Less than four months after it went public and was valued at more than $3 billion by Wall Street, Zymergen Inc. Bad news came out on Tuesday afternoon and was on track to lose more than two-thirds of its market cap.
Zymergen shares ZY,
fell more than 70% in after-hours trading Tuesday after the “biofacturing” company revealed that its only current product is struggling in the market, a key target for future business is not materializing and its chief executive is stepping down. mutual consultation.” After the IPO was priced at $31 a share on April 21, has since seen shares rise to $52 and closed Tuesday at $34.83, shares traded for less than $10 during the extended session.
Zymergen seeks to use natural or “bio-based” processes rather than chemicals in manufacturing processes. As it went public, Zymergen had only one product, Hyaline, but executives expected the product to start generating revenue this year, as the company developed several new products for other industries, with a focus on electronics, consumer care and agriculture.
In a press release Tuesday afternoon, Zymergen revealed that partners who used hyaline in their manufacturing processes “experienced technical issues” that will delay the product’s commercial ascent. Executives also said data on the foldable screen market on gadgets such as smartphones, part of the pressure on the electronics market, “indicates a smaller near-term market opportunity that is growing at a slower pace than expected,” and suggested it might impact on the sales forecast.
Speaking of that forecast, Zymergen now expects no product revenues in 2021 and “intangible” product revenues in 2022, saying executives are “developing a plan to reduce costs and align with the change in the company’s revenue expectations.” Josh Hoffman has stepped down as CEO and board member, effective immediately, and former Illumina Inc. ILMN,
CEO Josh Flatley has taken over as Acting CEO and Chairman.
In its first earnings report as a publicly traded company in May, Zymergen executives “reaffirmed expectations of the product pipeline, starting with Hyaline, which is in a 6-18 month qualification process with multiple customers and revenue will increase in 2H21.” going to boost,” JP Morgan said analysts at the time. They had an overweight rating on the stock with a price target of $40.
“We are disappointed with these developments and the board of directors and management team are focused on resolving the underlying issues to ensure Zymergen continues to move forward as a stronger company with a compelling operating plan,” Flatley said in a statement.