          United States Court of Appeals
                     For the First Circuit


No. 19-1557

               KAVITA MEHTA; WILLIAM L. STEPHENS;
                  KHALED RAMADAN; OLEG TKALYCH,

                     Plaintiffs-Appellants,

   THOMAS GALLAGHER, individually and on behalf of all others
similarly situated; DYLAN CARAKER, individually and on behalf of
 all others similarly situated; SHAWNA KIM, individually and on
            behalf of all others similarly situated,

                           Plaintiffs,

                               v.

           OCULAR THERAPEUTIX, INC.; AMARPREET SAWHNEY;
          ANDREW HURLEY; GEORGE MIGAUSKY; ERIC ANKERUD,

                     Defendants-Appellants.


          APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF MASSACHUSETTS

       [Hon. George A. O'Toole, Jr., U.S. District Judge]


                             Before

                  Thompson, Stahl, and Barron,
                         Circuit Judges.


     Jeremy A. Lieberman, with whom Austin P. Van, Pomerantz LLP,
Robert V. Prongay, Kara M. Wolke, Glancy Prongay & Murray LLP,
Glen DeValerio, Daryl Andrews, and Andrews DeValerio LLP were on
brief, for plaintiffs-appellants.
     Michael G. Bongiorno, with whom Peter J. Kolovos and Wilmer
Cutler Pickering Hale and Dorr LLP were on brief, for defendants-
appellants.

              April 9, 2020
             STAHL,     Circuit    Judge.         In     September    2015,    Ocular

Therapeutix,        Inc.     ("Ocular"     or    the     "company"),     a    public,

Massachusetts-based biopharmaceutical company, submitted a New

Drug Application ("NDA") to the United States Food and Drug

Administration ("FDA") for approval of its drug product, Dextenza,1

for treatment of ocular pain following ophthalmic surgery.                       After

publication in July 2017 of the FDA's inspectional observations of

issues at Ocular's manufacturing facility and a resultant drop in

the company's stock price, several shareholders ("plaintiffs")

initiated this securities fraud action against Ocular, its Chief

Executive        Officer,    Amarpreet    Sawhney,     and     its   Executive    Vice

President of Regulatory, Quality, and Compliance, Eric Ankerud

(collectively        "defendants"),       on    behalf    of    themselves     and   a

putative     class    of    all   other    investors      who   had   purchased      or

otherwise acquired the company's stock between March 10, 2016 and

July   11,   2017     (the    "class     period"). 2       Plaintiffs'       two-count


             1
            This opinion refers to the drug product at issue as
"Dextenza" except where the name appears in cited materials as
"DEXTENZA."

             2
            The district court consolidated four related actions
and appointed Kavita Mehta, William L. Stephens, Khaled Ramadan,
and Oleg Tkalych as lead plaintiffs. Plaintiffs initially named
Ocular's Chief Financial Officer, George Migausky, and its Chief
Commercial Officer, Andrew Hurley, as additional defendants.
However, plaintiffs subsequently did not contest defendants'
assertion that the claims against Migausky and Hurley should be
dismissed, and the district court dismissed all claims against
them. Plaintiffs do not challenge the dismissal of those claims
on appeal.
                                         - 3 -
complaint alleged: first, that all defendants had on multiple

occasions    intentionally          or   recklessly    misled       investors     about

Ocular's manufacturing problems in violation of Section 10(b) of

the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C.

§ 78j(b),     and    Rule    10b-5       promulgated    thereunder,        17    C.F.R.

§ 240.10b–5; and second, that Sawhney and Ankerud, as control

persons for Ocular, were liable under Section 20(a) of the Exchange

Act, 15 U.S.C. § 78t(a).

             Defendants moved to dismiss the complaint for failure to

state a claim pursuant to Federal Rules of Civil Procedure 12(b)(6)

and 9(b), the Exchange Act, and the Private Securities Litigation

Reform Act ("PSLRA"), 15 U.S.C. §§ 78u-4, 78u-5.                       The district

court   granted      the     motion      and   dismissed      the   complaint      with

prejudice.     Plaintiffs timely appealed.              We affirm, holding, on

de novo review, that plaintiffs have not alleged facts giving rise

to a strong inference of scienter as required by the PSLRA.

                                    I. Background

                               A. Factual History

             "We    recite    the     facts    as   alleged    in    the   complaint,

supplemented by certain 'materials [the] defendants filed in the

district court in support of their motion to dismiss.'"                         Brennan

v. Zafgen, Inc., 853 F.3d 606, 609-10 (1st Cir. 2017) (alteration

in original) (quoting Fire & Police Pension Ass'n of Colo. v.

Abiomed, Inc., 778 F.3d 228, 232 (1st Cir. 2015)).                     We also draw

                                          - 4 -
from "documents the authenticity of which are not disputed by the

parties," as well as "official public records; . . . documents

central to plaintiffs' claim[s]; [and] documents sufficiently

referred    to      in   the    complaint."             Id.    at   610    (alterations   in

original) (quoting Watterson v. Page, 987 F.2d 1, 3 (1st Cir.

1993)).

              Ocular, whose stock trades on the NASDAQ stock exchange,

was   founded       in   2006.            At    its   headquarters        and   multiproduct

manufacturing facility in Bedford, Massachusetts, the company

develops and commercializes therapies for diseases and conditions

of    the     eye    using          its        proprietary     bioresorbable        hydrogel

technology.3        Dextenza is a drug-eluting medical implant, or plug,

designed to be inserted into the tear duct of the eye, the

canaliculus, through a natural opening, the punctum, located in

the   inner       portion      of    the       eyelid   near    the   nose.        Following

insertion, Dextenza uses Ocular's proprietary hydrogel to provide

sustained delivery of FDA-approved corticosteroid dexamethasone as

an active pharmaceutical ingredient to the surface of the eye and

to act as an ocular tissue sealant.                      The production of Dextenza,

like the other drug products manufactured at Ocular's multiproduct

facility in Bedford,4 is subject to, inter alia, the current Good


              3   Ocular is incorporated in Delaware.

              4
            Ocular manufactured several drug products at its
multiproduct facility in Bedford during the class period. Among
                                                - 5 -
Manufacturing Practice ("cGMP") regulations regarding finished

pharmaceuticals found in Part 211 of Title 21 of the Code of

Federal Regulations.   See generally 21 C.F.R. Part 211.

