In re Bristol-Myers Squibb Securities Litigation

Full title: IN RE BRISTOL-MYERS SQUIBB SECURITIES LITIGATION

Court: United States District Court, D. New Jersey

Date published: Aug 17, 2005

Civil Action No. 00-1990 (SRC) (D.N.J. Aug. 17, 2005)

Opinion

Civil Action No. 00-1990 (SRC).

August 17, 2005

MEMORANDUM OPINION

STANLEY CHESLER, Magistrate Judge

This matter comes before the Court on the Motion for Summary Judgment, pursuant to Federal Rule of Civil Procedure (" Fed.R.Civ.P.") 56, of Defendant Bristol-Myers Squibb Company ("BMS" or "the Company") and individual defendants Peter R. Dolan ("Dolan"), Charles A. Heimbold, Jr. ("Heimbold") and Peter S. Ringrose ("Ringrose"). Lead Plaintiff ("Plaintiff") is the LongView Collective Investment Fund of the Amalgamated Bank ("Long View"). Pursuant to Orders entered by the Court on November 29, 2001 and July 1, 2004, the Court has certified a class of all purchasers of BMS stock (the "Class") between November 8, 1999 to April 19, 2000 ("First Class Period") and March 22, 2001 to March 20, 2002 ("Second Class Period"), and has appointed LongView as representative of the Class. For the reasons detailed below, Defendants' Motion will be granted in part and denied in part.

Also decided in this Opinion and the accompanying Order are Plaintiff's Motion to Strike Material from the Summary Judgment Record, filed on May 13, 2005 and Plaintiff's Appeal of Judge Hughes's Order and Opinion denying leave to file a Third Amended Consolidated Class Action Complaint, filed on May 12, 2005. For the reasons discussed below, the Appeal and the Motion will both be denied. TABLE OF CONTENTS

I. BACKGROUND A. The Parties B. Vanlev's Inception and the Early Clinical Trials C. Results of the All African-American Study. D. Communication with the FDA prior to Filing the Vanlev NDA E. Public Communications Regarding Vanlev and the Early Clinical Trials F. Submission of the Vanlev NDA to the FDA G. BMS Withdraws the Vanlev NDA: The End of the First Class Period H. The OCTAVE Protocol: The Start of the Second Class Period I. Unblinded OCTAVE Data. J. Disclosure of OCTAVE and OVERTURE Data to the Public II. PROCEDURAL HISTORY A. Rule 72.1(c)(1)(A) Appeal B. The Challenged Statements III. DISCUSSION A. Standard of Review 1. Summary Judgment 2. Section 10(b) 3. The Applicability of the PSLRA B. Materiality, Loss Causation, and the "Truth" Defense 1. Materiality 2. Loss Causation a. Loss Causation in the First Class Period b. Loss Causation in the Second Class Period 3. The "Truth" Defense C. Statements in the First Class Period: November 8, 1999 through April 19, 200 1. Puffery and Forward Looking Statements 2. Scienter a. Motive and Opportunity to Commit Fraud in the First Class Period b. Conscious Misbehavior or Recklessness in the First Class Period c. Statements in the First Class Period Directly Attributable to Defendants d. Statements by Weber, Black, Ferdinand and Dahlöf D. Statements in the Second Class Period: March 22, 2001 through March 20, 2002 1. "Safe Harbors" for Forward Looking Statements 2. Scienter a. Conscious Misbehavior (or Recklessness, Statement Sixteen only) i. The Seidenberg Memo ii. BMS Meetings with the FDA Regarding Angioedema iii. Vanlev as a Treatment for Heart Failure iv. Scienter in the Second Class Period, Conclusions E. Individual Liability of Defendants Dolan, Heimbold and Ringrose 1. Section 20(a) Liability 2. 10b-5 Liability F. Plaintiff's Motion to Strike Portions of the Summary Judgment Record IV. CONCLUSION I. BACKGROUND

The following facts have been distilled, in part, from Plaintiff's Statement Pursuant to Rule 56.1 ("Pl.'s 56.1"). Elements of that statement, which are immaterial or argumentative have been omitted. Indeed, large portions of Pl.'s 56.1 are inappropriately argumentative. The Court will not, however, entertain Defendants' suggestion that Pl.'s 56.1 not be considered at all. See Reply at 28-29. The Court is mindful that the Rule 56.1 Statement is not the proper forum for argument and has disregarded arguments contained therein. Alleged facts which are contested by Defendants are noted as such.

I.A. The Parties. Plaintiff's case is based upon sixteen statements made by BMS, individual doctors not employed by BMS, and by the individual Defendants. Each statement is related to a drug developed by BMS called Vanlev, the subject of a New Drug Application ("NDA") filed on December 20, 1999. Plaintiff claims that Defendants violated Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. § 78(j)(b) and 78(t)(a), and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5. It is alleged that Defendants' knew or were reckless in not knowing, at the time the statements were made, that they were false or misleading. The sixteen statements challenged allegedly caused BMS stock to be artificially inflated and upon corrective disclosure allegedly caused the stock to lose significant value (at the end of the First and Second Class Periods).

Through its divisions and subsidiaries, BMS produces and distributes pharmaceuticals, consumer medicines, nutritionals, medical devices and beauty care products. PX 2:4 (Final Pretrial Order submitted to the Honorable John J. Hughes on December 13, 2004, Section III: "Stipulation of Uncontested Facts.")¹ BMS is a publicly-held company whose common stock was, and is, registered with the Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange Act of 1934. Id. at 5. BMS stock trades on the New York Stock Exchange ("NYSE") and is governed by the provisions of the federal securities laws. Id.

1 Plaintiff's Exhibits to the Declaration of James W. Johnson are cited herein as "PX ___: ___" with the first number indicating the exhibit number and the second number indicating the page number (or paragraph number where preceded by ¶) within the exhibit. Defendants' Exhibits to the Declaration of Samira Shah, submitted with Defendants' moving papers, are cited herein as "DX ___: ___."

The individual Defendants have each been, during one or both of the Class Periods, an officer, director or high level manager of BMS. Heimbold was Chairman of the Board of BMS from 1995 to September 2001 and served as its CEO from 1994 to May 2001. PX 2:4. Heimbold was a director of BMS from 1989 until his departure on September 12, 2001. Id. Dolan succeeded Heimbold as Chairman of the Board of BMS in September 2001 and has served as its Chief Executive Officer since May 2001. Id. Dolan was President of BMS from January 2000 to September 2001. Id. Ringrose stated in his Declaration that he served as BMS's Chief Scientific Officer from January 1997 through December 2002. DX 9 ¶ 1. Plaintiff maintains that Ringrose assumed this post in 2000, citing the Revised Pre-Trial Order. See PX 2:5. For reasons that will be discussed below, the discrepancy is immaterial.

I.B. Vanlev's Inception and the Early Clinical Trials. In a meeting on September 13, 1999, the BMS Management Committee, led by Heimbold, reported that the "Blockbuster launch of Vanlev" was a "critical success factor" in BMS achieving its 2000 business plan. PX 301:OMA0099975. Plaintiff maintains that the term "blockbuster," when used in connection with a product from a major pharmaceutical company, describes a drug that achieves sales of $1 billion or more in its peak year. See Pl.'s 56.1 at ¶ 33 (citing presentation on or about February 8, 2000, given by Ringrose at Merrill Lynch's Global Pharmaceutical, Medical Device and Biotechnology Conference in New York, describing to the investor/analyst audience BMS's "six strategies for growth," and stating that a blockbuster was a product "achieving in excess of $1 billion global annual sales within three years of launch," PX 267:OMA1728618. Defendants' position is that it is immaterial whether a blockbuster is a drug with sales of $1 billion or sales of $500 million. Defendants' Memorandum of Law in Support of Summary Judgment ("Defs.' Mem.") at 12 n. 10. All things being equal, then, the Court will operate on the assumption that Ringrose's proffered definition is accurate.

"Omapatrilat," the generic name for the compound branded as Vanlev, was the subject of an Investigational New Drug Application ("INDA") to the U.S. Food and Drug Administration ("FDA") submitted on May 18, 1995. See DX 277. BMS sought to develop Vanlev/omapatrilat for use in hypertension and, at a later date, in heart failure. Id. Omapatrilat is a vasopeptidase inhibitor, a class of drugs that simultaneously inhibit angiotensin-converting enzyme ("ACE") and neutral endopeptidase ("NEP"). Id.; PX 2:5. Clinical trials began within a year of the filing of the INDA. During the clinical trial of Vanlev, there were four cases of life-threatening angioedema, which required intubation or a tracheotomy. DX 236:OMA0309556; PX 91:OMA1432579; PX 129; PX 311. Following the first event on January 20, 1998, the third and fourth cases, requiring life-saving intubations, occurred on March 11, 1999 and April 3, 1999. PX 129; 311. The third and fourth patients were both African-American and were enrolled in an all African-American clinical trial, protocol number CV137-037, known as the "037" study, comparing Vanlev with the ACE inhibitor lisinopril. Id.

I.C. Results of the All African-American Study. African American Women taking Vanlev experienced a greater than expected incidence of angioedema. See, infra, § III.C.2.b. The significance of this fact is discussed in greater detail below.Id. For the purpose of background, it is adequate to note that in the head-to-head comparison trial with lisinopril in African-American hypertensive patients, there were 12 cases of angioedema with Vanlev (4.0%) compared to one case with lisinopril (0.3%). PX 172; PX 181; Reply Addendum ("Add.") 5.

I.D. Communication with the FDA prior to Filing the Vanlev NDA. Prior to filing the Vanlev NDA, BMS prepared and sent a "Safety Supplement for [Vanlev] Investigator Brochure" to investigators, and a letter to FDA, "Update to Briefing Materials." Neither of these documents used the term "intubation" or "tracheotomy." DX 279; PX 172; PX 181. Both documents stated that "Among the 5,849 subjects exposed to omapatrilat (including 1030 blacks) in the clinical development program, four subjects have had airway compromise requiring intervention. . . ." Id. The "Update to Briefing Materials" prepared for the FDA did break-out the incidence of "angioedema" in the "037" study, but gave aggregate rates for angioedema which combined the data from the hypertension and heart failure studies: "approximately 0.5% in non-blacks and approximately 2.5% in blacks." DX 279:OMA0869779.

I.E. Public Communications Regarding Vanlev and the Early Clinical Trials. The first six challenged statements in this case, all during the First Class Period, were made at, or in connection with the American Heart Association ("AHA") Symposium in November 1999. These statements are discussed in detail below. For now, it is only important to note that, with exception of statement number five, they each reference the side effect profile and data from the early clinical trial of Vanlev. See, infra, § III.C.2.c.

I.F. Submission of the Vanlev NDA to the FDA. On December 20, 1999, BMS submitted an NDA to the FDA for the approval of Vanlev in the treatment of hypertension. DX 171:1. The NDA included extensive information about Vanlev. In it, BMS provided the FDA with data from clinical studies involving 9,372 subjects (over 6,500 of whom were exposed to Vanlev). DX 281:2. Among other things, the NDA included an Integrated Summary of Safety ("ISS"); an Integrated Summary of Efficacy ("ISE"); detailed reports of all the clinical trials; proposed labeling; and extensive technical information on the drug. DX 276; 280; 281.

On December 20, 1999, the day of filing, BMS requested priority review of its NDA for Vanlev. DX 171:1. According to the FDA Center for Drug Evaluation and Research, priority review is reserved for drug products that, if approved, would be a significant improvement compared to marketed products in the treatment, diagnosis, or prevention of a disease. DX 316:1. On January 3, 2000, the FDA granted BMS's request for priority review. DX 171:1.

Upon review of the NDA, the FDA raised concerns regarding the angioedema data and how that data was reported. Specifically, in a meeting with BMS on February 11, 2000, the FDA expressed concerns about the risk of angioedema with Vanlev. The FDA had two primary concerns:

All ACE inhibitors have the potential to cause angioedema. The Division's concern is whether the angioedema associated with omapatrilat is of a greater incidence or severity than that associated with the other ACE inhibitors. The Division noted four cases of angioedema in the omapatrilat database [NDA] in which the patients were hospitalized and ventilatory assistance was required. We are not aware of similar cases in the ACE inhibitor databases [NDAs]. Additionally, we noted that the head-to-head comparator study against lisinopril in black patients in which the incidence of angioedema was 10-fold greater on omapatrilat than on lisinopril.

DX 56:OMA0004558. The FDA did not indicate at the February 11, 2000 meeting that these concerns would prohibit approval of Vanlev. DX 56. Most of the challenged statements in the First Class Period were made prior to this meeting. See, infra, § II.B.

I.G. BMS Withdraws the Vanlev NDA: The End of the First Class Period. On April 19, 2000, BMS announced that it was withdrawing its NDA for Vanlev "in response to questions raised recently by the agency regarding the comparative incidence and severity of an infrequent side effect known as angioedema reported within the NDA database." DX 177. There is no dispute that BMS's withdrawal of the Vanlev NDA was material. PX 1 ¶ 113. On April 19, 2000, the value of BMS stock declined significantly. Defs.' Mem at 1; Opp'n at 4.

I.H. The OCTAVE Protocol: The Start of the Second Class Period. After the withdrawal of the first Vanlev NDA, various senior managers inquired into Vanlev's continued viability. PX 54; 254. Among them, Beth Seidenberg ("Seidenberg") considered and reported on the options for further Vanlev development, including the option ultimately chosen — a large head-to-head trial comparing Vanlev to an ACE inhibitor for treatment of hypertension (later called the OCTAVE study). PX 54. Seidenberg's had concluded that the most likely outcome of such a trial was a second-line indication for Vanlev as a treatment for hypertension. Id.

After a meeting on July 12, 2000, the FDA accepted the OCTAVE protocol designed by BMS; the primary safety hypothesis of which, was that if all patients began Vanlev therapy on a reduced dose of 10 mg, the incidence and severity of angioedema would be controlled and no worse than twice that observed with enalapril — a well known ACE inhibitor with an incidence rate of approximately 0.4%. PX 95; DX 62:OMA1241530. The final OCTAVE study protocol was formally submitted to the FDA on or about July 21, 2000. DX 60-63; PX 95. The OCTAVE protocol defined the trial as a 24-week study, but included a mandatory interim analysis of safety data upon the last patient's completion of eight weeks of treatment. PX 95. The protocol also specified that the NDA would be refiled and reviewed by FDA based on an abbreviated study report of eight-week safety data. PX 95; DX 60:OMA1322656.

I.I. Unblinded OCTAVE Data. BMS learned of the unblinded OCTAVE results in early September 2001. Defendants' Statement of Uncontested Facts Pursuant to Local Rule 56.1 ("Defs.' 56.1") ¶ 49; DX 243:2. BMS disseminated those results pursuant to a written unblinding plan, which listed the individuals who would receive the data and when they would receive it. DX 271. Such individuals included Defendants Ringrose, Dolan, BMS senior management and BMS's outside counsel. Id. The evidence shows that BMS and senior-management, such as Bodnar, Smaldone and Seidenberg, had this information by September 9, 2001. DX 271. On December 14, 2001, BMS resubmitted the Vanlev NDA, including the OCTAVE data. DX 273.

The unblinded OCTAVE data revealed that there were two cases of airway compromise with Vanlev (one requiring a tracheotomy and one treated with medication); the Vanlev angioedema rate was approximately 2.17%, compared to .68% for enalapril. DX 212; PX 157:OMA1796033.

I.J. Disclosure of OCTAVE and OVERTURE Data to the Public. On March 20, 2002, BMS contacted the NYSE to advise it that BMS would be issuing two releases, at separate times, relating to VANLEV later in the day: That day BMS released information to the public regarding both OVERTURE, a study of Vanlev in heart failure patients, and OCTAVE. PX 398:NYSEBMY0001. BMS disclosed the OVERTURE results approximately five days after the results were analyzed by BMS. PX 359. It is undisputed that this was as soon as possible after the results were known to BMS. Pl.'s 56.1 at ¶ 585. OCTAVE did not prove BMS's primary safety hypothesis. DX 62:OMA1241530.

BMS planned to release an announcement about OVERTURE at 10:15 am, and a separate announcement about OCTAVE at 2:30 pm. Id. The NYSE told BMS that both the OVERTURE and OCTAVE announcements should be released at the same time and directed BMS to provide them with copies of the press releases. Id. BMS confirmed that the OCTAVE and OVERTURE press releases were issued and provided to the appropriate news services at 9:45 a.m. at which time the NYSE halted trading of BMS stock. Id.

Specifically, BMS disclosed that:

the safety profiles of VANLEV and enalapril were similar, except for a higher risk of a side effect known as angioedema observed in VANLEV-treated patients. . . . The most common manifestation of angioedema in patients treated with VANLEV or enalapril was face or lip swelling. More than half of all cases of angioedema required no treatment or treatment with antihistamine only (1.28% with VANLEV vs. 0.52% enalapril). In the remaining cases, patients were treated with epinephrine or steroids (0.89% with VANLEV vs. 0.17% with enalapril). Two cases of airway compromise occurred, both in VANLEV-treated patients. One of these patients experienced an anaphylactic reaction that responded promptly to treatment with epinephrine and did not require mechanical airway protection. The other patient required mechanical airway protection prior to resolution. All patients with angioedema fully recovered. The overall incidence of angioedema over 24 weeks was 2.17% with VANLEV and .68% with enalapril. With both drugs, the risk of developing angioedema was higher in black patients (5.54% with Vanlev versus 1.62% with enalapril) than in non-black patients (1.78% with VANLEV versus 0.55% with enalapril).

Id. at 1-2. Trading of BMS stock resumed in the afternoon after both OCTAVE and OVERTURE results were disclosed and BMS's stock price declined.

On October 11, 2002 BMS announced that it received an "action" letter from the FDA on the refiled NDA. PX 377. In a press release, BMS stated that "the letter specifies the additional actions that must be taken by Bristol-Myers Squibb before the FDA can consider an approval of [Vanlev] . . . [BMS] is evaluating its options with Vanlev in light of this approvable letter." PX 377. The October 11, 2002 letter from FDA advised BMS that the Vanlev NDA was "approvable" but stated that before the NDA could be approved, it was necessary for BMS "to conduct at least one additional clinical trial to demonstrate an antihypertensive effect of [Vanlev] that is sufficient to off-set the identified risk of angioedema." Id. The FDA stated that it would consider approving the drug if BMS demonstrated a "superior antihypertensive effect of [Vanlev] in a patient population that has been unequivocally shown to be resistant to multiple other antihypertensives . . . used in combination at their highest tolerated doses." DX 274. Defendants' do not dispute that BMS never undertook such a study. See Reply Add. 5.

II. PROCEDURAL HISTORY

In April 2000, several actions were filed against BMS and its officers, alleging violations of federal securities law and state common law. The Honorable Garrett Brown consolidated the actions and appointed Long View Lead Plaintiff on July 24, 2000. On or about April 29, 2002, Defendants moved for Partial Judgment on the Pleadings, and on June 6, 2003, Plaintiff crossmoved for Leave to File a Second Amended Consolidated Class Action Complaint. On August 19, 2004 this Court issued an Opinion and Order ("2004 Opinion") in which, among other things, Defendants' Motion for Partial Judgment on the Pleadings was granted in part and denied in part and Plaintiff's Cross-Motion for Leave to File a Second Amended Consolidated Class Action Complaint was granted in part and denied in part. Plaintiff never filed a Second Amended Complaint, but on January 14, 2005 Plaintiff filed its Motion for Leave to File a Third Amended Consolidated Class Action Complaint. That Motion was denied by the Honorable John J. Hughes on April 24, 2005. An appeal of Judge Hughes's decision was filed on May 12, 2005. The merits of this Appeal are discussed immediately below.

II.A. Rule 72.1(c)(1)(A) Appeal.

Pursuant to Local Rule 72.1(c)(1)(A), Plaintiff seeks modification of the Honorable John J. Hughes's Opinion and Order, dated April 27, 2005, denying Plaintiff's Motion for Leave to Amend the Complaint ("2005 Opinion"). Plaintiff objects to Judge Hughes's ruling only with respect to three of the nineteen allegedly fraudulent statements which Plaintiff sought to include in its "Third Amended Complaint." Memorandum of Law in Support of Plaintiff's Rule 72.1 Motion at 1 ("Pl.'s 72.1 Mem.").

Pursuant to the Federal Magistrate Act of 1968, Rule 72(a) of the Federal Rules of Civil Procedure and Local Rule 72.1, a district court may reverse the decision of a magistrate judge on a non-dispositive issue only if it is "clearly erroneous or contrary to law." 28 U.S.C. § 636(b)(1)(A); Fed.R.Civ.P. 72(a); L. Civ. R. 72.1(c)(1)(A). As this Court has made clear at other stages of this litigation, under the clearly erroneous standard, "the reviewing court will not reverse the magistrate judge's determination even if the court might have decided the matter differently." In re Bristol-Myers Squibb Sec. Litig., Civ. No. 00-1990, Op. at 5 (D.N.J. June 25, 2003) (Chesler, D.J.). The reviewing court should only reverse a magistrate judge's decision when "the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed." Lo Bosco v. Kure Eng'g Ltd., 891 F. Supp. 1035, 1037 (D.N.J. 1995) (internal quotation omitted).

On appeal, the district court conducts a de novo review of a magistrate judge's legal conclusions. See, e.g., Haines v. Liggett Group Inc., 975 F.2d 81, 91 (3d Cir. 1992); Lo Bosco, 891 F. Supp. at 1037. But the district court is bound to accept the factual determinations of the magistrate judge unless those determinations are "either (1) completely devoid of minimum evidentiary support displaying some hue of credibility, or (2) bear no rational relationship to the supportive evidentiary data." Haines, 975 F.2d at 92 (internal quotation omitted).

Here, Judge Hughes denied Plaintiff's Motion upon the grounds that (1) amendment at this late stage in the proceedings would prejudice Defendants; (2) Plaintiff's Motion was unduly delayed and would further delay the trial; and (3) amendment would frustrate the heightened pleading requirements of the PSLRA. 2005 Opinion at 16.

"Under the Federal Rules of Civil Procedure, a plaintiff is entitled to amend his complaint once; courts may grant subsequent amendments `when justice so requires.' . . . Leave to amend should be `freely given,' [but] a district court has discretion to deny a request to amend if it is apparent from the record that (1) the moving party has demonstrated undue delay, bad faith or dilatory motives, (2) the amendment would be futile, or (3) the amendment would prejudice the other party. Fraser v. Nationwide Mut. Ins. Co., 352 F.3d 107, 116 (3d Cir. 2003); see also Cureton v. Nat'l Collegiate Athletic Ass'n, 252 F.3d 267, 273-74 (3d Cir. 2001) (affirming denial of amendment where motion was filed three years after complaint was filed with no reasonable explanation, factual information underlying amendment had been known for two and a half years, and judicial efficiency and interest in the finality of the litigation would be compromised); Duffy v. Charles Schwab Co., No. CIV. A. 98-4595 (MLC), 2001 WL 1104689, *1-2 (D.N.J. Sept. 4, 2001) (denying amendment proposed after defendant had filed for summary judgment on grounds of undue delay, prejudice, and futility).

