What Is Going on With Ginkgo Bioworks (DNA) Stock Today? – InvestorPlace

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Its an unforgettable day for Ginkgo Bioworks (NYSE:DNA) as the company just disclosed a deal with pharmaceutical giant Merck (NYSE:MRK). Together, the two companies hope to innovate pharmaceutical manufacturing processes through the use of enzyme technology. There are financial implications here, as well. Ginkgo will receive a research and development fee up-front and can earn multiple milestone payments. Even with this major development, however, DNA stock struggled to move into the green this morning.

So, heres a small dose of science for you. Merck and Ginkgo Bioworks plan to engineer up to four enzymes for use as biocatalysts in Mercks active pharmaceutical ingredient (API) manufacturing efforts. In other words, Merck is tapping Ginkgo to provide its cell engineering and enzyme design capabilities to potentially improve the way modern medicines are manufactured.

What does each company bring to the table? To oversimplify it a bit, Mercks bringing the capital and the laboratories, while Ginkgos bringing the fungal strains. This could certainly be a medical-market game-changer, but what has been Wall Streets initial response?

By 11:00 a.m. Eastern, DNA stock fell into the red but then moved higher. To a certain extent, it followed the ups and downs of the major stock market indices this morning.

Perhaps it will take some time for investors to absorb all of the scientific terminologies in the press release. Or maybe, theyre still mulling over the fiscal implications of the Merck-Ginkgo deal.

Those implications are certainly worth noting, especially if youre holding DNA stock. The arrangement specifies that Ginkgo Bioworks will, at the very least, receive an up-front research and development fee. However, Ginkgo will also be eligible to earn success-based research and development milestone payments.

On top of all that, Ginkgo Bioworks can also earn commercial milestone payments for achieving a number of biocatalysis targets. All told, these milestones could add up to $144 million for Gingko.

Thus, this is potentially good news for the pharmaceutical market and terrific news for Ginkgo Bioworks. In time, all of this could have a profoundly positive impact on DNA stock.

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On the date of publication, David Moadeldid not have (either directly or indirectly) any positions in the securities mentioned in this article.The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.

David Moadel has provided compelling content and crossed the occasional line on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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What Is Going on With Ginkgo Bioworks (DNA) Stock Today? - InvestorPlace