In re Egalet Corp. (340 F. Supp. 3d 479, 2018)

United States District Court for the Eastern District of Pennsylvania 2018-08-02

Citations

Full opinion text

Baylson, District Judge

I. Introduction

In this securities case, brought pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, a putative class of shareholders possessing shares of Egalet Corporation ("Egalet") alleges that three of Egalet's executives defrauded the class by failing to disclose that the FDA was likely to grant intranasal labeling exclusivity to a competitor's abuse-deterrent morphine drug. As a result, upon FDA approval of Egalet's own pain management drug, Egalet was not permitted to market its drug as effective at reducing intranasal opioid abuse, and when this news was announced, shares of the stock dropped significantly within a matter of days.

Presently before the Court are Defendants' Motion to Dismiss, and Plaintiffs' Motion to Strike one of the exhibits that Defendants attached to their Motion to Dismiss.

For reasons discussed below, Plaintiffs' Motion to Strike is DENIED and Defendants' Motion to Dismiss the Amended Complaint is GRANTED WITH PREJUDICE.

II. Procedural History

This case began on January 27, 2017, with the filing of a Class Action Complaint (ECF 1) by Plaintiff George Mineff against Robert S. Radie ("Radie"), Stanley J. Musial ("Musial"), Jeffrey M. Dayno ("Dayno," and together with the aforementioned individuals, "Individual Defendants"), and Egalet (together with Individual Defendants, "Defendants"). On February 10, 2017, Plaintiff Steve Klein filed a Class Action Complaint against Defendants in a separately captioned case (17-cv-617, ECF 1), which was designated as related and assigned to the undersigned. On March 28, 2017, two sets of movants filed motions for consolidation of the related cases, appointment of lead plaintiffs, and approval of their respective selections of legal counsel. (ECF 10-11) However, the first of the two motions was withdrawn on April 11, 2017. (ECF 15) Also on April 11, 2017, Defendants filed a response to the remaining motion, expressing their agreement that the related actions should be consolidated. (ECF 16)

On May 1, 2017, this Court granted the motion of Johseph Spizzirri, Abdul Rahiman, and Kyle Kobold (collectively, "Egalet Investor Group"), thereby consolidating the two related cases under the above caption, appointing Egalet Investor Group as Lead Plaintiff, and approving their selection of counsel. (ECF 17) On May 15, 2017, pursuant to a joint stipulation of the parties, this Court granted leave to Lead Plaintiff to file an amended complaint. (ECF 18) Lead Plaintiff filed its Consolidated Amended Class Action Complaint on July 3, 2017. (ECF 19, "CAC") The Amended Complaint contains two counts: (1) "Violations of Section 10(b) [ 15 U.S.C. § 78j(b) ] and Rule 10b-5 [ 17 C.F.R. § 240.10b-5 ] Promulgated Thereunder Against All Defendants," and (2) "Violations of Section 20(a) [ 15 U.S.C. § 78t(a) ] Against the Individual Defendants." (Id. )

Presently before the Court are three motions. The first two motions are (1) Defendants' Motion to Dismiss the Amended Complaint, which was filed on September 1, 2017; and (2) Plaintiffs' Motion to Strike Exhibit 1 to Defendants' Motion to Dismiss, or in the Alternative, to Treat Defendants' Motion to Dismiss as a Motion for Summary Judgment, which was filed on October 31, 2017. (ECF 24, "MTD"; ECF 26, "MTS") The parties submitted Responses and Replies to each motion. (ECF 25, "MTD Response"; ECF 28, "MTS Response"; ECF 29, "MTD Reply"; ECF 31, "MTS Reply")

On February 20, 2018, the Court held oral argument on both motions. (ECF 39) During oral argument, Plaintiffs represented to the Court that they would like to avail themselves of the opportunity to file a second amended complaint. Thereafter, on March 6, 2018, Plaintiffs filed the third motion now before the Court, a Motion for Leave to File a Second Amended Complaint (ECF 43), to which they attached a proposed third complaint. Defendants filed a Response (ECF 44) on March 20, 2018, and Plaintiffs filed a Reply on March 27, 2018. (ECF 45) Plaintiff also filed a Motion for Leave to File a Surreply (47), which this Court granted on April 4, 2018. (ECF 48).

On July 12, 2018, this Court held oral argument on all open motions, specifically addressing with the parties those portions of the proposed Second Amended Complaint which do not appear in the First Amended Complaint. Because Defendants' Motion to Dismiss is addressed to the First Amended Complaint, it is the principal subject of this opinion. The proposed Second Amended Complaint, which almost entirely mirrors the First Amended Complaint, is discussed infra in the context of whether amendment would be futile.

III. Factual History

A. The Parties

Plaintiffs are a class of persons who purchased or otherwise acquired shares of Egalet common stock between November 4, 2015, and January 9, 2017, inclusive (the "Class Period"). (CAC ¶ 1)

Defendant Radie has served as Egalet's CEO, President, and a member of its Board of Directors since March 2012. (Id. ¶ 24)

Defendant Musial has served as Egalet's Executive Vice President since December 2015, CFO since April 2013, and Principal Financial Officer and Secretary since September 2013. (Id. ¶ 25)

Defendant Dayno has served as Egalet's Chief Medical Officer since July 2014. (Id. ¶ 26)

Defendant Egalet is a specialty pharmaceutical company that focuses on developing and commercializing abuse-resistant formulations of opioids and other pain care drugs. (CAC ¶ 33) Egalet's proprietary Guardian Technology employs a novel application of "injection molding" to manufacture "tablets that are hard and difficult to manipulate for misuse and abuse." (Id. ¶ 34)

"At the beginning of the Class Period," Egalet was developing two late-stage lead product candidates: ARYMO ER™ and Egalet-002. (Id. ¶ 35) Both use Guardian Technology to impede abuse. (Id. ) Egalet also acquired two FDA-approved pain care products. (Id. ¶ 36)

Plaintiffs' Amended Complaint centers on ARYMO ER™ ("ARYMO"). Egalet developed ARYMO as an extended release morphine tablet intended to utilize Guardian Technology to deter abuse of the product by increasing resistance to physical methods of manipulation (e.g., cutting, crushing, grinding), chemical manipulation, and extraction. (Id. ¶ 34)

B. The 505(b)(2) Pathway to Drug Approval

In 1984, Congress passed the Hatch-Waxman Amendments to the Food, Drug, and Cosmetic Act, Pub. L. No. 98-417, 98 Stat. 1585 (1984). (See id. ¶ 47) The Hatch-Waxman Amendments require that a drug manufacturer seeking to market a new drug must first obtain approval from the Food and Drug Administration ("FDA"). (Id. ¶ 48) A manufacturer can obtain FDA approval via any of three different application pathways, one of which is known as a Section 505(b)(2) New Drug Application ("NDA"). (Id. )

