Good afternoon, and welcome to today's Zymergen business update call. Please be advised that today's call is being recorded. I would now like to hand the conference over to Kari Mandeville. Please proceed. Thank you. Earlier today, Zymergen issued a business update news release. If you haven't received it, or if you'd like to be added to the company's distribution list, please send an email to investors@zymergen.com. Joining me today from Zymergen are Jay Flatley, Acting CEO and Chairman, and Enakshi Singh, Chief Financial Officer. Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking statements within the meaning of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. Additional information regarding these risks and uncertainties appears in the section entitled Forward-Looking Statements in the press release Zymergen issued today. For a more complete list and description, please see the Risk Factors section of the company's Form 10-Q. Except as required by law, Zymergen disclaims any intention or obligation to update or revise any financial or product pipeline projections or other forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast, August 3rd, 2021. With that, I'll hand the call over to Jay. Thank you, Kari, and thank you all for joining us. At market close today, Zymergen released an important business update. In addition, the company announced my appointment as acting CEO while the board commences a search to identify a permanent successor. Starting with the update, we recently became aware of issues with Zymergen's commercial product pipeline that will impact the company's delivery timelines and revenue projections. The goal of our call today is to provide you with further details, including our current understanding of the issues and what we continue to review, the actions the board has already undertaken in connection with these events, and our plan to get the company back on track, reestablish credibility, and ensure Zymergen is positioned for success. Specifically, it's become clear that the commercial opportunity for our first product, Hyaline, is less than we expected. In response, the board initiated a series of deep dives into the company's product pipeline and development processes. While the work remains ongoing, the board anticipates that the roadmap and timelines for Zymergen's follow-on products could also be impacted. As a result, we no longer expect product revenue in 2021 and expect product revenue to be immaterial in 2022. Without a firm pipeline of customers and visibility on commitments, our projections beyond 2022 are highly uncertain. Let me now turn to the details of what we know today. As is typical and important for any company, the board receives periodic updates regarding the company's progress toward its goals. It was through these updates that we recently learned of significant execution challenges within the organization. Based on the board's preliminary analysis, we have identified several contributing factors to the revision of our plan. First, several key target customers had technical issues implementing Hyaline into their manufacturing processes. We've made progress toward addressing these challenges and believe there are no intrinsic technical issues with Hyaline. This resulted in a delay in the commercial ramp. Second, emerging data on the total addressable market for foldable display applications indicates a smaller near-term market opportunity with scaled demand pushed out in time and growing more slowly than anticipated. The market is in an earlier stage than we previously expected. Third, the company's commercial teams did not have significant insight into the customer qualification process and into their customers and users, which resulted in forecasts that overestimated near-term demand. We're already making substantive changes in our commercial team. I want to perhaps state the obvious, that we're taking this situation extremely seriously. As soon as we learned of the problems, our board and management immediately started to work to fully understand the issues and began developing a plan to address them. The board has formed dedicated committees, including a strategic oversight committee, to conduct an in-depth review of the company's operational, financial, product, and commercialization efforts. We have also engaged expert advisors to support us in this process. Currently, our work is focused in several key areas. First, we're conducting a deep dive into the company's sales forecasting process to examine how the initial forecast was developed, where the issues arose, and how to improve that process going forward. Second, we've retained a number of outside experts to examine the robustness of the products coming out of our pipeline and their readiness for full commercialization. Third, we're digging into the company's long-term market opportunities to ensure our product pipeline is aligned with industry trends and customer demand. With the assistance of a top-tier consulting firm, we're doing a full assessment of Zymergen's target markets and the fit of our products into the pipeline of those markets. As part of this workstream, we're exploring adjacent opportunities that could potentially provide for new revenue sources. We will conduct additionally a cultural assessment to ensure that there's broad-based accountability across the organization and that we operate with transparency and openness. Lastly, we're developing a plan to align our burn rate to match the newly expected revenue ramp. One of our top priorities will be expense management. However, we should note that the Q3 expense rate is likely to be higher than Q2 given the outside resources we've retained and the one-time expenses it will take to manage down the burn rate. In the meantime, we have ample cash on-hand to manage the business. As a result of the work underway, we will develop an updated