                       1. Ocular's 2015 NDA

          In September 2015, Ocular submitted an NDA to the FDA

seeking approval for the sale and marketing of Dextenza for

treatment of ocular pain following ophthalmic surgery.5    The FDA

accepted the NDA for filing and established July 24, 2016 as the

target date for action on the application under the Prescription

Drug User Fee Act ("PDUFA"), 21 U.S.C. § 355.

          In February 2016, as part of its reviewal of the NDA for

Dextenza, the FDA inspected Ocular's manufacturing facility in

Bedford for cGMP compliance.    On February 11, the FDA delivered



them were its drug product candidate OTX-TP, another hydrogel-
based drug-eluting intracanalicular plug but with FDA-approved
prostaglandin analogue travoprost as an active ingredient,
developed as a treatment for glaucoma and ocular hypertension, and
ReSure Sealant, a hydrogel-based post-surgical ophthalmic wound
sealant approved by the FDA for commercial sale in 2014.

          5 According to the FDA, "[t]he NDA application [sic] is
the vehicle through which drug sponsors formally propose that the
FDA approve a new pharmaceutical for sale and marketing in the
U.S.   The data gathered during the animal studies and human
clinical trials of an Investigational New Drug (IND) become part
of   the    NDA."       FDA,    New   Drug    Application    (NDA),
https://www.fda.gov/drugs/types-applications/new-drug-
application-nda (last updated June 10, 2019). During the class
period, Dextenza was in a Phase III clinical trial for the
treatment of post-surgical ocular pain and inflammation, in a Phase
III clinical trial for the treatment of allergic conjunctivitis,
and in a Phase II clinical trial for the treatment of inflammatory
dry eye disease.
                               - 6 -
its   inspectional      observations     to   Ocular's   management   on   the

agency's Form 483 ("February 2016 Form 483").6            The February 2016

Form 483 provided ten observations detailing issues with Ocular's

manufacturing       facility,   noting    that   they    were   "inspectional

observations [that] do not represent a final agency determination

regarding [Ocular's] compliance."             The relevant portions of the

FDA's observations were as follows:

            Observation 1 stated that "[l]aboratory records do not

include a complete record of all data secured in the course of

each test, including all spectra from laboratory instrumentation,

properly identified to show the lot tested and drug product

tested."7       See 21 C.F.R. §§ 211.180, 211.194(a).




            6
            FDA investigators issue a Form 483 to a company's
management at the conclusion of an inspection when they have
"observed any conditions that in their judgment may constitute
violations of the Food Drug and Cosmetic Act (FD&C) and related
Acts."     FDA, FDA Form 483 Frequently Asked Questions,
https://www.fda.gov/inspections-compliance-enforcement-and-
criminal-investigations/inspection-references/fda-form-483-
frequently-asked-questions (last updated Jan. 9, 2020).

            7
            Observation 1.A specified that "[r]eview of [Ocular's]
source documentation for analytical data submitted in [the] NDA
. . . found that printed [high-performance liquid chromatography]
chromatograms and integration results for dose content uniformity
and purity were discarded . . . and only the reprocessed data was
printed and retained."     Review of that reprocessed data, per
Observation 1.B.1, "revealed a failure to include the area of a
typical peak of unknown impurity" at a given retention time "in
the total area and content of unknown impurities." Observation
1.D noted that Ocular lacked "written procedures to clearly specify
how manual integration of chromatograms is performed."
                                    - 7 -
             Observation        2      stated    that    "[s]amples        taken    of    drug

products         for     determination            of     conformance           to    written

specifications          are    not       representative,"           and    that     Ocular's

"sampling plan supporting product release and stability testing

. . . is not designed to assure that samples are representative of

the   entire      subject      lot       or    unit    to     be    tested."        See    id.

§ 211.160(b)(1).

             Observation 3 stated that "[c]ontrol procedures are not

established which monitor the output and validate the performance

of those manufacturing processes that may be responsible for

causing variability in the characteristics of in-process material

and the drug product."8                See id. § 211.100.

             Observation           4     stated        that    "[a]ctual        yield      and

percentages       of    theoretical           yield    are    not    determined      at   the

conclusion of each appropriate phase of manufacturing of the drug

product."         See    id.   §       211.103.         Observation        5   stated     that

"[w]ritten       production        and    control       procedures        include   batches

formulated with the intent to provide [a certain] percent of the

labeled or established amount of active ingredient."                                See id.

§ 211.101(a).          Observation 6 stated that "[l]aboratory controls

do not include the establishment of scientifically sound and




             8
            As specified in Observation 3.D, Ocular "d[id] not
characterize and trend rejects produced during inspection of drug
product." See 21 C.F.R. § 211.180(e).
                                              - 8 -
appropriate test procedures designed to assure that drug products

conform to appropriate standards of identity, strength, quality

and purity."       See id. §§ 211.160(b), 211.165.

            Observation 7 stated that "[e]quipment for adequate

control     over        air   pressure,     micro-organisms,     humidity,    and

temperature is not provided when appropriate for the manufacture,

processing, packing or holding of a drug product."                       See id.

§ 211.46.       Observation 8 stated that "[t]ime limits are not

established when appropriate for the completion of each production

phase to assure the quality of the drug product."                        See id.

§ 211.111.      Observation 9 stated that "[u]nauthorized personnel

have   access      to    enter    areas   of   the   buildings   and   facilities

designated as limited access areas," see id. § 211.28(c), while

Observation 10 stated that "[b]uildings used in the manufacturing

of a drug product are not maintained in a good state of repair,"

see id. § 211.58.

