Zymergen's Product Revenue To Be Immaterial In 2022, CEO Steps Down, Stock Plunges

(RTTNews) - Shares of Zymergen Inc. (ZY) are down over 70% in pre-market trading Wednesday, following news that several key target customers had encountered technical issues in implementing the company's Hyaline into their manufacturing processes.

Hyaline is a breakthrough bio-manufactured product that has successfully been used in flexible circuits, display touch sensors and printable electronics, and by merging the benefits of advanced bio-fabrication with traditionally generated materials, the new Hyaline film was expected to pave the way for more sustainable, biologically produced products. It was expected to be Zymergen's first standalone product to be sold commercially. As a result of the issues with its commercial product pipeline, the company fears delay in its commercial ramp and delivery timeline, adversely impacting revenue projections.

The company said it no longer expects product revenue in 2021 and expects product revenue to be immaterial in 2022. The company has also simultaneously announced that Josh Hoffman has stepped down from the CEO post and that Jay Flatley, Chairman of the Board, has been appointed Acting Chief Executive Officer. Flatley earlier served as CEO, Executive Chair as well as Chairman of Illumina, a company in the human health space, for 17 years. The company's Board of Directors would be commencing a search process to identify a permanent CEO.

In the light of these developments, the company's Board has formed dedicated committees, including a Strategic Oversight Committee, and is working with outside experts to conduct an in-depth review of the company's operational, financial, product, and commercialization efforts to facilitate the development of an updated strategic plan for the company.

For the quarter ended June 30, 2021, the company currently estimates, based on preliminary unaudited results, to record total revenue of $5 million to $6 million, all relating to R&D service agreements and collaboration revenue.

As of June 30, 2021, the company had cash and cash equivalents of approximately $588 million, including restricted cash of approximately $11 million. ZY closed yesterday's trading at $34.83, up 2.35%. In pre-market hours today, the stock is down 73.77% at $9.25%.