An applicant for a 505(b)(2) NDA can receive approval for marketing a new drug even where one or more investigations relied upon for approval "were not conducted by or for the applicant and for which the applicant has not obtained a right of reference or use from the person by or for whom the investigations were conducted." (Id. ¶ 51) Thus, a 505(b)(2) NDA applicant can rely on previously published reports of studies and the FDA's own findings with respect to drugs that the FDA has previously approved. (Id. ) When an applicant relies on clinical studies that were previously submitted to the FDA in support of a different drug, the drug for which the borrowed studies were conducted is referred to as the "Reference Listed Drug" ("RLD"). (Id. ¶ 52) A 505(b)(2) NDA applicant may proffer studies conducted on the RLD to satisfy the applicant's burden of proving a new drug's safety and effectiveness. This generally occurs when the new drug differs only slightly from the RLD, such as a drug product innovation or change in drug strength. (Id. ¶ 54)

C. Marketing Exclusivity

The Hatch-Waxman Amendments create certain incentives to encourage innovation of new drug products. (See id. ¶ 55) One of those incentives is "marketing exclusivity," which the FDA can grant to new drugs that it approves. (Id. ¶ 54-55) Marketing exclusivity, as its name suggests, provides exclusive marketing rights over a drug. (Id. ¶ 55) It can prevent the issuance of requested labeling language sought by another applicant or prevent the submission or effective approval of other NDAs (such as 505(b)(2) NDAs). (Id. ) In other words, when the FDA grants marketing exclusivity to a drug, it confers substantial benefits on the drug. (Id. )

For a drug to receive exclusivity, it must meet all statutory requirements and receive approval by the FDA. (Id. ¶ 57) There are four categories of exclusivity, one of which is referred to as "Other Exclusivity." (Id. ) One type of "Other Exclusivity" is "new drug product exclusivity." See 21 C.F.R. § 314.108(b)(4). (Id. ¶ 58) New drug product exclusivity is granted when a 505(b)(2) NDA: (1) contains an active moiety (a sub-division of a molecule) that has previously received FDA approval; (2) includes new clinical investigations (other than bioavailability studies) conducted or sponsored by the applicant that were "essential to the approval of the application"; and (3) is approved by the FDA. (Id. ¶ 58) If these three conditions are met, the FDA will not approve another 505(b)(2) NDA with the same "conditions of approval" for a period of three years from the date of the application's approval. (Id. ¶ 58)

21 C.F.R. § 314 further defines several of the constituent terms in the second condition above-i.e., "the 505(b)(2) NDA includes new clinical investigations (other than bioavailability studies) conducted or sponsored by the applicant that were essential to the approval of the application."

A "new clinical investigation" is:

an investigation in humans the results of which have not been relied on by FDA to demonstrate substantial evidence of effectiveness of a previously approved drug product for any indication or of safety for a new patient population and do not duplicate the results of another investigation that was relied on by the agency to demonstrate the effectiveness or safety in a new patient population of a previously approved drug product.

21 C.F.R. § 314.108(a).

"Essential to approval" means, "with regard to an investigation, that there are no other data available that could support approval of the application." Id.

In 2012, the FDA's Center for Drug Evaluation and Research ("CDER") created an Exclusivity Board to "provide oversight and recommendations regarding exclusivity determinations made by the CDER, with a primary focus on clarity and consistency of decisions." (Id. ¶ 68) The Exclusivity Board also "oversees certain exclusivity determinations, including whether and what type of exclusivity should be granted and the proper scope of exclusivity grants." (Id. )

If exclusivity is granted to a drug, the FDA will assign it an exclusivity code that details the scope of the exclusivity. (Id. ¶ 70) The code and its description are listed with the drug product's information in the FDA-maintained publication entitled the Approved Drug Products with Therapeutic Equivalence Evaluations. (Id. ) Because the cover of the book is orange, it is colloquially referred to as the "Orange Book." (Id. )

D. CDER and Abuse-Deterrent Opioids

In April 2015, CDER published a guide to assist manufacturers wishing to develop opioid drug products with abuse-deterrent properties (the "AD Opioid Guidance"). (Id. ¶ 71) Among other things, the AD Opioid Guidance provides information to drug manufacturers about the FDA's "Physician Labeling Rule." (Id. ¶ 75) Section 9.2 of the Physician Labeling Rule requires that labeling for abuse-deterrent drug products "state the types of abuse that can occur with the drug and the adverse reactions pertinent to them, and must identity particularly susceptible patient populations." (Id. ) The AD Opioid Guidance supplies additional detail about Section 9.2, stating that

labeling language regarding abuse deterrence should describe the product's specific abuse deterrent properties as well as the specific routes of abuse that the product has been developed to deter. For example, a formulation that limits an abuser's ability to crush a tablet and to extract the opioid can be described as limiting manipulation for the purpose of snorting or injection if the data support such a statement.

(Id. ¶ 77)

E. ARYMO

ARYMO, previously discussed in general terms, is an Egalet product for the management of severe, long-term pain. (Id. ¶ 80) It is an abuse-deterrent extended release ("ER") oral morphine formulation to which Egalet applied its proprietary Guardian Technology "for the expected purpose of it becoming an FDA-approved ER morphine drug product with abuse-deterrent labeling for the intranasal, intravenous, and oral routes of abuse." (Id. ¶ 79)

Egalet submitted ARYMO as a 505(b)(2) NDA and selected MS Contin (extended-release morphine tablets) as ARYMO's RLD, thus seeking to establish that its 15mg, 30mg, and 60mg doses were bioequivalent to MS Contin as the same strengths. (Id. ¶ 81) As earlier discussed, an applicant submitting a 505(b)(2) NDA can rely on clinical studies previously submitted to the FDA in support of another drug (the RLD). (Id. ¶ 82) In this case, Egalet submitted its ARYMO application using clinical studies performed on MS Contin. (Id. ¶ 82) It also conducted its own clinical studies in support of ARYMO's approval, including in vitro and human abuse liability studies. (Id. ¶ 83)

ARYMO's abuse-deterrent properties differentiated it from the "vast majority of the ER morphine products prescribed in the U.S." (Id. ¶ 89) In fact, ARYMO's prospects for abuse-deterrent labeling for a trifecta of abuse routes-nasal, intravenous, and oral-was "particularly valuable." (Id. ¶ 90) No product had received FDA-approved abuse-deterrent labeling for all three routes of abuse. (Id. )

F. Inspirion and MorphaBond

Like Egalet, Inspirion is a "pharmaceutical company focused on developing and commercializing products with abuse deterrent features and benefits." (Id. ¶ 92) It applies its patent-protected SentryBond™ technology to deter and frustrate abuse of its products. (Id. ¶ 93)

On November 21, 2014, Inspirion submitted a 505(b)(2) NDA for a product called MorphaBond. (Id. ¶ 89) Like ARYMO, MorphaBond is an extended release, orally administered, morphine product. (Id. ¶ 94) Also like ARYMO, MorphaBond is intended for severe, long-term pain management. (Id. ¶ 95) There are other parallels, as well. (See generally id. ¶¶ 92-118)

