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`IN THE UNITED STATES DISTRICT COURT
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`FOR THE NORTHERN DISTRICT OF CALIFORNIA
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`DAVID F. BERLINGER,
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`Plaintiff,
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`v.
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`JEAN-JACQUES BIENAIME, et al.,
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`Defendants.
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`Case No. 21-cv-08254-MMC
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`ORDER GRANTING DEFENDANTS’
`MOTION TO DISMISS; AFFORDING
`PLAINTIFFS LEAVE TO AMEND
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`Re: Dkt. No. 48
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`Before the Court is defendants BioMarin Pharmaceutical Inc. (“BioMarin” or the
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`“Company”), Jean-Jacques Bienaimé (“Bienaimé”), Henry J. Fuchs (“Fuchs”), and Lon
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`Cardon’s (“Cardon”) “Motion,” filed May 25, 2022, “to Dismiss” the Amended Complaint
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`(“AC”). Plaintiffs Local 282 Pension Trust Fund and Local 282 Annuity Trust Fund have
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`filed opposition, to which defendants have replied. The Court, having read and
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`considered the papers filed in support of and in opposition to the motion, rules as
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`follows.1
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`BACKGROUND2
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`BioMarin is “a biotechnology company that develops and commercializes . . .
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`therapies to address rare diseases and medical conditions.” (See AC ¶ 3.) Bienaimé,
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`Fuchs, and Cardon3 are officers of BioMarin. (See AC ¶¶ 23-25.)
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`On November 7, 2018, at BioMarin’s 2018 Research and Development Day (“R&D
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`1 By order filed October 24, 2022, the Court took the matter under submission.
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`2 The following facts are taking from the AC, the operative complaint.
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`3 Plaintiffs allege Cardon left BioMarin by October 4, 2021. (See AC ¶ 25(c).)
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`Northern District of California
`United States District Court
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`Case 3:21-cv-08254-MMC Document 62 Filed 01/19/23 Page 2 of 8
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`Day”) “for investors and analysts,” the Company announced it was developing “a new
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`investigational . . . gene therapy,” BMN 307, for the treatment of phenylketonuria (“PKU”).
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`(See AC ¶¶ 6, 51.)4 In connection therewith, “Cardon presented pre-clinical data for BMN
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`307 and described some of the mouse models used to develop BMN 307.” (See AC ¶ 6.)
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`The following year, on November 14, 2019, at BioMarin’s 2019 R&D Day, Cardon
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`stated that BioMarin’s investigational new drug (“IND”) submission5 to the Food and Drug
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`Administration (“FDA”) for BMN 307 was “imminent.” (See AC ¶ 62). Thereafter, on
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`January 13, 2020, “BioMarin announced that BMN 307 had been approved for clinical
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`trials” (see AC ¶ 69), and, on April 29, 2020, the Company confirmed it was in the
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`“‘Clinical Phase 1/2’ stage”6 of developing BMN 307 (see AC ¶ 75).
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`Plaintiffs allege that defendants, between November 14, 2019, and February 23,
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`2022 (the “Class Period”), made “materially false and misleading statements and omitted
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`material facts concerning the status and development of” BMN 307. (See AC ¶ 138.)
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`Specifically, plaintiffs allege, defendants did not disclose until September 5, 2021, that
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`they “had observed liver tumors in a pre-clinical mouse study.” (See AC ¶ 66(a).)
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`Plaintiffs further allege that the FDA, as a result of those observations, placed a clinical
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`hold on Phase 1/2 testing of BMN 307 (see AC ¶ 106), which hold, in turn, caused a drop
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`in the price of BioMarin stock (see AC ¶ 107).
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`4 “PKU is a rare inherited disorder that causes an amino acid called phenylalanine
`(Phe) to build up in the body” due to “a defect in the gene that helps create the enzyme
`needed to break down [Phe],” without which enzyme “a dangerous buildup can develop
`when a person with PKU eats foods that contain protein,” which “can eventually lead to
`serious health problems.” (See AC ¶ 46.)
