Gregory v. Pronai Therapeutics Inc. (297 F. Supp. 3d 372, 2018)

PAUL A. ENGELMAYER, District Judge:

In this putative class action under the federal securities laws, lead plaintiffs Michael Gregory, Yeshan Jagroo, and Mindy Frost (collectively, "plaintiffs") claim that pharmaceutical company ProNAi Therapeutics Inc. ("ProNAi"), its CEO and President Nick Glover ("Glover"), and its CFO Sukhi Jagpal ("Jagpal") (together, "ProNAi" or "defendants") made false and misleading statements touting the prospects of PNT2258, ProNAi's sole drug candidate. These statements were made between July 15, 2015, the day ProNAi's initial public offering prospectus was released, and June 6, 2016, the day ProNAi announced the discontinuation of development of PNT2258.

Plaintiffs bring this lawsuit on behalf of all persons who purchased ProNAi securities between July 15, 2015 and June 6, 2016 (the "Class Period"). They allege violations of §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") and the corresponding rule of the Securities and Exchange Commission, 17 C.F.R. § 240.10b-5 ("Rule 10b-5").

Pending now is ProNAi's motion to dismiss the Amended Class Action Complaint ("AC") for failure to state a claim under Federal Rules of Civil Procedure 12(b)(6) and 9(b). For the following reasons, the Court grants the motion and dismisses the AC in its entirety.

I. Background

After identifying the parties, the Court here sets out, at length, the chronology of events regarding PNT2258. This rendition is lengthy because plaintiffs allege that, during the Class Period, ProNAi made some 70 false and misleading statements, spanning a series of disclosures, and because the statements alleged to be actionable concern the status of PNT2258 at various points in its complex testing and development. As a general proposition, plaintiffs' core theory is that ProNAi consistently overstated PNT2258's prospects, downplayed or failed to disclose historical and more recent negative test results, and identified as risk factors circumstances that had already come to pass. The 70 statements that plaintiffs claim to be actionable misstatements or omissions are listed chronologically in the Appendix to this decision. For ease of reference, they are identified there and here as misstatements ("MS") 1 through 70.

A. Parties

ProNAi is "a clinical stage oncology company with a focus on pioneering a novel class of therapeutics based on its proprietary DNA interference (DNAi) technology platform." AC at 9. "Throughout the Class Period, PNT2258 (a DNAi drug) was the Company's only drug product candidate and, thus, the successful development of PNT2258 was critical to ProNAi's long-term viability." Id.

The individual defendants are Glover, ProNAi's President and CEO and a member of its board since September 2014, and Jagpal, ProNAi's CFO since February 2015 (collectively, the "Individual Defendants"). Id. at 7-8.

The lead plaintiffs all purchased ProNAi securities during the Class Period. Id. at 6.

B. Pre-Class Period Events

1. PNT2258

During the Class Period, PNT2258 was ProNAi's lead product candidate and the company's only drug in clinical development. Id. at 9, 11. It was developed based on ProNAi's proprietary DNA interference (DNAi) technology platform. Id. at 11.

As ProNAi described DNAi technology, it is based on a discovery from "Wayne State University and Karmanos Cancer Institute that single-stranded DNA oligonucleotides can interact with genomic DNA" and interfere with gene transcription. See Prospectus at 82. The theory is that those oligonucleotides could be used to interfere with the transcription of genes linked to particular diseases. ProNAi's Prospectus illustrated this concept as follows:

Figure 1 (Prospectus at 82)

As the Prospectus illustrated, ProNAi was to use pH-responsive lipid nanoparticles to protect the DNAi oligonucleotide and deliver them across physiological membranes to the cancer cells.

The drug in question here, PNT2258, was within the DNAi class. AC at 13. PNT2258 was designed to target a particular oncogene, BCL2, and interfere with its transcription. Id. at 11. BCL2 gives cancer cells the ability to resist the primary mechanism for the removal of damaged or unnecessary cells, known as apoptosis. Id. By effectively programming cancer cells to survive this naturally occurring process, an overexpression of BCL2 contributes to the formation, growth, and chemo-resistance of a wide range of tumors. Id.

PNT2258 was designed with the goal of restoring the apoptotic process and, thus, killing cancer cells. Id. PNT2258 contains two parts: (1) PNT100, the single-stranded DNAi oligonucleotide that was designed to target a particular regulatory region of BCL2 to limit transcription, and (2) the protective lipid nanoparticles that allow PNT100 to travel to the cancer cell's nucleus so that it can modulate gene transcription. See Prospectus at 85.

Figure 2 (Prospectus at 83)

Defendants, during the Class Period, developed PNT2258 as a therapy for medical conditions "DLBCL" and "RCLL." "DLBCL is a cancer of B cells, a type of white blood cell responsible for producing antibodies. It is the most common type of [non-Hodgkins lymphoma ] among adults, accounting for about 30 percent of newly diagnosed cases in the United States. It occurs primarily in older individuals and is an aggressive lymphoma that can arise in lymph nodes or outside of the lymphatic system in the gastrointestinal tract, testes, thyroid, skin, breast, bone, or brain." AC at 12. "RCLL [or Richter's CLL] is a transformation which occurs in about 5-10% of B cell chronic lymphocytic leukemia (CLL) and hairy cell leukemia into a fast-growing DLBCL, which is refractory to treatment and carries a bad prognosis. Overall, the median survival for RCLL patients is between five and eight months." Id.

2. Clinical Trials

In 2010, ProNAi conducted a dose-escalation, Phase 1 study of PNT2258. Id. at 19. The study was conducted on 22 patients with relapsed or refractory solid tumors. Id. This was a safety study, designed to determine appropriate dosing for future studies which would test the drug's efficacy. Id. It was open-label, meaning ProNAi could access and evaluate the trial data while the trial was ongoing. Id. Of the study's 22 patients, 19 had an "ECOG" performance scale rating of 1-2, which meant that they were "fully active or slightly restricted in strenuous activity but nevertheless ambulatory." Id.

On December 5, 2012, ProNAi disclosed results of the Phase 1 study at the annual Symposium on Molecular Targets and Cancer Therapeutics. Id. at 20; Stokes Decl. Ex. 5. Of the 22 patients participating in the trial, ProNAi disclosed, none reported a complete or partial response to the drug. AC at 12. One patient died within 30 days of beginning the trial. Id. Thirteen experienced a deterioration in condition. Id. Five did not experience any clinical benefit. Id. As to more specific data, however, ProNAi, reported only pharmacokinetics data, that is, data regarding "the way in which drugs move through the body during absorption, distribution, metabolism, and excretion." Id. This data has implications for drug safety. Id. ProNAi did not report pharmodynamics data, meaning data regarding "the way in which drugs [a]ffect the body, namely whether the drug dosed at the site of action has a resulting effect. Id. Such data has implications for drug efficacy. However, the Phase 1 study was designed to test "safety and tolerability," AC at 19, not efficacy.