strategic plan for Zymergen with clear milestones and goals that the company can be held accountable to achieving. We are focused on reestablishing the credibility of the leadership team and the company. We recognize that this will not happen over weeks or months, but will require consistent quarter after quarter execution against a credible plan. To that end, another key element to ensuring we're set up for long-term success is to have the best possible leadership. As a co-founder and CEO, Josh Hoffman's vision and passion for partnering with nature to make better products has been instrumental to establishing Zymergen as an industry pioneer and innovator. We're all grateful to him for his work in advancing this mission and thank him for his many contributions. As we navigate the current situation and work to move the company forward as a refocused company, the board and Josh mutually agreed that new leadership is required. The board will initiate a comprehensive search to find the right leader to guide Zymergen's strategy moving forward and deliver on its strategic and operational goals. We will take whatever time is necessary to find the world-class leader our company deserves. In the meantime, I'm committed to leading the company and overseeing all operations as well as the reviews underway, and will keep you updated as we have more information to announce. During this period, Sandi Peterson will assume the role of lead independent director. Beyond our search for a new CEO, Josh has already strengthened the leadership team with several key new hires in priority areas for our business, and we look forward to announcing these additions in the very near future. We are laser-focused on ensuring that we have the right team to reinforce our product delivery and operations, efficiently bringing products to market and positioning Zymergen as a stronger company with a compelling operating plan. The board's hope was to speak to you today about the company's 2022 and 2023 prospects. However, we have more work to do before we can provide a more specific forecast. We're committed to acting with transparency and look forward to providing updates on our progress. Over the next several quarters, we expect to complete and deliver a full re-examination of the company's target markets, confirming our past views or altering them if the data indicate a shift in market focus is appropriate. This will also include exploring potential new markets. Second, a plan to strengthen the commercial team and ensure the reliability and robustness of both our sales pipeline qualification and our forecast processes. A plan to reduce the company's burn rate to align more closely with our revenue prospects. Fourth, a deep dive into the process by which we prepare and launch products to be sure they're market-ready and can be easily integrated into our customers' workflows. Lastly, a plan for 2022 and 2023 that we have confidence we will meet. To close, I want to acknowledge that these developments are deeply disappointing to all of us as supporters of Zymergen and its mission, including you, our analysts and investors, our employees, our customers, and our board of directors. This is a setback that we're committed to resolving fully and expeditiously. Our execution challenges do mean it will take longer to achieve our goals than previously expected. However, we remain focused on our strategy of pursuing continuous launches of breakthrough products and are proud of the work our teams are doing across the organization. Those of you who've been following our progress know that we have a clear vision to partner with nature to make superior products in a superior way. Our goals will remain ambitious, and we're confident in the long-term prospects for the company. The overall TAM is enormous. We have a strong platform to create novel products, and the markets are hungry for a new generation of technology that will transform the way materials are manufactured. Zymergen is well positioned to lead the way. I thank you for your support, and I look forward to providing you with updates on our progress. With that, I'd like to open the line for questions. Operator? Ladies and gentlemen, if you have a question at this time, please press star then the number one key on your touch tone telephone. If your question has been answered and you wish to remove yourself from the queue, please press the pound key. Once again to ask a question, please press star then the number one on your touch tone telephone. Your first question comes from the line of Doug Schenkel from Cowen. Your line is open. Good afternoon. Obviously, a disappointment for everybody involved and listening to this call. It's very surprising. If we take it up a level from Hyaline, there was a lot of excitement about the outlook for that product. I would argue that investors were as focused on Hyaline for the product itself, as well as essentially looking at it as a sign that investors and analysts could have more confidence that this platform could work. While the product itself had attached to it a large market value or market opportunity, I think folks looked at Zymergen as not just a Hyaline company, but if Hyaline worked, and then the follow-on product worked, that it would be a sign that this platform was worth much more. I know this has just happened, but I think it would be really helpful if you could share anything that would make all of us feel better that there truly is real platform value here. How do we get comfortable with that, Jay? Thank you. Thanks, Doug. Great to chat with you again. I wish it was under different circumstances. Everything I've seen to date, Doug, reinforces the confidence that we have in the overall ability of this platform to produce products. What I think we've seen as we look back over the last weeks is a real challenge in execution related to the match of the products that the