Good day and thank you for standing by. Welcome to the Zymergen First Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Niraj Javeri. Please go ahead. Thank you. Earlier today, Zymergen released preliminary financial results for the quarter ended March 31st, 2021. Joining me today from Zymergen are Josh Hoffman, Co-Founder and Chief Executive Officer, and Ena 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 the 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. Except as required by law, Zymergen dispenses any intention or obligation to update or revise any financial or product pipeline projections or other forward-looking statements, whether they should display information, future events or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast for May 24th, 2021. With that, I would like to turn the call over to Josh.

Thanks, Niraj, and thank you all for joining us this afternoon. I'm very pleased to welcome you to our first earnings call as a public company, to review our results for the first quarter of 2021. We completed our initial public offering in April, raising approximately $530 million in net proceeds. I'd like to start our call today by thanking our incredible team at Zymergen. This is an exciting milestone for our company and a testament to our team’s collective dedication and passion. Zach, Jed, and I founded this company with the vision to partner with nature to produce better products, and our team is making that vision a reality. On today's call, I'll start with a brief overview of our company, for those who are new to our story. Next, I'll provide an overview of our progress since the IPO, then I'll turn the call over to Ena for a more detailed look at our financials. At Zymergen, we are biofactors. We partner with nature, designing, manufacturing, and selling products in a better way. Our biofacturing platform enables this by combining biology, chemistry, and technology in a seamless way to bring these products into people's lives. Our goal is to do this in approximately half the time and at a tenth of the cost compared to traditional manufacturing. We design, develop, manufacture, and sell products that solve customer challenges with superior performance. Our strategy is to identify customer market needs, design and develop products to meet those needs, optimize microbes to make those products at scale, and commercialize those products. We will generate revenue primarily by selling these products across multiple industries. Speed to market is critical for us, and our growth will come both from the volume and frequency of our product launches. Traditionally, materials are made from a half dozen molecular building blocks, mostly derived from petrochemicals. The companies that make petrochemical-derived materials are huge but they're also old, slow, and lack innovation. The way they make materials hasn't changed in decades. Biology offers a better way. At Zymergen, we replaced a chemical plant with a microbe, a microscopic-engineered cell, because biomolecules are the product of billions of years of evolution. An engineered cell can produce a vast array of biomolecules that do things petrochemicals can’t. Biomolecules can make adhesives as strong as a muscle's grip or an optical film that is clear and thin as a dragonfly's wing. And because the biochemistry takes place inside the cell, biofacturing happens safely in fermentation vats. Biology is Earth's greatest innovator. We built an engine that can make breakthrough products based on nature's own inventions. We believe the opportunity our biofacturing platform addresses is massive, representing a total market opportunity of approximately $1.2 trillion across 20 industries, all of which are ripe for disruption. We estimate that electronics, consumer care, and agriculture, our first markets or core verticals, represent a combined market opportunity for us of around $150 billion. Beyond these initial core verticals, we are pursuing opportunities where the market needs new materials to solve hard problems. We choose markets where biology-based products have a functional advantage, can create substantial value for our customers, and where we believe our novel products can be rapidly adopted by the market. Our strategy is to pursue continuous product launches, with breakthrough products that build on each other over time. We currently have a pipeline of 11 products in our core verticals, including four in electronics, four in consumer care, and three in agriculture. At Zymergen, biofacturing is not just a long-term goal; we're doing it today. There are five steps on the Zymergen product journey: we identify a market or customer need, we design a product to meet that need, we create the microbes that will produce the building blocks of that product, we scale production of the microbe, and finally, we commercialize the product. Doing all this requires a wide range of technological, operational, and commercial capabilities, from product experts across our core and target verticals to the scientists and technologists we have, to the manufacturing expertise to produce these products, to the sales and marketing functions we've built out to bring our products to market. We have the ability to take each product in our pipeline from the first step to the last. Crucially, we've proven we can develop and scale products. Our database has over 75,000 biomolecules. We have developed microbial strains to produce many of them. We run over 25 programs with partners, including some of the largest companies in the world. Based on our work today, we believe that for approximately $50 million, we can bring a product to market in about five years. We have reliably discovered genomic edits that improve the