Full opinion text
ORDER: (1) DENYING DEFENDANTS’ MOTIONS TO DISMISS THE COMPLAINT; AND (2) DENYING DEFENDANTS’ REQUESTS FOR JUDICIAL NOTICE JONES, District Judge. This is a class action on behalf of all persons (“Plaintiffs”) who bought shares of Immune Response Corporation (“IRC”) between May 17, 1999 and July 6, 2001 (the “Class Period”). (Comply 1.) Plaintiffs allege IRC and its representatives made false and misleading statements about the efficacy of REMUNE — a drug IRC developed for the treatment of human immunodeficiency virus (“HIV”). Specifically, Plaintiffs allege securities fraud under the 1933 Securities Exchange Act §§ 11, 12(a)(2), and 15, as well as, Securities Exchange Commission (“SEC”) Rule 10b-5 and §§ 10(b), 20(a) of the 1934 Act. Defendants now move to dismiss under Fed.R.Civ.P. 12(b)(6) and 9(b). Plaintiffs oppose the Motions. For the reasons set forth below, Defendants’ Motions are DENIED. Request for Judicial Notice Defendants request incorporation by reference and judicial notice of various documents, some of which Plaintiffs oppose. As set forth below, the Court DENIES Defendants’ requests. “As a general rule, a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion.” Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir.2001); Pelletier v. Federal Home Loan Bank of San Francisco, 968 F.2d 865, 872 (9th Cir.1992) (review “on a motion to dismiss is limited to the contents of the complaint”). Additionally, the Court is “required to presume all factual allegations of the complaint to be true and draw all reasonable inferences in favor of the non-moving party.” U.S. v. LSL Biotechnologies, 379 F.3d 672, 698 (9th Cir.2004); see also Wright v. Oregon Metallurgical Corp., 360 F.3d 1090, 1096 (9th Cir.2004) (“When ruling on a motion to dismiss, we accept all material allegations of a complaint and view them in the light most favorable to the plaintiff.”). “Indeed, factual challenges to a plaintiffs complaint have no bearing on the legal sufficiency of the allegations under Rule 12(b)(6).” Lee, 250 F.3d at 688. “There are, however, two exeeptions[.]” Id. Incorporation by reference is one exception. See Parrino v. FHP, Inc., 146 F.3d 699, 705-06 (9th Cir.1998). Under that exception, “a court may consider material which is properly submitted [or attached] as part of the complaint[.]” Id.; see also Cooper v. Pickett, 137 F.3d 616, 622 (9th Cir.1997), superseded by statute on other grounds, see In re Vantive Corp. Secs. Litig., 283 F.3d 1079, 1091 (9th Cir.2002). “If the documents are not physically attached to the complaint, they may be considered if the documents’ authenticity is not contested and the plaintiffs complaint necessarily relies on them.” Lee, 250 F.3d at 688. But, “this is a narrow exception... It is not intended to grant litigants license to ignore the distinction between motions to dismiss and motions for summary judgment.” Levenstein v. Salafsky, 164 F.3d 345, 347 (7th Cir.1998). Then there is judicial notice. Under Fed.R.Evid. 201, “a court may take judicial notice of matters of public record.” Lee, 250 F.3d at 688-89. “But a court may not take judicial notice of a fact that is ‘subject to reasonable dispute.’ ” Id. at 689-690 (internal citation omitted). Here, Defendants seek to incorporate by reference twenty eight (28) documents, twelve (12) of which' — Exs. 1, 2, 3, 5, 6, 15, 16, 21, 23, 24 25, and F — Plaintiffs oppose. None of the opposed documents are central to, or form the basis of, Plaintiffs’ claims. Moreover, the Complaint does not “extensively” refer to any of them; nor do Plaintiffs’ claims necessarily rely on them. See U.S. v. Ritchie, 342 F.3d 903, 908 (9th Cir.2003) (“[A] document.. .may be incorporated by reference into a complaint if the plaintiff refers extensively to the document or the document forms the basis of plaintiffs claim.”); Lee, 250 F.3d at 688. Rather, Defendants offer the documents as evidence that Defendants did not commit securities violation. Also, considering these documents as part of the pleadings at this stage would expand the “narrow exception” and eliminate the distinction between a motion for summary judgment and a motion to dismiss. See Levenstein, 164 F.3d at 347. In other words, granting Defendants’ requests would turn the proceedings into a summary judgment motion without invoking the normal consequences. See In re Network Equip. Techs., Inc. Litig., 762 F.Supp. 1359, 1368 (N.D.Cal.1991) (“Court[s] should not.. .generate an evi-dentiary record and then weigh evidence ... to dismiss [a] complaint.”). Furthermore, consideration of the exhibits encourages a weighing of factual disputes; a process that is improper on a motion to dismiss. See In re Northpoint Communications Group, Inc., 221 F.Supp.2d 1090, 1095 (N.D.Cal.2002). At this stage, the Court must resolve any ambiguities in Plaintiffs’ favor. Accordingly, the Court denies Defendants’ request and will not consider the opposed documents. See Cooper, 137 F.3d at 622-23. Next, Defendants request judicial notice of seven (7) documents, four (4) of which — Exs. 4 and 13, G and H — Plaintiffs oppose. For the following reasons, Defendants’ request is denied. “Courts may only take judicial notice of adjudicative facts that are not subject to reasonable dispute.” Ritchie, 342 F.3d at 908-09. “Facts are indisputable, and thus subject to judicial notice, only if they either ‘generally known’... or capable of accurate and ready determination by resort to sources whose accuracy cannot be questioned[.]” Id. The contested exhibits are not the type of documents readily capable of judicial notice, and Plaintiffs contest their authenticity. There is no indication' that Plaintiffs intentionally omitted material facts to disguise any deficiency in their claims. See Parrino, 146 F.3d at 706. Moreover, the Court did not rely on the documents and finds them irrelevant in deciding the Motions. See Osher v. JNI Corp., 308 F.Supp.2d 1168, 1177 n. 2 (S.D.Cal.2004). Having found that the exceptions do not apply, the Court’s Review “on [this] motion to dismiss is limited to the contents of the [C]omplaint.” Pelletier, 968 F.2d at 872. As noted above, the Court is “required to presume all factual allegations of the [C]omplaint to be true and draw all reasonable inferences in favor of the non-moving party”the Plaintiffs. LSL Biotechnologies, 379 F.3d at 698. Regarding the unopposed documents, the Court will refer to them as it finds appropriate Factual Background For purposes of these Motions, the Court must construe the facts in a light most favorable to Plaintiffs. Accordingly, for the purpose of adjudicating the instant Motions to Dismiss, the Court assumes the following facts to be true. A. Defendants IRC, Moss and Carlo IRC is a biopharmaceutical company that develops immune-based therapies for the treatment of HIV. (ComplJ 1.) IRC’s stock is traded on NASDAQ. Defendant Dennis J. Carlo, Ph.D. (“Carlo”), is a co-founder of IRC and was its Chief Executive Officer during the Class Period. Defendant Dr. Ronald B. Moss (“Moss”) was Director of Medical and Scientific Affairs until January 2000, and then was named Vice President of Medical and Scientific Affairs. Moss and Carlo had the authority to control the contents of IRC’s quarterly reports, press releases and presentations to securities analysts. They also had copies of IRC’s reports and press releases before or shortly after their issuance, and had the ability and opportunity to prevent their