Delaware | | | 8731 | | | 46-2942439 |
(State or other jurisdiction of incorporation or organization) | | | (Primary Standard Industrial Classification Code Number) | | | (I.R.S. Employer Identification Number) |
Sarah K. Solum Pamela L. Marcogliese Freshfields Bruckhaus Deringer US LLP 2710 Sand Hill Road Menlo Park, CA 94025 (650) 618-9250 | | | Mina Kim Zymergen Inc. 5980 Horton Street, Suite 105 Emeryville, CA 94608 (415) 801-8073 | | | Rezwan D. Pavri Andrew T. Hill Andrew S. Gillman Wilson Sonsini Goodrich & Rosati, P.C. 650 Page Mill Road Palo Alto, CA 94304 (650) 493-9300 |
Large accelerated filer | | | ☐ | | | Accelerated filer | | | ☐ |
Non-accelerated filer | | | ☒ | | | Smaller reporting company | | | ☐ |
| | | | Emerging growth company | | | ☒ |
Title of Each Class of Securities to be Registered | | | Proposed Maximum Aggregate Offering Price(1)(2) | | | Amount of Registration Fee |
| | | |
(1) | Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) of the Securities Act of 1933, as amended (the “Securities Act”). |
(2) | Includes shares subject to the underwriters’ option to purchase additional shares, if any. |
| | Per Share | | | Total | |
Initial public offering price | | | | | ||
Underwriting discounts and commissions(1) | | | | | ||
Proceeds to Zymergen Inc., before expenses | | | | |
(1) | See the section titled “Underwriting” for a description of the compensation payable to the underwriters. |
J.P. Morgan | | | Goldman Sachs & Co. LLC | ||||||
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BofA Securities | | | Cowen | | | UBS Investment Bank | | | Lazard |
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1. | Identify and create novel biomolecules that are the basis of new materials with engineered characteristics that possess improved performance compared to existing products; |
2. | Insert genes into a host microbe that produces the desired biomolecules; and |
3. | Develop and scale up a production process, including optimizing the microbe to produce biomolecules economically at scale, while retaining product functionality via time-and-cost efficient optimization, leading to commercialization at attractive margins. |
1. | Biofacturing Platform: Our biofacturing platform, which is the engine that enables product innovation, is our most important asset. |
2. | Data Moat: Our biofacturing platform continuously improves as it generates more data. |
• | Product development yields structure:function data derived from iteratively formulating materials using bio-based molecules and subsequently testing their physical, chemical and other performance properties. |
• | Production microbe development yields genotype:phenotype data derived from iteratively applying genomic library types to the genome of the microbial host and assaying the impact on key production phenotypes such as titer and productivity. |
3. | Pipeline: We plan on years of breakthrough products. |
4. | Partners and Customers: Our business relationships are collaborations in innovation. |
5. | Team: We have created an organization of mission-driven scientists, engineers and business professionals. |
6. | Sustainability: We believe that our biofacturing process is better for the environment than anything made with petrochemistry. |
1. | Leverage our biofacturing platform for value and speed. Our business strategy is to design, make, and sell bio-differentiated breakthrough products. Our products are designed to create substantial economic value for our customers with performance that existing materials cannot offer, because that performance solves problems for our customer’s customer. We are initially focused on electronics, consumer care and agriculture. Our goal is to launch our products in about half the time and 1/10th of the cost of what traditional chemicals and materials companies can deliver. We believe this would allow us to access a large universe of product opportunities that traditional players are generally unable or unwilling to pursue. Based on our experience and expectations with our first four products, which are electronic films and insect repellent products, and subject to any regulatory requirements, which could lead to longer timelines and increased cost, we estimate the timelines and costs of launching our products to be roughly five years and $50 million. The platform is designed to accelerate launch of our products, satisfying customer need more rapidly and increasing the returns of our pipeline investments. |
2. | Invest in our biofacturing platform to extend our lead. While we believe our biofacturing platform today gives us an advantage over industry incumbents, we believe that improving the platform will allow us to better satisfy customer demand. Consequently, we intend to continue investing in our biofacturing platform to reduce the time from product concept to product launch, broaden the scope of opportunities we pursue and reduce the cost per product launch. |
3. | Expand into new verticals and applications. Today, we are focused on electronics, consumer care and agriculture, but in time we intend to expand to other industries and other applications suited to our biofacturing platform. Our biofacturing platform allows us to build a larger portfolio of on-market products than is typical for biopharma companies. We estimate that our total market opportunity is at least $1.2 trillion and we believe that we will ultimately benefit from the diversification of providing products across many industries and applications. We intend to expand in a structured and disciplined manner using three business tools: defined criteria to identify and qualify new opportunity areas of interest; preference for strategic adjacencies and R&D and commercial synergies; and use of partnerships to de-risk opportunities. |
