Block & Leviton LLP has filed a class action lawsuit with an expanded class period on behalf of shareholders against Danimer Scientific, Inc. (NYSE: DMNR), formerly known as Live Oak Acquisition Corp. (NYSE: LOAK) and certain of its executives and directors for securities fraud.
On March 20, 2021, the Wall Street Journal published an article entitled “Plastic Straws That Quickly Biodegrade in the Ocean? Not Quite, Scientists Say.” According to the WSJ report, “Nodax breaks down far more quickly than fossil-fuel plastics . . . [but] many claims about Nodax are exaggerated and misleading, according to several experts on biodegradable plastics.” The article quoted an expert in the area who stated that Danimer’s marketing is “sensationalized” and that making broad claims about Nodax’s biodegradability “is not accurate” and is “greenwashing.” On this news, Danimer’s stock price fell $6.43 per share, or approximately 13%, to close at $43.55 on March 22, 2021.
Then on April 22, 2021, analyst Spruce Point Capital Management published a report on Danimer, writing, “Another Go Around at Plastic Alternatives with Several Corporate Governance Red Flags: 65%-100% Downside Risk.” In this report, among other things, Spruce Point: (1) alleged that it found “several corporate governance red flags” involving past and current Danimer executives; (2) questioned the independence of Danimer’s scientific research; and (3) wrote that Danimer “has concealed, through numerous website changes and omission of past press releases, a pattern of conflicting and irreconcilable statements on capacity, facility size, and capex costs . . . .” On this news, the stock fell from $25.00 to $22.99 per share, or approximately 8%.
On May 4, 2021, Spruce Point issued an update to its earlier report, alleging that it found documents through a Freedom of Information Act request that “show smoking gun evidence of pricing inflation and slackness in capacity” at Danimer. Shares fell another $1.49 per share, or approximately 6.3%.