Pardi v. Tricida, Inc.

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 MICHAEL PARDI, et al., Case No. 21-cv-00076-HSG

8 Plaintiffs, ORDER GRANTING IN PART AND 9 v. DENYING IN PART MOTION TO DISMISS 10 TRICIDA, INC., et al., Re: Dkt. No. 128 Defendants. 11

12 13 This putative securities class action was filed against Defendants Tricida, Inc. and Gerrit 14 Klaerner (collectively, “Defendants”). On June 1, 2021, Lead Plaintiff Jeffrey Fiore filed an 15 amended complaint alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act 16 of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder. See Dkt No. 72 at ¶ 2. 17 The Court dismissed Fiore’s amended complaint with leave to amend. See Pardi v. Tricida, Inc., 18 No. 21-CV-00076-HSG, 2022 WL 3018144, at *1 (N.D. Cal. July 29, 2022) (“Order”). Fiore then 19 filed a second amended complaint reasserting the same claims. See Dkt. No. 1421 (“SAC”). 20 Pending before the Court is Klaerner’s motion to dismiss the SAC, for which briefing is 21 complete.2 See Dkt. Nos. 144-1 (“Mot.”), 143 (“Opp.”), 144-2 (“Reply”). The Court finds the 22 matter appropriate for disposition without oral argument and the matter is deemed submitted. See 23 Civil L.R. 7-1(b). For the following reasons, the Court GRANTS the motion in part and DENIES 24

25 1 The Court cites to redacted versions of the pleadings publicly filed on the docket pursuant to its recent sealing order. See Dkt. No. 141. 26 2 Defendant Tricida, Inc. filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code, and Fiore voluntarily dismissed Tricida from the case in March 2023. See Dkt. No. 132. 27 Accordingly, the only remaining defendant in this case is Klaerner. The Court refers to Klaerner 1 it in part. 2 I. BACKGROUND 3 A. Parties 4 Tricida is a clinical-stage biopharmaceutical company incorporated in Delaware with 5 principal executive offices in South San Francisco, California. SAC at ¶¶ 40, 45. Klaerner was 6 Tricida’s Chief Executive Officer and President at the time the SAC was filed. Id. at ¶ 41. Fiore 7 alleges he was damaged by Defendants’ misrepresentations and omissions because he “purchased 8 Tricida common stock at artificially inflated prices.” Id. at ¶ 34. 9 B. Factual Allegations 10 In May 2018, Tricida completed its Phase 3 clinical trial for veverimer, a drug intended to 11 slow the progression of chronic kidney disease (“CKD”) through treatment of metabolic acidosis. 12 SAC at ¶¶ 45, 62. In a June 5, 2018 press release, Tricida announced that the Phase 3 study for 13 veverimer “was conducted at 47 sites in the United States and Europe,” and that the study “met 14 both its primary and secondary endpoints in a statistically significant manner.” Id. at ¶ 62. 15 Following the trial results, Tricida held its initial public offering (“IPO”) on June 28, 2018 and 16 began trading that same day on the Nasdaq Global Select Market. Id. at ¶¶ 7, 65. In late August 17 2019, Tricida submitted its New Drug Application (“NDA”) for veverimer to the United States 18 Food and Drug Administration (“FDA”) under the FDA’s Accelerated Approval Program. Id. at 19 ¶ 71. The FDA accepted Tricida’s NDA for review three months later. Id. 20 Beginning in May 2020, Tricida began to receive indications from the FDA that there were 21 issues with its NDA. See, e.g., id. at ¶¶ 24–25, 176. Early that month, Tricida executives met 22 with representatives from the FDA in which the FDA shared that it had concerns regarding: 23 (1) “the magnitude and durability of the treatment effect on the surrogate marker of serum 24 bicarbonate demonstrated in the TRCA-301 and TRCA-301E trials” and (2) “the applicability of 25 data from the TRCA-301 and TRCA-301E trials to the U.S. population.” Id. at ¶ 27. 26 On July 15, 2020, Tricida issued a press release stating that the FDA had notified it that the 27 Agency “ha[d] identified deficiencies that preclude discussion of labeling and postmarketing 1 August 24, 2020 stating that it had received a Complete Response Letter from the FDA on August 2 21, 2020 explaining that Tricida’s Phase 3 trial was inadequate on its own to demonstrate the 3 efficacy of veverimer. Id. at ¶¶ 29, 177, 179. The FDA further stated that it required additional 4 data regarding the magnitude and durability of veverimer’s treatment effect and on the 5 applicability of that effect to the U.S. population. Id. at ¶ 177. Two months later, on October 29, 6 2020, Tricida announced that the FDA had informed it that the FDA was “unlikely to rely solely 7 on serum bicarbonate data for determination of efficacy” and would “require evidence of 8 veverimer’s effect on CKD progression from a near-term interim analysis of the VALOR-CKD 9 trial for approval under the Accelerated Approval Program.” Id. at ¶ 180. Finally, on February 10 25, 2021, Tricida announced in a press release that the FDA had denied the appeal of its 11 application denial. Id. at ¶¶ 33, 185. 12 C. Procedural Background 13 In January 2021, Plaintiff Michael Pardi filed this lawsuit asserting violations of Sections 14 10(b) and 20(a) of the Securities Exchange Act and Rule 10b-5. See Dkt. No. 1 at ¶ 1. In April 15 2021, the Court appointed Fiore as Lead Plaintiff and Block & Leviton LLP as Lead Counsel. 16 Dkt. No. 65. Fiore seeks to represent “a class consisting of all purchasers of the common stock of 17 Tricida” from June 28, 2018 through February 25, 2021. SAC at ¶¶ 3, 201. 18 II. LEGAL STANDARD 19 A. Rule 12(b)(6) Standard 20 Federal Rule of Civil Procedure 8(a) requires that a complaint contain “a short and plain 21 statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A 22 defendant may move to dismiss a complaint for failing to state a claim upon which relief can be 23 granted under Federal Rule of Civil Procedure 12(b)(6). “Dismissal under Rule 12(b)(6) is 24 appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support 25 a cognizable legal theory.” Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th 26 Cir. 2008). To survive a Rule 12(b)(6) motion, a plaintiff must plead “enough facts to state a 27 claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). 1 the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 2 556 U.S. 662, 678 (2009). 3 In reviewing the plausibility of a complaint, courts “accept factual allegations in the 4 complaint as true and construe the pleadings in the light most favorable to the nonmoving party.” 5 Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). However, 6 courts do not “accept as true allegations that are merely conclusory, unwarranted deductions of 7 fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 8 2008). 9 B. Heightened Pleading Standard 10 Section 10(b) of the Securities Exchange Act of 1934 provides that it is unlawful “[t]o use 11 or employ, in connection with the purchase or sale of any security registered on a national 12 securities exchange or any security not so registered . . . any manipulative or deceptive device or 13 contrivance . . . . ” 15 U.S.C. § 78j(b). Under this section, the SEC promulgated Rule 10b–5, 14 which makes it unlawful, among other things, “[t]o make any untrue statement of a material fact or 15 to omit to state a material fact necessary in order to make the statements made, in the light of the 16 circumstances under which they were made, not misleading.” 