In re ZYMERGEN INC.

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 UNITED STATES OF AMERICA 
 Before the 
 SECURITIES AND EXCHANGE COMMISSION 
 
 
SECURITIES ACT OF 1933 
Release No. 11303 / September 13, 2024 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-22112 
 
 
In the Matter of 
 
ZYMERGEN INC.  
 
Respondent. 
 
 
 
 
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO 
SECTION 8A OF THE SECURITIES ACT 
OF 1933, MAKING FINDINGS, AND 
IMPOSING A CEASE-AND-DESIST 
ORDER 
   
 
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act 
of 1933 (“Securities Act”) against Zymergen Inc. (“Zymergen” or “Respondent”).  
 
II. 
 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose 
of these proceedings and any other proceedings brought by or on behalf of the Commission, or to 
which the Commission is a party, and without admitting or denying the findings herein, except as 
to the Commission’s jurisdiction over it and the subject matter of these proceedings, which are 
admitted, Respondent consents to the entry of this Order Instituting Cease-and-Desist Proceedings 
Pursuant to Section 8A of the Securities Act of 1933, Making Findings, and Imposing a Cease-and-
Desist Order (“Order”), as set forth below. 
 
 
 
 
 
 

 
 2 
III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that:  
 
Summary 
 
1. These proceedings arise from Zymergen’s misrepresentations and omissions during 
and after its initial public offering (“IPO”) in April 2021. Zymergen was a biotechnology company 
focused on the manufacture of novel materials, including optical films used in electronic screens. 
From at least March to August 2021, Zymergen misled investors about its lone developed product’s 
market opportunity, revenue prospects, and customer pipeline.  
 
2. Leading up to and continuing after Zymergen’s IPO, which raised about $530 
million from investors, Zymergen misleadingly touted a large market opportunity for its sole 
commercially available product, an electronics film called Hyaline. Zymergen estimated that 
Hyaline had a $1 billion display market in 2020, the year before the IPO. Its finance team 
calculated this market opportunity by making certain assumptions about the size of Hyaline’s 
possible markets as well as the pricing that customers would be willing to pay. These 
assumptions were inconsistent with analysis conducted by Zymergen’s sales team responsible for 
marketing and selling Hyaline. However, even after the sales team provided its separate analysis, 
Zymergen failed to reassess the market opportunity it described to investors. 
 
3. Zymergen also misled investors about its overall revenue potential. Leading up to 
the IPO, Zymergen distributed revenue projections to research analysts so those analysts could 
create their own financial models that would be communicated to investors. Zymergen described 
its revenue projections as conservative when, in reality, the projections lacked a reasonable basis 
and were materially higher than the high-confidence projections initially prepared by 
Zymergen’s own sales team.   
 
4. Finally, Zymergen misled investors about the strength of Hyaline’s customer 
pipeline and future sales during the company’s first post-IPO earnings call held on May 24, 
2021. During the call, research analysts asked for an update on the status of the customers who 
were evaluating Hyaline. Zymergen responded that the progress of customer testing of Hyaline 
and customer feedback were positive and in line with expectations. These statements omitted 
adverse facts known to Hyaline’s sales team indicating that the late-stage customer pipeline 
experienced significant technical and commercial challenges over the first half of 2021, and that 
multiple significant customers were either delayed in their qualification process, had dropped out 
of the pipeline, or indicated that they were likely to do so. Nor did these comments reflect the 
rising concern within the company over the weeks and days preceding the earnings call about 
whether any of Hyaline’s late-stage customers would purchase significant amounts of Hyaline in 
2021. 
 
5. Through the above conduct and material misstatements, Zymergen violated 
Sections 17(a)(2) and 17(a)(3) of the Securities Act. 
 
 
1
  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not 
binding on any other person or entity in this or any other proceeding. 

 
 3 
Respondent 
 
6. Zymergen Inc. was incorporated in Delaware with its principal place of business in 
Emeryville, California. Zymergen was a biotechnology company focused on the manufacture of 
novel materials for use in the subsequent manufacturing of other products. Zymergen’s common 
stock was previously registered with the Commission under Section 12(b) of the Securities 
Exchange Act of 1934 (“Exchange Act”) and traded on the NASDAQ Global Select Market under 
the symbol “ZY” from April 22, 2021 until October 19, 2022. At all relevant times, Zymergen was 
required to file periodic reports with the Commission pursuant to Section 13(a) of the Exchange 
Act. On October 3, 2023, Zymergen filed a voluntary petition for relief under Chapter 11 of the U.S. 
Bankruptcy Code. After the U.S. Bankruptcy Court for the District of Delaware confirmed 
Zymergen’s Plan of Liquidation in February 2024, Zymergen’s assets and liabilities were 
transferred to a Liquidating Trust. 
 
Background 
 
7. Zymergen was founded in 2013 for the purpose of replacing petroleum-based 
products with biobased products, chemicals, and materials. Zymergen required hundreds of 
millions of dollars in capital to finance the development and manufacturing of its products. From 
2013 through the fall of 2020, Zymergen raised over $800 million through private offerings. At the 
time of its IPO, Zymergen had developed one commercially available product called Hyaline, a 
film designed for electronics companies to use for display touch sensors in personal devices and 
other applications. 
 
8. After the conclusion of its Series D private offering in the fall of 2020, Zymergen 
was rapidly burning through cash. At that time, Zymergen planned to raise at least one more 
private round of fundraising before going public. It initially planned to conduct an IPO after 
Hyaline generated substantial revenue. But in late 2020 and early 2021, when Zymergen needed 
capital and even though Hyaline had not yet produced any revenue for the company, Zymergen 
decided to pursue an IPO on an expedited basis because it viewed the capital markets as favorable.  
 
9. On March 23, 2021, Zymergen filed a registration statement and prospectus on 
Form S-1 to register its common stock. An amended version of the Form S-1 was declared 
effective on April 21, 2021. Zymergen’s IPO closed on April 26, 2021 and raised approximately 
$530 million in proceeds.  
 