In December 2012, ProNAi began to enroll patients in its Pilot Phase 2 trial of PNT2258, which was also open-label and lacked a control group. The primary objectives of this trial were to continue to collect safety data and to determine PNT2258's "anti-tumor activity across several hematological malignancies." Id. at 21. The study enrolled 13 patients. Id. Of those 13, 12 patients had an ECOG performance scale rating of 0-1. Id. The 13th had a score of 2. Id. Approximately 77% of the enrolled patients had received two or fewer prior lines of therapy. Id.

On December 5, 2014, ProNAi announced interim efficacy results in a press release. Id. Four of the DLBCL patients responded to treatment. Id. at 23. Three had complete responses and the fourth had a partial response. Id. One RCLL patient had a complete response. Id.

On December 28, 2014, based on the interim response of patients in the Pilot Phase II trial, ProNAi began enrolling patients in its Wolverine Trial. Id. at 28. This decision to enroll patients in a new trial based on an interim response was, plaintiffs allege, a deviation from industry practice. Id. Like past trials, the Wolverine Trial was open and without a control group, features that plaintiffs again claim were at odds with industry practice. Id. at 26, 28.

According to the Amended Complaint, the primary objective of the Wolverine trial was "to characterize anti-tumor activity and collect safety data on approximately 60 patients with relapsed or refractory DLBCL." Id. at 29. The original inclusion criteria of the trial did not limit the number of individuals with prior therapies and indicated that the study would accept patients with ECOG performance status of 0-2. Id. Ultimately 37 patients were enrolled in the study (which was ended prematurely).Id. Of those patients, 27% had either an ECOG performance status of 2 or had received four or more prior therapies. Id.

On December 22, 2014, six days before the clinical trial started enrolling patients, ProNAi modified the Wolverine clinical design as follows: The primary outcome measure, "disease control rate," i.e. "an endpoint that is durational in nature," was changed to become a secondary measure. Id. at 30, 32. The secondary measure, "overall response rate," was changed to be a primary outcome measure. Id. The "timeframe to measure both [was] extended from 4.5 to 6 months." Id. at 30. ProNAi also "add[ed] language that disease control rate and time to response and duration of response will be based upon a blinded independent imaging review." Id.

The AC alleges that this and other amendments to the Wolverine trial were prompted by unspecified data that must have been known to ProNAi several months before it announced these amendments. Plaintiffs infer this timeline from ProNAi's internal organization, as described by a confidential witness ("CW-4"). ProNAi, like all major pharmaceutical research companies, has an Internal Review Board ("IRB"). Id. at 36. The IRB approves protocol amendments. Further, CW-4, whom the AC describes as a former Senior Director of Biostatistics, has stated that, before a major protocol amendment can take effect, the Glover must sign off on it. See id. at 36-37. Extrapolating from the timelines ProNAi has disclosed for protocol amendments for other (later acquired) drugs, the AC alleges that as to PNT2258, this process would have taken at least a few months. See id. at 37-38. Thus, the AC alleges, ProNAi would have been aware several months before it amended the Wolverine protocols of whatever data motivated the adjustments. Id. at 38.

The December 2014 protocol amendments were disclosed on the public website "ClinicalTrials.gov," apparently on the day they went into effect. See Stokes Decl. Ex. 11 ("Clinical Trials") at 5, 14-26.

3. Pre-Clinical Experiments

From October 2014 until February 2015, a confidential witness ("CW-1") in charge of crafting and carrying out "proof of concept" PNT2258 experiments at ProNAi worked with two other scientists to discern PNT2258's mechanism of action. AC at 13. CW-1 has opined that their experiments suffered from a confounding variable: lipids. PNT2258 is a piece of DNA which is "composed inside of [a] lipid molecule." Id. at 14. According to CW-1, experiments involving PNT2258 should properly be run with a lipid control. Id. Otherwise, it is impossible to tell whether the observed effect was caused by the lipid or PNT2258. Id. At some point during this period, CW-1 was told by ProNAi's Chief Science Officer that such a control was unnecessary because a lipid control "was not applicable to what happens in vivo." Id.

Between May 2015 and July 2016, beginning before the start of the Class Period but extending into it, a different confidential witness who was a ProNAi research associate ("CW-2") conducted preclinical experiments to determine the mechanism of action for PNT2258. At unspecified times during this 14-month period, CW-1 and CW-2 have stated, they attended internal research meetings, occasionally attended by video by Glover, where "all the scientists reported the same conclusions-that DNAi and PNT2258 were ineffective." Id. at 15.

C. The Class Period

1. July 15, 2015-Prospectus

On July 15, 2015, ProNAi filed its offering prospectus with the Securities and Exchange Commission ("SEC"). Prospectus at 1.

a. Past and Future Research

The Prospectus described at length ProNAi's past research into PNT2258's safety and efficacy and its planned research of the drug in the future. In particular:

Phase I Trial : The 2010 Phase I trial, according to the Prospectus, was designed to test the safety and tolerability of PNT2258, not its efficacy. Prospectus at 86. ProNAi disclosed that the trial "involved 22 patients with relapsed or refractory solid tumor malignancies" and that "patients were not chosen for participation on the basis of their BCL2 status, and, thus, overt evidence of antitumor activity was not expected." Id. ProNAi also disclosed that, at the conclusion of the trial, only six patients had a stable disease, and that none had had a partial or complete response to PNT2258. Id. at 87.

Pilot Phase II Trial : The 2012 Pilot Phase II trial, meanwhile, was described as a "single arm, open-label Phase 2 trial," which means, as discussed above, that the study was uncontrolled and the doctors had access to the study data as the trial was ongoing. The purpose of the study, as described in the Prospectus, was to evaluate the antitumor activity and safety of PNT2258. Id. at 88. As reported at this interim stage, 85% of patients had a complete response, partial response, or stable disease. Id. The Prospectus broke out which patients had which response. For example, of the four DLBCL patients, one had a partial response and the three others had a complete response. Id. at 89. According to the Prospectus "[a]lthough not statistically powered for a formal efficacy analysis, [ProNAi believes] the preliminary evidence of efficacy observed in this trial, coupled with safety and tolerability data collected to date, suggest[s] that PNT2258 has the potential to change treatment paradigms across a wide range of oncology indications." Prospectus at 77. The Prospectus also disclosed, through description and detailed charts, the drug-related adverse events experienced in the trial to date. Id. at 90.

