Synthego: CRISPR Pioneer's 92-Day Liquidating Chapter 11

Synthego Corporation—the Redwood City biotechnology company founded by former SpaceX engineers that developed automated CRISPR genome engineering tools—filed for chapter 11 bankruptcy on May 5, 2025, in the U.S. Bankruptcy Court for the District of Delaware. The filing came after the company raised more than $450 million in venture capital from investors including Peter Thiel's Founders Fund, 8VC, and Wellington Management, with Nobel laureate Jennifer Doudna—co-discoverer of CRISPR-Cas9 gene editing—among its early backers.

The filing came amid biotechnology sector headwinds, where rapid growth outpaced revenue generation, margin compression eroded profitability, and interest burdens expanded more than tenfold between 2020 and 2023. Synthego entered the chapter 11 process with $50 million to $100 million in assets against $100 million to $500 million in liabilities, ultimately conducting a 92-day liquidating chapter 11 that transferred substantially all assets to its primary secured lender through an $85 million credit bid while preserving the company's operations, workforce, and brand.

From SpaceX to Synthetic Biology

Synthego began at SpaceX, where brothers Paul and Michael Dabrowski worked as computer engineers. Paul served as Lead Digital Designer at SpaceX, and Paul Dabrowski said the SpaceX experience influenced his approach to company building. Neither founder had a background in genetics—their expertise lay in software and automation.

In 2012, the Dabrowskis founded Synthego in Redwood City, California, using $250,000 in initial capital. Their vision was to apply automation-focused software to genome engineering. The company saw an opportunity to use software to help scientists automate research and accelerate CRISPR-based gene editing workflows. Paul Dabrowski later described how SpaceX influenced his approach: the brothers "saw how that company was being built with a big purpose and impact in mind."

The technology platform. Synthego developed proprietary technology for synthesizing high-quality guide RNA molecules that direct CRISPR-Cas9 to specific locations in the genome. In CRISPR-based gene editing, the guide RNA serves as a targeting mechanism that binds to a specific DNA sequence and directs the Cas9 enzyme to make a precise cut. The quality and specificity of guide RNA affects editing efficiency and off-target effects, making it an input for researchers developing gene therapies, studying disease mechanisms, or creating genetically modified organisms for agricultural applications.

Synthego's approach applied software and automation to what had traditionally been a laborious process. Rather than requiring scientists to synthesize their own guide RNA or rely on variable-quality academic collaborations, the company offered standardized, quality-controlled products that could be delivered rapidly to laboratories worldwide. The company's products enabled researchers to edit genes with precision, serving academic institutions, pharmaceutical companies, and biotech firms.

The core product line included:

• Synthetic guide RNA (sgRNA): Custom and chemically modified guide RNAs for specific genomic targets
• Predesigned libraries: Guide RNA collections for screening applications across disease-relevant genes
• CRISPRevolution: Flagship product launched in August 2016, offering end-to-end CRISPR solutions

The company opened its first facility in Redwood City in 2016, with two additional offices nearby in Menlo Park. Manufacturing capacity expanded in 2023 when Synthego opened an 18,000 square-foot GMP manufacturing facility capable of producing clinical-grade guide RNA for therapeutic applications. The facility followed current Good Manufacturing Practices (cGMP) and positioned Synthego to support IND and NDA/BLA enabling clinical studies.

Venture Capital Backing and Scientific Investment

Synthego's investor roster included Silicon Valley venture capital firms, with the company raising approximately $392 million in equity financing between 2012 and 2022. The funding trajectory accelerated as CRISPR technology drew investor interest.

The Doudna investment. Jennifer Doudna, the UC Berkeley professor who co-discovered CRISPR-Cas9 gene editing and later won the 2020 Nobel Prize in Chemistry for that work, invested in Synthego during the Series B round. Doudna's investment in Synthego added a CRISPR researcher to the cap table.

The $110 million Series C round in 2018, led by Peter Thiel's Founders Fund with participation from 8VC and Menlo Ventures, expanded Synthego's funding base. By August 2020, the Series D round added another $100 million from Wellington Management, RA Capital Management, and 8VC, bringing total private funding to more than $250 million; Synthego said the funding supported its goal of "virtualizing biology."

The shift to debt. Equity financing eventually gave way to debt as the company sought additional capital to fund continued expansion. Equity capital—while dilutive to existing shareholders—carries no repayment obligation and no interest burden. Debt financing, by contrast, creates fixed obligations that must be serviced regardless of the company's operating performance.

Perceptive Credit Holdings III, LP provided secured credit facilities. By the end of 2023, interest expenses had expanded more than tenfold compared to 2020-2021 levels.

The Path to Bankruptcy

Rapid Growth, Margin Compression.

Synthego experienced revenue growth between 2020 and 2023. Rapid expansion required heavy investments in manufacturing capacity, research and development, and commercial infrastructure. The company experienced margin compression as costs outpaced the ability to achieve profitability.

