b'the company was making significant progress in [its] clinical development program for galeterone. In a JulyThe court rejected plaintiffs argument 2016 press release, however, Tokai announced that it was discontinuing the Phase 3 trial and that continuingthat, because far fewer than 148 patients the trial would be futile because it was unlikely toenrolled in the Phase 3 study before it demonstrate an improvement in the survival rate for AR-V7+ patients. In Tokais next Form 10-Q, the com- was terminated, the defendants must pany disclosed that it would likely not pursue develop- have known at the time they made public ment of galeterone for AR-V7+ patients. In May of 2017, an article published in the Journal of Clinical Oncologystatements that the trial was not going to disclosed that enrollment for the trial was well belowmeet its goals, reasoning that the fact that the expected enrollment of 148 patients, and prelimi-nary study results indicated that galeterone was lessenrollment was ultimately unsuccessful effective than other CRPC treatments. Tokai, however,nearly a year after the statements at issue had never disclosed these results.was not evidence that defendants knew Initially, in 2016, investors filed two putative class actions against Tokai, which were subsequently consolidated,it would be unsuccessful at the time the but those cases were voluntarily dismissed after thestatements were made.proposed lead plaintiff withdrew his motion to serve as lead plaintiff. A third related class action for 1933 Act claims was remanded to Massachusetts state court. Infacts allegedly omitted from the registration statement July 2017, Angelos, suing solely on his own behalf andrendered any statement materially misleading, including claiming an investment loss of over $10,000,000 alone,because the registration statement accurately dis-filed suit in the District of Massachusetts, assertingclosed the structure of the planned Phase 3 trial and claims against Tokai, certain officers and directors, andthe additional information sought by plaintiff would not the underwriters for Tokais IPO for alleged violationshave been material. With respect to the Section 10(b) of Sections 11, 12, and 15 of the 1933 Act and Sectionsand Rule 10b-5 claims, the court held that even if the 10(b) and 20(a) and Rule 10b-5 of the 1934 Act. Plaintiffstatements at issue were misleading, the amended claimed in his amended complaint that the registra- complaint failed to raise a strong inference of scienter. tion statement for Tokais IPO contained misleadingThe court reasoned that there were no allegations in statements because it (1) failed to disclose the size ofthe amended complaint indicating that defendants the Phase 3 trials for galeterones competitor drugsknew of problems with the Phase 3 trial at the time of when disclosing the combined sales of those drugs,any allegedly misleading statements, or expressed an (2) claimed that the market for existing CRPC drugsintent to mislead investors about the Phase 3 trial. The was $2.1 billion, when there was no basis to think thatcourt rejected plaintiffs argument that, because far galeterone would take a significant portion of thatfewer than 148 patients enrolled in the Phase 3 study market due to the rarity of AR-V7+ patients, (3) misrep- before it was terminated, the defendants must have resented the studies of competitor drugs in suggestingknown at the time they made public statements that the that galeterone would be more effective in AR-V7+trial was not going to meet its goals, reasoning that the patients, (4) misleadingly and selectively disclosed con- fact that enrollment was ultimately unsuccessful nearly versations with FDA, and (5) did not disclose numerousa year after the statements at issue was not evidence issues with the Phase 3 studys design that purportedlythat defendants knew it would be unsuccessful at the would have indicated it was doomed to fail. Plaintifftime the statements were made. The court also rea-also claimed that Toaki made several misleading state- soned that plaintiffs allegations as to stock sales by ments or omissions after its IPO, including (1) a Juneinsiders failed to establish the requisite inference of 2015 press release announcing that the Phase 3 trialscienter, because there were no allegations that the results were expected by the end of 2016, (2) varioustiming or size of these sales was suspicious, and the public statements noting that the Phase 3 trial wouldsales were all conducted in accordance with Rule 10b5-1 contain 148 patients, and (3) a January 2015 presstrading plans. release indicating that then-existing CRPC medications were ineffective in AR-V7+ patients, without indicatingOn November 12, 2020, plaintiff appealed the district that the study upon which that finding was based wascourts dismissal of his complaint to the First Circuit. merely preliminary.Plaintiffs appeal is pending, and is expected to be fully Defendants moved to dismiss, and the court dismissedbriefed by April 12, 2021.the amended complaint in full. With respect to the Section 11 claims, the court concluded that none of the 15'