent unpredictability of that downstream value is, I'm sure, a key part of that because I know we deal with that, too, on our end -- has there been any change in terms of the cadence or pacing of potential downstream value like have projects been extended and things like that, that makes it sort of elongate that process or is it really just about the inherent unpredictability of that -- of those milestones and royalties..

Yeah. So I can take part of this, and Mark feel free to add to it. So the reason we don't want to guide is the unpredictability, right? In other words, I think two things happened last year. One, we have been saying we thought this would happen. In general, the milestones are more unprintable then that actually did happen.

So that's bad news for our interaction with all of you. But then second, internally, like the whole team got focused on like one external milestone, whatever, right at the end of the year, when at the end of the day, like, a lot of what makes those milestones happen or not is not actually in our hands and our customers' hand.

So we're doing gymnastics that I think are not particularly mission critical for us compared to driving the efficiency and the effectiveness of the platform that will just yield more things ending. And yes, you'll still be dependent on a customer to do various things, but that, again, will come out in the wash in terms of stuff finishing.

So I didn't like what was happening internally. I didn't like what it was doing for our relationship with investors and analysts and so that's why..

Got it. Thank you very much for that detail. Just a follow-up question. As we focus on just sort of the foundry service revenue and the fees, and you've talked in the past about sort of toggling contracts to depending on the type of program it is.

Given the focus on just foundry service, and that's what's going to be modeled, is there a view to maybe try to increase those R&D fees upfront to boost the growth in that business? And then secondarily, I noticed in one of the slides you talked about trying to drive milestones earlier based on technical completion or clinical progress.

Is that also a part of kind of necessary front loading, but just creating a little bit more certainty around the revenue stream that you're generating..

Yeah. And you can think of it like front loading. So I think like, look, this is one of the things I like, I mentioned this during the talk around diversity of options like allows you to play the game differently depending on what's happening in the environment.

So if we're concerned about like the larger macro environment, and we want to have a bigger margin of safety, absolutely. We can drive deals towards more fees and more milestones. Now as opposed to say, royalties, which, like you could argue pay more, but later, all right, to simplify it, so -- or equity.

I think the challenge is the fees can have a counter effect with sales. In other words, like the customers get more concerned about the fees than switching from like royalties to milestones.

So it's a little easier for me to toggle from royalties to milestones without affecting sales, it's a little harder to drive way higher fees and not get worried about sales. And so we have to just watch that really closely. I think obviously, we would love to do that.

If you move towards profitability faster and all the things, but -- it is a thing I also -- we're making a big mistake with the margin and safety we have, we slowed down our growth. Like growth is hugely valuable for Ginkgo.

It adds code based, it adds foundry scale, it adds future downstream value, like we don't want to slow down sales because we're trying to be greedy about fees..

Got it. All right. Thank you very much..

Thanks, Matt. All right. Rahul Sarugaser from Raymond James. I’ve opened your line. Go ahead, if you want to unmute..

Great.

Can you hear me right?.

Yeah, Rahul..

Terrific. Good evening folks. Thanks so much for taking our questions. So it's great to see ultimate it's great to see decoupling the milestones from the [indiscernible], so as we now look at that essentially NPV of milestones, and you gave us a case study on Slide 22, which is terrific and good guidance.

Should we be thinking of that as sort of kind of the average case study given your previous guidance of around $15 million of NPV per project, when you apply the same variables to that average case study, is it still around $15 million or is it higher? Is it lower? Can you give us just sort of directionality on that?.

Yes. Rahul, I might jump in and then let Mark and Jason supplement. One of the things we were trying to do with this updated sort of package of information is to give you the tools to look at -- look, these are what average royalty rates look like by industry, and this is what that time line looks like.

And there's plenty of data out there around, okay, once a drug makes it to clinic, what is the probability that it gets to customers.

And so based on candidly, your assumptions around probabilities of success across the portfolio and then looking at the data that we're able to provide on a quarterly basis around program mix between industry and between different type of downstream value. We're hopeful that, that will give you quite a few more tools to make it meant there.

It's a hard exercise even with perfect information, as Jason mentioned, but we're trying to share the information that we have..

