b'had encountered problems in Europe and that suchduring an investor callundermining any inference problems would manifest again in U.S. clinical trials.that defendants sought to conceal the issues. Finally, The court dismissed plaintiffs first amended complaint,the court held that a 2016 UK case report discussing but granted leave to amend. Plaintiffs filed a secondmigration in a single patient failed to carry the weight amended complaint, which the court also dismissed,the amended complaint sought, because plaintiffs had holding that plaintiffs failed to meet the PSLRAs height- not alleged facts showing why the report would have ened standard for pleading scienter. Plaintiffs thenalerted Endologix to a larger problem with migration, appealed to the Ninth Circuit. especially considering the case report defined migra-On June 10, 2020, the Ninth Circuit affirmed, holdingtion more stringently than FDA. The court concluded that plaintiffs complaint failed to sufficiently allegethat the more plausible inference from the facts alleged scienter. The court concluded that plaintiffs theorywas that defendants made promising statements about depended on the supposition that defendants wouldthe timing of FDA approval based on the initial results of rather keep the stock price high for a time and thenthe U.S. clinical trial, but then modulated their optimism face the inevitable fallout once Nellixs unsolvable mi- when the results began to raise more questions. The gration problem was revealed, which lacked any basisNinth Circuit also affirmed the district courts denial of in logic or common experience and was therefore im- leave to amend the complaint a third time. plausible. The court held that plaintiffs allegations from a confidential former Endologix employee expressingSEB Investment Management AB, et al. that the company knew of migration issues in Europev. Align Technology, Inc., et al., Case No. that would thwart FDA approvalallegations which18-cv-06720 (LHK), 2020 WL 5408056 were high on alarming adjectives but short on the facts about Nellix migrationfailed to support scien- (N.D. Cal.) ter, because the witness left Endologix before the com-Impact of Competition pany began receiving less favorable migration data. Moreover, the court reasoned, much of the companysAlign Technology, Inc. (Align) is a medical device com-internal concern about migration discovered in Nellixpany that designs, manufactures and sells Invisalign devices in Europe was made public at a conference,clear dental aligners and iTero 3D digital scanners for and the company discussed a study showing migrationuse in orthodontic treatment. The company owned a virtual monopoly over the clear aligner market until 2017 when its patents began to expire, at which time com-The court concluded that plaintiffs theorypetition from new industry players exerted pressure on the companys revenue. Between May 2018 and depended on the supposition thatOctober 2018, Align made a number of statements con-defendants would rather keep the stockcerning industry competition and significantly increased its promotional and marketing efforts. However, the price high for a time and then face thecompany did not disclose that, in response to an inevitable fallout once Nellixs unsolvableannouncement that its competitors were releasing products at lower price-points, Align had developed a migration problem was revealed, which$200-per-unit discount, which negatively affected the lacked any basis in logic or commoncompanys average sales prices (ASP). On October 24, 2018, Align informed investors of a drop in its ASP of experience and was therefore implausible.approximately $100, which it attributed to a combination of promotional programs and an unfavorable exchange 41'