The newly minted shares of Zymergen (NASDAQ:ZY) are collapsing in Wednesday’s premarket trading after the biotech dumped bad news on investors. ZY stock debuted on April 21 in a Nasdaq initial public offering (IPO).
Shares that were once as high as $52 a piece following that IPO, with a market capitalization of $4.8 billion, are set to open under $9. That’s more than 75% below Tuesday’s close.
The “biofacturing” company sprung on investors the news that its only current product, Hyaline, is struggling to gain footing. Additionally, a prime target for future business isn’t likely to happen and its CEO is stepping down “by mutual decision.”
Zymergen has been trying to use natural, or “bio-based,” processes instead of chemicals in manufacturing processes. At the April ZY stock IPO, the company had only the one product, but executives expected that Hyaline would generate some revenue this year while the firm developed other products, with a focus on electronics, consumer care and agriculture.
ZY Stock Fortunes Now In Hands of Acting CEO
“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,” acting CEO Jay Flatley said, in a press release. “We are confident in Zymergen’s opportunities and prospects, although it will take longer to accomplish our goals than previously expected.”
The prospectus for the April IPO had indicated that the company, then led by co-founder and now-departing CEO Josh Hoffman, expected Hyaline to start generating revenue in the second half of this year. In its inaugural earnings report in May, management reaffirmed product pipeline expectations.
That seems to be a pipe dream now, as the company said there’s now a “delay in the company’s commercial ramp” after its partners that were using Hyaline in their manufacturing processes “encountered technical issues.”
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, including previous stints with Bloomberg News and as a buyside equity research editor.