platform can produce with the market opportunity. Hyaline, you're right, was certainly an exemplar or intended to be an exemplar of what this platform could produce. We think the product still has a material opportunity in the market. It's certainly pushed out, and the pipeline is thinner than we might have expected back several months ago. Intrinsically, we think that the technical characteristics of the products are sound. Having said that, what's happened on Hyaline has caused us to relook at the entire pipeline of products that we're producing, not in terms of the actual specifications so much of those products, but our ability to manufacture them in a way that they're truly market-ready, number one, but secondarily, that they also have a match to the best market opportunities that the company has in front of it. In summary, I think the platform is solid. What we're facing here are execution challenges in matching the products that come off that platform to the market. Okay. Thank you for that, Jay. I guess one follow-up on what you've mentioned a couple of times, which is pipeline. I just want to make sure I understand that correctly. When you talk about pipeline, and maybe I should just understand this inherently, but are you talking about the products and the targets that the company has been talking about for a while in terms of what would come next, a re you talking about the funnel of customers that could be interested in Hyaline and other products? Or is it actually both? Your point's a good one. It's actually both, and pipeline is used to describe both of those things. What I would say is that the pipeline of products is as was represented during the IPO. Those products are continuing to be developed by the platform. What is thinner than we expected is the pipeline of customers for Hyaline specifically. Okay. In general, if we think of those product pipeline charts you guys shared, nothing's changed there. What's changed is your assessment of your ability to manufacture at a level that would put you in a position to address the markets in a way where the TAMs would be what was previously communicated. It's not so much the scalability of manufacturing, Doug, it's the actual fit of the products that we're making to the market opportunity, right? Do they satisfy the market? Are they timed in a way to hit the market when the market is actually ready for them? We think, as I mentioned in the script, that the timing for the foldable display markets is getting pushed out. As most people are aware, there's no hit product yet in the foldable display market, so they're all remaining theoretical, and that's sort of pushing out the timeline for Hyaline. That's an example, I think, of where we have a product in a market that's not quite ready for it yet, and so the timing gets pushed out. That's what's caused us to go back and relook at the entire pipeline of products to make sure that fit is appropriate, and that we're hitting the best market opportunities that the company has. Okay, thanks. I'll let other folks hop in, and good to chat with you, Jay. I agree, I wish it was under different circumstances, but good to hear your voice. Great. Thanks, Doug. Your next question comes from the line of Tycho Peterson from JP Morgan. Your line is open. Hey, thanks. Jay, good to reconnect again. I'm wondering if you can elaborate a little bit on what you mean by technical issues. We obviously talked to a number of customers during the due diligence process. There were no technical issues that came up in our discussions. Was it an issue of integrating the film into kind of the film stack? Did it not meet performance specs? I'm just curious, what the specific technical issues are that are being raised. Any impact on these for any of the other biofilms? I know you said the pipeline is still intact. Could some of these technical issues spill over to the other biofilms? There were two specific things, Tycho, that came up post-IPO. One was the fact that we had some product shrinkage in one customer site. As I said in the script, we believe we've largely addressed that. There's probably a little bit more testing required to ensure that that's the case. We think that's largely behind us. The second one has to do with material compatibility. As you know, these products go into a process that's different at every customer site. What we should have done as a company is done a better job of anticipating and modeling what those processes were at each of those customers, knowing in advance what risks our product could have in the hands of the third-party customers. That's where we had some execution challenges, and where we need to go back into our pipeline of products and make sure that when we produce a product, we understand clearly the various types of applications for that product and what issues might come up in those customer sites, and pretest for as many of those as we possibly can. Those were the technical issues that we faced. As I mentioned, we don't think there's any intrinsic problems with the product. These are normal sort of cutting your teeth problems that happen in the implementation of these advanced types of technologies. Then you mentioned a smaller near-term opportunity growing more slowly. I just want to make sure I understand. Did you have bad market data, or did the kind of goalposts move in your discussions with customers and they kind of pushed out the timelines? It was a combination. We've had some research reports that have clearly indicated a shift in market timing that's at least a year and maybe more. As I mentioned, we all watch the foldable phone market, and there's no killer product immediately on the horizon that at least we're aware of. That timeline has largely gotten pushed out. We've had direct customer contact, deep customer contact, through our commercial channels, where we've talked to customers about exactly