Synthetic biology company Zymergen plunges 68% after saying product revenue will be 'immaterial' in 2022, removing CEO
- Zymergen went public at $31 a share in April and traded as high as $48.50, valuing the company at $4.8 billion.
- The stock sank to $11.07 after hours on Tuesday, leaving its market cap at just over $1 billion.
- The company has yet to start generating product sales and said it now expects revenue from its products to be "immaterial" through 2022.
A little more than three months after pricing its IPO at the top of its expected range and soaring out of the gate, Zymergen is warning investors that revenue from its experimental products won't be coming anytime soon.
Zymergen, which describes itself as a "biofacturing company using biology to reimagine the world," plunged 68% in extended trading on Tuesday to $11.07, down from its IPO price of $31. The company said in a press release that it no longer expects to generate product revenue in 2021 and that revenue next year will be "immaterial."
The company also said that Josh Hoffman, who co-founded Zymergen in 2013, is stepping down as CEO and will be replaced on an acting basis by Jay Flatley, former CEO of Illumina.
Zymergen's market cap sank to just over $1 billion from a high in April of about $4.8 billion.
"We are disappointed by 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 operating plan," Flatley said, in the press release. "We are confident in Zymergen's opportunities and prospects, although it will take longer to accomplish 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, created using a biomolecule, that electronics companies can use for things like touch screens. Zymergen's goal is to have a product that's environmentally sustainable at significantly lower costs than what's produced by traditional chemical companies.
To date, Zymergen has earned some revenue for research and development service agreements but almost nothing for product sales. In its IPO prospectus, Zymergen said it expected to start generating revenue from Hyaline in the second half of 2021 from Hyaline.
That target has been pushed way back. Zymergen said on Tuesday that several potential customers during the quarter "encountered technical issues in implementing Hyaline into their manufacturing processes." While Zymergen said there are no "intrinsic technical issues with Hyaline," there is now "a delay in the company's commercial ramp."
Zymergen raised over $465 million in its IPO and said it now has cash and equivalents of $588 million. For the second quarter, it expects operating costs of $100 million to $105 million on total revenue of $5 million to $6 million.