A court may deny a plaintiff's motion for leave to file an amended complaint on the grounds of undue delay, unexplained delay or prejudice alone. See, e.g., Lorenz v. CSX Corp., 1 F.3d 1406, 1414 (3d Cir. 1993) ("In the absence of substantial or undue prejudice, denial instead must be based on bad faith or dilatory motives, truly undue or unexplained delay, repeated failures to cure the deficiency by amendments previously allowed, or futility of amendment.") (emphasis added); Fatir v. Dowdy, No. Civ. A. 95-677-GMS, 2002 WL 2018824, *7-9 (D. Del. Sept. 4, 2002) (denying leave to amend solely on grounds of undue delay and prejudice).

In this case, Plaintiff first argues that Judge Hughes's finding of undue delay was clearly erroneous because (1) the delay resulted from Plaintiff's decision to await the Court's ruling on Plaintiff's prior Motion for Leave to Amend and; (2) because the statements Plaintiff sought to add to its Complaint were buried in "a multi-million page document production." Pl.'s 72.1 Mem. at 7.

But as Judge Hughes adequately explained, these reasons are insufficient: Plaintiff's filing of the Third Motion to Amend almost a year after the close of discovery and after the commencement of the final pre-trial conference constituted undue delay because Plaintiff "simply offer[s] no satisfactory reasoning as to why these statements were not included in any of the previous Amended Complaints." 2005 Opinion at 14. With the exception of one, every statement that Plaintiff seeks to add to the Complaint was available well before Plaintiff filed the Second Motion to Amend, and two of the statements were available for almost three years prior to the instant Motion to Amend.

This Court agrees with Judge Hughes, that even considering the large number of documents in this case (the abundance of which the Court is, unfortunately, well aware), there is simply no adequate reason why Plaintiff had to wait for the Court's decision on its previous Motion to Amend before it raised the issue of these additional statements. The Motion to Amend with the additional statements could have been made as they became available (for all but one statement, this point was before the Second Motion to Amend was filed). Even the one statement that was included in a document produced a week after the Second Motion to Amend was filed, could have been brought to the attention of Defendants and the Court before the Third Motion to Amend. As Judge Hughes aptly explained:

[C]laims of Plaintiff that it was necessary to await decision on various dispositive motions or other developments in the case before seeking to add new alleged misrepresentations are illusory. The new claims could have been added after depositions of the speakers had been conducted or certainly before eight months had passed after the conclusion of fact discovery. There will always be more to `discover' and more to do in a case of this magnitude. The real issue is whether the Plaintiff class has had a full and fair opportunity to conduct discovery and adequately plead its case. The answer is a resounding yes.

2005 Opinion at 16.

Judge Hughes's finding that Plaintiff "had previous knowledge of these statements and had ample time to amend its complaint" is not clearly erroneous. 2005 Opinion at 14. Even if delay alone is an insufficient ground upon which to deny a motion to amend, see Howze v. Jones Laughlin Steel Corp., 750 F.2d 1208, 1212 (3d Cir. 1984), truly undue delay or delay without reasonable explanation is sufficient, especially in a case such this one, where judicial efficiency and interest in the finality of the litigation would be compromised. See e.g., Lorenz v. CSZ Corp., 1 F.3d 1406, 1414 (3d Cir. 1993); Cureton v. Nat'l Collegiate Athletic Ass'n, 252 F.3d 267, 273-74 (3d Cir. 2001).

Besides the unexplained delay in bringing the motion to add these statements to the Complaint, which is a sufficient basis for denial of the motion, Judge Hughes also found that Defendants would be unduly prejudiced by the amendment: "[A]llowing Plaintiff to amend the Complaint at this point `deprives [the Defendants] of fair notice, possibly discovery, and the opportunity for motion practice". 2005 Opinion at 13 (quoting Wilson v. Muckala, 303 F.3d 1207, 1215-16 (10th Cir. 2002)). Judge Hughes concluded that allowing the Proposed Complaint, "at such a late date, could only result in a serious impairment of the nonmovant's ability to present its case." Id. (citing Harter v. GAF Corp., 150 F.R.D. 502, 509 (D.N.J. 1993)). Judge Hughes determined that, given the stage of the case and all the preparation, work and expense Defendants had undertaken, all with a focus on the statements currently in the case, allowing Plaintiff to amend the Complaint would "unfairly disadvantage or deprive [Defendants] of the opportunity to present facts or evidence that it would have offered". Id.

Plaintiff responds, that in Plaintiff's opinion, the additional statements are similar enough to statements allowed in the case, such that additional presentation of facts of or evidence by Defendants would not be required. Pl.'s 72.1 Mem. At 10-12. But Plaintiff offers no evidence, case law or argument showing that Judge Hughes's determination of prejudice to Defendants was "clearly erroneous or contrary to law."

Finally, Plaintiff appeals Judge Hughes's finding that the PSLRA prohibits amendment of the Complaint. Pl.'s 72.1 Mem. at 12. Specifically, Plaintiff argues that the PSLRA is inapplicable at this late stage in the case and that, even if the PSLRA were relevant, any concerns about the sufficiency of the pleadings are addressed by a futility determination. Pl.'s 72.1 Mem. at 12-21. Plaintiff also contends that the requirements of the PSLRA "should not trump the liberal pleading standards of Rule 15(a) in this context". Pl.'s 72.1 Mem. 13-17.

The Court must agree with Judge Hughes, however, that allowing Plaintiff to amend their complaint without it being subjected to the requirements of the PSLRA "would allow it `to make an end run around the requirements of the [PSLRA].'" 2005 Opinion at 15 (quoting In re Champion Enters., Inc. Sec. Litig., 145 F. Supp. 2d 871, 877 (E.D. Mich. 2001)). The Third Circuit has been clear, that in actions filed under the PSLRA, leave to amend should not be given in a fashion that would frustrate the heightened pleading requirements of the statute. See Cal. Public Employees' Ret. Sys. v. Chubb Corp., No. 03-3755, 2004 WL 3015578, at *27 (3d Cir., Dec. 30, 2004) (affirming denial of leave to amend and noting "PSLRA's potential impact of narrowing application of [the Rule 15] standard in securities fraud cases"); see also In re ATT Sec. Litig., Civ. A No. 00-5364 (GEB), slip op. at 12-14 (D.N.J. Apr. 6, 2004) (denying plaintiffs' request to add new actionable statements to the final pretrial order because the addition of the claims was untimely and would be prejudicial to Defendants and the claims would fail to meet the PSLRA's pleading requirements), aff'd, (D.N.J. Jun. 8, 2004). Here, it is clear that Judge Hughes's determination is clearly supported by the precedent cited and applied therein.See 2005 Opinion 15-16.

In sum, Judge Hughes's Opinion and Order, offering not one, but three, independently valid reasons for denying Plaintiff leave to amend the complaint, is neither contrary to law nor clearly erroneous. Rather, it is exactly what this Court would have decided if it had considered the issue in the first instance. For this reason, Plaintiff's Rule 72.1 Motion will be denied, and Judge Hughes's Opinion and order dated April 27, 2005 will be affirmed.

Since leave to file the Third Amended Consolidated Class Action Complaint will not be granted, and since the Second Amended Complaint was never filed, Plaintiff's allegations stand as asserted in the First Amended Consolidated Class Action Complaint (hereinafter "Compl.").

II.B. The Challenged Statements

To facilitate reference throughout this Opinion, following is a numbered list of the challenged statements as set forth in the First Amended Consolidated Class Action Complaint (each statement is preceded by the date on which it was allegedly made and the name of the speaker):

1. 11/8/1999, Weber: "As far as the side effect profile is concerned, right now as yet I have not seen any evidence that this drug [VANLEV] differs from traditional ACE inhibitors in its side effect profile." Compl. ¶ 52; PX 450:OMA1787535-536.

2. 11/8/1999, Black: "These are very impressive results from a large group of patients" and the data indicates Vanlev may be "the best choice for doctors." Compl. ¶ 53; PX 240.

3. 11/8/1999, Black further described the results as "the most compelling we've seen with any new cardiovascular agent in the past 15 years." Compl. ¶ 50; PX 241.

4. 11/8/1999, Weber: "To date, omapatrilat has been studied in more than 6,500 patients and has been generally well-tolerated, with a safety profile comparable to several leading hypertension therapies." Compl. ¶ 53; PX 241.

5. 11/29/1999, Ringrose: "If you asked a cardiologist what the ideal drug would do, VANLEV pretty much ticks all the boxes." "We have three blockbusters at the moment, but we should have three more in Plavix (an antithrombotic), Avandia (for diabetes) and Vanlev." Compl. ¶ 65; DX 41 150-51; PX 246.

6. 11/1999, Weber: "Omapatrilat [Vanlev] was well tolerated, and discontinuation rates due to adverse events were similar in the omapatrilat, lisinopril and placebo groups." Compl. ¶ 58; PX 245:OMA1124654.

7. 12/20/1999, BMS: "In placebo-controlled clinical trials, the most commonly reported side effects were headache (more common in the placebo group) dizziness, upper respiratory infection and cough." Compl. ¶ 66; DX 241.

8. 1/10/2000, BMS: "In placebo-controlled trials, the most commonly reported side effects were headache (more common in the placebo group), dizziness, upper respiratory tract infection and cough." Compl. ¶ 70; PX 247.

9. 1/13/2000, BMS: "According to Health Canada procedure, a Priority Review can be granted for a drug that treats `a serious, life-threatening or severely debilitating disease or condition when there is `substantial clinical evidence that the drug provides significantly improved efficacy or significantly diminished risk over existing therapies . . . for a disease or condition that is not adequately managed by a drug marketed in Canada.'" Compl. ¶ 73; DX 74.

10. 3/11/2000, Dr. Ferdinand: The "safety and tolerability profile of omapatrilat compares favorably with placebo . . . overall safety and tolerability profile of omapatrilat is comparable to amlodipine and lisinopril" and that the "[i]ncidence of angioedema [is] comparable with current ACE inhibitors." Compl. ¶ 83; PX 244:OMAP0050280.0033.

11. 3/12/2000, Dahlöf: Summarizing safety findings, Dahlöf stated that Vanlev was observed to have a "tolerability profile at least comparable to existing agents." Compl. ¶ 82; DX 294:OMA0002096, OMA0002108.

Second Class Period

12. 11/7/2001, BMS: "Over the next 12 months, [BMS] . . . plans to submit an unprecedented number of regulatory submissions, including global regulatory filings for five new potential blockbuster compounds." Compl. ¶ 148; DX 285; 245.

13. 11/7/2001, Dolan: "As a result of these efforts, we believe we have the products that will allow us to achieve our goal of launching three potential blockbuster products a year for several years starting in 2003 and we are hopeful that the first of these products may launch in 2002." Compl. ¶ 148; DX 285; 245.

14. 12/13/2001, Dolan: "We are optimistic about the five new medicines that we are filing for regulatory approval in a 12-month period." Compl. ¶ 150; DX 293.

15. 12/13/2001, BMS also stated that it "has submitted — or plans to submit — five new drug filings. . . . The new drug filings include Vanlev ™ (omapatrilat), which the company intends to refile with the [FDA] on December 14, 2001 for treatment of hypertension. The company hopes the FDA will approve Vanlev during the second half of 2002." Compl. ¶ 151; DX 293.

16. 1/15/2002, Dolan reminded the market of "the record number of innovative blockbuster brands [the clinical and pharmaceutical divisions] are poised to deliver into the marketplace, among them Vanlev ™ (omapatrilat) for hypertension and heart failure. . . ." Compl. ¶ 155; PX 262:1.

There is one additional statement, which falls outside of the First Class Period, November 8, 1999 to April 19, 2000, as that period was Stipulated and Ordered on November 20, 2001. In its 2004 Opinion and Order, this Court upheld as actionable a statement by Tim Cost, made on October 19, 1999. 2004 Opinion at 40 (designated in that Opinion, statement number three); Proposed Second Amended Consolidated Class Action Complaint ¶ 61. Plaintiff seeks to have the class period revised to include the statement, but Plaintiff, after having been granted leave, never filed a Second Amended Consolidated Class Action Complaint including this statement. See Plaintiff's Letter to the Court, dated August 1, 2005. As explained above, therefore, the last Complaint of record is the First Amended Consolidated Class Action Complaint — and this Complaint does not include the Cost statement. Nor does the recently filed Revised Final Pre-trial Order, docket number 320, dated June 13, 2005 contain the Cost statement, see pp. 13-16.

But the issue is not so much that the Second Amended Complaint was never filed — the parties have proceeded on the assumption that the Second Amended Complaint controls, and in other circumstances that would be sufficient grounds to include the statement. The real issue, at this point, is that if Plaintiff had sought leave to file its Third Amended Complaint in a more timely manner, or had at least offered some reason for the delay, the Cost statement would have been included in that complaint. To permit the statement now, would undermine Judge Hughes's decision to not permit amendment. As it stands, for all of the reasons set forth in the previous section, it is too late to amend at this juncture. The statement is not permitted and there is no need to adjust the agreed upon class periods.

III. DISCUSSION

Plaintiff alleges that in the first class period Defendants misrepresented and omitted material information concerning the incidence and severity of Vanlev's angioedema side effect. In the second class period, Plaintiff alleges that Defendants repeatedly misrepresented to the market that Vanlev had the potential to be BMS's next "blockbuster" drug. The merits of Defendants' Summary Judgment Motion, which contests all of these allegations is considered below.

III.A. Standard of Review

III.A.1. Summary Judgment

A party seeking summary judgment must "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Orson, Inc. v. Miramax Film Corp., 79 F.3d 1358, 1366 (3d Cir. 1996).

In deciding whether there is a disputed issue of material fact, the Court must view the underlying facts and draw all reasonable inferences in favor of the non-moving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Pennsylvania Coal Ass'n v. Babbitt, 63 F.3d 231, 236 (3d Cir. 1995). The threshold inquiry is whether there are "any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).

Once the moving party has properly supported its showing of no triable issue of fact and an entitlement to judgment as a matter of law, the non-moving party "must do more than simply show that there is some metaphysical doubt as to material facts."Matsushita, 475 U.S. at 586; see also Anderson, 477 U.S. at 247-48. The non-moving party must "go beyond the pleadings and by [its] own affidavits, or by the `depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'"Celotex, 477 U.S. at 324; Big Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir. 1992) ("to raise a genuine issue of material fact . . . the [non-moving party] need not match, item for item, each piece of evidence proffered by the movant," but rather "must exceed the `mere scintilla' threshold"), cert. denied, 507 U.S. 912 (1993).

When there are no triable issues of fact, summary judgment is granted in securities cases. See In re Ikon Office Solutions, Inc., 277 F.3d 658, 666 (3d Cir. 2002); Tse v. Ventana Medical Systems, Inc., 297 F.3d 210 (3d Cir. 2002); GFL Advantage Fund, Ltd. v. Colkitt, 272 F.3d 189, 199 (3d Cir. 2001).

III.A.2. Section 10(b)

"The Securities and Exchange Commission's Rule 10b-5, promulgated under § 10(b) of the Securities Exchange Act of 1934 (Act), prohibits, in connection with the purchase or sale of any security, the making of any untrue statement of a material fact or the omission of a material fact that would render statements made not misleading." Basic Inc. v. Levinson, 485 U.S. 224, 224 (1988). Section 10(b) prohibits the "use or employ . . . [of] any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe. . . ." 15 U.S.C. § 78j(b).

"To state a valid claim under section 10(b) and Rule 10b-5, a plaintiff must show that the defendant (1) made a misstatement or an omission of a material fact (2) with scienter (3) in connection with the purchase or the sale of a security (4) upon which the plaintiff reasonably relied and (5) that the plaintiff's reliance was the proximate cause of his or her injury." Ikon, 277 F.3d at 666 (3d Cir. 2002); Semerenko v. Cendant Corp., 223 F.3d 165, 176 (3d Cir. 2000) (the "in connection with" prong is satisfied where the misrepresentations are material and disseminated to the public in a medium upon which a reasonable investor would rely and that they were material when disseminated).

Scienter can either be intentional fraud or recklessness. See In re Advanta Corp. Sec. Litig., 180 F.3d 525, 535 (3d Cir. 1999) (Defendants' conduct was "an extreme departure from the standards of ordinary care, and present[ed] a danger of misleading buyers or sellers that [was] either known to the defendant or is so obvious that the actor must have been aware of it."); McClean v. Alexander, 599 F.2d 1190, 1198 (3d Cir. 1979). In the Third Circuit, Ikon instructs that

[t]o establish securities fraud, plaintiffs must establish a more exacting threshold of scienter — "a mental state embracing intent to deceive, manipulate or defraud," . . ., or, at a minimum, "highly unreasonable (conduct), involving not merely simple, or even inexcusable negligence, but an extreme departure from the standards of ordinary care, . . . which presents a danger of misleading buyers or sellers that is either known to the defendant or is so obvious that the actor must have been aware of it."

Ikon, 277 F.3d at 666. "[B]y its terms, section 10(b) does not prohibit aiding and abetting." Id. (citing Central Bank, 511 U.S. at 191).

A plaintiff can establish an inference of scienter by adducing direct or circumstantial evidence either (1) to show that defendants had both a motive and opportunity to commit fraud, or (2) showing conscious misbehavior or recklessness. In re Alpharma Inc. Securities Litigation, 372 F.3d 137, 148 (3d Cir. 2004). A plaintiff can show conscious misbehavior by adducing facts that defendants had actual knowledge that their statements were false or misleading at the time they were made. GSC Partners CDO Fund v. Washington, 368 F.3d 228, 239 (3d Cir. 2004). When arguing that a defendant had a "good faith" belief in the veracity of her statements courts " assume that a defendant can genuinely have a subjective belief that demonstrates good faith even though it is the result of reckless conduct. However, it clearly can be argued that a subjective belief based on inquiry that is reckless can never properly be considered a `good faith' belief." United States Securities and Exchange Comm. v. Infinity Group Co., 212 F.3d 180, 193 n. 16 (3d Cir. 2000). In other words, it will not suffice for Defendants to show that they had a good faith belief in the truth of their statements if Plaintiff shows that Defendants were reckless in not knowing information that would prove those statements to have been false or misleading.

III.A.3. The Applicability of the PSLRA

The parties dispute whether the heightened pleading standard for scienter, under the Private Securities Litigation Reform Act ("PSLRA"), applies to substantive burdens on summary judgment, and for that matter, at trial. Defs.' Mem. at 3; Opp'n at 9; Reply at 3-4.

The PSLRA, without directly defining scienter, impacts its application the in Rule 10b-5 context in a number of ways. Specifically, the PSLRA requires plaintiffs to allege with particularity facts that create a "strong inference" of scienter.See Pub.L. No. 104-67 § 101(b) (codified at 15 U.S.C. § 78u-4(b)(2)), amending Exchange Act by adding § 21D9(b)(1)-(2). The PSLRA also limits joint liability in 10b-5 actions to persons who knowingly make false or misleading statements. See 15 U.S.C. § 78u-4(f)(A)-(B).

Defendants argue that it would be irrational for Congress to have made it "easier to gain the right to a trail after years of discovery than simply to plead a case." Reply at 4. In support of this argument Defendants cite Geffon v. Micrion Corp., 249 F.3d 29, 36 (1st Cir. 2001), wherein the court affirmed the use of a "strong inference" standard on summary judgment because "[t]he judicial reasoning applicable to imposing heightened pleading requirements is at least as forceful, if not more so, with regard to proof requirements that a trial judge must consider in deciding whether to allow a motion for summary judgment." Id. (citing also KA Inv. LDC v. Number Nine Tech Corp., No. 00-10966, 2002 WL 31194865, at *11 (D. Mass. Aug. 26, 2002) (applying strong inference standard to decide motion for summary judgment); Tse v. Ventana Med. Sys., Inc., 123 F. Supp. 2d 213, 225-26 (D. Del. 2000) (same)). In the context of this case, the First Circuit's position has three problems — the first is theoretical, the second is precedential and the third relates to the language of the PSLRA.

Theoretically speaking, it makes good sense to have a more stringent pleading requirement than proof requirement. The congressional intent of the PSLRA is "to deter strike suits wherein opportunistic private plaintiffs file securities fraud claims of dubious merit in order to exact large settlement recoveries." Lentell v. Merrill Lynch Co., Inc., 396 F.3d 161, 171 (2d Cir. 2005) (citation omitted). At the same time, the liberal pleading requirements of Rule 15(a), give plaintiffs latitude to plead facts without any evidentiary support. It makes sense that at a stage where a Securities Act plaintiff can plead essentially anything under the sun, they should, at the very least, be required to plead facts that permit a strong inference of scienter. It also makes sense, that at the summary judgment and trial phases, where allegations must be supported by admissible evidence, the need for such a check is alleviated.

In this circuit, moreover, the precedent is clear that "the determination of whether a given factual dispute requires submission to a jury must be guided by the substantive evidentiary standards that apply to the case," see In re ATT Corp. Securities Litigation, Civ. No. 00-5364, Mem. Op. t 41 (D.N.J. June 8, 2004). In the Third Circuit, that substantive evidentiary standard does not call for a "strong inference," but rather, a plaintiff must "supply a basis from which to draw a reasonable inference that [defendants] recklessly or knowingly issued a materially false and misleading [statement]," see Ikon, 227 F.3d at 668.

Further, in Advanta, 180 F.3d at 534, the Third Circuit set forth its view that the language and legislative history of the PSLRA impose a pleading requirement not a substantive requirement:

Under the heading "Requirements for securities fraud actions," the Act expressly characterizes subsections 21D(b)(1) and (b)(2) as imposing "pleading requirements." 15 U.S.C.A. § 78u-4(b)(3)(A) (West Supp. 1999). On this point, the legislative history is uncontradicted and reinforces the view that these provisions impose strictly procedural requirements. The Statement of Managers notes "this legislation implements needed procedural protections to discourage frivolous litigation," an explicit reference to the procedural nature of the Reform Act. H.R. Conf. Rep. No. 104-369 at 28 (1995). It also states that section 21D(b)(2) imposes a "heightened pleading standard" in response to disparate interpretations of Fed.R.Civ.P. 9(b), a procedural rule. See id. at 37 ("[Rule 9(b)] has not prevented abuse of the securities laws by private litigants. Moreover, the courts of appeals have interpreted Rule 9(b)'s requirement in conflicting ways, creating distinctly different standards among the circuits."). Likewise, the floor debate and committee reports in both houses of Congress, as well as the President's veto statement, all describe the Reform Act as imposing new "pleading requirements." In view of the statutory language and supporting legislative history, we believe section 21D(b)(2) was intended to modify procedural requirements while leaving substantive law undisturbed.

Advanta, 180 F.3d at 534.