Wolverine Trial : The Prospectus also discussed the ongoing Wolverine Phase II trial as a trial that examined third-line relapsed or refractory DLBCL (i.e. , DLBCL in patients who had already experienced two failed treatments). Id. at 91. The trial was described as open label, and as one that would "identify and characterize patients who respond to PNT2258 on the basis of their genetic and disease characteristics" and collect safety data. Id. The Prospectus estimated that approximately 60 patients would be enrolled. Id. The Prospectus described the primary endpoint as overall response rate and the secondary endpoints as duration of response, disease control rate, progression-free survival, and more. The Prospectus estimated that it would "be necessary to report safety and efficacy by mid-2016," and that, because the trial was open label, ProNAi anticipated "multiple clinical data read outs over the next 12 to 24 months." Id.

Brighton : The Prospectus also described the upcoming Brighton trial. Brighton was to be an open label trial, according to the Prospectus, and was designed to study PNT2258 in patients with Richter's CLL. Id. at 92. More specifically, it was intended to "characterize anti-tumor activity and collect safety data on approximately 50 [RCLL] patients." Id.

b. Cautionary Disclosures

The Prospectus also contained 41 pages of cautionary disclosures. Id. at 13-53. These included the following:

• "Investment in oncology product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate efficacy or an acceptable safety profile...." Id. at 13.

• "We are very early in our development efforts and have only one product candidate in clinical development, which has only been tested in a limited number of patients.... [T]he results of completed preclinical studies and early-stage clinical trials may not be indicative of the results from future clinical trials with a larger number of enrolled patients." Id. at 14.

• "Clinical trials are expensive, difficult to design and implement, can take many years to complete and are uncertain as to outcome. Most product candidates that begin clinical trials are never approved by regulatory authorities for commercialization. We cannot, therefore, guarantee that we will be successful in obtaining the required efficacy and safety profile from the performance of any of our clinical programs. A failure of one or more clinical trials can occur at any stage of testing." Id. at 15.

• "[R]esponse rates from the use of our product candidates will likely not be sufficient to obtain regulatory approval unless we can also show an adequate duration of response." Id.

• "The outcome of preclinical testing and early clinical trials may not be predictive of the success of later clinical trials, and interim results ... do not necessarily predict final results. To date, we have only obtained results from Phase 1 and Phase 2 clinical trials that are uncontrolled, involve small sample sizes and are of shorter duration than would be required for regulatory approval. Data from these clinical trials and our preclinical studies should not be relied upon as evidence that later or larger-scale, controlled clinical trials will succeed." Id.

• "For example, although the results from our Phase 2 trial of PNT2258 in patients with relapsed or refractory NHL characterized stable disease (SD) as providing evidence of antitumor activity, the FDA generally does not consider SD to provide a direct measure of antitumor activity. Accordingly, SD will likely not be a component of the primary efficacy endpoint of overall response rate of any pivotal trials necessary to obtain regulatory approval. There may be other reasons why our early clinical trials are not predictive of later clinical trials. For example, we have not discussed the design, including sample size, trial arms, duration and endpoints, or any results, of our completed, ongoing or planned clinical trials with the FDA, and thus we may not have the benefit of the FDA's current thinking on trial designs. In addition, the results of clinical trials in one set of patients or line of treatment may not be predictive of those obtained in other clinical trials, and protocols may need to be revised based on unexpected early results." Id.

• "Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses.... Many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their products." Id.

• "We may be required to suspend, repeat or terminate our clinical trials if they are not conducted in accordance with regulatory requirements, the results are negative or inconclusive or the trials are not well designed." Id. at 24.

• "Our approach to the discovery of therapeutic treatments based on our DNAi technology platform is unproven and may not result in marketable products.... We believe we are the first to develop DNAi as a therapeutic modality to be tested in humans. We may discover that our DNAi oligonucleotides do not possess the ability to hybridize to complementary regions of genomic DNA of an oncogenic target or our LNP delivery technology does not possess certain properties required for effective delivery...." Id. at 27.

• "[T]he scientific research that forms the basis of our efforts to develop product candidates based on our DNAi technology platform is preliminary and limited." Id.

• "We will have broad discretion in the use of the net proceeds to us from this offering and may not use them effectively." Id. at 49. "We may also use a portion of the net proceeds to acquire, license and invest in complementary products, technologies or businesses...." Id. at 55. The Company's intentions regarding the use of offering proceeds "could change in the future," including based on "the status of and results from clinical trials." Id.

c. Allegedly Actionable Statements in the Prospectus

Plaintiffs allege that the Prospectus's statements in the course of recounting the clinical trials about PNT2258's prospects were falsely and misleadingly positive, because the drug's prospects were more dubious. Plaintiffs further allege that some of the Prospectus's cautionary disclosures were materially misleading, such as the warning that ProNAi's business success depended on PNT2258 and that ProNAi's business would be materially harmed if PNT2258 experienced difficulty in development or in securing regulatory approval. These warnings, plaintiffs allege, were misleading because, by the time they were made, ProNAi knew that the risks warned of had already materialized. See AC at 57-58.

In total, plaintiffs claim that the Prospectus contains 17 misstatements about the efficacy of PNT2258, its potential market, and compliance with FDA regulations. See Appendix, MS1-17. They fall into two categories: (1) statements about the efficacy of PNT2258-more specifically the results of the Phase I and Pilot Phase II trials, the scientific viability of PNT2258, the applicability of PNT2258 to novel diseases, and the potential market for PNT2258; and (2) statements about the regulatory approval prospects of PNT2258.

d. Closing of ProNAi's IPO

On July 21, 2015, six days after the filing of the Prospectus, ProNAi announced that its IPO had closed. Id. at 62. ProNAi issued 9.315 million shares of common stock at $17.00 per share. Id. That is $158.4 million in gross proceeds. Id.

2. August 20, 2015-Wolverine Protocol Amendment

On August 20, 2015, ProNAi again adjusted the Wolverine trial protocols. Among other things, it changed the trial's secondary outcome measure to overall response rate only, abandoning as endpoints the disease control rate and duration of overall survival rate. See id. at 32; Clinical Trials at 43. ProNAi thus, according to plaintiffs, abandoned "any attempt to show a durational response." AC at 33. These changes, plaintiffs claim, were made because ProNAi possessed trial data which it had not disclosed "showing patients experienced disease progression at a faster rate when being treated with PNT2258 than compared to their prior therapies." Id.

On August 20, 2015, ProNAi also "removed as eligible patients those with high-risk aggressive histology such as ... Burkitt's-like DLBCL." Id. at 33; see also Clinical Trials at 44. "This [particular] amendment, targeting the most high-risk DLBCL patients," plaintiffs claim, "strongly suggests the sicker patient population initially enrolled in the Wolverine trial to date had not responded to treatment with PNT2258." AC at 33.

Plaintiffs contend that this change in the patent population in the middle of a trial was at odds with FDA regulations, which treat as methodologically unsound the exclusion of data from patients who leave the study before it has finished.

3. August 21, 2015-Q2 2015 Report

On August 21, 2015, ProNAi filed its Second Quarter Report with the SEC. AC at 62; Stokes Decl. Ex. 19 ("Q2 2015 Report"). It was signed and certified by Glover. The Q2 2015 Report included substantially the same cautionary statements as the Prospectus.