issuance or correct them. IRC invented REMUNE in 1987 to treat HIV. To market REMUNE, IRC had to get approval from the Food and Drug Administration (“FDA”). In fact, every drug sold in the United States must first be approved by the FDA. Approval by the FDA requires preclinical trials, usually done on animals, then at least three phases of clinical trials on humans; these trials are referred to as phases I, II, and III. Phase I trials are mainly aimed at determining if the metabolic and pharma-cologic actions of the drug in humans are safe enough to proceed to Phase II studies. Phase II studies are controlled clinical studies that involve a limited population infected with the disease the drug proposes to treat. Phase III studies usually involve many more people than Phase II studies and are intended to gather additional information on the drug’s efficacy and safety that will be used in evaluating its overall risks and benefits. By 1996, IRC had completed phases I and II, which proved REMUNE had a positive effect on secondary markers such as CD4 cells. But impact on secondary markers was not enough to obtain FDA approval. At phase III, IRC had to further show that REMUNE slowed the progression from HIV to Acquired Immune Deficiency Syndrome (“AIDS”) or from AIDS to death. This was the only measure of efficacy in 1996. B. Defendant Agouron and Study 806 In February 1996, IRC received clearance from the FDA to begin phase III studies of REMUNE (“Study 806”). Although IRC had other proprietary technologies, only REMUNE had advanced to Phase III testing. IRC accordingly issued a press release entitled “The Immune Response Corporation Receives Clearance From Food And Drug Administration To Begin Phase III HIV Clinical Trial,” which stated: The Immune Response Corporation announced today that its HIV treatment REMUNE(TM), formerly known as the HTV-1 Immunogen, has received clearance from the Food and Drug Administration to begin a large-scale Phase III clinical endpoint trial. This clinical trial is scheduled to begin during March in medical centers throughout the United States. This is the first HIV immune-based therapy to enter into a Phase III clinical trial and represents a major milestone for the company. (Comply 43.) Study 806 was overseen by an independent Data Safety Monitoring Board (“DSMB”). Dr. James O. Kahn acted as the Study Chair and Dr. Stephen Lagakos as the Statistician. Dr. Lagakos’ assessments were reported to the DSMB. To fund Study 806, IRC collaborated with Agouron Pharmaceuticals, Inc., a wholly owned subsidiary of Pfizer, Inc. Agouron was the primary source of funds for development of REMUNE. If regulatory approvals were received, IRC would manufacture commercial supplies of RE-MUNE. Agouron would then have exclusive rights to market REMUNE. The companies agreed to share profits on a 50/50 basis. At the start of Study 806, on March 18, 1996, IRC issued a press release entitled “First Patients Treated In Nationwide Clinical Trial Of HIV Therapy Proposed By Dr. Jonas Salk,” which stated: A nationwide clinical trial starts today of a therapy that fights HIV by stimulating the immune system. This is the largest trial of such a treatment ever conducted. Up to 3,000 HIV-infected individuals will participate in this trial testing RE-MUNE (TM), a therapy proposed by Dr. Jonas Salk, who developed the first polio vaccine. This therapy could provide physicians with an entirely new weapon against HIV that complements the anti-HIV drugs now available. REMUNE works in combination with antiviral drugs to attack HIV, the virus which causes AIDS. Antiviral drugs get into infected cells to shut down the machinery that manufactures HIV. REMUNE is designed to direct the immune system to attack and kill these infected cells. These two complementary weapons may be important in the fight against HIV. REMUNE is the first treatment designed to stimulate the immune system of HIV-infected patients to move into an FDA approved Phase III trial, the final stage of clinical trials... “This clinical trial may become a model for future HIV therapy development. The trial is designed to allow patients to continue all current therapies including the new protease inhibitors and other approved HIV treatments,” Dr. Lagakos said. “It will determine the ability of REMUNE to improve upon the current standard of care for HIV infection.” (ComplV 47.) Study 806 involved 2,500 patients enrolled from over 70 centers throughout the United States. It aimed to prove that there were “statistically significant” differences between the patients receiving placebos and the ones receiving REMUNE. Statistically significant denotes the threshold at which a drug is considered effective. For Study 806, the study design team defined statistical significance as meaning the group taking REMUNE showed a 50% greater AIDS-free survival rate, or generated an immune response at a 50% greater rate, than the group receiving placebos. All patients in Study 806 were injected with either REMUNE or a placebo every twelve (12) weeks for a planned total of 13 injections. The patients injected with RE-MUNE were also injected with antiretrovi-ral treatments (“ART”) or highly active antiretroviral treatments (“HAART”). ART or HAART impede replication of the HIV virus, whereas REMUNE was supposed to stimulate the immune system to fight the HIV virus directly. On May 12, 1997, IRC issued a press release entitled “The Immune Response Corporation Completes Enrollment of 2,500 Patient Phase III Clinical Trial of REMUNE (TM),” which stated: The Immune Response Corporation announced today that it has completed enrollment of its nationwide Phase III clinical trial of REMUNE, a therapy that fights HIV by stimulating the patient’s own natural defense mechanisms against the virus. This is the largest trial of an HIV-specific immune-based therapy ever conducted in the U.S. and involves 2,500 HIV-infected individuals at 74 medical centers around the United States. The trial is designed to determine the effectiveness of REMUNE in slowing the progression of HIV infection to AIDS or death. REMUNE is the first treatment of its kind to advance to a Phase III clinical trial. (ComplJ 48.) As previously noted, the primary efficacy or “end point” in Study 806 was AIDS-free survival, measured by the time it took for an HIV-positive patient to develop AIDS or for an AIDS-infected patient to die. But Study 806 also measured RE-MUNE’s effect on secondary markers, e.g. CD4 cells and viral loads. CD4 cells are indicators of immune response. Viral loads identify the number of HIV-infected Ribonucleic Acid (“RNA”) cells in a patient’s bloodstream. Blood samples were taken from each of the 2,500 patients every 24 weeks to measure their CD4 cells and viral loads. IRC also conducted a smaller sub-study of secondary markers, by randomly choosing 250 patients from the 2,500 patients selected for Study 806 (“250-Cohort Study”). IRC took blood samples from the 250 patients every 12 weeks to measure their CD4 cells and viral load. Data and analyses from the 250-Cohort Study were not part of Study 806’s protocol. C. The 435 Sub-Study By early 1999, it was determined that ART or HAART caused fewer patients than anticipated to reach Study 806’s primary endpoint — AIDS-free survival or death. Thus, in March 1999, a 435 patient sub-study (“435 Sub-Study”) was initiated. The 435 Sub-Study assessed whether RE-MUNE would decrease viral loads in a subset of 435 