While Advanta focused on whether the PSLRA changed substantive elements of the 10b-5 claim (specifically, whether motive and opportunity or recklessness allegations could satisfy the strong inference requirement), Advanta's discussion of the PSLRA went further by interpreting the statute to only apply at the pleadings stage.See id. To this extent, Advanta also suggests that the PSLRA did not change the evidentiary standard at summary judgment, even though that standard is arguably more procedural than substantive.

Lastly, for certain statements in this case, as will be demonstrated below, there is sufficient evidence for a jury to draw a reasonable inference of scienter, but there is also enough evidence for a jury to draw a strong inference of scienter — so, here, under either standard the outcome would be the same. Under any circumstances, the Court is satisfied that the heightened standards governing scienter contained in the PSLRA do not change the substantive burdens of proof of the respective parties.

III.B. Materiality, Loss Causation, and the "Truth" Defense

III.B.1. Materiality

In this case, the primary question with respect to materiality is whether an allegedly fraudulent statement must cause the stock price to increase on the day the statement is made, or whether it is sufficient to show a price drop when the truth is revealed. Defendants argue, that to the extent Plaintiff's case challenges affirmative misstatements of material fact (as opposed to omissions), these statements (in both class periods) are immaterial because "none of the statements had a positive (statistically significant) impact on the price of BMS's stock." Defs.' Mem. at 17-18; Reply at 16. Plaintiff does not dispute that none of the challenged statements coincided with an increase in the price of BMS stock. Opp'n at 24-26.

Certainly, it is the case that "in an efficient market `the concept of materiality translates into information that alters the price of the firm's stock,' if a company's disclosure of information has no effect on stock prices, `it follows that the information disclosed . . . was immaterial as a matter of law.'"Oran v. Stafford, 226 F.3d 275, 282 (3d Cir. 2000) (quoting In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1425 (3d Cir. 1997)). However, while some stock price change is required as a demonstration of materiality, Defendants cite no case, and the Court is aware of no case, wherein, in addition to a price change upon disclosure of corrective information, there must be a price change coinciding with the alleged misstatement or omission. Logic suggests that if a material omission serves to conceal information that would otherwise cause the stock price to fall, the very fact that the price does not change (until corrective disclosure) would evince the statement's materiality. Defendants concede as much. See Reply at 16 n. 16.

Similarly, though, if a statement that is actionable as an affirmative misstatement were to falsely pronounce that "all is well," in language that is verifiably, objectively false, it is conceivable that such a misstatement could serve to maintain the stock price at an artificially inflated level without also causing the price to increase further. In a case such as this one, where a plaintiff alleges that corrective disclosure caused a statistically significant price decrease, it is possible to determine retrospectively whether the alleged fraud (be it an affirmative misstatement or an omission) was material — if Plaintiff's allegations are ultimately supported by enough evidence to survive summary judgment, then a jury could reasonably find that the price drop at the end of each class period evinces the materiality of the challenged statements. For this reason, Defendants will not obtain summary judgment on the issue of materiality.

III.B.2. Loss Causation

The PSLRA, 15 U.S.C. § 78u-4(b)(4), expressly imposes on plaintiffs "the burden of proving" that the defendant's misrepresentations "caused the loss for which the plaintiff seeks to recover." Here, it is undisputed that there was a loss — there were two separate declines in BMS's share price, one on April 19, 2000 and the other on March 20, 2002. Defs.' 56.1. ¶ 600. But Defendants argue that Plaintiff cannot prove that these losses were caused by the alleged fraud. Defs.' Mem. at 26-28; Reply at 23-26.

The causation element of the Third Circuit's test for securities fraud under § 10(b) and Rule 10b-5 turns on a legal link between the defendants' misstatement or omission and the plaintiffs' injury. Tse v. Ventana Medical Systems, Inc., 297 F.3d 210, 218 (3d Cir. 2002). "In Semerenko, [the Third Circuit] equated loss causation with proximate cause, stating that there must be a `sufficient causal nexus between the loss and the alleged misrepresentation.'" EP Medsystems, Inc. v. EchoCath, Inc., 235 F.3d 865, 883 (3d Cir. 2000) (citing Semerenko v. Cendant Corp., 223 F.3d 165, 184 (3d Cir. 2000)). "Before . . . Semerenko . . ., [the Third Circuit] generally stated that the "misrepresentation must touch upon the reasons for the investment's decline in value." EP Medsystems, 235 F.3d at 883 (citing In re Phillips Petroleum Securities Litigation, 881 F.2d 1236, 1244 (3d Cir. 1989)) (emphasis added).

III.B.2.a. Loss Causation in the First Class Period

Defendants argue that the statement which Plaintiff alleges was BMS's "corrective disclosure" of the truth, marking the end of the First Class Period, does not address the alleged fraud, and therefore, the price drop coinciding with that disclosure, cannot be proof that the alleged fraud caused the loss. Id. The complete April 19, 2000, allegedly "corrective" disclosure was as follows:

Bristol-Myers Squibb Company is voluntarily withdrawing its current New Drug Application (NDA) for VANLEV (omapatrilat) from the U.S. Food Drug Administration (FDA). The Company now expects to resubmit its application early next year. Bristol-Myers Squibb is taking this action in response to questions raised recently by the agency regarding the comparative incidence and severity of an infrequent side effect known as angioedema reported within the NDA database.

DX 177; Transcript of Oral Argument on June 20, 2005 ("Trans.") at 9:2-8. The allegedly undisclosed and misrepresented information, as the Complaint sets forth was that

[u]nbeknownst to investors . . . BMS conducted clinical trials of VANLEV . . . which showed a high incidence of angioedema and an increase in severe forms of angioedema, including that four patients treated with VANLEV suffered a rare and very serious form of angioedema which required hospitalization and intubation . . . and that a less severe form of angioedema had afflicted 40 additional patients in the clinical trials. . . . Had defendants disclosed to investors that patients treated with VANLEV had experienced an adverse reaction that required intubation and/or hospitalization, a condition which . . . was not associated with any other ACE inhibitor already on the market, the investment community would not have perceived VANLEV as BMS's next billion dollar drug . . .

Compl. at ¶¶ 89; 101.

The parties have argued extensively, in their briefs, at oral argument, and in a series of letter briefs, about whether the Supreme Court's recent decision in Dura Pharmaceuticals v. Broudo, has rendered the "touch-upon" test obsolete. See Dura Pharmaceuticals v. Broudo, 125 S. Ct. 1627, 1630-32 (2005) (citing Semerenko favorably). Defendants suggest that Dura, stiffened the required pleading and proof of loss causation such that a plaintiff must show that the loss was caused by a corrective disclosure that mirrors, with precision, the alleged fraud. Trans. at 5:6-25; 6:1-7.

In Dura the Supreme Court's holding rejected the view of the Ninth Circuit that "`plaintiffs establish loss causation if they have shown that the price on the date of purchase was inflated because of [a] misrepresentation.'" Dura, 125 S. Ct. at 1630. The Court made the point that, among other reasons, this view is wrong because even if the buyer sells the artificially inflated stock later, at a lower price, the loss might not be related the earlier misrepresentation: It could, rather, be the result of "changed economic circumstances, changed investor expectations, new industry-specific or firm-specific facts, conditions, or other events . . . the most logic alone permits us to say is that the higher purchase price will sometimes play a role in bringing about a future loss." Id. at 1632 (emphasis added).

Dura did not analyze whether the alleged corrective disclosure — an announcement that the FDA would not approve the defendant company's product — was adequately connected to the alleged misrepresentation. Arguing otherwise, Defendants direct the Court's attention to language from Dura stating that "[t]he complaint's failure to claim that Dura's share price fell significantly after the truth became known suggests that the plaintiffs considered the allegation of purchase price inflation alone sufficient." See Visual Aids for Oral Argument at 1 (citing Dura, 125 S. Ct. at 1634). But this finding bears no relation to the instant case. Here, it is undisputed that BMS's share price dropped after the alleged truth became known — Plaintiff has not sought to rely on evidence of an inflated purchase price.

In short, Dura requires that plaintiffs must make some showing, beyond a price increase, to prove that there was a loss:

Given the tangle of factors affecting price, the most logic alone permits us to say is that the higher purchase price will sometimes play a role in bringing about a future loss. It may prove to be a necessary condition of any such loss, and in that sense one might say that the inflated purchase price suggests that the misrepresentation . . . "touches upon" a later economic loss. . . . But, even if that is so, it is insufficient. To "touch upon" a loss is not to cause a loss, and it is the latter that the law requires.

Dura, 125 S.Ct. at 1632 (citing 15 U.S.C. § 78u-4(b)(4)). Thus, Dura held that a price increase after alleged misrepresentations, standing alone, cannot prove that there was an actionable loss.

Yet, Dura's discussion of whether the price increase touches upon the loss leaves open the key questions in this case: (1) Whether, in addition to showing a price increase, showing a price drop, after disclosure of an alleged truth that touches upon the misrepresentation can thereby prove that the misrepresentation caused the loss; and (2) Whether Plaintiff, in this case, has made an adequate showing.

Another case, cited as persuasive authority by Defendants,Lentell v. Merrill Lynch Co. Inc., 396 F.3d 161 (2d Cir. 2005), is more on point than Dura, but sheds no more light on these key questions. Also analyzing loss causation, Lentell explained that

it cannot ordinarily be said that a drop in the value of a security is "caused" by the misstatements or omissions made about it, as opposed to the underlying circumstance that is concealed or misstated. Put another way, a misstatement or omission is the "proximate cause" of an investment loss if the risk that caused the loss was within the zone of risk concealed by the misrepresentations and omissions alleged by a disappointed investor. . . . Thus to establish loss causation, a plaintiff must allege that the subject of the fraudulent statement or omission was the cause of the actual loss suffered . . .

Lentell, 396 F.3d at 173 (2d Cir. 2005) (citations and ellipses omitted, emphasis in original).

Lentell held that false or misleading recommendations that clients should "buy" or "accumulate" particular securities, followed by an alleged corrective disclosure in the form of downgraded recommendations (changing "buy" to "accumulate" and changing "accumulate" to "neutral") did not adequately plead loss causation: "These allegations do not amount to a corrective disclosure . . . because they do not reveal to the market the falsity of the prior recommendations." Id. at 175 n. 4. In other words, the alleged corrective disclosure did not address the subject of the alleged fraud.

Here, citing Dura and Lentell, Defendants argue that BMS's April 19, 2000 disclosure could not have been a "corrective disclosure" because it did not reveal to the market the falsity of the prior statements. Trans. at 5:6-25; 6:1-7. Defendants point, for example, to the first part of the alleged corrective disclosure which essentially says "we are voluntarily withdrawing our NDA." Trans. at 9:9-10. They argue that unless the fraud allegedly concealed is a statement that "we are not going to withdraw our NDA," the statement that "we are withdrawing our NDA" cannot be corrective disclosure. Trans. at 9:19-20.

This theory of loss causation is flawed. First of all, it does not follow from the precedent cited, or any precedent of which the Court is aware. In Lentell, it would have been impossible for the downgraded recommendations to have corrected the lie implicit in the earlier recommendations because the entire communication — alleged lie and alleged fraud — was comprised of only four words. So yes, in Lentell, the corrective disclosure — "accumulate" and "buy" — could not have revealed to the market the more complicated fraud underlying the prior recommendations. But Lentell cannot, on these facts, stand for the general proposition that an alleged corrective disclosure must be the linguistic mirror image of the alleged fraud — and even if it did, this case is different.

In this case, it is incorrect to look at the disclosure "we are withdrawing our NDA" in isolation from the rest of the corrective statement, which explains, in many more words, that the reasons for the withdrawal were "questions raised . . . regarding the comparative incidence and severity of an infrequent side effect known as angioedema. . . ." See Trans. at 9:6-8. Defendants argument has rhetorical appeal, but only when the sentences that together make up the corrective disclosure are looked at as separate statements, no one of which, standing alone, reveals the whole truth. Taken as a whole, however, as it was presented to the market, the disclosure is perfectly congruent to the alleged fraud: That being, concealment, by omission of the company's concern about "a high incidence of angioedema . . . not associated with any other ACE inhibitor already on the market," and by affirmative misstatements asserting that Vanlev was well-tolerated, had a side-effect profile comparable to other ACE inhibitors, and that Vanlev would be "BMS's next billion dollar drug."

The fact that BMS stated along with the corrective disclosure that it "expects to resubmit its application," does nothing to neutralize the core "subject" of the disclosure — that BMS had undisclosed knowledge of an angioedema issue that was not seen in other ACE inhibitors. See Trans. at 11:13-24; 20:10-25. Also, the fact that the stock price fell without a more complete and detailed disclosure, if anything, only goes to show that the tip of the iceberg was enough cause the loss. See Trans. at 20:3-9.

Defendants also argue that because the alleged corrective disclosure is general enough to cover subjects other than those allegedly concealed, there is no way to prove that the market reacted to Plaintiff's "alleged truth," among the many other subjects that the statement could have been addressing. Trans. at 13:22-25; 14:1-9. By way of example, Defendants suggest that BMS's announcement could have been perceived by the market as stating that BMS sought to resubmit the Vanlev NDA because the FDA required a demonstration of higher efficacy. Transcript at 12:15-25; 13:1-6. This possibility, they argue, is consistent with "questions raised recently by the agency [about] angioedema." Id.

The problem with this argument is that whatever BMS's April 19, 2000 statement could have meant, at bottom, the only reason why BMS would withdraw its NDA to resubmit with higher efficacy data, would be because the FDA questioned the angioedema rates in light of underwhelming efficacy data. Either way, the truth comes out that angioedema is a problem for Vanlev. Dura is concerned with a loss that could have been caused by factors other than a truth-revealing statement. Dura is not concerned with pinning down which, among alternate versions of the same truth, might have caused the loss.

To be fair, Defendants propose other hypothetical reasons for why BMS would withdraw the NDA in response to concerns about angioedema that are not alternate versions of the same truth. In one scenario proposed at oral argument, BMS's "corrective disclosure" could have been issued in response to the FDA's mistaken conclusions about angioedema and Vanlev. Trans. at 13:7-25; 28:11-25; 29:1-10. Defendants argue that BMS could have, in that circumstance, mistakenly announced that "we are withdrawing our NDA in response to the FDA concerns regarding angioedema." Trans. at 13:22-25. In this scenario, they argue, the alleged corrective disclosure would have nothing to with fraud or with truth. Id. Again, Defendants rely on Dura for the proposition that if a plaintiff cannot rule out all possible explanations for BMS's April 19, 2000 statement, plaintiff cannot prove loss causation. See e.g., Trans. at 33:23-25; 19:15-18; 28:11-25; 29:1-10.

This line of argument (and the many illustrative examples) is flawed for two reasons. First, the argument cannot be disproved. According to Defendants' logic, Plaintiff would not be able to show loss causation without proving that investors rejected the possibility that what appeared to be the "truth" was actually a mistake. Second, relatedly, a plaintiff would have to adduce sufficient evidence that the alleged corrective disclosure, not only revealed a concealed truth, but also, that the market perceived it as a corrective disclosure and reacted to that perception. Thus, if Defendants argument prevails, a plaintiff must prove that it was the perception of the alleged corrective disclosure not necessarily the subject of the disclosure that caused the share price to drop. See Transcript at 32:9-12; 32:20-25.

This is an impossible burden to satisfy and cannot be required by Dura. Dura explains that a plaintiff cannot prove loss causation where an alleged loss could be the result of "changed economic circumstances, changed investor expectations, new industry-specific or firm-specific facts, conditions, or other events." Dura, 125 S. Ct. at 1630. In stark contrast to Defendants' proposed burden, the alternate causes to be ruled out under Dura can be readily addressed through the presentation of evidence.

In short, it is not what motivated BMS or caused BMS to make the April 19, 2000 statement that matters — it is the content of that statement. Here, the subject of the alleged corrective disclosure does more than "touch upon" the alleged fraud. It relates to the alleged fraud directly. Plaintiff has adduced facts sufficient to prove loss causation, see Opp'n at 42-43 (and contemporaneous analyst's reports cited therein), and withstands summary judgment on this issue.

III.B.2.b. Loss Causation in the Second Class Period

The loss causation issues in the Second Class Period are far less complicated than in the first. Here, there is no allegation that the corrective disclosure — the OCTAVE results — did not bear a one-to-one relation to the alleged fraud — concealment of the OCTAVE results. Here, however, Defendants contend that on March 20, 2002 the results of both the OCTAVE and the OVERTURE trial were announced, and therefore, Plaintiff's expert is "powerless to determine whether the . . . decline in the value of BMS stock that day was proximately caused by the disclosure of the OCTAVE results, on the one hand, or by the disappointing OVERTURE results, on the other." Reply at 25. They also contend that Plaintiff's experts have failed to prove that the price of BMS stock was artificially inflated before March 20, 2002. Id. at 26.

Plaintiff's expert may be subject to a Daubert challenge at the next stage of the litigation. For now, however, it is sufficient that one of Defendants' own experts testified that the announcement of the OCTAVE results could have caused some part of the March 20 price drop. See PX 27:187-88. The admissibility of this testimony is not challenged by Defendants, and it is sufficient grounds, more than a "mere scintilla," upon which to deny Defendants Motion. See In re Pharmaprint, Inc. Sec. Litig., No. 00-CV-00061, 2002 WL 31056813, *10 (D.N.J. Apr. 17, 2002) (denying summary judgment where "Lead Plaintiffs have offered an expert opinion that disputes [defendants' claim that fraudulent conduct did not cause plaintiff's injury]").

III.B.3. The "Truth" Defense

A core argument of Defendants', made with respect to every statement at issue in the First Class Period and the Second Class Period, is that the none of the statements are actionable because, aside from everything else, they are all objectively true. Reply at § II.A.1. But even an objectively true statement, if it leaves out material information may be actionable: "[E]ven absent a duty to speak, a party who discloses material facts in connection with securities transactions assume[s] a duty to speak fully and truthfully on those subjects." In re Ford Motor Co. Securities Litigation, 381 F.3d 563, 569-570 (6th Cir. 2004) (citation and quotation marks omitted); see also McMahon Co. v. Wherehouse Ent't, 900 F.2d 576 (2d Cir. 1990) ("Some statements although literally accurate, can become, through their context and manner of presentation, devices which mislead investors. For that reason, the disclosure required by the securities laws is measured not by literal truth but by the ability of the material to accurately inform rather than mislead prospective buyers.").

There is no general or independent duty to disclose "soft information," information that is uncertain and not objectively verifiable such as "predictions, matters of opinion, and asset appraisals." Id. However, even with "soft information," a defendant may choose silence or speech based on the then-known factual basis, but cannot choose half-truths. Id. (citing Helwig, 251 F.3d at 561, 564 (holding that a company may remain silent regarding soft information "until the fullness of time and additional detail permit confident disclosure," but it may not volunteer material, soft information despite its uncertainty and then escape liability for that information's misleading or false nature)).

Additionally, in some situations, statements that were accurate when made become inaccurate or misleading because of subsequent events. Most federal circuits have held that there is a duty to update when forward-looking statements still "alive" in the market have become inaccurate. See e.g., Weiner v. Quaker Oats Co., 129 F.3d 310 (3d Cir. 1997) (holding that a company that had stated its policy to maintain a stable debt-equity ratio came under a duty to disclose negotiations of a merger that would have added significant new debt); In re Time Warner Securities Litigation, 9 F.3d 259 (2d Cir. 1993) (finding that the public announcement of a plan to find a financial partner to mend over-leveraged capital structure triggered a duty to update when the company began to consider a dilutive stock offering as an alternate financing plan).

Thus, even objectively true statements can be actionable if Plaintiff can sustain its allegations that Defendants omitted material information that rendered a facially true statement false or misleading, or, that Defendants failed to update "true" forward-looking statements that later became inaccurate. Only where Plaintiff has alleged that the Defendants affirmatively misstated a material fact (but did not omit material information or tell a half-truth) is the objective truth of the statements the end of the story.

It is clear from the Complaint and the Opposition that all sixteen challenged statements are being challenged, as an initial matter, as affirmative misstatements of material fact. For example, Plaintiff's Opposition ("Pl.'s Opp'n"). at 23, sets forth facts which, if true, "do not support a characterization of Vanlev as having a `safety profile comparable to ACE inhibitors.'" "Comparable," it can be argued, can mean different things to different people. Thus, Plaintiff argues alternatively, that even if such statements are objectively true, they are only half-truths insofar as they omit material information that is necessary save the statements from being false or misleading.See e.g., Compl. ¶¶ 54-55, 59, 66, 69, 70, 81, 83, 146, 156. Where this is the case, Defendants' argument that the statements were objectively true is irrelevant. On the other hand, Defendants' argument that the statements were "believed to be true" or were "based upon facts" is a different issue that bears on scienter. See, infra, §§ III.C.2, III.D.2. Where applicable to specific statements, the tenability of Defendants' truth defense is considered below.

III.C. Statements in the First Class Period: November 8, 1999 through April 19, 2000

With respect to all of the statements in the First Class Period the Complaint alleges that,

had investors known that patients treated with VANLEV experienced more severe side effects than those associated with competing drugs already on the market, they would have known that, at a minimum, additional testing would be needed before FDA approval of VANLEV could be obtained and thus that the drug could not be marketed by BMS in the year 2000.

Compl. ¶ 111. Defendants' arguments specific to the First Class Period are that (1) a number of the statements are inactionable puffery, "soft information," or are forward-looking (statements two, three and five); (2) all of the statements were true or believed to be true when made; (3) some of the statements are not attributable to Defendants (statements one through four, six, ten and eleven); (4) none of the statements caused a significant price increase in BMS stock; (5) scienter cannot be proved with regard to any of the statements; and (6) some of the statements were never reported to the market (statements ten and eleven).

III.C.1. Puffery and Forward Looking Statements

First, with respect to statements two, three and five, in addition to arguing that each of these three statements is objectively true, Defendants argue that they are all inactionable "soft information" or puffery. Defs.' Mem. at 18-20; Reply at 16-18. Statements that constitute subjective analysis or extrapolation, such as opinions, motives, intentions and general statements of optimism are considered "soft information" or "puffery." In re Aetna Inc. Sec. Lit., 34 F. Supp. 2d 935, 945-46 (E.D. Pa. 1999). Puffery is not actionable because investors do not rely on such information in making investment decisions. Id.

Statement number three, that the results of the early Vanlev trials are "the most compelling we've seen with any new cardiovascular agent in the past 15 years," is not puffery because it refers specifically to the results from the Vanlev trials — a matter of historical fact. The statements' somewhat effusive language is insufficient to put the statement into the category of puffery. See Shapiro v. UJB Fin. Corp., 964 F.2d 272, 280 (3d Cir. 1992) ("Only if the alleged misrepresentations or omissions are so obviously unimportant to an investor that reasonable minds cannot differ on the question of materiality is it appropriate for the district court to rule that allegations are unactionable as a matter of law.") (citation omitted).