Plaintiffs allege that the Q2 2015 Report contains seven misstatements, largely similar or identical to the alleged misstatements in the Prospectus. See Appendix, MS18-24.

4. September 2, 2015-October 14, 2015-Other Wolverine Amendments

Between September 2, 2015 and October 14, 2015, ProNAi modified the Wolverine protocol several more times, adjusting the primary and secondary outcomes and adjusting the time frame of several response measures. AC at 30. For example, on September 9, 2015, ProNAi extended the timeframe to evaluate progression-free survival, a secondary measure, from 12 months to 24 months. Id. On September 10, 2015, ProNAi shortened the time to response, another secondary measure, from 24 months to 12 months. Id.

5. Quarterly Meetings in Late 2015 and Early 2016

Quarterly, in September 2015, December 2015, and February 2016, CW-1 participated in a research meeting attended by Glover and other research scientists. AC at 15. According to CW-1, Glover was briefed about study results "showing DNAi and PNT2258 were ineffective." Id. According to CW-1, Glover was "visibly upset" by these reports. Id.

6. October 29, 2015-Brighton Enrollment Begins

On October 29, 2015, ProNAi began enrollment in the Brighton trial, which was designed to study patients with RCLL. AC at 42. Like the studies before it, Brighton was open-label, non-randomized, and lacked placebo controls. Id. "During the Class Period, the Defendants repeatedly stated that they expected interim data from the Brighton trial to be disclosed by the end of 2016." Id. The initial criteria for the Brighton trial permitted the enrollment of patients with an ECOG score of 0-2 and with "no limit to the number of prior therapies." AC at 42-43.

7. November 5, 2015-Q3 2015 Report

On November 5, 2015, ProNAi filed its Third Quarter Report with the SEC. AC at 67; Stokes Decl. Ex 21 ("Q3 2015 Report"). The Q3 2015 Report indicated that the risk factors had not changed since the Q2 2015 Report. See Q3 2015 Report at 29.

Plaintiffs allege that the Q3 2015 Report contained six misstatements. See Appendix, MS25-30. Most are similar or identical to the alleged misstatements in the Q2 2015 report.

The new types of misstatements focused on ProNAi's internal financial control procedures. According to the Q3 2015 Report, ProNAi's independent auditor had identified material weaknesses in ProNAi's internal controls over financial reporting, specifically its lack of sufficiently qualified accountant personnel in 2013 and 2014. See AC at 71; Q3 2015 Report at 28. Plaintiffs allege that ProNAi's representations that, by September 30, 2015, the company's internal control procedures were effective and that its weaknesses had been addressed, were materially misleading. See AC at 71; Q3 2015 Report at 28. As alleged, these statements "(i) misrepresent[ed] the efficacy of its clinical trials; (ii) violate[d] FDA regulations; and (iii) violate[d] the Company's own internal policies related to its 'code of business conduct and ethics' and 'precautions [ ] to detect and prevent inappropriate conduct.' " AC at 72.

8. November 12, 2015-Wolverine Protocol Amendment

On November 12, 2015, ProNAi adjusted the inclusion criteria for the Wolverine study, excluding from the patient population those with ECOG scores of 2 or more and those with four or more prior lines of therapy. Id. at 35. Plaintiffs allege that ProNAi changed these criteria because "efficacy data from the ongoing trial showed subjects with an ECOG Performance Scale of 2 or more and/or greater than or equal to four prior lines of therapy were not responding to treatment with PNT2258." Id. at 35.

9. November 19, 2015 Glover Presentation

On November 19, 2015, at the Jefferies Autumn 2015 Global Healthcare Conference in London, Glover made a 36-page presentation of ProNAi, with an eye towards attracting further investment in ProNAi. AC at 72; Stokes Decl. Ex. 22 ("Nov. 2015 Presentation"). The presentation discussed, at a high-level, DNAi technology and the mechanism by which it works, as well as the PNT2258 clinical studies. Glover's report about the results of the PNT2258 trials was limited to the Phase I and Pilot Phase II trials. Glover discussed the adverse events reported in the Pilot Phase II trial, for example. Nov. 19, 2015 Presentation at 23, 24. He did not comment on the results of the Wolverine or Brighton trials. He indicated that interim results for these would be publicly released in 2016. Id. at 26.

Glover's presentation did explain ProNAi's belief that there was a "strong rationale to combine PNT2258" with other therapies. For example, Glover theorized that the combination of PNT2258 with chemotherapy "could sensitize cells over-expressing BCL2," i.e. , depress the harmful over-expression of BCL2. Id. at 33. The presentation also noted that targeted therapies such as PTK, CD2O and PI3K, which the presentation did not define, modulate the pathways that signal the apoptotic process to cause cancer cell death. Glover theorized that, because BCL2 sits at a key node in the apoptotic cascade, PNT225 "could further enhance apoptotic signals." Id. The presentation referred observers to the cautionary statements in ProNAi's SEC filings.

Plaintiffs allege that this presentation contained five misstatements. See Appendix, MS31-35. Theses largely duplicate (albeit in less formal terms) previous public statements of ProNAi that plaintiffs fault. The allegedly misleading statements included, for example, that ProNAi planned additional combination and monotherapy trials for PNT2258 in 2016. See, e.g. , MS34.

10. December 3, 2015 Press Release

On December 3, 2015, ProNAi announced a new management team, including Dr. Gregg Smith, who was appointed vice president of preclinical. He was brought in to "play a key role in ProNAi's portfolio expansion activities, including by being actively involved in the search, evaluation and development planning of any potentially acquirable oncology assets." AC at 49.

11. December 9, 2015-Thompson Resignation

On December 9, 2015, Peter Thompson notified ProNAi of his intent to resign from ProNAi's Board and Audit Committee approximately one and a half years after his initial appointment. AC at 45-46.

12. December 2015

CW-1 stated that, at this time, "the data coming out of mouse studies in December 2015 showed no effects from PNT2258." Id. at 14.

13. January 14, 2016 Glover Presentation

On January 14, 2016, Glover made another investor presentation, this time at the JP Morgan 2016 Healthcare conference. Id. at 74; Stokes Decl. Ex. 24 ("Jan. 2016 Presentation"). This conference was allegedly designed to target institutional, private equity, and venture capital investment, both short and long term. Glover gave a 27-page presentation that had substantial overlap with his presentation on November 19, 2015. AC at 74-75; see Jan 2016 Presentation. The presentation included updated safety and efficacy data for the Pilot Phase II trial. See Jan. 2016 Presentation at 14, 17. The presentation again referred readers to ProNAi's earlier cautionary statements in its SEC filings.

