Pioneer Synthetic Biology Unicorn Amyris Files for Bankruptcy Amid Strategic Restructuring

Recently, synthetic biology has once again been thrust into the spotlight.

In early August, Amyris, one of the “big three” global synthetic biology companies, announced that it had filed for bankruptcy and would subsequently streamline its business portfolio to focus on developing its core R&D capabilities. In a similar turn of events, less than a year earlier, at the end of 2022, Ginkgo Bioworks, another star enterprise among the big three, was formally delisted from the NASDAQ stock exchange in the United States and became a subsidiary of its peer, Zymergen. Thus, of the once highly touted global synthetic biology big three, only Zymergen appears to remain, standing alone in the commercial world.

As a disruptive biotechnology, synthetic biology has exerted a profound influence on the commercialization strategies chosen by practitioners worldwide during its transition from laboratory research to commercial applications, with leading companies such as Amyris, Zymergen, and Ginkgo Bioworks serving as prominent examples. Overall, while Amyris’s technological barriers are not particularly high, it boasts outstanding capabilities in translating research into commercial products, having been the first to develop many innovative categories of synthetic biology products.

Today, Amyris’s move toward bankruptcy restructuring has undoubtedly heightened caution regarding the growth potential of synthetic biology companies.

However, many industry practitioners believe that Amyris’s core foundation remains intact and its R&D pipeline still holds promising products worthy of further development. If the company can successfully navigate this crisis, it may yet achieve favorable growth in the future. For Amyris, this move is less a bankruptcy than a strategic retreat to ensure survival: it has divested its overseas operations, which carried a heavy cost burden, restructured business units with weak profitability, and refocused on its areas of competitive advantage.

In China, synthetic biology has emerged as a niche sector attracting significant attention from investment institutions. The continuous influx of venture capital has not only fostered the growth of many high-quality innovative enterprises but also, to some extent, accelerated the onset of intense intra-industry competition. What specific business model did Amyris’s bankruptcy ultimately disprove? Will Chinese synthetic biology companies follow in its footsteps? And how can they avoid these obvious pitfalls? We attempt to answer these questions through interviews with practitioners and investors in the field of synthetic biology.

“During Amyris’s fastest-growing years, it established partnerships with nearly all major corporations,” an investor told VCBeat. In his view, Amyris’s inevitable path to bankruptcy restructuring was fundamentally due to its overly rapid expansion. Within just a few years, Amyris quickly extended its business footprint beyond the United States, frequently entering into joint ventures and collaborations with major companies while continuously exploring new product categories.

Most members of Amyris’s founding team had strong technical backgrounds, and their entrepreneurial mission was to make disruptive innovations in the industry. In 2003, Jay Keasling, a chemistry professor at the University of California, Berkeley, together with three of his doctoral students, founded Amyris. Widely regarded as the “father of synthetic biology,” Keasling helped attract top-tier Silicon Valley venture capital firms, and the company secured tens of millions of dollars in venture funding shortly after its establishment.

At its inception, Amyris adopted an asset-light model of licensing out its R&D achievements, quickly gaining prominence in the industry. With funding from the Bill & Melinda Gates Foundation, Amyris successfully engineered yeast cells to produce artemisinin, a critical antimalarial drug, using novel strains. In 2006, Amyris provided these strains to pharmaceutical giant Sanofi royalty-free. The resounding success of artemisinin greatly energized the Amyris team, which promptly shifted its next product focus to biofuels.

Amyris attempted to develop farnesene, with initial progress proceeding very smoothly. The downstream applications for farnesene are highly diverse; beyond petroleum-derived products, it can be used in the manufacture of rubber, plastics, cosmetics, and lubricants through various chemical processes. In 2010, General Electric and Brazilian aircraft manufacturer Embraer tested Amyris’s aviation fuel and found it indistinguishable from conventional fuels. Furthermore, Mercedes-Benz placed sample orders for diesel fuel and deemed it a fully viable alternative.

However, it was the heavy bet placed on farnesene that led Amyris into blind expansion.

During its 2010 IPO roadshow, Amyris pledged that its farnesene production capacity would reach 40–50 million liters by 2012. For a synthetic biology company, this was an ambitious target, as scaling from producing 50 liters in the laboratory to 50 million liters in industrial facilities involves fundamentally different processes and levels of difficulty. To fulfill this capacity commitment, Amyris entered into more than 20 collaborations with chemical companies worldwide. However, the persistent issue of unexplained yeast cell death in large-scale fermentation tanks remained unresolved.

