The bio-succinic acid manufacturer BioAmber Inc., was recently served with a securities class action lawsuit alleging that the company and certain of its executives made false or misleading statements about its operations and business. To learn more about this case, visit Battea’s BioAmber case summary.
Specifically, the suit alleges that one of BioAmber’s large customers was not able to make a sizable purchase of succinic acid in the final quarter of last year as expected, and instead had to push back that order to sometime in 2017. As a consequence, a number of BioAmber’s executives are alleged to have made materially false or misleading statements about the company’s operations and prospects.
The suit was filed in the U.S. District Court for the Eastern District of New York, and has a class period from Jan. 23, 2017 – the point at which the company made a secondary public offering to raise $10 million – to March 16, 2017.
A closer look at the case
BioAmber announced its fourth-quarter and year-end financial results in mid-March, and highlighted a number of positives. For instance, the company sold $8.3 million worth of bio-succinic acid over the course of 2016, an increase of 281 percent from the previous year’s numbers. However, the company also noted that fourth-quarter sales came in well below the company’s initial projections. Originally, the company said it expected to be able to sell about $2.2 million worth of products, but the number only came to about $631,000. It noted that the additional $1.4 million in revenues was classified as deferred revenue in its year-end filing.
“We found customers were uncertain and hesitant about switching suppliers and placing orders in a depressed commodity environment,” Fabrice Orecchioni, BioAmber’s president and CEO, said on a conference call with investors. “Adding to the pricing pressures, we experienced a disruption from a large customer that was expected to purchase $2.8 million of bio-succinic acid in [the fourth quarter of] 2016, but due to a technical problem in its manufacturing facility postponed the order until 2017.”
The impact on stock prices
The stock price of BioAmber, Inc., started the year trading at $5.34 per share, and reached a year-to-date high of $6.10 a few days later. On Jan. 23, the day of the secondary public offering, it was trading at $5.26 but by the end of that month it had slumped to just $3.72. The price continued in a generally downward direction throughout February and into early March. The day BioAmber announced its fourth-quarter results, it was at $3.10 per share, but fell to just $2.55 by the next day.
The stock price continued to fall after that, and is now trading at just $2.17 per share.
For more information on this case or other class action litigations, please contact Sam Wankel, Senior Vice President, Research, Battea Global Litigation Research, Inc., at 203-987-4949 or email@example.com.