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`5 According to plaintiffs, “the results of preclinical testing are submitted to the FDA
`as part of an IND,” after which “researchers . . . decide whether the drug should be tested
`in people” in clinical trials. (See AC ¶¶ 31-32.)
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`6 Plaintiffs allege that “[c]linical trials to support new drug applications are typically
`conducted in three sequential phases, although the phases may overlap.” (See AC
`¶ 32.) Plaintiffs further allege that “[d]uring Phase 1, clinical trials are conducted with a
`small number of human subjects,” that “Phase 2 usually involves studies in a limited
`patient population,” and that “[i]f a compound is found to be potentially effective and to
`have an acceptable safety profile in Phase 1 and 2 evaluations, Phase 3 trials are
`undertaken . . . in an expanded patient population.” (See AC ¶ 33.)
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`Northern District of California
`United States District Court
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`Case 3:21-cv-08254-MMC Document 62 Filed 01/19/23 Page 3 of 8
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`Based on the above allegations, plaintiffs assert, on behalf of themselves and a
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`putative class, two claims: (1) a claim alleging, as against all defendants, violations of
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`§ 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5
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`promulgated thereunder (Count I), and (2) a claim alleging, as against all defendants,
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`violations of § 20(a) of the Exchange Act (Count II).
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`LEGAL STANDARD
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`Dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure “can be
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`based on the lack of a cognizable legal theory or the absence of sufficient facts alleged
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`under a cognizable legal theory.” See Balistreri v. Pacifica Police Dep't, 901 F.2d 696,
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`699 (9th Cir. 1990). “To survive a motion to dismiss, a complaint must contain sufficient
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`factual material, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
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`See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550
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`U.S. 544, 570 (2007)); see also Twombly, 550 U.S. at 555 (holding “[f]actual allegations
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`must be enough to raise a right to relief above the speculative level”). In analyzing a
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`motion to dismiss, a district court must accept as true all material allegations in the
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`complaint and construe them in the light most favorable to the nonmoving party. See NL
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`Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). Courts, however, “are not
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`bound to accept as true a legal conclusion couched as a factual allegation.” See Iqbal,
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`556 U.S. at 678 (internal quotation and citation omitted).
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`DISCUSSION
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`Section 10(b) of the Exchange Act makes it unlawful “[t]o use or employ, in
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`connection with the purchase or sale of any security . . . any manipulative or deceptive
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`device or contrivance in contravention of such rules and regulations as the Commission
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`may prescribe.” See 15 U.S.C. § 78j(b). Rule 10b–5, promulgated pursuant to § 10(b),
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`makes it unlawful “[t]o make any untrue statement of a material fact or to omit to state a
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`material fact necessary in order to make the statements made, in the light of the
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`circumstances under which they were made, not misleading.” See 17 C.F.R. § 240.10b–
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`5(b).
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`Case 3:21-cv-08254-MMC Document 62 Filed 01/19/23 Page 4 of 8
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`To plead a claim under § 10(b) and Rule 10b-5, a plaintiff must allege “(1) a
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`material misrepresentation or omission; (2) scienter; (3) a connection between the
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`misrepresentation or omission and the purchase or sale of a security; (4) reliance; (5)
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`economic loss; and (6) loss causation.” See Oregon Pub. Emps. Ret. Fund v. Apollo
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`Grp. Inc., 774 F.3d 598, 603 (9th Cir. 2014). Additionally, “a complaint stating claims
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`under section 10(b) and Rule 10b–5 must satisfy the dual pleading requirements of
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`Federal Rule of Civil Procedure 9(b) and the [Private Securities Litigation Reform Act of
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`1995 (‘PSLRA’)].” See Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 990 (9th
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`Cir. 2009). Under Rule 9(b), a plaintiff “must state with particularity the circumstances
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`constituting fraud . . . .” See Fed. R. Civ. P. 9(b). Under the PSLRA, a plaintiff must
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`“specify each statement alleged to have been misleading [and] the reason or reasons
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`why the statement is misleading,” see 15 U.S.C. § 78u-4(b)(1), as well as “state with
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`particularity facts giving rise to a strong inference that the defendant acted with the
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`required state of mind,” see § 78u-4(b)(2).
