The rise and fall of the short-lived biotech Zymergen has ended with a $30 million penalty from the SEC.
Zymergen’s rise began in April 2021 with an outsized $500 million IPO, capping a remarkable run for a company that once struggled to win over investors. Later that year, Ginkgo Bioworks acquired the California-based company for $300 million. But nearly a year after the deal closed, Zymergen filed for bankruptcy after disclosing its CEO’s departure and technical issues with Hyaline, the company’s only commercial product.
Now, the SEC says the company has agreed to pay a $30 million penalty after the agency alleged Zymergen deliberately overestimated the market for Hyaline, which is a thin polymer film designed for electronics.
Zymergen once boasted the ability to use its genetically engineered molecules to “biofacture” products for a range of potential applications, including electronics, consumer health and agriculture. The process, according to the company, obviated the need for toxic chemicals and huge infrastructure demands, potentially cutting costs by 90% in half the time.
But the SEC said Zymergen overestimated Hyaline’s market potential and mischaracterized its internal revenue projections.
“Zymergen did not disclose to analysts that the revenue projections for 2022 through 2025 were materially higher (sometimes double or more) than the highest-confidence projections originally provided by the sales team,” the SEC said.
The company also did not provide the appropriate disclosures in a 2021 earnings call, with the SEC alleging three customers had dropped out and a fourth decided to purchase a competing product.
“The company’s internal customer tracking documents indicated that the then-current display market for Hyaline was very small and that the company’s projections for Hyaline revenue continued to decline significantly,” the SEC alleged.