Jay Flatley, acting CEO of Zymergen
Mark newcomer | CNBC
Just over three months after the IPO was priced in at the high end of its expected range and shot out of the gate, Zymergen is warning investors that the revenue from its experimental products won’t be coming any time soon.
Zymergen, which describes itself as a “biofactoring company using biology to reinvent the world,” plunged 68% to $ 11.07 in expanded trading Tuesday, down from its $ 31 initial public offering . The company announced in a press release that it will no longer generate product sales in 2021 and that sales will be “negligible” for the next year.
The company also said that Josh Hoffman, who co-founded Zymergen in 2013, is stepping down as CEO and is being replaced on an acting basis by Jay Flatley, former CEO of Illumina.
Zymergen’s market cap fell from a high of about $ 4.8 billion in April to just over $ 1 billion.
“We are disappointed with these developments and the board and management team are focused on resolving the underlying issues to ensure Zymergen moves forward as a stronger company with a compelling operational plan,” Flatley said in the press release. “We are confident about Zymergen’s chances and prospects, even if it will take longer to achieve our goals than previously expected.”
Zymergen’s current challenges involve a product called Hyaline, which the company launched in 2020. It’s an optical film made from a biomolecule that electronics companies can use for touch screens, for example. Zymergen’s goal is an environmentally friendly product at a significantly lower cost than what is made by traditional chemical companies.
To date, Zymergen has made some revenue from research and development service contracts, but almost nothing from product sales. In its listing prospectus, Zymergen said it expects to generate revenue from Hyaline in the second half of 2021.
This goal was pushed back a long way. Zymergen said Tuesday that several potential customers “encountered technical issues implementing Hyaline into their manufacturing processes” during the quarter. While Zymergen said there were no “intrinsic technical issues with Hyaline,” there is now “a delay in the company’s commercial ramp”.
Zymergen raised over $ 465 million when it went public and now has $ 588 million in cash. For the second quarter, operating costs are expected to be in the range of $ 100 million to $ 105 million with total revenues of $ 5 million to $ 6 million.
