When a company’s stock declines, a shareholder lawsuit often follows. This case is no exception. Following a drop in the share price of ARIAD Pharmaceuticals, Inc., investors filed suit against the company and four corporate officers (together “ARIAD”), alleging securities fraud in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §§ 783(b) and 78t(a), as well as the Securities and Exchange Commission’s (“SEC”) Rule 10b-5, 17 C.F.R. § 240.10b-5. The complaint also raised claims under Sections 11 and 15 of the Securities Act of- 1933 (“Securities Act”), 15 U.S.C. §§ 77k and 77o, against ARIAD, its directors, and‘various under: writers involved in the company’s January 2013 offering of common stock. The district court stopped the- litigation in its tracks by dismissing the complaint in its entirety. See In re ARIAD Pharm., Inc.,
We affirm the district court’s dismissal of the securities fraud -counts, except with respect to,one particular alleged misstatement for which we find the allegations set forth in the complaint sufficient to state a claim. We also affirm the disposition of the plaintiffs’ claims under Sections 11 and 15, albeit on different grounds than those articulated by the district court.
I. Facts
Fairly read, the complaint alleges the following. ARIAD Pharmaceuticals, Inc. is a рublicly traded company headquartered in Cambridge, Massachusetts. At all times relevant to this litigation, Defendant-Ap-pellee Harvey Berger served as ARIAD’s Chairman and Chief Executive Officer (“CEO”), Defendant-Appellee Edward Fitzgerald served as the company’s Executive Vice .President and,. Chief Financial Officer, (“CFO”), Defendant-Appellee Frank Haluska served as its Senior Vice President and Chief Medical Officer, and Defendant-Appellee Timothy Clackson served as its President of Research and Development, Senior Vice President, and Chief Scientific Officer.
In 2008, ARIAD embarked on the development of ponatinib,
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a tyrosine kinase
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inhibitor (“TKI”) designed to treat patients suffering from chronic myeloid leukemia (“CML”). As with any experimental drug, the development process entailed a series of clinical trials. See N.J. Carpenters Pension & Annuity Funds v. Biogen IDEC Inc.,
In July 2012, ARIAD began the process of submitting a rolling application to the FDA for limited approval to market pona-tinib. In conjunction with the application, ARIAD submitted a July 2012 Interim Report consisting of data from the on-going PACE 2 trial, with a cut-off date of July 23, 2012. The Center for Drug Evaluation and Research (“CDER”), located within the FDA, subsequently analyzed the data and issued a series of reports of its own (collectively the “CDER Report”).
By October 2Q12, ARIAD and the FDA began corresponding in earnest about potential approval of ponatinib for limited applications. As part of this process, AR-IAD submitted a proposed label. The FDA, however, rejected ARIAD’s proposal, citing concerns about adverse cardiovascular events and dosage reductions. On December 14, 2012, after some additional back-and-forth, ARIAD announced that the FDA had approved the marketing of ponatinib on a limited basis. It was not all good news, however, as the FDA required ARIAD to include a “black box” warning on ponatinib’s label about the risk of adverse cardiovascular events. Following disclosure of these developments, ARIAD’s per share stock price fell from $23.88 to $18.93.
In the wake of the black box warning, ARIAD nevertheless continued to publicly project confidence in ponatinib. But more troubling news arose' in October 2013. First, on October 9, ARIAD informed investors that, based on additional data from an August 2013 Interim Report, it was pausing enrollment in all clinical studies of ponatinib due to increased instances of medical complications in the PACE 2 trial. Days later, on October 18, ARIAD issued a Form 8-K and accompanying press release indicating that it had agreed to halt the EPIC trial entirely. Finally, on October 31, ARIAD announced that it was “temporarily suspending the marketing and commercial distribution” of ponatinib at the direction of the FDA. The market reacted harshly, and ARIAD’s stock price fell to $2.20 per share. The instant shareholder lawsuit followed.
II. Procedural History
On the defendants’ motion, the district court dismissed the complaint in its entirety. As to the Exchange Act claims, the court found that the complaint sufficiently alleged material misrepresentations or omissions about ponatinib, but that it failed to give rise to a “strong inference” of scienter as required by the Private Securities Litigation Reform Act of 1995 (“PSLRA”). For the Securities Act claims, *750 the district court held that the complaint did not plausibly allege any material misrepresentations or omissions in relation to AKIAD’s January 2013 common stock offering.
We review the grant of a motion to dismiss for failure to state claim de novo.