4. | Own customer relationships and product design. Our close customer relationships give us insight into market needs, which we can then rapidly translate to novel products with differentiated performance using our biofacturing platform. Another important counterpoint to the chemicals and materials industry is that whenever possible we intend to outsource manufacturing and other intermediate steps. We believe that our focus on product innovation, low capital expenditures and customer relationships will be a powerful disruptor in the chemicals and materials industry. |
1 | *Reflects target launch dates for these products. **In order to accelerate product launch and meet customer demand, we launched Hyaline with a non-fermentation produced biomolecule sourced from a third party. We are currently developing commercial scale processes so we can produce the molecule through fermentation at sufficient volumes and costs to support commercial manufacturing. We expect this process to be complete in 2022. |
• | We have a history of operating losses and we do not expect to be profitable for the foreseeable future. |
• | We have a limited operating history, which may make it difficult to evaluate the prospects for our future viability and predict our future performance. |
• | We do not today have revenue from product sales, and we may not be able to successfully commercialize our products, including Hyaline, which we launched in December 2020, as our first product. |
• | The COVID-19 pandemic has had, and is expected to continue to have, an impact on our business, results of operations and financial condition. |
• | We may not be successful in our efforts to use and improve our proprietary biofacturing platform to build a pipeline of products. |
• | It is difficult to predict the time and cost of development of our pipeline products, which are produced by or based on a relatively novel and complex technology and are subject to many risks, any of which could prevent or delay revenue growth and adversely impact our market acceptance, business and results of operations. |
• | The market, including customers and potential investors, may be skeptical of the viability and benefits of our pipeline products because they are based on a relatively novel and complex technology. |
• | Even if we are successful in expanding our biofacturing platform, rapidly changing technology and extensive competition in the synthetic biotech and petrochemical industries could make the products we are developing and producing obsolete or non-competitive unless we continue to develop and manufacture new and improved products and pursue new market opportunities. |
• | The success of our business relies heavily on the performance of our products and developing new products at lower costs and faster development timelines. |
• | Consistent with our strategy, we have recently launched Hyaline, and may in the future launch other products, with a non-fermentation produced biomolecule and, if we are not successful in our efforts to convert to the fermentation-produced version of our products, our products may not be commercially successful. |
• | We do not have our own commercial scale manufacturing capability and any disruptions or interruptions in our biofacturing capacity, may prevent us from launching products or producing current and future products at necessary volumes to meet commercial demand, which may result in lost revenue opportunities. |
• | The manufacture of our products is complex, and we may be unable to secure necessary talent to establish and scale our manufacturing and supply chain to the extent necessary to make a profit or sustain and grow our current business. |
• | Our revenue, results of operations, cash flows and reputation in the marketplace may suffer upon the loss of a significant customer. |
• | If we are unable to obtain and maintain sufficient intellectual property protection for our products and technology, or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our products may be impaired. |
• | Governmental trade controls, including export and import controls, sanctions, customs requirements and related regimes, could subject us to liability or loss of contracting privileges or limit our ability to compete in certain markets. |
• | being permitted to present only two years of audited financial statements in this prospectus and only two years of related “Management’s Discussion and Analysis of Financial Condition and results of operations” in our periodic reports and registration statements, including as incorporated by reference in this prospectus; |
• | not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (“SOX”); |
• | reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements, including in this prospectus; and |
• | exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. |
• | shares of common stock issuable upon the exercise of outstanding warrants to purchase common stock as of December 31, 2020, with a weighted average exercise price of $ per share; |
• | shares of common stock issuable upon the exercise of outstanding warrants to purchase Series C preferred stock as of December 31, 2020, with a weighted average exercise price of $ per share; |
• | shares of common stock issuable upon the exercise of stock options outstanding as of December 31, 2020, under our 2014 Stock Plan, with a weighted-average exercise price of $ per share; |
• | shares of common stock that are reserved for issuance under our 2014 Stock Plan; |
• | shares of common stock issuable upon the exercise of options outstanding as of December 31, 2020, that were assumed in connection with an acquisition, with a weighted-average exercise price of $ per share; |
• | shares of common stock that are reserved for issuance under our 2021 Incentive Award Plan, that will become effective in connection with this offering; and |