            On March 10, 2016 -- the first day of the class period

-- Ocular filed its Annual Report on Form 10-K ("2016 Form 10-K")

for the year 2015 with the Securities and Exchange Commission

("SEC").    The company stated therein that it "fabricate[s] devices

and drug depot products for use in our clinical trials, research

and development and commercial efforts for all of our therapeutic

product     candidates           using    current     [G]ood     [M]anufacturing

[P]ractices, or cGMP, at our multi-product facility located in

                                          - 9 -
Bedford,    Massachusetts."      Ocular   additionally       disclosed     its

receipt of the February 2016 Form 483:

     [I]n February 2016, as part of the ongoing review of our
     NDA for DEXTENZA, the FDA conducted a pre-NDA approval
     inspection of our manufacturing operations. As a result
     of this inspection, we received an FDA Form 483
     containing inspectional observations focused on process
     controls, analytical testing and physical security
     procedures related to manufacture of our drug product
     for stability and commercial production purposes.     We
     addressed some observations before the inspection was
     closed and have responded to the FDA with a corrective
     action plan to complete the inspection process. . . .
     Any failure to comply with applicable regulations may
     result in fines and civil penalties, suspension of
     production, product seizure or recall, imposition of a
     consent decree, or withdrawal of product approval, and
     would limit the availability of [our product] and our
     product candidates that we manufacture. The failure to
     resolve the Form 483 inspectional observations from the
     February 2016 inspection could result in a delay in the
     PDUFA date and potential approval for the NDA we have
     filed for DEXTENZA for the treatment of post-surgical
     ocular pain.

            In July 2016, the FDA sent Ocular a Complete Response

Letter ("CRL") rejecting the NDA for Dextenza.9           On July 25, Ocular

issued a press release disclosing its receipt of the CRL and

stating    that   "[t]he   concerns   raised   by   the    FDA   pertain   to

deficiencies in manufacturing process and controls identified




            9The "FDA will send the applicant a [C]omplete
[R]esponse [L]etter if the agency determines that [it] will not
approve the application or abbreviated application in its present
form for one or more of the reasons given in [21 C.F.R.] § 314.125
or § 314.127," which provide bases upon which the agency may refuse
to approve an NDA. 21 C.F.R. § 314.110. The CRL rejecting the
NDA for Dextenza was neither publicly released nor entered into
the record of this proceeding.
                                 - 10 -
during a pre-NDA approval inspection of the Ocular Therapeutix

manufacturing facility."    That day, Ocular's share price fell

$0.75, or 14.51%, closing at $4.42.

          On November 9, 2016, Ocular held an earnings conference

call with investors, during which defendant Sawhney stated in part:

     I am pleased to report that we have had productive
     discussions with the FDA over the past several months.
     We believe we have taken the appropriate steps to address
     the manufacturing related items raised by the FDA,
     although the FDA will make its determination after we
     resubmit our NDA. As a reminder, in July we received a
     CRL, or complete response letter, relating to certain
     manufacturing processes on control deficiencies, and
     subsequently received a letter from the New England
     district office providing additional details as to the
     outstanding deficiencies related to their pre-NDA
     approval   inspection    of   the    Ocular    Therapeutix
     manufacturing facility. Among these was an observation
     related to the proposed process for identifying identity
     testing of an incoming inert gas component used in the
     Dextenza manufacturing process.      The district office
     letter also requested that we submit a formal report
     providing   evidence   that    migration    to   automatic
     integration of analytical testing has been completed.

Sawhney also stated:

     [W]hether or not re-inspection is required, is a
     determination that [the FDA] will make. And they just
     said that we'll get back to you in 30 days after your
     resubmission to inform you.     That's so -- we really
     can't get more guidance or can't give more guidance on
     that. I think it's important to realize that this is a
     matter of when not if type of a thing, we've adequately
     we think addressed the issues that they've raised. And
     communicated our plans to them and they seem in broad
     agreement with the plans that we have communicated. But
     until they kind of review the resubmission, they will
     not be in a position of giving any further guidance.
     So, when we do that, let's say that that were by the end
     of the year December we submit. In January they would


                              - 11 -
     let us know whether it's one more month left or five
     more months left.

                                 2. Ocular's 2017 NDA

             On    January       23,   2017,    Ocular    announced   that    it   had

resubmitted its NDA for Dextenza for the treatment of post-surgical

ocular pain.       On February 22, 2017, the company disclosed that the

FDA had accepted the resubmitted NDA for filing and had designated

July 19, 2017 as the target date for action on the application

under the PDUFA.

             On March 10, 2017, Ocular filed its Annual Report on

Form 10-K ("2017 Form 10-K") for the year 2016 with the SEC.                       The

2017 Form 10-K essentially repeated the statement included in the

2016 Form 10-K that Ocular "fabricate[s] devices and drug insert

and depot products for use in our clinical trials, research and

development and commercial efforts for all of our therapeutic

product candidates using current Good Manufacturing Practices, or

cGMP,   at    our     multi-product            facility    located    in     Bedford,

Massachusetts."       The 2017 Form 10-K also noted that in the CRL

Ocular had received in July 2016, "the concerns raised by the FDA

pertain to deficiencies in manufacturing process and controls

identified        during     a     pre-NDA      approval     inspection      of    our

manufacturing facility . . . in February 2016 that were documented

on FDA Form 483."




                                         - 12 -
             The FDA reinspected Ocular's manufacturing facility from

April 24 to May 4, 2017 as part of its reviewal of the resubmitted

NDA for Dextenza.           Following the reinspection, on May 4, the FDA

issued to Ocular's management another Form 483 that identified six

inspectional observations ("May 2017 Form 483").10                           In relevant

part, the May 2017 Form 483 identified the following issues:

             Observation 1 stated that "[w]ritten records are not

always made of investigations into unexplained discrepancies," and

specifically, that Ocular had "failed to investigate the nature of

particulate        matter    that   has       been    found    in    manufactured      drug

product."         See 21 C.F.R. § 211.22(a).                Further, "[p]articulate

matter has been noted in 10/23 lots . . . manufactured from

[February 2016] to [May 4, 2017]."                   As plaintiffs alleged, Ocular

had    determined      sometime     prior        to    April     28,    2017    that    the

particulate        matter    in   the    lots    appeared       to     be   inclusive    of

aluminum, which is toxic to humans if absorbed or consumed.

