Bayer and Ginkgo Bioworks have announced plans to create a new company focused on the plant microbiome. Improving the microbes’ ability to make nitrogen fertilizer available for plants offers a major potential benefit to sustainable agriculture.

The deal provides a Series A investment of $100 million by its parent companies and Viking Global Investors LP. The new company will be co-located with Ginkgo in the biotechnology-friendly community of Boston, Mass., and in West Sacramento, Cal., home of Bayer’s research and development (R&D) activities surrounding plant biologics.

The new company will focus on technologies to improve plant-associated microbes, with a major focus on nitrogen fixation. While some crops such as soybeans, peas and other legumes can pair with specific microbes that live within the plant and fulfill their nitrogen needs, most other crops cannot. Nitrogen fertilizer is, therefore, an essential component in modern agriculture. It can add costs to growers when used inefficiently, however. In addition, use of nitrogen fertilizer is a major environmental concern, driving greenhouse gas emissions and water pollution.

The endophytic microbes to be developed by the company aim to provide a platform to flexibly deliver new agronomic advantages. This is expected to have a profound positive benefit to growers, agriculture and society alike.

The new biotech company is the fifth investment by the Bayer Lifescience Center (BLSC), which operates as a strategic innovation unit within Bayer and directly reports to Bayer’s board of management. The BLSC's mission is to uncover, encourage and activate fundamental breakthroughs by creating and building new companies together with entrepreneurial best-in-class partners, such as Ginkgo Bioworks for synthetic biology. Along with the investment in this new company as well as previous investments in Casebia (CRISPR/Cas technology) and BlueRock (induced pluripotent stem cell technology), the BLSC has recently made some of the largest-ever Series A investments across the biotech and agricultural technology industries.

“Accessing the microbiome is part of Bayer’s innovation strategy. We are launching this enterprise to develop transformative agricultural products based on the latest synthetic biology technology,” said Kemal Malik, member of the board of management of Bayer AG responsible for innovation. “We have exclusively partnered with Ginkgo to build a leading player in this field.”

In addition to the initial $100 million Series A investment by Bayer, Ginkgo, and Viking Global Investors LP, Ginkgo will provide exclusive access to its technology, laboratory and office spaces, and will build a new facility exclusively for the new company. Bayer will also provide exclusive access to proprietary microbial strains and all necessary development know-how.

Dr. Mike Miille will be named interim chief executive officer of the new company. He is a biotech veteran in the field of agricultural use of the microbiome, former CEO of AgraQuest and currently vice president strategy and business management biologics at Crop Science, a division of Bayer. The board of directors of the new company will be comprised of two representatives from Ginkgo Bioworks -- Dr. Jason Kelly and Dr. Reshma Shetty -- and two representatives from Bayer -- Dr. Axel Bouchon and Dr. Juergen Eckhardt.

“Biology is changing industries as diverse as flavor and fragrance to consumer electronics. Agriculture is the original biological technology, and the more we can learn to work with the soil microbiome, the more we can discover new ways to add value to farmers and return to its biological -- and more sustainable -- roots,” said Jason Kelly, co-founder and CEO of Ginkgo Bioworks. “We’re thrilled to be working with Bayer to bring this transformational aspiration to life.”

The new company will operate out of Ginkgo’s Boston Seaport facility. Ginkgo is a rapidly growing biotech company building a versatile, automated platform for engineering biology that has applications across industries, such as consumer products and personal care, health and medicine and food and agriculture. In the past 24 months, Ginkgo has raised $154 million in venture capital, which has driven the growth of its platform technology.

Bioworks3, Ginkgo’s third-generation automated foundry, is currently under construction and will be used by the new company to develop technologies with applications in sustainable agriculture. The West Sacramento location is a global Crop Science R&D site that hosts the Biologics R&D team, with a focus on innovative biological pest and disease management solutions. The site houses Bayer’s center of excellence for research and development in this area, making Bayer a leading company for research, development and production of microbial-based solutions.

“The plant microbiome is one of the next frontiers in sustainable agriculture, and it may enable us to take a major leap in plant physiology: producing nitrogen fertilizer directly in the plant,” said Axel Bouchon, head of the BLSC. "We are excited to combine state-of-the-art plant science and leading microbial technology to help tackle this challenge. With Ginkgo, we have found the best-in-class partner to achieve this fundamental breakthrough.”

Closing of the transaction is subject to customary conditions and is expected to occur in the fall of 2017. Hiring for the new company is currently underway.