dismissal of our complaint on falsity and c enter grounds those are broadly the two issues that are before you this morning setting the stage i'd like to mention that it's really indisputed in this in this case that in the cupid one clinical trial the patients who received the might a car heart failure treatment started off a lot more healthy in fact on seven of the eight measures of health than the patients who received the placebo also under speeded your honour's is the fact that these what they called patient baseline imbalances created a serious and fundamental question as to whether the results of cupid one on efficacy or the effectiveness of the my car were reliable also undisputed your honour's is the fact that celadon sought to validate these efficacy results by running a sensitivity analysis post hoc so all of what you just described was publicly disclosed so i don't know what fraud was perpetrated on the investing public when these folks told everyone exe everything you just said well there there's a there's a number of things that were not disclosed in that supplement and i'm looking at it right here that everything you complain about in the complaint and in your brief dummy if i'm wrong because this is my assumption and this is what guides my plenary view everything that you're complaining about in terms of the methodology they explain exactly what they did now you might disagree with that you might say that well competent scientists certainly wouldn't think that render the initial results reliable nonetheless but they told everyone the analysis they went through and if people thought that that was junk science they were perfectly entitled to read that make their own judgment and not not bother investing in the company but nothing was with help so tell me if i'm missing something there well a couple things on so first of all the the the matters that you're talking about for public disclosure were disclosed exactly once in a medical journal two and a half years before the start of the class period three and a half years before the  readout of the cupid two results it was not disclosed in any in any document that was directed to investors it was not disclosed to investors and it was not disclosed at any point in time that was relevant to the class in fact it was disclosed at a time before celeron even what so what disclosures to investors were made that in which this should have been should have been a part of that so that disclosure to investors the filing fee of the sea appear to be very very general and we have a supplement what the supplement did not include and just to complete my answer to judge the judge wofford is any kind of validation or explanation of the methodology yes they said ok we took out the four placebo patients that we determined were highest risk or sickest but they didn't explain why they didn't explain why that was a reasonable methodology and how that showed that the efficacy results remained correct or remained reliable and that's important because they did that with other aspects of the cupid one design so for example with the p value being point two or twenty percent which is a very high threshold for statistical significance they took they took peer in the cuban one result article the article itself to explain why they did it that way but they were mid in the end this is not an actionable mission as was before plastered but they omitted in the data supplement any additional explanation or imbalances or of the sensitivity analysis at all but what somebody looking at that somebody who is knowledgeable looking at that at the fact that you took people out of the study after you on the after you one blinded it surely would have you know reasonable questions about about the methodology correct your honor but that's not the question before the panel the question before the panel is how what would a reasonable investor do with that information and a reasonable investor i would submit would not know what to do with that information i mean all the in for all they said in the article was we saw some patient in balances on certain of the criteria namely vio max and so on and so forth i mean i had to hire an expert to explain this to me right and to make the allegations in my complaint no reasonable investor would be able to make heads or tails of any of this he just had this very complicated chart and i'm looking at you know pages are he or thirty six with this you know very complicated set of  in this would be able to look at would would only look for words like encouraging you know good result on to on to next phase but why would that be why would that be false though your honor is that w ways that misleading if the if the if the folks at celadon believed that the results were encouraging that wouldn't necessarily be false ok so i believe your honour's question focuses on certain looking for your average investor those statements are so general that it's hard to say that celadon didn't believe them they were putting millions of dollars into the next into the next study so ok so the statements that your honor is talking about are the are the press releases with words like encouraging and validating the results and so on in the press release just wanted from a model same page with your own here's the thing about that so so so sell it on argue that those were were puff my submission is that they're not puffery because they're based on on criteria they're based on hard facts or based on their not just corporate boosterism like we're going to have a great year next year or on to the next you know great initiative they're based on very precise albeit we allege unreliable results from a clinical trial so i would