• | shares of common stock that are reserved for issuance under our 2021 Employee Stock Purchase Plan that will become effective in connection with this offering. |
• | the filing of our amended and restated certificate of incorporation and the effectiveness of our amended and restated bylaws upon the closing of this offering; |
• | the conversion of all outstanding shares of convertible preferred stock into an aggregate of shares of common stock upon the closing of this offering; |
• | the conversion of all warrants to purchase preferred stock that will become warrants to purchase shares of common stock upon the closing of this offering; |
• | no exercise or termination of outstanding options or warrants after December 31, 2020; and |
• | no exercise by the underwriters of their option to purchase up to additional shares of common stock in this offering. |
| | Year ended December 31, | ||||
| | 2019 | | | 2020 | |
| | (in thousands, except per share and share data) | ||||
Product revenue | | | $— | | | $2 |
Revenue from research and development service agreements | | | 13,234 | | | 9,788 |
Collaboration revenue | | | 2,185 | | | 3,494 |
Total revenue | | | 15,419 | | | 13,284 |
Costs and operating expenses: | | | | | ||
Cost of service revenue(1) | | | 102,640 | | | 84,818 |
Research and development(1) | | | 50,717 | | | 90,852 |
Sales and marketing(1) | | | 24,138 | | | 18,627 |
General and administrative(1) | | | 61,247 | | | 60,076 |
Loss on lease termination | | | 13,790 | | | — |
Total costs and operating expenses | | | 252,532 | | | 254,373 |
Loss from operations | | | (237,113) | | | (241,089) |
Interest income | | | 4,921 | | | 492 |
Interest expense | | | (2,943) | | | (10,960) |
Loss on change in fair value of warrant liability | | | — | | | (10,229) |
Loss on extinguishment of debt | | | (1,810) | | | — |
Other income (expense), net | | | 150 | | | (457) |
Loss before income taxes | | | (236,795) | | | (262,243) |
Income taxes | | | (8) | | | 49 |
Net loss and comprehensive loss | | | $(236,803) | | | $(262,194) |
Net loss per share attributable to common stockholders, basic and diluted | | | $(7.31) | | | $(7.15) |
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted | | | 32,375,409 | | | 36,654,165 |
(1) | Includes stock-based compensation expense as follows: |
| | Year ended December 31, | ||||
| | 2019 | | | 2020 | |
| | (in thousands) | ||||
Cost of service revenue | | | $919 | | | $1,179 |
Research and development | | | 669 | | | 1,343 |
Sales and marketing | | | 904 | | | 468 |
General and administrative | | | 1,520 | | | 1,839 |
Total | | | $4,012 | | | $4,829 |
| | As of December 31, 2020 | |||||||
| | Actual | | | Pro Forma(1) | | | Pro Forma, as adjusted(2)(3) | |
| | (in thousands) | |||||||
Consolidated Balance Sheet Data: | | | | | | | |||
Cash and cash equivalents | | | $210,205 | | | | | ||
Working capital(4) | | | 107,116 | | | | | ||
Total assets | | | 304,921 | | | | | ||
Short-term debt, net(5) | | | 79,331 | | | | | ||
Warrant liabilities | | | 14,231 | | | | | ||
Convertible preferred stock | | | 900,798 | | | | | ||
Accumulated deficit | | | (773,740) | | | | | ||
Total stockholders’ deficit | | | $(743,736) | | | | |
(1) | The pro forma column reflects: (i) the filing and effectiveness of our amended and restated certificate of incorporation; (ii) the conversion of all outstanding shares of our convertible preferred stock into an aggregate of shares of common stock upon the closing of this offering; and (iii) the conversion of all warrants to purchase preferred stock that will become warrants to purchase shares of common stock upon the closing of this offering. |
(2) | The pro forma as adjusted column further reflects the receipt of $ million in net proceeds from our sale of shares of common stock in this offering at an assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses. |
(3) | Each $1.00 increase or decrease in the assumed initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease, respectively, the amount of cash and cash equivalents, working capital, total assets, and total stockholders’ deficit by $ million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses. We may also increase or decrease the number of shares we are offering. An increase or decrease of 1,000,000 in the number of shares we are offering would increase or decrease, respectively, the amount of cash and cash equivalents, working capital, total assets, and total stockholders’ deficit by approximately $ million, assuming the initial public offering price of $ per share, the midpoint of the price range set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions. The pro forma as adjusted information is illustrative only, and we will adjust this information based on the actual initial public offering price and other terms of this offering determined at pricing. |
(4) | Working capital is defined as current assets less current liabilities. |
(5) | Due to the substantial doubt about our ability to continue operating as a going concern and the material adverse change clause in the loan agreement with our lender, the amounts outstanding as of December 31, 2020 have been classified as current in the consolidated financial statements. The lender has not invoked the material adverse change clause as of the date of issuance of these financial statements. |
• | our suppliers may cease or reduce production or deliveries, raise prices or renegotiate terms; |
• | we may be unable to locate a suitable replacement on acceptable terms or on a timely basis, if at all; |
• | if there is a disruption to our single-source or preferred suppliers’ operations, and if we are unable to enter into arrangements with alternative suppliers, we will have no other means of completing our manufacturing process until they restore the affected facilities or we or they procure alternative manufacturing facilities or sources of supply; |
