the things that they said about the studies suggest a degree of verification robustness that was objective lee not true at the time they said it and that's a really simple theory that i think is almost your bottle the second theory is this really interesting theory about recklessness that has to do with releasing data with reckless disregard for the fact that it might be false i'd like to talk about the first central truth complaint or second so i'm reading from one of their press releases which is that excerpt of record eighty nine the compelling results from this rigorously designed to trial clearly demonstrate i don't ingest the combination of this drug is more effective in treating second line non small cell lung cancer this is transformational data from a robust double blinded placebo controlled proof of principle trial if my daughter wrote her science report in high school she would get  grade given what the actual facts were now they may not have known that that was a little bit of a cheat there given what the actual facts were yes but they didn't know what the actual facts were you know what they knew they had they had this they had c s am running this running this contract was responsible contractor and they had to study the study they seem to have represented what that what the results of a study said that they may not have known that day the day the study was unblinded they made that particular press release what the problem was or they may not have known specifically that there was a problem what they did know what they absolutely knew is that those data were had not been verified in any reasonable way in the way that they described those data would have suggested to a reasonable investor that the data was something that they knew it was not they had not performed the simplest possible they can release anything they want they can release a pile of data and say we've got some day here you should look at it they can release a poll data and say look at this data we it shows x y and z but what they did is they said things about the data that were false they said things that would  cause a reason investor to think that they had done what they had always promised they would do they had promised that they would conduct trials in accordance with the clinical standards that the complaint sets forth a complaint sets forth a long detailed list of more than a dozen specific data are transformative these data are robust the study was very world and we these data change what we know the data didn't change anything because no one had checked in the simplest possible way to see if they were verified you can see the difference from what they said in their press releases and what the lawyers say in their briefs what the lawyers tell you they say things that are true they say it's interim data it's data that hasn't been prepared to show the f d a what we know is this data was not in a situation where yet could be submitted to the f d a because it hadn't yet been verified in the simplest possible way so when they told investors that this was transformational data from a robust double boiler proceed controlled phase two trial they knew the bases that people in the industry would expect you to have for knowing that the data actually prove what it was ten about you told me that they didn't have a duty to verify and i don't really don't understand your argument they don't have to verify before they release it but they can't release it and say that they have that  the information just got spit out of the computer they don't look at you know if you already told me counsel that they don't have a duty to verify i'm really puzzled as to why an investor would would be misled by that information and investor is going to listen to what they say yup and and peregrine pharmaceuticals i mean i just i just don't i just not see i'm just not seeing what one is what is where that where the deception is here the deception is if you were a reason the investor and for families the way that pharmaceutical  work and you heard the words transformational data from a robust double blinded to studio controlled trial you would think that someone had done more than they had done you would think that some would have checked just for example to see if the people who were in the what rule what case what industry standard would i know as an investor to go to look at and to understand that that you already told me again there's no duty to verify if there is no duty to verify i'm having a very hard time figuring out as a reasonable investor what i should have understood from that language so the standards that we describe are in paragraph two forty minute complaint which is an excerpt of record one hundred three one hundred seven it describes all these things they're supposed to do to describe the fact that they've consistently promise investors that they're going to do them so they don't have a duty to verify they have a duty to speak accurately are central point is that when they say it's transformational robust that means this is data this been produced the way you would expect it's not  just got spit out of the computer in might be on its face obviously not reliable and we have people that have test the company does that have said they think that on its face the data had problems with it you would have seen just from looking at the wrong numbers so our central theory is you could not have described the data so strongly giving investors the impression that the data had been prepared and and assessed more carefully than was the fact without misleading investors and so all that has to be proven for that to be valid is for us to show that investors who read this press release would have thought that they meant x when in fact they knew x was false i think the complete article or ledges that so it's a matter of would an investor who heard that who was to me with the way they're supposed to get really good the i think there's a i think you have you have a point where you have to decide whether the statement would be sufficiently strong that it would cause a result besar to be misled into question also as you have buying really good isn't as strong as transformative i think you could say really good i think you could say you could and you could say positive the briefs all say interim positive data which i think is hard to quarrel with the data is there in the data hasn't been tested in the most basic way the data is something that gets spit out of a computer no one's looked at it to see if it actually on its face suggesting part of the look at the right light level the output p values higher we should just say it's good that's all they've done you the investors would think before you said it was transformational you had done more with allege that investors would believe they had done more based on those statements i think we're entitled to it was right for me i'm kind of term of art i think that transformational is a really strong term it's better than really good it's up there with  you have the overlap of the i think that's right but those are questions of fact i think the problem is you have to assume first seder purposes that everything we've said in the complaint is true so you have to assume that a reasonable investor if they heard transformational would believe that this something and they would have known they would expect if that wasn't true so that's our central theory of the case and it has to do with what a reason investor would have thought if they'd read those press releases we've alleged that they would have thought and we've always or would have been shot of them i think we're entitled to prove what the investor would have drawn from these statements you have to assume all the stuff that we say is true but what investors were thought about it the if i could talk in fire of your complaint right it didn't seem to me that you alleged that the defendants made any statements they knew to be inaccurate or statements that were completely without basis or completely without basis in an anchor to separate things i think it's our contention that these statements were inaccurate and were known to be inaccurate because they knew that the data were not transformation because the data were primitive i like to continue comply yes i think that's the central theory of the