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  "documentTitle": "Danimer Scientific (DNMR)",
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  "authorName": "Carson Block",
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  "presentationDate": "2021-09-15 00:00:00",
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      "text": "DNMR's announcement that it intends to replace 30% of DNMR's PHA with Novomer's PHA seems to be providing false hope to customers and investors that there is a pathway to a more competitive offering.",
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      "text": "It is unlikely that Novomer resolved its fundamental and other issues before DNMR bought it. The former managers with whom we spoke understand that the announcement of a successful test production run made in March 2021 was performed on a pilot plant capable of producing only sample quantities of a few kilograms per day.36 (A prior pilot plant had also been built, but it was even smaller.) Descriptions of the severity of the plant design problems varied between the two sources, but both assessed that there was still critical work needed when they left. The former Novomer manager who was involved in the design and construction of both plants stated that the myriad issues were unlikely to have been solved between when he left in mid-2019 and the present. When asked about the possibility of there having been a subsequent breakthrough, he stated:",
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      "text": "needs to develop understanding to scale. DNMR positions Novomer's Rinnovo p(3HP) product as helping DNMR achieve simpler production that will also be 10x faster than fermentation, while requiring less OpEx and 80% lower CapEx on a per pound basis!31 DNMR's announcement that it intends to replace 30% of DNMR's final product formulations with Novomer's PHA seems to be providing false hope to customers and investors that there is a pathway to a more competitive offering. Based on our understanding of Novomer, the foregoing optimism does not seem warranted, because Novomer seems not to have the technology or processes to make these hopes real.",
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      "text": "Novomer's inability to solve its first principles issues and commercialize its PHA technology apparently led to it running out of money in late 2019. Novomer's headcount reportedly had dropped by the end of 2019 from approximately 60 to about 10. The departures seemingly included most of Novomer's senior talent, including the lead scientists responsible for the majority of its patent submissions, plant engineering, and design work. Many of Novomer's base patents had reportedly expired or were expiring, leaving largely process patents that are generally less protective. One of the former Novomer senior managers believes that the capital needed at that time to complete development of the technology and build a commercial-scale plant was between $300 million and $500 million. This range is considerably higher than the $200 million to $250 million range the market has been led to believe an 80,000 ton per year Novomer plant would run.32 (We assume that 2021 costs would be higher still.) Novomer was also reportedly impeded by other issues, including needing to use expensive and explosive feedstocks and expensive organic catalysts. Novomer's November 2019 hiring of Jeff Uhrig as CEO was apparently to prepare the company for a sale, as Mr. Uhrig's prior position as CEO included selling the company.33,34 We understand that the $152 million sale consideration was roughly equal to the amounts invested in Novomer plus grant funding. Several potential buyers and licensees apparently have passed on acquiring Novomer since 2016, including its own investor SABIC, a large polymer manufacturer.35",
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      "text": "31 July 29, 2021 DNMR Investor Call. 32 Sell-side anaylst report, July 29, 2021 33 https://www.linkedin.com/in/jeff-uhrig-0b56333/ 34 https://www.sirruschemistry.com/nippon-shokubai-acquires-sirrus-inc-expanding-its-core-business-under-reborn-nippon-shokubai-2020/ 35 https://www.sabic.com/en 36 https://www.plasticstoday.com/advanced-recycling/novomer-develops-industrys-lowest-cost-process-produce-compostable-plastics",
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