The combination increased pressure on liquidity:

• Operating losses increased: Cash outflows exceeded revenue
• Debt-servicing costs increased: The pivot from equity to debt financing added fixed obligations
• Interest burden increased: More than tenfold increase between 2020 and end of 2023
• Liquidity pressures: Available cash declined despite operational activity

In 2024, the company sold its engineered cell division in a divestiture designed to narrow the company's focus and reduce cash burn. The sale reduced losses but left the company cash-flow negative through early 2025.

Management pursued a sale process intended to preserve the business while providing recoveries to creditors.

Industry Headwinds.

Synthego's financial difficulties coincided with broader challenges facing the biotechnology sector. More than a decade after the CRISPR-Cas9 discovery, commercial success had not matched scientific breakthroughs. Investors began retreating from CRISPR-focused companies, and even successful industry players found themselves cutting staff. STAT News reported that CRISPR Therapeutics laid off approximately 50 employees just weeks before the FDA approved the first CRISPR-based treatment.

The promised treatments for rare genetic diseases had been slow to materialize, and the biotech market more broadly was described as "in a down cycle." Venture capital funding contracted, and pharmaceutical companies reduced research spending—both revenue sources for companies like Synthego that supplied tools to the drug development ecosystem.

Major Creditors.

At filing, Synthego's major unsecured creditors reflected the company's venture capital history:

The creditor list included venture capital investors that had funded Synthego's expansion.

Chapter 11 Restructuring

Filing and First Day Relief.

Synthego filed for chapter 11 protection on May 5, 2025, entering the U.S. Bankruptcy Court for the District of Delaware before Judge J. Kate Stickles. The filing stated a purpose to facilitate a sale of substantially all assets on a going-concern basis to Perceptive Advisors, the company's primary secured lender.

First Day Declarations filed by Craig Christianson and Allen Soong (of Paladin Management Group, serving as CRO) outlined the company's financial condition and the rationale for the bankruptcy filing. Management emphasized that day-to-day business operations were expected to continue as usual, with no anticipated changes to the management team, staffing, or services during the transition.

The company sought operational relief through first day motions:

Epiq Corporate Restructuring, LLC was appointed as claims and noticing agent and subsequently retained as administrative advisor to manage the case administration.

DIP Financing Structure.

The debtor-in-possession financing arrangement came from the prepetition secured lender. Delaware bankruptcy judge Kate Stickles granted interim approval for Synthego to access a portion of a $50 million DIP facility on May 9, 2025.

The structure—$12.5 million in new money combined with a $37.5 million roll-up of prepetition debt—provided the liquidity needed to fund operations through the sale process while ensuring Perceptive's prepetition position converted to superpriority status. The DIP facility funded operations during the case and provided adequate protection to the prepetition lender.

363 Sale Process and Credit Bid.

The sale process followed a typical Section 363 path for distressed asset sales. Synthego entered bankruptcy with a stalking horse agreement already in place, providing a floor for the auction process.

Stalking horse bid. Perceptive submitted a credit bid valued at up to $85 million, structured to exchange secured debt for ownership of the acquired assets. The credit bid mechanism allowed Perceptive to bid the face value of its secured claims rather than deploying additional cash.

Raymond James & Associates, Inc. served as investment banker, marketing the assets and running a sale process designed to test the stalking horse bid against potential competing offers. The court approved bidding procedures, and interested parties had the opportunity to submit qualifying bids.

No competing bids. The sale process did not generate competing offers sufficient to top Perceptive's stalking horse bid.

The court approved the sale to Perceptive for a July closing, with the transaction transferring substantially all of Synthego's assets free and clear of liens, claims, interests, and encumbrances.

Plan of Liquidation

Combined Plan and Disclosure Statement.

The case utilized a combined plan and disclosure statement, streamlining the confirmation process by consolidating the plan document with the required disclosures into a single filing. This approach is common in liquidating chapter 11 cases where the primary asset sale has already been completed and the plan serves primarily to establish the distribution mechanism and wind-down procedures.

The Plan of Liquidation provided for:

• Payment of administrative claims and priority claims
• Distribution of sale proceeds to secured and unsecured creditors
• Establishment of a liquidation trust to administer remaining assets
• Pursuit of any remaining causes of action
• Wind-down of remaining operations
• Dissolution of the debtor entity

Liquidation Trust Structure.

Following confirmation, a Liquidation Trust was established to administer remaining assets and make distributions to creditors. The trust provides a mechanism to:

• Administer any residual assets not transferred in the sale
• Pursue potential causes of action, if any, that remain with the estate
• Make distributions according to the confirmed plan's priority scheme
• Wind down the bankruptcy estate and seek a final decree

As part of the restructuring process, the debtor entity's name was changed to SHAPAUSTE, INC., while the acquiring entity continues operating under the Synthego brand.

Post-Acquisition Continuity

Perceptive Advisors as Acquirer.

The buyer, Perceptive Advisors, is a life sciences-focused investment manager founded in 1999 and based in New York. Perceptive manages approximately $7 billion in assets across a portfolio spanning more than 80 companies in biotechnology and therapeutic development.