10. On April 23, 2021, Zymergen filed a registration statement and prospectus on 
Form S-8 to register certain of its common stock and stock options issued or to be issued to 
certain of its directors, officers, and employees under incentive compensation plans.  
 
11. Zymergen’s misleading conduct and statements related to Hyaline’s market 
opportunity, revenue prospects, and customer pipeline occurred and were made at the time 
securities were being offered and sold pursuant to Zymergen’s Forms S-1 and S-8 registration 
statements. 
 
 
 

 
 4 
Misrepresentations Concerning Hyaline’s Market Opportunity 
 
12. In its Form S-1, Zymergen made representations regarding the market opportunity 
and risks for Hyaline. Specifically, Zymergen represented that although Hyaline had not yet 
generated sales, “we estimate that the display market alone for Hyaline was over $1 billion in 
2020 . . . .”  Because Hyaline was the first commercially available product created by Zymergen’s 
biofacturing platform, this estimate provided investors with an important datapoint to assess the 
potential scale of Zymergen’s revenues.  
 
13. Zymergen knew or should have known its statements concerning the $1 billion 
display market opportunity were materially misleading and lacked a reasonable basis. Zymergen’s 
finance team developed the $1 billion figure in early January 2021 by estimating the size of 
Hyaline’s display market opportunities and the prices at which those products would sell. Then 
they multiplied the estimated market sizes by the estimated pricing to calculate the total Hyaline 
display market opportunity. Although these finance employees consulted with Hyaline’s sales 
team, the finance team had no role in the marketing or sales of Hyaline and had no firsthand 
knowledge or expertise about Hyaline’s markets or appropriate pricing.  
 
14. Hyaline was an optical film specifically designed for the flexible electronic device 
market, including foldable devices with touch screens. The $1 billion figure was misleading 
because it included product markets that the sales team was not targeting and/or that were poor fits 
for Hyaline’s technical characteristics. Specifically, the estimate included the rigid-touch-sensors 
market and fingerprint-on-display market, which together comprised over 99 percent of the $1 
billion market opportunity figure provided in the Form S-1. No member of Zymergen’s sales team 
reviewed this assumption, nor did the information provided by the sales team support the inclusion 
of these markets. In fact, the sales team knew that past attempts to sell Hyaline in these markets 
had already failed after customers found Hyaline was either too expensive, unnecessary, or both. 
Thus, Hyaline’s customer pipeline maintained by the sales team did not list any customer that was 
testing the product for either the rigid-touch-sensors market or the fingerprint-on-display market as 
of the end of 2020. Despite this information, Zymergen included these markets in the $1 billion 
figure provided to investors.  
 
15. The $1 billion figure was also misleading because it relied on product pricing 
assumptions that were unreasonable and at odds with the company’s own internal sales analyses. 
When developing the $1 billion display market opportunity figure included in the Form S-1, 
Zymergen’s finance team assumed pricing that was three to five times higher than the pricing for 
similar products at that time. For example, the finance team assumed that Hyaline could be sold at 
a price of $100 per square meter in the two aforementioned markets—rigid-touch-sensors and 
fingerprint-on-display—even though the sales team knew that in those markets the dominant films 
were priced at approximately $20 per square meter. The price assumed by the finance team was a 
premium price that the sales team believed customers might pay for Hyaline in smaller specialty 
markets, such as the flexible and foldable films markets where there were not low-priced, strong 
incumbent films.  
 
16. Beginning in mid-January and through mid-February 2021, the sales team 
separately prepared internal analyses that calculated the display market opportunity for Hyaline. 
These analyses used product prices that reflected actual pricing realities and excluded the two 
markets (rigid-touch-sensor and fingerprint-on-display) that were deemed not likely to be a good 

 
 5 
fit for Hyaline. According to the sales team’s analyses, the total display market opportunity for 
Hyaline in 2021 was approximately $42 million to $100 million—or approximately 5 to 10 percent 
of the $1 billion market opportunity for 2020 presented in the Form S-1. 
 
17. Despite the material differences between the finance and sales teams’ market 
opportunity analyses, Zymergen failed to implement a reasonable process to reconcile the two 
figures. Likewise, between the time Zymergen initially developed its estimates in early January 
2021 and the publication of the Form S-1 in March 2021, Zymergen failed to assess whether the $1 
billion market opportunity estimate remained accurate. 
 
Misleading Revenue Projections 
 
18. In February 2021, Zymergen held meetings with research analysts who regularly 
published reports to investors on publicly-traded companies. Zymergen’s goal in these meetings 
was to educate the analysts on Zymergen’s business. Zymergen expected the analysts would report 
on Zymergen after the IPO and that they would also speak with and provide information to 
investors during Zymergen’s roadshow.  
 
19. Zymergen’s financial model and its projections for revenue, profits, and cash flow 
for 2022 and 2023 were important benchmarks that investors used to value Zymergen’s stock.  
 
20. To enable the analysts to build their own models, Zymergen provided them with an 
internal financial model that included revenue projections for Zymergen’s products for 2021 
through 2025. Zymergen also met with analysts to describe the model, provide context for the 
projections, and answer questions. Because Zymergen was a pre-revenue company, its internal 
financial estimates were important to analysts in building their own models. When analysts 
subsequently shared their models with investors, those investors knew that the analysts’ models 
were built using information that Zymergen provided to the analysts but could not provide to 
investors directly. 
 
21. To create Zymergen’s internal financial model, Zymergen’s finance team requested 
that the sales team provide its highest-confidence revenue projections based on a detailed, 
customer-by-customer analysis and assessment of potential market share. In response, the sales 
team provided projections indicating that revenues for 2021, 2022, and 2023 were approximately 
60–70% lower than management’s prior projections in September 2020.  
 