Plaintiffs allege that this presentation contained five misstatements. See Appendix, MS36-40; AC at 74-75. As before, these statements are largely duplicative of ProNAi's previous public statements. ProNAi also indicated that it intended to initiate four additional clinical trials to study PNT2258 in 2016. AC at 75; MS40.

14. January 25, 2016-Rodrigueza Resignation

On January 25, 2016, ProNAi's announced Wendi Rodrigueza's intent to resign, effective February 25, 2016. AC at 46. She was ProNAi's Chief Science Officer and had previously been vice president of product development. Id. Plaintiffs allege that this resignation came while ProNAi "was in the middle of its most important clinical trial to date." Id.

15. March 3, 2016-2015 Annual Report and Press Release

On March 3, 2016, ProNAi filed its 10K 2015 Annual Report. Stokes Decl. Ex 27 ("2015 Annual Report"). It was signed by Glover and Defendant Jagpal. AC at 75. In the 2015 Annual Report, ProNAi reiterated its prior cautionary statements.

Plaintiffs allege that the 2015 Annual Report contains 20 misstatements. See Appendix, MS41-60. Most were duplicative of previous alleged misstatements. They included claims that the Pilot Phase II trial had demonstrated safety and efficacy, that ProNAi planned to develop PNT2258 for a wide range of indicators, and that ProNAi was pursuing a registration-oriented strategy. As in Q3 2015, ProNAi also indicated that while it had had internal control problems that might have hindered its compliance with securities requirements, these had been fixed.

The same day, ProNAi released a press release to accompany its 10K statement.

AC at 86. The Press Release stated that, in 2015, the corporate team continued to transform ProNAi into a "world-class oncology development company." AC at 87. It also stated that it was operationalizing Wolverine and Brighton, studies whose interim results ProNAi would release later that year. Id. ProNAi indicated that it was planning further PNT2258 trials. Id. ProNAi also indicated that it was intending to purchase other drugs. Id. Plaintiffs argue that these representations, contained in two paragraphs of the press release, see Appendix, Statements 61-62, were actionable misstatements. AC at 87-88.

16. March 4, 2016-Vitangcol Resignation and Cha Decision Not to Run for Reelection

On March 4, 2016, ProNAi announced Alvin Vitangcol's intent to resign, effective March 18, 2016, from ProNAi's Board and Audit Committee. Id. at 46. Vitangcol and Thompson, before they resigned, formed a majority of the Audit Committee. Id.

That same day, ProNAi announced that Albert Cha had decided not to run for reelection to the company's board. Id. He had been appointed in 2014. Id.

17. March 10, 2016-Brighton Trial Amendment

On March 10, 2016, ProNAi modified the inclusion criteria in the Brighton trial to exclude those with ECOG scores of 2 or higher and to exclude those with three or more prior treatment regimes. AC at 44. Plaintiffs allege that this modification was designed to "skew the patient population towards more treatable patients." Id.

18. April 2016-Messmann Resignation

In April 2016, Richard Messmann, ProNAi's former Chief Medical Officer, resigned his post. AC at 16. According to CW-1, Messmann had told Glover and others at an executive meeting in late 2015 or early 2016 that DNAi was ineffective and, as synopsized by plaintiffs, that "ProNAi needed to stop telling the public that ProNAi was a DNAi company because DNAi [i]s not real." Id.

19. May 10, 2016-Q1 Report

On May 10, 2016, ProNAi filed its quarterly 10-Q Report. AC at 88. It was signed by both individual defendants and contained numerous cautionary statements. Id. at 2.

Plaintiffs allege that it contains eight misstatements, which again address the efficacy of PNT2258, its prospects for regulatory approval, and ProNAi's internal controls. See Appendix, MS63-70. ProNAi also told investors, in an accompanying press release, that it was on track to release the Wolverine results in June 2016. Stokes Decl. Ex 33 ("Q1 2016 Press Release") at 1.

20. May 26, 2016-ProNAi acquires AS-141.

On May 26, 2016, ProNAi acquired the exclusive license to develop and commercialize AS-141, "a small molecule kinase inhibitor targeting CDC7." Id. at 53. The purchase involved $900,000 upfront and $270 million if AS-141 was able to achieve regulatory and commercial milestones. Id. This acquisition was funded by the IPO. Id. at 54.

D. The Class Period Ends

"On June 6, 2016, the last day of the Class Period, ProNAi announced interim data from the Wolverine Phase 2 trial." AC at 94. ProNAi claimed that it had observed modest efficacy from PNT2258 in the Wolverine trial, but not enough to justify continuing clinical development of the drug. AC at 94. ProNAi further indicated that it had amended the Wolverine trial protocol and excluded the sickest patients from the efficacy results. AC at 95; see also Stokes Decl. Ex 35 ("June 2016 Presentation") at 18.

ProNAi also released the results of its Brighton trial, which had only enrolled five patients. AC at 95. Of those five patients, four discontinued treatment and no patient experienced a response. Id. ProNAi announced it would be terminating Brighton. Id.

ProNAi also disclosed that, in the Pilot Phase II study, patients did have positive responses to the treatment. See June 2016 Presentation at 15. However, the disease progressed at a faster rate during the treatment than it had during their prior therapies. AC at 95. Of the 13 patients in the Pilot Phase 2 study, 12 discontinued treatment. Id. 85 percent of, or 11 of 13, patients experienced one or more grade three or four adverse events. Id.

The results of the trials were further disclosed in a press release. See AC at 96.

On June 6, 2016, following the news of the discontinuation of work on PNT2258, ProNAi's share price dropped to $2.07 on heavy trading volume. Id. The previous Friday, June 3, 2016, ProNAi's share price had closed at $6.38. Id.

E. Procedural History

On November 19, 2016, plaintiffs filed their initial Complaint, alleging that ProNAi, Glover, and Jagpal had violated §§ 10(b) and 20(a) of the Exchange Act and Rule 10b-5. Dkt. 1.

On February 1, 2017, this Court granted plaintiffs' motion for appointment as co-lead counsel and approved their proposed lead counsel. Dkt. 18.

On March 17, 2017, plaintiffs filed an Amended Complaint. It brought substantially the same claims as before but identified more alleged misstatements and made expanded factual allegations. Dkt. 21. On May 1, 2017, defendants filed a motion to dismiss and a memorandum of law and declaration in support. Dkts. 22-24.

On June 15, 2017, plaintiffs filed a memorandum in opposition to the motion to dismiss. Dkt. 25 ("Pl. Br."). On June 29, 2017, defendants filed a reply and supporting declaration. Dkt. 27-29.

II. Applicable Legal Standards

A. Standards for Resolving a Motion to Dismiss

To survive a motion to dismiss under Rule 12(b)(6), a complaint must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A claim will only have "facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). A complaint is properly dismissed where, as a matter of law, "the allegations in a complaint, however true, could not raise a claim of entitlement to relief." Twombly , 550 U.S. at 558, 127 S.Ct. 1955. Although the court must accept as true all well-pled factual allegations in the complaint and draw all reasonable inferences in the plaintiff's favor, Steginsky v. Xcelera Inc. , 741 F.3d 365, 368 (2d Cir. 2014), that tenet "is inapplicable to legal conclusions," Iqbal , 556 U.S. at 678, 129 S.Ct. 1937.