Like ARYMO, MorphaBond's application relied on MS Contin as its RLD. ( Id. ¶ 97) It conducted in vitro and human abuse liability studies. (Id. ¶ 98-99) Its intranasal abuse potential study was "extremely similar in both [ ] design and scope" to ARYMO's. (Id. ¶ 101)

On October 2, 2015, the FDA approved MorphaBond as the first single-entity ER morphine product with labeling describing intranasal abuse-deterrent properties. (Id. ¶ 103) Inspirion issued a press release three days later announcing the results, and MorphaBond's label, including its intranasal abuse-deterrent labeling, was publicly available during October 2015. (Id. ¶ 104-05)

According to the Amended Complaint, MorphaBond "met all the requirements for receiving exclusivity pursuant to CFR § 314.108(a)." (Id. ¶ 109) The FDA went on to grant MorphaBond a three year period of exclusivity, with its scope defined as "labeling describing the expected reduction of abuse of single-entity extended-release morphine by the intranasal route of administration due to physiochemical properties." (Id. ¶ 114) The exclusivity period for MorphaBond expires on October 2, 2018. (Id. ¶ 116)

As a result of MorphaBond's exclusivity, when ARYMO was approved by the FDA, Egalet was not permitted to market ARYMO as effective at reducing intranasal abuse. (Id. ¶ 229) When the public heard this news, shares of the stock dropped significantly within a matter of days. (Id. ¶ 15)

G. The Alleged False and/or Misleading Statements and Omissions

Plaintiffs point to twenty (20) "events"-each involving one or more statements (or omissions) during the Class Period-in which Defendants made materially false and/or misleading statements and omissions. Each of the twenty events, as well as the statements or omissions alleged, is described below.

Event # 1: November 4, 2015 Earnings Call

During the question-and-answer session of Egalet's conference call on November 4, 2015, a stock analyst from Cantor Fitzgerald asked Defendant Radie to comment on the "Defendants' expectations for ARYMO['s] label," to which Radie responded that "we would expect that we would have claims for the ability for this product to likely deter [ ] abuse from an injectability standpoint, from an oral standpoint and from an intranasal standpoint as well." (Id. ¶ 120)

Plaintiffs assert that the statements:

(1) "misrepresented and failed to disclose adverse facts pertaining to ARMYO['s] ability to receive the intranasal abuse-deterrent labeling," and

(2) "were not honestly believed, lacked a reasonable basis, and misrepresented and failed to disclose adverse facts pertaining to the likelihood of ARYMO [ ] receiving intranasal abuse-deterrent labeling given MorphaBond's exclusivity."

(Id. ¶ 121)

Event # 2: December 15, 2015 Press Release

In Egalet's December 15, 2015 press release, it announced that it had filed its 505(b)(2) NDA with the FDA, and that its "submission includes a comprehensive battery of abuse-deterrent studies (Category 1, 2 and 3) which were conducted to support abuse-deterrent label claims for intravenous injection, snorting and oral abuse." (Id. ¶ 171)

Plaintiffs assert that the statements were "false and/or misleading [ ] and/or omitted to disclose that":

(1) "ARYMO [ ] could not and would not receive an intranasal abuse-deterrent label upon approval of [its] 505(b)(2) NDA as MorphaBond's marketing exclusivity for intranasal abuse-deterrent labeling precluded any 'other single-entity extended-release morphine product submitted in [a] 505(b)(2) application [to] be approved for that use,' " and

(2) "despite the comprehensive battery of abuse-deterrent studies," "the studies would still not allow ARYMO [ ] to receive FDA approval for the intranasal abuse-deterrent labeling."

(Id. ¶ 172)

Event # 3: January 11, 2016 Investor Presentation

On January 11, 2016, Defendant Radie presented a slideshow that Egalet had previously submitted as an attachment to a Form 8-K filed with the SEC. Slides 15 and 17 "touted" the drug's "reductions in oral, intra-nasal, and injection abuse," and slide 18 depicted that it was "potential" for ARYMO to receive an intranasal abuse-deterrent label from the FDA. (Id. ¶¶ 129-30)

Again, according to Plaintiffs, the statements were false, misleading, and/or failed to disclose the existence and effect of MorphaBond's marketing exclusivity on intranasal labeling. (Id. ¶ 131)

Event # 4: March 9, 2016 Earnings Call

During a March 9, 2016 conference call to discuss Egalet's 2015 Q4 and 2015 FY results, Defendant Dayno stated that the ARYMO NDA submission had included abuse-deterrent studies "to support abuse-deterrent label claims for intravenous injection, snorting and oral misuse and abuse." (Id. ¶ 134) He also stated that ARYMO is "resistant to particle size reduction, which is the first step in trying to manipulate a product ... to either snort or inject," and he briefly described the positive results from one of Egalet's studies assessing the potential for ARYMO's intranasal abuse. (Id. ) Plaintiffs also point to Dayno's statement that the FDA's response to the submission was that "no filing review issues were identified." (Id. )

Again, according to Plaintiffs, the statements were false, misleading, and/or failed to disclose the existence and effect of MorphaBond's marketing exclusivity on intranasal labeling. (Id. ¶ 135)

Event # 5: 2015 Form 10-K

Egalet's 2015 Form 10-K, signed and certified by Defendants Radie and Musial, stated that ARYMO's NDA submission included a battery of abuse-deterrent studies "which were conducted to support [abuse-deterrent] label claims for intravenous injection, snorting and oral abuse." (Id. ¶ 138) It also briefly summarized the positive results from one of Egalet's submitted studies assessing the potential for ARYMO's intranasal abuse. (Id. ¶ 139) The 10-K also discussed the "Risks Related to Our Business and Strategy," but was "silent as to any effect that MorphaBond's approval had on the intranasal abuse-deterrent labeling sought for ARYMO." (Id. ¶ 142) Instead, it only provided one example of how Egalet's business prospects could be affected by an exclusivity period for a competing drug; the example pertained to Egalet-002, not ARYMO:

Furthermore, if the FDA approves a competitor's 505(b)(2) application for a drug candidate before our application for a similar drug candidate, and grants the competitor a period of exclusivity, the FDA may take the position that it cannot approve our NDA for a similar drug candidate. For example, we believe that several competitors are developing extended-release oxycodone products, and if the FDA approves a competitor's 505(b)(2) application for an extended release oxycodone product and grants exclusivity before our NDA for Egalet-002 is filed and approved, we could be subject to a delay that would dramatically reduce our expected market potential for Egalet-002. Additionally, even if our 505(b)(2) application for Egalet-002 is approved first, we may still be subject to competition from other oxycodone products, including approved products or other approved 505(b)(2) NDAs for different conditions of use that would not be restricted by any grant of exclusivity to us.