17 C.F.R. § 240.10b–5(b). To 17 prevail on a claim for violations of either Section 10(b) or Rule 10b–5, a plaintiff must prove six 18 elements: “(1) a material misrepresentation or omission by the defendant; (2) scienter; (3) a 19 connection between the misrepresentation or omission and the purchase or sale of a security; 20 (4) reliance upon the misrepresentation or omission; (5) economic loss; and (6) loss causation.” 21 Stoneridge Inv. Partners, LLC v. Scientific–Atlanta, Inc., 552 U.S. 148, 157 (2008). 22 At the pleading stage, a complaint alleging claims under Section 10(b) and Rule 10b–5 23 must not only meet the requirements of Federal Rule of Civil Procedure 8, but also satisfy the 24 heightened pleading requirements of both Federal Rule of Civil Procedure 9(b) and the Private 25 Securities Litigation Reform Act (“PSLRA”). In re Rigel Pharm., Inc. Sec. Litig., 697 F.3d 869, 26 876 (9th Cir. 2012). Under Rule 9(b), claims alleging fraud are subject to a heightened pleading 27 requirement, which requires that a party “state with particularity the circumstances constituting 1 subject to the “more exacting pleading requirements” of the PSLRA, which require that the 2 complaint plead with particularity both falsity and scienter. Zucco Partners, LLC v. Digimarc 3 Corp., 552 F.3d 981, 990 (9th Cir. 2009). 4 III. REQUEST FOR JUDICIAL NOTICE 5 Klaerner asks the Court to take judicial notice of 30 exhibits. See Dkt. No. 129 (request 6 for judicial notice of 28 exhibits); Dkt. No. 136 (supplemental request for judicial notice of 2 7 exhibits). He argues that the exhibits are appropriately subject to the Court’s consideration under 8 the doctrines of judicial notice and incorporation by reference. Fiore filed no objection to either of 9 Klaerner’s requests for judicial notice. 10 A. Legal Standard 11 “Generally, district courts may not consider material outside the pleadings when assessing 12 the sufficiency of a complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure.” In re 13 Eventbrite, Inc. Sec. Litig., No. 18-CV-02019-EJD, 2020 WL 2042078, at *7 (N.D. Cal. Apr. 28, 14 2020) (citing Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001); Khoja v. Orexigen 15 Therapeutics, Inc., 899 F.3d 988, 998 (9th Cir. 2018)); see also Fed. R. Civ. P. 12(d). “This rule 16 does not apply to the incorporation by reference doctrine or judicial notice under Federal Rule of 17 Evidence 201.” Eventbrite, 2020 WL 2042078, at *7 (citing Khoja, 899 F.3d at 998). 18 A court may take judicial notice of an “adjudicative fact” pursuant to the Federal Rules of 19 Evidence, if that fact is one “that is not subject to reasonable dispute because it: (1) is generally 20 known within the trial court’s territorial jurisdiction; or (2) can be accurately and readily 21 determined from sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b). 22 Thus, under Rule 201, courts may “take judicial notice of matters of public record, but not of facts 23 that may be subject to reasonable dispute.” United States v. Corinthian Colls., 655 F.3d 984, 999 24 (9th Cir. 2011) (internal quotation marks and citation omitted). 25 In the Ninth Circuit, incorporation by reference is a doctrine that “treats certain documents 26 as though they are part of the complaint itself.” Khoja, 899 F.3d at 1002. A document may be 27 incorporated by reference into a complaint “if the plaintiff refers extensively to the document or 1 (9th Cir. 2003). “Once a document is deemed incorporated by reference, the entire document is 2 assumed to be true for purposes of a motion to dismiss, and both parties—and the Court—are free 3 to refer to any of its contents.” In re NVIDIA Corp. Sec. Litig., 768 F.3d 1046, 1058 n.10 (9th Cir. 4 2014) (internal quotation marks and citation omitted). 5 B. Analysis 6 Exhibits 1-7 are public documents filed with the SEC. Exhibit 17 is a public decisional 7 memo from the Office of Drug Evaluation, which Klaerner offers to provide publicly available 8 information about a previous drug development program he led. Exhibit 22 is an FDA Advisory 9 Committee Calendar document publicly posted by the FDA. Exhibits 23–26 are documents 10 publicly posted by the National Institutes of Health. The Court previously granted judicial notice 11 as to Exhibits 1–6 and 22–26 without taking notice of the truth of any of the facts asserted. See 12 Order at *3. The “accuracy” of all these public documents “is not reasonably subject to dispute.” 13 Wochos v. Tesla, Inc., No. 17-CV-05828-CRB, 2018 WL 4076437, at *1 (N.D. Cal. Aug. 27, 14 2018); see Dreiling v. Am. Exp. Co., 458 F.3d 942, 946 n.2 (9th Cir. 2006) (noting that SEC filings 15 are subject to judicial notice); In re Yahoo! Inc. Customer Data Sec. Breach Litig., No. 16-MD- 16 02752-LHK, 2017 WL 3727318, at *10 (N.D. Cal. Aug. 30, 2017) (“[B]oth SEC filings and 17 documents on government websites are proper subjects of judicial notice.”). Accordingly, the 18 Court GRANTS Klaerner’s request for judicial notice as to Exhibits 1–7, 17, and 22–26 for the 19 purpose of considering what was disclosed to the market. In doing so, the Court does not assume 20 the truth of any of the facts asserted. Wochos, 2018 WL 4076437, at *2. 21 Exhibits 8–14 and 28 and Reply Exhibit 2 are communications between Tricida and the 22 FDA, including meeting agendas, meeting minutes, letters, Type A meeting requests, and Type C 23 written responses. All of these exhibits except for Exhibit 13 are cited in the SAC and serve as the 24 basis for Fiore’s new allegations of falsity and scienter. Exhibits 15–16 are transcripts of earnings 25 calls cited in the SAC, which the Court found to be properly subject to judicial notice in its prior 26 order. See Order at *4. Reply Exhibit 1 is a transcript from an earnings call that is not cited in the 27 SAC. Exhibits 8–12, 14–16, and 28, as well as Reply Exhibit 2, are incorporated by reference 1 See Khoja, 899 F.3d at 998 (“a defendant may seek to incorporate a document into the complaint 2 ‘if the plaintiff refers extensively to the document or the document forms the basis of the 3 plaintiff’s claim.’”) (quoting Ritchie, 342 F.3d at 907); see, e.g., Mulquin v. Nektar Therapeutics, 4 510 F. Supp. 3d 854, 863 (N.D. Cal. 2020) (“The Court will consider the investor presentation 5 transcripts and investor presentation slide decks that Plaintiffs allege contain false and/or 6 misleading statements for the purpose of determining what was disclosed to the market.”). 7 Finding these documents incorporated by reference, the Court GRANTS the motion as to Exhibits 8 8–12, 14–16, and 28 and Reply Exhibit 2. Because Exhibit 13 and Reply Exhibit 1 are not 9 specifically referenced in the complaint or relevant to the Court’s analysis because they are offered 10 to dispute the SAC’s well-pled allegations, Klaerner’s requests as to those exhibits is DENIED. 11 See In re Lyft Inc. Sec. Litig., 484 F. Supp. 3d 758, 764 (N.D. Cal. 2020) (denying request for 12 judicial notice where exhibits were neither specifically referenced in the operative complaint nor 13 relevant to the Court’s analysis). 