This sprawling, unfocused expansion placed immense demands on the company’s management capabilities, yet at that time, Amyris had not yet established a systematic operational framework. Confronted with yeast strains that proved more fragile than anticipated, Amyris neither conducted meticulous analyses to pinpoint the causes of yeast cell lysis nor attempted to improve strain conversion rates. Instead, it pinned its hopes on continuously building new production facilities to circumvent the underlying issues.

This approach placed further strain on Amyris’s R&D and management operations, with the resulting capital requirements far exceeding the capacity of a startup. During this period, the United States experienced the shale oil revolution, leading to a steady decline in oil prices and eroding the cost advantage of Amyris’s biofuels. For Amyris, the greater the volume of farnesene produced, the larger the losses incurred.

“In fact, Amyris has been striving to build its own brand, aiming to rapidly shorten the typical development phase of a company,” said an investor. “This means incurring higher trial-and-error costs in the short term, consuming substantial human and material resources, with funding posing a significant challenge.”

Admittedly, Amyris’s business model itself holds limited reference value for Chinese enterprises, as the typical IP licensing path it chose is still difficult to implement effectively within China’s innovation ecosystem. However, as a classic case of industrialization in synthetic biology, Amyris offers an important lesson to the industry: avoid expecting overly rapid advancement; instead, remain focused and carefully configure a product portfolio capable of supporting high future valuations.

“Corporate development and technological maturity follow inevitable stages; one should not be overly short-sighted or eager for quick success,” emphasized the aforementioned investor.

In China, for most synthetic biology companies, the risk of blind expansion is secondary; R&D clustering and homogeneous competition are perhaps the more pressing challenges at present.

“In the past two years, the most common complaint I’ve heard is that business is tough, competition is fierce, prices keep falling, margins are shrinking, and times are hard,” an industry practitioner told VCBeat. Two years ago, he crossed over from another sector to establish a synthetic biology company, with its flagship project being ergothioneine—a highly competitive market.

In fact, amid competition driven by product homogenization, transaction prices for various raw materials experienced a significant decline in the first half of 2023.

In China, competition has become intensely fierce in product categories with relatively mature new manufacturing processes, including the cosmetic ingredients sector where ergothioneine is positioned. Data shows that there are over 40 synthetic biology companies in China engaged in the development of cosmetic ingredients. However, as these ingredients are added in trace amounts, the overall market demand remains limited, making price wars imminent. Taking ergothioneine as an example, current market usage stands at only around 1 ton, indicating a very slow pace of market expansion. With a surge of suppliers entering the market, the average price of ergothioneine has plummeted from approximately RMB 200,000 per kilogram to just tens of thousands of RMB per kilogram.

Furthermore, the market for sugar substitutes and certain primary metabolites, including amino acids and nucleotides, is also highly saturated. “In fact, most currently available enzyme-catalyzed products have numerous suppliers, so the level of competition is self-evident,” analyzed an investor.

The formation of this hyper-competitive landscape is driven by two main factors. On one hand, a massive influx of capital has spurred a wave of domestic synthetic biology companies to pursue rapid, unchecked expansion, resulting in wild, grassroots growth from scratch within a short period. On the other hand, the innovation ecosystem within the synthetic biology industry remains immature at this stage. Traditional fermentation enterprises undergoing transformation still constitute the mainstay of the sector; while they excel in process optimization, their innovative capabilities are relatively weaker. Meanwhile, disruptive synthetic biology products have yet to become mainstream in the market.

In China, the synthetic biology industry has grown rapidly in just a few years. In the years leading up to the second half of 2022, investment and financing in synthetic biology remained exceptionally hot, with massive capital inflows accelerating the industrialization of this new technology.

Data shows that from 2018 to 2021, the financing amounts for domestic synthetic biology projects were RMB 2.671 billion, RMB 403 million, RMB 2.159 billion, and RMB 2.295 billion, respectively. Spanning upstream platform development, midstream technical services, and downstream product applications, synthetic biology has become the hottest label in the primary market. According to the Artery Orange database, nearly 200 financing and investment events have occurred in China’s synthetic biology sector from 2020 to the present, with multiple projects—including Bluepha, Boyin Bio, Enzyme Biotech, and Occanase—completing three or more rounds of financing within a short period. Furthermore, research indicates that approximately 30%–50% of the literature in the field of synthetic biology has been published in the past five years, reflecting a concentrated surge in research outputs.

In this process, synthetic biology companies with a background in traditional fermentation enjoy a clear first-mover advantage. In the short term, this has led to a landscape of homogeneous product competition.