             Observation 2 stated that "[w]ritten production and

process control procedures are not followed in the execution of

production and process control functions and documented at the

time    of   performance."              See    id.     §§     211.22(d),       211.100(b).

Specifically, Ocular had "not set critical parameters for defect


             10
             Like its predecessor, the May 2017 Form 483 stated
that it contained "inspectional observations [that] do not
represent a final Agency determination regarding [Ocular's]
compliance."
                                          - 13 -
action limits, including but not limited to defects such as

particulate matter, found within the drug product."11

             Observation       3     stated    that    "[t]here      are   no    written

procedures for production and process controls designed to assure

that the drug products have the identity, strength, quality, and

purity they purport or are represented to possess."                              See id.

§ 211.100(a).        Observation 4 stated that "[t]he responsibilities

and procedures applicable to the quality control unit are not in

writing."     See id. §§ 211.22, 211.188.               Observation 5 stated that

"[l]aboratory        controls      do    not    include       the   establishment       of

scientifically        sound    and      appropriate     specifications          and   test

procedures        designed    to   assure      that    drug    products     conform     to

appropriate standards of identity, strength, quality and purity."

See   id.   §§     211.160(b),       211.165.         Observation     6    stated     that

"[e]mployees engaged in the manufacture, processing, packing and

holding of a drug product lack the training required to perform

their assigned functions."              See id. § 211.25(a).

             On the following day, May 5, 2017, Ocular released its

financial results for the first quarter of 2017 in its Quarterly

Report on Form 10-Q to the SEC.                That morning, Ocular conducted a




             11
            The FDA noted that three Dextenza batches -- from
which 224 plugs, 45 plugs, and 37 plugs, respectively, had been
rejected due to unknown particulate matter -- "were released for
intended commercial use on [January 12, 2017] without critical
defect limits established."
                                          - 14 -
conference call with investors to discuss its disclosures and

operations.12     At the outset, Ocular's Chief Financial Officer,

George Migausky, stated that "during today's call, we will be

making certain forward-looking statements," and that "[a]ctual

results   may    differ   materially   from   those      indicated    by   these

forward-looking     statements   as    a   result   of    various     important

factors."    Migausky also said that "any forward-looking statements

represent our views only as of today and should not be relied upon

as representing our views as of any subsequent date."                During the

call, defendant Sawhney disclosed that Ocular "received the Form

483 containing inspectional observations focusing on procedures

for manufacturing processes and analytical testing related to

manufacture of drug product for commercial production."                 Sawhney

related the company's "plan to evaluate these observations and

respond to the FDA in 15 days with corrective action plans to

complete the inspection process," and noted that "[a] timely

resolution of the 483 observations is a prerequisite to keep the

PDUFA date on track."      Subsequently, defendant Ankerud stated:

     FDA completed the re-inspection of our facility as part
     of the NDA review late yesterday afternoon.     As Amar
     [Sawhney] mentioned, 483 was issued. We were pleased
     during the re-inspection that the FDA investigator was
     able to confirm our corrective action plan from prior
     observations, and indicated that there was no further

            12
            Beyond plaintiffs' allegations, we draw quotations
from the full transcript of the May 5, 2017 conference call that
defendants provided as an exhibit to their motion to dismiss the
complaint. See Brennan, 853 F.3d at 609-10.

                                  - 15 -
     follow-up necessary to close out those issues. This was
     a new investigator not the same investigator from prior
     inspections, and their primary focus in the 483 relates
     to a particula[te] matter issue as part of our
     manufacturing process. The issue relates primarily to
     completion of an investigation that we have underway in
     regard   to   the   particula[te]   matter   solidifying
     specifications for in process, 100% visual inspection of
     our inserts, as well as enhancing our operator training.
     We feel quite comfortable that we have the situation
     under control and we are preparing responses to the 483
     as of this morning in anticipation of responding within
     15 calendar days to the agency. In addition to the
     particula[te] matter issue, FDA raised a couple of
     observations in regard to analytical method, testing to
     be completed, as well as some other issue related to
     quality oversight of batch records. So in summary, we
     believe that each of the observations raised by FDA
     during this continuous improvement review of our fully
     developed manufacturing process are handled well and
     will be resolved in our response to FDA.

Ankerud also stated:

     I think there is two important issues to recognize. The
     first is that from the prior preapproval inspection, FDA
     issued a 483.    We resolve those issues, close those
     issues with the district office and during this re-
     inspection the new investigator is responsible for
     confirming that we have implemented what was said in our
     responses. And the investigator went through each of
     our responses and confirm [sic] that we had properly and
     appropriately implemented those actions.     So I think
     that's a strong sign that the manufacturing process has
     moved forward significantly, and is in a fully developed
     mode.

Further, in response to an analyst's question of whether there was

"anything in [the FDA's] observations that you think could delay

the action date specifically," Sawhney replied:

     Nothing that we can currently see. I think these -- as
     you know, probably 90% plus inspections have 483. The
     question, what are the nature of the issues in the 483?
     We think these are resolvable issues, and we have

                             - 16 -
     responses.   Some are already prepared and some being
     prepared to address them in a timely fashion.

          Also on May 5, 2017, Ocular issued a press release that

disclosed: "Following a re-inspection of manufacturing operations

by the FDA . . . Ocular Therapeutix received an FDA Form 483

containing inspectional observations focused on procedures for

manufacturing    processes   and    analytical   testing,   related   to

manufacture of drug product for commercial production."       Following

the press release, the company's share price fell $1.47, or 16.15%,

closing that day at $7.63.

          On July 6, 2017, the website Seeking Alpha published an

article titled "Ocular: A Poke in the Eye," which included links

to the February 2016 and May 2017 Forms 483, making them public

for the first time.13    On the same day, STAT, a healthcare media

outlet, published an article about Ocular suggesting that the FDA

might reject the resubmitted NDA for Dextenza due to product




          13   The article described the content of the Forms 483
and opined:

     Even a layperson reading [the May 2017 Form 483] can
     tell that the company is having serious manufacturing
     issues, and their whole approach to manufacturing and
     patient safety is highly questionable.    What's more
     troubling is that either management doesn't fully
     understand the letter, or they have been misleading
     investors. Both are bad.