14 Exhibits 18–21 are four publications from the scientific journal, The Lancet. The Court 15 previously took judicial notice of these publications to indicate what was in the public realm at the 16 time. See Order at *4 (citing cases). For the same reasons, the Court GRANTS Klaerner’s 17 request for judicial notice as to Exhibits 18–21, again without taking notice of the truth of the facts 18 asserted. Finally, Klaerner seeks judicial notice of Exhibit 27, which is a public court filing 19 related to Tricida’s bankruptcy proceedings. The Court “may take judicial notice of court filings 20 and other matters of public record,” Reyn’s Pasta Bella, LLC v. Visa USA, Inc., 442 F.3d 741, 746 21 n.6 (9th Cir. 2006), and in light of Fiore’s lack of opposition, the Court GRANTS Klaerner’s 22 request as to Exhibit 27. 23 IV. MOTION TO DISMISS 24 Fiore alleges that Klaerner3 violated Section 10(b) of the Exchange Act and Rule 10b-5 by 25 making false or misleading statements either intentionally or recklessly, starting with the June 28, 26 2018 Registration Statement and Prospectus accompanying Tricida’s IPO and ending with 27 1 Tricida’s February 25, 2021 press release. See, e.g., SAC at ¶¶ 7, 33, 65, 185, 188. Klaerner 2 moves to dismiss on two grounds: (1) the challenged statements were not materially false or 3 misleading; and (2) Fiore fails to adequately plead facts giving rise to a strong inference of 4 scienter. See Mot. at 6–7.4 5 To plead a claim under section 10(b) and Rule 10b-5, Fiore must allege: “(1) a material 6 misrepresentation or omission by [Klaerner]; (2) scienter; (3) a connection between the 7 misrepresentation or omission and the purchase or sale of a security; (4) reliance upon the 8 misrepresentation or omission; (5) economic loss; and (6) loss causation.” Macomb Cty. Emps. 9 Ret. Sys. v. Align Tech., Inc., 39 F.4th 1092, 1098 (9th Cir. 2022). 10 As a preliminary matter, without seeking leave, Klaerner attempts to revisit statements that 11 the Court already found sufficiently pled. See, e.g., Mot. at 6 (asserting that the new FDA 12 documents “doom[] [Fiore’s] attack on all the challenged statements, including the one statement 13 that survived the prior motion to dismiss.”); id. at 27 (“But information before the Court for the 14 first time now undermines [Fiore’s] allegation, and the Court may appropriately revisit the issue in 15 light of that information.”); see generally id. at 11–18, 27–28. This is an impermissible de facto 16 motion for reconsideration of the Court’s previous order, which Klaerner neither acknowledges 17 nor properly briefs. The Court finds that there is no basis to revisit any of its prior rulings, 18 including the statements discussing outstanding review issues with the FDA that the Court 19 previously found to be sufficiently pled. See Order at *12–14, 17–18. Accordingly, the Court 20 only addresses the statements that it previously found inadequately pled, along with the new 21 purported misrepresentations and allegations of scienter raised in the operative complaint.5 22 A. Material Misrepresentations or Omissions 23 a. Legal Standard for Falsity 24 Klaerner challenges Fiore’s claims that his statements concerning Tricida’s Phase 3 25

26 4 All references to page numbers in filings are to the ECF pagination at the top of the document. 5 Even if considered, the Court disagrees that anything in the new FDA documents “dooms” the 27 SAC when “accept[ing] factual allegations in the [SAC] as true and constru[ing] the pleadings in 1 clinical trial for veverimer were false or misleading. See Mot. at 11–22. “Falsity is alleged when 2 a plaintiff points to [the] defendant’s statements that directly contradict what the defendant knew 3 at that time.” Khoja, 899 F.3d at 1008. “In setting forth the reasons why they contend that each 4 challenged statement is misleading, securities plaintiffs may rely either on an affirmative 5 misrepresentation theory or an omission theory.” Wochos v. Tesla, Inc., 985 F.3d 1180, 1188 (9th 6 Cir. 2021) (citing 17 C.F.R. § 240.10b–5(b)). “Under Rule 10b–5, an affirmative 7 misrepresentation is an ‘untrue statement of a material fact,’ and a fraudulent omission is a failure 8 to ‘state a material fact necessary in order to make the statements made, in light of the 9 circumstances under which they are made, not misleading.’” Id. 10 “A statement is misleading if it would give a reasonable investor the impression of a state 11 of affairs that differs in a material way from the one that actually exists.” Retail Wholesale & 12 Dep’t Store Union Local 338 Ret. Fund v. Hewlett-Packard Co., 845 F.3d 1268, 1275 (9th Cir. 13 2017) (quotations and alterations omitted). “To be misleading, a statement must be ‘capable of 14 objective verification.’” Id. (quoting Or. Pub. Emps. Ret. Fund v. Apollo Grp. Inc., 774 F.3d 598, 15 606 (9th Cir. 2014)). “For example, ‘puffing’—expressing an opinion rather than a knowingly 16 false statement of fact—is not misleading.” Id.; see also In re Cornerstone Propane Partners, 17 L.P., 355 F. Supp. 2d 1069, 1087 (N.D. Cal. 2005) (“Generally, such statements consist of 18 forward-looking or generalized statements of optimism that are ‘not capable of objective 19 verification,’ and ‘lack[ ] a standard against which a reasonable investor could expect them to be 20 pegged.’”) (citations omitted). However, even “general statements of optimism, when taken in 21 context,” may be misleading “when those statements address specific aspects of a company’s 22 operation that the speaker knows to be performing poorly.” In re Quality Sys., Inc. Sec. Litig., 865 23 F.3d 1130, 1143 (9th Cir. 2017). 24 “Even if a statement is not false, it may be misleading if it omits material 25 information.” Khoja, 899 F.3d at 1008–09. “An omission is material when there is a substantial 26 likelihood that the disclosure of the omitted fact would have been viewed by the reasonable 27 investor as having significantly altered the total mix of information available.” Irving Firemen’s 1 “Omissions are actionable only where they make the actual statements misleading; it is not 2 sufficient that an investor merely would consider the omitted information significant.” Id. 3 (internal quotation marks and citation omitted). “For the purposes of a 10b–5 claim, a 4 misrepresentation or omission is material if there is a substantial likelihood that a reasonable 5 investor would have acted differently if the misrepresentation had not been made or the truth had 6 been disclosed.” Livid Holdings Ltd. v. Salomon Smith Barney, Inc., 416 F.3d 940, 946 (9th Cir. 7 2005). 