Ginkgo CEO Jason Kelly (Photographer: Kyle Grillot/Bloomberg via Getty Images)

UP­DAT­ED: As Gink­go looks to clear its name, the feds have come sniff­ing around on the heels of short sell re­port

A month and a half af­ter a short sell at­tack near­ly brought Gink­go Bioworks’ new­ly pub­lic shares to its knees, the com­pa­ny on Mon­day took its largest step to date to­ward clear­ing its name. But it al­so re­vealed it’s cur­rent­ly the tar­get of a De­part­ment of Jus­tice probe.

Gink­go re­ceived an “in­for­mal in­quiry” from the DOJ con­nect­ed to the short sell re­port, re­leased last month by hedge fund Scor­pi­on Cap­i­tal, the com­pa­ny said dur­ing Mon­day’s third quar­ter earn­ings call. CEO Ja­son Kel­ly told an­a­lysts Gink­go is “co­op­er­at­ing” with reg­u­la­tors, sug­gest­ing the in­ves­ti­ga­tion re­mains on­go­ing.

“Short­ly af­ter the short sell­er re­port comes in, we re­ceived a pre­lim­i­nary in­quiry from the DOJ, in­for­mal,” Kel­ly said dur­ing the call, adding lat­er: “There’s not too much more I’d add at this point on it.”

The dis­clo­sure came in the same breath as Kel­ly say­ing its self-ap­point­ed in­de­pen­dent au­dit found all ac­cu­sa­tions of wrong­do­ing in the re­port to be “un­found­ed.” In a fol­low-up email ask­ing for com­ment, a Gingko spokesper­son re­ferred End­points News to Kel­ly’s re­marks and the earn­ings press re­lease.

Through spokesper­son Danielle Blevins, the De­part­ment of Jus­tice de­clined to com­ment.

“As a gen­er­al mat­ter, the De­part­ment does not con­firm, de­ny, or oth­er­wise com­ment on the ex­is­tence or non-ex­is­tence of in­ves­ti­ga­tions. We de­cline to com­ment fur­ther,” Blevins wrote to End­points in an email.

Though the probe is os­ten­si­bly con­nect­ed to the re­port, it’s not yet clear what in­for­ma­tion reg­u­la­tors sought from Gink­go or how broad the scope of the in­quiry is.

Back in Oc­to­ber, Scor­pi­on put out its re­port al­leg­ing Gingko was “a Franken­stein mash-up of the worst frauds of the last 20 years.” The hedge fund claimed there was a pat­tern of fraud at Gink­go, with the com­pa­ny fak­ing cus­tomer in­ter­est and over­hyp­ing a plat­form that’s seen a his­to­ry of fail­ure with­out any mean­ing­ful IP.

The re­port could not be con­firmed and short sell­ers — and the re­ports they put out — have a cer­tain rep­u­ta­tion about them. At the time, long­time stock com­men­ta­tor Cit­ron Re­search pushed back on the most se­ri­ous claims against Gink­go, say­ing the com­pa­ny us­es “roundtrip trans­ac­tions” to boost rev­enue re­ports but stopped short of call­ing it a “scam.”

But it’s sim­i­lar to what oc­curred af­ter Scor­pi­on re­leased a sep­a­rate re­port on Berke­ley Lights, send­ing that syn­bio play­er’s stock tank­ing as well. And Zymer­gen, the com­pa­ny Scor­pi­on re­ferred to as Gink­go’s “Siamese Twin,” blew up in spec­tac­u­lar fash­ion ear­li­er this year just months af­ter a mas­sive $500 mil­lion IPO.

Gink­go, too, is fac­ing the re­al­i­ties of be­ing a new­ly pub­lic com­pa­ny, hav­ing tak­en the SPAC route and re­verse merg­ing with Arie Bellde­grun’s blank-check com­pa­ny to raise a record $2.5 bil­lion. The deal set Gink­go’s mar­ket val­ue at $15 bil­lion, though the stock — trad­ing on Genen­tech’s old $DNA tick­er — hasn’t moved all that much since the merg­er closed in Sep­tem­ber.

Gink­go shares were down about 2.5% in ear­ly Mon­day trad­ing and are up about 27.5% since the SPAC process wrapped up.

This ar­ti­cle has been up­dat­ed to in­clude Gingko and the De­part­ment of Jus­tice’s re­spons­es to End­points’ re­quests for com­ment.

At the In­flec­tion Point for the Next Gen­er­a­tion of Can­cer Im­munother­a­py

While oncology researchers have long pursued the potential of cellular immunotherapies for the treatment of cancer, it was unclear whether these therapies would ever reach patients due to the complexity of manufacturing and costs of development. Fortunately, the recent successful development and regulatory approval of chimeric antigen receptor-engineered T (CAR-T) cells have demonstrated the significant benefit of these therapies to patients.