when they plan to implement it and what product they plan to implement it in. Another point in our commercial chain where we didn't do as good a job as we should have in understanding, in fact, the ultimate end use of the product in the stack and understanding what that demand curve looked like. That's why I think we potentially, or in fact did, overestimate the near-term demand for Hyaline. Last one for me. I know there's a lot of moving pieces here, but does any of this change your view on kind of the at-risk development model versus the foundry approach that we see by some of your peers? Have you kind of rethought any of that? Obviously, it's something we think about all the time, but I think the fundamental model of the company is sound from everything I've seen to date. Having said that, we're going to do a deep dive over the next months to really get at some of these core questions and issues and market opportunities. The product model that we have is one that today we stand behind very firmly and believe is the right model for this business. Okay, maybe one last one before I hop off. Do you have a timeline over which you'll kind of do this business assessment and provide an update? Should we assume six months or something shorter or longer? That's roughly in the ballpark. I think we described it as over the next several quarters, and it will not come out all at one time. There'll be certain pieces that we implement inside the company, number one, but also communicate externally as our knowledge of the situation evolves and our specific actions to get the company back on track evolve. Okay. Thank you. Thanks, Tycho Peterson. Great to chat with you. Your next question comes from the line of Derik De Bruin from Bank of America. Your line is open. Hi, good afternoon. Hi, Jay. Good to talk with you again. Hi, Derik. Hi. Jay, one question first, and just a specific one. Is there any issue in terms of making Hyaline at scale by the fermentation process? It was still being made by chemical synthesis when we last spoke. Yeah, we don't believe so. Obviously, we're not done with all of that work, but from everything I understand to date, we're on track to do that conversion next year, and that remains the clear intent of the company and no technical issues that I'm aware of, at least today. Jay, one of the issues that sort of came up during the whole IPO process and something we talked about repeatedly was the fact that as healthcare analysts, we're being asked to evaluate the electronics markets and consumer products and the ag markets. Certainly, we commented that we understand the biology of this, but sort of evaluating the markets and such were a little bit beyond our scope given that is, and so we relied on the company for their feedback and for their input. Just sort of listening to this today and sort of going on with this is like, how can we have any confidence whatsoever in anything that's been put out there in terms of numbers or putting the market opportunity, given that the one product, the one market that was set in stone to come out and be the breakthrough product is off so much. The question is like, what's the basis of our forecast for now on this and sort of the opportunity, and are you going through reevaluating all the other pipeline products as well? Yeah, great question. The answer to the last part of that is yes. We, being the board, were as surprised by this as you, our analysts and investors, have been. It's part of the reason we're doing our very deep dive to understand sort of what happened in the forecasting process, what happened in the product process, what happened in the overall market assessment here. I think it's totally fair that you question the credibility of any forecast that we give you today, which is frankly why we didn't give you any forecast today. Because we need to solidify our view of those forecasts and my confidence before I come back out to you and say, "Here's what we believe, and here's why we believe it." When we do come back out, my hope is that we will have sort of the background information and the support structure behind that to begin to reestablish credibility. We realize the challenges associated with that, and we're going to work hard, and we're going to dig in and work very hard to rebuild that as quickly as we can. Got you. Just how should we think about the cash burn? I know you mentioned that you're going to reduce it. Can you provide us some color on that, at least through 2022 as a start? Sure. We're in a great cash position at the moment. We have $580+ million of cash in the bank and net cash of about $500 million. Clearly, our intent is to reduce the burn rate sufficiently so that cash lasts us for much longer than it would have otherwise, number one, but also to the point where it matches the revenue stream that we predict going forward once we finish our work. Obviously, we'll have to consider sort of what financing is required to really scale production once we get there. Reducing the burn rate to match that revenue expected ramp is a key priority and one we're going to be spending a lot of time on in the next two months. Great. Thank you. Thanks, sir. Your next question comes from the line of Matthew Sykes from Goldman Sachs. Your line is open. Thanks, thanks for doing this call. I just had a question about the customer evaluation and testing phase. Obviously, it was fairly far along in the process when this was found out about the technical issues. As you think about the future and additional products, as you think about that testing and evaluation phase, it might be different for different end markets. How do you avoid the type of surprise so late in the process? Is it in terms of getting the product ready prior to that, or are there ways that you can check in to avoid these types of surprises going forward? There's two key things, Matt, that I think