The article further stated that observations in the February 2016
Form 483 were repeated in the May 2017 Form 483 and that
observations in the second were worse than those in the first.
                                   - 17 -
contamination,        including   aluminum,       found     during   an   agency

inspection of the company's manufacturing facility.                   After the

publication of the articles, Ocular's share price fell $3.06, or

30.06%, over the next two trading days, closing at $7.12 on July

7, 2017.

             On July 12, 2017, Ocular received another CRL from the

FDA rejecting the resubmitted NDA for Dextenza.               That day, Ocular

announced its receipt of the CRL in a press release, which stated

that   the        FDA's   rejection     was    based   on    "deficiencies     in

manufacturing        processes    and    analytical       testing    related   to

manufacture of drug product for commercial production identified

during a pre-NDA approval inspection of the Ocular Therapeutix

manufacturing facility that was completed in May 2017."                Following

this press release, Ocular's share price fell $0.93, or 12.24%,

closing at $6.67 on July 12.14




             14
            Plaintiffs alleged that the class period ended on July
11, 2017, one day before the loss that plaintiffs alleged was
caused by Ocular's July 12, 2017 press release.         Plaintiffs
further alleged that on December 22, 2017 -- well after the class
period ended -- Ocular issued a press release stating that it had
received an SEC subpoena requesting "documents and information
concerning DEXTENZATM (dexamethasone insert) 0.4mg, including
related communications with the FDA, investors and others."
Further, plaintiffs alleged that Ocular had stated its intention
to resubmit the NDA for Dextenza in the first half of 2018, and
that the NDA had not been approved as of the date of the amended
complaint, May 7, 2018. Counsel for defendants later represented
that the FDA ultimately approved the NDA in late 2018.
                                      - 18 -
                           B. Procedural Background

             In   July    and       August    2017,    several     plaintiffs       filed

putative class action lawsuits against defendants in the United

States District Court for the District of New Jersey.                         Defendants

successfully moved to transfer those actions to the District of

Massachusetts.       The district court consolidated the actions and

appointed lead plaintiffs in March 2018.                   Plaintiffs filed their

consolidated amended class action complaint on May 7, 2018.                           The

complaint alleged two counts: first, that during the class period

all   defendants     had       on    multiple        occasions     intentionally       or

recklessly    misled      investors          by   making   false       statements     and

omitting material facts about Ocular's manufacturing problems and

the impact those problems were likely to have on the FDA's approval

of Dextenza in violation of Section 10(b) of the Exchange Act, 15

U.S.C. § 78j(b), and Rule 10b-5 promulgated thereunder by the SEC,

17 C.F.R. § 240.10b–5; and second, that Sawhney and Ankerud, as

control    persons       for    Ocular,       were    liable     for    the    company's

violations pursuant to Section 20(a) of the Exchange Act, 15 U.S.C.

§ 78t(a).

             On   July    6,    2018,     defendants       moved       to   dismiss   the

complaint pursuant to Federal Rules of Civil Procedure 9(b) and

12(b)(6), the Exchange Act, and the PSLRA.                  On April 30, 2019, the

district    court    granted        defendants'       motion     and    dismissed     the

complaint with prejudice.             See In re Ocular Therapeutix, Inc. Sec.

                                        - 19 -
Litig., No. 17-12146, 2019 WL 1950399 (D. Mass. Apr. 30, 2019)

("Ocular I").          The district court determined that plaintiffs

failed to allege an actionable misstatement or omission under

Section 10(b) and Rule 10b-5 and that plaintiffs' allegations did

not give rise to a strong inference of scienter in satisfaction of

the PSLRA, 15 U.S.C. § 78u-4(b)(2)(A).                 Id. at *6-10.      The

district court also determined that plaintiffs' derivative Section

20(a) claim failed in the absence of an underlying securities

violation.     Id. at *10.    Plaintiffs timely appealed the dismissal

of both counts.

                               II. Discussion

              On   appeal,    plaintiffs      more    narrowly   argue    that

defendants' affirmative statements in the 2016 and 2017 Forms 10-K

that    Ocular       manufactured     Dextenza       "using   current     Good

Manufacturing Practices," and defendant Ankerud's two affirmative

statements during the May 5, 2017 conference call that Ocular's

manufacturing was "fully developed," were materially false and

misleading.        Plaintiffs further contend that a strong inference

of scienter can be drawn from those alleged misstatements because

defendants made them despite having received the February 2016 and

May    2017    Forms    483   that   apprised    defendants      of   Ocular's

manufacturing problems.




                                     - 20 -
                        A. Standard of Review

            We review de novo the district court's dismissal of a

securities fraud complaint for failure to state a claim under Rule

12(b)(6).    Kader v. Sarepta Therapeutics, Inc., 887 F.3d 48, 56

(1st Cir. 2018).      "To survive a motion to dismiss, a complaint

must contain sufficient factual matter, accepted as true, to 'state

a claim to relief that is plausible on its face.'"      Aschroft v.

Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 570 (2007)).     In determining whether the

complaint has done so, "we accept well-pleaded factual allegations

in the complaint as true and view all reasonable inferences in the

plaintiffs' favor."    Kader, 887 F.3d at 56 (quoting ACA Fin. Guar.

Corp. v. Advest, Inc., 512 F.3d 46, 58 (1st Cir. 2008)).     We may

affirm the district court's dismissal of the complaint on any

grounds supported by the record.   Abiomed, 778 F.3d at 241 (citing

Aldridge v. A.T. Cross Corp., 284 F.3d 72, 84 (1st Cir. 2002)).

  B. Plaintiffs' Section 10(b) and Rule 10b-5 Claim Against All
                            Defendants

            Section 10(b) of the Exchange Act renders unlawful the

"use or employ, in connection with the purchase or sale of any

security registered . . . [of] any manipulative or deceptive

device."    15 U.S.C. § 78j(b).     Pursuant to the statute, Rule

10b-5 forbids any person "[t]o make any untrue statement of a

material fact or to omit to state a material fact necessary in


                               - 21 -
order    to    make   the   statements    made,   in    the     light     of    the

circumstances under which they were made, not misleading . . . in

connection with the purchase or sale of any security."                  17 C.F.R.