(Id. ¶ 142)

Event # 6: April 5, 2016 Investor Presentation

Plaintiffs also point to Egalet's April 5, 2016 Form 8-K, which attached an investor presentation. (Id. ¶ 145) Slides 9 and 11 "touted" the drug's "reductions in oral, intra-nasal, and injection abuse," and slide 12 depicted that it was "potential" for ARYMO to receive an intranasal abuse-deterrent label from the FDA. (Id. ¶¶ 146-47)

Event # 7: May 10, 2016 Earnings Call

During Egalet's May 10, 2016 conference call, Defendant Radie discussed Egalet's preparation for ARMYO's FDA advisory committee meeting, stating "[w]e believe the novelty of our guarding [sic] technology and the strength of our abuse-deterrent data generated from our category one, two and three studies will support a differentiated label for ARYMO." (Id. ¶ 151) Then, during the question-and-answer session, Radie stated:

We've met all the primary and key secondary endpoints from all of the various category one, two and three abuse-deterrent studies that we conducted. So that gives us a tremendous amount of confidence and the FDA showed some consistency in their review is that they want to see that these products meet the primary endpoint in the various studies that are done and key secondary endpoints as per the guidance that they spent a lot of developing, getting a lot of external expertise to develop those guidance and I think that that's what we're going to see is the sponsors regularly being held to those standards and we believe that ARYMO meet those standards put forth in the guidance.

(Id. ¶ 152)

Again, according to Plaintiffs, the statements were false, misleading, and/or failed to disclose the existence and effect of MorphaBond's marketing exclusivity on intranasal labeling. (Id. ¶ 153) Moreover, to the extent that any of the statements can be considered statements of opinion, Plaintiffs assert that they "were not honestly believed, lacked a reasonable basis, and misrepresented and failed to disclose adverse facts pertaining to the likelihood of ARYMO [ ] receiving intranasal abuse-deterrent labeling," given MorphaBond's exclusivity. (Id. )

Event # 8: May 11, 2016 Conference Presentation

During Egalet's presentation at the Bank of America/Merrill Lynch Health Care Conference on May 11, 2016, the company utilized a slideshow they had previously filed as an attachment to a Form 8-K. (Id. ¶ 155) Slides 9 and 10 "touted" the drug's "reductions in oral, intra-nasal, and injection abuse," and slide 11 depicted that it was "potential" for ARYMO to receive an intranasal abuse-deterrent label from the FDA. (Id. ¶¶ 156-57)

Event # 9: May 12, 2016 Press Release

Egalet issued a press release on May 12, 2016 announcing that it had presented data at the American Pain Society's Annual Meeting that demonstrated that ARYMO "significantly lowered intranasal abuse potential as compared to MS Contin (ARYMO['s] RLD)." (Id. ¶ 160) The press release also described the positive results from one of Egalet's studies assessing ARYMO's ability to deter intranasal abuse. (Id. ¶ 161)

Event # 10: June 21, 2016 Form 8-K

Egalet filed a Form 8-K on June 21, 2016 that contained an investor presentation. (Id. ¶ 164) Slides 27 and 28 "touted" the drug's "reductions in oral, intra-nasal, and injection abuse," and slide 12 depicted that it was "potential" for ARYMO to receive an intranasal abuse-deterrent label from the FDA. (Id. ¶¶ 165-66)

Event # 11: June 28, 2016 Press Release

Egalet issued a press release on June 28, 2016, announcing that the FDA had scheduled a joint meeting for August 4, 2016 with the Anesthetic and Analgesic Drug Products Advisory Committee and the Drug Safety and Risk Management Advisory Committee (the "Joint Advisory Committee") to review ARYMO (the "Joint Meeting"). (Id. ¶ 169) The press release indicated that ARYMO's NDA included studies conducted to support abuse-deterrent label claims for intravenous injection, snorting, and oral routes of misuse and abuse. (Id. ¶ 171)

Event # 12: August 4, 2016 Press Release

On August 4, 2016, the FDA held its Joint Meeting "to discuss whether the clinical data supported approvability and abuse-deterrent labeling for ARYMO." (Id. ¶ 174) The Joint Advisory Committee tasked with assessing the approvability and abuse-deterrent labeling language for ARYMO described its first task as determining whether there was "sufficient data to support a finding that [ARYMO] has properties that can be expected to deter abuse, commenting on support for abuse-deterrent effects for each of the three possible routes of abuse": oral, intranasal, and intravenous. (Id. ¶ 177)

Although the Joint Advisory Committee members "were not asked to evaluate or review whether any FDA-granted exclusivities or patents existed that could affect ARYMO['s] approval or labeling," the Joint Advisory Committee voted to recommend to the FDA that the scientific data included with ARYMO's NDA submission supported abuse-deterrent labeling for all three routes of abuse: oral, intranasal, and intravenous. (Id. ¶¶ 178, 183)

Later on August 4, 2016, Egalet issued a press release announcing the results of the Joint Meeting. (Id. ¶ 182) That press release stated, in relevant part:

[The Joint Advisory Committee] voted 18 to 1 to recommend approval of ARYMO.

...

[The Joint Advisory Committee] also voted:

• 16 to 3 that if approved, ARYMO [ ] should be labeled as an abuse-deterrent product by the oral route of abuse;

• 18 to 1 that if approved, ARYMO [ ] should be labeled as an abuse-deterrent product by the nasal route of abuse; and

• 18 to 1 that if approved, ARYMO [ ] should be labeled as an abuse-deterrent product by the intravenous route of abuse.

...

"The Committees' support of ARYMO [ ] labeling as an abuse-deterrent product by the intravenous, nasal and oral routes of abuse is an important step forward in the development of this product candidate," said Bob Radie.

...

Based on the committees' votes, Egalet anticipates, if approved, the label for ARYMO [ ] will describe the product's abuse-deterrent properties that are expected to reduce, but not totally prevent, abuse of the drug when the tablets are manipulated. The FDA is not abound by the recommendations of its advisory committees....

(Id. ¶ 183)

Event # 13: August 4, 2016 Earnings Call

Later on August 4, 2016, Egalet held a conference call, during which Defendant Radie summarized the Joint Advisory Committee's votes, and stated that "[w]e are encouraged by the outcome of today's [Joint Meeting], and support for labeling ARYMO [ ] as an abuse deterrent product by the intravenous, nasal and oral routes of abuse." (Id. ¶ 186-187) Radie went on to say that, "[i]f approved, this could be the broadest label for an abuse deterrent extended release morphine product candidate," and that "[i]t is our hope and expectation that we will achieve abuse deterrent claims in the label for the intravenous routes, oral routes and intranasal routes of abuse." (Id. ¶¶ 188-89)

Radie explained that his "statement about this ... revolves around the comparisons of the labels for the other two currently approved abuse deterrent extended release morphine products being Embeda and MorphaBond." (Id. ¶ 189) He also detailed the claims that Embeda and MorphaBond have in terms of abuse deterrence: "Embeda has claims for intranasal and oral abuse [ ] and MorphaBond has an intranasal and IV claim," while "if successful we would expect to be able to achieve all three of those claims in our label [intranasal, oral, and intravenous]." (Id. )