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See Aldridge v. A.T. Cross Corp.,
III. Exchange Act Claims
Section 10(b) of the Exchange Act “forbids the ‘use or employ, in connection with the purchasе or sale of any security ..., [of] any manipulative or deceptive device ....”’ Tellabs Inc. v. Makor Issues & Rights, Ltd.,
The only two elements implicated by this appeal are the existence of a material misrepresentation and scienter. Ultimately, because we find that the complaint fails to adequately plead scienter with respect to most of the alleged misstatements, we need not determine whether those statements contained any misrepresentations or, if so, whether such misrepresentations were material.
We have, however, recognized that “the materiality and scienter inquiries are linked.” Abiomed,
The Supreme Court has described scienter as “a mental state embracing intent to deceive, manipulate, or defraud.” Tellabs,
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At the pleading stage, the PSLRA requires plaintiffs to “state with particularity facts giving rise to a strong inference that the defendant acted with” scienter. 15 U.S.C. § 78u-4(b)(2)(A) (emphasis added). “To qualify as ‘strong1 ... an inference of sсienter must be more than merely plausi-. ble or reasonable—it must be cogent and at least as compelling as any opposing inference of nonfraudulent intent.” Tellabs,
Here, ARIAD’s alleged misstatements fall into two broad categories: (1) those made before the FDA’s December 14, 2012 limited approval of ponatinib and the corresponding disclosures; and (2) those made after such approval. We address.each of these categories in turn below, and, with the exception of one pre-approval statement, we agree with the district court that the complaint fails to give rise to the required strong inferencе of seienter. We also find the plaintiffs’ allegations of insider trading insufficient to resuscitate the inadequate fraud claims.
A. Pre-Approval
The first alleged misstatement identified during the pre-approval period occurred in a December 11, 2011 press release about the PACE 2 trial data. The release indicated that “[i]nitial safety data show ponatinib to be well tolerated.” It went on to list the rates' of some adverse events, including rash, thrombocytopenia, dry skin, abdominal pain, headache, and pancreatitis, but it-did not mention the rate of cardiovascular events. As required by the PSLRA, the complaint purports to explain “why the statement [wa]s misleading,” 15 U.S.C. § 78u-4(b)(l), by referencing the CDER Report based on data collected through July 23, 2012. The complaint identifies several similar statements by ARIAD about the safety of po-natinib between December 2011 and mid-July 2012. The plaintiffs claim that each of these statements was materially misleading in light of the data reflected in the CDER Report.
But the plaintiffs’ theory of fraud suffers from a glaring omission. The complaint contains conclusory allegations that the defendants possessed “contemporaneous[ ]” knowledge of various facts in the CDER Report, including the 8% rate of serious cardiovascular events, “based on their continuous monitoring of the PACE 2 trial data.” The plaintiffs do not, however, allege any specific facts about when the defendants learned of these adverse events or even when the adverse events occurred. Rather, they impermissibly seek to establish fraud by hindsight, suggesting that, as early as December 2011, the defendants must have known about adverse events occurring up until the July 23, 2012 cut-off date. Not only does this theory defy logic, it also ignores our caselaw’s instruction that “[a] statement cannot be intentionally misleading if the dеfendant did not have sufficient information at the relevant time to form an evaluation that there was a need to disclose certain information and to form an intent not to disclose it.” Biogen,
The complaint’s allegations about access to the PACE 2 data do not fill this gap. Only one such allegation relates to the pre-approval period, and it stands for the unremarkable proposition that, as of May 9, 2012, ARIAD was “in the process of collecting, QCing, [and] processing the data.” The paragraph is silent on the crucial questions of when the serious adverse events occurred and when the defendants became aware of them.
In addition to statements about ponatin-ib’s safety, the complaint also cites various allegedly misleading statements about dose reductions. For example, on December 12, 2011, Haluska, ARIAD’s Chief Medical Officеr, told investors, “we haven’t quantified yet the number of dose interruptions or dose reductions” in the PACE 2 study. The plaintiffs’ theory.of fraud follows a familiar pattern: this statement was purportedly misleading because of the defendants’ contemporaneous knowledge of certain facts in the CDER Report, including the fact that- 73% of patients required a dose interruption or dose reduction. Subsequent paragraphs contain similar allegations. We are, however, left to guess as to precisely when the defendants became aware of the dose reductions.
For these reasons, wе have little trouble concluding that the complaint fails to create a compelling inference of scienter with respect to statements made before the July 23, 2012 cut-off date for the CDER Report. Indeed, the plaintiffs come close to conceding as- much by alleging that the defendants possessed knowledge of the relevant adverse events and dosage reductions “[b]y no later than July 23, 2012.”
