Silicon Valley’s gene-editor Synthego files for bankruptcy with plans to sell itself to lenders
By Steven Church, Bloomberg
Synthego Corp., which makes gene-editing tools for drug developers and other researchers, filed for bankruptcy with plans to sell itself to its main lender, an affiliate of private equity firm Perceptive Advisors.
Perceptive Credit Holdings III would trade as much as $85 million in debt for ownership of Synthego, unless a higher offer comes in, the company said in a proposal filed Monday in federal court in Wilmington, Delaware. Perceptive manages about $8 billion that is largely focused on health-care technology.
Synthego, based in Rewood City, was founded in 2012 by former employees of Elon Musk’s SpaceX company. Paul Dabrowski and Michael Dabrowski used $250,000 to start a firm that would apply their engineering background to the field of biology and the developing technology of gene editing.
The company struggled for years to make a profit as it raised $392 million from equity investors, Allen Soong, a restructuring adviser with Paladin Management Group, said in court papers. Synthego’s debt ballooned in recent years, adding to its struggles, Soong said.
“By the end of 2023, the company was still not generating positive cash flow and the interest burden had expanded in excess of ten times what it was in 2020-2021,” he said in a filing.
Loan and Court Fight
Perceptive is also loaning the company as much $12.5 million to pay for the Chapter 11 case. Under the proposed loan, Synthego must finish selling itself, to Perceptive or another buyer, within 70 days.
Synthego sells gene-slicing tools and software that helps companies develop everything from new pharmaceuticals to agricultural products. Earlier this year, the company cut a deal to make a gene-editing enzyme developed by pharmaceutical giant AstraZeneca.
Synthego is locked in a court fight over technology that Agilent Technologies claims is protected by two patents. That dispute is awaiting an appeals court ruling, according to court documents.
The bankruptcy case is Synthego Corporation, 25-10823, US Bankruptcy Court, District of Delaware (Wilmington).
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