Great. That is very helpful. And then just a very quick follow-on question perhaps for you, Mark. There were $17 million in milestones on this quarter.

Could you give us a sense for any milestones that you were expecting this quarter in Q4, potentially leaking over into Q1, again, with this decoupling, we need to start actually making some more assessments as to what those -- as our estimates as to what those milestones will be in the next quarter?.

Yeah. So as we had mentioned during the JPMorgan update, we did see some slippage of two milestones in effect, discrete milestones that we had targeted to hit in Q4 and didn't -- we are still actively working those. We do believe that we've largely completed the technical work there.

There is some dependency on parties outside of Ginkgo and manufacturing facilities that are not ours to conduct successful pilots for demonstrating milestone achievements. And so those are still very much milestones that we are working on achieving but there's just more work to do there..

Great. Thanks again for taking our questions..

Thanks, Rahul. All right. Tejas, I am opening up your line, if you want to unmute, go ahead..

Hey, guys. Thank you. Thanks for the time. Maybe I'll start with a quick follow-up on the milestone exclusion aspect of it again.

Jason, do you think you'll disclose the aggregate potential milestone number on a quarterly basis, even if you sort of leave the time line around the achievement of those milestones big or is that something you anticipate doing perhaps only annually?.

Yeah. I think -- I don't think we'll do it quarterly because part of the challenge is that, like this year was the first year where like it was big enough that by not, like, I wouldn't have just told you what a customer who didn't want to publicly announce the milestones have done with us. Right. So that's sort of the game we're playing with sharing.

And we're happy to have been able to share more of this with you all today, and hopefully that's why we received. But we also have to maintain confidentiality with our customers. And so I think maybe it depends on how the numbers eventually get on new programs and so on in the quarter, but I think it will be tough to do it for a little bit..

Got it. Okay. And then any color you can share on the mix of standardized versus custom programs today where you hope to be by year-end? And could this have a near-term impact on customer demand for foundry services? Because typically, on one of the joys of working with earlier stage companies is that you get a lot of attention from your vendor.

So as you look to sort of a more cookie-cutter offering to the extent possible, how is that dynamic something you hope to navigate?.

Yeah. So I'm super excited about this. To be honest, we're -- it's an experiment we're running in the market, right? So to date, if you look at Ginkgo, the history of Ginkgo is like basically all custom deals. All right.

And what I mean by customer is like, what do you want a cell engineer to do customer in the pharma industry or fragrance industry or ag industry. Okay, you want a protein, you want a small molecule, right? Your challenge is, you want to optimize the manufacturing. You have something over here on Discovery. It's all over the place. Okay.

And the team at Ginkgo has had a very hard job of receiving all these custom things. And somehow running it through a common lab infrastructure. And that's a lot of our secret sauce. This is our flexible automation, the software logistics, all this stuff, where I say we run a lab like a factory.

We have the extra challenge that we're not like Quest or LabCorp, that's running the exact same diagnostic test a million times like a factory. No, no. It is variable R&D being run through a factory, and that is very hard. So we're still going to offer that people need that customization, no problem.

What we are seeing is, like as we talk to customers, sometimes either a whole project or a portion of a project, we keep seeing over and over again.

So a good example of this is find me a better enzyme, okay? And you might want this if you were, say, an enzyme therapeutics company, right? Like so a company like Synlogic in those bugs that they have as a probiotic is a little enzyme, that enzyme needs to be optimized, okay, so they care about enzyme optimization.

It could be you're an industrial biotech, and you want a new enzyme for laundry detergent or it could be as part of a four enzyme pathway to make a small molecule chemical. The third enzyme in that pathway needs to be optimized. Well, all of those kind of feel like the same project.

And so that's where we're running this experiment to see could we make that essentially more cookie-cutter offering. It would let the deals close faster. It would make the work happen faster.

The customer -- this is what I'm super excited about over time starts to have more certainty of success, right? Because my underlying belief is like the thing that really makes the biotech industry, not the tech industry, not software, is its unpredictability -- tool have to spend money out of research budgets.

They spend money hoping they will get something. But that is not like what a software company -- they spend money on a bunch of software engineers. They know they're going to get software. Spend money on building a bridge or a building and you're going to get a bridge of a building.