22. In response to the sales team’s projections, Zymergen’s finance team reduced by 
approximately half the 2021 estimate provided but requested that the sales team target revenue 
projections that were significantly higher than the highest-confidence projections by the sales team 
for 2022 and 2023. These revised figures were more in-line with the prior projections from the fall 
of 2020. After receiving these targets, the sales team complied with the finance team’s request and 
significantly increased (in some instances, more than doubled) its previous highest-confidence 
projections for 2022 through 2025, increasing total revenues for those years by approximately 
$740 million. The finance team subsequently increased these figures even further before providing 
the final numbers to analysts.  
 
23. Zymergen described these projections as “conservative” to analysts and suggested 
in the meetings that it had with the analysts that there were multiple ways the company could 

 
 6 
exceed the 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. Analysts subsequently published and provided 
models to investors that substantially mirrored the higher projections provided by the company. In 
light of the unreasonable process used to develop these projections, Zymergen knew or should 
have known that the financial model and revenue numbers that it provided to analysts and 
characterized as “conservative” were misleading. 
 
Misrepresentations During Zymergen’s First Quarter 2021 Earnings Call 
 
24. On May 24, 2021, Zymergen held its first earnings call as a public company. 
During the call, research analysts asked about the current status of Zymergen’s customer pipeline 
and requested an “update on the number of customers evaluating” Hyaline and “where your 
customers are in evaluation process.” Among other things, the company responded by noting that 
“customer market feedback during the product qualification process has been positive,” and 
customer qualification was “progressing in line with expectations.” Zymergen also stated that it 
“continue[d] to strengthen the pipeline” of customers. 
 
25. These statements were materially misleading. Leading up to the earnings call, the 
company’s internal reports and communications reflected growing concern and materially adverse 
information regarding the sales pipeline, customer qualification process, and overall revenue 
prospects and market for Hyaline. For example, internal documents prior to the earnings call 
indicated that several of the company’s key customers were delaying purchases of Hyaline and/or 
dropping out of the pipeline altogether due to technical issues that arose in the qualification 
process. At least three major customers dropped out of the short-term revenue pipeline due to 
technical issues and delays in qualification, and another large customer indicated that it was 
purchasing a competitor’s product instead of Hyaline. Additionally, 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.  
 
26. Zymergen’s disclosure review process leading up to the earnings call did not 
reasonably reflect or address this adverse information available to the company. Nor did the 
company’s public statements appropriately reflect the steady stream of negative information. As a 
result, the company’s statements during the May 24, 2021 earnings call misled investors and 
created a misleading, positive impression of the state of Hyaline’s customer pipeline and overall 
prospects. 
 
Subsequent Developments 
 
27. On August 3, 2021, Zymergen issued a press release and Form 8-K disclosing 
adverse facts concerning Hyaline’s deteriorating pipeline and technical issues with the product. 
The disclosures noted that “the Company no longer expects product revenue in 2021, and expects 
product revenue to be immaterial in 2022.” Zymergen also announced that its former CEO had 
separated from the company and resigned from the Board of Directors. On this news, Zymergen’s 
stock price declined approximately 76%. 
 
28. On November 3, 2021, Zymergen announced the discontinuation of all but one of 
its products, including Hyaline.   

 
 7 
 
29. On July 24, 2022, Zymergen signed an agreement to be acquired by a competing 
biotechnology company at terms that valued Zymergen at approximately $300 million, which was 
about 10 percent of the company’s valuation at the time of the IPO. That acquisition was 
completed on October 19, 2022.  
 
30. On October 3, 2023, Zymergen filed a voluntary petition for relief under Chapter 11 
of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware, Case No. 23-
11661 (Bankr. D. Del.) (the “Delaware Bankruptcy”).  
 
Violations 
 
31. As a result of the conduct described above, Zymergen violated Section 17(a)(2) of 
the Securities Act, which proscribes, in the offer or sale of a security, obtaining “money or property 
by means of any untrue statement of a material fact or any omission to state a material fact 
necessary in order to make the statements made, in light of the circumstances under which they 
were made, not misleading.” In addition, Zymergen also violated Section 17(a)(3) of the Securities 
Act, which proscribes, in the offer or sale of a security, engaging “in any transaction, practice, or 
course of business which operates or would operate as a fraud or deceit upon the purchaser.” A 
violation of these provisions does not require scienter and may rest on a finding of negligence. See 
Aaron v. SEC, 446 U.S. 680, 685 & 701-02 (1980). 
 
Zymergen’s Cooperation 
32. In determining to accept the Offer, the Commission considered cooperation 
afforded the Commission staff by Respondent. 
Undertakings 
 
33. Zymergen (including its post-bankruptcy successor or representative, officers, 
directors, and employees, and third-party consultants within Zymergen’s control, provided that 
the Liquidating Trustee of the ZYM Liquidating Trust shall have no personal liability for the 
Undertakings set forth in this Order, including with respect to the undertakings set forth in this 
paragraph 33), shall, until the termination of the ZYM Liquidating Trust, subject to the 
availability of funds in the ZYM Liquidating Trust to do so, continue to cooperate fully with the 
Commission with respect to this action and to any related judicial proceeding, administrative 
proceeding, or investigation commenced by the Commission or to which the Commission is a 
party, subject to compliance with applicable law. Zymergen agrees that such cooperation shall 
include, but is not limited to: 
 
a. Production of Information: at the Commission’s request, upon reasonable notice, 
and without subpoena, Zymergen shall truthfully and completely disclose all information 
in its possession reasonably requested by the Commission staff in connection with this 
action or any related investigation, litigation, or other proceeding commenced by the 
Commission or to which the Commission is a party.  
 