"Securities fraud claims are subject to heightened pleading requirements that the plaintiff must meet to survive a motion to dismiss." ATSI Commc'ns, Inc. v. Shaar Fund, Ltd. , 493 F.3d 87, 99 (2d Cir. 2007) ; see also Tellabs, Inc. v. Makor Issues & Rights, Ltd. , 551 U.S. 308, 321-23, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007).

First, a complaint alleging securities fraud must meet the requirements of Federal Rule of Civil Procedure 9(b). See ECA & Local 134 IBEW Joint Pension Trust of Chi. v. JP Morgan Chase Co. , 553 F.3d 187, 196 (2d Cir. 2009). Rule 9(b) states that "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b). "Allegations that are conclusory or unsupported by factual assertions are insufficient." ATSI , 493 F.3d at 99.

Second, such a complaint must comply with the pleading requirements of the Private Securities Litigation Reform Act ("PSLRA"), 15 U.S.C. § 78u-4(b). See ECA , 553 F.3d at 196. In particular, where a plaintiff's claims depend upon allegations that the defendant has made an untrue statement of material fact or that the defendant omitted a material fact necessary to make a statement not misleading, the plaintiff "shall specify each statement alleged to have been misleading [and] the reason or reasons why the statement is misleading." 15 U.S.C. § 78u-4(b)(1). Thus, in order to plead a claim of securities fraud, plaintiffs "must do more than say that the statements ... were false and misleading; they must demonstrate with specificity why and how that is so." Rombach v. Chang , 355 F.3d 164, 174 (2d Cir. 2004). In addition, the plaintiff "shall, with respect to each act or omission ... state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind." 15 U.S.C. § 78u-4(b)(2).

B. Elements of Plaintiffs' Claims

Plaintiffs assert claims under §§ 10(b) and 20(a) of the Exchange Act, and Rule 10b-5. Amend. Compl. at 117-20.

Section 10(b) of the Exchange Act makes it unlawful to "use or employ, in connection with the purchase or sale of any security ... any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe." 15 U.S.C. § 78j(b). The SEC's implementing rule, Rule 10b-5, provides that it is unlawful "[t]o make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading." 17 C.F.R. § 240.10b-5.

To state a claim under § 10(b) of the Exchange Act, a plaintiff must adequately plead "(1) a material misrepresentation or omission by the defendant; (2) scienter; (3) a connection between the misrepresentation or omission and the purchase or sale of a security; (4) reliance upon the misrepresentation or omission; (5) economic loss; and (6) loss causation." Matrixx Initiatives, Inc. v. Siracusano , 563 U.S. 27, 37-38, 131 S.Ct. 1309, 179 L.Ed.2d 398 (2011) (internal quotation marks and citation omitted).

To state a claim under § 20(a) of the Exchange Act, "a plaintiff must show (1) a primary violation by the controlled person, (2) control of the primary violator by the defendant, and (3) that the defendant was, in some meaningful sense, a culpable participant in the controlled person's fraud." Carpenters Pension Tr. Fund of St. Louis v. Barclays PLC , 750 F.3d 227, 236 (2d Cir. 2014) (quoting ATSI , 493 F.3d at 108 ) (internal quotation marks omitted). If a plaintiff has not adequately alleged a primary violation, i.e. , a viable claim under another provision of the Exchange Act, then the § 20(a) claims must be dismissed. See id.

C. Scienter

As noted, Rule 9(b) and the PSLRA require plaintiffs to "state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind." 15 U.S.C. § 78u-4(b)(2). "For an inference of scienter to be strong, 'a reasonable person [must] deem [it] cogent and at least as compelling as any opposing inference one could draw from the facts alleged,' " and "the court must take into account plausible opposing inferences." ATSI , 493 F.3d at 99 (quoting Tellabs , 551 U.S. at 324, 127 S.Ct. 2499 ) (alteration and emphasis in original). The requisite mental state is one "embracing intent to deceive, manipulate, or defraud." Tellabs , 551 U.S. at 319, 127 S.Ct. 2499 (internal quotation marks and citation omitted).

Plaintiffs "may satisfy this requirement by alleging facts (1) showing that the defendants had both motive and opportunity to commit the fraud or (2) constituting strong circumstantial evidence of conscious misbehavior or recklessness." ATSI , 493 F.3d at 99. And where plaintiffs do not sufficiently allege that defendants had a motive to defraud the public, they "must produce a stronger inference of recklessness." Kalnit v. Eichler , 264 F.3d 131, 143 (2d Cir. 2001).

Recklessness is "a state of mind approximating actual intent, and not merely a heightened form of negligence." S. Cherry St., LLC v. Hennessee Grp. LLC , 573 F.3d 98, 109 (2d Cir. 2009) (citation and emphasis omitted). To qualify as reckless, defendants' conduct must have been "highly unreasonable" and "an extreme departure from the standards of ordinary care." Novak v. Kasaks , 216 F.3d 300, 308 (2d Cir. 2000) (quoting Rolf v. Blyth, Eastman Dillon & Co. , 570 F.2d 38, 47 (2d Cir. 1978) ) (internal quotation marks omitted). An alleged "refusal to see the obvious, or to investigate the doubtful," must be "egregious" to be actionable. Chill v. Gen. Elec. Co. , 101 F.3d 263, 269 (2d Cir. 1996) (citation omitted).

Plaintiffs can establish recklessness by adequately alleging that "defendants knew facts or had access to non-public information contradicting their public statements" and therefore "knew or should have known they were misrepresenting material facts." In re Scholastic Corp. Sec. Litig. , 252 F.3d 63, 76 (2d Cir. 2001) (citing Novak , 216 F.3d at 308 ). However, an inference of scienter does not follow from the mere fact of non-disclosure of relevant information. In re Sanofi Sec. Litig. ("Sanofi I") , 87 F.Supp.3d 510, 534 (S.D.N.Y. 2015), aff'd sub nom. Tongue v. Sanofi ("Sanofi II") , 816 F.3d 199 (2d Cir. 2016). "Instead, to adequately plead scienter, plaintiffs must also provide sufficient factual allegations to indicate that defendants understood that their public statements were inaccurate, or were 'highly unreasonable' in failing to appreciate that possibility." Id. (quoting Novak , 216 F.3d at 308 ). "The key, of course, is the honest belief of the management in the truth of information issued to the public." In re AstraZeneca Sec. Litig. , 559 F.Supp.2d 453, 470 (S.D.N.Y. 2008), aff'd sub nom. State Univ. Ret. Sys. of Ill. v. Astrazeneca PLC , 334 Fed.Appx. 404 (2d Cir. 2009) (summary order).