8 b. The Statements at Issue 9 1. Opinion Statements 10 In the SAC, Fiore challenges a number of statements made by Klaerner which were 11 allegedly misleading as to the likelihood that Tricida would achieve accelerated approval because 12 those representations omitted concerns raised by the FDA in its ongoing dialogue with Tricida 13 throughout the review and approval process. For example, Klaerner stated that the TRCA-301 14 trial “met both its primary and secondary endpoints in a highly statistically significant manner” 15 and that TRCA-301E “met its primary and all secondary endpoints.” See, e.g., SAC at ¶¶ 106, 16 114, 121, 123, 125, 136, 144, 155–56. Klaerner also expressed optimism about the submission, 17 review, and approval of the NDA. See, e.g., id. at ¶ 104 (“Based on feedback from the FDA, we 18 believe that the data from the TRCA-101, TRCA-301 and TRCA-301E trials will provide 19 sufficient evidence of clinical safety and efficacy to support the submission and review of an NDA 20 for TRC101 pursuant to the Accelerated Approval Program.”); id. at ¶ 114 (Klaerner reported on 21 an earnings call that the combined results of the TRCA-301/TRCA-301E trial “far exceeded our 22 expectations,” and “we feel good about what we’ve learned in the 301E study regarding safety and 23 efficacy, increasing our confidence for a successful VALOR-CKD trial.”); id. at ¶ 131 (“And 24 when you fast-forward in all the work that we’ve done, from a discovery to an early development, 25 to a late stage development, agreeing with FDA, an accelerated approval path, you -- all you 26 expect to do is to show a surrogate effect, and then you have a post-marketing commitment that 27 ultimately then, you confirm that, that surrogate is going to translate.”) (emphasis omitted); id. at 1 will provide sufficient clinical evidence of safety and efficacy to support the approval of our NDA 2 for veverimer pursuant to the Accelerated Approval Program.”). And on May 7, 2020, Klaerner 3 stated that “[o]verall, while the FDA continues its review, we remain confident that our 4 submission meets the standard for approval through the Accelerated Approval Program.” Id. at 5 ¶ 158. 6 Fiore contends that the representations regarding the trial’s endpoints were false and 7 misleading because Klaerner failed to disclose that the FDA had repeatedly indicated its 8 disagreement that TRCA-301’s endpoint was substantial enough to demonstrate the trial’s clinical 9 effectiveness, and the Agency had warned Defendants that simply “winning” on the primary 10 endpoint was insufficient for accelerated approval. Id. at ¶¶ 122–23, 126, 137, 156. Fiore also 11 claims that the optimistic statements about the NDA were false and misleading because they failed 12 to disclose significant issues and feedback communicated by the FDA. Id. at ¶¶ 104–105, 157; 13 see, e.g., id. at ¶ 115 (the FDA had “repeatedly told Defendants that it did not agree that TRCA- 14 301/301E’s endpoint was substantial enough to demonstrate clinical efficacy.”). Finally, Fiore 15 argues that the May 7, 2020 statement was false or misleading because the FDA had told Klaerner 16 at two prior meetings that “the trial results were likely inapplicable to the U.S. population because 17 TRCA-301/301E relied on foreign data primarily from a single site in Bulgaria and because the 18 size of the treatment effect was too small to be ‘reasonably likely’ to predict clinical benefit,” and 19 that study participants largely appeared to be suffering from a different condition, Balkan Endemic 20 Nephropathy (“BEN”), not CKD. Id. at ¶¶ 160–61. 21 The Court finds that the statements identified by Fiore are opinions, “since they inherently 22 reflect the speaker’s assessment of and judgment about the underlying circumstances.” Markette 23 v. XOMA Corp., No. 15-CV-03425-HSG, 2017 WL 4310759, at *4 (N.D. Cal. Sept. 28, 2017). 24 “Interpretations of clinical trial data are considered opinions,” which “are only actionable under 25 the securities laws if they are not honestly believed and lacked a reasonable basis.” City of 26 Edinburgh Council v. Pfizer, Inc., 754 F.3d 159, 170 (3d Cir. 2014). In pleading the falsity of 27 opinion statements such as these, Fiore “must allege both that ‘the speaker did not hold the belief 1 & Fire Ret. Sys. v. Align Tech., Inc., 856 F.3d 605, 616 (9th Cir. 2017). As the Supreme Court 2 explained in Omnicare, “a statement of opinion is not misleading just because external facts show 3 the opinion to be incorrect.” Omnicare, Inc. v. Laborers Dist. Council Const. Indus. Pension 4 Fund, 575 U.S. 175, 186 (2015). “[W]hether an omission makes an expression of opinion 5 misleading always depends on context.” Id. at 190. Investors take into account “the customs and 6 practices of the relevant industry,” “[s]o an omission that renders misleading a statement of 7 opinion when viewed in a vacuum may not do so once that statement is considered, as appropriate, 8 in a broader frame.” Id. 9 While “general statements of optimism” made against a clearly pessimistic backdrop “may 10 form a basis for a securities fraud claim,” the SAC does not sufficiently plead an actionable claim 11 on this basis. Macomb, 39 F.4th at 1099 (quoting Police Ret. Sys. of St. Louis v. Intuitive Surgical, 12 Inc., 759 F.3d 1051, 1060 (9th Cir. 2014)). Fiore fails to plausibly allege that Klaerner did not 13 hold the optimistic beliefs he professed, or that these beliefs are objectively untrue. For example, 14 the FDA’s expression of its view that the results likely would not be applicable to the U.S. 15 population does not show that Klaerner’s confidence in the likelihood of approval was necessarily 16 objectively false or not honestly held. See Markette, 2017 WL 4310759, at *5 (quoting Dearborn 17 Heights, 856 F.3d at 616); see also Omnicare, 575 U.S. at 186 (characterizing the inquiry as 18 focused on whether the speaker’s opinion was “honestly held”). Thus, Fiore fails to plausibly 19 plead any basis for concluding that Klaerner’s opinion statements characterizing the trial results 20 and expressing optimism about FDA approval directly contradicted what he knew at the time and 21 were therefore false. Khoja, 899 F.3d at 1008. 22 Moreover, the Court agrees with Klaerner that there is no general requirement under the 23 securities laws for a company to engage in a rolling, communication-by-communication disclosure 24 of every detail arising from the back-and-forth dialogue with the FDA throughout its complex 25 review and approval process, or to adopt the FDA’s position as correct and share it with the public 26 when discussing its product. See Mot. at 19–22; see also Brody v. Transitional Hosps. Corp., 280 27 F.3d 997, 1006 (9th Cir. 2002) (rejecting argument that there is a “freestanding completeness 1 assumption that because the FDA communicated its views to Klaerner throughout the course of 2 the extensive review and approval process, it follows that his statements failing to 3 contemporaneously convey the FDA’s views and accept them as true were materially misleading. 4 But that theory does not plausibly plead falsity. Fiore does not cite, and the Court has not found, 5 controlling Ninth Circuit authority suggesting that a company’s failure to disclose the FDA’s 6 positions in real time establishes falsity under the PSLRA. To the contrary, the FDA approval 7 process necessarily involves a dialogue between companies like Tricida and the Agency, and the 8 company has “no legal obligation to loop the public into each detail of every communication with 9 the FDA.” In re Dynavax Sec. Litig., No. 4:16-CV-06690-YGR, 2018 WL 2554472, at *7 (N.D. 10 Cal. June 4, 2018) (quoting Corban v. Sarepta Therapeutics, Inc., 868 F.3d 31, 40 (1st Cir. 2017)). 11 Post-Omnicare, other courts of appeal have rejected theories imposing such a disclosure 12 requirement in securities fraud cases involving the FDA approval process. For example, in 13 Tongue v. Sanofi, the plaintiffs “[were] sophisticated investors, no doubt aware that projections 14 provided by issuers are synthesized from a wide variety of information, and that some underlying 15 facts may be in tension with the ultimate projection set forth by the issuer.” 