Plaintiffs alleged that defendants made false or misleading statements and omissions regarding the company’s products and partnerships in various press releases and investor conference calls during the period from 2000 to 2006 during which plaintiffs purchased company stock. For example, several of defendants’ statements in 2004 and 2005 set forth the company’s expectation that it would be entering into partnerships to exploit its Aprotinin product and generate revenue therefrom. Consistent with these statements, in November 2005 defendants announced that the company had entered into “new partnering discussions for development of [Aprotinin]” and would be completing the transaction “during the next days.” Notwithstanding this statement, the company shut down its operations one month later and filed for bankruptcy in January 2006. Following its bankruptcy filing, the company’s stock plummeted, and plaintiffs suffered close to $900,000 in losses.

In granting defendants’ motion to dismiss, the court noted that the statements at issue, which concerned “anticipated partnership agreements, developmental research and revenue streams from product sales,” were all forward-looking statements under the Private Securities Litigation Reform Act. The court ruled that none of these statement could support plaintiffs’ Section 10(b) and Rule 10b-5 claims because plaintiffs alleged no facts indicating that (i) defendants failed to disclose the forward-looking nature of their statements when they made them, or (ii) the statements were false when made or that defendants knew that they were false when made. Plaintiffs’ conclusory allegation that the statements were false, unsupported by any specific facts, was not enough to withstand defendants’ motion to dismiss.

The court also ruled that plaintiffs’ scienter allegations were deficient because they asserted only general allegations relating to defendants’ compensation and motives for lending money to the company. Moreover, even assuming that the statements at issue were false and were made with scienter, the court ruled that plaintiffs’ claims were still defective because they had not shown that they relied on the allegedly false statements or that such statements caused their injury. The court found that plaintiffs did not tie any of their stock purchases between 2000 and 2006 to any of the defendants’ alleged false statements. Similarly, with respect to loss causation, the court ruled that plaintiffs failed to show that any of the alleged misstatements contributed to the decline in the company’s stock price. (Lory v. Ryan, 2008 WL 4630306 (D. Ariz. Oct. 20, 2008))