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`Here, defendants argue, plaintiffs “fail to adequately identify the statements they
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`challenge,” “fail to adequately plead any false or misleading statement,” and “fail to plead
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`a strong inference of scienter.” (See Defs.’ Mot. to Dismiss (“Defs.’ Mot.”), at 11:4, 12:5 &
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`19:20, Dkt. No. 51.) As set forth below, the Court agrees.7
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`A. Identification of Statements
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`In response to defendants’ argument, plaintiffs, first contend they have “identif[ied]
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`each challenged statement in italics and bold.” (See Lead Pls.’ Opp’n to Defs.’ Mot. to
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`Dismiss Am. Compl. (“Pls.’ Opp’n”), at 6:23, Dkt. No. 55.) The AC, however, includes no
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`explanation as to the significance of the italics and boldface, which are scattered among
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`numerous and relatively lengthy blocks of quoted text. Indeed, plaintiffs’ use of such
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`manner of emphasis appears to go considerably beyond whatever factual assertions
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`7 In light of this finding, the Court does not address herein the remaining argument
`raised by defendants in support of dismissal. (See Defs.’ Mot. at 1:25-26.)
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`Case 3:21-cv-08254-MMC Document 62 Filed 01/19/23 Page 5 of 8
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`plaintiffs may be challenging as false. (See, e.g., AC ¶ 63 (italicizing and bolding
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`analyst’s question “[C]an you just comment maybe a little bit more on durability
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`considerations for PKU?”); ¶ 73(b) (italicizing and bolding “first goal [of the clinical trials]
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`is to find the dose”).) Moreover, adding to the lack of clarity is plaintiffs’ inconsistent
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`treatment of several statements, by quoting the statement without emphasis in one
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`paragraph and italicizing and bolding it in another. (Compare AC ¶ 99 with ¶ 102.)
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`Under such circumstances, the AC fails to adequately “give fair notice of the
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`grounds” on which plaintiffs’ claims are based. See 3226701 Canada, Inc. v. Qualcomm,
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`Inc., 2017 WL 971846, at *14 (S.D. Cal. Jan. 27, 2017) (dismissing complaint for failure
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`to satisfy Rule 9(b) and PSLRA where complaint “place[d] emphasis—such as using bold
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`or italic fonts—on portions of paragraphs of statements without explanation regarding the
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`emphasis”).8
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`Accordingly, the AC is subject to dismissal on that ground alone. Moreover, as
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`discussed below, the AC fails for additional reasons.
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`B. Falsity of Statements
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`Whatever the allegedly false statements may be, plaintiffs allege only one reason
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`as to why they were false, namely, defendants’ “fail[ure] to disclose that, as admitted
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`beginning on September 5, 2021, they had observed liver tumors at 52 weeks in a
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`preclinical study in 85% of mice dosed at the 2e14 Vg/kg[9] level” (hereinafter, “Highest
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`Dose Study”). (See AC ¶ 66(b) (internal citations omitted); see also AC ¶¶ 66(a), (c)-(e),
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`8 Although plaintiffs, citing defendants’ briefing as to other asserted deficiencies in
`the AC, contend defendants “have no trouble identifying the challenged statements or the
`reasons why such statements are alleged to be false in raising their remaining
`arguments” (see Pls.’ Opp’n, at 7:11-13), “[d]efendants are not required to guess at the
`basis of [p]laintiffs' claims,” see Primo v. Pac. Biosciences of California, Inc., 940 F.