816 F.3d 199, 211 (2d 16 Cir. 2016). The Second Circuit explained that these investors, “well accustomed to the ‘customs 17 and practices of the relevant industry,’” would fully expect that the defendants and the FDA were 18 engaged in a continuous dialogue “about the sufficiency of various aspects of the clinical trials and 19 that inherent in the nature of [such] a dialogue are differing views.” Id. Thus, the Second Circuit 20 concluded the defendants’ statements about the effectiveness of their drug “[could not] be 21 misleading merely because the FDA disagreed with the conclusion—so long as Defendants 22 conducted a ‘meaningful’ inquiry and in fact held that view, the statements did not mislead in a 23 manner that [was] actionable.” Id. at 214. 24 Similarly, in In re Amarin Corp. PLC Sec. Litig., the Third Circuit concluded that the 25 plaintiffs failed to plead falsity because the company’s announcement of the topline results of its 26 Phase 3 trial “did not lack a reasonable basis.” No. 21-2071, 2022 WL 2128560, at *3 (3d Cir. 27 June 14, 2022). The court also found the plaintiffs’ theory of omission liability unpersuasive 1 argued was improperly omitted. Id. And the court rejected the theory that the company had a duty 2 to disclose additional information when announcing its topline results because the company had 3 put information about the trial’s placebo arm “in play.” Id. The court recognized that “[t]here is 4 no affirmative duty to disclose all material information, but such a duty may arise when a 5 company chooses ‘to speak about a material subject to investors.’” Id. (citations omitted). The 6 Third Circuit explained, however, that while the disclosures at issue described the trial results with 7 reference to the placebo group, “they did not make any affirmative characterizations regarding the 8 effectiveness” of the placebo. Id. (citation omitted). Accordingly, “[the company’s] disclosure of 9 the topline results did not put into play either the full trial data or additional information” 10 regarding the placebo. Id. 11 Here, as in Amarin, the SAC details several instances in which Klaerner did disclose 12 information that Fiore argues was improperly omitted. See Mot. at 20–21. For example, in both 13 the 2018 Prospectus and the Prospectus accompanying the April 2019 offering, Tricida disclosed 14 that its application relied on “an unvalidated surrogate endpoint,” and explained that “the FDA 15 may not agree that we have achieved the primary endpoint in our pivotal Phase 3 clinical trial, 16 TRCA-301, to the magnitude or to the degree of statistical significance required by the FDA.” 17 SAC at ¶ 108 (emphasis omitted). 18 Fiore claims that these disclosures were “too generalized” to actually disclaim the specific 19 risks identified by the FDA. See, e.g., SAC at ¶¶ 103, 108. The Court disagrees. “Reasonable 20 investors understand that dialogue with the FDA is an integral part of the drug approval process, 21 and no sophisticated investor familiar with standard FDA practice would expect that every view [] 22 taken by Defendants was shared by the FDA.” Sanofi, 816 F.3d at 214. Fiore does not plausibly 23 plead that the statements at issue here “lack[ed] a reasonable basis,” Amarin, 2022 WL 2128560, 24 at *3, or that Defendants failed to conduct a “meaningful” inquiry and did not in fact hold the 25 views expressed in their statements, Sanofi, 816 F.3d at 214. “In the absence of plausible 26 allegations showing a conflict between Defendants’ statements and the FDA feedback,” Sanofi, 27 816 F.3d at 214, the SAC fails to sufficiently plead that omitting information regarding the 1 omitted to discuss certain matters).” In re OmniVision Tech., Inc. Sec. Litig., 937 F. Supp. 2d 2 1090, 1101 (N.D. Cal. 2013) (emphasis omitted); see also Markette, 2017 WL 4310759, at *7. 3 And as in Sanofi, “fatal to [Fiore’s] case is the absence of any serious conflict between the FDA’s 4 interim, albeit repeated, concerns about [the adequacy of the Phase 3 trial] and Defendants’ 5 optimism about FDA approval.” Sanofi, 816 F.3d at 212. Ultimately, the fact that Tricida had a 6 years-long iterative dialogue with the FDA, during which the agency unsurprisingly raised issues 7 as to which there were differences of opinion, does not plausibly allege that the opinion statements 8 by Klaerner identified in the SAC were false or misleading by omission under the demanding 9 standard set by the PSLRA and cases interpreting it. 10 Nor does the Ninth Circuit’s decision in Schueneman support a different result. While that 11 case formally addressed scienter rather than falsity, the Schueneman court found that the plaintiff 12 adequately pled scienter where the company reported “favorable results on everything” in animal 13 studies and conveyed optimism about FDA approval while allegedly concealing strong indications 14 that the drug caused cancer in rats. Schueneman v. Arena Pharm., Inc., 840 F.3d 698, 702, 708 15 (9th Cir. 2016) (emphasis omitted). The company “did more than just express its confidence in 16 [the drug’s] future”—it affirmatively represented that “all the animal studies that [had] been 17 completed” supported the company’s case for approval. Id. at 708. At the time these statements 18 were made, the company “knew the animal studies were the sticking point with the FDA.” Id. 19 (emphasis in original). The Ninth Circuit reasoned that these statements were representations 20 about the drug that the company could not support at the time they were made. As the court 21 explained, [the company] was free to express confidence in FDA approval. It 22 might have represented that [the company] was working through some requests from the FDA and was confident the data would 23 vindicate [the drug]. But what it could not do was express confidence by claiming that all of the data was running in [the drug’s] favor. It 24 was not. 25 Id.; see also Corban, 868 F.3d at 40 (“That the defendants neglected to mention specific factors 26 (many of them intricate and technical) contributing to the FDA's position, while nonetheless 27 faithfully representing that position (indeed quoting directly from FDA sources at times), strikes 1 Along these lines, Fiore relies on a recent opinion from this district in contending that 2 Klaerner’s omissions about the FDA’s concerns were actionable. Opp. at 20 (citing Homyk v. 3 ChemoCentryx, Inc., No. 21-CV-03343-JST, 2023 WL 3579440, at *8 (N.D. Cal. Feb. 23, 2023)). 4 In Homyk, the plaintiff similarly alleged that the defendants’ statements were misleading because 5 they failed to disclose the FDA’s concerns about the company’s drug trial. Homyk, 2023 WL 6 3579440, at *8. For example, the defendant in Homyk stated “All of our interactions with the 7 agency so far . . . [have] to my mind been straightforward and expected,” and “[T]he review 8 process in our opinion is going in a very straightforward, routine manner . . . So, nothing 9 extraordinary to report at this point.” Id. at *15 (emphasis omitted). The Court found that the 10 plaintiff adequately pled that the challenged omissions were misleading, because any of the risks 11 identified by the FDA that the drug would not be approved “could be important to a reasonable 12 investor.” Id. The Court also found the plaintiff’s theory of motive plausible even if the 13 defendants “truly believed” they could successfully convince the FDA that the omitted adverse 14 facts should not affect the drug’s approval. Id. at *20. 