 
 8 
b. Production of Documents: at the Commission’s request, upon reasonable notice, 
and without subpoena, Zymergen shall provide any document, record or other tangible 
evidence in its possession reasonably requested by the Commission staff in connection 
with this action or any related investigation, litigation, or other proceeding commenced 
by the Commission or to which the Commission is a party.  
 
c. Production of Cooperative Personnel: at the Commission’s request, upon 
reasonable notice, and without subpoena, Zymergen shall secure the attendance and 
truthful statements, deposition, or testimony of any Zymergen officer, director, or 
employee or third-party consultant within Zymergen’s control, excluding any person who 
is a party to any related litigated judicial or administrative proceeding, at any meeting, 
interview, testimony, deposition, trial, or other legal proceeding commenced by the 
Commission or to which the Commission is a party. At the Commission’s request, 
Zymergen shall also use its best efforts to secure the attendance and truthful statements, 
deposition, or testimony of any former Zymergen officer, director, or employee, 
excluding any person who is a party to any related litigated judicial or administrative 
proceeding, at any meeting, interview, testimony, deposition, trial, or other legal 
proceeding commenced by the Commission or to which the Commission is a party. 
 
 The foregoing obligations are subject to Zymergen’s reservation of rights: (i) to 
claim that documents or information requested is subject to attorney-client privilege,  
attorney work-product protection, or other applicable protection; and (ii) to seek entry of 
a confidentiality order as to: sensitive business documents or information; sensitive 
personnel documents or information; or confidential information pertaining to parties 
other than Zymergen; and  
 
d. Service and Personal Jurisdiction Consents: Zymergen further agrees that, with 
respect to this action and any related judicial proceeding, administrative proceeding, or 
investigation commenced by the Commission or to which the Commission is a party, it 
will: (i) accept service by email, mail, or facsimile transmission of notices, requests, or 
subpoenas issued by the Commission for documents or testimony at depositions, 
hearings, or trials, or in connection with any related investigation by the Commission 
staff (“Commission Service”); (ii) appoint Zymergen’s counsel as agent to receive 
Commission Service; (iii) with respect to Commission Service, waive the territorial limits 
upon service contained in Rule 45 for the Federal Rules of Civil Procedure and any 
applicable local rules, provided that the party requesting the testimony reimburses 
Zymergen’s travel, lodging, and subsistence expenses at the then-prevailing U.S. 
Government per diem rates; and (iv) consent to personal jurisdiction over Zymergen in 
any United States District Court for purposes of enforcing any Commission Service. 
 
 In determining whether to accept the Offer, the Commission has considered these 
undertakings. 
 
IV. 
 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in Zymergen’s Offer. 
 

 
 9 
 Accordingly, it is hereby ORDERED that: 
 
 A. Pursuant to Section 8A of the Securities Act, Respondent Zymergen cease and desist 
from committing or causing any violations and any future violations of Sections 17(a)(2) and 
17(a)(3) of the Securities Act. 
 
 B. Respondent shall comply with the undertakings enumerated in Section III above.  
 
 C. Respondent shall pay a civil money penalty of $30,000,000 to the Securities and 
Exchange Commission, which amount shall be allowed as a Class 3 General Unsecured Claim 
under Respondent’s First Amended Joint Chapter 11 Plan of Liquidation dated February 1, 2024 
(the “Plan”) and treated as set forth in the Order Approving the Stipulation Between the ZYM 
Liquidating Trust and U.S. Securities and Exchange Commission issued by the U.S. Bankruptcy 
Court for the District of Delaware and dated June 10, 2024 (D.I. 512-1) (the “Stipulation”). Payment 
shall be made in the following installments: Respondent, through the ZYM Liquidating Trust (the 
“Liquidating Trust”), shall pay $5,000,000 to the Commission promptly upon Bankruptcy Court 
approval of the Offer, as set forth in the Stipulation; and the Liquidating Trust shall also make 
subsequent distributions under the Plan to the Commission as set forth in the Stipulation up to 
$30,000,000. Upon the termination of the Liquidating Trust and following the distribution of the 
remaining Liquidating Trust Assets in accordance with Section 10.2 of the Liquidating Trust 
Agreement, the Commission will forgo any further distributions on unpaid penalties and the 
Commission Claim (as defined in the Stipulation). 
 
 D. Payment must be made in one of the following ways:   
 
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
 Payments by check or money order must be accompanied by a cover letter identifying 
Zymergen as a Respondent in these proceedings, and the file number of these proceedings; a copy 
of the cover letter and check or money order must be sent to Jason H. Lee, Associate Regional 
Director, Division of Enforcement, Securities and Exchange Commission, 44 Montgomery Street, 
Suite 2800, San Francisco, CA 94104. 
 

 
 10 
 E. Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, a Fair Fund is created 
for the penalties referenced in paragraphs C–D above. Amounts ordered to be paid as civil money 
penalties pursuant to this Order shall be treated as penalties paid to the government for all 
purposes, including all tax purposes. To preserve the deterrent effect of the civil penalty, 
Respondent agrees that in any Related Investor Action, it shall not argue that it is entitled to, nor 
shall it benefit by, offset or reduction of any award of compensatory damages by the amount of any 
part of Respondent’s payment of a civil penalty in this action (“Penalty Offset”). If the court in any 
Related Investor Action grants such a Penalty Offset, Respondent agrees that it shall, within 30 
days after entry of a final order granting the Penalty Offset, notify the Commission’s counsel in 
this action and pay the amount of the Penalty Offset to the Securities and Exchange Commission. 
Such a payment shall not be deemed an additional civil penalty and shall not be deemed to change 
the amount of the civil penalty imposed in this proceeding. For purposes of this paragraph, a 
“Related Investor Action” means a private damages action brought against Respondent by or on 
behalf of one or more investors based on substantially the same facts as alleged in the Order 
instituted by the Commission in this proceeding. 
 
 
 By the Commission. 
 
