On July 29, 2025, the United States District Court for the Eastern District of Pennsylvania dismissed a putative class action asserting claims under the Securities Exchange Act of 1934 against a biotechnology company and its CEO. In re Ocugen, Inc. Sec. Litig., 2025 WL 2146836 (E.D. Pa. July 29, 2025). Plaintiff alleged that the company failed to accurately disclose the reason for its CFO’s departure and failed to properly account for a commercial agreement in its financial reporting. The Court held that the alleged misrepresentations regarding the financial reporting were not actionable because they were immaterial as a matter of law and that plaintiff failed to identify a false statement with respect to the CFO’s departure.
With respect to the company’s financial reporting, plaintiff alleged that the company’s accounting had failed to properly take into account estimated costs relating to a co-development and commercialization agreement with another company. The Court, however, held that this alleged misrepresentation was immaterial after taking judicial notice of the company’s stock price movement following an alleged corrective disclosure. The Court explained that “if a company’s disclosure of information has no effect on stock prices, it follows that the information disclosed was immaterial as a matter of law.” Id. (quoting Oran v. Stafford, 226 F.3d 275, 282 (3d Cir. 2000)). The Court concluded that the stock price had completely recovered after two trading days, which “negates any inference of materiality, because it indicates that investors quickly determined that the ‘new’ information was not material to then-investment decisions.” Id. at *7.
With respect to alleged misrepresentations respecting the CFO’s departure, plaintiff alleged that the company’s SEC filing stating that its CFO was no longer with the company—and also providing notification that the company’s 10-Q would be filed late—omitted that the CFO was allegedly terminated because he refused to sign the 10-Q. Id. at *2. The Court first conducted another materiality analysis and concluded that the company’s stock price movements were an insufficient basis to dismiss the claim at the pleading stage, because, while the stock price initially rebounded, it took six business days to do so and then continued to decline. Id. at *6. However, the Court emphasized that a duty to disclose arises only “when there is insider trading, a statute requiring disclosure, or an inaccurate, incomplete or misleading prior disclosure.” Id. The Court observed that SEC regulations required the company to disclose the fact of the CFO’s departure and the date it occurred—which the company did—but did not impose an affirmative duty to disclose the reasons for the departure. Id. Moreover, the Court determined that plaintiff did not point to any statement by the company that was rendered false or misleading by the allegedly omitted information.
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