b'had dropped 35% for melanoma and 18% for renal cell carcinoma. After this news, Nektars stock price de- Among other things, the court reasoned that clined 42%. While the PIVOT-02 data was disappointing,plaintiffs failed to explain why the inclusion Nektar continued to emphasize the promising EXCEL data, including at a June 6, 2018 conference. of an outlier patient in data disclosed to the On October 1, 2018, Plainview LLC, a short-seller,public was wrong or indicative of scienter. published a report (the Short Seller Report) reflectingOn this point, the court observed that the that Nektars 30-fold increase chart was distorted by a single outlier patient who purportedly recorded ancomplaint lacked the critical allegations extreme change in cancer-fighting cells but saw nonecessary to transform the claim into clinical benefit. The Short Seller Report also contend-ed that the source for the 30-fold increase chart was amore than a statistical disagreement.single line chart from a poster Nektar displayed at a conference, which revealed discrepancies in Nektars claims concerning the number of participants and theto allege falsity. With respect to allegations that the participants dosing schedules. Upon the Short Seller30-fold increase chart and related public statements Reports publication, Nektar stock dropped 7% in onewere misleading because the positive data was based day. on the inclusion of an outlier patient, the court held Investors filed a putative class action complaint onthat plaintiffs failed to plead facts establishing that the October 20, 2018, alleging that Nektar and its officersShort Seller Report, the source of these allegations, violated Sections 10(b) and 20(a) and Rule 10b5 ofwas reliable, especially considering the highly-tech-the 1934 Act by making materially false and misleadingnical matters at issue in the case. Moreover, the court statements in Nektars 30-fold increase chart and at in- concluded that even if defendants statements were in vestor conferences. Plaintiffs alleged that the chart mis- fact based on the inclusion of an outlier patient, plain-leadingly (1) failed to disclose that the 30-fold figure wastiffs failed to show how this made the chart materially based on the inclusion of an outlier patient; (2) misrep- misleading. Rather, plaintiffs simply took for granted resented that all participants were dosed every threethat outlier data made defendants statements flawed, weeks, when in fact some participants were dosed ev- without justifying the inference. Similarly, plaintiffs as-ery two weeks; and (3) failed to disclose that participantsumed that the source of Nektars EXCEL clinical data results were derived from two distinct patient popula- was a single line chart referenced in the Short Seller tions, not one. Plaintiffs further alleged that defendantsReport, but again, plaintiffs failed to adequately allege commentary at investor conferences concerning EXCELthat its conclusions were reliable.and the 30-fold increase chart deceived investors bySecond, for similar reasons, the court held that plain-omitting that the results were allegedly incomplete andtiffs failed to adequately allege scienter. Among other statistically flawed.things, the court reasoned that plaintiffs failed to explain On July 13, 2020, the court granted defendants mo- why the inclusion of an outlier patient in data disclosed tion to dismiss. First, the court held that plaintiffs failedto the public was wrong or indicative of scienter. On this point, the court observed that the complaint lacked the critical allegations necessary to transform the claim into more than a statistical disagreement. The With respect to allegations that the 30-foldcourt also rejected plaintiffs attempt to plead scienter under a core operations theory, holding that it was not increase chart and related public statementsenough to simply plead that the trial was important or were misleading because the positive datathat certain individual defendants should have known that the data disclosed were misleading in light of their was based on the inclusion of an outlierbackgrounds.patient, the court held that plaintiffs failed toThe court also dismissed the amended complaints plead facts establishing that the Short Sellerscheme liability claim under Rule 10b5, which would have required plaintiffs to allege deceptive conduct Report, the source of these allegations,beyond misrepresentations or omissions. Plaintiffs was reliable, especially considering thescheme liability claims were based on allegations that Nektar directed employees not to follow procedures highly-technical matters at issue in the case. when collecting, analyzing, and disclosing data from the PIVOT-02 clinical trial, including publicly disclosing real-time, unverified data from trial sites and granting 45'