§ 240.10b-5.      Therefore, to state a claim for securities fraud

under Section 10(b) and Rule 10b-5, plaintiffs must allege: 1) a

material      misrepresentation   or     omission;     2)     scienter;    3)     a

connection with the purchase or sale of a security; 4) reliance;

5) economic loss; and 6) loss causation.               Brennan, 853 F.3d at

613.    The first and second elements are at issue in this appeal.

              The heightened pleading standard of the PSLRA requires

that complaints alleging securities fraud "specify each statement

alleged to have been misleading" and "the reason or reasons why

the statement is misleading."          15 U.S.C. § 78u-4(b)(1); see also

ACA Fin., 512 F.3d at 58 n.7 ("The PSLRA is consistent with this

circuit's prior application of Federal Rule of Civil Procedure

9(b) to securities fraud actions, a standard which is 'notably

strict and rigorous.'" (quoting Greebel v. FTP Software, Inc., 194

F.3d 185, 193 (1st Cir. 1999))).

              As for scienter, which is "a mental state embracing

intent to deceive, manipulate, or defraud," Tellabs, Inc. v. Makor

Issues & Rights, Ltd., 551 U.S. 308, 319 (2007) (quoting Ernst &

Ernst v. Hochfelder, 425 U.S. 185, 193-94 & n.12 (1976)), the PSLRA

requires that complaints "state with particularity facts giving

rise to a strong inference that the defendant acted with the

                                   - 22 -
required state of mind," 15 U.S.C. § 78u–4(b)(2)(A).                     Here,

plaintiffs    must    "show   either   that   the   defendants   consciously

intended to defraud, or that they acted with a high degree of

recklessness."       Kader, 887 F.3d at 57 (quoting Aldridge, 284 F.3d

at 82).   Recklessness involves "a highly unreasonable omission"

constituting "not merely simple, or even inexcusable, negligence,

but an extreme departure from the standards of ordinary care, and

which presents a danger of misleading buyers and sellers that is

either known to the defendant or is so obvious that the actor must

have been aware of it."       Brennan, 853 F.3d at 613 (quoting Greebel,

194 F.3d at 198).

             "To qualify as 'strong'" within the meaning of the PSLRA,

"an inference of scienter must be more than merely plausible or

reasonable—it must be cogent and at least as compelling as any

opposing inference of nonfraudulent intent.”              Tellabs, 551 U.S.

at 314.   This Court "must consider the complaint in its entirety"

and ask "whether all of the facts alleged, taken collectively,

give rise to a strong inference of scienter, not whether any

individual     allegation,    scrutinized     in    isolation,   meets   that

standard."     Id. at 322-23.    We have found this demanding standard

met where a complaint "contains clear allegations of admissions,

internal records or witnessed discussions suggesting that at the

time they made the statements claimed to be misleading, the

defendant[s]     were    aware   that    they      were   withholding    vital

                                   - 23 -
information or at least were warned by others that this was so."

Brennan, 853 F.3d at 614 (alteration in original) (quoting In re

Bos. Sci. Corp. Sec. Litig., 686 F.3d 21, 31 (1st Cir. 2012)).

             Further, in undertaking this analysis, this Court "must

consider, not only inferences urged by the plaintiff[s], . . . but

also   competing    inferences    rationally    drawn   from   the   facts

alleged."     Tellabs, 551 U.S. at 314.        "When there are equally

strong inferences for and against scienter, the draw is awarded to

the plaintiff."    Abiomed, 778 F.3d at 241 (quoting City of Dearborn

Heights Act 345 Pol. & Fire Ret. Sys. v. Waters Corp., 632 F.3d

751, 757 (1st Cir. 2011)).

             We need not determine whether the allegedly misleading

statements     identified    by    plaintiffs     constitute     material

misrepresentations because we find that the complaint, viewed

holistically, failed to allege facts giving rise to a strong

inference of scienter with respect to those alleged misstatements.

See In re Ariad Pharm., Inc. Sec. Litig., 842 F.3d 744, 750 (1st

Cir. 2016).

                 1. Ocular's 2016 and 2017 Forms 10-K

             We first assess plaintiffs' allegations that defendants

intentionally or recklessly misstated in Ocular's 2016 and 2017

Forms 10-K that they "fabricate devices and drug . . . products

for use in our clinical trials, research and development and

commercial efforts for all of our therapeutic product candidates

                                  - 24 -
using current Good Manufacturing Practices, or cGMP" despite the

receipt of the February 2016 Form 483.15             Read in the context of

the complaint as a whole, these allegations do not give rise to a

strong   inference   that    defendants     intentionally      or    recklessly

misled investors.

           As an initial matter, and as all parties acknowledge,

the February 2016 Form 483 is not a final agency determination,

and its inspectional observations did not affirmatively establish

that Ocular was incapable of complying with cGMP regulations.

Plaintiffs nevertheless contend that the February 2016 Form 483

placed    defendants    on     notice       of     Ocular's        manufacturing

difficulties,   compelling     a   strong    inference       that    defendants

intentionally   or   recklessly     misled       investors    by   subsequently

stating in the Forms 10-K that they were "using current Good

Manufacturing Practices" at their manufacturing facility.                  This

argument is unpersuasive.          In the two Forms 10-K, defendants

disclosed receipt of the February 2016 Form 483, described its

relevance to Ocular's manufacturing capabilities, and warned of




           15
            Ocular's Forms 10-K were submitted in March 2016 and
March 2017, after the company received the February 2016 Form 483
and before it received the May 2017 Form 483. Thus, plaintiffs'
argument implicates only the February 2016 Form 483.      See ACA
Fin., 512 F.3d at 62 ("A plaintiff may not plead 'fraud by
hindsight'; i.e., a complaint 'may not simply contrast a
defendant's past optimism with less favorable actual results' in
support of a claim of securities fraud." (quoting Shaw v. Dig.
Equip. Corp., 82 F.3d 1194, 1223 (1st Cir. 1996))).
                                   - 25 -
its implications.        Defendants stated in both Forms 10-K, under