All about Omi­cron; We need more Covid an­tivi­rals; GSK snags Pfiz­er’s vac­cine ex­ec; Janet Wood­cock’s fu­ture at FDA; and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

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Usama Malik

Ex-Im­munomedics CFO charged with in­sid­er trad­ing, faces up to 20 years in prison af­ter al­leged­ly tip­ping off girl­friend and rel­a­tives of a PhI­II suc­cess

The former CFO of Immunomedics, who helped steer the company to its $21 billion buyout by Gilead last year, has been charged with insider trading, the Department of Justice announced Thursday.

Usama Malik tipped off his then-girlfriend and four others that a Phase III study for Trodelvy would be stopped early four days before Immunomedics publicly announced the result in April 2020, DoJ alleged in its complaint. The individuals then purchased Immunomedics shares, selling them after the news broke and Immunomedics’ stock price doubled.

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Merck's new antiviral molnupiravir (Quality Stock Arts / Shutterstock)

As Omi­cron spread looms, oral an­tivi­rals ap­pear to be one of the best de­fens­es — now we just need more

After South African scientists reported a new Covid-19 variant — dubbed Omicron by the WHO — scientists became concerned about how effective vaccines and monoclonal antibodies might be against it, which has more than 30 mutations in the spike protein.

“I think it is super worrisome,” Dartmouth professor and Adagio co-founder and CEO Tillman Gerngross told Endpoints News this weekend. Moderna CEO Stéphane Bancel echoed similar concerns, telling the Financial Times that experts warned him, “This is not going to be good.”

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Common performs onstage, December 2020 (Getty Images)

Com­mon, Jamie Foxx among celebs stand­ing up for clin­i­cal tri­als in star-stud­ded can­cer group's pan­dem­ic push

Healthcare screenings and clinical trial enrollment were battered by the pandemic. But the well-known celebrity-backed Stand Up To Cancer non-profit, along with pharma and advocacy partners, has been working to reverse that and make up lost ground, by stepping up awareness campaigns.

Twelve campaigns launched in 2020 and another five in 2021 amplify the need for cancer screening and care, especially for underserved communities. While pharma companies have long been donors to the cancer research group, Covid brought new support — and increased awareness efforts.

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UP­DAT­ED: Am­gen halts some drug dis­counts for safe­ty net hos­pi­tals as SCO­TUS takes on 340B case

Amgen will soon be the 10th biopharma company to pull back on offering drug discounts to contract pharmacies of safety-net hospitals under a federal program. Like its peers, Amgen argues that the growth of these contract pharmacies has ballooned in recent years and needs to be reigned in.

Beginning Jan. 3, 2022, Amgen’s policy will only allow 340B covered hospitals to designate a single pharmacy location, with the exception of federal grantees and contract pharmacies wholly owned by a 340B hospital, or that have common ownership with a health system.

In­cor­po­rat­ing Ex­ter­nal Da­ta in­to Clin­i­cal Tri­als: Com­par­ing Dig­i­tal Twins to Ex­ter­nal Con­trol Arms

Most drug development professionals are familiar with the nerve-racking wait for the read-out of a large trial. If it’s negative, is the investigational therapy ineffective? Or could the failure result from an unforeseen flaw in the design or execution of the protocol, rather than a lack of efficacy? The team could spend weeks analyzing data, but a definitive answer may be elusive due to insufficient power for such analyses in the already completed trial. These problems are only made worse if the trial had lower enrollment, or higher dropout than expected due to an unanticipated event like COVID-19. And if a trial is negative, the next one is likely to be larger and more costly — if it happens at all.

What's fair? New ICER re­port shows pay­ers gen­er­al­ly en­sur­ing fair ac­cess to drugs

The nonprofit Institute for Clinical and Economic Review on Wednesday released a new report highlighting the ways in which payers are generally ensuring fair access to prescription drugs, even when based on a set of criteria set by the nonprofit.

While noting the lack of transparency hindered the report’s results, ICER said that the “great majority” of payer policies in the formularies evaluated are structured in a way to support many key elements of how ICER defines “fair access.”

Ab­b­Vie tacks on a new warn­ing to Rin­voq la­bel as safe­ty frets crimp JAK class

The safety problems that continue to plague the JAK class as new data highlight some severe side effects are casting a large shadow over AbbVie’s Rinvoq.

As a result of a recent readout highlighting major adverse cardiac events (MACE), malignancy, mortality and thrombosis with Xeljanz a couple of months ago, AbbVie put out a notice late Friday afternoon that it is adding the new class risks to its label for their rival drug.

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