Robbins Geller Secures $125 Million Settlement with Underwriter Banks and Venture Capital Funds in Securities Class Action

Robbins Geller Rudman & Dowd LLP recently filed a motion for approval of a $125 million settlement in a securities class action case arising from biotechnology company Zymergen Inc.’s initial public offering. The settling defendants include former officers and directors of Zymergen, the financial institutions underwriting the IPO – including J.P. Morgan and Goldman Sachs, among others – and venture capital funds, including Softbank, that made significant pre-IPO investments in Zymergen. The settlement is pending court approval.

Plaintiffs allege that Zymergen’s Registration Statement issued in connection with the IPO misrepresented and omitted material facts concerning the company’s flagship product candidate, Hyaline, and its commercial readiness. Less than four months after Zymergen’s April 2021 IPO, the company disclosed that Hyaline production was experiencing issues and its commercial opportunity was smaller than previously claimed. Due to delays with Hyaline, as well as the follow-on products in its pipeline, Zymergen did not expect any product revenue in 2021, and its projections beyond 2022 were uncertain. Zymergen announced its CEO had been terminated and the board of directors was conducting a deep dive into the company’s operations. These disclosures caused a significant decline in the company’s stock price, damaging investors who purchased shares pursuant or traceable to the IPO.

“The breadth of the accountable actors here is important, not to mention that this is one of the largest IPO-related securities class action recoveries ever achieved in the Northern District of California,” partner Daniel J. Pfefferbaum told Bloomberg Law.

The litigation has been actively contested since its filing in August 2021. After the court largely denied defendants’ motions to dismiss as to the core claims, the case proceeded through class certification, amendments to the pleadings, and further motion practice concerning the scope of liability.

Robbins Geller attorneys Shawn A. Williams, Daniel J. Pfefferbaum, Juan Carlos Sanchez, Patton L. Johnson, and Alex N. Jilizian represent the lead plaintiff in the action.

Wang v. Zymergen Inc., No. 5:21-cv-06028-PCP (N.D. Cal.).