15 Here, unlike in Schueneman, Klaerner did not “represent that there was no controversy 16 [with the FDA] because all the data was favorable.” Schueneman, 840 F.3d at 709. And unlike in 17 Homyk, as discussed above, the SAC notes multiple instances in which Klaerner directly and 18 specifically described risk factors based on what the FDA might ultimately decide. See, e.g., SAC 19 at ¶¶ 103, 108. Klaerner’s failure to disclose all of the specific details of the FDA’s concerns does 20 not render all of his opinions conveying optimism about the approval process false and 21 misleading. “That such a dialogue [with the FDA] was ongoing did not prevent [Klaerner] from 22 expressing optimism, even exceptional optimism, about the likelihood of drug approval.” Sanofi, 23 816 F.3d at 211. 24 Therefore, the Court grants Klaerner’s motion as to these statements. 25 2. Factual Statements Alleged to be False or Misleading 26 (a) Statement that the Advisory Committee Meeting Was Canceled “In Part” Due to COVID-19 27 1 on the May 7, 2020 earnings call that an upcoming Advisory Committee meeting, also known as 2 “AdCom,” was canceled “due in part to the logistical challenges posed by COVID-19” was false 3 or misleading. See Order at *12; see also SAC at ¶¶ 25–26, 158–59. The Court explained that the 4 previous complaint contained no facts “supporting the suggestion that the FDA told Defendants it 5 canceled the AdCom meeting because of problems with the NDA.” Order at *12. 6 In the SAC, Fiore now directly alleges that “[t]he FDA did not cite logistical challenges 7 stemming from COVID-19 as even a contributing factor in canceling the AdCom meeting in its 8 communications with Tricida.” SAC at ¶ 159. Instead, citing the documents produced by the 9 FDA, he alleges that the AdCom meeting was canceled because of “the FDA’s concerns that there 10 were too many problems with the NDA to even warrant convening an Advisory Committee.” Id. 11 Specifically, Fiore cites documents detailing communications from the FDA to Tricida beginning 12 in January 2020 in which the Agency identified “significant issues” with the trial and their impact 13 on a potential AdCom meeting, and contends that these issues ultimately led to cancellation of that 14 meeting. See, e.g., id. at ¶¶ 72–77, 159. The SAC further alleges that Klaerner knew about these 15 issues because he attended meetings in January and May 2020 at which the FDA discussed them. 16 Id. at ¶¶ 163–65. 17 Klaerner argues that “[s]aying that the need for a meeting is ‘no longer obvious’ is a far cry 18 from saying that the meeting will not take place and even further removed from a statement that 19 the drug will not be approved,” and contends that the minutes of the mid-cycle meeting cited by 20 Fiore show that the AdCom meeting was still on the table. Mot. at 17. However, construing the 21 pleadings in the light most favorable to Fiore, the Court concludes that he has sufficiently alleged 22 that Klaerner’s May 7 statement was false or misleading given that the FDA never cited COVID- 23 19 logistics as the reason for the cancellation. Cf. Sanofi, 816 F.3d at 214 (finding the plaintiffs’ 24 claims failed in the absence of plausible allegations showing a “direct conflict” between the 25 defendants’ statements and the FDA feedback). Fiore plausibly pleads that Klaerner misled 26 investors as to the true reasons, even “in part,” for why the AdCom meeting was canceled, 27 “affirmatively creat[ing] an impression of a state of affairs that differ[ed] in a material way from 1 substantial likelihood that the disclosure of the [allegedly] omitted fact”—namely, that the FDA 2 referenced its concerns with the NDA, and never referenced the COVID-19 pandemic, in 3 canceling the AdCom meeting—“would have been viewed by the reasonable investor as having 4 significantly altered the total mix of information available.” Irving, 398 F. Supp. 3d at 556. 5 Therefore, the Court denies Klaerner’s motion to dismiss on this ground. 6 (b) Other Alleged Omissions 7 Similarly, the SAC identifies other factual representations that Fiore contends were 8 misleading with respect to Tricida’s likelihood of achieving FDA approval. For example, 9 Klaerner stated that “[o]ne hundred ninety-six of the 208 subjects who completed the 12-week 10 treatment period in our pivotal Phase 3 trial, TRCA-301, agreed and were eligible to continue in 11 our extension trial, TRCA-301E, which we completed in March 2019.” SAC at ¶ 125. Fiore 12 argues that this statement was misleading because very few patients in the United States continued 13 on and completed the full 52-week trial, and the FDA had warned Tricida not to rely on a patient 14 population outside of the United States. Id. at ¶¶ 127, 138. 15 The Court finds that the SAC does not adequately plead that these omissions identified by 16 Fiore made the affirmative factual statements false or misleading. Importantly, Tricida did 17 disclose to investors that the majority of the trial participants were outside of the United States and 18 explained how that fact could affect FDA approval. Id. at ¶ 103 (“We conducted the TRCA-301 19 trial and are conducting the TRCA-301E trial with majority enrollment outside the United States 20 and may, in the future, conduct clinical trials of our product candidates outside the United States. 21 The FDA may not accept such foreign clinical data . . . .”) (emphasis omitted). Viewing the 22 identified statements in context, Omnicare, 575 U.S. at 190, Fiore does not explain how 23 Klaerner’s omissions affected the “total mix” of information available to a reasonable investor, 24 Irving, 398 F. Supp. 3d at 556, or why the disclosures Klaerner did make gave reasonable 25 investors a misleading impression of the actual state of affairs, Berson v. Applied Signal Tech., 26 Inc., 527 F.3d 982, 987 (9th Cir. 2008), given that there is no “freestanding completeness 27 requirement” under the securities laws, Brody, 280 F.3d at 1006. B. Scienter 1 a. Legal Standard for Scienter 2 3 Klaerner also contends that Fiore’s allegations are insufficient to support a “strong 4 inference” of scienter. Mot. at 22–30. Under the PSLRA, whenever intent is an element of a 5 claim, the complaint must “state with particularity facts giving rise to a strong inference that the 6 defendant acted with the required state of mind.” 15 U.S.C. § 78u-4(b)(2)(A). “The PSLRA’s 7 strong inference requirement has teeth,” and “is an exacting pleading obligation” that “present[s] 8 no small hurdle for the securities fraud plaintiff.” Nguyen v. Endologix, Inc., 962 F.3d 405, 414 9 (9th Cir. 2020) (citing Zucco Partners, 552 F.3d at 990). “A complaint will only survive only if a 10 reasonable person would deem the inference of scienter cogent and at least as compelling as any 11 plausible opposing inference one could draw from the facts alleged.” Tellabs, Inc. v. Makor Issues 12 & Rts., Ltd., 551 U.S. 308, 310 (2007). “In this circuit, the required state of mind is a mental state 13 that not only covers intent to deceive, manipulate, or defraud, but also deliberate recklessness.” E. 14 Ohman J:or Fonder AB v. NVIDIA Corp., 81 F.4th 918, 937 (9th Cir. 2023) (citation omitted). 15 “‘[D]eliberate recklessness’ is more than ‘mere recklessness or a motive to commit fraud.’” 16 Nguyen, 962 F.3d at 414 (citations omitted) (emphasis in original). “It is instead ‘an extreme 17 departure from the standards of ordinary care,’ which ‘presents a danger of misleading buyers or 18 sellers that is either known to the defendant or is so obvious that the actor must have been aware of 19 it.’” Id. (citation omitted) (emphasis in original). 20 As in its prior order, the Court addresses scienter as to the statements it previously found 21 were adequately alleged to have been material misrepresentations and omissions, as well as the 22 one new misrepresentation it finds to be sufficiently pled.6 23 ///

