It’s been more than a half century since humanity first learned to genetically modify organisms. While we’re still learning new things every day about it, synthetic biology has now become commonplace in a multitude of industries. From chemical production in agriculture to drug design and discovery, many modern products would be impossible or too expensive without synthetic biology. This has opened the door for amazing synthetic biology stocks.
However, synthetic biology still has far more potential left to unlock. The 21st century will bring a growing demand on food and industrial goods, thanks to climate change and the need to mitigate greenhouse gasses. That means the 21st century could be the century of synthetic biology. Furthermore, synthetic biology stocks will be needed to feed the world and achieve our climate goals.
The best synthetic biology companies will be those who are increasingly needed in the world to come. Companies which can help the world face climate change, an aging population and a growing population will all thrive. The best synthetic biology companies can also bring to the table new revenue and business models for the 21st century. The disruptive potential of such new models could be as important as the science and products which are behind them.
So, if you want to invest in the future, then synthetic biology stocks are some of the best ways to go. Here are three of the top synthetic biology stocks you can buy today.
Gingko Bioworks (DNA)
Ginkgo Bioworks (NYSE:DNA) has explosive potential in the field of synthetic biology. Unlike traditional biotech companies, which sell synthetic biology products directly, Ginkgo has a unique approach. The company wants to be the Apple (NASDAQ:AAPL) App Store of biotechnology. Ginkgo’s business model is to step in when other companies have a biotech product in mind. Ginkgo then creates a microorganism to produce these biotech products efficiently, and sells that organism for a modest sum plus royalties on future earnings.
This business model is heavily weighted towards Ginkgo. By gaining royalties on all products they work with, they can potentially gain huge returns with far less risk. Gingko hopes to drive down costs enough that companies will be forced to use its services and sign off on its royalties.
That dream has been slow-going, but it may be coming back to life. Ginkgo has recently announced partnerships with Novo Nordisk (NYSE:NVO) and Sumitomo Chemical (OTCMKTS:SOMMY). The former announcement sent the stock price soaring, but Gingko has given back most of those gains as the year has progressed. Still, these collaborations show that the business model still has potential.
Ginkgo’s most recent earnings report shows them with $1.1 billion in cash and cash equivalents. They have a long road ahead to get their business model working, but they have the cash to get there. Meanwhile revenue shrank dramatically but expenses shrank far more. Their net loss went from $671 million to $173 million year-on-year. Ginkgo is still losing money, but they’re playing a long game. Each partnership they sign brings the potential for future royalties once the product they’re working on gets to market. If the synthetic biology industry achieves its revolutionary potential, Ginkgo with be the best synthetic biology company to capitalize on it.
Corteva (CTVA)
As a leading player in agriculture, Corteva (NYSE:CTVA) specializes in the creation of genetically modified (GMO) crops, which are key to the modern food industry. Corteva spun off from DowDuPont (NYSE:DD), itself made from the merger of Dow and DuPont, two major GMO companies. Corteva thus brings a long history and significant expertise to the field.
As with many GMO crop makers, one of Corteva’s key innovations is specialized pesticides tailored for use with their GMO crops. This integrated system enables farmers to achieve more efficient pest management, ultimately leading to reduced pesticide usage. The synergy between their GMO crops and associated pesticides not only enhances agricultural productivity but also aligns with sustainable farming practices.
Moreover, Corteva is launching more GMO crops that are inherently resistant to pests, exemplified by their recent release of anti-rootworm corn. In addition to new products, Corteva is opening up new markets. It recently gained approval for selling GMO canola in China. New products and new markets should soon lead to new revenue.
This year, Corteva has also resolved a significant issue by settling with United States water authorities regarding its use of PFAS chemicals. This removes uncertainty and potential legal challenges. And finally, for income investors, Corteva recently raised its dividend to $0.16 a share. Overall 2023 has been a busy year for Corteva, and with new products, new markets, and less uncertainty, the future is looking quite bright for the stock.
While their most recent earnings report showed relatively flat year-over-year performance, the company’s investments and research give them room to grow. As climate change alters weather and soil, GMO crops will become increasingly necessary to feed the world’s growing population. Corteva is well positioned for the road ahead, making them a must-buy synthetic biology stock for a long-term investor.
LanzaTech Global (LNZA)
LanzaTech Global (NASDAQ:LNZA) is on a mission to supercharge the green economy using synthetic biology. They seek to capture carbon dioxide and other greenhouse gasses and use microorganisms to turn those gasses into natural products. They came public via a SPAC just this year, and are already showing disruptive potential.
LanzaTech’s promise lies in how its microorganism can create industrially important compounds like ethylene. This means that LanzaTech can earn revenues in two ways at once. Not only can they sell the products created by their microorganisms, but in markets with carbon credits they can also get money by sequestering carbon. Both the Biden administration and the EU have shown a willingness to pay people to sequester carbon. If LanzaTech can make its dual-revenue streams both work, they could be the most important synthetic biology company of the 21st century, as global greenhouse emissions continue to rise.
LanzaTech’s most recent earnings report shows growing revenue, but also growing costs. Total revenue grew year-on-year from $10 million to $13 million. Their comprehensive loss went from $16 million to $27 million thanks to increasing expenses. Still, with $110 million in cash and cash equivalents, LanzaTech has several quarters to get their business model working.
The key to LanzaTech’s success or failure will lie in the promise of both capturing carbon and making useful products. The world will almost certainly need carbon capture to reach its climate goals, and making carbon capture profitable is the best way to achieve that. LanzaTech isn’t a sure bet by any means, but with their incredible potential they’re still a must buy synthetic biology stock.
On the date of publication, John Blankenhorn held a LONG position in AAPL . The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