Perceptive was the prepetition secured lender, DIP provider, and stalking horse bidder. The credit bid mechanism allowed Perceptive to convert its secured debt position into equity ownership without requiring new capital deployment beyond the DIP financing.

Operations Continue Under Synthego Brand.

The transaction closed on July 18, 2025—74 days after the chapter 11 filing. Under new ownership, operations continued:

• Business continuity: Synthego continues operations as normal
• Leadership: The company's existing leadership team and staff remain in place
• Brand: The Synthego brand identity continues, including the synthego.com domain
• Manufacturing: Guide RNA manufacturing continues in Redwood City, California
• Customers: CRISPR products and services continue to serve the global customer base

While the debtor entity wound down and eventually dissolved, the operating business continued under new ownership.

Professional Retentions and Fees

The debtor retained the following professionals:

Fee applications. Raymond James filed its final fee application on August 7, 2025, with approval granted September 11, 2025. Pachulski Stang filed its final fee application, and other professionals followed. An Omnibus Order approving final fee applications was entered on November 3, 2025, concluding the major professional fee matters.

Claims Administration

The estate filed omnibus objections to claims.

ERS Genomics Limited filed a Motion for Payment of Administrative Expenses on October 6, 2025, asserting claims arising from the post-petition period.

Key Case Timeline

Industry Context: CRISPR Technology

Market Size and Long-Term Projections.

Market projections show long-term growth for CRISPR technologies. The global CRISPR-based gene editing market was estimated at $3.06 billion in 2024 and is projected to reach $13.39 billion by 2034, representing a compound annual growth rate of approximately 13%. Growth drivers include precision medicine applications, therapeutic development, and agricultural biotechnology.

Near-Term Challenges.

The near-term environment remains challenging for CRISPR-focused companies. The biotechnology sector broadly has been in a down cycle, with investors retreating and even successful CRISPR companies reducing staff. Venture capital funding contracted, and pharmaceutical companies reduced research spending.

Synthego filed chapter 11 after raising more than $450 million in funding and reporting margin compression and rising interest burdens between 2020 and 2023.

Perceptive Ownership.

Perceptive acquired substantially all of Synthego's assets and continued operations under the Synthego brand after the July 18, 2025 closing.

Frequently Asked Questions

When did Synthego file for bankruptcy?

Synthego Corporation filed for chapter 11 bankruptcy on May 5, 2025, in the U.S. Bankruptcy Court for the District of Delaware before Judge J. Kate Stickles.

Who founded Synthego?

Brothers Paul and Michael Dabrowski, both former SpaceX engineers with computer engineering backgrounds, founded Synthego in Redwood City, California in 2012. Neither founder had a genetics background—they applied automation expertise to genome engineering.

How much venture capital did Synthego raise?

Synthego raised more than $450 million in total financing, including approximately $392 million in equity funding from investors including Peter Thiel's Founders Fund, 8VC, Wellington Management, RA Capital Management, Menlo Ventures, Intel Capital, and CRISPR pioneer Jennifer Doudna.

What caused Synthego's bankruptcy?

Multiple factors contributed: rapid growth that outpaced revenue generation, margin compression despite sales growth, operating losses, interest burdens that expanded more than tenfold between 2020 and 2023, and broader biotechnology sector headwinds with contracting venture capital funding.

Who bought Synthego out of bankruptcy?

Perceptive Advisors, through its affiliate Perceptive Credit Holdings III, LP, acquired substantially all of Synthego's assets through an $85 million credit bid. Perceptive served as the company's prepetition secured lender and DIP financing provider.

Does Synthego still exist?

Yes. The sale transaction closed on July 18, 2025, with operations continuing under the Synthego brand. The leadership team and staff remain in place, and guide RNA manufacturing continues at the company's Redwood City, California facility.

How long did the Synthego bankruptcy case take?

The case ran from petition filing (May 5, 2025) to plan confirmation (August 5, 2025) in 92 days. The sale to Perceptive closed on July 18, 2025—74 days after filing.

What products did Synthego make?

Synthego specialized in synthetic guide RNA (sgRNA) for CRISPR-Cas9 gene editing applications. The company served academic researchers, pharmaceutical companies, and biotech firms with custom and predesigned guide RNA products through its CRISPRevolution platform.

What was Jennifer Doudna's connection to Synthego?

Jennifer Doudna, the UC Berkeley professor who co-discovered CRISPR-Cas9 gene editing and won the 2020 Nobel Prize in Chemistry, was an early investor in Synthego during the company's Series B funding round, providing scientific validation of the company's approach.

What happened to the Synthego company name after bankruptcy?

The debtor entity changed its name to SHAPAUSTE, INC. as part of the restructuring process, while the acquiring entity continues operating under the Synthego brand with the synthego.com domain.

Who is the claims agent for Synthego?

Epiq Corporate Restructuring, LLC serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

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