In China, synthetic biology companies mainly originate from two sources: the commercialization of university research achievements and the transformation of traditional fermentation enterprises. Companies born out of scientific research commercialization possess stronger attributes of original innovation, with many attempting to create entirely new product categories; however, they face greater risks in subsequent industrialization and commercialization. Consequently, their current development progress lags behind the synthetic biology products offered by transformed traditional fermentation enterprises. In the traditional fermentation sector, external financing has remained relatively low for a long period, with most projects supported by direct corporate investment. As a result, these companies tend to prefer relatively mature product categories when selecting items for development.

“Starting this year, synthetic biology companies will be gradually cleared out of the market,” said an investor. He noted that since the second half of 2022, the valuation center of gravity for China’s synthetic biology industry has clearly declined, with some smaller synthetic biology firms increasingly unable to secure financing.

Synthetic biology remains a sector of significant interest to most investment institutions. However, amid tighter funding conditions and as the industrialization of synthetic biology enters more complex and challenging phases, investors are becoming increasingly cautious. The investment rationale is gradually shifting from a fervor for frontier technologies to a pursuit of commercial certainty.

It has been nearly 20 years since Amyris licensed its artemisinin-producing yeast strain to Sanofi, marking the beginning of global efforts to industrialize synthetic biology. Public perception of the commercialization of synthetic biology has quietly evolved: from an initial pursuit of disruptive technologies to the realization that no matter how advanced synthetic biology techniques may be, they alone are insufficient to build a competitive moat for commercial success. Only teams with sufficiently strong comprehensive capabilities can leverage synthetic biology to disrupt traditional manufacturing.

Certainly, robust technical capabilities remain fundamental, yet technology alone does not easily create a competitive moat. The core of synthetic biology lies in microbial strains and biological parts. Unlike innovative drugs, which enjoy a period of patent exclusivity following their initial market launch, the core products of synthetic biology pioneers are quickly commoditized by latecomers. This implies that correct product category selection and comprehensive cost management capabilities are undoubtedly the keys to survival for synthetic biology companies in the commercial landscape.

First is product category selection. The selection of product categories in synthetic biology is not limited to a single industry. This is a unique advantage for synthetic biology companies, as they can initiate projects targeting various scarce materials from industries such as skincare, food additives, pesticides, animal feed, chemicals, and active pharmaceutical ingredients (APIs), thereby building a cross-industry R&D pipeline internally.

This undoubtedly increases the difficulty of product category selection. After all, if the chosen category faces intense competition or represents a niche market, it will be difficult to generate sufficient commercial value, even after successful product development and scaled-up production capacity. Selecting product categories in synthetic biology requires, on one hand, rigorous论证 and analysis to identify categories that are not easily substitutable; on the other hand, extensive collection of industry information is needed to discover categories with sustained, significant supply-demand gaps amidst a rapidly changing external environment.

“There are actually many such product categories where orders are already secured, but due to gaps in certain technical aspects, they may not be suitable for us to initiate projects,” said the aforementioned industry practitioner. Synthetic biology is an emerging technology, and every industry may have high-value topics. By leveraging synthetic biology, significant cost advantages can be achieved. It is entirely possible to identify “ready-to-produce” product categories through cross-industry information exchange, rather than developing products first and then seeking markets.

Next is the certainty of products and production capacity, namely mass production capability and comprehensive cost control. “Achieving the lowest comprehensive cost is the key to survival, but this is the reality of the synthetic biology industry,” the aforementioned practitioner told VCBeat. At the beginning of his career, many peers believed that original innovation was the most critical task. Everyone hoped their products would be unique, allowing each company to survive with substantial profit margins, while viewing homogeneous innovation as pseudo-innovation. “In retrospect, this perspective failed to recognize reality. Synthetic biology cannot rely on technological moats; what matters is competing on costs. The industry tests mass production capabilities and comprehensive cost control.”

“For synthetic biology, front-end technology is only one aspect; the ultimate focus must be on industrialization and commercialization.” An investor similarly noted that industrialization capability may be even more critical in market competition than front-end technology. Without prior experience in industrial-scale production, without considering strain adaptability during industrial processes, without systematically optimizing fermentation conditions and parameters, or without sufficient industrial management expertise within the team, errors are highly likely. For instance, tank failures caused by bacteriophage contamination can result in losses of millions of yuan per batch. Such expertise is built upon numerous trial-and-error experiences accumulated across the industry over time.

As Amyris filed for bankruptcy, the intense competition within synthetic biology projects has persisted, with financing and R&D activities continuing unabated. We remain confident in the disruptive potential of synthetic biology; however, realizing this potential may require more sober reflection and meticulous experimentation regarding the implementation pathways.