`Supp. 2d 1105, 1112 (N.D. Cal. 2013) (noting defendants’ “ab[ility] to argue that the
`pleading was inadequate does not establish that it provided them with sufficient notice of
`the claims against them”).
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`9 Plaintiffs allege “2e14 Vg/kg” is “the highest dose group.” (See AC ¶ 12; see also
`Defs.’ Mot. at 6:22-23 (noting dose is “measured by the number of vector genomes (‘vg’)
`per kilogram (‘kg’) of bodyweight (‘vg/kg’)”).)
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`Case 3:21-cv-08254-MMC Document 62 Filed 01/19/23 Page 6 of 8
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`73(a)-(c), 77(a)-(c), 82(a)-(c), 89(a)-(e), 96(a)-(d), 103(a)-(b).)
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`“Falsity is alleged when a plaintiff points to defendant's statements that directly
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`contradict what the defendant knew at that time.” See Khoja v. Orexigen Therapeutics,
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`Inc., 899 F.3d 988, 1008 (9th Cir. 2018). Here, as defendants argue, the AC contains no
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`factual allegation as to when defendants obtained the knowledge attributed to them, or
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`any factual allegations from which such a finding reasonably can be inferred, e.g., “when
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`the study that prompted the clinical hold started, when dosing concluded, when BioMarin
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`received data from the study, when BioMarin began analyzing the data, how long that
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`analysis took, when and how BioMarin learned that mice in the highest dose arm
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`developed liver tumors, and when and how that information was communicated to the
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`individual defendants.” (See Reply in Supp. of Mot. to Dismiss (“Defs.’ Reply”), at 4:2-6,
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`Dkt. No. 57.) Rather, plaintiffs point to statements made by defendants, which
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`statements, plaintiffs essentially argue, constitute admissions as to the alleged
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`knowledge. As discussed below, the Court disagrees.
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`In support of their claims, plaintiffs first note that Cardon, on November 7, 2018,
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`stated, “[a]ll of our nonclinical studies will be done in the first half of next year,” and that
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`Bienaimé, on February 21, 2019, stated, “[w]e plan to complete preclinical studies in the
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`first half of 2019.” (See Pls.’ Opp’n, at 7:17-18 n. 6 (citing AC ¶¶ 53, 57) (emphases
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`omitted).) Such statements of optimism do not, however, suffice to plead the actuality,
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`i.e., that defendants in fact completed all preclinical studies, much less the Highest Dose
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`Study, in 2019.
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`Plaintiffs next point to their allegation that “on the first day of the Class Period,
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`Cardon discussed the completion of pre-clinical trials.” (See id. at 8:7-8 (citing AC ¶ 62).)
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`As quoted in the AC, however, Cardon’s statement does not make reference to all
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`preclinical trials, but rather, “nonhuman primate studies” (see AC ¶ 62 (emphasis
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`omitted)), and, as noted, the study on which plaintiffs rely involved mice, not primates
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`(see AC ¶ 66(a)).
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`Likewise unavailing is plaintiffs’ reliance on their allegation that Cardon, on
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`Case 3:21-cv-08254-MMC Document 62 Filed 01/19/23 Page 7 of 8
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`November 14, 2019, stated, “We finished our nonhuman primate and mass GLP[10]
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`studies.” (See AC ¶ 62.) Contrary to plaintiffs’ assertion, such statement did not
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`constitute a “confirm[ation] that BMN 307 had completed pre-clinical mouse and non-
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`human primate studies in the first half of 2019” (see AC ¶ 123 (citing AC ¶ 62)), in that, as
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`alleged in the AC, Bienaimé explained that the Highest Dose Study was a “non-GLP
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`pharmacology study in . . . mice” (see AC ¶ 109).
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`Plaintiffs’ argument based on BioMarin’s Form 10Qs fares no better. (See Pls.’