complaint it lists all the statements well my worry is that it seems to me that from reading the complaint that what they were saying were statements about chaos in the faith if you will made into the reports if you will in this phase t trial and that the things that they found in the phase two trial they didn't exaggerate those things i think they did exaggerate them how did they exaggerate in exaggerate them by changing the numbers they didn't say the p value zero point zero two and it's actually i want to thank do to exaggerate they describe them in words that a reasonable buster woodley would have been led to believe that they had actually checked the data the way that you could use it for something intriguing is worth anything our complaint alleges that the data was not in a form that you could have even given it to the f d a because it hadn't been checked out if it's not going to for the f d a why is it good enough for investors to assume this or something i like to say a second a few things about our second theory of our complaint which first theory so that's what he said which which is logically doesn't make any sense the second theory is that when they received the data at the time the unblinding they extremely departed one extreme is extreme extremely depart from ordinary care so they were had a deliberately reckless disregard for the possibility there were errors in this really tracks very closely the fifth circuit opinions pittsburgh it's much like it's much like the matrix case he's talked about we detail in section two forty on the complaint very few forty nine sixteen specific standards with which they promise to comply all of which are it's our job to make sure this is done right they can't it's of no interest to the f d a or the industry that we heard somebody else did they did it wrong we are responsible for doing it right there sixteen of these students we detail which they depart is just like in spits right when someone says reserves their complaint allege that well you tell investors in oil and should i mean reserves will people in the oil industry think reserves means that you've done x y and z tests here they had departed so far from the standards of the way pharmaceutical trials are supposed to be conducted that there was a reckless disregard for the possibly the what they were saying had substantial errors in it this is a man you're down to one minute would you like leisure time i would say thank you s the tables listing and graphs and that just shows the outcome the statistical analysis of the class and what does it show it shows that the placebo those attacks all the chemotherapy drug reduced tumors the primary endpoint is tumor reduction at a rate a seven point nine percent but the first treatment arm the low dose arm had a response so the placebo here had response that was roughly double fifteen percent and the high dose had seventeen point nine percent so you have the low dose and high dose what about that it in this is a doubling of the tumor response rate it's the doubling of the tumor response rate for the most ever richest type of cancer right now lung cancer is the biggest killer non small on cancers or eighty five to ninety percent of lung cancers so is this a transformational well ok we can quibble about transformational terrific the question is was it exaggerated and the point is of course not that's what the data said that's what the data said and counsel i believe what counsel saying he says it was a poorly constructed conducted trial this was and f d a approved investigational plan protocol there's not a single confidential witness that says it was something other than they said well the data was preliminary and unverified well again this is there's a protocol the f d a approved it the company went out and it was the company said we can't run these trials we need to hire a clinical research organizations like c s m the company then went out and hired c s m entered into agreements with them that they would follow the protocol so there's there's literally not a single factual evidence piece of evidence in this complaint that says anything other than that so i'm going to talk a little bit about scienter because it's clear that that's the big issue in this case they have to show that it's a form of knowing and intentional misconduct and the play of claims the standard that your honor articulated earlier there's a plea to highly and reasonable nation involving extreme departure from the standards of ordinary care that is either known or so obvious that the actor must have been aware and the court specifically zoned in on this and said the crucial question is whether defendants knew there were major discrepancies in the face of clinical trial or at least put on notice that there might be so again let's just stop there they've cited sort of general very general portions of the i c h the international conference harmonization standards and kind of good clinical practice is that say things like you know you should have an investigational plan and and a protocol and you should hire you to the extent that you can't do it yourselves hire people to do it and make sure they do it by entering into agreements with them and that's what the company did and that's what they thought happened but one thing is for sure there is no standard that says by the way when you get this data from your biased statistician in in the tables listening graphs and the statistical analysis you need to stop and you need to double check every single thing every single clinical research organization that you hired did and make sure they did it correctly they haven't cited a case that says that and of course they haven't cited any anything in the protocol in investigation or plan in any of the the sort of generalized statements about the clinical practices that would require this company to do it and in fact there are no again on this exam i understand now that they've abandoned the duty to verify argument and that's fine but the exaggeration argument is really a duty to verify and sheep's clothing isn't what they're saying is well you couldn't have said said what was plainly written in the statistical analysis they're not saying that we said one thing and we we said something else the statistical analysis and the tables and listen graphs come in they say x we report  on its face a doubling of tumor response looks good is a terrific is a transformational for people who are doctors and colleges for people who are suffering from these cancers you bet where is it anywhere in the record that someone said this defendant this speaking defendant was put on notice that there was a problem we know from the twenty g letter they file that there was no one new in till september twentieth two thousand and twelve that when c s admitted for the first time that one of their employees janet bleecker unilaterally switched the treatment codes she didn't tell anyone at c s m that she did it she didn't tell anyone at paragon she did it and she she said that it was a deviation from the contract that that company signed with parent pursuant to the protocol there is there is nothing there is not a single confidential witness then it's not just that the test revealed it that they went to a speaking defendant and said hey did you know about this and then it's not just that they knew about it but what did they do did the back point act recently was what they did in extreme departure what they don't even have the first thing they don't even have a test during the really critical time period may twenty one when the first study was pressure lisa's reported i'd like to say three things briefly your honour's first they dismiss these clinical practice is really they include three they're not being conclusory they're two forty nine they're very detailed you should read them if you think that we that there are specific standards that people consider binding people reason would have thought had been followed they didn't apply with secondly the idea that no one suggested a thing wrong this is in the complaint come through when the stated she was were credible and hard to believe which up which paragraph paragraph one twenty eight except a record seventy five so i think that does suggest that there was something in the days she's one of shock but she was she left