thank you the verdict below should be reversed for two independent reasons st mr johnson was under no legal duty to disclose the f d a recommendation of a nd trial when one the recommendation was not a results of tivo one trial for of a expressively warned of the risk that the f d a could require a nd trial and finally to national law firms independently reached the conclusion that no disclosure of the recommendation was required nd there was no evidence of scienter presented at the trial there was no witness who testified that mr johnson intended to violate the securities laws there is no exhibit introduced evidence saying that mr johnson intended to violate the securities laws no evidence of stock sales introduced and mr johnson's recommendation to management of a zero disclosed the f d a has concerns knowing that it would and in fact did cause a significant stock price decline is inconsistent with the finding of scientists and finally the law for a negative assurance letters that i mentioned further undercuts i enter the conclusions of those law firms obviate a finding that mr johnson's actions were either reckless or even negligent now go ahead you finish with your initial statement don't we don't we don't contest materiality i think one could make an argument that pending upon what that recommendation morphed into it could turn out not to be material for example and this is part of the  uncertainty with the recommendation if it was a recommendation that it was going to be post approval study one could argue that's not material but but the argument here is not to materiality one can assume materiality for this argument and it really something that would fall into the grounds of science or acting with intent to violate the securities laws well your client direct statement in response that he did not have any honor i would disagree that that's a false statement at the time that that statement was made during the r b c conference the only dialogue that the company had had with f d a was the pre n d a meeting in may and they disclosed the has concerns in the interim the only thing that happened is the company made a submission and to schedule a meeting with the f d a what's known as a type a meeting that meeting did not happen so in the context company may have spoken to f d a after we've completed our phase three trials to talk about our new drug application in those discussions the company expressly disclosed that the f d a had raised concerns about the overall survival data in the secondary endpoint of the trial and the f d a further said that those concerns were significant enough they potentially could be an issue that would prevent the filing of the new drug application and if the f d a elected to file the new drug application those concerns would be a review issue so i think in the context to suggest that mr johnson was denying that discussion happened that was a discussion that was fully disclose the point from the question at the time at the r b c conference is have you had these discussions and he said we haven't had formal discussions and that was a true statement the company was attempting to do so they submitted a proposal for a nother trial they were scheduled to have a meeting that meeting was cancelled and they actually did not have a further meeting with f d a and till march which was after the date that mr johnson so because the company did not know what the contours of the recommendation was it was not a requirement and it made a big difference from the company if the recommended trial was going to be a pre or post approval trial and at the time the company made the statement in august they had actually asked f d a for clarification on that and had not received a response from the f d a so in the context of what the company did disclose they disclose st in their risk factors that the f d a ordinarily requires two phase three trials the company has only done one phase three trial and the company expressly said we do not know whether the f d a would require us to do a nd trial if the f d a required us to do a trials with that effect in the stock market price of your well well we don't we don't we don't know that your honor the disclosure that the company elected to make knowing that it would negatively affect the stock price with the f d a has expressed concerns about the data in the trial and that those concerns could lead to the f d a not even accepting an n d a order to be and that drop the company's stock price twenty seven percent so the company's position is that was not hiding the f d a s concerns it actually made in the firm of the vendor at the recommendation of my client to make that disclosure the company did not have to say anything about their discussions with the f d a they went out and they said what they knew for certainty and they were waiting for clarification and they knew if you look in the companies the exhibits that were there they had a matrix that they had put together that was designed to say do we have a disclosable event and the company had concluded that if the f d a said you were required to have another trial prior to approval that would be a disclosable of event with connection with an under written offering the underwriters require what are known as these negative assurance letters and the law firms say based upon what we know that we're not aware of any facts that needed to be disclosed to make what was disclose not materially misleading both of those law perms had the f d a minutes were aware of the recommendation and that was the conclusion that they reached now the f c c in its brief suggests that it was only they were only relying on what mr johnson said and that was not the testimony at trial the testimony at trial was that they spoke with mr johnson they spoke with other members of management and they had the f d a minutes to disclose the recommendation so if you have two law firms that reach the same conclusion that there is that it isn't that the information is material it isn't that it might be important to investors if what does it make what the company said materially meeting as reflected in the minutes the f d a recommended that the sponsor conduct a nd adequately powered trial that sounds to me like the f d a discussed a further trial at that  discuss making a further trial after that and after the ropes and gray and wilmer hale had issued its letters and analyst on a call then asked johnson has the a discussed any further trials so it seems to me at that point if he's going to answer that question the only truthful answer is yes  that it was proper to answer that question in that way they did simply opined prior to that and based what existed prior to that and prior to that question being asked th two thousand and thirteen at the r b c conference which is months after the company has disclosed the concerns months after the company has disclosed the f d a as guidance that it would be both a filing and a review issue and in between that period of time what the company had tried to do was to have a formal discussion they've made a recommendation the formal discussion was i said what that thing he says he goes through the scenarios he goes through in this is on page two thousand four hundred and ninety five there's a whole range of possibilities that might come out of this on the most positive is that odac in the f d a says yes we understand we believe that the companies explanation for the overall survival power phrasing data that explanation makes sense and on the other hand they could say this sounds plausible we would like to see a confirmatory trial before you start marketing that's what we call the bad news scenario but in between there's a whole series of things and it's fairly conceivable