• | delays caused by supply issues may harm our reputation, frustrate our customers and cause them to turn to our competitors for future projects; and |
• | our ability to progress the development and production of our pipeline products could be materially and adversely impacted if the single-source or preferred suppliers upon which we rely were to experience a significant business challenge, disruption or failure due to issues such as financial difficulties or bankruptcy, issues relating to other customers such as regulatory or quality compliance issues, or other financial, legal, regulatory or reputational issues. |
• | greater name and brand recognition; |
• | greater financial and human resources; |
• | larger R&D departments; |
• | broader product lines; |
• | larger sales forces and more established distributor networks; |
• | substantial intellectual property portfolios; |
• | larger and more established customer bases and relationships; |
• | the leverage to enter into contracts on more favorable terms; and |
• | better established, larger scale and lower cost manufacturing capabilities. |
• | political, social and economic instability; |
• | fluctuations in currency exchange rates; |
• | higher levels of credit risk, corruption and payment fraud; |
• | enhanced difficulties of integrating any foreign acquisitions; |
• | regulations that might add difficulties in repatriating cash earned outside the United States and otherwise prevent us from freely moving cash; |
• | import and export controls and restrictions and changes in trade regulations; |
• | compliance with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and similar laws in other jurisdictions; |
• | multiple, conflicting and changing laws and regulations such as privacy, security and data use regulations, tax laws, trade regulations, economic sanctions and embargoes, employment laws, anticorruption laws, regulatory requirements, reimbursement or payor regimes and other governmental approvals, permits and licenses; |
• | failure by us, our collaborators or our distributors to obtain regulatory clearance, authorization or approval for the use of our products in various countries; |
• | additional potentially relevant third-party patent rights; |
• | complexities and difficulties in obtaining intellectual property protection and enforcing our intellectual property; |
• | difficulties in staffing and managing foreign operations; |
• | logistics and regulations associated with shipping samples and customer orders, including infrastructure conditions and transportation delays; |
• | financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises, on demand and payment for our products and exposure to foreign currency exchange rate fluctuations; |
• | natural disasters, political and economic instability, including wars, terrorism and political unrest, and outbreak of disease; |
• | breakdowns in infrastructure, utilities and other services; |
• | boycotts, curtailment of trade and other business restrictions; and |
• | the other risks and uncertainties described in this prospectus. |
• | regulatory authorities may impose a hold or risk evaluation and mitigation strategies which could result in substantial delays, significantly increase the cost of development and/or adversely impact our ability to continue development of the product; |
• | regulatory authorities may require the addition of statements, specific warnings, or contraindications to the product label; |
• | we may be required to conduct additional safety, or environmental studies; |
• | we may be required to implement a risk minimization action plan, which could result in substantial cost increases and have a negative impact on our ability to commercialize the product; |
• | we may be subject to limitations on how we promote the product; |
• | we may, voluntarily or involuntarily, initiate product recalls; |
• | sales of the product and interest in collaborations may decrease significantly; |
• | regulatory authorities may require us to take our product off the market; |
• | we may be subject to litigation or product liability claims; and |
• | our reputation may suffer. |
• | a failure to achieve market acceptance for our products or expansion of our products sales; |
• | the development of new technology rendering our products, or the end products of which they are components, obsolete; |
• | loss of customer orders and delay in order fulfilment; |
• | damage to our brand reputation; |
• | increased warranty and customer service and support costs due to product repair or replacement; |
• | product recalls or replacements; |
• | inability to attract new customers and collaboration opportunities; |
• | diversion of resources from our manufacturing and R&D departments into our service department; and |
• | legal and regulatory claims against us, including product liability claims, which could be costly, time consuming to defend, result in substantial damages and result in reputational damage. |
• | decreased demand for any products that we have developed or may develop; |
• | loss of revenue; |
• | substantial monetary payments; |
• | significant time and costs to defend related litigation; |
• | the inability to commercialize any products that we have developed or may develop; and |
• | injury to our reputation and significant negative media attention. |
• | the timing of launch of our products and the degree to which the launch and commercialization thereof meets the expectations for securities analysts and investors; |
• | commencement or termination of collaborations for our product development and research programs; |
• | failure or discontinuation of any of our product development and research programs; |
• | the success of existing or new competitive products, services or technologies; |
• | regulatory or legal developments in the United States and other countries; |