Defendants puffery argument with respect to statement number two — "`[t]hese are very impressive results from a large group of patients" and the data indicates Vanlev may be "the best choice for doctors," — is unpersuasive for the same reasons that apply to statement three. Statement two references the results of the Vanlev clinical trials and what the data indicate about the results. While the Court is mindful that "the best choice for doctors" does have an air of opinion to it, because the statement as a whole refers to what "the data indicate," it is sufficiently connected to objective, hard facts for it to be actionable. The "impressive results" allegedly seen, and the nature of what "the data indicate" about Vanlev vis-à-vis other drugs doctors would choose from, clearly reference historical facts.

Defendants also argue that statement number two is forward-looking, referring to the words "Vanlev may be the best choice for doctors." PX 240 (emphasis added). A forward-looking statement is a "statement containing a projection of," among other things, "plans and objectives of management for future operations, including plans or objectives relating to the products or services of the issuer." See 15 U.S.C. §§ 78u- 5(i)(1)(A) and 78u-5(i)(1)(B).

Taken out of context, the phrase Defendants extract from statement two indeed sounds forward-looking. But what was actually said was that " the data indicate Vanlev may be the best choice for doctors." PX 240 (emphasis added). Thus, the statement is actually somewhat of a hybrid: It is a present expression of forward-looking expectations. A similar statement was treated by the Third Circuit as follows:

A statement by the CEO of EchoCath that contracts with four companies were "ready to take place" may reasonably be construed as a representation about the current state of negotiations between EchoCath and the four companies it had identified. As such, the representation could be reasonably construed by a trier of fact to be a statement of fact rather than a prediction of future events.

EP Medsystems, Inc. v. EchoCath, Inc., 235 F.3d 865, 876-77 (3d Cir. 2000). The Third Circuit has explained that this view is consistent with that of other circuits. Id. (citing Grossman v. Novell, Inc., 120 F.3d 1112, 1123 (10th Cir. 1997) (concluding that the "bespeaks caution" doctrine would not apply because the statements at issue contained "then-present factual conditions, or implied background factual assumptions a reasonable investor would regard the speaker as believing to be true."); Shaw v. Digital Equip. Corp., 82 F.3d 1194, 1213 (1st Cir. 1996) (finding a statement that the company's reserves were adequate to cover costs contained both "forward-looking" and "present-oriented" aspects and was therefore not subject to the "bespeaks caution" doctrine); Harden v. Raffensperger, Hughes Co., Inc., 65 F.3d 1392, 1405-06 (7th Cir. 1995) (determining that a statement regarding the company's "plans" to restore profitability was "a present assertion of fact, i.e., `plans' exist or are being formulated").

Here too, "the data indicate[s]" portion of statement number two changes the meaning, from a simple expression of future possibility, to one expressing a current, certain and present possibility. As such, this statement could be reasonably construed by a jury to be a statement of fact rather than a prediction of future events. Statement number two will not be treated as a forward-looking statement.

With respect to statement number five, which Defendants argue is inactionable puffery, in his 2001 Opinion, Judge Brown found that

Dr. Ringrose's statement . . . when taken in context with other statements regarding Vanlev's safety and potential contribution to BMS's earnings, is a statement of fact regarding what drugs are in BMS's pipeline, and implicitly suggests that Vanlev will contribute to BMS's earnings as one of three "blockbusters."

2001 Opinion at 23-24. The court concluded that this statement was actionable "given the allegations in the Complaint." Id. At this stage, none of the evidence presented has changed the fundamental nature of this statement — it remains, for the same reasons Judge Brown described, the type of factual information upon which investors rely in making investment decisions.

Defendants also argue that statement number five is forward-looking. Defs.' Mem. at 19; Reply at 17. The Court agrees that insofar as the statement refers to what " should" happen in the future, statement number five is forward-looking. Plaintiff argues, that regardless, Defendants had actual knowledge that it was false when it was said. Opp'n 31-33. These arguments are considered in the following section because they dovetail with more general scienter issues.

III.C.2. Scienter

III.C.2.a. Motive and Opportunity to Commit Fraud in the First Class Period

As explained previously, a plaintiff can prove scienter with evidence that the defendant had "motive and opportunity" to commit fraud or evidence of "conscious misbehavior or recklessness." See, supra, § III.A.2. A showing of motive requires allegations that the individual corporate defendants stood to gain in concrete and personal ways from one or more of the alleged misleading statements or wrongful omissions. Wilson v. Burnstock, 195 F. Supp. 2d 619, 633 (D.N.J. 2002) (citing, inter alia, Novak v. Kasaks, 216 F.3d 300, 307 (2d Cir. 2000)). A showing of opportunity requires a showing that there were "`means and likely prospect of achieving such concrete benefits by the means alleged.'" Wilson, 195 F. Supp. 2d at 633 (citing Ganino v. Citizens Utilities Co., 228 F.3d 154, 170 (2d Cir. 2000)).

It is not seriously disputed that Defendants had the opportunity to manipulate the price of BMS stock by issuing material misstatements. Defendants Heimbold and Dolan both served as Chief Executive Officer and Chairman of the Board of BMS, and both had prior experience in the pharmaceutical division of the company. Defs.' 56.1 ¶¶ 3-4. Ringrose, during the relevant time period, served as President of BMS's Pharmaceutical Research Institute — the segment of BMS responsible for Vanlev, and as BMS's Chief Science Officer. Id. at ¶ 2. See San Leandro Emergency Medical Group Profit Sharing Plan v. Phillip Morris Companies, Inc., 75 F.3d 801, 813 (2d Cir. 1996) (finding "no doubt" that defendants had the opportunity to manipulate stock price as they held the highest positions of authority and power in the company).

In this case, the closer question is whether the evidence can show that Defendants had a motive to benefit from the alleged nondisclosure and misstatements. Defendants argue that because the allegedly withheld information about the incidence and severity of angioedema was disclosed to the FDA in the Vanlev NDA, the alleged fraud could not have gone undetected and, for this reason, the alleged fraud makes no sense. See e.g., Defs.' Mem. at 7 (the argument was also presented at oral argument and has been the subject of numerous letter briefs). Plaintiff's expert, Dr. Benumof, admitted that Defendants accurately disclosed the required information to the FDA with the Vanlev NDA. See Benumof Dep. at 250:23-251:6. Defendants argue further, that where the alleged fraud makes no sense, a reasonable jury could not infer that Defendants acted with scienter. See Letter Brief from Defendants, dated June 30, 2005. Defendants urge that this argument applies regardless of how Plaintiff chooses to prove scienter — whether it is by showing "motive and opportunity" evidence or evidence of "conscious misbehavior or recklessness." Id.

There is, indeed, some merit to the argument that the alleged fraud in this case makes little or no sense (see discussion below). This shortcoming in Plaintiff's proof, indeed, calls into question Plaintiff's ability to prove scienter by showing "motive and opportunity." But it is also clear that where a plaintiff can produce adequate evidence of scienter by demonstrating conscious misbehavior or recklessness, the question of "motive" is irrelevant. Motive is simply not an element of a 10b-5 claim. That is why "[w]here motive is not apparent, it is still possible to plead scienter by identifying circumstances indicating conscious behavior by the defendant, though the strength of the circumstantial allegations must be correspondingly greater." GSC Partners CDO Fund v. Washington, 368 F.3d 228, 238 (3d Cir. 2004) (citing Kalnit v. Eichler, 264 F.3d 131, 142 (2d Cir. 2001).

The same alternative methods of proof apply at the summary judgement stage. Thus, when Judge Brown ruled on this issue at the pleading stage of this case he explained: "[T]he court cannot dismiss the plaintiff's claims merely because the ultimate success of the alleged fraud was in doubt from its inception." 2001 Opinion at 19. Indeed, none of the cases cited by Defendants support the proposition that when the fraud makes no sense a showing of conscious misbehavior or recklessness would be insufficient to support allegations of scienter. See Defs.' Mem. at 7 (citing Shields v. Citytrust Bancorp., Inc., 25 F.3d 1124, 1130 (2d Cir. 1994) (affirming dismissal for failure to plead scienter with particularity where no motive could be proven because "[p]laintiffs' view of the facts defies economic reason, and therefore does not yield a reasonable inference of fraudulent intent," and there was no evidence of conscious misbehavior or recklessness either); Kalnit v. Eichler, 264 F.3d 131, 140 (2d Cir. 2001) (affirming dismissal for failure to plead scienter with particularity where plaintiffs' allegations of motive were "not only conclusory and speculative, but nonsensical as well," and plaintiff did not plead adequate allegations of conscious misbehavior or recklessness either)).

Going to the merits of the issue, is it really the case that the fraud Plaintiff alleges makes no sense? Defendants have admitted that if their motive was delayed public discovery of the angioedema issue, such delay could have been achieved through the alleged fraud. See Defs.' Mem. at 7. They argue, however, that delay cannot have been the motive because if it were, BMS would not have sought expedited, priority review of the Vanlev NDA.Id. Plaintiff argues that priority review was granted before the FDA could have discovered the incidence and severity of angioedema in the clinical trials and that BMS must have known that the data could not have been reviewed before priority review would be granted. See Pl.'s 56.1 ¶¶ 274-78. Moreover, if Plaintiff's allegation that BMS had actual knowledge of an angioedema issue as early as April 3, 1999 is credited, then even the fastest review possible would have delayed discovery from that date until at least early 2000. Plaintiff argues further, that BMS would have benefitted from this short delay by using the time to create "hype" about Vanlev while it was still in clinical development, even before the NDA was submitted to the FDA. See Plaintiff's Letter Brief dated June 29, 2005 at 2. Then, on the off chance that Vanlev was approved for treatment of hypertension or heart failure, it would have the marketing head-start required to become a blockbuster drug. Id.

The flaw in Plaintiff's argument is that it is not specific to the circumstances of this case. If credited, it would mean that every drug company has a motive to make false claims to generate "hype" while an NDA is pending, and that any positive claims about an ultimately unapproved drug, made during the pendency of the NDA, would be actionable. That cannot be the case, and here, Plaintiff has no alternative evidence of motive. Thus, Plaintiff will have to rely on evidence of conscious misbehavior or recklessness to support its allegations that Defendants acted with scienter.

III.C.2.b. Conscious Misbehavior or Recklessness Evidence in the First Class Period

Even if Plaintiff cannot prove scienter through evidence of motive and opportunity, evidence of conscious misbehavior or recklessness may suffice. See GSC Partners CDO Fund v. Washington, 216 F.3d at 238-39 (3d Cir. 2004). "`Where motive is not apparent, it is still possible to plead scienter by identifying circumstances indicating conscious [or reckless] behavior by the defendant, though the strength of the circumstantial allegations must be correspondingly greater.'"Id., 368 F.3d at 238 (quoting Kalnit, 264 F.3d at 142). In the context of securities fraud, a reckless statement is one representing "`an extreme departure from the standards of ordinary care, and which presents a danger of misleading buyers or sellers that is either known to the defendant or so obvious that the actor must have been aware of it.'" Advanta 180 F.3d at 535 (quoting McLean v. Alexander, 599 F. 2d 1190, 1197 (3d Cir. 1979)). "An egregious refusal to see the obvious, or to investigate the doubtful, may in some cases give rise to an inference . . . of recklessness." Novak v. Kasaks, 216 F.3d 300, 308 (2d Cir. 2000) (citing Chill v. General Elec. Co., 101 F.3d 263, 269 (2d Cir. 1996)) (quoting Goldman v. McMahan, Brafman, Morgan Co., 706 F. Supp. 256, 259 (S.D.N.Y. 1989)) (omission in original). At the same time, however, corporate officials "need not present an overly gloomy or cautious picture." Novak, 216 F.3d 300, 309 (citations omitted).

Defendants argue that conscious misbehavior or recklessness cannot be inferred because each of the eleven challenged First Class Period statements — each implying or stating that "Vanlev had been shown to be effective, to be generally safe and well tolerated and to present a risk of angioedema similar to competing agents" — were made with "every reason to believe that [they] were true or were opinions reasonably based on facts." Defs.' Mem. at 8-9; Defs.' 56.1. ¶ 162.

Defendants' Evidence: Defendants cite the following evidence to show that the early clinical trials supported the truth of the challenged statements:

• expert opinions that the early clinical trials demonstrated that Vanlev was more effective than widely prescribed ACE inhibitors at reducing blood pressure in hypertensive patients, see Defs.' 56.1 ¶ 163 (citing DX 11 ¶¶ 17,18; DX 22 ¶ 26);

• report of the Bristol-Myers Squibb, Pharmaceutical Research Institute, "Integrated Summary of Safety for Omapatrilat," final draft dated November 22, 1999, which states in the "Summary and Conclusions" section that "omapatrilat was safe and well tolerated in subjects with hypertension at doses of up to 80mg once daily, with a rate of adverse events and discontinuation due to adverse events similar to established antihypertensive agents . . .," see id. (citing DX 282:163-64) (emphasis added);

• an abstract published in the February 2000 Supplement to the Journal of the American College of Cardiology, intended for reference at the 49th Annual Scientific Session, where Dr. Pouler was scheduled to give an oral presentation, discussing the results obtained from Omapatrilat in the pre-OVERTURE heart failure trails, stating that "OMA improved the combined endpoint of death or hospitalization for worsening [heart failure] . . . Both drugs [omapatrilat and the comparator, lisopril] were well tolerated . . . there was one case of angioedema with [lisopril] and none with [omapatrilat]," see id. (citing DX 156);

• another AHA abstract noting that in hypertension trials omapatrilat and lisopril were "similarly well tolerated," see id. (citing DX 161); and

• lastly, the deposition testimony of each of the speakers of the sixteen challenged statements in the First Class Period, each of whom have testified, in so many words, that they had every reason to believe that their statements were true or were opinions reasonably based on facts, see id. at ¶¶ 85-118.

While this list is not exhaustive of the evidence cited by Defendants to support their position that all of the challenged statements were objectively true or were reasonably based upon facts, it is representative. It is also important to note that the belief of individual speakers in the truth of their statements is irrelevant if those statements were "adopted or endorsed" by one of the defendants and that defendant exhibited conscious misbehavior or recklessness in its endorsement or adoption. See In re Honeywell Int'l Sec. Litig., 182 F. Supp. 2d 414, 428 (D.N.J. 2002). Whether or not the statements of doctors in the first class period were indeed endorsed or adopted by BMS is discussed in detail below, for now, it suffices to say that the deposition testimony demonstrating the speakers belief in their own veracity can only take Defendants so far — if Defendants knew or were reckless in not knowing that these statements were false or misleading BMS can be liable for fraud in connection with the statements.

Another preliminary issue, before getting to Plaintiff's evidence, is that a good portion of Defendants' evidence is the subject of Plaintiff's Motion to Strike Material from the Summary Judgment Record, filed on May 13, 2005. But even if all the challenged evidence were admissible, evidence that the challenged statements were objectively true or reasonably based on facts, must be considered both in the context of contemporaneous evidence to the contrary and with regard to its relevance, insofar as Plaintiff alleges an actionable omission. Thus, it makes sense to consider Plaintiff's evidence before deciding the Motion to Strike.

Plaintiff's Evidence: In its Opposition to Defendant's Motion, Plaintiff offers evidence tending to show, that whatever optimistic conclusions could have been drawn when looking at the early clinical trials in isolation, (1) individuals at BMS were aware, concerned and vocal about the incidence and severity of angioedema (both generally and in the "037" study in particular); and (2) the results of those trials could have and should have been compared to databases cataloging the side effect profile of other ACE inhibitors. These databases, Plaintiff argues and offers evidence to prove, establish clearly that Vanlev was not "equally well tolerated."

First, Plaintiff has produced evidence suggesting that as early as December 4, 1998 individuals at BMS knew that the side effect profile of Vanlev in comparison to currently marketed ACE inhibitors was going to be a critical issue with respect to FDA approval. For example, in an e-mail written shortly after the second tracheotomy during the clinical trials, on or about December 4, 1998, a senior marketing employee, Tony Coniglio, wrote to colleagues: "We will still have strong efficacy data . . . but a profile of side effects that is much worse than ARBs (and ARB/diuretic combos), and not even as good as ACEIs. Norvasc's success has been not only efficacy but creating a perception of greater tolerability than other CCBs" PX 220:OMA0651637.

Second, Plaintiff has produced evidence tending to show that in the Spring of 1999, before any of the challenged statements, Kathleen Moulton of BMS was tasked with collecting the reports of investigator identified angioedema in the Vanlev clinical trials — and these reports raised flags. PX 215:OMA1908263 (internal e-mail from Moulton to Paul Chang, Elliott Levy and Richard Reeves of Vanlev's clinical and safety teams, among others). Moulton's e-mail, dated April 26, 1999, states that "[a]s of today, investigator identified angioedema has been reported in 40 subjects (36 of these subjects were in the [hypertension] program). This includes only [adverse events] coded as angioedema and is based on entered data. Exposure to [Vanlev] is estimated to be 6476 subjects (thus, 0.62%)." Id.

The handwriting of Joanna Whyte, a junior epidemiologist in BMS's Outcomes Research department, appears on the printed copy of this e-mail. See Id. Wyte notes that the angioedema rate "could be higher." PX 215. When asked at deposition what she meant by this, Wyte testified: "I don't know why I wrote this." Wyte Dep., PX 40 159:5. But a jury could reasonably infer that Wyte thought the angioedema rates could have been higher because a number of angioedema events were not coded properly: The Moulton e-mail explains that rates discussed only include "[adverse events] coded as angioedema and is based on entered data," and another e-mail reply to Moulton, from Reeves, states that in these "updated #'s . . . AEs [adverse events that are] coded otherwise, eg "facial edema," etc are not included." PX 215: OMA1908263.

Third, in a handwritten note produced in connection with the Moulton e-mail, Whyte noted that BMS "want[s] to develop [a] position paper on angioedema. How do we join the two (angio[edema] and [Vanlev]) without saying `hey this is a problem.'" PX 215:OMA1908269. Whyte further noted that BMS "[n]eed[s] to look [at] all cases that we think may be angioedema (i.e., coded as angio[edema] or other)." Id. Whyte concludes by setting forth a list of needed items, including: "inside outside database work up," "a work plan of how [Vanlev] is being handled;" "physician consulting visit (will need to be handled carefully);"and "new database study done inside (internal-captopril, monopril for ISS review)."Id.

Fourth, Wyte's investigations were discussed at an "Angioedema meeting and teleconference" on May 5, 1999, which was attended principally by marketing staff, but also included staff from clinical safety and epidemiology, to discuss the increased incidence of angioedema with omapatrilat. PX 174:OMAP0091644.0001. One slide prepared for the meeting stated, "We want to find a lower incidence in patients on Omapatrilat . . . than on other ACE Inhibitors." PX 58:OMA1910189. By the spring of 1999, the evidence suggests, the Outcomes Research Department had considered the possibility of obtaining data from large external databases, like Henry Ford, to permit some meaningful comparisons of angioedema experiences between Vanlev and ACE inhibitors. PX 58:OMA1910186.

To this end, on May 5, 1999, five specific suggestions for a continuing investigation of the incidence of angioedema were drafted, to be discussed with BMS's "CV [Clinical] and Global Marketing" groups: These were (1) preparation of a backgrounder report on angioedema in general; (2) in Phase II Vanlev trials specifically (to be completed by Mary Bethala-Sithya and Richard Reeves); (3) consultation with outside physicians; (4) an internal analysis of angioedema rates in a healthcare database; and (5) review of data on BMS ACE inhibitors captopril and monopril. PX 174:OMAP0091644.0001 (emphasis added). Each of these options was to be discussed with BMS's Clinical and Global Marketing groups, and it was noted that "Safety, CV [clinical] and OR [outcomes research][would] be needed to implement an effective strategy." Id. Whyte's notes indicate that her that her literature review should not integrate information from the Vanlev database. PX 213:OMA1910192.

Upon completion of her literature review, Whyte determined that the risk of ACE inhibitor induced angioedema was frequently recognized as 0.1-0.2%, but proposed that rates ranged from 0.1-1.0%, citing four studies. Id. This finding was very positive for Vanlev.

However, with respect to one of these four studies, relating to the angioedema rate with Captopril, which Whyte reported as 1%, Plaintiff asserts, and the Court agrees, that a reasonable jury could find that Whyte made a simple transcription error. See Pl.'s 56.1 ¶ 86. Indeed, Captopril is a BMS product for which BMS had access to the developmental database and NDA, and for which Whyte's own Table III indicates an Angioedema rate of only 0.1%.See PX 183:OMAP0046799.0016; PX 211 (similar chart with same data on Captopril). The Physician Desk Reference also states that Captopril is associated with a low incidence of angioedema: 0.1% or 1 in 1,000 patients. DX 52:1960. Once again, Kathleen Moulton's e-mail concerning the angioedema rate estimated from the Vanlev trial was around 0.62%. PX 215:OMA1908263.

Fifth, although he could not recall the timing, Dr. Robert Wolf of BMS testified that in 1999 he reviewed some antihypertensive drug "summary bases of approval" (SBAs) in order to gain an understanding of the angioedema experience. DX 49 48:22-49:16. He did not identify any reports of intubation directly linked to angioedema and testified that he requested the SBAs from BMS's regulatory department. Id. The inference that BMS had opportunities to undertake a more complete review of angioedema as seen in the SBAs of ACE inhibitors can be inferred from Dr. Wolf's testimony and from the testimony of Dr. Laurie Smaldone, who at the time of the Vanlev trials was BMS's Senior Vice-President of Worldwide Regulatory Affairs. DX 29 (Smaldone Dep) at 11:7-14; 151:23-152:9 ("I would not be surprised if an SBA review was undertaken [in 1999] because that would be part of the broader literature review.").

A number of the aforementioned facts (and inferences drawn therefrom) are contested by Defendants. Of particular importance is Defendants position that the first time anyone at BMS had ever heard about the comparison of outside databases to Vanlev data was at the company's February 11, 2000 meeting with the FDA:

. . . [T]he fact they say we should have disclosed [is] that the databases that the FDA had[,] showed a better safety profile for ACE inhibitors than it did for Vanlev. When did we first hear anything like that? February 11, 2000. There's nothing in the record that suggested we had access to the FDA databases before that, nor could we. They are confidential to the agency and drug companies do not have access to those databases. What we had was access to public databases of drugs in the marketplace which showed that people had died from ACE inhibitors. And no one had died during the Vanlev trials. That's all we had when we said the safety profiles were comparable. . . . [A]fter they told us that they had a database internally that had a difference between ACE and Vanlev . . . [w]e made two statements, the two statements I mentioned to you before, on March 10 and March 11, and neither one of them was published to the marketplace.

Trans. at 91:4-21.

