Danimer Scientific, Inc.

Case Details

Class Period: December 30, 2020 - March 19, 2021
Date Filed: May 14, 2021
Case Number: 1:21cv02708
Jurisdiction: New York Eastern District Court
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Case Summary

The complaint alleges that, throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operations, and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Danimer had deficient internal controls; (ii) as a result, the Company had misrepresented, inter alia, its operations’ size and regulatory compliance; (iii) Defendants had overstated Nodax’s biodegradability, particularly in oceans and landfills; and (iv) as a result, the Company’s public statements were materially false and misleading at all relevant times. On March 20, 2021, the Wall Street Journal (“WSJ”) published an article entitled “Plastic Straws That Quickly Biodegrade in the Ocean, Not Quite, Scientists Say” addressing, among other things, Danimer’s claims that Nodax breaks down far more quickly than fossil-fuel plastics. The WSJ article alleged that, according to several experts on biodegradable plastics, “many claims about Nodax are exaggerated and misleading.” While Danimer reportedly asserts its claims are factual, the article cites at least one expert as stating that making broad claims about Nodax’s biodegradability “is not accurate” and is “greenwashing.” On March 22, 2021, the first trading day following the publication of the WSJ article, Danimer’s stock price fell $6.43 per share, or 12.87%, to close at $43.55 per share on March 22, 2021. Following the end of the Class Period, on April 22, 2021, Spruce Point Capital Management (“Spruce Point”) published a report on Danimer, noting, among other red flags, various inconsistencies with Legacy Danimer’s (and Danimer’s) historical and present claims regarding the size of its operations, Nodax’s makeup and degradability, and the Company’s expected profitability. Following the publication of the Spruce Point report, Danimer’s stock price fell $2.01 per share, or 8.04%, to close at $22.99 per share on April 22, 2021. Then, on May 4, 2021, Spruce Point published another report on Danimer alleging that the Company had “wildly overstated” production figures, pricing, and financial projections based on documents Spruce Point had acquired from the Commonwealth of Kentucky’s Department of Environmental Protection under the Freedom of Information Act, all of which cast serious doubt on the integrity of the Company’s internal controls. Following the publication of this second Spruce Point report, Danimer’s stock price fell $1.49 per share, or 6.31%, to close at $22.14 per share on April 22, 2021.