And we and biotech are still living like in the pre-engineering confidence part of the idea with the standard offerings is to carve pieces out that we think are more predictable.

And hopefully, there's a nice feedback loop where even though the customer is getting something a little more standard, they can have higher confidence they're going to get it..

Got it. And one quick one for Mark here.

Mark, any color on cash burn you can share for '23? And is it fair to assume a pretty material dip in '24 that essentially sort of underpins your confidence in not needing to tap the capital markets again?.

Yeah. So let's start with 2022, just to kind of frame it for you. And so the cash -- the operating cash burn, including CapEx in 2022 was roughly $300 million. And if you consider that there was a big contribution from biosecurity in 2022.

It was roughly $70 million of EBITDA, then you can sort of start to -- I think that's a good starting point or a framework. We're thinking about what 2023 would look like. So even though we don't guide to the cash burn number.

What you can do is assume, of course, you're not going to get that big contribution from biosecurity and also assume that we are expanding the business. And so there is some OpEx expansion. And so that should sort of get you to a place where you can think about what burn would be in 2023. 2024, that's -- we're not commenting that far out.

But as Jason mentioned, in the sort of core discussion, a huge focus for the company this year. is on driving that operating efficiency within the foundry. And we do think that is one of the absolute sort of key levers or initiatives that will ultimately let us reduce the cash burn..

Yeah. Thanks, guys. Appreciate the color..

Yes. I'll add one actually a little bit to that. If we do our job and drive efficiency this year, in other words, more and more and more programs without really ballooning spending.

We have a more efficient system to scale up in the future, right? So it's a very healthy time right now, I would say, for us to be having this focus on sort of efficiency and effectiveness on the platform side in terms of delivering against programs. If we work out a lot of people in the company are working on this right now, listening.

Like if we solve this problem, like scaling in the future is going to be a dream. So I think this is really what it's about this year, and that's why I'm excited that it kind of -- there's an alignment between our commercial targets. What we're trying to do internally and the global strategy of the company. It's really exciting.

And it's one of those things that's particularly right down the middle for making biology easier to engineer. So from like a mission standpoint, like I like getting better at selling just doesn't feel as good as like when we really tune up the foundry. That feels like delivering on the mission a very practical way. So I'm excited about '23..

Got it. Thanks, Jason..

Yeah..

All right. Steve Mah from Cowen. Your line is open, if you want to unmute..

Okay. Great. Thanks for taking the questions. Two-parter here on the biopharma business. So on the industry mix of active programs, it looks like Promote is about 35%.

So do you expect that percentage mix to continue going forward? And then second part, we've heard from peers that in their partnership discussions, there's a lot of partners that don't want to pay a lot of money upfront because of cash conservation concerns.

However, your 65% growth in cell engineering services in 2023 suggests you aren't seeing that. Could you maybe help us reconcile that and maybe give us a bit more color on the trends you're seeing on the weighting of upfront versus downturn value..

Yeah. I'll comment on that. So in terms of like where we would like to go. I think we will -- we want to -- I think it will drive more in the direction of biopharma. That's why I wanted to highlight it today. And the main reason, like I said in the talk, is it is just substantially more untapped market for us than industrials.

Like again, companies don't know us. They haven't seen our capabilities. We hope to have these first meetings and then show some data, and there's a lot of excitement.

If there was that similar excitement for one of the large industrial companies, they would said it two years ago, right? I'm more waiting for them to have more breakthroughs on the product side and want to do more biotech, not that they that like we're just -- they just didn't know about us being better than doing it themselves.

So like I do think you'll see that increase for us if we're doing our job right. In terms of people paying upfront and so on. This is the kind of the point I made on that first question coming in from Twitter. I think for the smaller companies, what you're hearing from peers is right. Like there's just not as much appetite to pay upfront and all that.

For the larger companies -- I mean, budget companies have budgets, right? And so I don't -- we don't see that as much with the large biopharma, I would say..

Okay. Got it.

So the 65% growth you're guiding to, that's driven more by just new program adds or versus mix?.

Mark, do you want to comment a little bit about....

Yeah. No, it's new programs. It's new customers. Keep in mind that in some cases, we will take equity as a form of consideration for the upfront service fee on a program as well. And so that's -- in some cases, that's how we've handled the situation that you're kind of referencing with companies that are to point conserving cash.

