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Danimer Scientific Clarifies Business Model and Technology in Wake of Short-Seller Report

Image: Danimer Scientific Danimer Scientific logo
CEO Stephen E. Croskrey issues statement responding to “unfortunate misconceptions, falsehoods, and speculation that have been circulating” about Danimer Scientific.

Danimer Scientific has released further statements and additional information to “help investors better understand its business in light of unfortunate misconceptions, falsehoods, and speculation that have been circulating about the company.” This is in response to short seller Spruce Point Capital Management, which published a report claiming that Danimer Scientific's “production figures, its pricing, and rosy financial projections simply do not add up.”

Stephen E. Croskrey, CEO of Danimer Scientific, said, “As a result of our longstanding efforts to develop and commercialize the next generation of biodegradable materials, Danimer Scientific is now at the forefront of the bioplastics industry as a premium biopolymer supplier. As a newly public company, we recognize that we have an opportunity to provide further clarity around our business and technology. In addition to the details below, we are committed to addressing the topics that are important to investors, including our upcoming earnings conference call and ongoing investor engagement going forward. We remain squarely focused on building our business and executing on our strategy.”

Danimer’s statement regarding product biodegradability noted that the company has been in “the field of bioplastic biodegradability for more than 15 years.” It claims to hold more than 150 granted patents and pending patent applications in more than 20 countries. Danimer also claims that it has a variety of customers, including “some of the world’s largest consumer brands, on our shared goal of addressing the global plastics waste crisis.” These customers have conducted “their own independent testing and have expressed confidence that Danimer’s Nodax provides a biodegradable, scalable, highly effective way to significantly reduce plastic pollution.”

Regarding Danimer’s average sales price (ASP), the company claims that it is based on its actual sales of both PHA and PLA finished products to its customers. “As such, production figures in regulatory reports representing material in process are irrelevant to our ASP. . . . For reference, as previously disclosed, ASP for 2020 was over $2.70 per pound, which included an average price of over $2.75 per pound in Q4 2020. For Q1 2021, our ASP increased to over $2.85 per pound.”

While the company claims to have manufacturing capacity at both its Georgia and Kentucky facilities, in Kentucky Danimer produces PHA while in Georgia the company produces PLA. In Kentucky, Danimer commented that it “completed the first of a two-phase expansion, adding 20 million pounds of finished product nameplate production capacity with fermentation runs starting in January 2020 and downstream and extrusion starting in March 2020.

“In Q1 2021, our PHA production in Kentucky was over 50% of capacity, and we continue to expect to be at 100% of nameplate capacity by the end of the year. Phase II construction commenced in December 2020 and is expected to come online in Q2 2022 to begin ramping up to an additional 45 million pounds of finished product nameplate capacity. The completion of both phases is expected to bring our total nameplate PHA capacity up to 65 million pounds of finished product per year,” said Danimer.

“In Georgia, where our operations currently focus on the production of PLA-based resins, our total production capacity is 100 million pounds, depending on the mix and type of product. Over time, we have leased facilities surrounding our Bainbridge headquarters to accommodate company growth and varying production needs,” said Danimer. “Prior to and during the ramp-up in production in Kentucky, some other processes were taking place in our PHA pilot plant in Bainbridge, GA, but have not shifted to Kentucky as our PHA pilot plant has transitioned back to research and development.”

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