Danimer Scientific, Inc. (DNMR, DNMRWS) Made Misstatements Regarding its Business Prospects
According to a class action complaint filed on behalf of Danimer shareholders, Danimer was formed through a business combination when Live Oak Acquisition Corp. combined with Meredian Holdings Group, Inc., d/b/a Danimer Scientific (“Legacy Danimer”), a performance polymer company specializing in bioplastic replacements for traditional petrochemical-based plastics (the “Business Combination”). Following the Business Combination, Live Oak changed its name to Danimer Scientific, Inc., changed its business to Legacy Danimer’s business, and replaced its management with Legacy Danimer’s management.
Since 2020, Legacy Danimer, and now Danimer, has sold polyhydroxyalkanoates (“PHAs”) under the “Nodax” brand name for a wide variety of plastic applications. The Company has touted Nodax as 100% biodegradable, renewable, and sustainable plastic, which is purportedly superior to traditional plastics. However, defendants failed to disclose that Danimer had deficient internal controls, and as a result, had misrepresented, among other things, its operations’ size and regulatory compliance and overstated Nodax’s biodegradability.
On March 20, 2021, the Wall Street Journal published an article addressing, among other things, Danimer’s claims that Nodax breaks down far more quickly that fossil-fuel plastics. The article, relying on several experts on biodegradable plastics, alleged that “many claims about Nodax are exaggerated and misleading.” The first trading day after the article was published, Danimer’s stock price fell almost 13%, to close at $43.55 per share on March 22, 2021.
Then, on April 22, 2021 and May 4, 2021, respectively, Spruce Point published reports noting red flags and inconsistencies, as well as “wildly overstated” production figures, pricing, and financial projections. Danimer’s stock declined following both reports.
Danimer Scientific, Inc. (DNMR, DNMRWS) shareholders have legal options. If you own shares of Danimer Scientific contact us to learn more about your rights.
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