• | developments or disputes concerning patent applications, issued patents, other intellectual property or proprietary rights; |
• | the impact of COVID-19 on our business and on global economic conditions; |
• | our ability to identify, recruit and retain skilled personnel; |
• | the level of expenses related to any of our research programs or product development programs; |
• | actual or anticipated changes in our estimates as to our financial results or development timelines; |
• | whether our financial results, forecasts and development timelines meet the expectations of securities analysts or investors; |
• | announcement or expectation of additional financing efforts; |
• | sales of our common stock by us, our insiders, or other stockholders; |
• | expiration of market standoff or lock-up agreements; |
• | variations in our financial results or those of companies that are perceived to be similar to us; |
• | changes in estimates or recommendations by securities analysts, if any, that cover our stock; |
• | general economic, industry and market conditions; and |
• | the other factors described in this “Risk Factors” section. |
• | establish that our board of directors is divided into three classes, Class I, Class II and Class III, with each class serving staggered three-year terms; |
• | provide that our directors may be removed only for cause; |
• | provide that vacancies on our board of directors and any newly created directorship may be filled only by a majority of the remaining directors then in office, even though less than a quorum; |
• | eliminate cumulative voting in the election of directors; |
• | authorize our board of directors to issue shares of preferred stock and determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval; |
• | permit stockholders to take actions only at a duly called annual or special meeting and not by unanimous written consent; |
• | prohibit stockholders from calling a special meeting of stockholders; |
• | certain litigation against us can only be brought in federal court or in Delaware and certain litigation in Delaware may require minimum ownership thresholds in order to file suit; |
• | require that stockholders give advance notice to nominate directors or submit proposals for consideration at stockholder meetings; |
• | authorize our board of directors, by a majority vote, to amend certain provisions of the bylaws; and |
• | require the affirmative vote of at least 662∕3% or more of the outstanding shares of common stock entitled to vote generally in the election of directors, voting as a single class to amend many of the provisions described above. |
• | our ability to successfully commercialize our products, including Hyaline, which is the first product we launched in December 2020; |
• | our plans for the development, launch and commercialization of the products in our current and future product pipeline; |
• | our ability to successfully produce products (including Hyaline) through fermentation that we initially launch using non-fermentation monomers; |
• | the implementation of our business model and our ability to transition from revenues that are substantially all derived from R&D service contracts and collaboration agreements to revenues primarily derived from the commercialization of our products; |
• | our ability to create products in about half the time and 1/10th of the cost of what traditional chemicals and materials companies can deliver and to launch our products in roughly five years and $50 million; |
• | the potential benefits of our existing and potential future R&D collaborations and other partner relationships; |
• | our ability to address the market opportunity in the electronics, consumer care and agriculture sectors, as well as the total market opportunity across numerous sectors; |
• | the size and growth potential of the markets for our products and our ability to serve those markets; |
• | our capital requirements and our needs for additional financing; |
• | our expectations regarding our ability to obtain and maintain intellectual property protection for our biofacturing platform, products and related technologies; |
• | our ability to obtain and maintain regulatory approval for certain of our products; |
• | regulatory developments in the United States and foreign countries; |
• | the ability of incumbent chemical companies and synthetic biology companies to address the needs of our existing and potential customers; |
• | developments relating to our competitors and our industry; |
• | the success of competing products that are or may become available; |
• | our goals for producing bio-based products that contribute to a more sustainable future; |
• | our ability to successfully enter new markets and manage our international expansion; |
• | our financial performance; |
• | our ability to generate revenue and obtain funding for our operations, including funding necessary to complete further development of our current and future products; |
• | our estimates regarding margins, future revenue, expenses, capital requirements and needs for additional financing; |
• | the success of our significant investments in our continued R&D of new products; and |
• | the impact of COVID-19 on our business. |
• | A number of reports prepared by IHS Markit analyzing data relating to market opportunity information for a selection of chemicals and materials in our target industries. |
• | World Development Indicators by the World Bank |
• | Delaware Online, “DuPont Timeline,” (February 1, 2017). |
• | The Adhesive and Sealant Council (ASC), “North American Market Report for Adhesives and Sealants with a Global Overview,” (November 2018). |
• | Randi Kronthal-Sacco and Tensie Whelan, “Sustainable Market Share Index,” New York University Stern Center for Sustainable Business, (July 2020). |
