Zymergen, which researches, develops and manufactures microbes for industrial application, develops molecules for biomedical coatings and adhesives that can be used as surgical glues inside the body or on the skin to close a wound or to protect against infection. In addition, the company integrates artificial intelligence algorithms and robotic genomics to search the microbial genome, discover new materials, commercialize new products and improve existing bio-manufactured products.
Zymergen’s stated goal was to manufacture products like films used in smart devices at a fraction of the cost of similar existing products using a process called biofacturing. Rather than using traditional petroleum-based raw materials, Zymergen is creating biomolecules through fermentation and using them to manufacture products.
In December 2020, Zymergen initiated its first product, Hyaline, which can be used to manufacture foldable touchscreens, enabling flexible display applications for screens and devices. However, the product was still in the customer qualification stage, so Zymergen launched a version produced by third parties using a non-fermentation process.
Zymergen went public in April 2021. In May, during Zymergen’s first-quarter earnings release, the company said it expects to begin generating revenue from Hyaline in the latter half of 2021 and to convert nonfermentation biomolecules to fermentation-produced biomolecules by 2022.
On August 3, Zymergen related that some of its key target customers encountered “technical issues” in incorporating Hyaline into its manufacturing processes. Zymergen became aware of issues with its commercial product pipeline that will impact the company’s delivery timeline and revenue projections.
As a result, the company is delaying its ramp-up, and it does not expect to generate any product revenue in 2021. Zymergen also expects product revenue to be “immaterial” in 2022. In addition, the company said the total addressable market for foldable displays is growing at a slower-than-expected pace, forcing the company to rethink its market focus and sales forecast. In other words, it seems that Zymergen had no idea whether there will be a market for its only product.
“Several key target customers encountered technical issues in implementing Hyaline into their manufacturing processes,” according to Zymergen, which added that while it made progress addressing the challenges, there will be a delay in the company’s commercial ramp-up. Zymergen shares decreased by 76 percent after it said issues with its main product would prevent the company from generating material revenue this year and next.
Things turned so sour for the company that its CEO Josh Hoffman has stepped down effective immediately, handing over the reins to former CEO of Illumina Jay Flatley. Flatley will serve as acting CEO until the company finds a permanent replacement for Hoffman.
Zymergen rebounded by as much as 85 percent on Thursday Cathie Wood’s Ark Invest tripled its stake in the synthetic biology company. Ark Invest saw opportunity in Zymergen’s massive Wednesday decline and ultimately tripled its stake in the company. Currently, the Ark Invest Genomic Revolution ETF owns more than 3.5 million shares of Zymergen. Thus, Zymergen was able to recoup some of its massive losses from the previous day.