Ultimately, regardless of whether every public, private and FDA database was accessible before the February 11, 2000 meeting with the FDA, it would certainly be reasonable for a jury to assume, based on the above detailed evidence, that at least some databases — e.g., BMS's internal data on captopril and monopril and the SBAs for other ACE inhibitors — were available for an intensive comparison to the data in the Vanlev database. Moreover, after the February 11, 2000 meeting, BMS senior-management did task one of its epidemiologists, Dr. David Lilienfeld, with obtaining and analyzing data from large databases in order to compare Vanlev with other ACE inhibitors, with respect to both the incidence of all angioedema and the incidence of life-threatening angioedema — this time, in preparation for the FDA advisory committee meeting in May 2000. PX 330; 30 56:3-25; PX 175; 176; 177. Databases consulted by Lilienfeld, on the rates of angioedema and intubation in ACE-inhibitor-treated patients, included publicly (and privately) accessible sources and databases such as SBAs, Henry Ford and MediCal. PX 330; 30 56:3-25; PX 175; 176; 177.

From all of the above facts, it could be inferred that such an intensive comparison could have been undertaken as early as the Spring of 1999, when individuals at BMS were aware of the possible problem with angioedema. Among other things, Dr. Lilienfeld's comparison revealed that (1) in a MediCal database of 201,188 patients taking ACE inhibitors, 1 intubation occurred, for a rate of 0.00005 events per subject; (2) in the Brown database of 27,834 ACE inhibitor patients, 4 intubations occurred, for a rate of 0.00014 events per subject; and (3) in a Henry Ford database of 17,655 ACE inhibitor patients, 2 intubations occurred, for a rate of 0.00011 events per subject. PX 176: OMAP0020553.0003. The Vanlev database (including 20mg and 10mg regimens) showed that among 6662 patients 4 intubations occurred, for a comparatively higher rate of .0006. Id.

As further proof that Defendants knew or were reckless in not knowing that the challenged statements were false or misleading, Plaintiff has submitted evidence that by December 1999 it was clear to a number of individuals at BMS that African American women taking Vanlev experienced a greater than expected incidence of angioedema. This evidence is particularly compelling because at least one piece of evidence cited by Defendants, the Vanlev Integrated Summary of Safety ("ISS"), cited to show that the challenged statements were grounded in fact, includes discussion of how Vanlev would be a particularly good treatment for sub-populations including, among others, African Americans. Defs.' 56.1 ¶ 163 (citing DX 282). The "Summary and Conclusions" section of the ISS, besides stating that "Omapatrilat was safe and well tolerated," also states that "Omapatrilat is effective regardless of age, race, or gender," and that "Omapatrilat is effective in difficult to treat populations including blacks. . . ." DX 282:163.

While the Court is mindful that effectiveness and safety are different measures that do not always overlap, it appears that a reasonable jury could find that an especially frequent and severe side effect among African American patients, directly contradicts the idea that the drug would be a particularly effective treatment for that group. To this extent, insofar as Defendants had serious concerns about the incidence and severity of angioedema in blacks, Defendants' evidence of reliance on a document that touts the good prospects of the drug for treating blacks is of dubious worth.

Plaintiff's evidence regarding Defendants' knowledge of "037" study is extensive. It appears that even before the ISS was drafted, individuals at BMS were very concerned about angioedema in African Americans. For example, in an e-mail dated December 8, 1998, before any of the challenged statements were made, in which Richard Reeves and Dan MacNeil discussed the second tracheotomy in the clinical trials, Reeves noted that "this guy appears to have had life-threatening angioedema . . . one other case was this bad." PX 128. In response, MacNeil noted that:

At present, there are 23 other serious and non-serious cases which have been entered into the Clintrial [Vanlev] database. Assuming a 4000 patient exposure to date, the incidence remains well below 1% as stated in the brochure. Of note, 11 of the 23 are black which is consistent with what has been suggested in the literature. More striking, is that 9 of these 11 are females. Black women may have a greater risk of developing angioedema than others. We will have to look at this as our data is unblinded.

Id. (emphasis added). Then, in an e-mail dated July 14, 1999, MacNeil reiterated to Reeves that "I continue to believe that our final data will show a substantially greater risk of angioedema for black females." PX 130. In October1999, Defendants had completed data analysis from the head-to-head trial comparing Vanlev with the ACE inhibitor lisinopril in African-American patients — this was the "037" study. DX 279; 155; 180; 283. In this trial, 12 of 301 Vanlev patients had suffered angioedema and 1 of 295 lisinopril patients. DX 279.

In addition, Michael Mitnick's notes from a meeting held on September 13, 1999 indicate that senior level clinical and regulatory staff discussed the "037" results as well as the incidence of intubation in the overall clinical trials and how it should be reported to FDA — all before any of the challenged statements were made. PX 427. Among the attendees were BMS senior management, Drs. Hubert Pouleur, Sol Rajfer and Laurie Smaldone.Id. The notes indicate the number of intubations in the Vanlev clinical trials to date, broken down by race, as well as the incidence of angioedema seen in the clinical trials to date.Id. The notes also indicate that following a discussion of the incidence and severity of angioedema in the Vanlev clinical trials, and Bodnar's acknowledgment that the FDA would conduct a risk/benefit analysis, Joel Lasker, BMS's in-house counsel, directed the 17 participants to "be careful in all writings."Id.

One of the earliest draft "safety updates" intended for submission to the FDA in support of BMS's request for priority review, dated September 20, 1999, is headed "EVENT: Angioedema in Black Women." PX 125:OMA0974087. This draft offers an analysis of the rate of angioedema observed in 4200 omapatrilat-treated patients in short-term double-blind hypertension studies and one open-label trial. Id. In these trials, according to the draft, 4.27% of African-American women exposed to Vanlev suffered angioedema, as compared with 1.67% of African-American men, 0.63% of all other women, 0.63% of white men and 0.52% of men of other races. Id. The draft states that "Angioedema requiring intubation or tracheotomy was reported in only 4 subjects." Id. The draft also communicates that the rate of angioedema in African-American women on Vanlev was in excess of what was expected:

Published reports indicate that angioedema associated with ACE-inhibitors occurs with an incidence of 1% in the Caucasian population but may be 3-fold higher in Black Americans. . . . However, the rate seen in black women on [Vanlev] (4.27%) was almost 7-fold greater than that reported in Caucasians treated with the study drug. Reasons for this difference are unclear and further analysis of these findings to identify other risk factors for angioedema in this subset of the study population are ongoing.

PX 125. In contrast, a later draft dated September 24, 1999, cites tobacco use a potentially greater risk factor for angioedema than race alone. PA 124:OMA1630950.

The September 20, 1999 draft also states that "[i]n contrast to the hypertension studies, only 2 (0.2%) cases of angioedema have been reported to date from the more than 1000 subjects (including about 160 black subjects) exposed to omapatrilat in completed short and long-term double-blind heart failure trials." Id. at OMA0974087. Drafts circulated later on September 20 and September 23, 1999 aggregated the patient numbers in the hypertension and heart failure trials. PX 456. Among this aggregated pool, African-American Vanlev patients were at a 5-times greater risk for angioedema, as opposed to the 7-fold greater risk observed in the hypertension population separately. Id.

Ultimately, in BMS's final submissions to the FDA, investigators reported that "four subjects have had airway compromise requiring intervention. . . ." See DX 279; PX 172; PX 181; PX 124: OMA1630950. The words "intubation" and "tracheotomy" were not used. Id. Expert testimony is offered by both parties on the question of whether "airway compromise" is a term that would tend to understate the severity of the angioedema caused by Vanlev. The admissibility of this evidence is the subject of cross-motions to exclude not decided here.

Even without considering expert evidence, however, it is clear that the mere change in terminology from one draft to the next could be the source of a reasonable inference that BMS was attempting to downplay, to the public, the incidence and severity of angioedema. The same inference could be drawn from the decision to aggregate the angioedema statistics from the heart failure and hypertension trials. Defendants argue that this inference is only possible in hindsight — after the FDA decided to look at look at hypertension and heart failure separately. Reply at 9. Indeed, if there were no evidence that prior drafts presented these statistics in disaggregated form, Defendants would have a valid point — but here, it was well before the FDA decided to look at hypertension separately, that individuals at BMS considered and rejected publicly presenting the disaggregated data.

The previous several pages catalog the parties' evidence concerning what Defendants knew or were potentially reckless in not knowing about the incidence and severity of angioedema as seen in the clinical trials. The next section applies the relevant law to these facts to determine whether Defendants can be found liable for the challenged statements.

III.C.2.c. Statements in the First Class Period Directly Attributable to Defendants

The first challenged statement unquestionably attributable to at least one Defendant (statement number five) was made by Peter Ringrose, then Chief Scientific Officer of BMS, following the AHA seminar, on or about November 29, 1999, during an interview with "The Financial Times." See DX 41 150-51; PX 246. Specifically, Ringrose stated that: "If you asked a cardiologist what the ideal drug would do, Vanlev pretty much ticks all the boxes. . . .We have three blockbusters at the moment, but we should have three more in Plavix (an antithrombotic), Avandia (for diabetes) and Vanlev." Id. As discussed above, the statement about what "should" happen with Vanlev is forward-looking in nature. See, supra, § III.C.1.

A forward-looking statement is not actionable at all if it is nothing more than a "vague expression of corporate optimism [or] expectations about a company's prospects," because such statements are not relied on by reasonable investors. In re Aetna Inc. Securities Litigation, 34 F. Supp. 2d 935, 945 (E.D. Pa. 1999) (citing Lasker v. New York State Elec. Gas Corp., 85 F.3d 55, 57-58 (2d Cir. 1996)). This determination can be made before the summary judgment stage because forward-looking language is evident on the face of the statement. Indeed, in this Court's 2004 Opinion it was settled, that while a statement of this ilk is indeed forward-looking, it is not of the class of statements that is per se immaterial, thus, the statement was not dismissed from the Complaint as a matter of law. The 2004 Opinion explained that

[s]tatements, [which] to varying degrees, link Vanlev to the status of "blockbuster" or "best-in-class" . . . [g]iven the allegations in the Complaint — that Defendants had equated "blockbuster" with being a multi-billion dollar product . . ., that blockbuster appears to have a specific meaning in the industry, that Defendants knew with greater and greater certainty that Vanlev would never be a blockbuster . . ., and that Vanlev was thought of as the only reason to own BMS stock . . ., Plaintiff has adequately plead that the misrepresentation of Vanlev as a blockbuster is a material and actionable misrepresentation.

2004 Opinion at 71 (citing Judge Brown's Memorandum Opinion of March 9, 2001 at 23-24.). While the evidence may or may not support an inference that the statement was true or believed to be true when made, see discussion below, the Court's previous analysis that the statement is material to investors is unchanged in light of the evidence presented. See, supra, §§ III.B.1, III.C.1.

It is also worth noting that most of the statements referring to the "blockbuster" potential of Vanlev were made in the Second Class Period. For these statements as well, Defendants' first line of defense — that regardless of any safe-harbor, these forward-looking statements are immaterial — remains, to the extent it was unpersuasive in the Court's 2004 Opinion, unpersuasive in light of the evidence available at summary judgment.

Still, statement number five, and other forward-looking statements like it, may be protected by the PSLRA safe-harbor or the "bespeaks caution doctrine." The PSLRA contains a statutory safe harbor for forward-looking written or oral statements. Under that provision, an issuer is not liable for a forward-looking statement if it is "identified as a forward-looking statement, and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the forward-looking statement."EP Medsystems, Inc. v. EchoCath, Inc., 235 F.3d 865, 872-873 (3d. Cir. 2000) (citing 15 U.S.C.A. § 78u-5(c)(1)(A)(i) (West Supp. 2000)).

The statutory safe harbor is available for oral forward-looking statements under certain conditions. Id. "Under the Reform Act, an issuer is not liable for any oral forward-looking statements if (1) the issuer informs the audience that the statement is forward-looking and that actual results may differ materially from the predictions; (2) the issuer orally directs the audience to other "readily available" written documents that contain the additional information about important factors relating to the forward-looking statement; and (3) the identified documents set forth satisfactory cautionary statements." Id. (citing 15 U.S.C.A. § 78u-5(c)(2)(B) (West Supp. 2000)).

The safe harbor does not apply if the statement was made with "actual knowledge" that the statement was false or misleading.Advanta, 180 F.3d at 535 (3d Cir. 1999) (citing § 78u-5(c)(1)(B)(I)). A forward-looking statement carries various testable factual assertions: the speaker genuinely holds her opinion; there exists a reasonable basis for her opinion; the speaker knows of no uncontested facts that contradict the opinion. Hence, if one of these implicit assertions is provably false, a forward-looking statement can be "false."

The PSLRA did not supercede yet another layer of protection for forward-looking statements, the "bespeaks caution doctrine."See In re Adams Golf, inc. Sec. Litig., 381 F.3d 267, 278-79 (3d Cir. 2004). Statements "not identified as forward-looking as required by the safe harbor provision," may still be protected under the bespeaks caution doctrine as adopted by the Third Circuit in In re Donald J. Trump Casino Sec. Litig., 7 F.3d 357 (3d Cir. 1993). EP Medsystems, 235 F.3d 865, 873 (3d Cir. 2000). "Under this doctrine, `cautionary language, if sufficient, renders the alleged omissions or misrepresentations immaterial as a matter of law.'" Id. "`[B]espeaks caution' . . . is essentially shorthand for the well-established principle that a statement or omission must be considered in context, so that accompanying statements may render it immaterial as a matter of law." Id. But not just any cautionary language will trigger application of the bespeaks caution doctrine. Instead, the Third Circuit requires that disclaimers

relate directly to that on which investors claim to have relied. . . . [A] vague or blanket (boilerplate) disclaimer which merely warns the reader that the investment has risks will ordinarily be inadequate to prevent misinformation. To suffice, the cautionary statements must be substantive and tailored to the specific future projections, estimates or opinions . . . which the plaintiffs challenge.

Id. (citations omitted).

Finally, as with the PSLRA safe harbor, the bespeaks caution doctrine will not immunize forward-looking statements that are made with actual knowledge of their falsity at the time they are made. See Id. (citing, with approval, Shaw v. Digital Equip. Corp., 82 F.3d 1194, 1213 (1st Cir. 1996), which explained that a statement may contain "both a forward-looking aspect and an aspect that encompasses a representation of present fact," and "[t]o the extent that plaintiffs allege that the . . . statement encompasses the latter representation of present fact, and that such a representation was false or misleading when made, the surrounding cautionary language could not have rendered the statement immaterial as a matter of law.").

Defendants argue that because statement number five is "cautionary" on its face — insofar as it says that Vanlev " pretty much ticks all the boxes" and it " should be a blockbuster" — both the PSLRA safe harbor and the bespeaks caution doctrine shelter this statement from liability. Defs.' 56.1. ¶ 401-02; Defs.' Mem. at 19-20; Reply at 16-18. This argument is unpersuasive. The problem is that Defendants rely on the word "should" for dual, but incompatible, purposes. It cannot be the case that the very same words that render a statement "forward-looking" — e.g., "may," "might," "will," and "should" — can do double duty as "cautionary language" under the bespeaks caution doctrine or the PSLRA. That would put every forward-looking statement into one or both of the safe-harbors and the "cautionary language" requirement would be a makeweight. Notwithstanding that issue, here, it can hardly be argued that the word "should" is "substantive and tailored to the specific future projections."EP Medsystems, 235 F.3d at 873.

Thus, neither the PSLRA nor the bespeaks caution doctrine apply to statement number five. As such, Plaintiff can prove scienter through evidence of conscious misbehavior or recklessness: "Opinions, predictions and other forward-looking statements are not per se inactionable under the securities laws. Rather, such statements of `soft information' may be actionable misrepresentations if the speaker does not genuinely and reasonably believe them." In re Donald J. Trump Casino Securities Litigation-Taj Mahal Litigation, 7 F.3d 357, 368-369 (3d Cir. 1993) (emphasis added).

Nevertheless, with respect to statement number five, Plaintiff has failed to show recklessness — and this is true even if Plaintiff's Motion to Strike were granted. The problem is that none of Plaintiff's evidence of recklessness is sufficiently related to the content of the statement. Recall the first part of the statement — "If you asked a cardiologist what the ideal drug would do, Vanlev pretty much ticks all the boxes. . . ." This part of the statement does not mention side effects; the results of the clinical trials; the comparison of Vanlev to currently marketed ACE inhibitors; or what types of cardiologists are being asked about their "ideal drug." As a result, the statement leaves open the possibility that the incidence and severity of angioedema is the one box that Vanlev does not "tick." The evidence set forth above is insufficient to prove that Ringrose could not have genuinely and reasonably believed that Vanlev exhibited the remaining characteristics of the "ideal drug" for cardiologists. Essentially, the statement is just too general for Plaintiff to specify any evidence that contradicts it.

The second part of the statement — "We have three blockbusters at the moment, but we should have three more in Plavix (an antithrombotic), Avandia (for diabetes) and VANLEV." — is also unprotected under the bespeaks caution doctrine and/or the PSLRA. But here too, Plaintiff has failed to adduce evidence sufficient to prove recklessness. Putting aside the possibilities for Vanlev as a hypertension treatment, this statement was made before anyone at BMS had serious reasons to doubt the promise of Vanlev as a potential treatment for heart failure. This remains true even if Plaintiff's Motion to Strike were granted. Moreover, unlike some other challenged statements in the first class period, which are allegedly misleading because they incompletely assess the side-effect profile of Vanlev, or the clinical trials (see statements one, two, three, four, six, seven, eight, ten and eleven), the portion of statement number five referring to Vanlev's "blockbuster" potential is uncontradicted by any of the evidence. Plaintiff has, thus, failed to adduce sufficient evidence of scienter. For this reason, Defendants' Motion will be granted with respect to statement number five.

Next, on December 20, 1999 and again on January 10, 2000, before the February 11, 2000 meeting with the FDA, BMS issued two substantially similar a press releases, each announcing that it had filed an NDA with the FDA seeking approval for Vanlev. DX 241; PX 247. In these press releases, BMS stated that "In placebo-controlled clinical trials, the most commonly reported side-effects were headache (more common in the placebo group), dizziness, upper respiratory [tract] infection and cough." DX 241; PX 247 (statements seven and eight). Statements seven and eight are not forward-looking in nature and Plaintiff does not challenge the objective truth of the statements. Rather, Plaintiff alleges that failure to mention the company's concern with angioedema made the statements materially misleading. See Compl. ¶¶ 66. As discussed above, § III.B.3, even objectively true statements can be actionable if Defendants omitted information rendering the statement false or misleading, or if Defendants failed to update forward-looking statements that later became inaccurate.

Here, ample evidence presented would permit the inference that, at the time of this statement, the company had serious concerns about the incidence and severity of angioedema with Vanlev, especially relative ACE inhibitors marketed at the time and especially among African Americans. See, supra, § III.C.2.b. Discussion of the "most commonly reported side effects" without mentioning a side effect that was the subject of substantial attention and concern at BMS is a misleading half-truth. Because a jury could infer that control persons at the company knew or were reckless in not knowing that statements seven and eight were misleading, Defendants' Motion with regard to statements seven and eight will be denied.

Next, as mentioned above, on February 11, 2000 officers of BMS met with the FDA. At this meeting, the FDA expressed concerns about whether "angioedema associated with omapatrilat is of a greater incidence or severity than that associated with the other ACE inhibitors," and noted that in "the head-to-head comparator study against lisinopril in black patients . . . the incidence of angioedema was 10-fold greater on omapatrilat than on lisinopril." DX 56:OMA0004558; PX 55:OMAP0046092.0002. The FDA did not indicate that these concerns would prohibit approval of Vanlev. DX 11:28; DX 56; DX 57; DX 32: 16-136:2. But Plaintiff argues, and the Court agrees, that after this meeting, a number of high level managers at BMS had actual notice of the FDA's serious concerns about the side effect profile of Vanlev compared to other ACE inhibitors. Only three of the eleven statements alleged to have been made in the first class period were made after this meeting. These three statements are discussed below.

Only one of the three statements made after the February 11, 2000 meeting, statement number nine, was made directly by BMS (as opposed to an outside physician). On January 13, 2000, BMS announced that Canada had granted priority review for Vanlev. DX 74. In this press release, BMS stated that priority review in Canada was granted only when, inter alia, "there is `substantial clinical evidence that the drug provides significantly improved efficacy or significantly diminished risk over existing therapies . . . for a disease or condition that is not adequately managed by a drug marketed in Canada." Id. Plaintiff does not challenge the objective truth of the statement. See DX 296:2; Compl. ¶ 69. The statement is only challenged to the extent that it allegedly omits material information. Id. Specifically, Plaintiff argues that "[t]his statement was false and misleading since Vanlev did not provide significantly improved efficacy or diminish risk over existing therapies for a disease that was not adequately controlled. Indeed, by failing to mention the incidence and severity of angioedema." Pl.'s 56.1. ¶ 277.

The Court is mindful of the fact that after the February 11, 2000 meeting with the FDA, BMS could not credibly state that Vanlev promised "significantly improved efficacy or significantly diminished risk over existing therapies," without mentioning the FDA's concern with angioedema. Statement number nine, however, doesn't speak to the qualities of Vanlev at all: It doesn't speak about the results of the clinical trials of Vanlev or the side-effect profile of Vanlev. Statement number nine only states Canada's policy. Moreover, the only evidence Plaintiff cites in connection with this statement, see Pl.'s. 56.1 ¶ 277, is a PaineWebber document indicating that analysts raised their estimates of BMS earnings and Vanlev sales estimates based on the FDA's grant of priority review. PX401:OMA0043271. This document makes no mention of the Candian approval — and Plaintiff has no evidence to back up the assertion that statement nine was made misleading by omitted information. Based on this record, a reasonable jury could not find that statement number nine is false on its face or that it omits material information. For this reason, with respect to statement number nine, Defendants' Motion will be granted.

The last statements made in the First Class Period, after the February 11, 2000 meeting with the FDA, were made by Drs. Ferdinand and Dahlöf on March 11 and 12, 2000, respectively. These are discussed in the next section, which considers the potential liability of Defendants for numerous statements made by physicians not employed by BMS including Drs. Ferdinand, Dahlöf, Weber and Black.

III.C.2.d. Statements by Weber, Black, Ferdinand and Dahlöf

The first challenged statement by a non-BMS physician was made by Dr. Weber, on November 8, 1999, in an oral presentation accompanied by slides at the AHA Symposium. When answering questions posed after his presentation Weber stated, "[a]s far as the side effect profile is concerned, right now as yet I have not seen any evidence that this drug [Vanlev] differs from traditional ACE inhibitors in its side effect profile." PX 450:OMA1787535-36 (challenged statement number one).

Plaintiff argues that statement number one is actionable as an affirmative misstatement of material fact or, alternatively, that is was rendered misleading by the omission of material facts. Plt. Fcts ¶ 171; Compl. ¶¶ 54-55. Defendants argue, initially, that the statement is true. Defs.' Mem. at 17; Reply at 15. Indeed, with respect to statement number one, Plaintiff has failed to adduce evidence that Weber's assertion of what he had "seen," and what he concluded from that — speaking only for himself — omitted anything that rendered the statement false or misleading. Nor, has Plaintiff cited any evidence that any Defendant knew or was reckless in not knowing that the statement was false or misleading. Plaintiff offers some evidence which could suggest that Dr. Weber knew that there had been two intubations and two tracheotomies at the time of the AHA conference. DX 48 45:3-20; DX 41 144.9-145:18; DX 46 54:23-56:16. But this evidence is insufficient to permit the inference that Weber had seen evidence (perhaps known to BMS) that this incidence differed from clinical data on traditional ACE inhibitors.