performance of microbial production, even though many of those edits are in parts of the genome that humans barely understand. We scaled up fermentation from lab scale to hundreds of liters to hundreds of thousands of liters. We can and have produced biomolecules at industrial scale. We've proven our platform works. Our partners have sold over $1.3 billion of products using microbes that we've developed and engineered. Moving to our product pipeline, our first core vertical is electronics. We're initially focused on optical films with a range of usages. In 2019, this market opportunity was estimated to be around $25 billion. Hyaline, our first product, is a transparent film used in devices across the display stack for a range of applications, with adjacent usages as well, such as in flexible printed electronics. We're very excited about Hyaline, and customer market feedback during the product qualification phase has been positive. We're currently in the 6 to 18-month qualification process with multiple customers, including sampling and discussions on commercial terms. As customers move through the qualification progress, we expect to have product sales later in 2021. In addition, we're on track to convert to a fermentation-based molecule in 2022. Next year, we're targeting the launch of a second film product, which has different chemistry and a range of different usages. In 2023, we plan to introduce a third product in this vertical, an optical film for foldable electronic devices. This product will have usages across multiple application areas such as insulation for 5G antennas and transparent heaters, among others. Beyond films, we're currently developing a bio-based adhesive product in our electronics vertical, which will have distinctive features for components assembly in smartphones and surface mounting of vehicle electronics. In all, we expect our market opportunity in electronics is around $59 billion. In our consumer care vertical, our first product will be ZYM0201, a naturally derived insect repellent. Every year, an estimated one-third of the U.S. population uses repellents containing the chemical DEET to protect themselves from insect-borne illnesses. DEET is a neurotoxin, and consumers face the unappealing choice of applying it or risking exposure to insect-borne diseases. We plan to launch the insect repellent in 2023 and are in the process of scaling production, branding, and developing a distribution plan. Beyond ZYM0201, we have three additional consumer care products in development, including a naturally derived UV protectant and a silicone-free film former. Film formers are the chemicals used in personal products, shampoos, lotions, and the like; they give these products the texture consumers have come to expect. However, the current silicone-based products have a number of problematic end-of-life properties. Unlike ZYM0201, our consumer care products address increasingly stringent regulatory backdrops, along with meeting customer demand for better products made without harmful ingredients. Agriculture is our third core vertical and is a market that needs economic, sustainable solutions to address a diverse array of problems that are increasing in urgency due to climate change and population growth. Biofacturing can provide natural products with gene-level precision to address these challenges, achieving levels of effectiveness and specificity not possible with traditional chemistry, while being compliant with evolving regulations that aim to phase out legacy products that harm the environment. We're developing our first agricultural product, ZYM0301, with a partner. It's an alternative to synthetic nitrogen fertilizer, helping to improve crop nutrient uptake and thereby increasing farmer yields. Beyond this, ZYM0302 targets specific crop pests, and ZYM0303 is a crop-specific herbicide. Both would increase grower profits through their efficacy and application requirements compared to existing products on the market. We're excited about the products currently in our pipeline, and this is just the start. Consumers demand products with better performance, sustainability, and safety. By overcoming the challenges of discovering and scaling products to market with biology, a biofacturing platform can seize this massive market opportunity. We plan to expand beyond our core verticals and enter new markets through partnerships with industry leaders. We currently have several of these efforts underway and look forward to sharing announcements regarding progress in the coming quarters. We continue to make progress since we completed our IPO four weeks ago, at the end of April. Key drivers of our success over the long term will be both the volume and frequency of product launches, as well as our ability to enter new markets. The foundation of all of this will depend on our continuing to grow our incredibly talented team. I'm excited to welcome Aindrea Campbell as our new Chief Manufacturing Officer. Aindrea comes to us with over two decades of experience leading multi-billion dollar manufacturing teams at world-class brands, firstly at Ford and most recently as the Senior Director of iPad Operations at Apple. Aindrea's experience across manufacturing, procurement, and supply chain will be instrumental as we continue to scale our production capabilities for commercial markets. We have a mission-driven culture at Zymergen that inspires our commitment to each other, to our customers, to achieve things never done before. As we continue to invest heavily across our platform, we are committed to retaining these core values that we believe are critical to our long-term success. With that, I will now turn the call over to Ena for more detail on our financials. Ena?