• | M. Berners-Lee, C. Kennelly, R. Watson and C.N. Hewitt, “Current Global Food Production is Sufficient to Meet Human Nutritional Needs in 2050 Provided There is Radical Social Adaptation,” Elementa: Science of the Anthropocene (July 2018). |
• | Joseph A. DiMasi, Henry G. Grabowski and Ronald W. Hansen, “Innovations in the Pharmaceutical Industry: New Estimates of R&D Costs, Journal of Health Economics (May 2016). |
• | National Research Council, “Commercialization of New Materials for a Global Economy” (1993). |
• | United States Environmental Protection Agency (EPA), “Overview of Greenhous Gases.” |
• | The UN Environment Assembly, “Global Chemicals Outlook II” (2019). |
• | IHS Markit, “Specialty Films” (December 2018). |
• | DSCC, “Quarterly Foldable/Rollable Display Shipment and Technology Report” (December 2020). |
• | Statista, “Beauty & Personal Care Report” (2020). |
• | Statista, “Home & Laundry Care Report” (2020). |
• | on an actual basis; |
• | on a pro forma basis to reflect: (i) the filing and effectiveness of our amended and restated certificate of incorporation, (ii) the conversion of all outstanding shares of our convertible preferred stock into an aggregate of shares of common stock upon the closing of this offering and (iii) the conversion of all warrants to purchase preferred stock that will become warrants to purchase shares of common stock upon the closing of this offering; |
• | on a pro forma as adjusted basis to reflect: (i) the pro forma adjustments set forth above and (ii) the issuance and sale of shares of common stock by us in this offering at the initial public offering price of $ per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses. |
| | As of December 31, 2020 | |||||||
(in thousands, except per share and share data) | | | Actual | | | Pro forma | | | Pro forma As adjusted |
Cash and cash equivalents | | | $210,205 | | | | | ||
Short-term debt, net(1) | | | 79,331 | | | | | ||
Warrant liabilities | | | 14,231 | | | | | ||
Convertible preferred stock, $0.001 par value per share; 214,181,024 shares authorized; 204,279,898 shares issued and outstanding, actual; no shares issued or outstanding, pro forma and pro forma as adjusted | | | 900,798 | | | | | ||
Stockholders’ equity | | | | | | | |||
Common stock, $0.001 par value per share; 286,477,669 shares authorized, and 38,437,001 shares issued and outstanding actual; shares authorized, and shares issued and outstanding pro forma and pro forma as adjusted | | | 38 | | | | | ||
Additional paid-in capital | | | 29,966 | | | | | ||
Accumulated deficit | | | (773,740) | | | | | ||
Total stockholders’ deficit | | | (743,736) | | | | | ||
Total capitalization | | | 250,624 | | | | |
(1) | Due to the substantial doubt about our ability to continue operating as a going concern and the material adverse change clause in the loan agreement with our lender, the amounts outstanding as of December 31, 2020 have been classified as current in the consolidated financial statements. The lender has not invoked the material adverse change clause as of the date of issuance of these financial statements. |
• | shares of common stock issuable upon the exercise of outstanding warrants to purchase common stock as of December 31, 2020, with a weighted average exercise price of $ per share; |
• | shares of common stock issuable upon the exercise of outstanding warrants to purchase Series C preferred stock as of December 31, 2020, with a weighted average exercise price of $ per share; |
• | shares of common stock issuable upon the exercise of stock options outstanding as of December 31, 2020, under our 2014 Stock Plan, with a weighted-average exercise price of $ per share; |
• | shares of common stock that are reserved for issuance under our 2014 Stock Plan; |
• | shares of common stock issuable upon the exercise of options outstanding as of December 31, 2020, that were assumed in connection with an acquisition, with a weighted-average exercise price of $ per share; |
• | shares of common stock that are reserved for issuance under our 2021 Incentive Award Plan, that will become effective in connection with this offering; and |
• | shares of common stock that are reserved for issuance under our 2021 Employee Stock Purchase Plan that will become effective in connection with this offering. |
Assumed initial public offering price per share | | | | | ||
Historical net tangible book value per share as of | | | | | ||
Pro forma increase in net tangible book value per share as of | | | | | ||
Pro forma net tangible book value per share as of | | | | | ||
Increase in pro forma net tangible book value per share attributable to new investors purchasing shares of common stock in this offering | | | | | ||
| | | | |||
Pro forma as adjusted net tangible book value per share | | | | | ||
| | | | |||
Dilution per share to new investors participating in this offering | | | | |
| | Shares purchased | | | Total consideration | | | Weighted- average price per share | |||||||
| | Number | | | Percent | | | Amount | | | Percent | | |||
Existing stockholders | | | | | | | | | | | |||||
New investors | | | | | | | | | | | |||||
Total | | | | | | | | | | |
• | shares of common stock issuable upon the exercise of outstanding warrants to purchase common stock as of December 31, 2020, with a weighted average exercise price of $ per share; |
• | shares of common stock issuable upon the exercise of outstanding warrants to purchase Series C preferred stock as of December 31, 2020, with a weighted average exercise price of $ per share; |
• | shares of common stock issuable upon the exercise of stock options outstanding as of December 31, 2020, under our 2014 Stock Plan, with a weighted-average exercise price of $ per share; |
• | shares of common stock that are reserved for issuance under our 2014 Stock Plan; |