To the contrary, and irrefuted by Plaintiff, is the sworn declaration of Dr. Weber indicating that his statement of what he had seen to date was true at the time he made it and that, even if it were not objectively true, it was his subjective analysis that the data regarding ACE inhibitors was no different than Vanlev. DX 10: ¶¶ 11-21. Plaintiff has disputed ¶ 15 of the Weber Declaration insofar as it "offers speculation and unsupported conclusions as to whether Defendants intended to mislead anyone regarding Vanlev, and as to what Defendants knew and believed. . . ." Plaintiff's Memorandum of Law in Support of Motion to Strike Material from the Summary Judgment Record ("Pl.'s Mem. to Strike") at 6. The reasoning that "Dr. Weber is not competent to testify as to what others intended or believed, or as to what others were or were not aware of," however, does not apply to Weber's declaration of his own personal knowledge. Thus, a jury could not reasonably conclude that Defendants knew or were reckless in not knowing that Dr. Weber had in fact seen evidence to the contrary. For all of these reasons, Defendants Motion will be granted with respect to statement number one.

In addition to statement number one, in connection with an AHA-symposium-related press conference, doctors Black and Weber made the following representations (challenged statements two, three and four):

• As reported in a Bloomberg article on November 8, 1999, Dr. Black stated the following about the Phase III data: "These are very impressive results from a large group of patients and the data indicate Vanlev may be "the best choice for doctors." PX 240 (challenged statement number two).

• In a November 8, 1999 PR Newswire press release, Dr. Black stated that "[t]he overwhelmingly positive clinical data presented here suggest that omapatrilat is a superior treatment in a broad range of patients with hypertension, as compared with several currently available agents for this disease. . . . These collective data are the most compelling we've seen about any new cardiovascular agent in the past 15 years." PX 241 (challenged statement number three)

• In a November 8, 1999 PR Newswire press release Dr. Weber and the Brookdale University Hospital and Medical Center reported, "To date, omapatrilat has been studied in more than 6,500 patients and has been generally well-tolerated, with a safety profile comparable to several leading hypertension therapies." PX 241 (challenged statement number four).

In addition, after the AHA seminar, Dr. Weber represented, in an article entitled, "Emerging Treatments for Hypertension: Potential Role for Vasopeptidase Inhibition," published in the November 1999 Supplement Issue of the American Journal of Hypertension, Volume 12, Number 11, Part 2, that "Omapatrilat was well tolerated, and discontinuation rates due to adverse events were similar in the omapatrilat, lisinopril and placebo groups." PX 245:OMA1124654. (challenged statement number six).

The first issue with regard to these five statements is whether they can be attributed to any or all of the Defendants — if there is no evidence supporting attribution they must be dismissed.See Defs.' Mem. at 21; Reply at 19-20. Where a defendant has adopted or endorsed a third-party's statement, a plaintiff need only show that the defendant — not the third party — acted with scienter. See In re Honeywell Int'l Sec. Litig., 182 F. Supp. 2d 414, 428 (D.N.J. 2002) (finding that Defendants acted with scienter in providing analysts with false statements that were then published in analysts' reports).

As Judge Brown recognized in his 2001 Opinion at 22, to hold a defendant liable for the misstatements made by non-employee third parties, a plaintiff must prove that the defendant either "(1) intentionally foster[ed] a mistaken belief concerning a material fact that was incorporated into [statements] . . .; or (2) adopted or placed [its] imprimatur" on the third party's statements. See also Novak v. Kasaks, 216 F.3d 300, 314 (2d Cir. 2000). Indeed, "[a]lthough a company is not generally responsible for the accuracy of statements made by [third parties], a company may adopt or endorse a [statement] causing the [statement] to be attributed to the company." In re DSP Group Sec. Litig., No. C 95-4023-CAL, 1997 WL 678151, at *8 (N.D. Cal. Mar. 5, 1997).

The theory of liability is "that a company may so involve itself in the preparation of reports and projections by outsiders as to assume a duty to correct material errors in those projections." Elkind v. Ligget Myers, Inc., 635 F.2d 156, 163 (2d Cir. 1980). "This may occur when officials of the company have, by their activity, made an implied representation that the information they have reviewed is true or at least in accordance with the company's views." Id. In Elkind, the defendant corporation reviewed and corrected analysts' earnings forecasts before they were published. Id. Nonetheless, the Second Circuit refused to impute the forecasts to the defendant because the defendant never directly commented on the accuracy of the forecasts or suggested that the forecasts were in line with its own internal projections. Id. The company's failure to comment on the forecasts was not an implied representation that the forecasts were accurate because the defendant had a corporate policy of not commenting on forecasts. Id. at 163.

The Third Circuit "[has] no problem with the `adopt or endorse' test [because] [t]o say that one is `comfortable' with an analyst's projection is to say that one adopts and endorses it as reasonable." In re Burlington Coat Factory, 114 F.3d 1410, 1428-29 (3d Cir. 1997). "When a high-ranking corporate officer explicitly expresses agreement with an outside forecast, that is close, if not the same, to the officer's making the forecast."Id. There is "no reason why adopting an analyst's forecast by reference should insulate an officer from liability where making the same forecast would not." Id.

In this case, Judge Brown has already held that allegations that Drs. Weber and Black were BMS's "paid consultants," who made misrepresentations at medical symposiums via presentation materials that BMS "reviewed and approved," were sufficient to show that BMS adopted or endorsed these doctors' public misstatements. See 2001 Opinion at 22. Consistent with Judge Brown's opinion, it is further clear, that facts showing that Black and Weber were paid consultants, standing alone, without further evidence that BMS "reviewed and approved" the challenged statements, are insufficient for a jury to attribute the statements to BMS. See J/H Real Estate Inc. v. Abramson, 901 F. Supp. 952, 958 (E.D. Pa. 1995) (citing Elkind v. Liggett Myers, Inc., 635 F.2d 156,163 (2d Cir. 1980) and Stack v. Lobo, 903 F. Supp. 1361, 1370 (N.D. Cal. 1995).

In order to establish "sufficient entanglement" a plaintiff must identify a specific analyst statement or forecast and the company insider who adopted the statement or forecast; point to the specific interaction between the insider and analyst that gave rise to the entanglement; and allege that the insider provided misleading information to the analyst, that appeared in its publication. Id. The question then, is whether Plaintiff can adduce sufficient evidence to support its allegations that BMS "reviewed and approved" Black and Weber's statements.

Defendants cite several cases for the proposition that a "one-way flow of information," which they suggest occurred when "BMS might have reviewed and discussed with Drs. Weber and Black some of the material regarding Vanlev," falls short of establishing that the Defendants adopted or endorsed specific statements. Reply at 20 (citing e.g., In re Syntex Corp. Sec. Litig., 95 F.3d 922, 934 (9th Cir. 1996) (rejecting as a matter of law allegations not rising to the level of adoption and endorsement); also citing In re Stratosphere Corp. Sec. Litig., 66 F. Supp. 2d 1182, 1200 (D. Nev. 1999) (granting summary judgment in the absence of a showing of adoption or endorsement)). See also In re Caere Corporate Sec. Litig., 837 F. Supp. 1054, 1059 (N.D. Cal. 1993) (adoption occurs when a defendant "sufficiently entangled himself with the analysts' forecasts . . . [there are] sound reasons to construe the entanglement requirement strictly").

In Syntex, there was a one-way flow of information, but that did not rise to the level of "entanglement" of the defendant corporation with unreasonable analyst reports because "when . . . asked about the analysts' predictions related to future earnings per share, [the defendant corporation's CEO] stated, `We don't forecast earnings,' and emphasized that such estimates should not be attributed to [the corporation]." Syntex, 95 F.3d at 934. Likewise, the Stratosphere defendants "never commented upon submitted draft reports, except to correct matters of public record . . . such conduct would, at most, constitute a one-way flow of public information." Stratosphere, 66 F. Supp. 2d at 1200 (citation omitted).

Here, Plaintiff adduces far stronger evidence of adoption (with respect to most of the statements) than that present in Syntex or Stratosphere. The following evidence, taken together, would be sufficient for a jury to reasonably conclude that there was a two-way flow of information between BMS and Drs. Weber and Black, through which BMS adopted certain of the challenged statements:

• Defendants admit in their Amended Answer to the First Amended and Consolidated Class Action Complaint, that "the information and conclusions presented at the [AHA] symposium were reviewed by BMS before the presentations." PX 1 ¶ 48.

• Plaintiff has produced: (1) an email from Richard Reeves of BMS to Linda Giering of Applied Clinical Communications (an outside publications vendor working with BMS) and others at BMS requesting that Giering draft a slide about adverse events in the three studies that would be discussed by Dr. Black at the AHA conference, see PX 63; (2) an e-mail from Terry Stevens to Anthony Coniglio ("Coniglio"), Richard Reeves ("Reeves") and Paul Chang of BMS indicating that Coniglio made changes to Dr. Black's proposed AHA oral presentation and/or slides used at that presentation, see PX 64; and (3)an e-mail from Jill Errington of Applied Clinical Communications to Coniglio and James Powell of BMS, indicating that Errington was sending " pending your approval" the slides that Dr. Black intended to used for the Canadian Advisory Board Meeting, PX 68. These slides, attached to the Errington e-mail, included statements that "omapatrilat is well-tolerated" and "well-tolerated, comparable to currently available agents." Id. at OMA0650187, OMA0650192.

• Plaintiff has produced an email from BMS, through Linda Giering to Black dated September 22, 1999, in which Giering outlined the objectives and content for AHA and a KOL meeting in Miami in January. PX 66. Giering advised Black that she would draft his presentations for his review. Id. In spite of Black's declaration to the contrary, see DX 1 ¶¶ 14-17, from this evidence a jury could reasonably infer that Black subsequently received draft slides and or content for his presentations.

• There is further evidence that BMS's Public Affairs department began planning for AHA in August 1999 and that the Department sought to " [p]repare spokespersons (internal and external)" and prepare press releases for BMS and third parties. See PX 60 (emphasis added). In a memorandum entitled "Vanlev Media Activity Report," dated November 7, 1999, Ami Knoefler and Sylvia Sharockman of BMS indicated that they had "conducted aggressive media outreach to top international and US reporters about the AHA meeting and expected Vanlev Phase III study news." PX 67:OMA1032300-OMA1032304. They also noted that they "are encouraged . . . by plans for two omapatrilat reporters to be briefed on the [Vanlev] study results early Monday by Dr. Weber and Dr. Black." The authors then list the numerous media interviews scheduled for Black and Weber and explain how BMS arranged for the interviews and provided the reporters with background information on Black and Weber. Id.

• Plaintiff has also produced a group of e-mails, dated October 4, 1999, circulated among various BMS employees, including one reply from Coniglio in which the following comments were made:

We had a reasonably good discussion with Mike [Weber] and Henry [Black] this weekend regarding AHA. [Black] is no problem, Linda [Giering] will keep working with him for the intro . . . [Weber] is another issue. As we look at the data we are asking him to present, it is underwhelming. Also, we need to think through how we present the safety/tolerability data. . . . Finally, once we get the presentation finalized, we need to physically meet with [Weber], review in detail, and conduct media training/QA . . . please see if we can meet with [Weber] before AHA in NY. . . ."

PX 57 (emphasis added).

All of this evidence is compelling, but this last exhibit is a particularly striking example of two-way communications — review and revision — by BMS, which would tend to show BMS's adoption of Weber and Black's statements at the AHA conference, and related events. Taken together, the evidence cited above would provide sufficient grounds from which a reasonable jury could infer that BMS adopted Weber and Black's statements at the AHA symposium, and those in press releases and press conferences in connection with that event. But this evidence does not apply to all of Weber and Black's challenged statements with equal weight.

Notably absent from Plaintiff's evidence, see Opp'n at 48-39, is any support for the allegation that BMS adopted or endorsed statement number six contained in Weber's article published in the November 1999 Supplement Issue of the American Journal of Hypertension. PX 245:OMA1124654. See Shuster v. Symmetricon, Inc., 1997 WL 269490, *7 (N.D. Cal. 1997) ("A company is liable only if it engages in conduct from which it could reasonably be inferred that the company expressly or impliedly placed its imprimatur on the reports.") (citation omitted). As discussed above, it would be insufficient for Plaintiff to argue, without supporting evidence, that the article was published as a "service" for BMS pursuant to the company's alleged consultancy agreement with Weber — and at any rate, no such supporting evidence has been offered. See Pl.'s 56.1 ¶ 162. Weber is not a Defendant in this case and BMS cannot be liable for a third-party statement which it did not adopt or endorse. Thus, Defendants' motion will be granted with respect to statement number six.

Returning to Black and Weber's other statements, for which adoption by BMS is provable, Plaintiff must still prove that the statements were adopted with scienter. To this end, § III.C.2.b,supra, detailed evidence that BMS employees at high levels had serious concerns about angioedema observed during early clinical trials of Vanlev. To reiterate briefly, by November 8, 1999, individuals at BMS had voiced concerns about the incidence and severity of angioedema in the early clinical trials; individuals had urged a comparison of the incidence of angioedema in Vanlev to the incidence in other comparable drugs as reported in available databases (internal and external) and in SBAs; and Vanlev's data regarding angioedema in African Americans was much worse than other ACE inhibitors. In that section it was explained, further, how this evidence could permit a reasonable, even strong, inference that Defendants knew or were reckless in not knowing the false or misleading nature of statements suggesting that "Vanlev had been shown to be effective, to be generally safe and well tolerated and to present a risk of angioedema similar to competing agents." Statements two, three and four all discuss the results of the clinical trials without mentioning these concerns. A jury could reasonably find that the statements were adopted by BMS, and that BMS knew or should have known that they contained material and misleading omissions. For these reasons, Defendants Motion will be denied with respect to statements two, three and four.

This brings us to the challenged statements made by Drs. Ferdinand and Dahlöf. After the February 11, 2000 meeting with the FDA, BMS sponsored a variety of events in connection with conferences organized by the American College of Cardiology ("ACC") and the Association of Black Cardiologists ("ABC") in Anaheim, California from March 10, 2000 to March 15, 2000. PX 329; 243; 453. These conferences involved Drs. Black, Keith Ferdinand and Björn Dahlöf. Id. BMS's desire to spread the word on Vanlev at the ACC event is apparent:

The "[ACC] meeting serves as the 2000 `launch pad' for the dissemination of new Vanlev data, hypertension awareness messages . . . ACC provides us with a major opportunity to reinforce the VANLEV pre-launch messages to key business and health reporters who are interested in learning more about the brand. . . .

PX 243:OMA1265206 (Vanlev Public Affairs Overview).

In a presentation entitled "Vasopeptidase Inhibition: From Bench to Bedside," PX 244, delivered at the Association of Black Cardiologists conference in Anaheim on March 11, 2000, Ferdinand presented a slide which stated that: "The safety and tolerability profile of omapatrilat compares favorably with placebo"; "The overall safety and tolerability profile of omapatrilat is comparable to amlodipine and lisinopril"; and that the "Incidence of angioedema [is] comparable with current ACE inhibitors." PX 244:OMAP0050280.0033 (challenged statement number ten).

Plaintiff cites the following evidence to support its contention that this statement was adopted by Defendants:

• An e-mail from BMS marketing executive Anthony Coniglio ("Coniglio") to various BMS employees stating: "We also have Keith Ferdinand presenting . . . at the ABC meeting on VPIs [vasopeptidase inhibitors], so we need to decide on content and work with him." PX 329 (emphasis added).

• An e-mail from William Maher of BMS to others including Coniglio stating that Ferdinand [will give a] presentation at [the] ABC symposium, March 11 — High level overview of Vanlev, survey of clinical data, possibly a single slide of -037; aggregate SE summary, possibly by ethnicity . . . Ferdinand need[s] to get a QA briefing. We will have both Black and Ferdinand at Adv. Board meeting on March 8, so there will be a chance to talk with them there.

PX 340.

• The testimony of Ami Knoefler, of the "Vanlev Public Affairs Team," that the Public Affairs Team was not involved with Ferdinand's ABC presentation, but that she had discussed the content of that presentation with Tony Coniglio of the Global Brand Group: "I recall discussion with Tony Coniglio about Dr. Ferdinand's presentation as it related to the efficacy and safety results of omapatrilat clinical trials." DX 37, Knoefler Dep. 213:5-9.

• Finally, Plaintiff has evidence that some of Ferdinand's slides were the same as those shown at the AHA Symposium by Drs. Weber and Pouler and at the ACC by Black and Dahlöf. Compare PX 244 with DX 294; PX 222; PX 56; PX 69; PX 70.

The question is whether this evidence, taken together, is sufficient to support the inference that BMS "reviewed and approved," and therefore adopted Ferdinand's challenged statement at the ABC event. The Knoefler testimony, at most, shows that Coniglio had an interest in what Ferdinand said at the conference but it fails to suggest BMS's "entanglement" with Ferdinand's statement. The evidence that Ferdinand would be briefed on Q A for the event is also irrelevant to the adoption question because the challenged statement is part of slide and was not an unscripted comment made during a Q A session. The evidence that Drs. Black, Weber, Dahlöf and Ferdinand had some of the same slides, may permit the inference that the doctors had two-way communications with one another regarding their respective presentations, but it does not permit the inference that one or all of the Defendants reviewed and approved the slides' content. The best, most probative evidence on this issue is the Coniglio e-mail which is unambiguous about the fact that individuals at BMS "decide[d] on [the] content [of Ferdinand's ABC presentation] and work[ed] with him." PX 329. This e-mail alone permits the inference that BMS reviewed and approved the slides presented by Ferdinand at the conference. Therefore, should a jury find that BMS adopted Ferdinand's statement, well after the February 11, 2000 meeting with the FDA, when individuals at the company had actual notice of the FDA's concern about angioedema, Plaintiff has adduced sufficient evidence of conscious misbehavior or recklessness to prove scienter in connection with statement number ten.

However, Defendant's raise an additional issue with respect to Ferdinand's statement, which is that the statement was made at a medical conference and, according to Defendants, there is no evidence that it was reported to the market. Defs.' 56.1. ¶¶ 476. Plaintiff counters with the following two pieces of evidence:

• A "Credit Suisse, First Boston" report titled "ACC Meeting Wrap Up" devoting its lead story the Vanlev data presented at the ACC; stating that "[a]dditional efficacy and safety data for Vanlev could provide later claims in heart failure and add provide [sic] support for its hypertension launch for in [sic] the third quarter . . . Vanlev was shown to have tolerability similar to lisinopril." PX 520:2.

• Evidence that SG Cowen held a conference call to discuss the news emerging from the ACC meeting. PX 521 ("Data will be presented [at the ACC] on Bristol-Myers Squibb's Vanlev and Plavix. . . .").

Assuming that the ABC is considered a sub-part of the larger ACC conference, this evidence would be sufficient for a jury to infer that the Ferdinand presentation was reported to the market. Defendants are unaided by In re Cypress Semiconductor Securities Litigation, 891 F. Supp. 1369, 1378 (N.D. Cal. 1995) which they cite for the proposition that a "statement [made] to a group of . . . sales persons . . . [and] not a public gathering . . . [such that] the information did not enter the market and affect the stock price. . . . [such that] plaintiffs cannot establish reliance on this statement" is not actionable. Defs.' Mem. at 22 n. 16. Unlike Cypress, here, there can be no dispute that the ACC and ABC are public gatherings and that Ferdinand's presentation was covered in analysts' reports.

Defendants argue, further, that the cited reports are insufficient because the reports do not mention the Ferdinand statement explicitly. Reply at 21. But the Court is persuaded by Plaintiff's logic, presented in a different context but equally applicable here: On the question of materiality Plaintiff argued that,

in an efficient market, one does not expect significant stock price reactions — positive or negative — when a defendant's misstatements or omissions do not announce new information to the market and instead only confirm investors' prior expectations . . . Here, Defendants' misstatements and omissions on the ten days in question did not announce any new information, but rather released information that simply confirmed the market's expectations about Vanlev's safety profile and chances for FDA approval. . . . Accordingly, investors had no reason to revise their estimates of the value of BMS's stock. . . .

Opp'n at 24 n. 10.

Similarly, in this context, one does not expect reports of misstatements or omissions that do not announce new information to the market, reports that only confirm investors' prior expectations, to be extensive and detailed. It is clear from Plaintiff's evidence that Ferdinand's statement was received by reporters and analysts. But it would be a mistake require that analysts explicitly mention Ferdinand's statement when reporting on the ACC conference. To the extent that Ferdinand's presentation only reinforced the "good news" about Vanlev, it could have served to maintain the share price at an artificially high level. See, supra, § III.B.1. Ferdnaind's statement indeed confirmed the positive statements that Black, Weber, Ringrose and BMS had announced earlier. Because Ferdinand announced no new information it is not necessary that analysts' reports mention the statement explicitly, it is enough to prove that the presentation was included in an event that analysts attended and reported upon.

For all of the above reasons, it is clear that Defendants acted with scienter when they adopted statement number ten and that the statement was indeed disseminated to the market. Summary judgment will be denied with respect to statement number ten.

The evening following Ferdinand's presentation, at a dinner held in connection with the ACC Symposium on or about March 12, 2000, Dahlöf gave a presentation entitled, "Clinical Benefits of Effective Blood Pressure Lowering," in which he showed and explained a slide entitled "Common Clinical AEs in Placebo-Controlled Studies (%)." DX 294:OMA0002096, OMA0002108. The slide states that Vanlev has been observed to have a "tolerability profile similar to amlodipine, lisinopril, and losartan," and Dahlöf told his audience that VANLEV was observed to have a "tolerability profile at least comparable to existing agents." DX 94:OMA0002096, OMA0002108 (challenged statement number eleven).

As with the other statements by non-defendant physicians, Defendants argue that they did not adopt Dahlöf's statement. Plaintiff cites the following four pieces of evidence to support its contrary contention:

• Evidence that Dahlöf contracted with BMS and received payments for work on Vanlev at least as early as November 1998. See PX 519;

• evidence that the statement was made at a dinner for Vanlev investigators and key-opinion leaders, organized and chaired by BMS in connection with the ACC symposium. PX 453;

• evidence that some of Dahlöf's slides were the same as those shown by other physicians at events in connection with Vanlev. Compare DX 294 with PX 56; PX 69; PX 70; and

• evidence that Dahlöf's safety message conformed to BMS's QA and Product Summary of Vanlev as revised for the ACC events. Compare DX 294:OMA0002108 with PX 517:OMA0054762.

See also Plaintiff's Visual Aids Distributed at Oral Argument held on June 20, 2005 at 73-79.