patients. The 435 Sub-Study’s inquiry was more narrow than that of Study 806 which measured the progression from HIV to AIDS, or from AIDS to death. Drs. Lagakos and Kahn worked with Defendant Carlo on the proposals for the 435 Sub-Study. In March 1999, the DSMB approved the proposals. The DSMB’s approval came before the DSMB had reviewed Study 806’s results for secondary markers. In May 1999, the 435 Sub-Study showed that REMUNE had no effect on CD4 cells and viral loads. D. Study 806 Termination In early May 1999, Dr. Lagakos — Study 806’s statistician — met with the DSMB. The DSMB told Dr. Lagakos that it intended to terminate Study 806. Two reports were then prepared. The “open” report set forth the reasons for the DSMB’s recommendation to terminate Study 806. It also set forth the overall viral load of the total patient population, the 435 Sub-Study results, and other secondary endpoints that were part of the study plan. The “closed” report included an appendix that was not attached to the “open” report. The appendix contained the data on the patients in the placebo and REMUNE groups as well as the clinical and secondary endpoints in each group. On May 14, 1999, at a meeting in Chicago with one representative from Agouron and IRC representatives Moss and Carlo, the DSMB summarized its reasons for terminating Study 806. After the meeting, Dr. Lagakos gave the representatives a copy of the “closed” report with the appendix containing the codes necessary to “un-blind” the data. On May 15, 1999, the DSMB officially recommended termination of Study 806. The DSMB found it unlikely that Study 806 would yield REMUNE’s primary efficacy or “endpoinf’-patients who received REMUNE died or developed AIDS-related infections as often as those getting a placebo. DSMB also found that RE-MUNE had no effect on viral loads or CD4 cells. Soon thereafter, Dr. Lagakos received several phone calls from IRC. Dr. Lagakos reported that IRC representatives, Carlo and Moss, “feverishly” reviewed the un-blinded Study 806 data in search of some kind of positive impact on some types of patients. He also recalled that Carlo and Moss specifically relied on the viral load data from IRC’s 250-Cohort Study. Dr. Lagakos warned them not to “over-interpret” the data from IRC’s 250-Cohort study since the more comprehensive study — Study 806 — showed that RE-MUNE had no positive effect on viral loads. Then, according to Plaintiffs, Defendants issued a series of press releases and Securities and Exchange Commission (“SEC”) filings that were false or misleading. The first occurred on May 17, 1999, when IRC issued a press release entitled “Independent Panel Recommends Concluding Clinical Endpoint Trial of RE-MUNE; Agouron Pharmaceuticals, Inc. and The Immune Response Corporation To Pursue Alternative Regulatory Strategy,” (“the Press Release”). The Press Release stated: The Immune Response Corporation and Agouron Pharmaceuticals, Inc. announced today that an independent Data Safety Monitoring Board (DSMB) completed a second interim analysis of the 2500-patient, placebo-controlled, Phase III clinical endpoint trial to evaluate the immune-based therapy REMUNE(TM) added to patients’ other anti-HIV therapy. The DSMB recommended the trial be concluded at this time because differences in clinical endpoints were not observed between treatment groups and because extending the trial would be unlikely to provide sufficient additional clinical endpoints to permit statistically significant differences between the treatment groups to be observed in the near term. The number of HIV-associated clinical endpoints observed in the trial was far less than originally anticipated, which was believed to be the result of increasing use of Highly Active Antiretroviral Therapy (HAART) including HIV protease inhibitors, after the trial was initiated. The Immune Response Corporation and Agouron Pharmaceuticals, Inc. reported that separate analysis of a cohort of 250 patients randomly pre-selected for surrogate marker analysis, showed a significantly greater reduction in viral load (level of HIV RNA in plasma) after 48 and 96 weeks of treatment and significantly greater increases in lymphocyte proliferation in those who added RE-MUNE to their underlying anti-retrovi-ral therapy, compared with those who did not. The Companies also reported that Agouron plans to initiate two additional phase III surrogate marker trials of REMUNE in light of an agreement previously reached with the Food and Drug Administration that an application for the marketing of REMUNE could be submitted based upon favorable virological endpoints. “While HAART, which became the standard of care after we initiated this trial, has been an enormous benefit to HIV patients, it has made it exceedingly difficult to conduct a trial based upon reaching clinical endpoints,” according to Dennis J. Carlo, Ph.D., president and chief executive officer of The Immune Response Corporation. “The significant improvements in viral load and in lymphocyte proliferation observed in the REMUNE arm of the 250 patient cohort confirm previous results and provide support for a proposed rollover study for patients currently enrolled in the clinical endpoint study. This rollover study, which is planned to be initiated in the next 2-3 months after FDA clearance, is intended to evaluate the ability of patients to maintain viral load suppression after discontinuation of anti-retroviral drugs.” “We believe the improved control of viral load observed in the clinical endpoint study provides strong support for new pivotal clinical trials of REMUNE to be based on virologic markers,” said Peter Johnson, Agouron’s president and chief executive officer. “Concluding the clinical endpoint trial- at this time also presents a unique opportunity to address a very contemporary question: can immune-based therapy extend the duration of the anti-HIV response induced by HAART under the most challenging conditions? The potential to produce this effect remains one of REMUNE’s most important attributes.” (ComplJ 68.) Plaintiffs allege that the Press Release was misleading as evidenced by the positive analyst reports that followed it. One analyst report noted that the drug still showed promise. Bloomberg reported on May 17,1999: “It’s a setback for them, clearly,” said Alan Auerbach, an analyst with First Security Van Kasper. “Does it mean game over? I don’t think so.” Though the drug didn’t appear to have any statistical effect on patient survival, the companies said an analysis of 250 of the 2,500 patients appeared to show a reduction in the level of HIV in the blood of REMUNE patients. (Comply 70.) On May 18, 1999, Prudential Securities issued a report by C. Copit-horne based on conversations with IRC management. The report rated IRC a strong buy: While not the primary endpoint of the study, the DSMB (Data Safety Monitoring Board) reviewed the affect [sic] of REMUNE on viral load in the trial. There were 250 patients (or about 10% of those enrolled) in the trial which were randomly preselected for more intense monitoring for surrogate marker analysis. Of the 250 patients analyzed, those in the arm treated with REMUNE in addition to HAART demonstrated a statistically significant reduction in viral load compared to HAART alone, after both 48 and 96 weeks of treatment. While the detailed data will not be disclosed until they can be presented in a proper scientific forum, the reductions were highly statistically