Thanks, Josh. Total revenue for the first quarter of 2021 was $3.7 million, all relating to R&D service agreements and collaboration revenue. This represents a 26% increase over the same quarter in 2020 and was primarily driven by the impact of new and acquired contracts, offset by a decrease in revenue from contracts ending in 2020. Total operating expenses for the first quarter of 2021 were $87.1 million, a 33% increase from $65.6 million in the first quarter of 2020. The increase was primarily attributable to an increase in R&D activities in the continued development of the highly in-production process, as well as the cost associated with becoming a public company. I would like to highlight that we plan to continue to increase our investments in R&D, Sales and Marketing, as well as G&A as we scale the company. We also expect our ongoing operating expenses to increase as we continue to incur public company costs that we previously did not have prior to our IPO in April. R&D expenses for the first quarter of 2021 were $39.8 million, compared to $21.8 million in the first quarter of 2020. This is primarily due to an increase in resources focused on our product development, along with further investments in new products for our pipeline, including the continued development of Hyaline. We expect R&D expenses to continue to increase in absolute dollars as we invest in growing our product pipeline and further improving our biofacturing platform. Sales and marketing expenses for the first quarter of 2021 were $6.9 million compared to $5.5 million in the first quarter of 2020. The increase was primarily due to an increase in customer and brand marketing activities. We expect sales and marketing expenses to continue to increase in absolute dollars as we invest in activities to commercialize products. General and administrative expenses for the first quarter of 2021 were $19.3 million compared to $13.7 million in the first quarter of 2020. This increase was primarily driven by fees associated with becoming a public company, increased headcount, and an increase in facilities costs as we continue to expand our footprint. We expect general and administrative expenses to continue to increase in absolute dollars as we support our operations as a public company and incur additional facilities costs as we expand our office and lab space. Net loss in the first quarter of 2021 was $84.6 million compared to $65.3 million in the first quarter of 2020. We ended the first quarter of 2021 with approximately $121 million in cash and cash equivalents. Subsequent to quarter end, we completed our IPO in April 2021, raising approximately $575 million of gross proceeds, resulting in $530 million of net proceeds. We also wanted to note that in our second quarter, we closed on the acquisition of Lodo Therapeutics, a New York-based company with technology that is complementary to our existing metagenomic platform. This acquisition increases our molecular and genomic libraries and accelerates our natural product discovery capabilities across our business. We believe this is going to be an exciting year for Zymergen, and we are really just getting started. As Josh mentioned, our business model is to sell products, and our strategy is to pursue continuous product launches. Key drivers of our success over the long term will be both the volume and frequency of product launches, as well as our ability to enter new markets. We currently have a pipeline of 11 products in our core verticals, including four in electronics, four in consumer care, and three in agriculture. We expect to launch a second commercial product in 2022 and two additional products in 2023. Over the long term, we will target at least three new product launches every year across markets. Our plan focuses on products that we estimate will generate average annual revenue of $100 million to $300 million, and at scale we'll generate combined long-term gross margins of approximately 50% and combined long-term EBITDA margins of around 20%. In 2021, we will continue to invest across all areas of our business, including production capacity and our commercial operations as we continue with the commercial rollout of Hyaline. With biofacturing, we are committed to transforming what is possible by partnering with nature to make better products in a better way. And with that, I would like to turn the call back over to Josh for closing comments.

Thank you, Ena. A new biological century demands we replace the way products and materials are made. Through biofacturing, Zymergen is leading the way to this inevitable future, nature's molecular catalog at our fingertips. We're designing high-performance solutions that are beyond the reach of conventional manufacturing. We believe we go from molecule-to-market in half the time and one-tenth the cost of traditional methods, and our platform is getting smarter and faster all the time. We founded Zymergen to create an economically vibrant and environmentally sustainable future through biology. The demand for material solutions to our big problems has never been greater. I'm so excited about what's ahead for Zymergen, and I look forward to updating you on our progress. I think we're ready to take questions.

Our first question comes from the line of Doug Schenkel from Cowen. Your line is now open.

Good afternoon and thank you for taking my questions. I want to ask about two topics: first, non-fermented Hyaline, and then second, progress towards fermented Hyaline. Starting on the first topic, as you continue to advance through the qualification process with customers; how is your preparation for scaling production of non-fermented Hyaline progressing? Should we expect product revenue in the second quarter?