25 6 Fiore sets forth no new arguments regarding scienter as to the theories rejected by the Court in its last order. See Order at *14–15 (discussing Fiore’s allegations that Defendants were motivated to 26 mislead the market because they otherwise would have run out of money, and that Klaerner made suspicious stock sales, as well as Fiore’s generalized claims under the “core operations” theory). 27 Accordingly, the Court does not revisit its prior rulings on these bases, other than to again b. Statements About the Location of the Phase 3 TRCA- 1 301/TRCA-301E Trial Sites 2 The Court previously found that Fiore did not plausibly allege scienter with respect to the 3 statements that Tricida conducted its Phase 3 trials in “Europe.” See Order at *15–16. The Court 4 reasoned that “there [were] no allegations supporting the required ‘strong inference’ that 5 Defendants intended to mislead or were deliberately reckless in characterizing the trial location as 6 ‘Europe’ generally.” Id. at *16. “Put another way, as alleged, nothing about the claimed 7 underlying representativeness problems meets this high ‘so obvious’ standard, such that 8 Defendants would have known that their literally true use of ‘Europe’ would be misleading.” Id. 9 Fiore now contends that the new FDA documents supply what was missing in the prior 10 complaint. Specifically, the SAC provides additional allegations derived from the FDA 11 documents indicating that Klaerner attended meetings at which the FDA specifically cautioned 12 Tricida against relying on patient data from Eastern European countries. See, e.g., SAC at ¶¶ 57– 13 58, 69, 76, 98, 140, 188; see also Opp. at 12. Klaerner argues that these allegations are no 14 different than those previously rejected by the Court, in that they amount to the assertion that 15 Defendants knew “the FDA would be less likely to accept their NDA because it relied on clinical 16 trial data from Eastern European patients who are unlikely to be representative of the U.S. patient 17 population and U.S. medical care.” Order at *16. 18 The Court agrees with Klaerner and finds that Fiore’s allegations again fail to raise a 19 “strong inference” of scienter. As the Court found in its prior order, there are no allegations in the 20 SAC plausibly pleading that the literally true characterization of the trial location as “Europe” 21 generally amounted to “an extreme departure from the standards of ordinary care, and which 22 present[ed] a danger of misleading buyers or sellers” that was either known to Klaerner or so 23 obvious that Klaerner must have been aware of it. Zucco Partners, 552 F.3d at 991; see also 24 Order at *16. 25 Klaerner also convincingly argues that the fact that Tricida specifically directed the market 26 to information disclosing the location of the trials cuts against any inference of scienter. See Mot. 27 at 26. For example, Tricida conveyed this information through articles published by The Lancet, 1 (Ex. 15) at 7 (“I would like to highlight the publication of our Phase III TRC101 clinical trial 2 results in The Lancet, a leading independent general medical journal.”). Such actions further 3 negate any inference of scienter. See, e.g., Rigel, 697 F.3d at 885 (“if the individual defendants 4 were acting based on their belief that they had a financial motive to conceal the ‘true’ results of the 5 clinical trial, they would not have voluntarily publicly disclosed all the data and the statistical 6 methodology.”); Nguyen, 962 F.3d at 417 (finding the plaintiff was “hard-pressed to build a fraud 7 case” around a study when she admitted in her complaint that the defendant “acknowledged and 8 discussed this very study on an investor conference call”). 9 Accordingly, the Court again finds that Fiore fails to sufficiently allege scienter as to these 10 statements. 11 c. Risk Disclosures About the Location of the Phase 3 TRCA- 301/TRCA-301E Trial Sites 12 13 Similarly, in its prior order, the Court concluded that Fiore did not plausibly allege scienter 14 as to the risk disclosures regarding Tricida’s use of foreign clinical data. See Order at *15. The 15 Court explained that the scienter analysis for these disclosures tracked that for the “Europe” 16 statements “because both flow from the same contention that Defendants knew the FDA would be 17 less inclined to accept their NDA because it relied on clinical trial data taken from Eastern 18 European patients unlikely to be representative of the U.S. patient population and U.S. medical 19 care.” Id. The only difference between the risk disclosures and the “Europe” characterization was 20 that Fiore alleged Defendants misrepresented the risk that the FDA would deny Tricida’s NDA 21 because of deficiencies in the clinical trial data. Id. 22 For the same reasons outlined above, the Court again finds that there are no allegations in 23 the SAC plausibly pleading that the risk disclosures meet the high “so obvious” standard such that 24 Klaerner would have to know that Tricida’s disclosures would be misleading. See Order at *16. 25 Namely, Fiore’s allegations based on Klaerner’s participation in the FDA approval process are 26 insufficient to substantiate a plausible “strong inference” that Klaerner intended to mislead or was 27 deliberately reckless in disclosing a generalized risk that the FDA could reject foreign clinical data 1 Klaerner’s statement communicating the risks associated with Tricida’s reliance on foreign 2 clinical data. See, e.g., SAC at ¶ 103 (“We conducted the TRCA-301 trial and are conducting the 3 TRCA-301E trial with majority enrollment outside the United States and may, in the future, 4 conduct clinical trials of our product candidates outside the United States. The FDA may not 5 accept such foreign clinical data . . . .”) (emphasis omitted). 6 Therefore, the Court again concludes that Fiore fails to adequately plead scienter as to the 7 risk disclosures. 8 d. Statements About the Multicenter Nature of the Phase 3 TRCA- 301/TRCA-301E Trial7 9 10 The Court also previously found that Fiore’s scienter allegations with respect to statements 11 describing Tricida’s Phase 3 trial as “multicenter” were insufficient to survive dismissal. See 12 Order at *16–17. The Court found that, “as with the previous statements, there [were] no 13 allegations supporting the ‘strong inference’ that Defendants intended to mislead or were 14 deliberately reckless in labeling the trial as ‘multicenter,’ especially given that there does not 15 appear to be any dispute that the trials were in fact ‘conducted at 47 sites’ as alleged in the 16 complaint.” Id. at *17 (citing Zucco Partners, 552 F.3d at 991). 