significant and were of a magnitude greater than that seen in the small Valentine study announced in 3Q 1998 — in which 86% of the RE-MUNE/HAART patients had viral loads below 40 copies per milliliter versus 67% in the placebo/HAART arm (see note dated 10/26/98). These patients also had a greater increase in lymphoctye proliferation, consistent with that seen in long-term non-progressors. (Comply 71.) According to Plaintiffs, after the Press Release, IRC’s stock declined to $7.56, but would have declined further had IRC not asserted that the 250-Cohort Study yielded “significant improvements” in patients using REMUNE. IRC’s stock continued to trade in an inflated price of $5-$6 range through the summer of 1999. Plaintiffs identify portions of the Press Release they claim were false or misleading. Plaintiffs first take issue with the following statement by Defendants’ about DSMB’s recommendation to terminate Study 806: because differences in clinical endpoints were not observed between treatment groups and because extending the trial would be unlikely to provide sufficient additional clinical endpoints to permit statistically significant differences between the treatment groups to be observed in the near term. The number of HIV-associated clinical endpoints observed in the trial was far less than originally anticipated, which was believed to be the result of increasing use of Highly Active Antiretroviral Therapy (HAART) including HIV protease inhibitors, after the trial was initiated. (Excerpt from the May 17, 1999 Press Release.) According to Plaintiffs, “Study 806 was terminated because it showed no significant difference between the REMUNE and placebo groups for the primary clinical endpoints or any of the numerous secondary clinical endpoints, including viral load and lymphocyte markers.” (Compl.í 76.) Also, according to Plaintiffs, Dr. Lagakos “completely disagree[d]” that there were not enough endpoints from which to evaluate REMUNE’s efficacy. Rather, Plaintiffs allege, REMUNE proved ineffective since 106 patients experienced disease progression or death during the three-year period in which Study 806 took place. (Comply 90.) “Furthermore, [Plaintiffs allege], HAART’s impact on the number of clinical endpoints was not the reason that the DSMB recommended terminating Study 806. The trial was terminated because the primary and secondary clinical endpoint data from the REMUNE and placebo groups showed no difference between the two groups, ie., no added benefit from REMUNE.” (Comply 91.) E. The 250-Cohort Study Plaintiffs next claim that IRC’s statements about the results achieved in its separate study — the 250-Cohort Study— were misleading. In the May 17, 1999 Press Release, IRC claimed: separate analysis of a cohort of 250 patients ... showed a significantly greater reduction in viral load ... and significantly greater increases in lymphocyte proliferation in those who added RE-MUNE to their underlying anti-retrovi-ral therapy, compared to those who did not. According to Plaintiffs, the more comprehensive analysis of data from Study 806, which included 2,500 patients, showed no reduction in viral loads. Thus, Plaintiffs claim, IRC should have included the negative results from Study 806 in the Press Release. Plaintiffs next contend that the Press Release should have included language indicating that IRC’s 250-Cohort Study was never intended to be used for a stand-alone analysis of viral load or any other secondary marker; the FDA would not have accepted the viral load secondary endpoint to show efficacy of REMUNE as clinical endpoints were the only acceptable measures of efficacy. According to Plaintiffs, the Press Release failed to disclose: (1) that the Study 806’s team was not involved in the 250-Cohort Study; (2) that the 250-Cohort Study was done after Study 806 terminated; and (3) the results from the 435 Sub-Study, which showed that REMUNE had no effect on viral loads. (See Compl. ¶¶ 83-86.) Plaintiffs also challenge the design and validity of IRC’s 250-Cohort Study. According to Plaintiffs, a separate analysis of the viral load of only 10% of the 2,500 population was meaningless because it ignored the data for the remaining 90% of the patients, which showed no difference in viral load as a result of taking REMUNE. Also, according to Plaintiffs, the patients in the 250-Cohort Study had no specific biologic marker in common that was absent in the overall 2,500 patient population; both the cohort and the entire population were divided into REMUNE and placebo groups by random selection without regard to a common marker. The only difference between the 250-patient cohort and the total study population was the frequency of testing on the patients for certain biologic markers; test samples for patients in the 250-patient cohort were taken every 12 weeks while the total study population had test samples taken every 24 weeks. Dr. Lagakos said, “The frequency of testing does not change the biology of the product that we were trying measure[J” (Comply 84.) Prior to the publication of the Press Release, Plaintiffs claim, Drs. Kahn and Lagakos objected to the internal analysis of the 250-Cohort Study because, among other things, it omitted the viral load analysis from Study 806, which used a method that IRC and the FDA had approved before the study began. (See Compl. ¶¶ 80-86.) Plaintiffs further claim that when Dr. Lagakos analyzed the data from the 250-Cohort Study, he determined there was no significant difference in the viral load of the group taking REMUNE with the placebo group. Dr. Lagakos, however, did not use IRC’s multiple time point method for analyzing the viral load data due to the high chance of finding a false positive. Instead, he applied the same method used in Study 806, analyzing viral load data from all the time points when viral load samples were taken from the REMUNE and placebo groups, and then calculated an average for each group. Dr. Lagakos found no significant difference in viral load between the two groups in his analysis. Dr. Lagakos communicated these results to Chris Nardo, former head of IRC’s Information Technology Department and Lead Data Analyst for IRC. Nardo acknowledged in a phone conversation with Dr. Lagakos that Dr. Lagakos’ results indeed showed no significantly different viral load effect in the REMUNE group compared with the placebo group. (See Compl. ¶ 87.) Lastly, Plaintiffs take issue with the portion of the Press Release where Carlo is quoted as saying: “[t]he significant improvements in viral load and in lymphocyte proliferation observed in the REMUNE arm of the 250 patient cohort confirm previous results and provide support for a proposed rollover study.. .intended to evaluate the ability of patients to maintain viral load suppression after discontinuation of anti-retroviral drugs.” (ComplA 88.) Plaintiffs allege this statement was false or misleading because “Study 806... showed that REMUNE had no impact on CD4 percentage or viral load.” (Id. ¶ 89.) F. SEC Filing On July 2, 1999, IRC filed a Form 8-K with the SEC (“Form 8-K”). Form 8-K stated: The Company reported on May 17, 1999, that the Independent Data Safety Monitoring Board (“DSMB”) completed a second interim efficacy analysis of Trial 806 to evaluate the immune-based therapy REMUNE when used alone or in combination with other anti-HIV therapy. The primary efficacy endpoint for this clinical trial was disease progression to an AID’S defining