This is a securities class action on behalf of investors who purchased securities of Danimer Scientific, Inc. (“Danimer Scientific,” “DNMR,” or the “Company”) from October 5, 2020 through May 4, 2021 (the “Class Period”), seeking to recover damages caused by Danimer’ and certain of its senior officers’ violations of the Securities Exchange Act of 1934.
Based in Bainbridge, Georgia, Danimer has sold polyhydroxyalkanoates (“PHAs”) commercially under its proprietary “Nodax” brand name for usage in a wide variety of plastic applications including water bottles, straws, and food containers, among others since 2020. The case arises from Defendants’ false and misleading statements concerning its production of polyhydroxyalkanoate (“PHA”) – a biodegradeable alternative to petrochemical-based plastics, which the company sells under its proprietary Nodax brand for usage in water bottles, straws, and food containers. Specifically, the Company touted Nodax as a 100% biodegradable, renewable, and sustainable plastic, which is purportedly superior to traditional plastics because of its advanced biodegradability. The Company attributed Nodax’s advanced biodegradability to microorganisms in nature that eat the bioplastic.
In truth, Danimer had deficient internal controls, had misrepresented, inter alia, its operations' size and regulatory compliance, and had overstated Nodax's biodegradability, particularly in oceans and landfills. The truth emerged over a series of disclosures, beginning on Mar. 20, 2021, when the Wall Street Journal questioned whether Nodax’s breaks down far more quickly than fossil-fuel plastics, finding “many claims about Nodax’s are exaggerated and misleading.” One plastics expert labeled Danimer’s claims about Nodax’s biodegradability as “not accurate” and as “greenwashing.” Next, on Apr. 22, 2021 analyst Spruce Point Capital Management published a scathing report noting: red flags; various inconsistencies about Danimer’s historical and present claims about the size of its operations; Nodax’s makeup and degradability; and the Company’s expected profitability. Finally, on May 4, 2021 Spruce Point published a follow-up report after acquiring documents from Kentucky’s Department of Environmental Protection and accused Danimer of “wildly overstating” production figures, pricing, and financial projections. According to Spruce Point, Danimer materially misreported its monthly PHA production for the Kentucky facility by as much as 100% in some months and its average selling price for Nodax’s® was overstated by by 30 – 40%. Each of these revelations sent the price of Danimer shares crashing lower, harming investors.