First of all, in evaluating this evidence, the fact of a contractual relationship between BMS and Dahlöf is, as explained above, insufficient in itself to permit an inference of adoption. By the same token, evidence that BMS sponsored the event at which the alleged misstatement or omission was made is also insufficient — it does not show any "entanglement" with the content of the statement or two-way communication about the statement, as it does not suggest review or revision. As with Ferdinand's slides, evidence that some of Dahlöf's slides were the same as those shown by other physicians at other events in connection with Vanlev only permits the inference that the doctors communicated with one another regarding the content of their respective presentations. This evidence fails to implicate Defendants — and it is particularly unhelpful since Plaintiff failed to cite the particular slides, within these several, long, and technical presentations, which are allegedly identical. Lastly, the evidence that Dahlöf's safety message conformed to BMS's QA and Product Summary of Vanlev, perhaps shows that Dahlöf got his information from BMS but it does not permit an inference that Defendants reviewed and approved Dahlöf's message. Contrast this evidence with the Coniglio e-mail, discussing Ferdinand's statement, which unambiguously stated that individuals needed to "decide on content [for the ACC presentation] and work with him." PX 329. None of the Dahlöf evidence rises to this level.

Plaintiff argues that one reason why the evidence of adoption or endorsement is so scant here, is that Ferdinand and Dahlöf were never deposed. Plaintiff filed an affidavit pursuant to Fed.R.Civ.P. 56(f) to depose Ferdinand and Dahlöf, and has directed the Court's attention to Korea Express USA, Inc. v. K.K.D. Imports, Inc., No. Civ. 00-2940 (WHW), 2002 WL 31954077 at *9 (D.N.J. Aug. 28, 2002), which urges that "district courts have a duty under Rule 56(f) to ensure that the parties have been given a reasonable opportunity to make their record complete before ruling on a motion for summary judgment." The Court, however, agrees with Defendants' position that Plaintiff had reasonable, ample opportunity to take these depositions before the close of fact discovery and that they declined to do so despite the fact that Plaintiff had expressly challenged statements attributed to Ferdinand and Dahlöf in their First Amended consolidated class action complaint, filed to this date, nearly three years ago. DX 247: ¶¶ 81-83. It is clearly the case that Judge Hughes' decision to place reasonable limits on discovery cannot excuse Plaintiff's failure to seek a deposition that, as they claim, is critical to the Plaintiff's case.

Thus, notwithstanding Plaintiff's request to depose Ferdinand and Dahlöf, Defendants' Motion, with respect to Dahlöf's statement number eleven, will be granted because Plaintiff has adduced insufficient evidence that any of the Defendants adopted or endorsed the statement.

Summing up, Defendants' Motion for Summary Judgment will be granted with respect to statements five and nine because Plaintiff has failed to adduce evidence that would permit an inference of conscious misbehavior or recklessness, scienter, on the part of Defendants. Defendants' Motion for Summary Judgment will be granted with respect to statement one because it is neither false nor misleading. Defendants' Motion will also be granted with respect to statements six and eleven because there is insufficient evidence for a jury to find that the Defendants adopted or endorsed the statements. Finally, for the reasons set forth fully above, Defendants motion will be denied with respect to statements two, three, four, seven, eight, and ten.

III.D. Statements in the Second Class Period: March 22, 2001 through March 20, 2002

The challenged statements in the Second Class Period all relate to Vanlev's potential to be a blockbuster and they are all indisputably forward-looking. They were all made after the results of the OCTAVE (hypertension) trial were known to the company but before the results of the OVERTURE (heart failure) trial were known. Defs.' 56.1 ¶ 352. Plaintiff contends, and Defendants do not deny, that Defendants had the unblinded results of the OCTAVE study in September 2001 and that the results established that the Vanlev angioedema rate, at a lowered 10mg starting dose was 2.2%, and that based on internal BMS benchmarks, developed in consultation with the FDA, these results did not meet BMS's safety hypothesis for Vanlev. PX 157; DX 212.

The Statements (with emphasis added): On or about November 7, 2001, BMS issued a press release entitled, "Bristol-Myers Squibb Announces Unprecedented Plan to Submit Global Regulatory Filings for Five Potential Blockbusters Within 12 Months — Accelerated Pipeline Expected to Produce Three New Products Per Year" — in which it was stated that, "[o]ver the next 12 months, Bristol-Myers Squibb Company (NYSE:BMY) plans to submit an unprecedented number of regulatory submissions, including global regulatory filings for five new potential blockbuster compounds." DX 285; 245 (challenged statement number twelve). Dolan was quoted as stating, "Our `Strategy for Growth' plan, which was announced just one year ago, has already delivered significant results" and,

[d]uring the past year, the company has been quite visible in the area of acquisitions and divestitures. The organization has also been aggressively focused on efforts to accelerate and enrich our future pipeline. As a result of these efforts, we believe we have the products that will allow us to achieve our goal of launching three potential blockbuster products a year for several years starting in 2003 and we are hopeful that the first of these products may launch in 2002.

DX 285; 245 (challenged statement number thirteen).

On or about December 13, 2001, BMS issued a press release entitled "Bristol-Myers Squibb Provides EPS Guidance for 2002 — Company to Refile Vanlev ^TM Hypertension Application with FDA on December 14." DX 293. Dolan was quoted in the press release as stating: "We are optimistic about the five new medicines that we are filing for regulatory approval in a 12-month period." DX 293 (challenged statement number fourteen). The text of the press release issued the same day stated, "The company has submitted — or plans to submit — five new drug filings. . . . The new drug filings include Vanlev ^TM (omapatrilat), which the company intends to refile with the U.S. Food and Drug Administration (FDA) on December 14, 2001 for treatment of hypertension. The company hopes the FDA will approve Vanlev during the second half of 2002." DX 293 (challenged statement number fifteen).

Next, on or about January 15, 2002, BMS issued a press release in which Dolan was quoted as stating, "the newly-combined clinical and pharmaceutical development organization will succeed in advancing record number of innovative blockbuster brands they are poised to deliver into the marketplace, among them Vanlev^TM (omapatrilat) for hypertension and heart failure." PX 262:1 (challenged statement number sixteen).

Defendants argue that Plaintiff's case with respect to Second Class Period statements should be dismissed on all of the following grounds: (1) each of the statements was true, or was reasonably believed to be true based on available facts, Defs. Mem. § III.A.1; (2) there was no statistically significant price increase at the time the statements were made (this argument was addressed, and dismissed, in this Opinion, supra, § III.B.1); (3) the statements are all inactionable "soft information," or forward-looking statements; and (4) they each came with adequate cautionary language.

III.D.1.a. "Safe Harbors" for Forward Looking Statements

Plaintiff argues, initially, that all of the Second Class Period statements survived the Court's 2004 Opinion and Order as well as Judge Brown's 2001 Opinion and Order, and that these prior Opinions are the law of the case with respect to the statements' actionability. See Opp'n at 27; Defs. Mem. at 18-19; 2004 Opinion at 69-71; 2001 Opinion at 23-24; see also Vosgerichian v. Commodore Int'l Ltd, No. CIV. A 92-CV-4867, 1998 WL 966026, at *4 (E.D. Pa. Nov. 6, 1998) (finding court's ruling on issue of "puffery" on motion to dismiss binding for purposes of summary judgment). The 2001 and 2004 Opinions may be the law of the case, but these rulings do not foreclose dismissal of the statements at this stage of the litigation, for other reasons.

Specifically, in its 2004 Opinion this Court found that

[e]ven though these statements are forward-looking in that they refer to the " potential blockbuster" or " potential first-in-line" status of Vanlev and even if these statements were accompanied by adequate cautionary language, Plaintiff adequately alleges that Defendants had enough information regarding the OCTAVE trial design and results to know that this status would not be attained.

2004 Opinion at 63 (citing In re Prudential Sec. Ltd. Partnerships Litig., 930 F. Supp. 68, 72 (S.D.N.Y. 1996) ("The doctrine [safe harbor or bespeaks caution] provides no protection to someone who warns his hiking companion to walk slowly because there might be a ditch ahead when he knows with near certainty that the Grand Canyon is one foot away")). At this juncture, then, it is appropriate to consider whether Plaintiff's allegations are supported by sufficient evidence to permit an inference that Defendants had enough information to know, or to be reckless in not knowing, that their forward-looking statements were false or misleading. Whether Plaintiff has the burden of proving actual knowledge or recklessness depends on whether the forward-looking statements fall into common law or statutory "safe harbors."

As discussed above, the PSLRA contains a statutory safe harbor for forward-looking written or oral statements that are "identified as a forward-looking statement[s], and [are] accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the forward-looking statement." EP Medsystems, Inc. v. EchoCath, Inc., 235 F.3d 865, 872-873 (3d. Cir. 2000) (citing 15 U.S.C.A. § 78u-5(c)(1)(A)(i) (West Supp. 2000)).

Additionally, statements "not identified as forward-looking as required by the safe harbor provision," may still be protected under the bespeaks caution doctrine as adopted by the Third Circuit in In re Donald J. Trump Casino Sec. Litig., 7 F.3d 357 (3d Cir. 1993). EP Medsystems, 235 F.3d at 873. "Under this doctrine, `cautionary language, if sufficient, renders the alleged omissions or misrepresentations immaterial as a matter of law.'" Id. Cautionary language "must relate directly to that on which investors claim to have relied. . . . [A] vague or blanket (boilerplate) disclaimer which merely warns the reader that the investment has risks will ordinarily be inadequate to prevent misinformation will not suffice . . . cautionary statements must be substantive and tailored to the specific future projections, estimates or opinions . . . which the plaintiffs challenge."Id. (citations omitted). As with the PSLRA safe harbor, the bespeaks caution doctrine will not immunize forward-looking statements that are made with actual knowledge of their falsity at the time they are made. See id. (citing with approvalShaw v. Digital Equip. Corp., 82 F.3d 1194, 1213 (1st Cir. 1996)).

Defendants argue that statement number sixteen is "cautionary" on its face because it says that BMS is only " poised" to deliver a record number of blockbuster brands. Defs.' 56.1 ¶ 521; Defs.' Mem. at 19-20; Reply at 18. This argument is unpersuasive for the same reason that it was unpersuasive with respect to statement number five, see, supra, § III.C.2.b. As with statement number five (and at the risk of repetition), Defendants inappropriately place dual reliance on the word " poised." The statement is forward-looking because "poised" means essentially the same things as "about to" or "is planning to" — to this extent, there is no problem. The problem arises when the single word that makes the statement "forward-looking," is also cited as the statement's "accompanying cautionary language." As explained previously, if every "forward-looking word" is also considered "inherently cautionary," every forward-looking statement would fall into the safe harbors. The safe harbors' requirement for meaningful cautionary language would be a meaningless. At any rate, it can hardly be argued that the word "poised," even if it is cautionary, is "substantive and tailored to the specific future projections." EP Medsystems, 235 F.3d at 873. For these reasons, Neither the PSLRA nor the bespeaks caution doctrine apply to statement number sixteen. Proof of recklessness will, therefore, suffice to defeat summary judgment with respect to this statement.

On the other hand, statements twelve, thirteen, fourteen and fifteen, were accompanied by the following cautionary language (all emphasis added):

• "This press release contains `forward-looking statements' as that term is defined in the Private Securities Litigation Reform Act of 1995. The forward-looking statements include statements regarding the company's research pipeline concerning product development and product potential. These statements are based on management's current expectations and involve significant risks and uncertainties that may cause results to differ materially from those set forth in the statements. There can be no guarantees with respect to pipeline products that future clinical studies will support the data described in this release, that products will receive regulatory approvals, or that they will prove to be commercially successful. These and other risk factors are discussed in Exhibit 99 to the company's 2000 Annual Report on Form 10-K and in the company's periodic reports on Form 10Q. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise." DX 245:6 (accompanying statements twelve and thirteen) (emphasis added).

• "This press release includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding, among other things, statements relating to goals, plans and projections regarding the company's financial position, product development and business strategy. These statements may be identified by the fact that they use words such as `anticipate,' `estimate,' `expect,' `intend,' `plan,' `believe,' and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual outcomes and results to differ materially from current expectations. These factors include, among other things, market factors, competitive product development, governmental regulations and legislation, patent positions and litigation. For further details and a discussion of these and other risks and uncertainties, see the company's Securities and Exchange Commission filings, including the company's 2000 annual report on Form 10-K. The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise." DX 293:3 (accompanying statements fourteen and fifteen) (emphasis added).

• Additionally, in the company's 2000 Form 10-K, BMS explained that "[t]his Form 10-K Annual Report, and other written or oral statement[s] that the Company makes from time to time, contain certain `forward-looking' statements all of which are subject to risks and uncertainties. . . . These statements are likely to relate to, among other things, the Company's goals, plans and projections regarding its financial position, results of operations, market position and product development, which are based on current expectations that involve in Herat [sic] risks and uncertainties, including factors that could delay, divert or change any of them in the next several years. . . . Although it is not possible to predict or identify all factors, they may include the following: . . . New government laws and regulations, such as . . . (ii) changes in the FDA and foreign regulatory approval processes that may cause delays in approving, or prevent the approval of new products . . . Difficulties and delays inherent in product development, manufacturing, and sale, such as (i) products that may appear promising in development may fail to reach market for numerous reasons, including efficacy or safety concerns, the inability to obtain necessary regulatory approval, and the difficulty or excessive cost to manufacture . . . No assurance can be given that any goal or plan set forth in forward looking statements can be achieved and readers are cautioned not to place undue reliance on such statements, which speak only as of the date made. The Company undertakes no obligation to release publicly any revisions to forward looking-statements as a result of future events or developments." DX 330: PAG00017140 (emphasis added).

Plaintiff argues that none of this language is adequate to qualify the challenged statements for any of the safe harbors because it is "neither sufficient nor meaningful." Opp'n at 33-36. It is just boilerplate, Plaintiff argues, because it could apply to any drug and is not tailored to address the issues related to Vanlev. Id. at 34-35.

Indeed, the excerpted cautionary language does not include a specific statement that "after OCTAVE, the FDA will likely not approve the Vanlev NDA." It does, however, state generally that "there can be no guarantees that products will receive regulatory approvals," "uncertainties include . . . products that may appear promising in development [but] may fail to reach market for numerous reasons, including efficacy or safety concerns." Thus, here, the general representations of blockbuster potential were mitigated by the discussion of the several factors that could impact the commercial success of pipeline drugs. Since the statements on which Plaintiff relies speak to Vanlev's general potential to be a blockbuster brand, the uncertainties enumerated relate sufficiently, and are sufficiently specific, to be "meaningful," and to warn investors of the risks. See In re Adams Golf, Inc. Securities Litigation, 381 F.3d 267, 279 (3d Cir. 2004) (finding that cautionary language was adequate for safe harbors where (1) plaintiff alleged that the material omission was the potential for "retail oversupply affecting golf industry retailers" and (2) the cautionary language categorized a series of specific risks facing an investor, but did not mention retail oversupply in particular; explaining that "the cautionary statements relate directly to the claim on which plaintiffs allegedly relied; and that the general representations of better business ahead were mitigated by the discussion of the several factors that could have caused poor financial results.").

For the reasons above, statements twelve, thirteen, fourteen, and fifteen come under the umbrella of the bespeaks caution doctrine and/or the PSLRA safe harbor for forward-looking statements. As such, for these statements, Plaintiff must adduce adequate evidence that the statements were made with actual knowledge that they were false, otherwise the statements are not actionable. This inquiry is related to the general question of scienter and is undertaken in the next section.

III.D.2. Scienter

III.D.2.a. Evidence of Conscious Misbehavior (or Recklessness, Statement Sixteen only)

As proof of scienter in the Second Class Period, Plaintiff has adduced evidence from two key sources. The first is an internal memo authored by Beth Seidenberg, who was at the time a senior BMS epidemiologist. The second is evidence from meeting minutes cataloging the company's conversations with the FDA about the agency's concern with angioedema, leading up to, during and after OCTAVE was unblinded. Defendants respond, arguing that even if this evidence is credited, it remains clear that Defendants reasonably thought, based on available facts, that Vanlev could have been a blockbuster for the treatment of heart failure alone.E.g., Defs.' Mem. at 25. Representative portions of the evidence are excerpted below.

III.D.2.a.i. The Seidenberg Memo

Plaintiff cites a memo e-mailed from Beth Seidenberg to Ringrose (also copied to Laurie Smaldone of BMS) as evidence that, even before the OCTAVE data was unblinded, the company knew that Vanlev would never be a blockbuster drug for the treatment of hypertension. PX 54 (dated May 30, 2000). The memo was written and reviewed before any of the challenged statements in the Second Class Period were made. In essential part, the memo reads as follows:

We completed a careful review of all the results and risk factor analysis available from the hypertension and heart failure studies (still blinded). The starting dose hypothesis [later tested in OCTAVE] has some flaws (i.e.: if we combine angioedema with head and neck edema the 10mg starting dose has the same incidence as the 20mg starting dose). . . . Based on this and the desire to maximize our probability of success, we have been considering several options which might provide optimization of the positioning and market opportunity. . . . The options are briefly outlined below:

. . .

Option A:

Option B:

Accelerate OVERTURE and file First line for Heart Failure Second Line for Hypertension at the same time. An expedited regulatory review maybe granted based on positive OVERTURE results showing mortality/morbidity benefit over enalapril. Positive OVERTURE results may also have a halo effect and help support a second-line indication for hypertension.

[C]onduct a large ACE-inhibitor comparison study [testing 10mg dose hypothesis] to ascertain the incidence of angioedema. This would be an attempt to maintain the first line indication for Hypertension. . . . The potential outcomes are:

• If the incidence and severity are similar between omapatrilat and enalapril . . . the results [would then] support a first line claim for hypertension which can be filed as early as 06/2001. This outcome is not likely.

• If the incidence and/or severity are only moderately higher with omapatrilat than enalapril, the results may support a second-line indication for hypertension . . . filing . . . when OVERTURE is available (end [of] 2001). This is a more likely outcome. . . . The filing would include both a second-line indication in hypertension and a first-line indication in heart failure based on OVERTURE results.

• [If] the incidence and/or severity are significantly higher with omapatrilat than enalapril, the results will not support use in hypertension. A claim for treatment of heart failure only maybe filed independently [at the] end [of] 2001 based on OVERTURE results.

The third option is to pursue a morbidity and mortality claim for hypertension . . . It should be noted that there is no pilot mortality/morbidity data showing a survival benefit for omapatrilat . . . in hypertensive patients; hence it is not possible to predict the likelihood of showing a mortality/morbidity benefit over an ACE [inhibitor] in patients with hypertension.

PX 54:OMA0052536-39.

The Seidenberg memo would permit the following inferences: (1) the company knew that even after conducting a large scale study at a lower starting-dose, a study like OCTAVE, the most likely outcome would be that Vanlev would have only second-line indication for hypertension; (2) even if Vanlev were second-line for the treatment of hypertension, it still had the potential to be a first-line treatment for heart failure; (3) and the predictions made in the memo were based on review of all data that the company had on omapatrilat as of May 30, 2000 (this can be inferred from the fact that no predictions about likely outcomes were made under Option C because of the lack of clinical data).

The Seidenberg memo did not go unanswered, and it must be considered in context. By July 16, 2000, BMS was approaching a final decision to proceed with OCTAVE. DX 32 at 158. BMS's Andrew Bodnar, then Senior Vice-President of Medical External Affairs, prepared a memorandum to Ringrose, dated July 16, 2000, which countered the conclusions and predictions of the Seidenberg memo. DX 270. In relevant part the Bodnar memo states the following:

. . . Beth [Seidenberg's] . . . thinking has evolved significantly in [the last six weeks] in response to further clarification of the FDA's positions. . . .

. . .

. . . Our review of the literature from post-marketing reports and a 1994 FDA advisory led us to the conclusion that, at the 10mg starting-dose, angioedema associated with omapatrilat appeared to be comparable to the rate associated with ACE inhibitors.

. . . [I]n . . . discussions with the FDA, we proposed to lay out the details of a large study evaluating the blood pressure reducing efficacy of omapatrilat vs. enalapril, while, at the same time, assessing the comparative incidence of angioedema associated with the two agents. Starting from an assumption that the two drugs would show the same frequency of angioedema, we proposed to power the study to yield a 95% confidence level . . . that omapatrilat is not associated with angioedema at more than twice the rate associated with enalapril. . . . The FDA agreed, in principle with our assessment and we set out to design and consider such a trial.

. . .

While not stated explicitly, given the history . . . the conclusions in Beth [Seidenberg's] memo . . . were clearly predicated on a number of assumptions that have subsequently not been borne out.

DX 270:OMAP 0085802.001-002. Bodnar's memo clearly contradicts the conclusions in the Seidenberg memo and it explains, in detail not quoted above, reasons why Bodnar thought Seidenberg was wrong.

While Bodnar's memo does not wipe out the possible inference that the Seidenberg memo was credited by individuals at BMS, it does show that executives at BMS were faced with conflicting assessments. When coupled with the fact that even Seidenberg was optimistic about the possibilities for Vanlev in treating heart failure, it does not appear that any reasonable jury could find that the speakers in the Second Class Period were reckless, no less, speaking with actual knowledge that their statements were false.

Plaintiff's proof is, however, more extensive. In addition to the Seidenberg memo, Plaintiff has offered evidence from a number of sources to prove exactly how much BMS knew about the FDA's views of Vanlev. This evidence is reviewed in the next section.

III.D.2.a.ii. Evidence from BMS Meetings with the FDA Regarding Angioedema

According to an internal BMS e-mail written by Dan MacNeil, a member of the Vanlev team, in a meeting between the FDA and BMS held on March 17, 2000, before any data from OCTAVE was available, the FDA raised "strong concern about the four subjects in our database who required intubation for angioedema." PX 133. MacNeil further stated that the FDA, as first discussed in the February 11, 2000 meeting, had

not seen intubation in clinical trial databases before. It is the severity rather than the incidence of angioedema which is the chief concern, and an issue for approvability . . . They would like some assurance that this severity is not unique to omapatrilat. The FDA are willing to discuss the issue on a weekly basis. Our database searches have become even more important.

Id.

In addition, official meeting minutes indicate that the FDA started the meeting stating that in the past it was enough for an agent to just lower blood pressure, now "[t]here are many antihypertensive agents currently available that effectively lower blood pressure and have a low safety risk." DX 57:OMA0076749. "The increased safety risk needs to be addressed prior to approval." DX 57: OMA0076750. During the meeting, with respect to the risk benefit balance of Vanlev, the FDA stated further:

If there is an increased risk with omapatrilat, then the question is whether omapatrilat offers a greater benefit than what is currently available or a benefit to a specific subpopulation that the others do not offer. The increased risk would be more acceptable if omapatrilat saved lives. Even if it were shown that omapatrilat is better at lowering blood pressure than other antihypertensive agents (i.e., lowers more mm mercury than other approved agents do), this may not be sufficient to warrant approving omapatrilat. It might be that the dose ranges of the other agents were not fully explored and that at higher doses, the other agents would have the same effect. If omapatrilat addressed an unmet medical need, such as effectively lowering blood pressure in patients who are refractory to other antihypertensive agents, the safety concerns would be more acceptable. However, we are not convinced that omapatrilat addresses such a need.