condition or death. The DSMB recommended that Trial 806 be concluded because differences in clinical endpoints were not observed between treatment groups and because extending the trial would be unlikely to provide sufficient additional clinical endpoints to permit statistically significant differences between the treatment groups to be observed in the near term. As part of the second interim analysis of Trial 806, the DSMB also reviewed surrogate marker data. This included some viral load data (level of HIV RNA in plasma) from a subset of 435 patients, consisting of patients who at the outset of the trial were taking Highly Active Anti-Retroviral Therapy (“HAART”) and had low levels of viral load (baseline HIV-1 RNA less than 400 copies/mL). The data was based on samples drawn every six months, but also included some additional data from samples drawn every three months from a small number of these 435 patients. The DSMB determined that in this subset of patients there was no statistically significant difference in viral load between those taking HAART and those taking HAART with REMUNE. In addition, other surrogate marker data was analyzed by the DSMB and significant differences were observed with respect to lymphocyte proliferation and CD4 cell count. There are a large number of plasma samples that have not been tested for viral RNA. It is possible, that this additional information might provide alternative findings and the DSMB encouraged testing these specimens with additional analy-ses. The Company also previously reported that a separate analysis by the Company and Agouron Pharmaceuticals, Inc. (“Agouron”), a wholly owned subsidiary of Warner-Lambert Company, of a cohort of 250 patients randomly pre-select-ed from Trial 806 for surrogate marker analysis, showed a significantly greater reduction in viral load after 48, 96 and 120 weeks of treatment and significantly greater increases in lymphocyte proliferation in those who received REMUNE compared with those who did not. The data was based on samples drawn from the patients in the 250 patient cohort every three months. Since the 250 patient cohort was randomly pre-selected, the Company believes that it was representative of the 2,500 patients in the study and included both patients who were and were not using HAART at the outset of the trial and thus had varying viral load levels. The analysis of this 250-patient cohort was completed after the DSMB had reached its findings and was not reviewed by the DSMB. It is possible that the results can be used, in conjunction with other data, to support an application for the marketing of RE-MUNE in the U.S. This data has not yet been presented to the United States Pood and Drug Administration (“FDA”), but the Company and Agouron plan on submitting the results to the FDA for its consideration. The Company is considering additional analyses to better understand the disparate viral load findings between the different patient populations analyzed in Trial 806. (Comply 95.) Plaintiffs allege the statements in the Form 8-K “were false or misleading because defendants reported the manipulated and meaningless results of their analysis of the [250-cohort Study] while not disclosing that the analysis from the entire 2,500-patient study showed no impact on viral load. Further, defendants’ emphasis on their analysis falsely showing positive results mitigates the negative results of the [435 Sub-study] which showed REMUNE had no impact on viral load.” (ComplJ 96.) G. Additional REMUNE Studies Plaintiffs next allege Defendants misled investors by telling them about new studies of REMUNE, which were much smaller and less comprehensive than Study 806. On September 27, 1999, IRC announced that a new clinical trial was initiated to “further evaluate the safety and efficacy of REMUNE.” (Comply 104.) IRC also said that “[p]re-vious clinical studies ‘suggested that when combination antiviral drug therapy is accompanied by.. .injections of RE-MUNE ... improvements in immunologic markers and positive trends in virological markers of the response to HIV are observed.’ ” (Id.) On November 3, 1999, IRC issued a press release entitled “The Immune Response Corporation Presents Data Suggesting That REMUNE May Have an Effect on the Control of HIV Infection,” which stated: The Immune Response Corporation announced today that data were presented at the Royal College of Physicians, London, England, showing that patients treated with REMUNE (TM), an immune-based therapy to treat HIV infection, exhibited a significant increase in lymphocyte proliferation (p<0.05) associated with a decrease in the amount of HIV RNA in the bloodstream (p<0.05), commonly referred to as viral load... “This data would appear to support the premise on which REMUNE is based, that improved immune health may lead to the control of HIV infection!.]” ... Viral load, or the amount of HIV RNA in the plasma (cell-free portion of the blood), is a very good indicator of disease progression in the body. “The lower the viral load, the more favorable the prognosis for the patient,” Dr. Moss explained ... The data Dr. Moss presented were based on results from a recently concluded 120-week study that involved 2,500 HIV-infected individuals. Patients were allowed to follow any regimen of antiviral therapy and switch antiviral drugs as needed. In a random,- preselected cohort (n=252), lymphocyte proliferation was significantly higher (p<0.05) for individuals who received Remune plus adjuvant (a general immune stimulant) compared to an adju-vant control group. Following treatment with REMUNE, the data suggest that lymphocyte proli-ferative responses specifically against HIV may have been restored in these patients. Viral load was significantly lower (p<0.05) in Remune treated patients compared to the control group at multiple timepoints over the ,120-week period. Additionally, there was a significant increase in CD4 cells (p<0.05) in patients treated with Remune. “The patients in this study were allowed to follow any antiviral drug regimen and switch drugs as often as needed, a situation not typical of most clinical studies in which patients must follow a strictly prescribed regimen. The fact that we still observed significant decreases in viral load for patients treated with Remune against such a background of unrestricted drug therapy is very encouraging in its potential relevance to a real-life clinical situation,” Dr. Moss commented. “We are very pleased with these results that we believe support the scientific validity of REMUNE, our immune-based approach to combating HlV infection,” said Dr. Dennis J. Carlo, President and CEO of The Immune Response Corporation!] (Compl-¶ 99.) Plaintiffs allege these, statements were false or misleading since Study 806 proved that REMUNE had no effect on viral load or other secondary markers. Specifically, Plaintiffs allege “these statements were completely - contrary to the findings of Study 806 — that there was little evidence of a meaningful difference in clinical progression for the patients given REMUNE and the lack of any pre-specified meaningful effects on CD4 cell count, CD4 percentage and HIV RNA (viral load). In fact, the official Study 806 results, published a year later, would say that ‘subjects randomized to REMUNE demonstrated no significant improvement compared to those randomized to placebo with respect to HIV RNA.’ ” (Id. ¶ 100.) 