 
 
Vanessa A. Countryman 
       Secretary 
 
 

UNITED STATES OF AMERICA 

 Before the 

 SECURITIES AND EXCHANGE COMMISSION 

 

 

SECURITIES ACT OF 1933 

Release No. 11303 / September 13, 2024 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-22112 

 

 

In the Matter of 

 

ZYMERGEN INC.  

 

Respondent. 

 

 

 

 

ORDER INSTITUTING CEASE-AND-

DESIST PROCEEDINGS PURSUANT TO 

SECTION 8A OF THE SECURITIES ACT 

OF 1933, MAKING FINDINGS, AND 

IMPOSING A CEASE-AND-DESIST 

ORDER 

   

 

I. 

 

 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-

and-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act 

of 1933 (“Securities Act”) against Zymergen Inc. (“Zymergen” or “Respondent”).  

 

II. 

 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose 

of these proceedings and any other proceedings brought by or on behalf of the Commission, or to 

which the Commission is a party, and without admitting or denying the findings herein, except as 

to the Commission’s jurisdiction over it and the subject matter of these proceedings, which are 

admitted, Respondent consents to the entry of this Order Instituting Cease-and-Desist Proceedings 

Pursuant to Section 8A of the Securities Act of 1933, Making Findings, and Imposing a Cease-and-

Desist Order (“Order”), as set forth below. 

 

 

 

 

 

 



 

 2 

III. 

 

 On the basis of this Order and Respondent’s Offer, the Commission finds1 that:  

 

Summary 

 

1. These proceedings arise from Zymergen’s misrepresentations and omissions during 

and after its initial public offering (“IPO”) in April 2021. Zymergen was a biotechnology company 

focused on the manufacture of novel materials, including optical films used in electronic screens. 

From at least March to August 2021, Zymergen misled investors about its lone developed product’s 

market opportunity, revenue prospects, and customer pipeline.  

 

2. Leading up to and continuing after Zymergen’s IPO, which raised about $530 

million from investors, Zymergen misleadingly touted a large market opportunity for its sole 

commercially available product, an electronics film called Hyaline. Zymergen estimated that 

Hyaline had a $1 billion display market in 2020, the year before the IPO. Its finance team 

calculated this market opportunity by making certain assumptions about the size of Hyaline’s 

possible markets as well as the pricing that customers would be willing to pay. These 

assumptions were inconsistent with analysis conducted by Zymergen’s sales team responsible for 

marketing and selling Hyaline. However, even after the sales team provided its separate analysis, 

Zymergen failed to reassess the market opportunity it described to investors. 

 

3. Zymergen also misled investors about its overall revenue potential. Leading up to 

the IPO, Zymergen distributed revenue projections to research analysts so those analysts could 

create their own financial models that would be communicated to investors. Zymergen described 

its revenue projections as conservative when, in reality, the projections lacked a reasonable basis 

and were materially higher than the high-confidence projections initially prepared by 

Zymergen’s own sales team.   

 

4. Finally, Zymergen misled investors about the strength of Hyaline’s customer 

pipeline and future sales during the company’s first post-IPO earnings call held on May 24, 

2021. During the call, research analysts asked for an update on the status of the customers who 

were evaluating Hyaline. Zymergen responded that the progress of customer testing of Hyaline 

and customer feedback were positive and in line with expectations. These statements omitted 

adverse facts known to Hyaline’s sales team indicating that the late-stage customer pipeline 

experienced significant technical and commercial challenges over the first half of 2021, and that 

multiple significant customers were either delayed in their qualification process, had dropped out 

of the pipeline, or indicated that they were likely to do so. Nor did these comments reflect the 

rising concern within the company over the weeks and days preceding the earnings call about 

whether any of Hyaline’s late-stage customers would purchase significant amounts of Hyaline in 

2021. 

 

5. Through the above conduct and material misstatements, Zymergen violated 

Sections 17(a)(2) and 17(a)(3) of the Securities Act. 

 

 
1  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not 

binding on any other person or entity in this or any other proceeding. 



 

 3 

Respondent 

 

6. Zymergen Inc. was incorporated in Delaware with its principal place of business in 

Emeryville, California. Zymergen was a biotechnology company focused on the manufacture of 

novel materials for use in the subsequent manufacturing of other products. Zymergen’s common 

stock was previously registered with the Commission under Section 12(b) of the Securities 

Exchange Act of 1934 (“Exchange Act”) and traded on the NASDAQ Global Select Market under 

the symbol “ZY” from April 22, 2021 until October 19, 2022. At all relevant times, Zymergen was 

required to file periodic reports with the Commission pursuant to Section 13(a) of the Exchange 

Act. On October 3, 2023, Zymergen filed a voluntary petition for relief under Chapter 11 of the U.S. 

Bankruptcy Code. After the U.S. Bankruptcy Court for the District of Delaware confirmed 

Zymergen’s Plan of Liquidation in February 2024, Zymergen’s assets and liabilities were 

transferred to a Liquidating Trust. 

 

Background 

 

7. Zymergen was founded in 2013 for the purpose of replacing petroleum-based 

products with biobased products, chemicals, and materials. Zymergen required hundreds of 

millions of dollars in capital to finance the development and manufacturing of its products. From 

2013 through the fall of 2020, Zymergen raised over $800 million through private offerings. At the 

time of its IPO, Zymergen had developed one commercially available product called Hyaline, a 

film designed for electronics companies to use for display touch sensors in personal devices and 

other applications. 

 

8. After the conclusion of its Series D private offering in the fall of 2020, Zymergen 

was rapidly burning through cash. At that time, Zymergen planned to raise at least one more 

private round of fundraising before going public. It initially planned to conduct an IPO after 

Hyaline generated substantial revenue. But in late 2020 and early 2021, when Zymergen needed 

capital and even though Hyaline had not yet produced any revenue for the company, Zymergen 

decided to pursue an IPO on an expedited basis because it viewed the capital markets as favorable.  

