Marrone Bio launches internal investigation

By From page A1 | September 05, 2014


Pam Marrone, founder and CEO of Marrone Bio Innovations. Courtesy photo

Thirteen months after their initial public offering, Marrone Bio Innovations announced an internal investigation Wednesday after company management discovered a document that raised eyebrows about an $870,000 transaction in late 2013.

The Davis company is a global provider of bio-based pest management and plant health products.

The document was discovered about two weeks ago and reported to the company’s board of directors, said Pam Marrone, the CEO and founder. The board’s audit committee determined that filings for the company’s annual report and the unaudited 2014 quarterly reports can no longer be relied upon, and have brought in an independent law firm to conduct further investigations.

Investors immediately began trading after the news release, and MBI’s stock price tumbled 44 percent from $5.45 at opening on Wednesday to close at $3.15. The stock fell slightly on Thursday to $3.12.

“It’s obvious we’ve been inaugurated very brutally into the world of public companies,” Marrone said, but assured, “the company is very strong, the fundamentals are wonderful. We are not our stock prices.”

MBI went public last August, after a successful initial public offering raised $56 million in net proceeds. It was the Sacramento region’s first successful IPO in nearly a decade.

Marrone could not say whether this incident was a one-time occurrence, saying that would come out through the investigations. A number of law firms already have announced intentions to spearhead their own inquiries on behalf of investors, which could result in class-action lawsuits against the company in months to come.

News of the audit followed a tough second quarter, as MBI reported revenues plunging from $4.5 million in 2013 to $3.6 million in 2014. Company officials blamed the drop on adverse weather conditions in its growing regions.

MBI’s net loss for the second quarter was $10.4 million compared to $10.2 million in the first quarter of 2014.

But this year hasn’t been all bad news: The company officially opened its Michigan operating plant in July. In May, Marrone introduced Regalia Rx, a biofungicide, and launched Venerate, a bioinsecticide, in April.

In addition, the company’s chief operating officer, Hector Absi, left the company earlier this month. Marrone could not comment about whether his departure is related to the investigation, but said she is working to fill the marketing and sales positions that opened after his exit.

Elizabeth Case

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