• | shares of common stock issuable upon the exercise of options outstanding as of December 31, 2020, that were issued in connection with an acquisition, with a weighted-average exercise price of $ per share; |
• | shares of common stock that are reserved for issuance under our 2021 Incentive Award Plan that will become effective in connection with this offering; and |
• | shares of common stock that are reserved for issuance under our 2021 Employee Stock Purchase Plan that will become effective in connection with this offering. |
| | Year ended December 31, | ||||
| | 2019 | | | 2020 | |
| | (in thousands, except per share and share data) | ||||
Product revenue | | | $— | | | $2 |
Revenue from research and development service agreements | | | 13,234 | | | 9,788 |
Collaboration revenue | | | 2,185 | | | 3,494 |
Total revenue | | | 15,419 | | | 13,284 |
Costs and operating expenses: | | | | | ||
Cost of service revenue(1) | | | 102,640 | | | 84,818 |
Research and development(1) | | | 50,717 | | | 90,852 |
Sales and marketing(1) | | | 24,138 | | | 18,627 |
General and administrative(1) | | | 61,247 | | | 60,076 |
Loss on lease termination | | | 13,790 | | | — |
Total costs and operating expenses | | | 252,532 | | | 254,373 |
Loss from operations | | | (237,113) | | | (241,089) |
Interest income | | | 4,921 | | | 492 |
Interest expense | | | (2,943) | | | (10,960) |
Loss on change in fair value of warrant liability | | | — | | | (10,229) |
Loss on extinguishment of debt | | | (1,810) | | | — |
Other income (expense), net | | | 150 | | | (457) |
Loss before income taxes | | | (236,795) | | | (262,243) |
Income taxes | | | (8) | | | 49 |
Net loss and comprehensive loss | | | $(236,803) | | | $(262,194) |
Net loss per share attributable to common stockholders, basic and diluted | | | $(7.31) | | | $(7.15) |
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted | | | 32,375,409 | | | 36,654,165 |
(1) | Includes stock-based compensation expense as follows: |
| | Year ended December 31, | ||||
| | 2019 | | | 2020 | |
| | (in thousands) | ||||
Cost of service revenue | | | $919 | | | $1,179 |
Research and development | | | 669 | | | 1,343 |
Sales and marketing | | | 904 | | | 468 |
General and administrative | | | 1,520 | | | 1,839 |
Total | | | $4,012 | | | $4,829 |
| | As of December 31, 2019 | | | As of December 31, 2020 | |
Consolidated Balance Sheet Data: | | | | | ||
Cash and cash equivalents | | | $143,589 | | | $210,205 |
Working capital(1) | | | $54,316 | | | $107,116 |
Total assets | | | $227,890 | | | $304,921 |
Short term debt, net(2) | | | $78,310 | | | $79,331 |
Warrant liabilities | | | $4,002 | | | $14,231 |
Convertible preferred stock | | | $607,763 | | | $900,798 |
Accumulated deficit | | | $(511,546) | | | $(773,740) |
Total stockholders’ deficit | | | $(499,578) | | | $(743,736) |
(1) | Working capital is defined as current assets less current liabilities. |
(2) | Due to the substantial doubt about our ability to continue operating as a going concern and the material adverse change clause in the loan agreement with our lender, the amounts outstanding as of December 31, 2019 and 2020 have been classified as current in the consolidated financial statements. The lender has not invoked the material adverse change clause as of the date of issuance of these financial statements. |
• | We signed our first revenue-generating R&D service contract in June 2014 with DARPA. This proof-of-concept contract led to follow on agreements and our participation in DARPA’s Living Foundries 1000 Molecules program, focused on the development of next-generation tools and technologies for engineering biological systems. While there is no longer any funding due to us in connection with the DARPA work, to date such work has generated over $23 million in revenue and has been a key step in the testing and validation of both the elements of our biofacturing platform focused on product discovery (including the predecessor system to the ZYmergen Navigator for Chemistry (ZYNC)) and establishing our own product pipeline across three primary industry verticals and our long-term strategy of serving numerous industry verticals. We do from time to time identify opportunities for funding through grants from government agencies and may pursue these in the future. |
• | In September 2014, we entered into an R&D service contract with a multinational food processing company that focused on the improvement of a commercial production microbe used in the processing of an animal feed component. Pursuant to this arrangement, we demonstrated that our new approach, which involves systematically scanning the “dark matter” (or areas of the genome where you would not predict to find interesting functionality) of the genome, was a breakthrough in combining technology with biology to develop new products efficiently. This agreement has generated over $22 million in revenue, has yielded |
• | We established our Products group in 2016 and their initial efforts focused on products for electronics, consumer care and agriculture. Through early conversations with electronics customers, we identified unmet customer needs and started building our pipeline of electronic films products. In parallel, we began developing our pipeline of consumer care and agriculture products. |
• | We acquired Radiant Genomics, Inc. in December 2017, through which we acquired our metagenomics library, the Unified Metagenomics Database (UMDB). This extensive library enables the rapid isolation of novel enzymes, giving us the ability to reduce our costs. It also enables us to mine our library in an effort to create nature-based products that can support a number of verticals. |