 

9. On March 23, 2021, Zymergen filed a registration statement and prospectus on 

Form S-1 to register its common stock. An amended version of the Form S-1 was declared 

effective on April 21, 2021. Zymergen’s IPO closed on April 26, 2021 and raised approximately 

$530 million in proceeds.  

 

10. On April 23, 2021, Zymergen filed a registration statement and prospectus on 

Form S-8 to register certain of its common stock and stock options issued or to be issued to 

certain of its directors, officers, and employees under incentive compensation plans.  

 

11. Zymergen’s misleading conduct and statements related to Hyaline’s market 

opportunity, revenue prospects, and customer pipeline occurred and were made at the time 

securities were being offered and sold pursuant to Zymergen’s Forms S-1 and S-8 registration 

statements. 

 

 

 



 

 4 

Misrepresentations Concerning Hyaline’s Market Opportunity 

 

12. In its Form S-1, Zymergen made representations regarding the market opportunity 

and risks for Hyaline. Specifically, Zymergen represented that although Hyaline had not yet 

generated sales, “we estimate that the display market alone for Hyaline was over $1 billion in 

2020 . . . .”  Because Hyaline was the first commercially available product created by Zymergen’s 

biofacturing platform, this estimate provided investors with an important datapoint to assess the 

potential scale of Zymergen’s revenues.  

 

13. Zymergen knew or should have known its statements concerning the $1 billion 

display market opportunity were materially misleading and lacked a reasonable basis. Zymergen’s 

finance team developed the $1 billion figure in early January 2021 by estimating the size of 

Hyaline’s display market opportunities and the prices at which those products would sell. Then 

they multiplied the estimated market sizes by the estimated pricing to calculate the total Hyaline 

display market opportunity. Although these finance employees consulted with Hyaline’s sales 

team, the finance team had no role in the marketing or sales of Hyaline and had no firsthand 

knowledge or expertise about Hyaline’s markets or appropriate pricing.  

 

14. Hyaline was an optical film specifically designed for the flexible electronic device 

market, including foldable devices with touch screens. The $1 billion figure was misleading 

because it included product markets that the sales team was not targeting and/or that were poor fits 

for Hyaline’s technical characteristics. Specifically, the estimate included the rigid-touch-sensors 

market and fingerprint-on-display market, which together comprised over 99 percent of the $1 

billion market opportunity figure provided in the Form S-1. No member of Zymergen’s sales team 

reviewed this assumption, nor did the information provided by the sales team support the inclusion 

of these markets. In fact, the sales team knew that past attempts to sell Hyaline in these markets 

had already failed after customers found Hyaline was either too expensive, unnecessary, or both. 

Thus, Hyaline’s customer pipeline maintained by the sales team did not list any customer that was 

testing the product for either the rigid-touch-sensors market or the fingerprint-on-display market as 

of the end of 2020. Despite this information, Zymergen included these markets in the $1 billion 

figure provided to investors.  

 

15. The $1 billion figure was also misleading because it relied on product pricing 

assumptions that were unreasonable and at odds with the company’s own internal sales analyses. 

When developing the $1 billion display market opportunity figure included in the Form S-1, 

Zymergen’s finance team assumed pricing that was three to five times higher than the pricing for 

similar products at that time. For example, the finance team assumed that Hyaline could be sold at 

a price of $100 per square meter in the two aforementioned markets—rigid-touch-sensors and 

fingerprint-on-display—even though the sales team knew that in those markets the dominant films 

were priced at approximately $20 per square meter. The price assumed by the finance team was a 

premium price that the sales team believed customers might pay for Hyaline in smaller specialty 

markets, such as the flexible and foldable films markets where there were not low-priced, strong 

incumbent films.  
 

16. Beginning in mid-January and through mid-February 2021, the sales team 

separately prepared internal analyses that calculated the display market opportunity for Hyaline. 

These analyses used product prices that reflected actual pricing realities and excluded the two 

markets (rigid-touch-sensor and fingerprint-on-display) that were deemed not likely to be a good 



 

 5 

fit for Hyaline. According to the sales team’s analyses, the total display market opportunity for 

Hyaline in 2021 was approximately $42 million to $100 million—or approximately 5 to 10 percent 

of the $1 billion market opportunity for 2020 presented in the Form S-1. 

 

17. Despite the material differences between the finance and sales teams’ market 

opportunity analyses, Zymergen failed to implement a reasonable process to reconcile the two 

figures. Likewise, between the time Zymergen initially developed its estimates in early January 

2021 and the publication of the Form S-1 in March 2021, Zymergen failed to assess whether the $1 

billion market opportunity estimate remained accurate. 

 

Misleading Revenue Projections 

 

18. In February 2021, Zymergen held meetings with research analysts who regularly 

published reports to investors on publicly-traded companies. Zymergen’s goal in these meetings 

was to educate the analysts on Zymergen’s business. Zymergen expected the analysts would report 

on Zymergen after the IPO and that they would also speak with and provide information to 

investors during Zymergen’s roadshow.  

 

19. Zymergen’s financial model and its projections for revenue, profits, and cash flow 

for 2022 and 2023 were important benchmarks that investors used to value Zymergen’s stock.  

 

20. To enable the analysts to build their own models, Zymergen provided them with an 

internal financial model that included revenue projections for Zymergen’s products for 2021 

through 2025. Zymergen also met with analysts to describe the model, provide context for the 

projections, and answer questions. Because Zymergen was a pre-revenue company, its internal 

financial estimates were important to analysts in building their own models. When analysts 

subsequently shared their models with investors, those investors knew that the analysts’ models 

were built using information that Zymergen provided to the analysts but could not provide to 

investors directly. 

 

21. To create Zymergen’s internal financial model, Zymergen’s finance team requested 

that the sales team provide its highest-confidence revenue projections based on a detailed, 

customer-by-customer analysis and assessment of potential market share. In response, the sales 

team provided projections indicating that revenues for 2021, 2022, and 2023 were approximately 

60–70% lower than management’s prior projections in September 2020.  