suggest that those not puffery at all when she says look at these encouraging clinical results that's not puffery she's finds she's expressed an opinion and if you wanted to try to prove that she didn't genuinely hold that opinion that would be one thing you have presented not one fact that suggest in any way that she did not sincerely believe that the sensitivity analysis that she did not withstanding the flaws in the methodology you allege but one fact that suggests that she didn't really believe that the analysis they did in fact did validate the result so i would disagree with that you're ok what do you got i'm not from ok so i would suggest that  first of all it doesn't it doesn't satisfy its own methodology at all very that's very strange that should have been a red flag today i'm talking about ok so subjectively that she did not sincerely believe that the sensitivity analysis in fact validated the result i think what you would need is some kind of back channel communication hey this is really bad but let's keep the you know the party line out there even though we all know that this completely undermines what we've done you need something pretty damning like you to say that she in subjectively in her head she did not genuinely believe that the results were still about well i don't think the standard is whether i have some kind of you know smoking there's nothing sorts of the opposite i'm saying what else would you be able to point to all you've said is that any competent scientists in this field would have to know that this was just junk that's what you basically said ok well what about that so first of all there's no there's no disclosure of the of there's no disclosure of the baseline imbalances or the sensitivity analysis any time during the class period at all i think that is i think that is suspicious especially are not exactly looking to what is in doctor's evos mind you have and i don't know if you want to move on to something else but the question i put to you have not come up with one fact that says she in her own mind did not genuinely believe that the sensitivity analysis validated the result so what do you have on that front before you try to move on to something about let's look at let's let's look at let's look at one thing so so  both documents it's on the cupid one article which your honor remind the room was disclosed back in two thousand and eleven it's also on the data supplement which those documents go together d is that we have alleged facts that the that the methodology for the sensitivity analysis is wrong those those facts have to be taken as true there are no facts in the record interestingly that  show otherwise but you know aren't you suggesting that given doctors evos experience given that this is a small company given that she this is her feel she's got a ph d in this stuff that you're asking that there is a  knowledge or the deliberate reckless it's not a question of of opinion under under obamacare and i think i think you know respect i think maybe that the standards may be getting a bit muddled so we are ledged with specific facts that are that are up by an expert in the field that this methodology was all wet and what's interesting here and what takes us out of the regal rubric is that there is nothing in the record either from the company itself or from counsel in the submissions below or even in this court that goes against that there's no explanation saying no plaintiffs you don't know what you're talking about this is why we did it this way and this is why the sensitivity analysis is totally reasonable there's nothing on that it's almost like it's almost like the sensitivity analysis is it almost admitted as as being indefensible which is which is which i think is remarkable and that's one of the things incident you know that takes us out of the regal good her name is on the document so she has to stand by the document right and then her howard re every x a panel of this court held that if you sign an s c c filing you're responsible for what's in the filing now there's no question that she stands behind the cupid one article so that means she's got to stand behind the data supplement to i mean it's almost like the defense are arguing that ok well she stands behind the ten k but she doesn't you know necessarily understand the exhibits to the ten k because that was an online document that didn't get sent out to the shareholders so i don't think that's really going to work so she's got to be responsible for both that's the essence of the argument here also as as judge  said we have all of the indicia that have been accepted by courts multiple times in other cases of this variety tiny company thirty five employees this was their only product i mean this was her baby to use a colloquialism the entire purpose of the company was to get this my the car good morning and may please the court code you for camera for the defendants in the pick up with science or if this is a fraud case they're accusing my client of intending to deceive the investing public  and judge rufford's line of questioning and it's really you don't need to go the onset scienter because there's just no well planned allegation in this complaint and describe why  adequately alleged scienter plaintiff must plead a highly unreasonable mission involving not merely simple or even inexcusable negligence but in extreme departure from the standard of care so think about that there are statements that they say are misleading by way of omission because she failed to include some information in the study about their observation of a baseline balance and sensitivity analysis that they ran but the only way that becomes actionable is to judge