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`Opp’n, at 8:13-14 (citing AC ¶ 75).) In particular, plaintiffs cite to “BioMarin’s Form 10Q
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`for 3Q 2019,” which lists the “Stage” of development for “BMN 307” as “Preclinical,” and
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`“BioMarin’s Form 10Q for 1Q 2020,” which lists the “Stage” of development as “Clinical
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`Phase 1/2” (see AC ¶ 75 n.10), to support their argument that the Highest Dose Study
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`was completed prior to 2020. As defendants point out, however, BioMarin, before and
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`during the Class Period, “repeatedly told investors that preclinical testing may continue
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`after its 2019 IND submission.” (See Defs.’ Mot. at 5:18-19; see also Decl. of Joshua
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`Walden in Supp. of Defs.’ Mot. to Dismiss (“Walden Decl.”), Ex. 10, at 14, Dkt. No. 51-1
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`(BioMarin’s Form 10-K for 2018, filed with SEC on February 27, 2019, stating “[l]ong term
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`preclinical tests, such as animal tests of reproductive toxicity and carcinogenicity, may
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`continue after the IND . . . is submitted”); see also Walden Decl. Ex. 13, at 13 (BioMarin’s
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`Form 10-K for 2019, filed with the SEC on February 27, 2020, stating same); Ex. 15, at
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`16 (BioMarin’s Form 10-K for 2020, filed with the SEC on February 26, 2021, stating
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`same).11
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`10 According to plaintiffs, GLP refers to the “good laboratory practice” regulations of
`the FDA, and “[r]esearchers typically use GLP . . . for preclinical laboratory studies,”
`although “[i]n some cases, researchers use non-GLP studies that do not require the rigor
`of GLP studies.” (See AC ¶ 31.)
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`11 The Court hereby GRANTS defendants’ request for judicial notice as to the
`above-referenced three exhibits to the extent they establish that the statements therein
`were made. See Mir v. Little Co. of Mary Hosp., 844 F.2d 646, 649 (9th Cir. 1988)
`(noting “it is proper for the district court to take judicial notice of matters of public record
`outside the pleadings and consider them for purposes of [a] motion to dismiss”) (internal
`quotation and citation omitted); see also Dreiling v. Am. Exp. Co., 458 F.3d 942, 946 n.2
`(9th Cir. 2006) (noting courts “may consider . . . any matter subject to judicial notice, such
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`Case 3:21-cv-08254-MMC Document 62 Filed 01/19/23 Page 8 of 8
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`Without allegations sufficient to plead the requisite chronology, plaintiffs fail to
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`plead that any challenged statement “was untrue or misleading when made.” See Fecht
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`v. Price Co., 70 F.3d 1078, 1082 (9th Cir. 1995) (emphasis in original) (internal quotation
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`and citation omitted).
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`Accordingly, plaintiffs’ claims are subject to dismissal on this additional ground as
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`well.12
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`CONCLUSION
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`For the reasons set forth above, defendants’ motion to dismiss the AC is hereby
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`GRANTED, and the AC is hereby DISMISSED with leave to amend.
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`Any Second Amended Complaint shall be filed no later than February 21, 2023.
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`IT IS SO ORDERED.
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`Dated: January 19, 2023
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`MAXINE M. CHESNEY
`United States District Judge
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`as SEC filings”); In re Veritas Software Corp. Sec. Litig., 2004 WL 7338912, at *4 (N.D.
`Cal. May 19, 2004) (taking judicial notice of SEC filings “to determine the statements that
`were made therein”).
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`12 As plaintiffs have failed to state a claim under § 10(b) and Rule 10b-5, their
`§ 20(a) claim likewise is subject to dismissal. See Lipton v. Pathogenesis Corp., 284
`F.3d 1027, 1035 n.15 (9th Cir. 2002) (noting “to prevail on . . . claims for violations of
`§ 20(a) . . . , plaintiffs must first allege a violation of § 10(b) or Rule 10b-5”).
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