17 Here, there still appears to be no dispute that the trials were “conducted at 47 sites.” See, 18 e.g., SAC at ¶ 95 (“most trial sites for the TRCA-301/TRCA-301E trial were in Eastern Europe” 19 and “one Bulgarian site in particular was entirely responsible for the long term treatment effects 20 seen in the study”). The SAC otherwise contains no particularized allegations in support of its 21 claim that Defendants “knew or recklessly disregarded the truth” in characterizing the trial as 22 “multicenter,” id., and Fiore’s assertions about Klaerner’s participation in the FDA approval 23 process do not tip the scales. Thus, the allegations in the SAC do not alter the Court’s previous 24 finding that it “cannot conclude that the inference that [Klaerner] acted with deliberate 25 recklessness or intent to mislead investors is ‘at least as compelling’ as the inference that [he] did 26 not.” Order at *17 (citing Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27, 50 (2011)). 27 1 As a result, the Court again finds that Fiore fails to sufficiently allege scienter as to these 2 statements and grants Klaerner’s motion on this basis. 3 e. Statement Related to the Cancellation of the Advisory Committee Meeting 4 5 Finally, the Court concludes that Fiore has plausibly alleged scienter with respect to 6 Klaerner’s statement that the AdCom meeting was canceled in part due to “the logistical 7 challenges posed by COVID-19.” Fiore pleads that on January 24, 2020, well before the start of 8 the COVID-19 pandemic in the United States, the FDA “expressly informed Defendants” that, 9 given “significant issues” it identified with the TRCA-301 and TRCA-301E trials, it was “no 10 longer obvious” to the Agency that the AdCom meeting was needed. SAC at ¶ 159; see also id. at 11 ¶¶ 72–74 (detailing two of the “significant issues” identified by the FDA on January 24, 2020, and 12 alleging that “[a]s a result of these ‘significant issues[,]’ the FDA told Tricida that an advisory- 13 committee meeting was no longer needed”). The FDA allegedly reiterated these issues on several 14 occasions. For example, on April 17, 2020, the FDA sent Tricida a package ahead of the 15 upcoming late-cycle meeting, the purpose of which was to discuss any outstanding review issues, 16 and stated that it “remain[ed] concerned about the magnitude and durability of the treatment 17 effect.” Id. at ¶ 75. The same package reminded Tricida that, at an earlier meeting, the FDA had 18 “indicated that it was not clear that the results of TRCA-301/301E were applicable to the U.S. 19 population and practice of medicine,” and that Tricida’s decision to enroll participants at sites in 20 Eastern Europe was “particularly problematic” due to the prevalence of patients affected by BEN 21 in that region. Id. at ¶¶ 76–77; see, e.g., id. at ¶ 76 (“We are concerned that the response to 22 treatment in patients with BEN (i.e., the size of the treatment effect on blood bicarbonate) may not 23 be representative of the size of the treatment effect in patients in the U.S. with metabolic acidosis 24 associated with CKD who do not have BEN.”) (emphasis omitted). Then, at the late-cycle 25 meeting on May 1, 2020, the FDA repeated the substantive review issues it had laid out in the 26 April 17, 2020 package, and told Tricida once again that it did not believe an AdCom meeting was 27 needed. Id. at ¶ 77. 1 COVID-19 “logistical issues,” Klaerner shared only one of the outstanding review issues raised by 2 the FDA at the late-cycle meeting—“the magnitude and durability of the treatment effect on the 3 surrogate markup.” Id. at ¶ 158. Klaerner then concluded that “[o]verall, while the FDA 4 continues its review, we remain confident that our submission meets the standard for approval 5 through the Accelerated Approval Program.” Id. 6 The Court finds that Fiore plausibly pleads that Klaerner intentionally or recklessly 7 misrepresented the true reasons for the cancellation of the AdCom meeting. The SAC alleges that 8 Klaerner was party to extensive communications with the FDA about its concerns and their 9 potential impact on the AdCom meeting, and that the FDA did not at any point cite COVID-19 10 logistical issues as the reason for canceling the meeting. SAC at ¶¶ 159, 162. And the SAC 11 pleads that Klaerner selectively raised only one of the FDA’s concerns in the May 7, 2020 call, but 12 not others, thereby misleading the market by omission. Id. at ¶ 158. Under the circumstances, it 13 was obviously relevant whether the meeting was canceled for “logistical reasons” or substantive 14 ones, and it was also relevant what the full substantive reasons were once Klaerner chose to 15 highlight some of them. See Schueneman, 840 F.3d at 709. It is plausible that a seasoned 16 pharmaceutical executive like Klaerner would be aware that the FDA’s reasons for canceling a 17 critical meeting would be highly significant to investors. These allegations thus plausibly plead 18 “an extreme departure from the standards of ordinary care, and which presents a danger of 19 misleading buyers or sellers” that was either known to Klaerner or so obvious that he must have 20 been aware of it. Zucco Partners, 552 F.3d at 991. 21 Therefore, the Court denies Klaerner’s motion on this ground. 22 V. CONCLUSION 23 For the reasons stated above, the Court rules as follows: 24 1. The Court DENIES Klaerner’s motion to dismiss as to Fiore’s claim based on 25 canceling the Advisory Committee meeting in part due to COVID-19.8 26 8 As with its prior order, because the Court finds that at least one Section 10(b) claim has been 27 adequately pled, and because neither party substantively addressed the Section 20(a) control 1 2. The Court GRANTS Klaerner’s motion to dismiss as to Fiore’s other claims 2 WITHOUT LEAVE TO AMEND due to the failure to adequately plead falsity 3 and scienter. See Zucco Partners, 552 F.3d at 1007 (“where the plaintiff has 4 previously been granted leave to amend and has subsequently failed to add the 5 requisite particularity to its claims, ‘[t]he district court’s discretion to deny leave to 6 amend is particularly broad.’”) (citation omitted). 7 In sum, at this stage of the proceedings, the Court has found that two categories of 8 statements about the May 1, 2020 late-cycle meeting are actionable under the PSLRA and may 9 || proceed: (1) the statements discussing outstanding review issues with the FDA that the Court 10 || found in its prior order found to be sufficiently pled, see Order at *12—14, 17-18; and (2) the 11 statement that the AdCom meeting was canceled “due in part to the logistical challenges posed by 12 || COVID-19” that the Court now finds is sufficiently pled. 5 13 The Court further SETS a telephonic case management conference for March 26, 2024 at 14 || 2:00 p.m. The Court further DIRECTS the parties to submit a joint case management statement 3 15 by March 19, 2024. All counsel shall use the following dial-in information to access the call: a 16 Dial-in: 888-808-6929 3 17 Passcode: 6064255 S 18 For call clarity, parties shall NOT use speaker phone or earpieces for these calls, and where 19 at all possible, parties shall use landlines. All attorneys appearing for a telephonic case 20 || management conference are required to dial in at least 15 minutes before the hearing to check in 21 with the CRD. 22 IT IS SO ORDERED. 23 || Dated: 3/11/2024 24 25 Aapurrl 5 hdl} HAYWOOD S. GILLIAM, JR. 26 United States District Judge 27 28