that they might want to confirmatory trial post marketing that's exactly what the company was in the process of trying to get guidance from f d a so the context that this statement was made is in the context that the company has made a proposal for the timing and the format of another trial and they had not had an  discussion with f d a about that trial they didn't know what trial the f d a was going to require if any and in fact just a month later when the company did finally have that type a meeting with f d a f d a sent some conflicting signals and the response from dr slick and meyer was a you telling us that you're now requiring a nd trial and the f d a said no your application is still under review so it was not even decided whether the f d a would part of the trial and that was the whole point of the company not disclosing the recommendation is because there was uncertainty around that and as the court has observed in biogen idec for example sometimes disclosing things when you don't have enough information actually can do a disservice to your will i guess what i'm having trouble directing your attention to it seems to me when not even talking about to get you to disclose here we're talking about giving a false answer to a question on the during the curial well i guess the way that again putting it the f d a pre n d a meeting was a meeting where the company walked out and said what is it that the f d a wants if anything and do we need to do another trial and i think in the context of this where you have to look where mr johnson and the company are now seven or eight months later than that they are still trying to get information from f d a what is this trial going to look like are you going to require one and for example for the company if it was a post marketing commitment that was no deal because the company was going to be doing that anyway so it was very important for the company to know what it was that the f d a wanted and not to give an impression that the f d a either was too negative on the drug or too positive on the drug and  in that sense that's why the company made the decision to disclose the f d a is concern your yes good morning yes good morning your honor is and may please the court my name is paul alvarez i represent the securities and exchange commission as your questions have gotten right to the heart of this is a very simple case  honour's under the anti fraud provisions of the federal securities laws while you may not have an obligation to speak affirmatively about something once you choose to speak about it you have to tell the truth you cannot make misstatements of material fact that mislead investors and that's exactly what david johnston did here as mr johnston was the c f o and the head of corporate communications for of a he misled investors about  the fact that the f d a had recommended a formal formally recommended a nd phase three clinical trial for avails flagship drug t bo in response direct response to questions about whether the f d a had made such a recommendation he caused of a representatives to state that it wouldn't that they wouldn't want to speculate as to whether or not the f d a had made such a recommendation and that they had not engaged in any formal discussions about conducting such a recommendation even though he knew that in may of two thousand and twelve the f d a had made such a formal recommendation and even though he knew that in response to that they owe had planned an eighty three million dollars they story clinical trial a nd trial and had formally proposed that in a formal type a meeting request and that the f d a had responded in writing to that formal type a meeting but they don't seem to be making a big deal out of this formal vs informal notion says the f d a consider the pre meeting informal i don't know whether the f d a considers it formal or informal i don't think that distinction matters at all i think if you look at what the questions are and i think as you assess whether a statement is materially misleading that really is the crux of the issue here for the jury whether these statements were misleading as you look at that you have to look in light of the circumstances under which the statements were made and the questions as judge chaotic pointed out the questions were not did you have formal discussions the questions were did the f d a did you have discussions and then when and in august of two thousand and twelve i'd like to point the court to the questions asked the the f d a kind of push you in a different direction of maybe doing some additional new analysis or additional studies or did they discuss other possibilities as a way to fix their survivability issue to respond to that the only truthful answer is just  point out is yes they did this is not a matter of formal versus informal this is a matter of answering the questions that were asked and to cheshire cat his point certainly mr johnston and avail could have said we're not going to comment on that this isn't a question about whether they had a duty to disclose but whether what they disclosed was materially misleading and in light of the record evidence here a rational jury viewing that evidence in the light most favorable to the to the commission very easily could have concluded that mr johnston statements were materially misleading and thus the verdict should be affirmed if the court has any questions i'm happy to answer them attorney sylvia i believe you have some republican yes thank you i wanted to just address the issue of actually what what brought this case which was the non disclosure of the recommendation in the context of disclosing the f d a as concerns and at that time it is clear that no one knew whether a nd trial was going to be required not even the f d a and this notion of a formal recommendation versus a recommendation neither is a requirement the f d a the f t c has argued that the f d a cannot a trial that cannot require an applicant to do anything and one sense that's true that the applicant doesn't have to do something the f d a requires but they're not going to get their drug approved so effectively they can require something and in fact we know that because f d a that was the question that they posed is a nd trial required and that was the st time that f d a required a nd trial so when this case was presented it was basically not that what the company had said was untrue about the f d a says concerns but that that that somehow changed the risk profile by not disclosing the recommendation and i would  court to fill because on a and saying a duty to disclose only arises where the risk approach is a certainty and absent such certainty a company has no obligation to quantify the precise degree of risk and that's exactly the case here that the company could not quantified the degree of risk because it did not know what type of trial f d a was requiring and i want to just one last time just make a point about science or one is that it was undisputed trial that the disclosures were reviewed by the board by the audit committee in house counsel disclosure committee and then we had the other two law firms that independently came to the same conclusion that under the facts that you didn't have an obligation to disclose the recommendation of the trial and i understand that as focused on the analyst presentation as i said i think there is a distinction when you say formal a was thinking about and more importantly what the timing of the trial is and having not had those answers would in fact be speculating to say at that time what the f d a might require in the thank you thank you counsel that concludes argument in this case attorney silvia an attorney alvarez you should disconnect from the hearing all the vices