DX 57:OMA0076750-OMA0076751.

Shortly thereafter, on March 30, 2000, two weeks before the 8-week OCTAVE data was available, BMS requested another meeting with the FDA to discuss BMS's hypothesis that the angioedema seen with Vanlev could be controlled by initiating treatment at a 10 mg dose and then titrating them to higher doses. PX 228:OMA0941661-OMA0941664. In official meeting minutes the FDA concluded

The Division's position at the Advisory Committee Meeting will probably be that there is some phenomenon with some tested regimens of omapatrilat that show more serious angioedema than did the other ACE inhibitors, at least for the dose regimens that were studied. The Division was skeptical that [BMS's] present data and analysis are sufficiently compelling to assure us that starting at 10mg doses completely addresses the angioedema safety concerns.

Id. at PX 228 OMA0941664. Then, on April 13, 2000, the FDA reiterated its concerns about Vanlev's higher rate of angioedema, "especially of serious angioedema, a potentially lethal adverse effect. Such a serious adverse effect does not appear acceptable for an antihypertensive agent, unless the agent had an unequivocal advantage, such as considerably greater efficacy, etc., over other antihypertensive therapy, including combination therapy." DX 59:OMA0868532. The FDA also reiterated that the "overall rate of angioedema with [Vanlev] appears to be 5-10 times higher than the rate for the ACE inhibitors and the cases more severe," and stated that

[t]he Agency has defined a finite acceptable risk with respect to the incidence and severity of angioedema for the ACE inhibitors. With appropriate warnings in the label, the ACE inhibitors are useful antihypertensive tools with an acceptable safety risk. The risk appears higher for [Vanlev] with no advantage to offset it.

DX 59:OMA0868532-34.

The FDA also stated that BMS's "suggestion that a lower (10mg) starting-dose will yield a lower rate [of angioedema was] plausible and somewhat supported by the data, but . . . the retrospective nature of the analysis left too much uncertainty given the importance of the issue." DX 59:OMA0868532. The FDA displayed a particular concern over the discrepancy of angioedema between Vanlev and ACE-inhibitor-treated African-American patients.

At a meeting on April 13, 2001, BMS senior-management discussed whether BMS should refile the Vanlev NDA with the eight-week or 24-week data. PX 325; PX 448; PX 394. The handwritten notes of Dr. Seidenberg noted that the "Risk vs benefit unblind now risk higher than benefit; more obligation to announce." DX 44:243-248; PX 325. She also noted that the "Pattern of angioedema combined data does not fulfill prior hypotheses not favorable." Id.

The whole of the above detailed evidence, unequivocally, permits an inference that Defendants had actual knowledge that Vanlev would never be a blockbuster for the treatment of hypertension — the combination of the FDA's view of the risks and benefits, coupled with the disappointing results of OCTAVE are indisputably sufficient to support such an inference.

Still, Plaintiff's case in the Second Class Period comes down to whether Defendants had actual knowledge that the drug could not possibly be blockbuster for the treatment of heart failure. Defendants have produced substantial evidence that BMS insiders, based on contemporaneous internal projections, could have reasonably believed that the drug had blockbuster potential for heart failure. Both Plaintiff and Defendants' evidence is discussed in the following section.

III.D.2.a.iii. Evidence Concerning Vanlev as a Treatment for Heart Failure Defendants' Evidence: Defendants cite, among other things, the following evidence that BMS internal projections showed that Vanlev had blockbuster potential solely for the treatment of heart failure:

• an unidentified chart dated (in handwriting) September 22 (year not marked) predicting that, on the high end, the world wide market for Vanlev as a heart failure treatment could exceed a billion dollars by 2005 and two billion dollars by 2007, variables cited are clinical trial outcomes; success in pricing negotiations; and market share (the most optimistic projections assume a 50% market share in the United States, 38% International), Defs.' 56.1 ¶ 167 (citing DX82: OMA 1751098);

• a chart from presentation materials titled, "Worldwide Medicines, 2002-2005 Strategic Plan, Financial Review, Executive Committee," dated July 12, 2001, predicting that if the OVERTURE results are positive, in a heart failure only launch of Vanlev, BMS could achieve 755 million in net sales by 2003; 2.1 billion by 2004; and 3.5 billion by 2005, id. (citing DX 85:OMA 1766286); and

• a chart from a presentation given by Anthony Coniglio, of the Global Marketing Group, titled "VANLEV: Brand Plans: Base and Optimized Plans Across Three Potential Scenarios," dated August 22, 2001, forecasting that Vanlev sales in 2005 as an indication for heart failure alone, could exceed those in the alternative scenarios, id. (citing DX86:OMA 1712156).

Defendants also cite experts' and analysts' reports indicating that Vanlev had promise to be a blockbuster for the treatment of heart failure, but these, in contrast to contemporaneous internal projections, shed little light on the state of mind of individuals at the company. Likewise, projections made after any of the challenged statements were made are irrelevant.

Plaintiff's Evidence: Plaintiff offers the following five pieces of evidence to suggest that Defendants had actual knowledge (or in the case of statement sixteen, were reckless in not knowing) that Vanlev could not have been a blockbuster for the treatment of heart failure alone. See Pl.'s 56.1 ¶¶ 516-27, 574.

First, Plaintiff cites a BMS, internal record of contact with Dr. Stockbridge of the FDA. The record was made by Andrew Waclawski, a BMS regulatory liaison, on or about January 11, 2002. The record post-dates all but one of the challenged statements — statement sixteen. Plaintiff's Rule 56.1 statement excerpted this report as follows:

In that conversation [with Waclawski], Dr. Stockbridge explained his opinion that an FDA Advisory Committee meeting would not be needed to discuss the refiled NDA. As related in a Record of FDA Contact written by Waclawski:

[Stockbridge] said that if the data presented (i.e. the OCTAVE data summary) at the meeting (of September 19) were accurate, he did not think the Agency would need the advice of an Advisory Committee. . . . Dr. Stockbridge said that he did not think that [OVERTURE] would matter much. He said that if the hypertension data presented already were accurate `we were in a pretty deep hole and it was `hard to imagine' how the heart failure data could help.

Pl.'s 56.1 ¶ 574 (citing PX 200:OMA1786197-98). In actuality, the document cited states, further, that:

I [Waclawski] pointed out that this heart failure study could show a mortality benefit versus an ACE inhibitor. [Stockbridge] acknowledged that this might have some impact.

On the other hand, [Stockbridge] said that the data from the heart failure study, if positive against an ACE inhibitor would be important for a heart failure indication, since we have actually measured benefit. He went on to note that in the hypertension studies, we still only measure a surrogate of benefit. He also said that in the case of a positive heart failure study the need for an Advisory Committee was not obvious, if only because a [sic] the assessment could be fairly clear-cut in favor of a heart failure indication.

PX 200:OMA 1786197 (emphasis added). Considered in full, this evidence supports an inference that Defendants had a basis to believe that the FDA supported approval of Vanlev for the treatment of heart failure, if OVERTURE yielded positive results.

Second, Plaintiff cites an internal, BMS e-mail exchange between Larry Reed, Thomas Speigel, Michael Jahn and Helen Torley, in which Speigel requests "operations input on [whether] congestive heart failure [CHF] is an Opportunity Seeking Blockbuster [OSB], [as a] standalone indication." Pl.'s 56.1 ¶ 514 (citing PX 425: OMA 0584296). Reed responded that "CHF does not readily show blockbuster potential . . . As a standalone indication it does not feel comfortable to believe that a compound solely for CHF has OSB potential." PX 425: OMA 0584296. Reed explains briefly his reasons for this view and goes on to say that "[n]evertheless, given the needs of the business, I am very open to exploring any realistic possibilities. . . . [g]iven the current treatment paradigm, thinking about a compound for CHF as an add-on to existing therapy [ACE inhibitors or VPI] seems most prudent."Id.

Viewing this evidence at its most damaging to Defendants, the most that it proves is that there were individuals at BMS who did not think that Vanlev could be a blockbuster for the treatment of heart failure. When considered in context, alongside Defendants evidence that others at BMS thought that Vanlev could be a blockbuster for the treatment of heart failure, this e-mail does not permit the inference that speakers believing one side over the other were reckless in relying upon that belief.

Third, Plaintiff cites a Vanlev forecast prepared in November 27, 2000, discussing a heart-failure-only scenario, showing that Vanlev, with a 25% greater benefit than enalapril in the treatment of heart failure would still only earn $400 million sales after eight years of marketing. Pl.'s 56.1 ¶ 515 (citing PX 378, not citing page number in exhibit). The chart to which Plaintiff seems to be referring, however, also forecasts earnings should Vanlev demonstrate a 30-50% greater benefit than enalapril. In this scenario, internal BMS projections were that Vanlev could achieve nearly $800 million in sales. Now, this figure might not satisfy Plaintiff's definition of what is a "blockbuster," but it surely is close enough to make it reasonable for someone, speaking close to a year later, to state that the drug could be a blockbuster.

Fourth, Plaintiff cites the testimony of Dr. Packer, who was a consultant with BMS. Pl.'s 56.1 at ¶ 516 (citing DX 38 165:13-20). As recounted by Dr. Packer:

Q. Did anyone with Bristol-Myers Squibb express disagreement with your views [that the heart failure marketplace is actually underestimated and is in fact larger than the hypertension marketplace]?

A. It would be fair to say that they found my views to be interesting, but not necessarily reflective of their views. They always thought of hypertension as being more important than heart failure. And we continued to discuss this for months and years.

Id. This testimony, however, does not permit the inference that it would be reckless to believe (and to state) that a heart failure treatment could be a blockbuster. Even assuming that the heart failure market was not underestimated, and even if it could never be greater than the hypertension market, Packer's testimony still says nothing about whether a drug for the treatment of heart failure could be a blockbuster. This evidence is irrelevant to the assertions in the challenged statements.

Fifth, and finally, Plaintiff relies heavily on the expert report of Dr. Allan Detsky. Plaintiff relies on the report to prove the following:

• Following OCTAVE, even if OVERTURE showed a 20% proportionate reduction in the risk of death compared with enalapril, Vanlev could not have achieved "blockbuster" status. Pl.'s 56.1 at ¶ 517 (citing PX 14:12-13).

• Dr. Detsky reviewed internal BMS forecasts from a variety of sources and concluded that "New molecular entities (NME) would be expected to take 22% of the market [of worldwide heart failure sales], thus even if Vanlev captured the entire 22%, sales would only have been about $500 million. Id. at ¶ 518 (citing PX 14:13; PX 472: VAS00140341).

• Dr. Detsky did not believe that the ability to raise the price of Vanlev, if it were only marketed for heart failure, would improve its ability to be a blockbuster. Id. at ¶ 519 (citing PX 14:13)

• After OCTAVE, the angioedema issues for the hypertension indication would extend to heart failure because: (1) patients, providers and physicians "are bound to extrapolate; (2) the drug would likely have a "black box warning;" (3) patients with heart failure also have hypertension, so the markets cannot be totally segregated. Id. at ¶ 520 (citing PX 14:14). Dr. Detsky further opined, "based on the examples of Serzone and Seldane and his expertise, that Vanlev's peak sales as a treatment for heart failure . . . would be reduced by at least 70% and as much as 90% . . . due to the results of OCTAVE." Id. at ¶ 521 (citing PX 14:15).

Assuming, for the sake of argument, that the Detsky testimony and report were admitted as proof of all of the above propositions (Detsky is the subject of one of Defendants' Daubert Motions) this evidence still fails to suggest that anyone at BMS shared Dr. Detsky's views. Nor does it suggest that anyone at BMS was even aware of Detsky's views. On the question of whether individuals at BMS would have been reckless in believing that Vanlev could be a blockbuster for heart failure, Detsky's views are irrelevant. While it is true that Dr. Detsky's report purports to be based on internal BMS projections — and so, arguably, individuals at BMS could have extrapolated, as did Dr. Detsky — nevertheless, the BMS projections relied on by Detsky did not stand alone: There is sufficient evidence that other BMS projections were more optimistic about the heart failure indication and the Detsky evidence tells us nothing about which set of projections influenced the speakers in the Second Class Period.

III.D.2.a.iii. Analysis of the Evidence of Scienter in the Second Class Period and Conclusions Statement Fifteen: Statement fifteen falls into one or both of the safe harbors for forward-looking statements. As such, for the statement to be actionable, Plaintiff would have to show that Defendants acted with actual knowledge that the statement was false or misleading. See, supra, § III.D.1. But the Court need not reach this issue, because with respect to this statement, Plaintiff has failed to make the threshold showing that the statement was false or misleading. The evidence may show that Defendants knew Vanlev could never be a blockbuster for the treatment of hypertension. But statement fifteen does not say that the drug would be a blockbuster at all — not for hypertension nor anything else.

Statement fifteen says that BMS planned to refile the Vanlev NDA for the treatment of hypertension and that it hoped the NDA would be approved. Plaintiff's evidence does not show that BMS, after OCTAVE, abandoned its intention to refile the Vanlev NDA. Nor does the evidence show that BMS had no hope that Vanlev would be approved, even if it meant the drug would have a black box warning. In point of fact, BMS did refile the Vanlev NDA after OCTAVE. Pl.'s 56.1 ¶ 567. Based on the evidence, a reasonable jury could not find that statement number fifteen was false or misleading. For this reason, Defendants' Motion, with respect to statement fifteen, will be granted. Statement Sixteen: Because statement sixteen was not accompanied by meaningful cautionary language, see, supra, § III.D.1, Plaintiff need only adduce evidence sufficient to permit the inference that Defendants were reckless in not knowing that the statement was false or misleading.

Statement sixteen, while it mentions hypertension, is not about Vanlev exclusively as a treatment for hypertension. The statement expresses Dolan's view that Vanlev would be a blockbuster brand for the treatment of hypertension and heart failure, combined. See PX 262. Consider the statement's context: Dolan was quoted in a press release announcing that Elliot Sigal would be assuming the position of Senior VP of Global Clinical and Pharmaceutical Development. Id. Dolan was expressing his confidence in Sigal's leadership in advancing the Vanlev brand. Id. The entire press release is devoted to Sigal's qualifications. No portion of it is technical or scientific and there is no discussion of Vanlev, other than the challenged statement. Id. Simply, when Dolan named "Vanlev (TM) (omapatrilat) for hypertension and heart failure" among a list of three other drugs and their respective indications, it is clear that he was merely identifying the brand in more detail. He was not specifying that this brand would a be a blockbuster for each of these two indications.

Considering all of the evidence in a light most favorable to the Plaintiff it appears that individuals at BMS, at this point in time, still held the reasonable belief that Vanlev had the potential to be blockbuster for the treatment of heart failure. A reasonable jury could not infer from the evidence that this belief and statements expressing this belief were reckless. Reckless conduct is "highly unreasonable (conduct), involving not merely simple, or even inexcusable negligence, but an extreme departure from the standards of ordinary care." Ikon, 277 F.3d at 666. Here, reckless conduct is not at all evident. For this reason Defendants' Motion will be granted with respect to statement number sixteen. Statements twelve, thirteen and fourteen: Because statements twelve, thirteen and fourteen were each accompanied by meaningful cautionary language, see, supra, § III.D.1, and are protected by the bespeaks caution doctrine (and/or the PSLRA safe-harbor provisions), Plaintiff must adduce evidence that Defendants had actual knowledge that these statements were false.

If the evidence is insufficient to prove that a belief in the blockbuster potential of Vanlev was reckless, then a fortiori, the same evidence cannot support the inference that the statements were knowingly false. Defendants have produced evidence sufficient to show that they reasonably believed that Vanlev could be a blockbuster for the treatment of heart failure alone. Plaintiff has failed to show that Defendants had actual knowledge to the contrary and no one of these statements so much as mentions hypertension. For this reason, Defendants' Motion will be granted with respect to statements twelve, thirteen and fourteen. None of the challenged statements in the Second Class Period survive summary judgment.

III.E.1. Individual Liability of Defendants Dolan and Heimbold, Section 20(a)

Plaintiff alleges that Defendants Heimbold and Dolan are liable as controlling persons under Section 20(a). See Opp'n 45-49. Plaintiff does not maintain any allegation that Ringrose was a control person. Opp'n at 45. Defendants contend that Plaintiff cannot support its allegations with evidence that Heimbold and Dolan were "culpable participants" in the alleged fraud. Defs.' Mem. at 28.

"Section 20(a) creates liability for `controlling persons' in a corporation, 15 U.S.C. § 78t(a), and imposes joint and several liability upon anyone who `controls a person liable under any provision of" the Exchange Act." P. Schoenfeld Asset Management LLC v. Cendant Corp., 142 F. Supp. 2d 589, 623 (D.N.J. 2001) (citing Rochez Brothers, Inc. v. Rhoades, 527 F.2d 880, 885 (3d Cir. 1975)). "To maintain a claim under § 20(a), the plaintiffs must establish (1) an underlying violation by a controlled person or entity, (2) that the defendants are controlling persons, and that they were `in some meaningful sense culpable participants in the fraud perpetrated by controlled persons.'" Id. Defendants do not deny that at certain periods Heimbold and Dolan were control persons with the ability to control BMS, see Defs' Mem. at 29-30. As established above, BMS has potential 10b-5 liability for statements two, three, four, seven, eight and ten. See, supra, §§ III.C.c.-C.d.

Only one surviving statement, statement ten, made on March 11, 2000, was made during Dolan's tenure as a control person. Mr. Dolan did not become CEO of BMS until the Second Class Period. Opp'n at 46. Prior to becoming CEO, Dolan was president of BMS (named in late January 2000). Id. So, at the time Dr. Ferdinand made the actionable statement, Dolan had only been president of BMS for approximately five weeks. Simply, it strains credulity to infer that in those five weeks, Dolan had the opportunity to internalize the alleged institutional knowledge of BMS and to "culpably participate" in Dr. Ferdinand's allegedly fraudulent statement at a medical conference. "Culpable participation" can be satisfied on summary judgment where facts show the control person "knew or should have known that [the] primary violator . . . was engaged in fraudulent conduct." Dietrich v. Bauer, 126 F. Supp. 2d 759, 765-66 (S.D.N.Y. 2001). Here, no reasonable jury could reach such a conclusion. Plaintiff has detailed evidence of Dolan's involvement with Vanlev — but none of this evidence pre-dates statement number ten, so it is all irrelevant to the issue of Dolan's individual liability.

Second, with respect to Heimbold, Plaintiff relies on the following relevant evidence:

• Heimbold became President of BMS in October 1992, and Chairman in June or July 1995. DX 36 19:8-20:25 Heimbold's job "was to be responsible for the affairs of the Company." Id. at 175.

• Heimbold chaired the Corporate Issues Committee ("COC") in 1999 and 2000, which typically met the day before each board meeting in order to brief Heimbold on major areas within the company. DX 32: 27-28. The COC consisted of the heads of the various corporate staff functions, as well as the heads of the WWM and the head of Research Development (Ringrose). The COC was the most senior group of people at BMS other than members of the Board of Directors. Id. at 26:17-27; 27:20-29:5.

• Heimbold also chaired a management committee which reviewed BMS's business on a monthly basis. DX 36:70. At the September 13, 1999 Management Committee meeting, Heimbold and other Committee members discussed Vanlev and noted that the "blockbuster" launch of Vanlev was a critical success factor for BMS. Id. at 81-82; PX 301.

• Heimbold generally reviewed and approved press releases in which he was quoted discussing issues of regulatory approval and Vanlev. DX 36 at 90.

• BMS's President of WWM, who had direct oversight of Vanlev, reported to Heimbold. PX 28 168:21-24.

• Reviewing the recommendation from the pharmaceuticals research group, Heimbold made the ultimate decision to withdraw the Vanlev NDA in April 2000. DX 36:104-05. He, along with Dolan, also made the decision to proceed with OCTAVE. DX 36: 104-05.

Once again, "culpable participation" is evident if these facts demonstrate that Heimbold knew or should have known that the primary violator, here BMS, was engaged in fraudulent conduct, but Heimbold did nothing to prevent it. See Dietrich v. Bauer, 126 F. Supp. 2d 759, 765-66 (S.D.N.Y. 2001). Heimbold presents a much closer case than Dolan.

On the one hand, the statements remaining in the case, all from the First Class Period, are very specific — generally discussing the results of the Vanlev clinical trials. There is no evidence that Heimbold reviewed and approved any of the individual statements specifically. On the other hand, however, because there are numerous statements to the same effect — "Vanlev has a favorable side-effect profile compared to other ACE inhibitors" — a reasonable jury could infer that these statements were part of a more general message for the promotion of Vanlev, of which, Heimbold certainly would have been aware. Moreover, based on Heimbold's involvement in the daily affairs of the corporation, it can be inferred that he had knowledge of the angioedema issue, which was discussed extensively among individuals and teams involved with Vanlev. So, on balance, it appears that Plaintiff has adduced sufficient evidence for a jury to find Heimbold liable under Section 20(a). Defendants Motion will be denied with respect to Mr. Heimbold's liability under Section 20(a).

III.E.2. Section 10(b) Individual Liability

Plaintiff's cause of action against Defendants Ringrose and Dolan individually, under Section 10(b), must be dismissed because the statements made by Ringrose and Dolan, statements five, thirteen, fourteen, fifteen, and sixteen, did not survive summary judgment.

E. Plaintiff's Motion to Strike Portions of the Summary Judgment Record

Because none of the evidence challenged in Plainitff's Motion to Strike was relied upon in this Opinion, the Motion will be dismissed as moot.

V. Conclusion

In an Order accompanying this Opinion and dated the same, Defendants' Motion for Summary Judgment will be granted with respect to statements one, Compl. ¶ 52; five, Compl. ¶ 65; six, Compl. ¶ 58; nine, Compl. ¶ 73; eleven, Compl. ¶ 82; twelve, Compl. ¶ 148; thirteen, Compl. ¶ 148; fourteen, Compl. ¶ 150; fifteen, Compl. ¶ 151; and sixteen, Compl. ¶ 155.

Defendants' Motion for Summary Judgment will be denied with respect to statements two, Compl. ¶ 53; three, Compl. ¶ 50; four, Compl. ¶ 53; seven, Compl. ¶ 66; eight, Compl. ¶ 70; and ten, Compl. ¶ 83.

Defendants' Motion for Summary Judgment with respect to the individual liability of Dolan and Ringrose, will be granted; and with respect to the individual liability of Heimbold, the Motion will be denied.

Plaintiff's Appeal of Judge Hughes's Order and Opinion of April 28, 2005, Dkt. No. 229, will be denied.

Plaintiff's Motion to Strike Material from the Summary Judgment Record, Dkt. No. 299, will be dismissed as moot, and decision with respect to Daubert Motions will be reserved for a later date.