In the context of the development of a new drug, "[i]f the management knows that certain facts will necessarily prevent the regulatory approval ... and conceals these facts from the investing public, then there is scienter." Id. Similarly, there is scienter "if the management is reckless in dealing with such adverse facts." Id. If, on the other hand, "the management of the company releases positive reports about the drug to the public along the way which the management honestly believes to be true, and where there is no reckless disregard for truth, then that is not securities fraud." Id. (collecting cases).

D. False or Misleading Statements or Omissions

Section 10(b) and Rule 10b-5 "do not create an affirmative duty to disclose any and all material information."

Id. at 44; see also Basic Inc. v. Levinson , 485 U.S. 224, 239 n.17, 108 S.Ct. 978, 99 L.Ed.2d 194 (1988). "Disclosure of ... information is not required ... simply because it may be relevant or of interest to a reasonable investor." Resnik v. Swartz , 303 F.3d 147, 154 (2d Cir. 2002). An omission of information not affirmatively required to be disclosed is, instead, actionable only when disclosure of such information is "necessary 'to make ... statements made, in the light of the circumstances under which they were made, not misleading.' " Matrixx Initiatives , 563 U.S. at 44, 131 S.Ct. 1309 (quoting 17 C.F.R. § 240.10b-5(b) ) (ellipses in original); see also In re Vivendi, S.A. Sec. Litig. , 838 F.3d 223, 239-40 (2d Cir. 2016) (" 'Pure omissions' of information, absent a duty to disclose, are not actionable. Half-truths, however, 'statements that are misleading ... by virtue of what they omit to disclose,' " are.)

As for the materiality requirement, it "is satisfied when there is 'a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the total mix of information made available.' " Id. at 38, 131 S.Ct. 1309 (quoting Basic , 485 U.S. at 231-32, 108 S.Ct. 978 ). As the Supreme Court has explained, a lower standard-such as defining a "material fact" as any "fact which a reasonable shareholder might consider important"-would lead corporations to "bury the shareholders in an avalanche of trivial information[,] a result that is hardly conducive to informed decisionmaking." TSC Indus., Inc. v. Northway, Inc. , 426 U.S. 438, 448-49, 96 S.Ct. 2126, 48 L.Ed.2d 757 (1976). The "materiality hurdle" is, therefore, "a meaningful pleading obstacle." In re ProShares Trust Sec. Litig. , 728 F.3d 96, 102 (2d Cir. 2013). However, because of the fact-intensive nature of the materiality inquiry, the Court may not dismiss a complaint "on the ground that the alleged misstatements or omissions are not material unless they are so obviously unimportant to a reasonable investor that reasonable minds could not differ on the question of their importance." ECA , 553 F.3d at 197 (internal quotation marks and citation omitted).

E. Statements of Opinion

Like objective statements of material fact, subjective statements of opinion can be actionable as fraud. As the Supreme Court and the Second Circuit have recently clarified, such statements of opinion can give rise to liability in two distinct ways.

First, "liability for making a false statement of opinion may lie if either 'the speaker did not hold the belief she professed' or 'the supporting fact she supplied were untrue.' " See Sanofi II , 816 F.3d at 210 (2d Cir. 2016) (quoting Omnicare, Inc. v. Laborers Dist. Council Const. Indus. Pension Fund , --- U.S. ----, 135 S.Ct. 1318, 1327, 191 L.Ed.2d 253 (2015) ). "It is not sufficient for these purposes to allege that an opinion was unreasonable, irrational, excessively optimistic, [or] not borne out by subsequent events." In re Salomon Analyst Level 3 Litig. , 350 F.Supp.2d 477, 489 (S.D.N.Y. 2004). "The Second Circuit has firmly rejected this 'fraud by hindsight' approach." Podany v. Robertson Stephens, Inc. , 318 F.Supp.2d 146, 156 (S.D.N.Y. 2004) (citing Stevelman v. Alias Research, Inc. , 174 F.3d 79, 85 (2d Cir. 1999) ).

Second, "opinions, though sincerely held and otherwise true as a matter of fact, may nonetheless be actionable if the speaker omits information whose omission makes the statement misleading to a reasonable investor." Sanofi II , 816 F.3d at 210 (citing Omnicare , 135 S.Ct. at 1332 ). To adequately allege that a statement of opinion was misleading through the omission of material information, "[t]he investor must identify particular (and material) facts going to the basis for the issuer's opinion-facts about the inquiry the issuer did or did not conduct or the knowledge it did or did not have-whose omission makes the opinion statement at issue misleading to a reasonable person reading the statement fairly and in context." Id. at 209 (quoting Omnicare , 135 S.Ct. at 1332 ). As the Supreme Court has explained, "a reasonable investor, upon hearing a statement of opinion from an issuer, 'expects not just that the issuer believes the opinion (however irrationally), but that it fairly aligns with the information in the issuer's possession at a time.' " Id. at 210 (quoting Omnicare , 135 S.Ct. at 1329 ). "The core inquiry," then, "is whether the omitted facts would 'conflict with what a reasonable investor would take from the statement itself.' " Id. (quoting Omnicare , 135 S.Ct. at 1329 ).

The Supreme Court has instructed that this second theory of liability for opinions, based on omissions of material facts that may render a statement of opinion actionable, should not be given "an overly expansive reading"; rather, establishing liability on such a theory "is no small task for an investor" to meet. Id. (quoting Omnicare , 135 S.Ct. at 1332 ) (internal quotation marks omitted). "Reasonable investors understand that opinions sometimes rest on a weighing of competing facts, ...[and do] not expect that every fact known to an issuer supports its opinion statement." Id. (quoting Omnicare , 135 S.Ct. at 1329 ) (alterations and internal quotation marks omitted). "[A] statement of opinion 'is not necessarily misleading when an issuer knows, but fails to disclose, some fact cutting the other way.' " Id. (quoting Omnicare , 135 S.Ct. at 1329 ).

Further, the Supreme Court has emphasized, statements of opinion must be considered in the context in which they arise. " '[T]he investor takes into account the customs and practices of the relevant industry,' and ... 'an omission that renders misleading a statement of opinion when viewed in a vacuum may not do so once that statement is considered, as is appropriate, in a broader frame.' " Id. (quoting Omnicare , 135 S.Ct. at 1330 ).