Item 1A, "Risk Factors," and the subheading "Risks Related to

Manufacturing,"     that    the   February      2016     Form     483    contained

"inspectional observations focused on process controls, analytical

testing and physical security procedures related to manufacture of

our    drug    product    for   stability      and     commercial        production

purposes."      (Emphasis added).      Defendants also stated that they

"addressed some observations before the inspection was closed and

[had] responded to the FDA with a corrective action plan to

complete the inspection process."           (Emphasis added).           Among these

statements, defendants cautioned that "[a]ny failure to comply

with   applicable    regulations      may     result    in    fines      and   civil

penalties, suspension of production, product seizure or recall,

imposition of a consent decree, or withdrawal of product approval,

and would limit the availability of . . . our product candidates

that we manufacture."

              More specifically, in the 2016 Form 10-K, defendants

clarified that "[t]he failure to resolve the Form 483 inspectional

observations from the February 2016 inspection could result in a

delay in the PDUFA date and potential approval for the NDA we have

filed for DEXTENZA for the treatment of post-surgical ocular pain."

(Emphasis added).        In the 2017 Form 10-K, submitted months after

the    FDA    rejected    Ocular's    September        2015     NDA,     defendants

specifically noted that "the concerns raised by the FDA" in the

                                     - 26 -
CRL rejecting the NDA "pertain to deficiencies in manufacturing

process     and     controls     identified        during   a   pre-NDA     approval

inspection of our manufacturing facility . . . in February 2016

that   were    documented        on   FDA   Form    483."       (Emphasis   added).

Defendants further stated that "[a]dequate resolution of Form 483

manufacturing deficiencies with the [FDA] is a prerequisite to the

approval of the NDA for DEXTENZA."              (Emphasis added).

              These      informative    disclosures     about     the    nature    and

consequences of the February 2016 Form 483 undercut any inference

that defendants intentionally or recklessly misled investors by

stating, in the same Forms 10-K containing those disclosures, that

they were "using current Good Manufacturing Practices" at their

manufacturing facility.           See Abiomed, 778 F.3d at 243-44 (holding

that scienter argument was undercut by a company's disclosure to

investors      of        correspondences    with      the   FDA    and    potential

consequences        of    the   agency's    negative    determination);       In   re

Genzyme Corp. Sec. Litig., 754 F.3d 31, 42-43 (1st Cir. 2014)

(holding that company's informative disclosures, including of a

Form 483 and other FDA communications, "undercut any inference of

fraudulent intent on the part of defendants"); Waters Corp., 632

F.3d at 760 ("[A]ttempts to provide investors with warnings of

risks generally weaken the inference of scienter." (alteration in

original) (quoting Ezra Charitable Trust v. Tyco Intern., Ltd.,

466 F.3d 1, 8 (1st Cir. 2006))).

                                       - 27 -
              Assuming arguendo that any inference of scienter could

be drawn from the complaint's allegations regarding defendants'

statements in the Forms 10-K, that inference is not "at least as

compelling as any opposing inference of nonfraudulent intent" such

that it is sufficiently "strong" under the PSLRA.                   Tellabs, 551

U.S. at 314.     Here, given defendants' statements in the two Forms

10-K   that    they   produce    multiple     products     at     their    Bedford

manufacturing      facility     "using"    cGMP,   and     in     light    of     the

informative disclosures regarding the February 2016 Form 483, the

more   reasonable     inference     of    nonfraudulent         intent    is     that

defendants     were   stating   their     intention   to   comply        with    cGMP

regulations as the governing standards for their drug product

manufacturing operations.         See Abiomed, 778 F.3d at 240 (holding

that materiality and scienter inquiries are linked and that a fact

is material where there is a "substantial likelihood" that a

reasonable investor would view it as "significantly alter[ing] the

total mix of information made available" (alteration in original)

(quoting Waters Corp., 632 F.3d at 756)); see also Singh v. Cigna

Corp., 918 F.3d 57, 60-64 (2d Cir. 2019) (holding that a reasonable

investor would not rely on statements in two Forms 10-K that a

company "expect[s] to continue to allocate significant resources"

to various compliance efforts as representations of satisfactory

compliance without more detail (alteration in original)).                       Thus,



                                    - 28 -
reading    the     complaint      as    a     whole,    we       determine    that   these

allegations do not give rise to a strong inference of scienter.16

                    2. The May 5, 2017 Conference Call

            We     turn    to    plaintiffs'          allegations      that       defendant

Ankerud intentionally or recklessly misled investors during the

May   5,   2017    conference         call    by   twice     stating       that   Ocular's

manufacturing process was "fully developed" despite the receipt of

the May 2017 Form 483 one day before and the earlier receipt of

the February 2016 Form 483 showing that Ocular had manufacturing

problems.        Read in the context of the entire complaint, these

allegations       also    do    not    give    rise    to    a    strong     inference   of

scienter.




            16
            Plaintiffs alleged that a confidential witness had a
direct conversation with Ankerud in late 2016 or early 2017, prior
to Ocular's NDA resubmission, in which "Ankerud expressly
acknowledged that he and the Company knew Ocular would be including
batch records in the NDA resubmission that would not meet FDA
standards." Plaintiffs also alleged that the witness's statements
"make clear that Ocular and the Individual Defendants were aware
of the severity of the problems Ocular faced in manufacturing
DEXTENZA using cGMP."     Before the district court, plaintiffs
specified that these allegations concerned only their contention
regarding the 2017 Form 10-K.      Plaintiffs now reference those
allegations in support of their scienter argument.             This
contention is unpersuasive. Plaintiffs do not now challenge the
district court's finding that the complaint "failed to allege a
sufficient link between Ankerud's purported isolated admission
about unspecified 'batch records' months before the challenged
cGMP statement on the 2017 Form 10-K to render the cGMP statement
false."   Ocular I, 2019 WL 1950399 at *7 n.9.         Thus, these
confidential witness allegations do not disrupt our determination
that the complaint, read as a whole, does not allege facts giving
rise to a strong inference of scienter.
                                         - 29 -
            On      the   conference    call,    after     defendant     Sawhney's

disclosure that Ocular had "received the [May 2017] Form 483

containing inspectional observations focusing on procedures for

manufacturing processes . . . of drug product for commercial

production," Ankerud spoke about the Form 483's contents and

implications as well as the company's need to pursue remediation.