Event # 14: August 5, 2016 Form 10-Q

Egalet's August 5, 2016 Form 10-Q, reporting its 2Q2016 results summarized the results of the Joint Meeting, and disclosed the risk that "[i]f we fail to obtain the necessary regulatory approvals, or if such approvals are limited, we will not be able to commercialize our product candidates, and we will not generate product revenues." (Id. ¶ 196) More specifically, the 10-Q disclosed that "the FDA is not bound by the Advisory Committees' recommendations as it continues its review of ARYMO [ ]. As a result, there is a risk that the FDA could determine not to approve ARYMO [ ], or to approve ARYMO [ ], but without abuse-deterrent labeling." (Id. ¶ 196)

Event # 15: August 26, 2016 Form 8-K

Egalet filed a Form 8-K on August 26, 2016 that contained an investor presentation. (Id. ¶ 200) Slide 8 "touted" the drug's "reductions in oral, intra-nasal, and injection abuse," and slide 9 depicted that it was "potential" for ARYMO to receive an intranasal abuse-deterrent label from the FDA. (Id. ¶¶ 201-02)

Event # 16: October 13, 2016 Press Release

Egalet issued a press release on October 13, 2016 stating that the FDA would not meet its previous goal date for determining whether to approve ARYMO. (Id. ¶ 205) In the press release, Egalet again summarized the results of the Joint Meeting, and stated that the FDA "confirmed that not additional scientific information or data is needed for our application." (Id. ¶ 206)

Event # 17: November 4, 2016 Earnings Call

Egalet held a conference call on November 4, 2016, stating, in relevant part, "[w]e were encouraged by the outcome of the FDA advisory committee meeting and support for labeling ARYMO [ ] as an abuse deterrent product." (Id. ¶ 212)

Event # 18: November 14, 2016 Form 8-K

Egalet filed a Form 8-K on November 14, 2016 that contained an investor presentation. Slide 8 "touted" the drug's "reductions in oral, intra-nasal, and injection abuse." (Id. ¶ 216)

Event # 19: November 15, 2016 Conference Presentation

Defendant Radie presented on November 15, 2016 at the Stifel Healthcare Conference. (Id. ¶ 219) Plaintiffs highlight the following statements:

[A]t that advisory committee meeting we received very strong support 18 to 1 vote in favor of approval of ARYMO with abuse-deterrent labeling, and then similarly they asked three other questions in addition to approval of the advisors, they asked, does it-does the data suggest it would deter abuse the intravenous, the nasal and the oral route, and all of those votes were overwhelmingly positive in favor of ARYMO.

...

It's important to note that they did not request any additional data from the company, and additional scientific information and instead basically led us to recognize if there were a patent approved abuse-deterrent products [sic] missing their [goal] date and that this product was likely to meet that patent just based on the complexities of the FDA's process to approve opioids.

...

[W]e know from their statement [ ] that they're actively working on our label, which we believe are all very positive signs.

(Id. ¶ 220)

Event # 20: January 9, 2017 Conference Call

On January 9, 2017 at 2:51 p.m. ET, Egalet announced the FDA's approval of ARYMO's NDA. (Id. ¶ 223) That same day, the FDA announced its approval of ARYMO but also announced that ARYMO would not receive intranasal abuse labeling because MorphaBond already possessed marketing exclusivity for "the expected reduction of abuse of single-entity extended-release morphine by the intranasal route." (Id. ¶ 224)

Plaintiffs highlight a question posed to Defendant Radie at a conference call held later that same day: "[T]he exclusivity around the intranasal data, was that a surprise to you?" (Id. ¶ 230) In response, Radie stated, "we had considered it, but we couldn't predict any definitive outcome based on previous exclusivity findings in this class." (Id. )

H. Egalet's Stock Price Falls

In response to the news disclosed on January 9, 2017, Egalet's stock price dropped from a closing price of $8.38 on January 9, 2017, to a closing price of $6.52 per share on January 10, 2017, a stock drop of approximately 22%. (Id. ¶ 231) The next day, the stock price further dropped, closing at $5.99 per share. (Id. ) By May 31, 2017, the stock price had dropped to a low of $2.03. (Id. )

I. Relevant Post-Class Period Statements

In support of their allegations, Plaintiffs include in their Amended Complaint several post-Class Period statements. (Id. ¶¶ 232-239) Several of the statements were made by stock analysts outside Egalet. (Id. ¶¶ 233-34) For example, a Cantor Fitzgerald analyst stated that "our enthusiasm following the approval to ARYMO [ ] this afternoon was tempered as the label, which we expected to include abuse-deterrent [ ] claims in oral, intranasal, and IV routes of abuse, only included IV." (Id. ¶ 233)

However, some of the statements appear in Egalet's financial statements. For example, Plaintiffs highlight that Egalet's Form 10-K filed on March 13, 2017 disclosed new risks that Egalet had not previously mentioned, such as that "the FDA may not approve the labeling claims, including claims regarding abuse deterrence, that we believe are necessary or desirable for the successful commercialization of our products and product candidates." (Id. ¶ 237) Another risk that had previously not been included in Egalet's financial statements was that, "if the FDA approves a competitor's 505(b)(2) application for a drug candidate before our application for a similar drug candidate, and grants the competitor a period of exclusivity, the FDA may take the position that it cannot approve our FDA ... or that our label cannot reflect certain claims." (Id. ¶ 239)

IV. Motion to Strike

Defendants' Motion to Dismiss includes various attachments as exhibits. In response, Plaintiffs filed a Motion to Strike Exhibit 1 (to the Motion to Dismiss), or in the alternative, to treat Defendants' Motion to Dismiss as a motion for summary judgment. Exhibit 1 to Defendants' Motion to Dismiss is a memorandum, dated November 16, 2016 and signed November 29, 2016, written by the FDA's CDER Exclusivity Board regarding the "Scope of 3-Year Exclusivity for MorphaBond." (MTD, Ex. 1, the "CDER Memo")

A. Parties' Contentions

In the Motion to Dismiss, Defendants assert that the Court can consider the CDER Memo "because it is explicitly relied upon in the [Amended Complaint] and integral to Plaintiffs' claims." (MTD, at 1, n.1) Defendants indicate that paragraph 114 of the Amended Complaint quotes from the CDER Memo. (Id. )

Plaintiffs contend that this Court should strike Exhibit 1, and all factual assertions made by Defendants in reliance on it, because:

(1) "the Complaint does not rely upon or even reference the CDER Memo a single time"; and

(2) "the CDER Memo is not integral to Plaintiffs' claims which are based on Defendants' public misrepresentations regarding their efforts to secure FDA approval of a broad label for ARYMO [ ] covering intranasal abuse deterrence while failing to disclose a risk to the approvability of that label."