we need to do there. One is that we need to do a much better job of understanding and anticipating the end use of the product in the customer hands and having a more intimate relationship with the customer so we understand specifically how they're going to use it, what other materials they're using in their factories so that our material winds up being fully compatible at the time we put it in their hands. There's always some of this that's going to happen as you put a brand-new product into a new application. The second thing we need to do to make that go much more smoothly is have more talent at the application engineer level that works directly with the customer on-site. COVID, we've never used COVID as an excuse in any of this, but there have been some COVID challenges in getting our teams to fly to customer sites and be able to meet with customers. As a backdrop, that's been a challenge, frankly, for the company in the last year and a half. What we need to do as we come out of COVID is to make sure we have those application engineers on-site working directly with the customers in a much more timely way. Thank you for that. Then just on the overall credibility, obviously, there will be questions going forward and how much of this can we attribute specifically to the technical issues that Hyaline had and/or electronic films versus other end markets and the conversations that you'll likely have with customers that you've been working with in other end markets to assure them that this is a specific issue to a specific end market and a specific product versus the overall platform that you kind of addressed in an earlier question, but just want a little more detail on that. Yeah. Matt, we don't have any concerns about the real market opportunities for this company. We believe that the opportunity we have to make new products that don't exist today, to make them in much more organic ways, nature-friendly ways, is as enormous as we communicated and others in this field have communicated. There's no doubt about that. The challenge we have is to make sure that the specific product that we make meets the market need of a particular application area. That's where I think we've fallen down is in that execution side of things. We need to track the evolution of these markets much more closely, so that if these markets evolve while we're developing products, that we have the ability to adapt and react to those. There's no reduction of our optimism about the market opportunities for Zymergen products in the long run. Thank you. Your next question comes from the line of Matt Larew from William Blair. Your line is open. Jay Flatley, good afternoon. Hi, Matt. I don't think I heard you clarify something I was just asked. The two customers with which you had problems in terms of incorporating Hyaline, did those customers walk or are they still intending to sort of stick with Zymergen and work through potentially to an improved product? Yeah, these are problems that we've worked through largely with those customers, and we continue to work with them, and we have a very solid relationship with those customers. I think the concern we have is how fast they're going to ramp and how fast their end user markets will ramp based on what we now know about the foldable display market. No specific challenge with those customers. We continue to work with them on a day-by-day basis. We anticipate no issues in being able to attract new customers as that market evolves over time. Okay, fair enough. As just sort of part of the overall platform evaluation process and market evaluation process, I'm just curious how you're thinking about tailoring the platform towards specific markets or again, leveraging it to go after multiple different markets, which I think is sort of part of the appeal from an investor perspective. Just how did that factor into the board's assessment? Yeah. The underlying platform, I'll use the word generic. It's not intended to mean that it's simple because it's extraordinarily complicated and sophisticated. The platform has the ability to manufacture lots of things inherently, depending upon what microbes we start with, what products we coax them to manufacture. In that way, the platform is a very general-purpose platform. The part that we need to really focus on is where are the big end user opportunities and where are the near-term biggest opportunities to actually turn the engine on to make those products. That's what the analysis we're doing is all about, number one, but also make sure when we actually manufacture that product, that it's as close to ready, it's in a higher state of readiness for the customer application than perhaps Hyaline was. Okay. Fair enough. There are no further questions at this time. I would now like to turn the conference back to Mr. Jay Flatley. Thanks again, everybody, for joining us today, and I'd like to close with a couple of final thoughts. First, we feel these setbacks are clearly disappointing for all of you and for all of us, but we remain confident in the significant opportunity that we have in front of us and the opportunity for Zymergen's prospects overall. I also want to reiterate my personal commitment to the company as acting CEO. I'm ready to hit the ground running and dig into this business to make sure we get it right. I believe deeply in the vision that Zymergen has, and I'm committed to doing whatever is required to deliver on the goals of the company. I'd like to once again thank our employees for the hard work that they've done every day to further our mission and embody our values, and I'm confident that together we can work through the challenges and come out stronger on the other side. I want to thank all of you for your support for Zymergen, and we look forward to keeping you updated as we move forward. Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day. You may all disconnect.