Zymergen Inc. (“Zymergen” or the “Company”), today provided a
business update regarding its commercial product pipeline and
financial forecast.
Zymergen recently became aware of issues with its commercial
product pipeline that will impact the Company’s delivery timeline
and revenue projections. Accordingly, the Company no longer expects
product revenue in 2021, and expects product revenue to be
immaterial in 2022.
During the quarter, several key target customers encountered
technical issues in implementing Hyaline into their manufacturing
processes typical of new product and process development learnings.
The Company has made significant progress towards addressing these
challenges and believes there are no intrinsic technical issues
with Hyaline. However, this issue has resulted in a delay in the
Company’s commercial ramp. Zymergen is working to strengthen its
commercial team to ensure the reliability and robustness of the
sales pipeline qualification and forecast processes.
The Company is also evaluating emerging data on the total
addressable market for foldable display applications, which
indicate a smaller near-term market opportunity that is growing
less rapidly than anticipated, as well as its impact on Zymergen’s
sales forecast. The Company will conduct a full re-examination of
Zymergen’s target markets confirming our past views or altering
them if the data indicate a shift in market focus is
appropriate.
“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 Jay Flatley, Acting CEO and
Chairman of the Board. “The 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
Zymergen. The underlying promise of our business and technology is
sound, and I am proud of the work our teams are doing across the
organization. We are confident in Zymergen’s opportunities and
prospects, although it will take longer to accomplish our goals
than previously expected.”
CEO Transition
In connection with the business update, Zymergen also announced
that Jay Flatley has been appointed Acting Chief Executive Officer,
effective immediately. Flatley’s appointment follows the mutual
decision by Zymergen and Josh Hoffman that Hoffman will step down
as CEO and as a member of the Board, effective immediately. The
Company’s Board of Directors will commence a search process to
identify a permanent CEO. Sandi Peterson will serve as Zymergen’s
Lead Independent Director while Flatley serves as Acting CEO.
Flatley is a seasoned executive, with a strong track record of
driving operational excellence and bringing innovative technology
and products at scale into the markets. Flatley served as CEO of
Illumina, a cutting-edge company in the human health space, for 17
years, and as its Executive Chair, and later Chairman of the Board,
until 2021.
“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,” said Flatley. “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. On behalf of the Board and management team, I
thank Josh for his work in advancing our mission and wish him the
best in his future endeavors.”
Preliminary Q2 FY 2021 Results
For the quarter ended June 30, 2021, the Company currently
estimates total revenue of $5 million to $6 million, all relating
to R&D service agreements and collaboration revenue.
The Company currently estimates GAAP total cost and operating
expenses of approximately $100 million to $105 million, including
estimated stock-based compensation, depreciation and amortization
and an increase in non-cash rent expense of approximately $20
million, and non-GAAP total cost and operating expenses of
approximately $80 million to $85 million.
As of June 30, 2021, the Company had cash and cash equivalents
of approximately $588 million, including restricted cash of
approximately $11 million.
In connection with today’s business update, Zymergen is
developing a plan to reduce and align expenses with the change in
the Company’s revenue expectations
The financial results presented in this press release are
preliminary, estimated and unaudited. They are subject to the
completion and finalization of Zymergen’s purchase accounting for
the acquisition of Lodo and other financial and accounting closing
procedures. They reflect management’s estimates based solely upon
information available to management as of the date of this press
release. Further information learned during that completion and
finalization may alter the final results. In addition, the
preliminary estimates should not be viewed as a substitute for full
quarter financial statements prepared in accordance with GAAP.
There is a possibility that Zymergen’s second quarter financial
results could vary materially from these preliminary estimates. In
addition to the completion of the financial closing procedures,
factors that could cause actual results to differ from those
described above are set forth below under “Cautionary Note
Concerning Forward-Looking Statements.” Accordingly, you should not
place undue reliance upon this preliminary information.
Additional information regarding the Company’s second quarter
2021 financial results will be available in the Company’s Form
10-Q, which will be filed with the U.S. Securities and Exchange
Commission (the “SEC”).
Business Update Call
Zymergen will host a conference call to discuss the business
update today at 5:00 PM Eastern Time. A webcast for this call can
be accessed at https://investors.zymergen.com/. The webcast
will be archived and available for replay for at least 90 days
after the event.
About Jay Flatley
Mr. Flatley most recently served as CEO of Illumina, a
cutting-edge company in the human health space, from 1999 until
2016. He then transitioned to the role of Executive Chair until
January 2020, and served as Chairman of the Board from January 2020
to May 2021. During his tenure as CEO of Illumina, Mr. Flatley took
the company from $1.3 million in sales in 2000 to $2.2 billion in
2015. Under his leadership, Illumina was named multiple times to
each of the Deloitte & Touche Fast 50 and Fast 500 list, the
Forbes 25 Fastest-Growing Tech Companies list, the Fortune 100
Fastest-Growing Companies list and was recognized by MIT Technology
Review as the World’s Smartest Company in 2014. Prior to joining
Illumina, Mr. Flatley was co-founder, President, CEO and a director
of Molecular Dynamics, a life sciences company focused on genetic
discovery and analysis, from 1994 until its sale to Amersham
Pharmacia Biotech in 1998. Mr. Flatley serves as Chairman of the
Board of Zymergen, as a member of the Boards of Denali Therapeutics
Inc and Coherent Inc., is an advisory board member for U.C. San
Diego’s Moore Cancer Center and serves on the Board of Trustees for
The Salk Institute for Biological Studies. Mr. Flatley holds a BSc
and MSc (Hons) from Stanford University, along with a BA from
Claremont McKenna College.
About Zymergen
Zymergen is a biofacturing company using biology to reimagine
the world. Zymergen partners with nature to design, develop and
manufacture bio-based breakthrough products that deliver value to
customers in a broad range of industries. A unique combination of
biology, chemistry, software and automation enables the company to
design and create new materials.
Cautionary Note Concerning Forward-Looking
Statements
This press release contains “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995, as amended. Such forward-looking statements are based on the
Company’s beliefs and assumptions and on information currently
available to it on the date of this press release. Forward-looking
statements may involve known and unknown risks, uncertainties and
other factors that may cause the Company’s actual results,
performance or achievements to be materially different from those
expressed or implied by the forward-looking statements, including
but not limited to statements regarding the opportunities and
prospects for our company, including our business, technologies and
products, the delivery timeline, revenue projections and market
opportunity for Hyaline and other products in our pipeline, the
development of our strategic and operating plans, our plan to
reduce expenses and our preliminary financial results. We do not
have revenue from product sales, and we may not be able to
successfully commercialize Hyaline or our pipeline products. These
and other risks are described more fully in the Company’s filings
with the SEC, including the Company’s quarterly report on Form 10-Q
for the quarter ended March 31, 2021 and other documents the
Company subsequently files with the SEC from time to time,
including the Company’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2021. Except to the extent required by law,
the Company undertakes no obligation to update such statements to
reflect events that occur or circumstances that exist after the
date on which they were made.
Investor ContactNiraj
Javeriinvestors@zymergen.com
Media ContactMike
Dulinmdulin@zymergen.com502-777-2029
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