(MTS, at 2)

Plaintiffs specifically refute Defendants contention that the CDER Memo is quoted in Paragraph 114 of the Amended Complaint, and aver that "the CDER Memo is not quoted, cited, or referenced anywhere else in the Amended Complaint." (Id., at 6)

Instead, Plaintiffs assert, Paragraph 114 "refers to the exclusivity code given to MorphaBond in the Orange Book." (Id. )

Moreover, Plaintiffs state, because Defendants rely on the CDER Memo for the truth of the information contained within it, the Court should disregard Defendants' factual assertions based on the CDER Memo. (Id., at 7)

In their Response, Defendants contend that Paragraph 114 of the Amended Complaint "contains the exact language found in the conclusion of the Memo, in quotation marks, without any attribution to another source." (MTS Response, at 1) Thus, they say it is "relied upon" by Plaintiffs in making their claims and should be considered by the Court. (Id. )

Defendants also contend that the CDER Memo is "integral to" the Amended Complaint and may be considered by the Court even if it were not cited in the Amended Complaint. (Id. ) Defendants characterize Plaintiffs' description of the case as "being about what Defendants supposedly knew about the risk that the FDA would not approve the labeling Egalet had requested for ARYMO [ ] because of MorphaBond's exclusivity." (Id. ) Because the CDER Memo-published in November of 2016 (after the Class Period had ended)-appears to demonstrate that the scope of MorphaBond's exclusivity was undecided prior to that point, Defendants assert that the CDER Memo specifically addresses what Defendants could have known (and/or could not have known) during the Class Period. (Id. ) Moreover, Defendants contend, the CDER Memo "sets forth the FDA's reasoning underlying its decision about the scope of exclusivity to which MorphaBond was entitled," thus demonstrating the "nature of the risk" that Defendants allegedly should have disclosed. (Id. )

Lastly, Defendants assert that the Court "may judicially notice [the CDER Memo] as a public record." (Id. ) Even if the CDER Memo were not integral to the Amended Complaint (which Defendants do not concede), they contend that the Court could take "judicial notice of the date of the Memo's publication," and this fact alone would be sufficient to dismiss Plaintiffs' claims. (Id. at 2)

In their Reply, Plaintiffs assert that the language of Paragraph 114 of the Amended Complaint was not drawn from the CDER Memo, but rather from MorphaBond's exclusivity code, as expressed in the FDA's Orange Book (which also includes the exact language quoted in Paragraph 114). (MTS Reply, at 2) Thus, they contend, the CDER Memo was not "explicitly relied upon" in the Amended Complaint. (Id., at 7)

Plaintiffs also dispute Defendants characterization of the CDER Memo as "integral to" their claims. (Id., at 2) Plaintiffs highlight that they do not claim any statement in the CDER Memo was fraudulent, do not rely upon it to show any element of their claims, and do not mention or cite it for any proposition. (Id., at 6)

Lastly, Plaintiffs contend that even if the Court were to take judicial notice of the CDER Memo, the Court should strike any assertions contained in Defendants' Motion to Dismiss that rely on the CDER Memo for the truth of the matter asserted, i.e., to "demonstrate that Defendants could not have known the scope of Morpha[B]ond's exclusivity." (Id., at 7-8)

B. Legal Standard

In general, a district court considering a motion to dismiss under Fed. R. Civ. P. 12(b)(6)"may not consider matters extraneous to the pleadings" without converting the motion into one for summary judgment. In re Burlington Coat Factory Sec. Litg., 114 F.3d 1410, 1426 (3d Cir. 1997). However, there are at least three exceptions to this general rule. Courts may also consider:

(1) Exhibits attached to the complaint;

(2) Matters of public record; and

(3) Undisputedly authentic documents integral to or explicitly relied upon in the complaint.

Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir. 2014)

In this case, Exhibit 1 was not attached to Plaintiffs' Amended Complaint, but rather Defendants' Motion to Dismiss. Thus, only the latter two exceptions are relevant here.

C. Public Records

It is undeniable that documents qualifying as public records may be judicially noticed by courts. The Third Circuit has expressed its approval of district courts considering public records, ranging from SEC filings, id., and published reports of administrative bodies, City of Pittsburgh v. W. Penn Power Co., 147 F.3d 256, 259 (3d Cir. 1998), to criminal case dispositions and decision letters of government agencies, Pension Ben. Guar. Corp. v. White Consol. Industries, Inc., 998 F.2d 1192, 1197 (3d. Cir. 1993). The Supreme Court has also expressed its approval of courts considering "other sources" beyond the complaint, such as "matters of which a court may take judicial notice." Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007).

A public record is not simply one that is accessible to the public, but rather one to which "the public ha[s] unqualified access." Pension Ben., 998 F.2d 1192, 1197 (3d Cir. 1993). Thus, it is not sufficient that the public can access a written exchange between a regulator and a company it regulates through a Freedom of Information Act request. Id.

Although the Third Circuit has not considered the specific question of whether a court may consider FDA records on a Rule 12(b)(6) motion, other courts in this district have decided they may properly do so, including reports published on the FDA website. See, e.g., In re Viropharma, Inc. Sec. Litig., No. 02-cv-1627, 2003 WL 1824914, at *1 (E.D. Pa. Apr. 7, 2003) ; In re Wellbutrin SR/Zyban Antitrust Litig., 281 F.Supp.2d 751, 755 n.2 (E.D. Pa. 2003) ; Starks v. Coloplast Corp., No. 13-cv-3872, 2014 WL 617130, at *2 (E.D. Pa. Feb. 18, 2014) ; see also Funk v. Stryker Corp., 631 F.3d 777, 783 (5th Cir. 2011). In the present case, the public has unqualified access to the CDER Memo, which is accessible to the public via the FDA website. Thus, this Court will take judicial notice of the CDER Memo.

The next issue for the Court to decide is for what purposes the CDER Memo may be judicially noticed. Fed. R. Evid. 201(b)(2) allows courts to take judicial notice of any "fact that is not subject to reasonable dispute because it ... can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned." In prior cases in this circuit, courts have taken "judicial notice of the veracity of" FDA website documents, Scanlon v. Medtronic Sofamor Danek USA Inc., 61 F.Supp.3d 403, 413 n. 16 (D. Del. 2014), to, among other things, illustrate approval of medical devices, see, e.g., Starks, 2014 WL 617130, at *4. "Such notice serves only to indicate what was in the public realm at the time, not whether the contents of those documents are true." U.S. ex rel. Spay v. CVS Caremark Corp., 913 F.Supp.2d 125, 139-140 (E.D. Pa. 2012) (citing Benak ex rel. Alliance Premier Growth Fund v. Alliance Capital Mgmt., L.P., 435 F.3d 396, 401 n. 15 (3d Cir. 2006) ).

The same can be done here. The accuracy of the CDER Memo "cannot reasonably be questioned". Fed. R. Evid. 201(b)(2). Judicial notice of the Memo serves to illustrate that the FDA wrote its decision as to the scope of the MorphaBond's exclusivity on November 16, 2016 and signed it on November 29, 2016. It "indicate[s] what was in the public realm at the time," and it also indicates what was not in the public realm at the time (i.e., a final agency determination as to the scope of MorphaBond's marketing exclusivity on intranasal abuse-deterrent claims in morphine pharmaceuticals of its kind). U.S. ex rel. Spay, 913 F.Supp.2d at 139.