Okay, a lot of questions there, Doug. Let me try and get through them. First, we are on track. We continue to manufacture non-fermentation-based Hyaline in our supply chain in Japan and are on track to qualify our U.S. supply chain in 2021, giving us sufficient capacity for all the film we expect. Number two on fermentation-based supply; we continue to be on track for the 2022 drop-in as we indicated. We have continued to demonstrate equivalent performance, and I've heard no customer anxiety or concern at this time. Did I get you on all the operations?

I want to just…

Yeah, I think he got everything other than…

Ena, do you want us to have product revenue in the Q2 model or would you prefer that's not the second half?

I'll let Ena take that. Ena, go.

So Doug, we're still expecting product revenue later in 2021. We're still going through our 6 to 18-month application process with customers and do not expect any product revenue until later in 2021.

Okay, alright. Thank you very much.

Thank you. Our next question comes from the line of Tycho Peterson from JP Morgan. Your line is now open.

Guys, a quick follow up on Hyaline. In the past, I think you mentioned the number of customers evaluating. You talked about two customers in the approval stage and maybe nine in late-stage evaluation. Can you just maybe talk about where your customers are in the evaluation process?

Yes. So what I would say is that as Ena indicated, we continue to have customers working with us on the 6-month to 18-month qualification process. And that process is progressing in-line with our expectations. We continue to build our pipeline of customers. While we're not discussing specific numbers, we continue to strengthen the pipeline. Number two, we do see that due to the breadth of different usage, it's important to understand in our films portfolio that these don't cannibalize each other. There’s excitement from customers about multiple films in our portfolio, and we are seeing folks trialing especially ZYM0107 alongside Hyaline given the expected launch next year. Lastly, we are not seeing delays due to the semiconductor shortage, but we are sufficiently upstream that it wouldn’t have an impact.

And then a follow-up to Doug's question on fermentation because that came up a lot during the IPO discussions. How did you get customers comfortable with your ability to transition over to fermentation molecules and ultimately scale that up?

Yes, it's a great question. We started our company with R&D service contracts. We've completed around 25 of them by now. We have a very successful record of scale-up. The engineered microbes we’ve developed have gone into production and have contributed over $1.3 billion of sales for partners. Customers have confidence in our ability to scale and transition. They appreciate that we have dual sources of raw material for their products, giving them comfort regarding our capabilities. We have made the film using the fermentation-based monomer, qualified the fermentation-based process monomer into our production, and we've validated the film—there's essentially no risk involved.

And then for the consumer segment, ZYM0201, I know that's not till 2023, are there other things we should be paying attention to in the back half of this year or next year as you do the evaluation and development?

I don't think there's anything in the back half of this year. You might ask again six months from now, and I may have a different answer, but right now, there's nothing I’d suggest you should be paying attention to.

Okay. And lastly, there's been a lot of capital coming into the space. I'm just curious if any of this changed your view on competitive dynamics given how much capital is coming into the biospace right now.

We continue to pay attention to what's happening in the market. We have a simple business model: we sell products that compete and win on our unique performance available because we access a large and proprietary library of biomolecules. This is a vertically integrated market that has required us to build and operate and demonstrate capabilities from product design to scale-up to commercialization. That allows us to reliably target what we've estimated at a $1.2 trillion market opportunity that is plenty large enough for us to build an enormous business. It stands to reason that in such a large market there will be other companies with different business models, and there’s enough opportunity for others to be successful too. Our success will depend on our ability to meet customer demands, and we feel very positive about that.

The only thing I'd highlight just reiterably is that our success in the long term is driven by both the volume and frequency of product launches, as well as our ability to continue to pursue that broader market opportunity as we enter new industries.

Our next question comes from the line of Matt Sykes from Goldman Sachs. Your line is now open.

Just along the lines of the competitive landscape, we talked to a lot of your customers who are in the evaluation phase for Hyaline and some of your film products. They mentioned clear advantages in terms of costs and performance of your products versus the incumbents. Given this, has there been any feedback from those customers that incumbent competitors have responded on price? It's probably way too early, I understand, but any commentary would be helpful.

We have not heard anything similar from customers. We think it may be too early for that. The core value proposition we offer to our customers and which they are evaluating is differentiated performance. We firmly believe that our product offers unique performance that remains very strong. This is a non-commodity market where our ability to provide performance that customers need to delight their customers is crucial, and we stand firm in that conviction.