1. Study 905 In a press release issued on January 25, 2000, Defendant Carlo stated “[o]ur studies have consistently suggested that RE-MUNE enhances cell-mediated immunity specifically against HIV” and announced that another new study — Study 905— would be conducted at Cedars-Sinai Medical Center in Los Angeles. Study 905... also intended to measure RE-MUNE’s effects on HIV-specific immune responses and secondary markers of disease progression including CD4 cell count and viral load. (Comply 105.) Plaintiffs allege Carlo’s statements were “false or misleading because previous clinical studies, specifically Study 806, showed that REMUNE did not enhance cell-mediated immunity against HIV, e.g., there was no benefit on viral load. Furthermore, the surrogate immune responses contemplated in Study 905 [were] not widely viewed as acceptable substitutes for reduction in disease progression in the setting of immunologic therapies.” (ComplA 106.) 2. The Thai Study According to Plaintiffs, IRC then initiated a Phase II clinical trial in Thailand (“Thai Study”). The Thai Study assessed whether HIV-infected and AIDS patients treated with REMUNE showed increased CD4 cell counts. (ComplA 107.) The patients from the Thai Study received no form of treatment other than REMUNE. This was because at that time other accepted forms of HIV treatment, such as ART, were not widely available in Thailand. IRC issued several press releases about the results of the Thai Study, all of which Plaintiffs allege were false or misleading. First, on February 23, 2000, IRC issued a press release entitled “The Immune Response Corporation Announces Results From A Phase II Clinical Trial of RE-MUNE in Thailand at The WHO-UNAIDS Vaccine Advisory Committee Meeting,” which stated: The Immune Response Corporation announced today that the results from a double blind placebo controlled trial of REMUNE(TM) alone versus adjuvant alone in 297 Thai HIV-1 infected subjects ... also showed a significant effect (P<0.05) on HIV specific immune function favoring the REMUNE treated group... The primary endpoint for the trial was a change in CD4 helper T-cell counts (immune cells selectively destroyed by HIV). CD4 cell counts and viral load are currently the only two accepted, validated clinical markers for HIV infection. Better clinical outcomes have been associated with increases in CD4 cell counts and decreases in viral load. The results suggested that there was a significant increase (P<0.05) in CD4 cell counts in the REMUNE treated group compared to the control group. In addition, both humoral (P<0.05) and cell-mediated (P<0.05) immune responses specifically against HIV were elevated in patients treated with REMUNE compared to controls... Both treatment groups remained stable in viral load during the blinded period of the 40 week trial. Additional data on 68 of the subjects who continued to receive REMUNE alone revealed that 87% (59/68) remained stable or decreased in viral load by week 88[.] (ComplJ 108.) Then, on March 28, 2000, IRC issued a press release entitled “Recent Clinical Data Suggest that REMUNE May Help to Rebuild Immune System When Used Alone or in Combination With Antiviral Drugs Against AIDS Virus; Thai Investigators to Propose REMUNE Monothera-py as First Course of Treatment in HIV-Infected Individuals in Thailand,” which stated: The Immune Response Corporation announced today that recent clinical data suggest that REMUNE (TM), its immune-based therapy to treat HIV infection, may induce HIV immunity when used as a combination therapy with other antiviral drugs or when used alone as a monotherapy .... An observation common to the multiple trials suggest that patients treated with REMUNE in combination with antiviral drug therapy mount strong CD4 helper T cell immune responses against HIV. In this study, 297 HIV-1 infected patients who had never taken antiviral drug therapy received either REMUNE or placebo during the 40-week trial period and were monitored for several indicators of immune health and disease progression. The primary measure of the number of CD4 helper T cells was significantly higher (P<0.05) in the RE-MUNE treatment group .... “While antiviral drug therapy has been very beneficial to HIV patients in keeping viral load in check, it has not generally proven to help rebuild the immune system, which is ravaged by the virus. A common theme among the trial results reported today suggests that REMUNE may help to restore immune function to these patients. In fact, it is the T helper cells — the very immune cells that are destroyed by the virus— that appear to re-establish after treatment with REMUNE[.]”... He noted that 87% (59/68) of those patients tested 48 weeks after the trial’s end had stable (39 patients) or significantly decreased (20 patients) amounts of HIV in the bloodstream, commonly referred to as viral load. Furthermore, the decrease or stabilization of viral load was associated with a sustained increase in number of CD4 helper T cells as well as increased body weight. “Several clinical parameters of immune health and disease progression assessed in this trial and during the follow-up period suggest that REMUNE alone may be a beneficial monotherapy in the treatment of HIV infection. This is particularly important for HIV patients who do not have access to antiviral drug therapy.” (ComplJ 109.) Lastly, on July 14, 2000, IRC issued a press release, stating that it proposed “ ‘to Thai health authorities that REMUNE should be used as a first line therapy, with cost-effective antivirals added on for non-responding patients. The stability of these patients receiving REMUNE alone is comparable to that of clinical non-prog-ressors.’ ” (ComplJ 110.) Plaintiffs allege the press releases about the Thai Study were false or misleading since they failed to disclose: (1) “Study 806 with a significantly larger study population of 2500 patients and a three-year study period had already determined that REMUNE had no effect on CD4 cell counts and viral load”; (2) “the proposal IRC purportedly made to Thai health authorities that REMUNE be tested alone or with limited ART [was] misleading because REMUNE would never be considered by the FDA as a stand alone therapy”; (3) “Dr. Lagakos, who helped design the Thai Study and analyzed the trial data, harshly criticized the Thai report as inaccurate calling it ‘one of the most egregious examples of misusing data’... [as] the Thai doctor isolated only one of ten data points that were available... and [analyzed] it different than the agreed-upon study design”; and (4) “the positive claims surrounding the Thai study which was designed to complement Study 806 did not carry much credibility because it was conducted by a private medical group — Trinity Medical — which is both an investor in [IRC] and has a financial interest in the approval of REMUNE for use in Asia under a distribution agreement with IRC.” (CompLM 112,113.) 