So that's all in the 65% growth..

Yeah, that can help with so for the smaller companies, taking equity in lieu of cash can actually help quite a lot. Yes. So we do some of that for the smaller guys..

The only thing I might add, Steve, and I know we've talked about this in the past is that there is an interesting dynamic where when R&D budgets are getting pressured, the idea of laying people off or closing a facility or something like that, it's a really hard thing that R&D leads don't want to be faced with us.

And so the idea of working with a vendor that you can scale up and down and treat as variable cost is more healing and feels a lot safer in an environment like this than building a new plant or hiring a ton of folks when you're not sure how much budget you're going to have next year.

And so I think as we think about what are the factors that could increase penetration in biopharma, in particular, over time, this type of a macro environment could actually be a nice catalyst for that shift..

Okay. Yeah. Thanks for the color. And let me just sneak one more in. So yeah, I appreciate why you removed the milestones guidance because of unpredictability and whatnot. But at a later date, when you have more mature programs, would you be providing guidance at that point and when do you think that would happen? Thanks..

It's a good question. I think it will be like a law of large numbers thing, right? So like at some point, there's enough things happening that you're just starting to move with I don't know, like more obvious trends.

So I think it will be until then that you'll for us to do it, I would say, right? Like, I'm sure Apple somehow predicts their app store revenue, even though they don't know exactly like which apps are going to fire next quarter because there's just so many of them and it's sort of just like moving with the Internet or something.

-- we're very far from that. I think that's the extreme form of it. But like somewhere along the way, there's enough in there, we're just enough of a utility that comes out in the wash and then maybe we start to do it.

But I just don't want to get back in the game of like individual event prediction, particularly outside of our control because I think it's extremely distracting internally..

Okay. Great. Thanks, Jason..

Thank you. All right. Madeline from William Blair. Opened your line, if you want unmute, you are welcome to ask your question..

This is Madeline on for Matt Larew (ph). Just wanted to go back to something you said earlier. I think that you mentioned that you're going to be making some investments in the business in 2023 that might offset some of the phaseout of the Zymergen impact.

Could you talk a little bit more about that specifically where you're going to be investing?.

Yeah.

So some of our -- well, Jason, do you want to talk about some of the biopharma capabilities?.

Well, I don't know the specific Zymergen, so do you want to explain that?.

Yes. So what we're really just talking about Madeline is OpEx. And so if you look at Q4, you're going to have Zymergen costs layered into our Q4 numbers, some of which will be gone by the end of 2023 because they relate to certain support functions that we would think of as sort of transitional in nature. And so once the integration is done.

So you're going to have some of that cost coming out, but also sort of a counter acting sort of back would be on the core Ginkgo sort of R&D side, you're going to have some continued expansion, right? I mean we don't hire some people. We still have targeted investments in our mammalian capabilities, for example, and so that's all I meant by that.

And I'm not sure, Jason, if you want to elaborate..

No, that's right. Yes, I would say, in general, the '23 focus is on efficiency and effectiveness of the platform. In other words, trying not to spend a lot of expansion, but you will see us do some targeted moves, as Mark saying, particularly in biopharma we could use more mammalian capacity.

And again, the testing about our platform is it's not really organized that way, it's not exactly like just purely dedicated like only works from but like there are certain functions in the foundry that are more heavily weighted that way. So we would want to invest more there.

But other functions synthesis and so on, construction, a lot of our assays and analytics. That's not really specific to any particular market. So there, we can adjust without having to build new stuff..

Great. Thank you..

All right. Mark from BTIG. I’ve opened your line, if you want to unmute, you are welcome to ask your questions..

Terrific. Maybe just a question on Zymergen you completed that acquisition last year. What do you believe to be the core capabilities that you're porting over as we think about 2023 and 2024? Just curious if you're planning to deploy the reconfigurable automation cards or the racks. And then any status on the real estate in California..

So I'll speak to the racks and someone else can chime in on the latest on the real estate. Yes is the answer. I'm extremely excited. You can ask people I can go because I put it in our Slack channels all the time, when will the rack show up in here in Boston. Yes. So we're extremely excited about that flexible automation.