D. Integral or Relied-Upon Documents

Courts may consider documents "integral to or explicitly relied upon in the complaint ... without converting the motion to dismiss into one for summary judgment." Schmidt, 770 F.3d at 249 (citing In re Burlington, 114 F.3d at 1426 ). In In re Burlington, 114 F.3d 1410, a seminal Third Circuit securities case, the Court explained that "[t]he rationale underlying this exception is that the primary problem raised by looking to documents outside the complaint-lack of notice to the plaintiff-is dissipated where plaintiff has actual notice ... and has relied upon these documents in framing the complaint." Id. at 1426 (internal citation omitted). Much like the present case, the complaint in In re Burlington did "not explicitly refer to or cite" the challenged exhibit. Id. Nonetheless, the Court considered the exhibit, deciding that the critical inquiry was "not merely whether the extrinsic document was explicitly cited," but rather "whether the claims in the complaint are 'based' on [the] extrinsic document." Id. Ultimately, the Court explained, "Plaintiffs cannot prevent a court from looking at the texts of the documents on which its claim is based by failing to attach or explicitly cite them."

However, it is not enough that the complaint rely upon the extrinsic document. The document must also be "undisputedly authentic." In re Donald J. Trump Casino Sec. Litig., 7 F.3d 357, 368 n. 9 (3d Cir. 1993).

In this case, it is clear that the CDER Memo is a document that this Court may properly consider. For reasons discussed earlier with respect to the question of judicial notice, supra , the CDER Memo is indisputably authentic-so much so that Plaintiffs do not contest its authenticity. See, e.g., Pryor v. Nat'l Collegiate Athletic Ass'n., 288 F.3d 548, 560 (3d Cir. 2002) ("[D]ocuments whose contents are alleged in the complaint and whose authenticity no party questions, but which are not physically attached to the pleading, may be considered." (quotation omitted) )

Moreover, the CDER Memo was both explicitly relied upon and integral to the Amended Complaint. The CDER Memo contains the exact language found in the conclusion of the Memo, in quotation marks, without any attribution to a source. Compare CAC ¶ 114 ("Predictably, the FDA defined MorphaBond's scope of exclusivity as 'labeling describing the expected reduction of abuse of single-entity extended-releasemorphineby the intranasal rout [sic] of administration due to physiochemical properties .' ") with CDER Memo, at 2 ("The Board ... concludes that the scope of MorphaBond's exclusivity is labeling describing the expected reduction of abuse of single-entity extended-release morphine by the intranasal route of administration due to physiochemical properties .") (emphases added).

Notably, the primary claim-repeated throughout Plaintiff's Amended Complaint-is that Defendants failed to disclose that ARYMO "could not and would not receive an intranasal abuse-deterrent label" because it was precluded by "MorphaBond's marketing exclusivity for intranasal abuse-deterrent labeling." (See CAC ¶¶ 121, 125, 131, 135, 140, 143, 153, 162, 172, 184, 198, 207). MorphaBond's marketing exclusivity began, according to Plaintiffs, "at the time the FDA approved MorphaBond's 505(b)(2) NDA," on October 2, 2015. (MTS Reply, at 8) However, its marketing exclusivity for the specific type of intranasal abuse-deterrent labeling at issue in this case was not yet determined on that date. Instead, it was not until November 29, 2016 that the FDA published the CDER Memo detailing the scope of MorphaBond's exclusivity (with such exclusivity made retroactive to October 2, 2015). (See CDER Memo) In other words, if not for the CDER Memo, the FDA would not have decided that MorphaBond has marketing exclusivity for intranasal abuse-deterrent labeling for drugs of this kind. That fact alone demonstrates that the CDER Memo is integral to the Amended Complaint. It is the final, official FDA document establishing the scope of exclusivity specifically at issue in this case.

V. Motion to Dismiss

Having decided that the CDER Memo may properly be considered at this stage of the litigation, the Court now turns to the underlying motion at issue: Defendants' Motion to Dismiss the Amended Complaint.

A. Parties' Contentions

In their Motion to Dismiss, Defendants make four primary arguments:

(1) Because the CDER Memo demonstrates that the scope of MorphaBond's exclusivity had not been established during the Class Period, none of the allegedly false or misleading statements were, in fact, false;

(2) Because the Amended Complaint's allegations that Defendants knew or should have known of MorphaBond's exclusivity are based on publicly available information, any omission of this information is immaterial (i.e., "truth on the market" defense);

(3) Because many of Defendants' statements were forward-looking, Defendants are shielded from liability for those statements under the PSLRA's safe harbor provision; and

(4) Because Defendants' alleged motives are legally insufficient, and the Amended Complaint does not demonstrate actual knowledge, there is no scienter.

In Response, Plaintiffs assert that:

(1) Because the false or misleading statements were made misleading as a result of a failure to disclose the substantial risk that MorphaBond's exclusivity would include abuse-deterrent labeling for intranasal abuse, the CDER Memo does not change the false or misleading nature of Defendants' statements;

(2) Because the "truth on the market" defense has a high burden, it is not an appropriate basis for dismissing the complaint in most circumstances, including in this case, where the stock price dropped once the relevant information was revealed;

(3) Because many of Defendants' misstatements were not forward-looking, were made with actual knowledge that they were misleading and false, were not accompanied by meaningful cautionary language, and, if believed, were not reasonable, the PSLRA's safe harbor provision does not shield Defendant's statements from liability; and

(4) Because the Amended Complaint demonstrates Defendants' knowledge of the undisclosed risk and the relevant regulatory landscape, the Amended Complaint sufficiently alleges scienter. It also adequately alleges motive and opportunity as a means of demonstrating scienter.

B. Legal Standard

In considering a motion to dismiss under Rule 12(b)(6), "we accept all factual allegations as true [and] construe the complaint in the light most favorable to the plaintiff." Warren Gen. Hosp. v. Amgen, Inc., 643 F.3d 77, 84 (3d Cir. 2011) (internal quotation marks and citations omitted). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim for relief that is plausible on its fact.' " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929, (2007) ).

Fed. R. Civ. P. 9(b) imposes an additional pleading requirement "[i]n all averments of fraud or mistake," obliging claimants in such cases that "the circumstances constituting fraud or mistake shall be stated with particularity." This particularity requirement has been "rigorously applied" in securities fraud cases. In re Burlington, 114 F.3d at 1417. At a minimum, plaintiffs should be able to name the "who, what, when, where and how" of the fraud. Id. at 1422. Rule 9(b) gives defendants "notice of the claims against them, provides an increased measure of protection for their reputations, and reduces the number of frivolous suits brought solely to extract settlements." Id. at 1418.

