Shares of Zymergen plummeted by 68% Tuesday from its April IPO price of $31 per share to just $11.7 per share after news that the company will not likely see revenue anytime soon.
Shares in biofacturing firm Zymergen plummeted by 68% Tuesday from its April IPO price of $31 per share to just $11.7 per share after news that the company will not likely see revenue anytime soon.
In a press release, Zymergen said that issues with its commercial product pipeline would disable it from delivering on its timeline and revenue expectations for 2021 and even 2022, calling these “immaterial.” The firm said that the delays are primarily due to technical issues that several of its key customers had in implementing Hyaline into their manufacturing processes.
While the company said that it already addressed the said technical issues, it had led to a delay in its commercialization plans. Zymergen assured that it is working on strengthening its commercial arm to ensure that all milestones and deadlines are met moving forward.
Zymergen launched its initial public offering in April 2021 and started strong at $48.50 per share, giving it a total valuation of $4.8 billion. After the stock value dropped after hours on Tuesday, Zymergen’s market capitalization is now a little over $1 billion. During its IPO, the firm had managed to raise more than $465 million. As of this writing, Zymergen is said to have $588 million in cash and equivalents.
The company has also announced that its chief executive officer Josh Hoffman, who co-founded Zymergen in 2013, is stepping down from his post and as a board member with immediate effect. According to the statement, the decision to vacate the position was mutual.
Hoffman will be replaced in the interim by former Illumina CEO Jay Flatley until a new permanent chief is named. Sandi Peterson will assume the role of Lead Independent Director, as well.
“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,” said Flatley in a statement.
Flatley revealed that the Board has created several dedicated committees, including Strategic Oversight, and is working with external experts to review the firm’s financial, operational, product, and commercialization efforts. The goal at present is to conduct a complete re-examination of the company’s target markets to either confirm past views or alter them if there is a need to shift in market focus.
“A key element to ensuring Zymergen is set-up for long-term success is having the right team in place, and the Board and Josh recognize that new leadership is required. The Board will take whatever time is needed to conduct a thorough search to identify a world-class leader for Zymergen. Until then, I am committed to working with our deep bench of talent to drive our company forward,” added Flatley.
Zymergen ended the second quarter (30 June 2021) with total revenue of $5 million to $6 million, all from its R&D service agreements and collaboration earnings.
