Zymergen Synthetic Biology Hope Stocks Dive As CEO
revealed Tuesday evening that its CEO Josh Hoffman was leaving after some customers had problems implementing the company’s main product. Shares fell more than 68% in after-hours trading after the announcement.
The company, which uses biological processes to make chemicals, said Tuesday it no longer expects product revenue in 2021. Next year’s product revenue is expected to be “intangible,” Zymergen said in a report. communicated.
Barron recently highlighted
(ticker: ZY) as one of the three players to watch in synthetic biology. The other two were
(AMRS) and Ginkgo Bioworks, which plans to go public through a merger with Soaring Eagle Acquisition (SRNG), a special purpose acquisition company, or SPAC. Synthetic biology is the mixture of biotechnology with industrial chemistry.
Zymergen said Hoffman, who is also a co-founder, had, by “mutual decision”, resigned as chief executive and board member with immediate effect. Company President Jay Flatley, a former CEO of
(ILMN), replaces him as interim CEO.
“We are disappointed with these developments, and the board and management team are focused on resolving the underlying issues to ensure Zymergen progresses as a stronger company with a compelling operating plan.” Flatley said in a statement.
The news comes more than three months after Zymergen went public in April at $ 31 a share. Zymergen’s stock rose more than 21% on its market debut to close at $ 37.65. The shares hit a high of $ 48.42 later in the month and ended Tuesday at $ 34.83.
Synthetic biology, if it works, could reduce the need for petroleum-based chemicals as well as plant and animal products, benefiting the environment. Zymergen’s key product is Hyaline, an optical film that can be used in display touch sensors for personal devices and other applications. The product was in the process of being qualified with customers.
Zymergen said several target customers during the quarter “encountered technical issues” with the implementation of Hyaline and that this will cause a delay in the company’s commercial ramp. Zymergen said it is also evaluating data for the total addressable market for foldable display applications which indicates “a smaller short-term market opportunity that is growing less rapidly than expected,” the statement said.
In May, JP Morgan launched a cover of Zymergen with an overweight rating and a price target of $ 40.
Zymergen has formed dedicated committees and is working with external experts to conduct a review of its operational, financial, product and marketing efforts and is developing an updated strategic plan for the company, Flatley said. She also initiated a search process to identify a permanent CEO.
Zymergen is reducing and aligning its spending due to its reduced revenue expectations. The company now expects total revenue of $ 5-6 million, all related to R&D service agreements and collaborative revenue, for the quarter ended June 30. It has approximately $ 588 million in cash and cash equivalents.
Write to Luisa Beltran at [email protected]