Also, the software infrastructure and team at Zymergen is a real gift in terms of speeding up our ability to drive that efficiency and effectiveness of the platform next year, both like just the literal assets and the quick integration of the teams to develop new things.

But they also just ran into many of the same challenges we have run into over the last five to 10 years. And we sold some -- they've sold some and being able to put them together now as one team is a real speed up. And so it is high integration on the platform side.

As we mentioned during the whole acquisition on the product side Ginkgo is not a product company. So we're still looking for homes for various of the products and so on, hoping news on that in the future. But the platform integration is aggressive and working well. And Mark, I don't know if you want to speak to the....

Yes. On the real estate, we did sublease 1 facility in the fourth quarter, and we are, of course, evaluating all the options with respect to the real estate there. And so that very much -- it's sort of what I would call it a very active exploratory phase right now..

Okay. That's helpful. One for you, Jason. Kind of a bigger picture question on code based I think you leverage over 2 billion proprietary protein sequences. You've called out Bayer as one of the folks that's evaluating this, I believe.

How should we think about this asset evolving and perhaps turning into a commercial engine? When do you think we might hear when and how much you can monetize code-base?.

Okay. Yeah. So this is a great question. So first off, like think about what we do for a customer, right? Because we're coming in, they want to sell a program to do something. That means they don't have it working right now.

They need a new thing, all right? And so there's going to need to be some lab work done -- and in particular, we need to change the genome of that cell and test whether that change did the thing the customer wanted, all right? So one answer is try a lot of designs informed by our design software and so on.

A thing that can save you a lot of work is if we have done something similar to what you were asking for. And so we have a lot of intuition about what the best designs will be, okay? And we see this. We have like a really nice case study.

I don't know some on the website, but like where we start with like a big, like would we make like 3,000 or 4,000 synthesized enzymes from all over, like our big, like you were mentioning that big 2 billion or whatever genome like gene sequence collection.

We go find all these potential genes from our proprietary database, print them, we're going to print at twist, put them in selves, test them. We do that. And then we train our own machine learning model just for that enzyme, okay? Like that data goes into a model just for this particular enzyme. And then we do it again.

We tell the model now to say, hey, give me 3,000 new ones to make. We make them -- we do it again. And then the last improvement, which is the 1 that gives the most improvement, we only try 100.

Because at that point, we'd like generated data and trained our model well enough that the model is now becoming increasingly predictive, and it's saving you the lab work. And what's really cool is now if the future customer wants that particular class of enzymes, we're not starting all the way back at the beginning.

We now have this like trained up model. So that is -- we are selling that today. Now what is the right business model, I think it's partially what you're asking, like, maybe I should just offer that as a service. maybe you should access that code base, but you do the lab work at your lab customer X. Today, we don't think that's great.

We think there's a real nice alignment between the throughput that we can run on our lab work and the data asset because there's just a lot of high throughput like both analysis and lab that it's better together, but you maybe could imagine that in the future. We are not today actually offering that data asset as a stand-alone product.

It is only offered integrated as part of a larger cell program.

Does that make sense?.

Yes, it does. Thank you for that. And if I can ask one last quick one. Your guidance for 100 new programs beat our estimate of 80 for 2023.

I'm just curious if you've seen any changes in lead time to like close a deal? Like what is your typical lead time from identifying a program and then closing it? And maybe I'd be curious, if you're seeing any changes to the components of your funnel as we enter 2023 here?.

Yeah. So I can say two things. One, I'd say it's the healthiest I've seen really since we started Ginkgo. And that's one of the points I was trying to make earlier is I feel generally good like our ability to -- and by the way, this is going to vary quarter-to-quarter right? Like it's a similar thing like it's not like total metronome here.

But like as I look across the year, we have a big set of potential both new customers that have new programs attached to them, but also increasingly inside sales into our current customers, right? So I was talking about that in biopharma, like you have -- you do a manufacturing deal and then next thing you know you're doing an R&D deal.

That is that the thing is starting to shorten our deal cycle -- we have a very different, maybe to state the obvious time to close a deal, if it's one of our current customers as a close deal, I mean adding a new program versus a brand-new customer.