F. The PSLRA Safe Harbor for Forward-Looking Statements and the Bespeaks Caution Doctrine

The PSLRA amended the Exchange Act to provide a safe harbor for forward-looking statements. See 15 U.S.C. § 78u-5(c). Forward-looking statements are defined as those that contain, among other things, "a projection of revenues, income, [or] earnings," "plans and objectives of management for future operations," or "a statement of future economic performance." Id. § 78u-5(i)(1). A forward-looking statement is not actionable if it "is identified and accompanied by meaningful cautionary language or is immaterial or the plaintiff fails to prove that it was made with actual knowledge that it was false or misleading." Slayton v. Am. Exp. Co. , 604 F.3d 758, 766 (2d Cir. 2010). Because the statute is written in the disjunctive, statements are protected by the safe harbor if they satisfy any one of these three categories. Id. Materiality is defined above; the other two categories are defined as follows:

Meaningful cautionary language : To qualify as "meaningful," cautionary language "must convey substantive information about factors that realistically could cause results to differ materially from those projected in the forward-looking statements." Id. at 771 (quoting H.R. Conf. Rep. 104-369, at 43 (1995) ). Language that is "vague" or "mere boilerplate" does not suffice. Id. at 772. "To determine whether cautionary language is meaningful, courts must first 'identify the allegedly undisclosed risk' and then 'read the allegedly fraudulent materials-including the cautionary language-to determine if a reasonable investor could have been misled into thinking that the risk that materialized and resulted in his loss did not actually exist.' " In re Delcath Sys., Inc. Sec. Litig. , 36 F.Supp.3d 320, 333 (S.D.N.Y. 2014) (quoting Halperin v. eBanker USA.com, Inc. , 295 F.3d 352, 359 (2d Cir. 2002) ). Plaintiffs may establish that cautionary language is not meaningful "by showing, for example, that the cautionary language did not expressly warn of or did not directly relate to the risk that brought about plaintiffs' loss." Halperin , 295 F.3d at 359.

Actual knowledge : The scienter requirement for forward-looking statements-actual knowledge-is "stricter than for statements of current fact. Whereas liability for the latter requires a showing of either knowing falsity or recklessness, liability for the former attaches only upon proof of knowing falsity," Slayton , 604 F.3d at 773 (quoting Inst. Invs. Grp. v. Avaya, Inc. , 564 F.3d 242, 274 (3d Cir. 2009) ), pled with the required particularity, 15 U.S.C. § 78u-4(b)(2).

This doctrine does not apply to statements made in connection with an initial public offering, such as an IPO prospectus. See 15 U.S.C. §§ 77z-2(b)(2)(D), 78u-5(b)(2)(D) ; Johnson v. Sequans Commc'ns S.A. , No. 11 CIV. 6341 (PAC), 2013 WL 214297, at *10 (S.D.N.Y. Jan. 17, 2013).

However, the bespeaks-caution doctrine, a "corollary of the well-established principle that a statement or omission must be considered in context," does. Sequans Commc'ns S.A. , 2013 WL 214297, at *9 (quoting Iowa Pub. Emps.' Ret. Sys. v. MF Global, Ltd. , 620 F.3d 137, 141 (2d Cir. 2010) ). Under this doctrine, "[a] forward-looking statement accompanied by sufficient cautionary language is not actionable because no reasonable investor could have found the statement materially misleading." MF Glob., Ltd. , 620 F.3d at 141. To apply, however, the cautionary language must pertain to the specific risk that was realized. "[C]autionary language [that] did not expressly warn of or did not directly relate to the risk that brought about plaintiffs' loss" is insufficient. Halperin v. eBanker USA.com, Inc. , 295 F.3d 352, 359 (2d Cir. 2002).

III. Discussion

As noted, the AC alleges 70 instances of actionable material misstatements or omissions of material facts that ProNAi had been required to disclose. (For brevity, the Court refers to these collectively as "misstatements.") A large number of these are mere puffery or are ignored or mostly undiscussed in plaintiffs' brief, and-for the reasons below-can be put to one side with limited discussion.

The misstatements on which plaintiffs focus can be broadly grouped into four categories: (1) ProNAi's statements regarding the efficacy of PNT2258; (2) ProNAi's failure to more timely disclose protocol amendments; (3) ProNAi's statements to the effect that it had designed clinical trials with an eye toward FDA approval; and (4) ProNAi's failure to reveal that it lacked appropriate internal disclosure mechanisms. The Court, after first identifying those statements that it finds mere puffery, addresses these four categories in turn. The Court then addresses scienter.

A. Mere Puffery

Statements are mere puffery, and hence non-actionable, when they are "too general to cause a reasonable investor to rely upon them." ECA , 553 F.3d at 206 ; accord Boca Raton Firefighters & Police Pension Fund v. Bahash , 506 Fed.Appx. 32, 37 (2d Cir. 2012).

Various broad assertions by ProNAi fall under this doctrine and are not actionable. These include that ProNAi's "technology, knowledge, experience, and scientific resources provide [ProNAi] with competitive advantages," MS13, that ProNAi has a "competitive advantage," MS11, and that ProNAi was "a leader in developing and commercializing a broad and diverse portfolio of cancer therapies and deliver therapeutic outcomes that dramatically changed patients' lives," MS6, MS21, MS45. See, e.g. , Boca Raton Firefighters , 506 Fed.Appx. at 37 (statements regarding integrity, credibility, and objectivity held puffery); SE Pennsylvania Transp. Auth. v. Orrstown Fin. Servs., Inc. , No. 1:12-CV-00993, 2015 WL 3833849, at *30 (M.D. Pa. June 22, 2015) (claim of experience expertise held puffery); Norfolk Cty. Ret. Sys. v. Tempur-Pedic Int'l, Inc. , 22 F.Supp.3d 669, 684 (E.D. Ky. 2014) (claim of "strengthened competitiveness" held puffery), aff'd sub nom. Pension Fund Grp. v. Tempur-Pedic Int'l, Inc. , 614 Fed.Appx. 237 (6th Cir. 2015) ; Sequans Commc'ns , 2013 WL 214297, at *14 (statement that company was "early leader" held puffery); Gammel v. Hewlett-Packard Co. , 905 F.Supp.2d 1052, 1071 (C.D. Cal. 2012) (claim of a deep executive bench held puffery); In re Xinhua Fin. Media, Ltd. Sec. Litig. , No. 07 CIV. 3994 LTS/AJP, 2009 WL 464934, at *8 (S.D.N.Y. Feb. 25, 2009) (claim that management team was "strong," "experienced" and "capable" held puffery); In re Cable & Wireless, PLC , 321 F.Supp.2d 749, 768 (E.D. Va. 2004) (claim of competitive advantage held puffery).

B. Statements Regarding the Efficacy and Safety of PNT2258

ProNAi made numerous statements about the efficacy of PNT2258 which plaintiffs challenge. These fall into three broad categories (with some falling into multiple categories): (1) statements about the results of the Phase I and Pilot Phase II trials, (2) statements about the scientific mechanism behind PNT2258, and (3) statements of general belief as to PNT2258's potential application to novel settings and markets. The Court addresses each in turn.

1. The Results of the Phase I and Pilot Phase II Trials

Plaintiffs a