Biotech: Zymergen Hits Roadblock, Shares Crater, CEO Out
A certain biotech company with high ambitions has seen its shares crater down from the height of its ambitions after it reported some updates to investors. It’s Zymergen, a company working on biochemical processes to develop synthetic forms of various industrial materials.
- Zymergen issued a statement to investors on Tuesday that it recently became aware of issues with its commercial product pipeline that’ll negatively affect its prospects. In fact, because of the issues, the company no longer expects to make any money from selling products this year, and then “immaterial” sales next year.
- Zymergen doesn’t yet have a commercial product, as it’s still in the trial stage. Shareholders of the company are primarily betting on its future potential of applying biochemical processes to make synthetic industrial materials at scale and bring in sales. For now, the company only makes money from R&D services rendered for industrial firms.
- For now, Zymergen’s only product (on trial) is an optical film trademarked as Hyaline that electronics makers can use for components like touch screens. The company is trialing its use in foldable smartphone displays, with the aim of having a product that’s environmentally sustainable at significantly lower costs than comparable materials sourced from chemical companies.
- Now, Zymergen is having issues building a supply chain and pipeline to launch Hyaline. It also says it’s evaluating emerging data on the foldable display market that suggests it’s growing lesser than thought and thus may impact its sales forecast. Such wasn’t good news to investors who began massively bailing out of its stock and sent shares cratering 68% in extended trading on Tuesday.
- Also, Zymergen’s CEO, Josh Hoffman, is stepping down from his position to be replaced in the interim by board chairman Jay Flatley, notably the former CEO of genetic testing giant Illumina. It appears that Zymergen’s board wasn’t confident in Hoffman’s leadership and pressured him to give way, and it’s now spearheading a search for a new permanent CEO.
- Currently, Zymergen makes minuscule revenue (relative to costs) from R&D and collaboration agreements. It though has about $600mn in cash at hand to weather through a series of losses in hopes of finding gold in a product, and also the ever-buying stock markets to possibly raise more money if it sees fit.