3. Study 5057 On May 10, 2000, IRC announced another “new” Phase III clinical study — a 96-week trial conducted at New York University Medical Center known as Study 5057. Study 5057 aimed to prove that RE-MUNE, when added to ART or HAART, suppressed viral load levels longer than antiretroviral therapies alone. Study 5057’s design and purpose was nearly identical to Study 806’s 435 Sub-Study. (Comply 114.) On May 10, 2000, IRC issued a press release entitled “The Immune Response Corporation and Agouron Announce the Initiation Of a Pivotal Clinical Trial of REMUNE(TM), an Investigational Immune-Based Therapy for the Treatment of HIV Infection; The Adult AIDS Clinical Trials Group (AACTG) to Conduct Multi-Center Trial,” which stated: The Immune Response Corporation and Agouron Pharmaceuticals, Inc. today announced that a pivotal trial has been initiated to evaluate the safety and efficacy of the investigational product RE-MUNE (™) (HIV-1 Immunogen) in increasing durability of viral suppression for people infected with HIV, when added onto their current antiretroviral regimens ... “Previous clinical studies have suggested that when combination antiviral drug therapy is accompanied by intramuscular injections of REMUNE administered once every three months, improvements in markers of the immune response to HIV and positive trends in virologie markers are observed,” said Fred Valentine, M.D., of Bellevue Hospital, New York University Medical Center, and Protocol Chair of the newly initiated trial... The primary objective of this 96 week, randomized, double-blind, adjuvant-con-trolled study is to determine whether the addition of REMUNE to a regimen of potent, suppressive antiretroviral therapy delays the time to virologie relapse (defined as a predetermined level of HIV-1 RNA detected in the plasma)[.] (ComplJ 115.) Plaintiffs allege this statement was false or misleading. Plaintiffs rely on Dr. Kahn’s statement that Study 5057 was “worthless” from the start because IRC was “trying to do the same study [435 Sub-Study] and get different results.” Plaintiffs also allege the statement failed to disclose that Study 806 had already determined REMUNE had no impact on prolonging virologie suppression. Thus, Plaintiffs allege, IRC’s Study 5057 was an intentional effort to mislead the public into believing that REMUNE was still a potentially viable treatment for suppressing HIV in virologically-suppressed patients. (ComplJ 116.) According to Plaintiffs, IRC attempted to prevent Dr. Kahn from informing the Study 5057 researchers about the results of the 435 Sub-study. “IRC even tried to withhold the results of Study 806 from Study 5057’s sponsor. And, in fact, the study’s design team did not receive the final DSMB report on Study 806 and were not aware of the negative results from the 435 Sub-study, until after Study 5057 enrollment began. Once these results were made available in late May or early June 2000, the National Institute of Health suspended patient enrollment.” (Id.) Some time between the May 10, 2000 announcement of Study 5057 and June 5, 2000, the study team for Study 5057 received the viral load data from Study 806. On June 5, 2000, after reviewing the data, the AACTG decided to suspend enrollment in Study 5057. IRC announced this decision on June 9, 2000 in a press release entitled “The Immune Response Corporation and Agouron Pharmaceuticals, Inc. Announce ACTG Study Update,” which stated that the reason for suspension was a “change in protocol”: The Immune Response Corporation and Agouron Pharmaceuticals, Inc. today announced that they have been informed by the AIDS Clinical Trials Group (ACTG) that enrollment in the 96 week, randomized, double-blind, adjuvant-con-trolled study, previously announced on May 10, 2000, has been halted while it reviews protocol changes... The study protocol team has also informed The Immune Response Corporation and Agouron Pharmaceuticals, Inc. that the revised study protocol is expected to be developed quickly. The study was designed to answer the scientific question of whether vaccine-induced immune responses could aid in the control of HIV, and the practical question of whether this intervention could prolong the efficacy of potent an-tiretroviral therapy. (Comply 119.) Plaintiffs allege the statement failed to disclose the actual reasons for halting the study, as well as the nature of the protocol changes to Study 5057’s design and patient informed consent form. (ComplA 122.) According to Plaintiffs, “Dr. Kahn explained that the so-called change in protocol was the DSMB’s decision to revise the informed consent provision in the patient enrollment form to include a statement that a prior study (Study 806) evaluated REMUNE’s effect on virologie suppression which was the focus of Study 5057, and the prior study showed no positive effects from REMUNE.” (Comply 120.) H. IRC’s Secondary Public Offering On July 12, 2000, IRC issued a press release announcing a secondary offering of its stock. The press release entitled “The Immune Response Corporation Offers 2,400,000 Shares of Its Common Stock,” stated: The Immune Response Corporation announced today that it has filed a supplement to its previously filed shelf registration statement with the Securities and Exchange Commission (SEC) for a public offering of 2,400,000 shares of its common stock (plus up to 360,000 additional shares to cover over-allotments, if any). The shares are being offered through First Security Van Kasper and Gruntal & Co., L.L.C. The Company plans to use substantially all of the net proceeds from the sale of the common stock to further its REMUNE(TM) manufacturing process scale-up, for product development, for working capital and other general corporate purposes. (Comply 123.) IRC filed a Prospectus and Registration Statement with the SEC. The Prospectus, which was signed by Defendant Carlo, stated: REMUNE is designed to stimulate an HIV-infected individual’s immune system to attack HIV, the virus that causes AIDS. We believe that results from previous clinical trials demonstrate that REMUNE significantly boosts HIV-specific immune responses and may induce a positive virologic effect in HIV-infected individuals. Furthermore, we believe REMUNE stimulates the production of specific antiviral substances that naturally protect components of the immune system from HIV infection. Leading HIV clinical researchers have begun to recognize that in order to effectively stop or slow the progression of HIV to AIDS, therapies must stimulate HIV-specific cell mediated immune responses in infected individuals in addition to reducing viral load through the use of antiviral drugs. By utilizing an immune-based therapy such as REMUNE, in conjunction with existing antiviral drugs, it may be possible to boost the HIV infected individual’s immune system against the virus, so that the viro-logic effect of antiviral drug therapy is prolonged and enhanced. REMUNE is currently involved in multiple clinical trials. Together with our primary marketing partner, Agouron Pharmaceuticals, Inc., or Agouron, a Pfizer Inc. company, we have initiated a Phase 3 pivotal trial designed to evaluate whether REMUNE plus highly active antiretroviral therapy, HAART, delays virologic failure in HIV-infected individuals. We currently expect to obtain results by the end of 2001, subject to successful patient enrollment. The National Institutes of Health, or NIH, is currently redesigning and if it is implemented, a second phase 3 trial to evaluate whether REMUNE plus HAART delays virologic failure could commence. The AIDS Clinical Trial Group, conducting the study for the NIH, closed the trial after it was determined that it was unlikely that the administration of REMUNE in the context of the original trial with a sample size of 472 patients would effect a significant reduction in the time to viro-logic relapse. An ongoing 243 patient pivotal HIV trial in Spain, scheduled to be completed in April 2001, is also evaluating the effectiveness of REMUNE in delaying virologic failure. The