I know the consumer care market is still in development, but as you ramp up the spend for that, should we expect a similar cost trend for the consumer care market? Given it's consumer-facing, will there be a higher cost in marketing or sales for launching in that market?

Yes, Matt. We're not providing guidance on a product-by-product basis as yet. However, we do expect that our sales and marketing expenses will continue to increase in absolute dollar terms as we invest in activities to commercialize future products, whether those are film products, adhesive products, or products in consumer care. We would expect our sales and marketing expenses to go up as we move forward.

Okay, and just last one on Lodo Therapeutics, can you talk about what that quantifies as an increase in terms of adding that genomic database to your current rating assets?

It's a great question. Lodo offers us a slightly different way of sequencing and collecting sequences, so an apples-to-apples comparison is a bit difficult. However, we do think that it multiplies our dataset significantly and radically accelerates our natural product discovery capability. I'd be happy to provide more details after we close on the deal.

Our next question comes from the line of Derik De Bruin from Bank of America. Your line is now open.

Thanks for the questions and congrats on the offering. Would you give us some color on how you're thinking about your M&A strategy going forward? Are there any particular areas you're looking to strengthen?

Yes, our M&A strategy is straightforward. We are actively looking for small- to mid-size transactions to bolster our platform and help us use inorganic means to increase the speed of getting product to market or reduce the cost involved. Our past acquisitions have followed that principle. We are in a rapidly changing field, and we're proud of our team and our platform, but we're conscious of others' capabilities and expertise. We'll ensure we're using M&A intelligently to enhance our speed to market. Additionally, we’re open to acquiring pipeline products that may need our expertise for scaling or commercializing.

Is $3.7 million in R&D services revenue a good run rate to think for the rest of the year?

In terms of our R&D service revenue, these revenues belong to R&D service contracts we've signed with partners that we worked with as part of building out our platform. Some contracts may end this year, and our revenues could be lumpy due to milestone-based revenues and bonus payments. So thinking about a $3.7 million run rate may not necessarily be the right approach.

Yes, absolutely. And if I could get the share count?

As of the end of the first quarter, the weighted average share count was 12.9 million.

Thank you. Our next question comes from the line of Dan Brennan from UBS. Your line is now open.

I wondered about the electronics market. When you think about the opportunity for your products across foldable and traditional handsets, how should we view your ability to penetrate those categories?

As you know, the electronics market is large and demanding of new features. Consumers want new kinds of opportunities—whether that's novel form factors like foldable displays, brighter or better screens, or lower power consumption. They’re also increasingly concerned about environmental sustainability. With our biofacturing capabilities, we think we can meet these needs. We offer an entirely new pallet of molecules, allowing us to create materials with unmatched performance that traditional petrochemical companies simply cannot provide. We’re excited about our ability to penetrate this market over the next few years.

I know you sell to sub-component suppliers and not directly to OEMs. However, would it take successful penetration of companies like Samsung or Apple for success, or are we looking at this differently?

While we're excited about our pipeline, we can't comment on specific customers. Our go-to-market strategy involves engaging with various companies across the value chain, including OEMs and Tier 1 suppliers. We see a lot of positive responses from multiple levels in the industry regarding our performance. We're optimistic about translating these discussions into revenue over the coming years.

From a commercial scale-up standpoint, what do you consider to be the biggest hurdles to success over the next 12 to 24 months?

Our success over the next 12 to 24 months will depend on the volume, frequency, and quality of our product launches. We want to ensure that products like Hyaline are gaining traction, that we see early success in our customer pipeline for ZYM0107, and that ZYM0201 launches effectively. Additionally, we aim to enter new markets that present opportunities as large as our current verticals. 24 months is a reasonable timeframe to evaluate the success of our early product launches, the pace of new product introductions, and our expansion into new markets. These metrics will be crucial in determining our ongoing success.

Thank you. At this time, I'm showing no further questions. I would like to turn the call back over to CEO, Josh Hoffman for closing remarks.

Thank you. I wanted to thank everybody for dialing in today. We're excited about the business we're building and we look forward to talking to you again in the quarter.

Thanks, everybody. This concludes today's conference call. Thank you for participating. You may now disconnect.