 

22. In response to the sales team’s projections, Zymergen’s finance team reduced by 

approximately half the 2021 estimate provided but requested that the sales team target revenue 

projections that were significantly higher than the highest-confidence projections by the sales team 

for 2022 and 2023. These revised figures were more in-line with the prior projections from the fall 

of 2020. After receiving these targets, the sales team complied with the finance team’s request and 

significantly increased (in some instances, more than doubled) its previous highest-confidence 

projections for 2022 through 2025, increasing total revenues for those years by approximately 

$740 million. The finance team subsequently increased these figures even further before providing 

the final numbers to analysts.  

 

23. Zymergen described these projections as “conservative” to analysts and suggested 

in the meetings that it had with the analysts that there were multiple ways the company could 



 

 6 

exceed the 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. Analysts subsequently published and provided 

models to investors that substantially mirrored the higher projections provided by the company. In 

light of the unreasonable process used to develop these projections, Zymergen knew or should 

have known that the financial model and revenue numbers that it provided to analysts and 

characterized as “conservative” were misleading. 

 

Misrepresentations During Zymergen’s First Quarter 2021 Earnings Call 

 

24. On May 24, 2021, Zymergen held its first earnings call as a public company. 

During the call, research analysts asked about the current status of Zymergen’s customer pipeline 

and requested an “update on the number of customers evaluating” Hyaline and “where your 

customers are in evaluation process.” Among other things, the company responded by noting that 

“customer market feedback during the product qualification process has been positive,” and 

customer qualification was “progressing in line with expectations.” Zymergen also stated that it 

“continue[d] to strengthen the pipeline” of customers. 

 

25. These statements were materially misleading. Leading up to the earnings call, the 

company’s internal reports and communications reflected growing concern and materially adverse 

information regarding the sales pipeline, customer qualification process, and overall revenue 

prospects and market for Hyaline. For example, internal documents prior to the earnings call 

indicated that several of the company’s key customers were delaying purchases of Hyaline and/or 

dropping out of the pipeline altogether due to technical issues that arose in the qualification 

process. At least three major customers dropped out of the short-term revenue pipeline due to 

technical issues and delays in qualification, and another large customer indicated that it was 

purchasing a competitor’s product instead of Hyaline. Additionally, 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.  

 

26. Zymergen’s disclosure review process leading up to the earnings call did not 

reasonably reflect or address this adverse information available to the company. Nor did the 

company’s public statements appropriately reflect the steady stream of negative information. As a 

result, the company’s statements during the May 24, 2021 earnings call misled investors and 

created a misleading, positive impression of the state of Hyaline’s customer pipeline and overall 

prospects. 

 

Subsequent Developments 

 

27. On August 3, 2021, Zymergen issued a press release and Form 8-K disclosing 

adverse facts concerning Hyaline’s deteriorating pipeline and technical issues with the product. 

The disclosures noted that “the Company no longer expects product revenue in 2021, and expects 

product revenue to be immaterial in 2022.” Zymergen also announced that its former CEO had 

separated from the company and resigned from the Board of Directors. On this news, Zymergen’s 

stock price declined approximately 76%. 

 

28. On November 3, 2021, Zymergen announced the discontinuation of all but one of 

its products, including Hyaline.   



 

 7 

 

29. On July 24, 2022, Zymergen signed an agreement to be acquired by a competing 

biotechnology company at terms that valued Zymergen at approximately $300 million, which was 

about 10 percent of the company’s valuation at the time of the IPO. That acquisition was 

completed on October 19, 2022.  

 

30. On October 3, 2023, Zymergen filed a voluntary petition for relief under Chapter 11 

of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware, Case No. 23-

11661 (Bankr. D. Del.) (the “Delaware Bankruptcy”).  

 

Violations 

 

31. As a result of the conduct described above, Zymergen violated Section 17(a)(2) of 

the Securities Act, which proscribes, in the offer or sale of a security, obtaining “money or property 

by means of any untrue statement of a material fact or any omission to state a material fact 

necessary in order to make the statements made, in light of the circumstances under which they 

were made, not misleading.” In addition, Zymergen also violated Section 17(a)(3) of the Securities 

Act, which proscribes, in the offer or sale of a security, engaging “in any transaction, practice, or 

course of business which operates or would operate as a fraud or deceit upon the purchaser.” A 

violation of these provisions does not require scienter and may rest on a finding of negligence. See 

Aaron v. SEC, 446 U.S. 680, 685 & 701-02 (1980). 

 

Zymergen’s Cooperation 

32. In determining to accept the Offer, the Commission considered cooperation 

afforded the Commission staff by Respondent. 

Undertakings 

 

33. Zymergen (including its post-bankruptcy successor or representative, officers, 

directors, and employees, and third-party consultants within Zymergen’s control, provided that 

the Liquidating Trustee of the ZYM Liquidating Trust shall have no personal liability for the 

Undertakings set forth in this Order, including with respect to the undertakings set forth in this 

paragraph 33), shall, until the termination of the ZYM Liquidating Trust, subject to the 

availability of funds in the ZYM Liquidating Trust to do so, continue to cooperate fully with the 

Commission with respect to this action and to any related judicial proceeding, administrative 

proceeding, or investigation commenced by the Commission or to which the Commission is a 

party, subject to compliance with applicable law. Zymergen agrees that such cooperation shall 

include, but is not limited to: 

 

a. Production of Information: at the Commission’s request, upon reasonable notice, 

and without subpoena, Zymergen shall truthfully and completely disclose all information 

in its possession reasonably requested by the Commission staff in connection with this 

action or any related investigation, litigation, or other proceeding commenced by the 

Commission or to which the Commission is a party.  

 



 

 8 

b. Production of Documents: at the Commission’s request, upon reasonable notice, 

and without subpoena, Zymergen shall provide any document, record or other tangible 

evidence in its possession reasonably requested by the Commission staff in connection 

with this action or any related investigation, litigation, or other proceeding commenced 

by the Commission or to which the Commission is a party.  