lead researcher of this study has recently released interim data that suggest that treatment with REMUNE may enhance the immune system’s reserves of HIV-specific killer T cells... REMUNE, unlike antiviral drugs, can induce an HIV specific response, which is now thought by numerous researchers to be important in controlling HIV replication. REMUNE has been administered to more than over 2,000 patients, has an excellent safety profile, is well tolerated and is easy to administer. The fact that REMUNE reconstitutes HIV-specific immunity provides a unique niche for REMUNE to be utilized in combination with drug therapy to provide long-term management of disease. One goal of the combination RE-MUNE-drug approach is to prolong the impact of antiviral drug therapies on viral load by increasing the immune response to HIV-infected cells. If successful, a delay in drug resistance and a prolonged duration of low levels of virus in the blood coupled with an increase in the immune response to HIV could translate into clinical benefit. (ComplJ 124.) On August 11, 2000, IRC raised $15 million in its secondary public offering. Plaintiffs allege the statements in the Prospectus were false and misleading since “one month prior to the [IRCj’s secondary offering, Dr. Kahn, the director of Study 806, had provided IRC with a copy of the manuscript the Study 806 researchers had prepared which showed no evidence of clinical benefits for REMUNE.” I. Dr. Kahn’s Report Dr. Kahn’s manuscript said, there was a ‘lack of evidence of a difference between the [REMUNE] group and the control group with respect to clinical progression’ and that such results were ‘consistent with the lack of any prespecified meaningful effects on CD4 cell count, CD4 percentage, and HIV RNA.’ ‘The results of this trial failed to demonstrate that the addition of [REMUNE] to ART conferred any effect on HIV progression-free survival to that achievable by ART alone.’ James 0. Kahn, MD, Deborah Weng Cherng, MS, et al., JAMA Vol 284, No. 17 (Nov. 1, 2000). (Compl-¶ 125.) On October 31, 2000, IRC filed an arbitration proceeding to prevent the publication of Dr. Kahn’s manuscript, claiming that Dr. Kahn’s report was confidential information which belonged to IRC. That same day, IRC issued a press release entitled “The Immune Response Corporation Announces Arbitration Proceedings And Dispute Over Exclusion of Clinical Investigators and Sponsor Comments In The Publication of Clinical Trial Data Of RE-MUNE(TM) (HIV-1 Immunogen),” which stated: The Immune Response Corporation announced today that it had initiated binding arbitration proceedings in a disagreement with the University of California San Francisco (UCSF) and a member of its faculty, Dr. James Kahn. The principle basis for the arbitration is over the public disclosure of clinical data by Dr. Kahn, which the Company believes is subject to customary confidentiality under the terms of a Research Agreement and an Investigational Site Agreement. The Company also contests that Dr. Kahn excluded clinical investigators and sponsor comments in the publication of clinical trial data of REMUNE(TM) (HIV-1 Immunogen) from Study 806, which ended and was reported in May 1999. The Company decided that involvement of a third party arbitrator under the terms of a Research Agreement and an Investigational Site Agreement was a necessary measure to ensure that confidential clinical trial data from Study 806 of REMUNE would not be published until all parties, including all of the clinical investigators, had an opportunity to review and agree upon a manuscript to be submitted for publication... As was previously announced by the Company on May 17, 1999, Study 806, a 2500-patient, placebo-controlled Phase III clinical trial of REMUNE, was concluded based on the recommendation of an independent Data Safety Monitoring Board (DSMB). The trial was concluded because differences in clinical endpoints were not observed between treatment groups and because extending the trial would have been unlikely to provide sufficient additional clinical endpoints to permit statistically significant differences between treatment groups to be observed in the near term. Before the study began, the predicted clinical endpoint event rate was 6% progression per year, meaning that 6% of 2,500 patients would progress to an AIDS defining condition or death each year. However, when the study was stopped, only 0.73% per year progressed using the original Centers for Disease Control AIDS-defining conditions. “What is at issue here is that while an effect of REMUNE on ‘clinical’ endpoints was not demonstrated in Study 806, we still gained very important insight from data concerning the effects of REMUNE on viral load (the amount of HIV in the bloodstream). This viral load information has helped us to design subsequent clinical trials of REMUNE,” said Dr. Moss... Data from a random, pre-selected subset of 252 patients suggested that viral load was significantly lower (p<0.05) at multiple timepoints (Weeks 36, 48, 60, 84, 96 and 120) in REMUNE treated patients compared to the control group. The reduction in virus correlated with the induction of cell-mediated responses (T cell help) against the virus... “In the subset study, we observed that patients treated with REMUNE had lower viral loads and increased T cell help compared to the placebo group. This is important because these characteristics are typical for people with HIV that do not progress in their disease,” said Dr. Moss. “We had tried to come to an agreement with Dr. Kahn to publish all the data and to let the clinical investigators have a chance to review the manuscript. However, the authors decided to submit a manuscript to a scientific journal without input from their colleagues who participated in the study... “As the top patient-enrolling clinical investigator in Study 806, I am extremely disappointed that neither I nor the other investigators were given the opportunity to review the manuscript of this very important clinical trial before it was submitted for publication. This omission was particularly surprising given that I have worked with these authors on several projects in the past,” said John L. Turner, M.D., at Graduate Hospital, Philadelphia, Pennsylvania. “The Company has informed me that the details of the virological sub-study will not be included in the manuscript to be submitted for publication, and I find this to be an egregious omission... When Dr. Kahn informed the Company of his intent to publish data from Study 806 without incorporating a pre-planned substudy analysis, which other clinical investigators and the Company deemed essential for completeness, this reinforced the Company’s decision to enter into arbitration. At the time Study 806 began, clinical endpoints were the only measures of efficacy that were accepted by the FDA for approval of REMUNE. Since then, the FDA now allows viral load markers for licensure of biological products such as REMUNE. A Phase III pivotal trial of REMUNE was initiated in September 1999 that is testing endpoints based on viral load instead of progression to AIDS and death (clinical endpoints).” (ComplJ 129.) Plaintiffs allege these statements were false since Study 806 with a significantly larger study population of 2500 patients and a three-year study period had already determined that REMUNE had no effect on CD4 cell counts and viral load. (ComplA 130.) On November 1, 2000, the leaders of the St