Please complete this form relating to your transactions for Zymergen Inc. (NASDAQ: ZY) common stock pursuant and/or traceable to the registration statement and prospectus (collectively, the “Registration Statement”) issued in connection with Zymergen’s April 2021 initial public offering (“IPO”).
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Notice is hereby given that a class action lawsuit has been filed on behalf of those who purchased or acquired Zymergen Inc. (“Zymergen”) (NASDAQ: ZY) common stock pursuant and/or traceable to the registration statement and prospectus (collectively, the “Registration Statement”) issued in connection with Zymergen’s April 2021 initial public offering (“IPO”).
Zymergen uses a process it calls “biofacturing” to create products that purportedly combine the design and manufacturing efficiency of biological processes with technology’s ability to rapidly iterate and control diverse functions. Its first product is called Hyaline, an optical film designed for electronic companies to use for display touch sensors, which will purportedly enable customers to make foldable touchscreens and high density flexible printed circuits. Hyaline was launched in December 2020 but has not generated revenue because it is still in its qualification process with customers.
On April 23, 2021, Zymergen filed its prospectus on a Form 424B4, which forms part of the Registration Statement. In the IPO, Zymergen sold approximately 18,549,500 shares of common stock at a price of $31.00 per share. The proceeds from the IPO were purportedly to be used for working capital and other general corporate purposes, including the continued investment in commercializing its existing products, launching products in its pipeline, and furthering the development of its biofacturing platform and technology. The Registration Statement touted Hyaline, and predicted that Hyaline will begin generating revenue in the second half of 2021 and presented a purported $1.2 trillion total market opportunity.
The truth emerged on August 3, 2021. After the market closed, Zymergen issued a business update stating that it “recently became aware of issues with its commercial product pipeline that will impact the [c]ompany’s delivery timeline and revenue projections.” Specifically, “several key target customers encountered technical issues in implementing Hyaline into their manufacturing processes,” and Zymergen also found that its total addressable market appears to be smaller than previously expected. As a result, Zymergen “no longer expects product revenue in 2021, and expects product revenue to be immaterial in 2022.” Zymergen also announced that its Chief Executive Officer, Josh Hoffman, was stepping down, effective immediately.
Following this news, Zymergen’s stock price fell $26.58 per share, or 76%, to close at $8.25 per share on August 4, 2021. At the time the complaint was filed, Zymergen’s stock was trading as low as $8.25 per share, a nearly 73% decline from the $31 per share IPO price.
The complaint alleges that the Registration Statement was materially false and misleading and omitted to state that: (1) during the qualification process for Hyaline, key customers had encountered technical issues, including product shrinkage and incompatibility with customers’ processes; (2) though the qualification process was critical to achieving market acceptance for Hyaline and generating revenue, Zymergen lacked visibility into the qualification process; (3) as a result, Zymergen overestimated demand for its products; (4) as a result of the foregoing, Zymergen’s product delivery timeline was reasonably likely to be delayed, which in turn would delay revenue generation; and (5) as a result of the foregoing, the defendants’ positive statements about Zymergen’s business, operations, and prospects, were materially misleading and/or lacked a reasonable basis.
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Filling out the online form above or communicating with any counsel is not necessary to participate or share in any recovery achieved in this case. Any member of the purported class may move the court to serve as a lead plaintiff through counsel of his/her choice, or may choose to do nothing and remain an inactive class member.