C. Analysis

In this case, Plaintiff's seek relief under § 10(b) of the Securities Exchange Act. "Section 10(b) prohibits the 'use or employ, in connection with the purchase or sale of any security, ... [of] any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe....' " In re Ikon Office Solutions, Inc., 277 F.3d 658, 666 (3d Cir. 2002) (quoting 15 U.S.C. § 78j(b) ). Rule 10b-5, in turn, created a private right of action for investors harmed by materially false or misleading statements to enforce § 10(b), and it "makes it unlawful for any person '[t]o make any untrue statement of a material fact or to omit to state a material fact necessary to make the statements made in the light of the circumstances under which they were made, not misleading ... in connection with the purchase or sale of any security.' " Id. (quoting 17 C.F.R. § 240.10b-5(b) ).

To prevail on their claim under § 10(b), Plaintiffs must prove:

(1) A material misrepresentation or omission by Defendants;

(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).

Defendants' Motion to Dismiss focuses on the first and second elements above, but also relies on the PSLRA's Safe Harbor Provision, 15 U.S.C. § 78u-5(c), which shields Defendants against § 10(b) liability for "forward-looking" statements accompanied by "meaningful cautionary language."

Thus, the Court will (1) assess whether the Safe Harbor Provision insulates Defendants against § 10(b) liability; and then determine whether Plaintiffs have adequately alleged (2) a material misrepresentation or omission by Defendants, and (3) Defendants' scienter.

(1) Safe Harbor

The PSLRA's Safe Harbor Provision provides that:

[A] person ... shall not be liable with respect to any forward-looking statement, whether written or oral, if and to the extent that-

(A) the forward-looking statement is-

(i) identified as a forward-looking statement, and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the forward-looking statement; or

(ii) immaterial; or

(B) the plaintiff fails to prove that the forward-looking statement-

(i) if made by a natural person, was made with actual knowledge by that person that the statement was false or misleading; or

(ii) if made by a business entity; was-

(I) made by or with the approval of an executive officer of that entity; and

(II) made or approved by such officer with actual knowledge by that officer that the statement was false or misleading.

15 U.S.C. § 78u-5(c)(1). See Institutional Inv'rs Grp. v. Avaya, Inc., 564 F.3d 242, 254 (3d Cir. 2009).

Thus, the PSLRA's Safe Harbor shields a defendant from liability where the challenged forward-looking statement is "identified as forward-looking," and "accompanied by meaningful cautionary statements." 15 U.S.C. § 78u-5(c)(1).

Defendants do not raise the Safe Harbor defense with respect to all of the alleged misstatements or omissions. Instead, they assert that it applies to the following challenged statements (the "Challenged Forward-Looking Statements"):

• CAC ¶ 120: "And so we would expect that we would have claims for the ability for this product to likely deter-abuse from an injectability standpoint, from an oral standpoint and from an intranasal standpoint as well.";

• CAC ¶¶ 129, 146, 156: Slides entitled "ARYMO ER: AD Morphine Could be on Market in '16*";

• CAC ¶¶ 130, 147, 157, 166: Slides entitled "Potential ARYMO ER Label Vs. Competition";

• CAC ¶ 151: "We believe the novelty of our guardi[an] technology and the strength of our abuse-deterrent data generated from our category one, two and three studies will support a differentiated label for ARYMO ER.";

• CAC ¶ 152: "We've met all the primary and key secondary endpoints from all of the various category one, two and three abuse-deterrent studies that we conducted. So that gives us a tremendous amount of confidence and the FDA showed some consistency in their review is that they want to see that these products meet the primary endpoint in the various studies that are done and key secondary endpoints as per the guidance that they spent a lot of [time] developing, getting a lot of external expertise to develop those guidance and I think that that's what we're going to see is the sponsors regularly being held to those standards and we believe that ARYMO meet[s] those standards put forth in the guidance.";

• CAC ¶ 165: Slide entitled "ARYMO ER Could be on Market by Year-End*";

• CAC ¶ 183: "Based on the committees' votes, Egalet anticipates, if approved, the label for ARYMO ER will describe the product's abuse-deterrent properties that are expected to reduce, but not totally prevent, abuse of the drug when the tablets are manipulated."

• CAC ¶ 188: "We are encouraged by the panel's support for ARYMO as an abuse deterrent morphine, and we are encouraged by their support for all three abuse deterrent claims of oral, intranasal, and IV. If approved, this would be the broadest label for an abuse deterrent extended release morphine product candidate."

• CAC ¶ 189: "It is our hope and expectation that we will achieve abuse deterrent claims in the label for the intravenous routes, oral routes and intranasal routes of abuse.... So if successful we would expect to be able to achieve all three of those claims in our label."

MTD, at 24-25.

Defendants made the Challenged Forward-Looking Statements in earnings calls on November 4, 2015, May 10, 2016, and August 4, 2016; investor presentations filed as attachments to Forms 8-K on January 11, 2016, April 5, 2016, May 11, 2016, and June 21, 2016, and a press release on August 4, 2016. See supra , Events ## 1, 2, 6-8, 10, 12-13.

Plaintiffs contend that "[m]any of the misleading statements identified in the Complaint are not forward-looking," and, with respect to those statements that "potentially may be deemed forward-looking," those statements were "inextricably intertwined with statements of present or history fact [and/or] were not accompanied by meaningful cautionary language." MTD Response, at 30. The Court must therefore consider whether the Challenged Forward-Looking Statements constitute "forward-looking statements," and whether they are "accompanied by meaningful cautionary language."

i. Forward-Looking Statement

The term "forward-looking statement" is defined in the Safe Harbor statute, and it includes, "a statement of the plans and objectives of management for future operations, including plans or objectives relating to the products or services of the issuer," as well as "any statement of the assumptions underlying or relating to any" forward-looking statement. 15 U.S.C. § 78u-5(i)(1)(B),(D). As Defendants point out, courts in this circuit have repeatedly found "that statements regarding the likelihood and timing of FDA approval for a drug and the reasons for management's beliefs that such approval will occur fall under the statutory definition of 'forward-looking.' " (MTD, at 23-24) See, e.g., Bauer v. Eagle Pharm., Inc., No. 16-cv-3091, 2017 WL 2213147, at *9 (D.N.J. May 19, 2017) (Statements such as "[w]e expect to launch," and "if approved, [we] intend to launch our [product] the following day," which "relat[e] to anticipated FDA approval of the NDA are forward-looking statements protected by the Safe Harbor Provision); In re Discovery Labs. Sec. Litig., No. 06-cv-1820, 2006 WL 3227767, at *4 (E.D. Pa. Nov. 1, 2006) (Statements such as "[w]e intend to use the results from [successful clinical] trials to form the basis for a new drug application (NDA) with the [FDA]," and "[the company] now is focusing on preparing for the commercialization of [the product] for Respiratory Distress Syndrome (RDS), if approved," are forward-looking).

Plaintiffs note that "a mixed present/future st