(Emphasis added).         Ankerud specified that the FDA's "primary focus

in the 483 relates to a particula[te] matter issue as part of our

manufacturing process" and that it also contained observations

regarding "analytical method, testing to be completed, as well as

some other issue related to quality oversight of batch records."

(Emphasis added).         Following this disclosure, Ankerud stated that

defendants "believe that each of the observations raised by the

FDA   during     this     continuous   improvement        review   of   our    fully

developed manufacturing process are handled well and will be

resolved in our response to FDA. . . . and we're marching toward

that PDUFA date and expect that we can resolve the 483 issues in

a timely manner."         (Emphasis added).      Ankerud subsequently stated

that "the 483 is something that we have to respond to . . . . [W]e

understand where [the FDA is] coming from and what needs to be

done to address their concern."             Afterwards, in response to an

analyst's request for "something you can tell us or say to us in

terms of how things have evolved at the company overall and

oversight      of     manufacturing,"           Ankerud     stated      that    "the

                                       - 30 -
manufacturing process has moved forward significantly, and is in

a fully developed mode," and that "the new investigator was

experienced in the pharmaceutical industry and we had good dialog

and good discussion and that's why we felt confident that we can

address these 483 issues in a timely manner."               (Emphasis added).

           Ankerud's disclosures regarding the May 2017 Form 483

made pellucid that Ocular's manufacturing process was considered

deficient by the FDA and thus undercut any inference that he

intentionally    or    recklessly   misled      investors    by    stating      that

Ocular's   manufacturing     process      was    "fully     developed."          See

Abiomed, 778 F.3d at 243-44; Genzyme Corp., 754 F.3d at 42-43;

Waters Corp., 632 F.3d at 760.17         Defendants submit that according

to the FDA, a "fully developed" process is one that has surpassed

the   concept   or    piloting   stage   but    must   still      be   tested    and

validated to determine whether the process works as intended and

meets the necessary standards.           See FDA, Guide to Inspections of

Medical Device Manufacturers at § 7 (2014) ("The process must be

developed before it can be validated. . . . It is impossible to




           17We reject plaintiffs' argument that defendants'
disclosures of the February 2016 and May 2017 Forms 483 in the
Forms 10-K and the May 5, 2017 conference call did not sufficiently
inform investors that the Forms 483 documented "major" rather than
"minor"   problems    in    Ocular's   manufacturing    operations.
Plaintiffs provide no legal support for their speculative
assertion that the issues observed by the FDA and recorded in the
Forms 483 were so major that they rendered nugatory defendants'
disclosures and ultimately compel a strong inference of scienter.
                                    - 31 -
validate a process (i.e. show that it consistently operates within

established parameters and produces results or products that meet

specifications) until the process is fully developed."), available

at     https://www.fda.gov/inspections-compliance-enforcement-and-

criminal-investigations/inspection-guides/page-9.                  We      may

consider that fact.     See Brennan, 853 F.3d at 609-10; Tellabs, 551

U.S. at 322 ("[C]ourts must consider the complaint in its entirety,

as well as other sources courts ordinarily examine when ruling on

Rule 12(b)(6) motions to dismiss, in particular . . . matters of

which a court may take judicial notice.").         In light of that term

of art and Ankerud's disclosures during the conference call that

contravene plaintiffs' characterization of his statements, the

more   reasonable     and     compelling    inference    drawn    from     the

complaint's allegations is that Ankerud spoke with nonfraudulent

intent in describing Ocular's manufacturing process as "fully

developed."      See Tellabs, 551 U.S. at 314.

            Overall, reading the complaint as a whole, we determine

that plaintiffs have not alleged facts giving rise to a strong

inference     of   scienter   as   required   by   the   PSLRA.   18     Thus,


            18
             The district court correctly determined that defendant
Sawhney's purchase of Ocular shares during the class period
somewhat "[f]uther negat[es] an inference of scienter," at least
as to Sawhney and Ocular. Ocular I, 2019 WL 1950399 at *10 n.12;
see Abiomed, 778 F.3d at 246 (holding that an individual
defendant's purchase of company stock during the class period
"negates any inference that he had a motive to artificially inflate
[the company's] stock during that period"); cf. Tellabs, 551 U.S.
                                   - 32 -
plaintiffs' securities fraud claim brought under Section 10(b) and

Rule 10b-5 fails.

C. Plaintiffs' Section 20(a) Claim Against Individual Defendants

            Section 20(a) of the Exchange Act imposes joint and

several liability on persons in control of entities that are liable

for     violations     of   securities   laws   "unless   the   controlling

person[s] acted in good faith and did not directly or indirectly

induce the act or acts constituting the violation."              15 U.S.C.

§ 78t(a).    A claim brought under Section 20(a) is thus derivative

of a claim alleging an underlying securities law violation.            See

Abiomed, 778 F.3d at 246.        Accordingly, because the complaint does

not state a securities fraud claim under Section 10(b) and Rule

10b-5, plaintiffs' derivative claim under Section 20(a) too must

fail.    See id.

                                III. Conclusion

            The      district   court    properly   dismissed   plaintiffs'

primary Section 10(b) and Rule 10b-5 claim and derivative Section

20(a) claim.       We therefore AFFIRM the judgment of the district

court.




at 325 ("While it is true that motive can be a relevant
consideration, and personal financial gain may weigh heavily in
favor of a scienter inference, . . . the absence of a motive
allegation is not fatal."). Viewed in the context of the complaint
as a whole, this fact is consistent with our conclusion that
plaintiffs have not alleged facts giving rise to a strong inference
of scienter.
                                    - 33 -