 

c. Production of Cooperative Personnel: at the Commission’s request, upon 

reasonable notice, and without subpoena, Zymergen shall secure the attendance and 

truthful statements, deposition, or testimony of any Zymergen officer, director, or 

employee or third-party consultant within Zymergen’s control, excluding any person who 

is a party to any related litigated judicial or administrative proceeding, at any meeting, 

interview, testimony, deposition, trial, or other legal proceeding commenced by the 

Commission or to which the Commission is a party. At the Commission’s request, 

Zymergen shall also use its best efforts to secure the attendance and truthful statements, 

deposition, or testimony of any former Zymergen officer, director, or employee, 

excluding any person who is a party to any related litigated judicial or administrative 

proceeding, at any meeting, interview, testimony, deposition, trial, or other legal 

proceeding commenced by the Commission or to which the Commission is a party. 

 

 The foregoing obligations are subject to Zymergen’s reservation of rights: (i) to 

claim that documents or information requested is subject to attorney-client privilege,  

attorney work-product protection, or other applicable protection; and (ii) to seek entry of 

a confidentiality order as to: sensitive business documents or information; sensitive 

personnel documents or information; or confidential information pertaining to parties 

other than Zymergen; and  

 

d. Service and Personal Jurisdiction Consents: Zymergen further agrees that, with 

respect to this action and any related judicial proceeding, administrative proceeding, or 

investigation commenced by the Commission or to which the Commission is a party, it 

will: (i) accept service by email, mail, or facsimile transmission of notices, requests, or 

subpoenas issued by the Commission for documents or testimony at depositions, 

hearings, or trials, or in connection with any related investigation by the Commission 

staff (“Commission Service”); (ii) appoint Zymergen’s counsel as agent to receive 

Commission Service; (iii) with respect to Commission Service, waive the territorial limits 

upon service contained in Rule 45 for the Federal Rules of Civil Procedure and any 

applicable local rules, provided that the party requesting the testimony reimburses 

Zymergen’s travel, lodging, and subsistence expenses at the then-prevailing U.S. 

Government per diem rates; and (iv) consent to personal jurisdiction over Zymergen in 

any United States District Court for purposes of enforcing any Commission Service. 

 

 In determining whether to accept the Offer, the Commission has considered these 

undertakings. 
 

IV. 

 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Zymergen’s Offer. 

 



 

 9 

 Accordingly, it is hereby ORDERED that: 

 

 A. Pursuant to Section 8A of the Securities Act, Respondent Zymergen cease and desist 

from committing or causing any violations and any future violations of Sections 17(a)(2) and 

17(a)(3) of the Securities Act. 

 

 B. Respondent shall comply with the undertakings enumerated in Section III above.  

 

 C. Respondent shall pay a civil money penalty of $30,000,000 to the Securities and 

Exchange Commission, which amount shall be allowed as a Class 3 General Unsecured Claim 

under Respondent’s First Amended Joint Chapter 11 Plan of Liquidation dated February 1, 2024 

(the “Plan”) and treated as set forth in the Order Approving the Stipulation Between the ZYM 

Liquidating Trust and U.S. Securities and Exchange Commission issued by the U.S. Bankruptcy 

Court for the District of Delaware and dated June 10, 2024 (D.I. 512-1) (the “Stipulation”). Payment 

shall be made in the following installments: Respondent, through the ZYM Liquidating Trust (the 

“Liquidating Trust”), shall pay $5,000,000 to the Commission promptly upon Bankruptcy Court 

approval of the Offer, as set forth in the Stipulation; and the Liquidating Trust shall also make 

subsequent distributions under the Plan to the Commission as set forth in the Stipulation up to 

$30,000,000. Upon the termination of the Liquidating Trust and following the distribution of the 

remaining Liquidating Trust Assets in accordance with Section 10.2 of the Liquidating Trust 

Agreement, the Commission will forgo any further distributions on unpaid penalties and the 

Commission Claim (as defined in the Stipulation). 

 

 D. Payment must be made in one of the following ways:   

 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request;  

 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 

 Payments by check or money order must be accompanied by a cover letter identifying 

Zymergen as a Respondent in these proceedings, and the file number of these proceedings; a copy 

of the cover letter and check or money order must be sent to Jason H. Lee, Associate Regional 

Director, Division of Enforcement, Securities and Exchange Commission, 44 Montgomery Street, 

Suite 2800, San Francisco, CA 94104. 

 

http://www.sec.gov/about/offices/ofm.htm


 

 10 

 E. Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, a Fair Fund is created 

for the penalties referenced in paragraphs C–D above. Amounts ordered to be paid as civil money 

penalties pursuant to this Order shall be treated as penalties paid to the government for all 

purposes, including all tax purposes. To preserve the deterrent effect of the civil penalty, 

Respondent agrees that in any Related Investor Action, it shall not argue that it is entitled to, nor 

shall it benefit by, offset or reduction of any award of compensatory damages by the amount of any 

part of Respondent’s payment of a civil penalty in this action (“Penalty Offset”). If the court in any 

Related Investor Action grants such a Penalty Offset, Respondent agrees that it shall, within 30 

days after entry of a final order granting the Penalty Offset, notify the Commission’s counsel in 

this action and pay the amount of the Penalty Offset to the Securities and Exchange Commission. 

Such a payment shall not be deemed an additional civil penalty and shall not be deemed to change 

the amount of the civil penalty imposed in this proceeding. For purposes of this paragraph, a 

“Related Investor Action” means a private damages action brought against Respondent by or on 

behalf of one or more investors based on substantially the same facts as alleged in the Order 

instituted by the Commission in this proceeding. 

 

 

 By the Commission. 

 

 

 

Vanessa A. Countryman 

       Secretary