On April 18, 2017, Pomerantz LLP was appointed Lead Counsel in a class action lawsuit filed against TerraVia Holdings, Inc. (“TerraVia” or the “Company”) and certain of its officers. The class action, filed in United States District Court, Northern District of California, and docketed under 16-cv-07388, is on behalf of a class consisting of all persons or entities who purchased or otherwise acquired TerraVia securities between March 13, 2013 and November 4, 2016, both dates inclusive (the “Class Period”), seeking to recover compensable damages caused by defendants’ violations of the Securities Exchange Act of 1934.
TerraVia creates and sells food, nutrition, and specialty ingredients from algae. Its platform uses microalgae to produce high-value triglyceride oils, proteins, fibers, micronutrients, and other ingredients, including algal flour.
The Company was formerly known as Solazyme, Inc. and changed its name to TerraVia Holdings, Inc. in March 2016. TerraVia was incorporated in 2003 and is headquartered in South San Francisco, California.
The Complaint alleges that throughout the Class Period, defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) ingestion of TerraVia’s algal flour caused gastrointestinal distress, including nausea and vomiting; (ii) the Company’s algal flour was therefore unlikely to be a competitive product in the market for nutrition foods; (iii) consequently, the Company had overstated the commercial viability of its algal flour; and (iv) as a result of the foregoing, TerraVia’s public statements were materially false and misleading at all relevant times.
On November 7, 2016, Bloomberg published an article entitled “Soylent Thinks It Found What Was Making People Sick: Algae”, stating that an algal flour ingredient provided by TerraVia for use in Rosa Foods, Inc.’s (“Rosa Foods”) flagship meal replacement drink, Soylent, caused consumers to experience gastrointestinal distress, including nausea and vomiting, and that Rosa Foods would be removing the ingredient altogether from its product formulations by early 2017. Despite TerraVia Senior Vice President Mark Brooks’s adamant denial that TerraVia’s algal flour was responsible, Bloomberg further reported that TerraVia had sent a letter in July to a distributor of Honey Stinger, a Colorado energy bar company owned by EN-R-G Foods, LLC, “warning that [TerraVia] had received a ‘modest number of reports’ showing that algal protein can cause ‘gastrointestinal distress,’ according to a copy seen by Bloomberg”—similar ailments to those reported by Soylent consumers.
On this news, TerraVia’s share price fell $0.15, or 8.11%, to close at $1.70 on November 7, 2016, damaging investors.