NEW YORK, May 18, 2021 /PRNewswire/ — Today, prominent investor rights law firm Bernstein Litowitz Berger & Grossmann LLP («BLB&G») filed a class action lawsuit for violations of the federal securities laws in the U.S. District Court for the Middle District of Georgia against Danimer Scientific, Inc. («Danimer» or the «Company») and certain of its senior executives (collectively, «Defendants»). The complaint expands the class period that was asserted in the previously filed related securities class action pending against Danimer captioned Rosencrants v. Danimer Scientific, Inc., No. 1:21-cv-02708 (E.D.N.Y.), which did not sufficiently protect investors’ interests or encompass the full scope of Danimer’s fraud regarding the biodegradability of Nodax, demand for Nodax, and Nodax’s average selling price. Today’s class action is brought on behalf of investors in Danimer securities between December 30, 2020 and May 3, 2021, inclusive (the «Class Period»).
BLB&G filed this action on behalf of its client, Carlos Caballero, and the case is captioned Caballero v. Danimer Scientific, Inc., No. 1:21-cv-00095-LAG (M.D. Ga.). The complaint is based on an extensive investigation and a careful evaluation of the merits of this case. A copy of the complaint is available on BLB&G’s website by clicking here.
Danimer’s Alleged Fraud
Headquartered in Bainbridge, Georgia, Danimer is a manufacturer of plastics known as polyhydroxyalkanoates («PHAs») that are derived from living organisms instead of fossil fuels. Danimer’s principal product is Nodax, the brand name of a purportedly biodegradable PHA. Nodax is made by feeding canola oil to bacteria, from which carbon is extracted and turned into plastic. Danimer became a publicly traded company through the acquisition of its predecessor company by Live Oak Acquisition Corp., a special purpose acquisition company, and began trading on the New York Stock Exchange on December 30, 2020.
The complaint alleges that, throughout the Class Period, Defendants made false and misleading statements regarding Nodax’s environmental benefits, its viability as a fully biodegradable alternative to conventional plastic, the level of demand for Nodax, and Nodax’s selling price. As a result of Defendants’ misrepresentations, shares of Danimer common stock traded at artificially inflated prices during the Class Period.
The truth began to emerge on March 20, 2021, when The Wall Street Journal published an article debunking Danimer’s claims that Nodax breaks down far more quickly than fossil-fuel plastics. The article reported that according to the same expert who co-authored a study touted by Danimer as «certifying» Nodax’s biodegradability, «many claims about Nodax are exaggerated and misleading.» According to that expert, Danimer’s broad claims about Nodax’s biodegradability were «not accurate» and «greenwashing.» The article also quoted Danimer’s Chief Technology Officer, Phil Van Trump, admitting that Danimer CEO Stephen E. Croskrey’s statements that bacteria in a landfill would consume Nodax were not «wholly accurate.» Instead, Van Trump admitted that Nodax products are «unlikely to biodegrade in most modern landfills.»
Then, on April 22, 2021, research firm Spruce Point Capital Management («Spruce Point») issued a report (the «April Report») demonstrating that the Company’s annual report disclosures regarding the purchase price of its production facility in Kentucky (the «Kentucky Facility») were inconsistent with city records. The April Report also established that the production capacity buildout of the Kentucky Facility was only 10% completed as of January 15, 2021, throwing into question Danimer’s Class Period statements that several components of the first phase of the production capacity buildout were completed at the end of the third quarter of 2020. Spruce Point’s April Report also contained findings from a recent research study into the biodegradability of PHA that in an anaerobic environment, such as a sealed landfill, the PHA product does not completely biodegrade. According to Spruce Point, the study states that bioplastics in a landfill can, in fact, be worse than traditional plastic, as they release methane gas which has a global warming potential that is multiples higher than that of carbon dioxide. The April Report also revealed that Danimer has a history of overstating the size and capacity of its manufacturing facilities, with its descriptions of its production rates consistently changing over the years.
Finally, on May 4, 2021, Spruce Point issued a follow-up report (the «May Report») containing information about Danimer newly obtained through a Freedom of Information Act request on the Kentucky Department of Environmental Protection. The May Report revealed that Danimer’s production figures, average selling price, and financial projections had been «wildly overstated.»
The filing of this action does not alter the previously established deadline to seek appointment as Lead Plaintiff. Pursuant to the May 14, 2021 notice published in connection with the Rosencrants action, under the Private Securities Litigation Reform Act of 1995, investors who purchased or otherwise acquired Danimer securities during the Class Period may, no later than July 13, 2021, seek to be appointed as Lead Plaintiff for the Class. Any member of the proposed Class may seek to serve as Lead Plaintiff through counsel of their choice, or may choose to do nothing and remain a member of the proposed Class.
If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact Scott Foglietta of BLB&G at (212) 554-1903 or e-mail at firstname.lastname@example.org.
BLB&G is widely recognized worldwide as a leading law firm advising institutional investors on issues related to corporate governance, shareholder rights, and securities litigation. Since its founding in 1983, BLB&G has built an international reputation for excellence and integrity and pioneered the use of the litigation process to achieve precedent-setting governance reforms. Unique among its peers, BLB&G has obtained several of the largest and most significant securities recoveries in history, recovering over $33 billion on behalf of defrauded investors. More information about the firm can be found online at www.blbglaw.com.
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