watford's point it was a highly unreasonable mission that she knew that the sensitivity analysis in their words were a sham and i'm a tell you why that's not she's not alone in the study the study had twenty seven principal investigators the study included some of the most significant cardiologists and cardiovascular surgeon in the country the chair of the study dr merrill jessop is a former president of the american heart association dr thomas cupola is the chief of cardiovascular surgery at the university of pennsylvania dr daniel pauly the chief of cardiology at the university of florida these are the authors of the study these are the people who ran the sensitivity analyses these are people to whom they say no had no financial allegiance to the company now they've they've identified a few of the authors and principal investigators like dr greenberg who is the chief of party ology he's a former president of the heart failure society of america and a director of the advanced heart failure treatment program at u c s d they say well you know he has a state and because on the advisory board and without more they say that you know he must be and so in order to believe the plaintiffs theory that this sensitivity analysis that was run not to change the study outcome but just to understand whether or not the baseline imbalances that they observed  were a problem let's just try to understand that they're not running a new statistical analysis to get to a new endpoint the study had an endpoint they met every single one they saw the baseline imbalances and said ok well we should probably run some analyses on this and the baseline imbalances run some sensitivity analysis they did to judge walker's point they disclosed it in an online supplement point where that disclosure may not be enough and i know you're arguing that it was that it isn't ever not enough because the disclosure was disclosed in some obscure publication that nobody's ever going to read anyways and you can't hide behind and say what we disclose were good and i think that's what the plaintiffs are are doing it's a it's a great question the problem for them is that every single person in the industry so we're going to i'm going to talk about specific other actors every person in the industry knows including the analysts who make the market including the specialists on the floor of the trade and they know where to go to get this information and it's called clinical trials dot gov all the information for clinical trial in clinical trials like if you google might acquire a clinical trial the very first hit is cupid one if you click into that scroll to the bottom it'll say publication of results click on that  you get right to the american heart association peer reviewed journal circulation online you can just click on the supplementary materials and outcomes takes twenty seconds and the reason why this is important  is they sort of say that we've hit it in the ether it's literally in the place that everyone would go first i have a bookmark in my phone we do a lot of life sciences work if i hear about a clinical trial that's where i go right and the idea that we would have to end the conclusion by the way the sensitivity analysis that they ran was that it could not explain these baseline imbalances could not explain the very positive results analysis was no longer statistically significant ok the again the point was not to run a new statistical analysis but i will tell you that the individual analysis was still highly significant and all the time to record events analyses which became the end point for cupid two were or highly significant and if you like when you go through those points in the valley i'd be happy to do so in their brief they argue that when you conduct a sensitivity analysis the trial goes from past a failed that's wrong in order to the success of this trial is defined as is follows primary endpoint success criteria efficacy in either the group level or the individual level or the outcome analysis plus at least positive corresponding trend numerics of her already in all other analyses no clinical worsening significant worsening of any of the endpoints even when you take out the four patients you need it for individual you need for out the four patients were taken and how many were left so it's a great skew in favor of the placebo group but nevertheless we're not again we're not running a new statistical analysis the only thing we have a result cupid one met all of its efficacy endpoints but we're observing that there is an dose so let's just run some analyses and who ran it the people i've described and i didn't tell you about the other principal investigators which include the directors or or chairs of the  cardiovascular surgery or cardiology departments at the university of chicago at the cleveland clinic at the university of iowa at methodist hospital these are very significant people and the idea that they would run a sham sensitivity analysis and then present that to the very people cardiologists and cardio vascular surgeons who would most likely ferret out aired out a sham analysis point after that where folks in the field said they like these guys are saying this is a joke was there any kind of critique like that no one zero the only time the balance in balance is and to be sure other people raise the of the imbalances when they initiated cover coverage right after a company went public in february of two thousand and fourteen barclays came out credit suisse came out and said among other things look it looks very encouraging that's their words right looking at the study but yeah but they were basing that based on your words were they not well ok so when we're