The brand new customers still just take time, right? Like we're looking at, I don't know what it is exactly, but three months to six months, right? So there is just a process to convince people and so on. But if you have a relationship with online and you have a joint steering committee and you're meeting every quarter.

And you can kind of boot up a new deal under your existing legal agreement. It's just a decision to spend money.

-- right? When we do a new deal, by gosh, right, it's a whole it's all the negotiations, right? So we like to get that kind of umbrella deal in place and then it makes things on average faster, but you kind of see a bimodal depending on whether it's a current or a new customer on timing?.

Great. I look forward to ferments and I’ll see you next month..

Yeah. Please do come out. Yeah. It’s going to be a good one..

Thanks, Mark. All right. Gaurav, I've opened up your line. Go ahead..

Hey. How is it going? I hopped in a little late, so apologies if these were covered. Just two quick ones for me. First, it looks like bulk of the new 2022 programs were AgBio and pharma. It seems like this will remain the case in the near term in terms of those 2 end markets really comprising the most of the new programs.

Are there any attractive relatively untapped end markets to look for that can creep in more materially and contribute to new cell programs in the midterm?.

Great question. I don't know. I mean this is one of these things where I think we benefit from being a platform that we don't have to be too certain of where that's going to be.

Like if you were acquiring the clock 3 or 4 years ago when we actually did that Cronos deal like, I remember Canada was made legal in Canada and suddenly like biotech for cannabinoids was on fire. And there was a lot of interest start-up companies, 18 things happening.

And we could just flex into that even back then, right? And now we're substantially more flexible than we were three or four years ago to move to where the action is.

So I have like my personal thoughts probably, but like to some degree, it doesn't matter, right? Like what I'd rather make and go able to do is go wherever it is, and then we just watch, right? We don't have to try to predict it.

But I do think you're seeing at least on the like as a consequence of COVID, you are seeing countries wanting to shore up critical infrastructure like onshore or like I think it's called like, I don't know, whatever, friendly country shore basically -- and it's changing where certain activities, like, for example, API manufacturing is done.

So you might see opportunities in API manufacturing that just weren't there a couple of years ago, not because of like particularly on the economics, but because countries are putting their foot on the scale to make sure they have access to critical drugs in the event of a more polarized world, as one example I could think of..

Got it. Thank you. And then just a last one, just a quick one for me. It seems like -- I think it was on Slide 20, right? Of that $200 million of milestones or potential milestones between 2021 and 2020 that you guys racked up in terms of the pipeline.

Have any of that been realized? Or is it still early days?.

Yeah, Gaurav. Maybe just to give you a little bit of additional context. The milestones that are in that chart would represent not intermediate, technical [Multiple Speakers] at the earliest kind of completion of a technical program milestones and then quite often, a lot of them are further down the value stream of the product.

And so given that our average product is -- our average program is a couple of years, we wouldn't have expected to see milestones from those sources yet..

Got it. Thanks, guys. Appreciate it. Congrats..

Thanks. All right. Our last question here is from John at Bank of America. John, I’ve opened up your line. John you might need to unmute. We can’t hear you..

Can you hear me?.

Yes..

Hey. Thanks for letting me on. I would like to go back to the financial guide here. Given that you guys have discussed the recent milestones being pushed out and you expect to capture that soon.

Is it fair to assume that the fourth quarter foundry revenues were just purely fee-for-service -- and again, if there's any sort of quantifiable range in terms of the milestone revenues that you might be able to recognize in '23, if you could provide that, that would be great..

Yeah. So fourth quarter revenue did have milestone revenue in. We've got that on Slide 10 in the deck, it breaks out. And so you'll see it was about $17 million of the of the $50 million plus of revenue in the quarter was in fact downstream value share milestone revenue. And then -- sorry, the second part of the question was 2023 expectation.

So I guess I'll just sort of reiterate the comment I made before. There is -- there were some discrete milestones that we were hoping to hit in Q4 that we didn't. We're still very much actively working on those. We think the technical work is largely done. There are some factors outside of our control there, but we are still very much working on that..

Got you. Thank you. That’s all for me. Thank you..

All right. Thanks, John. That was our last formal question. So unless anyone's got any closing remarks, we can say good night..

Thanks, everybody..

Bye..