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United States securities and exchange commission logo
March 22, 2021
Josh Hoffman
Chief Executive Officer
Zymergen Inc.
5980 Horton Street, Suite 105
Emeryville, CA 94608
Re: Zymergen Inc.
Amendment No. 1 to
Draft Registration Statement on Form S-1
Submitted March 9,
2021
CIK No. 0001645842
Dear Mr. Hoffman:
We have reviewed your amended draft registration statement and
have the following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Amendment No. 1 to Draft Registration Statement on Form S-1 submitted
March 9, 2021
Prospectus Summary
Overview, page 2
1. We note your response
to comment 2 and your amended disclosure on page 2. Please
further revise your
disclosure to place less emphasis on the comparisons you are drawing
to the development of
Kevlar. In this regard, we note your current and proposed products
do not appear to
compete with Kevlar. For the purpose of contrasting your development
process with the
process used by traditional chemical and materials companies to produce
novel materials, we do
not object to you referencing Kevlar in a manner similar to the way
you reference
cellophane, nylon and Teflon, or the other additional products you reference
on page 97.
Josh Hoffman
FirstName LastNameJosh Hoffman
Zymergen Inc.
Comapany
March NameZymergen Inc.
22, 2021
March2 22, 2021 Page 2
Page
FirstName LastName
3. Pipeline: We plan on years of breakthrough products., page 6
2. Please amend your disclosure to describe approximately how long you
anticipate the
qualification Hyaline process will take, and when you expect to begin
generating revenue
from your Hyaline product. Please also clarify if you will begin
generating revenue on
your Hyaline product prior to replacing the non-fermentation produced
biomolecule, and
if so, disclose the impact on your revenues from the Hyaline product,
if any. Please also
disclose when you estimate you will begin generating revenue from your
10 other
products in development.
Our Business Challenges, page 9
3. To provide context for investors regarding the consequences to you if
your contract with
the CMO site in the United States expires at the end of 2021, please
provide an estimate
for how long it could take for you to find and enter into an agreement
with another
suitable CMO site.
Our Product and Product Pipeline, page 71
4. We note your response to comment 10 and the revised pipeline table. As
previously
requested, please delete the final row of the table, here and in the
summary, as the
products aggregated in this row do not appear to be sufficiently
developed to include with
the other products in the table.
Business
Overview
Our Revenue Model, page 94
5. We note your response to comment 17, as well as your revised
disclosure. Please disclose
the approximate time or time range you expect it will take for a
product to generate
positive gross margins. In addition, please explain the basis for your
statement that the 6-
18 month product qualification process with customers is "typical." In
this regard, we note
you have launched only one product, and that product is still in
qualification. As a related
matter, please tell us why you believe the assumptions you present for
costs and timing
are reliable. In this regard, we note these assumptions appear to be
based on only one
product that has been developed and otherwise rely upon predictions of
future
development costs and times for products that are still in
development.
Consumer Care, page 117
6. We note your disclosure that "[r]esearch from NYU found that
sustainability-marketed
products were responsible for more than 50% of growth in
consumer-packaged goods
from 2015-2019, and that younger consumers drove the demand for
sustainable
packaging." Please amend your disclosure to identify the study or
report conducted by
NYU that supports this statement.
Josh Hoffman
Zymergen Inc.
March 22, 2021
Page 3
Collaborative Research and Development, page 127
7. Please disclose the economic terms of the executed project plans with
Sumitomo. In this
regard we note you disclose that your collaboration agreements
typically include one or
more of the following: payments for the R&D services to be performed,
milestone
payments to be received upon the achievement of the milestone events
defined in the
agreements, revenue sharing and royalty payments upon the
commercialization of the
molecules in which you share in the customer s profit.
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies
Revenue Recognition, page F-12
8. Refer to your response to prior comment 23. In the first paragraph of
your response, you
state fees for R&D services are billable in connection with one to
four fixed-fee phases.
You further state you recognize revenue only for the phase in which
you are operating
through the passage of time and measure progress within each phase
using the input
method. This appears to be meaningful disclosure. Please revise your
disclosure to
include disclosure consistent with the response in this regard or
advise.
14. Collaborative Agreements, page F-33
9. You disclose you analogized to ASC 606 for Sumitomo Chemical's share
of your R&D
service activities and the development of the Zymergen Development
Item. Please
explain to us the basis for your analogy and why recognition of
revenue is appropriate for
this activity and how your treatment is consistent with 808-10-15-5B
and 45-1.
General
10. Please tell us whether any rights, obligations or instruments related to
or associated with
your currently outstanding classes of convertible preferred stock will
survive the closing
of this offering. We note disclosure on the bottom-half of page 15
indicating that all such
securities will be converted into shares of common stock at the closing
of the offering.
However, on the top-half of the same page, in the second bullet, for
example, you indicate
FirstName LastNameJosh Hoffman
that the number of shares outstanding excludes shares of common stock
issuable upon the
Comapany NameZymergen
exercise Inc.
of outstanding warrants to purchase Series C preferred stock.
March 22, 2021 Page 3
FirstName LastName
Josh Hoffman
FirstName LastNameJosh Hoffman
Zymergen Inc.
Comapany
March NameZymergen Inc.
22, 2021
March4 22, 2021 Page 4
Page
FirstName LastName
You may contact Nasreen Mohammed at (202) 551-3773 or Doug Jones at
(202) 551-
3309 if you have questions regarding comments on the financial statements and
related
matters. Please contact Katherine Bagley at (202) 551-2545 or Dietrich King at
(202) 551-
8071 with any other questions.
Sincerely,
Division of
Corporation Finance
Office of Trade &
Services
cc: Sarah Solum