talking about stock analysts in life sciences i think you can it's reasonable to assume that who know what they're doing in terms of life science so they did their own work they said i mean they may have looked only at the study results and the supplement and they came to their own conclusion but the important packed point is hey you know before we say that we should be concerned about x no journal article no document not a single confidential witness you did have an article critical just before celadon announce the results of and if i look at some of these specific metrics boy i just don't think the study was powered enough and again time and again that's the one the first thing in all the disclosures it was a small study we're not tens of millions of dollars in this company is it reasonable to assume that they didn't go and pull the online supplement is it reasonable to assume that they didn't pull the study results of course we know the company was private at the time there the issue they were in their meeting with management they were there poring over everything that's a reasonable commonsense conclusion about how the largest pharmaceutical companies in the world are going to act prior to investing tens of millions of before giving these designations which you know we represent more life sciences companies and any from in the country and i can tell you my clients would be thrilled if they could skip phase three clinical trials they would be thrilled if they could get  more access to the senior members of the f d a of course they looked at it of course they looked at the study results in the online supplement probably had some questions they would about this a principal investigator dr what about this and they got answers and what was the result of those interactions on december eleventh fastrack designation in the beginning of two thousand and twelve a special protocol assessment after the end of phase two meeting allowing for the next trial now why in the world if this was a sham if this was so obviously a fraud why in the world with the f d a do any of that and then for the first time ever since you are one of six granting breakthrough designation to a company for for a gene therapy program and why would the e m a and the european medicines agency say by the way to keep it works we might be able to skip face three and go to marketing in europe is that those reactions by these sophisticated actors by pfizer novartis james j m p m capital which is the largest that one could draw from the facts that they alleged in the complaint that are very consistent with her belief that exactly what they said it's a small study thirty nine people hit the ball out of the park on each one of these endpoints there was a baseline imbalance she's a biochemist by the way and i'm not running away from the fact that she she was an author but she was surrounded by people who are  cardiologist cardiovascular surgeons and they together made this decision you have to believe that they were in on it that this is a sham and i see my time isn't so and they just haven't done that thank you thank your honour's appreciate that so for more i said a whole bunch of things during his presentation many of the facts that he presented were outside the complaint about looking things up on the internet and so forth things that i can't frankly speak to but things that are just not in the record at all about his his personal involvement and so forth i think the court is more than qualified to separate that out  says that you know this fraud was so obvious and and a sham that it was a sham but it wasn't so obvious you'd have to you'd have to to be able to discern it that that doubt that that's the whole point that's part of the thrust of our in this why waste millions of dollars more on a test that is not likely to be to work in the end and so does this depend on your on your proof that  the doctor save oh i'm sold stock before she before the second test came out it's not that it wasn't necessarily likely to succeed when we talk about cupid too it's at the risk that cupid too would fail was much greater than the company let on they could not advance my car to cuba to unless they showed success in toopid one cuban one was a was a precondition to two moving or advancing my car to cu two you had to get past the first hurdle to get past the second hurdle and i would suggest that the thing about not having to do phase three was a motivation rather than a proof of innocence they knew that if they could get cupid to get to cupid too then they would be able to get to the promised land and become very very rich and successful so when they realized that that they had these tremendous imbalances which were so tremendous when you when when one who knows looks at the data that they very likely drove the efficacy results of hubert won it wasn't just oh no there's a small imbalance this was a very severe imbalance and we alleged that that actually caused  the results we allege that they had a paper that over with a sensitivity analysis so that they could get to cuba to say the thrust of our case is that it's not that they thought q but you would fail or they they they they they knew it would fail they certainly they wanted it to succeed sure they did but the risk of failure was far greater than they let on they knew that it was a huge gamble this is our allegation but they didn't disclose the risk adequately to the investing public to my client into the class that we seek to represent that's that's what this case is about and that doctors ebo knew that that risk was far greater than what was disclosed that's the core of the case we certainly are not saying that doctors ebo hoped it would fail