• | In 2019 we entered into a collaboration arrangement with Sumitomo Chemical for joint innovation of certain materials and applications of strategic interest to Sumitomo Chemical. Under this arrangement we have partnered with Sumitomo Chemical to bring together our ability to conceive and produce breakthrough products leveraging Sumitomo Chemical’s manufacturing and supply chain capabilities to significantly reduce the timeline to scale manufacturing of our electronic film products. We may enter into agreements similar to the collaboration arrangement with Sumitomo Chemical in the future. We may do this to help speed up the product development process or to utilize areas of expertise of specific partners. |
• | In March 2020 we acquired EnEvolv, Inc. for their ultra-high throughput testing techniques which speed microbe development. The acquisition further enhances our biofacturing platform and supports rapid product development. |
• | In December 2020, we launched our Hyaline product, beginning the typically 6-18 month product qualification process with customers. We have not yet generated revenue from product sales (except for nominal revenue related to the sale of samples). |
2 | *Reflects target launch dates for these products. ** In order to accelerate product launch and meet customer demand, we launched Hyaline with a non-fermentation produced biomolecule sourced from a third party We are currently developing commercial scale processes so we can produce the molecule through fermentation at sufficient volumes and costs to support commercial manufacturing. We expect this process to be complete in 2022. |
• | generating sales of Hyaline, a high-quality optical film designed for use in the electronics market, which is the first product we launched in December 2020; |
• | strengthening our films product sales pipeline by attracting new customers; |
• | building our sales and marketing organization; |
• | ramping films production volume by ensuring sufficient manufacturing capacity; |
• | continuing to perform under our existing R&D services and collaboration arrangements; |
• | launching and commercializing the next target products in our product pipeline, particularly those targeted for launch in 2022 and 2023; |
• | commercializing the fermentation-produced version of Hyaline and any future bio-based products or products with bio-based components or ingredients initially launched with non-fermentation produced components, and achieving the product gross margins that we anticipate therefrom; |
• | continuing to grow and expand our product pipeline by investing in pipeline R&D and expanding into new industries through partnerships; and |
• | continuing to invest in our biofacturing platform to accelerate the time from product concept to launch, expand the scope of our technology and deepening the richness of our datasets. |
| | | | |||||||||
| | Year ended December 31, | | | Change | |||||||
| | 2019 | | | 2020 | | | $ | | | % | |
| | (in thousands, except per share and share data) | | | | | ||||||
Product revenue | | | $— | | | $2 | | | $2 | | | 100% |
Revenue from research and development service agreements | | | 13,234 | | | 9,788 | | | (3,446) | | | (26)% |
Collaboration revenue | | | 2,185 | | | 3,494 | | | 1,309 | | | 60% |
Total revenue | | | 15,419 | | | 13,284 | | | (2,135) | | | (14)% |
Costs and operating expenses: | | | | | | | | | ||||
Cost of service revenue(1) | | | 102,640 | | | 84,818 | | | (17,822) | | | (17)% |
Research and development(1) | | | 50,717 | | | 90,852 | | | 40.135 | | | 79% |
Sales and marketing(1) | | | 24,138 | | | 18,627 | | | (5,511) | | | (23)% |
General and administrative(1) | | | 61,247 | | | 60,076 | | | (1,171) | | | (2)% |
Loss on lease termination | | | 13,790 | | | — | | | (13,790) | | | (100)% |
Total costs and operating expenses | | | 252,532 | | | 254,373 | | | 1,841 | | | 1% |
Loss from operations | | | (237,113) | | | (241,089) | | | (3,976) | | | (2)% |
Interest income | | | 4,921 | | | 492 | | | (4,429) | | | (90)% |
Interest expense | | | (2,943) | | | (10,960) | | | (8,017) | | | (272)% |
Loss on change in fair value of warrant liability | | | — | | | (10,229) | | | (10,229) | | | (100)% |
Loss on extinguishment of debt | | | (1,810) | | | — | | | 1,810 | | | 100% |
Other income (expense), net | | | 150 | | | (457) | | | (607) | | | (405)% |
Loss before income taxes | | | (236,795) | | | (262,243) | | | (25,448) | | | (11)% |
Income taxes | | | (8) | | | 49 | | | 57 | | | 713% |
Net loss and comprehensive loss | | | $(236,803) | | | $(262,194) | | | (25,391) | | | (11)% |
Net loss per share attributable to common stockholders, basic and diluted | | | $(7.31) | | | $(7.15) | | | $0.16 | | | 2% |
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted | | | 32,375,409 | | | 36,654,165 | | | — | | | — |
(1) | Includes stock-based compensation expense as follows: |
| | Year ended December 31, | ||||
| | 2019 | | | 2020 | |
| | (in thousands) | ||||
Cost of service revenue | | | $919 | | | $1,179 |
Research and development | | | 669 | | | 1,343 |
Sales and marketing | | | 904 | | | 468 |
General and administrative | | | 1,520 | | | 1,839 |
Total | | | $4,012 | | | 4,829 |
| | Year ended December 31, | | | Change | |||||||
| | 2019 | | | 2020 | | | $ | | | % | |
| | (in thousands) | | | | | ||||||
Product revenue | | | $— | | | $2 | | | $2 | | | 100% |
Revenue from research and development service agreements | | | 13,234 | | | 9,788 | | | (3,446) | | | (26)% |
Collaboration revenue | | | 2,185 | | | 3,494 | | | 1,309 | | | 60% |
Total Revenue | | | $15,419 | | | $13,284 | | | $(2,135) | | | (14)% |
• | $3.9 million decrease as a result of contracts terminating or completing in 2019 and 2020; |
• | $3.0 million decrease as a result of a contract strain delivery in 2019 without the same delivery requirement in 2020; |
• | $0.8 million decrease due to a reduction in contractual requirements under our DARPA contract in 2020 as compared to 2019; and |
• | $0.3 million decrease due to the impact of the COVID-19 lab shutdown. |