b'amend. Accordingly, the court remanded the case for The Second Circuit rejected this theory,the district court to determine on the record whether to holding that plaintiffs motive-basedallow plaintiffs an opportunity to replead. On November 16, 2020, the district court denied allegations all involved generic motivatorsplaintiffs motion for leave to amend the complaint on that were common to all companies, likegrounds of futility, and dismissed the case with prej-udice. On December 16, 2020 plaintiffs appealed the a desire to increase the companys stockcourts denial of leave to amend to the Second Circuit.price or to avoid bankruptcy, which were insufficient to raise the necessary inferenceSkiadas v. Acer Therapeutics Inc., of fraudulent intent. Case No. 1:19-cv-6137 (GHW), 2020 WL 3268495 (S.D.N.Y. June 16, 2020) Complete Response Letterdosed with Squalamine would not have been clinicallyAcer Therapeutics Inc. (Acer) is a development-stage meaningful. On September 20, 2019, the district courtpharmaceutical company focused on creating therapies granted defendants motion to dismiss, concluding thatfor rare and life-threatening diseases. One of its drug the amended complaint failed to adequately pleadcandidates is celiprolol, a beta-blocker Acer is seeking either a material misrepresentation or scienter. Theto market as EDSIVO to treat a rare genetic disor-district court denied plaintiffs an opportunity to amendder called vascular Ehlers-Danlos Syndrome (vEDS). the complaint.Celiprolol has been approved in the European Union Plaintiffs appealed to the Second Circuit. On Octoberfor the treatment of hypertension since 1984, and is pre-9, 2020, the Second Circuit affirmed the dismissal ofscribed off-label in Europe for treatment of vEDS, but the complaint, resting its decision on the amendedhas not been approved for any indication in the U.S. complaints failure to raise a strong inference of scien- To demonstrate the efficacy of EDSIVO for the treat-ter. Plaintiffs had attempted to plead scienter largely byment of vEDS, rather than conducting its own clinical tri-alleging that defendants had a motive and opportunityal, in December 2016, Acer licensed data from a clinical to mislead Ohrs investors regarding the trial results.study of celiprolol from a French hospital (the Ong Trial The Second Circuit rejected this theory, holding thatData). According to Acer, the Ong Trial Data showed plaintiffs motive-based allegations all involved genericthat celiprolol reduced the risk of a cardiac or arterial motivators that were common to all companies, likeevent in patients with vEDS by 64%. In December 2017 a desire to increase the companys stock price or toand August 2018, Acer conducted public offerings, and, avoid bankruptcy, which were insufficient to raise thein the offering documents for each offering, represent-necessary inference of fraudulent intent .The courted that FDA had agreed that further clinical trials also observed that common sense underminedbeyond the Ong Trial Data were not needed or not plaintiffs allegations concerning scienter, because thelikely needed for EDSIVO. Acer raised $12.56 million company did not conduct a secondary stock offeringfrom the December 2017 offering and $46 million from until seven months after the statements that allegedlyits August 2018 offering. In October 2018, Acer submit-inflated the price of the companys stock, by which timeted an NDA to FDA for EDSIVO based only on the Ong the stock price had fallen considerably from its highTrial Data, its own analysis of the data, and supplemen-water mark. If there were fraudulent intent, the courttal patient registry data. On June 25, 2019, FDA issued noted, defendants likely would have struck quicklya CRL rejecting Acers NDA for EDSIVO. According to and attempted to conduct an offering at the inflatedAcers press release, FDA found the data submitted price. The court also rejected plaintiffs theory that theby Acer insufficient to support the NDA and required allegations in the complaint supported an inferenceAcer to conduct an adequate and well-controlled trial. of conscious misbehavior or recklessness becauseFollowing this news, Acers stock price fell over 78%. defendants were aware of facts that contradicted their public statements. On this point, the court held that theOn July 1, 2019, an investor filed a putative class action amended complaints non-conclusory allegations failedcomplaint against Acer and several of its officers, alleg-to clear the high threshold of pleading recklessness,ing violations of Sections 10(b) and 20(a) of the 1934 Act and at most pleaded negligence with respect to someand Rule 10b-5 promulgated thereunder. The amend-of the statements at issue. However, the Second Circuited complaint alleged that defendants misrepresented concluded that the district court abused its discretionthe prospects for FDA approval of the EDSIVO NDA by dismissing the complaint without granting leave tobecause, contrary to the companys public statements, amend and without explaining the denial of leave to 26'