Arguably, the analysis could be different for time periods after that date if the defendants were familiar with the data that ARIAD provided to the FDA. But the complaint contains no such allegation. ■ In fact, aside from a conclusory statement that Haluska “participated in the creation” of ARIAD’s-July submission, the complaint fails to indicate whether and to what extent the defendants were involved in collecting -or reviewing the relevant data. Accordingly, we find the plaintiffs’ allegations insufficient to state a claim with respect to the purported misstatements from July 23 through October 2012.
On October 25, 2012, the FDA sent an email to unspecified individuals at AR-IAD rejecting the company’s proposed label for ponatinib due to inadequate safety disclosures. The agency cited the 8% rate of serious cardiovascular events in the PACE 2 trial data, as well as the 73% dose reduction rate. A follow-up meeting was held on November 1, 2012, which included FDA personnel, Haluska, and Clackson, ARIAD’s Chief Scientific Officer, among others. After that meeting, the FDA directed ARIAD to submit a revised label with a black box warning.
In light of these later communications with the FDA, the plaintiffs’ allegations are sufficient to support a strong inference of scienter with respect to one particular material misstatement. 3 On De *753 cember 11, 2012, an investment bank published a report on ARIAD based on a breakfast meeting the previous day with Chairman and CEO Berger, Haluska, and Clackson, among others. The report stated, in pertinent part, that “management continues to be optimistic about ponatinib’s prospects for approval in the U.S. ... with a favorable label.” It further indicated that the drug’s “profile continues to look veiy benign, -with few worrisome signals.” The report cited pancreatitis as “the most prevalent” sérious adverse event (occurring in 5% of patients) and noted “low rates of cardiovascular issues.”
Assuming these, allegations are-true, it was knowingly or recklessly misleading for Haluska and Clackson to express optimism about ponatinib’s chances for apрroval with a “favorable label” weeks after learning that the FDA had rejected ARIAD’s proposed label. While management may have held out hope of achieving this result, the expression of that hope without disclosure of recent troubling developments created an impermissible risk of misleading investors. See Zak v. Chelsea Therapeutics Int’l, Ltd.,
ARIAD fails to develop any argument that these misstatements were not material, and, in any event, we have little difficulty concluding that disclosure of the FDA’s concerns or the rate of serious cardiovascular events with respect to 'ARIAD’s leading product would have altered the total mix of information available to investors. For these'reasons, we reverse the district court’s dismissal of the Section 10(b) and Rule 10b-5 claims predicated upon this December 11,2012 press release. 4
B. Post-Approval
The plaintiffs’ post-approval allegations rely on the same type of fraud by hindsight theory that doomed the majority of their pre-approval claims. It is undisputed that, on December 14, 2012, ARIAD disclosed to investors the 8% rate of serious cardiovascular events as well as the FDA’s requirement of a black box warning. Thе complaint nonetheless identifies *754 various subsequent statements about pona-tinib that were purportedly misleading for failure to disclose an increase in the rate of adverse events after the July 2012 cut-off date. More specifically, the rate of serious cardiovascular events is said to have increased from 8% to 11.8%. The alleged misstatements occurred between March 1 and August 9, 2013, but the plaintiffs rely on data collected through an unspecified date in August to claim that those statements were fraudulent. Because the complaint fails to indicate when the adverse events occurred, let alone when the defendants became aware of them, it fails to create a strong inference of scienter.
Nor do the plaintiffs’ allegations of access to post-approval data get them over the PSLRA’s pleading hurdle. To be sure, these allegations are more extensive and detailed than their pre-approval counterparts. But the plaintiffs still fail to allege specifically when the defendants became aware of any adverse events. See Police Ret. Sys. of St. Louis v. Intuitive Surgical, Inc.,
C. Insider Trading
The plaintiffs seek to bolster their fraud claims with allegations of insider trading by the officer defendants. As an initial matter, while such insider trading may be “probative of scienter,” it is not sufficient to establish an inference of scien-ter on its own. Greebel v. FTP Software, Inc.,
Here, during the pre-approval period, the complaint alleges that Haluska, Clackson, and Fitzgerald sold “irregular amounts of shares.”
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These three defendants made their last pre-approval trades on May 2, August 15, and October 1, 2012, respectively. Thus, both Haluska and Clackson ceased pre-apprоval sales more than a month and a half before the October 5 high-point of ARIAD’s share price. Accordingly, the timing of their trades “does not appear very suspicious.” Id. at 206. Fitzgerald, the defendant who traded closest to that date, was ARIAD’s CFO and the least likely of the three to have been privy to material nonpublic information about the clinical trials. Moreover, the defendants’ trades are readily explainable by the steady increase in ARIAD’s share price during the class period, which “create[d] á substantial incentive for holders to sell” regardless of any material non-public information. Local No, 8 IBEW Ret. Plan & Tr. v. Vertex Pharm., Inc.,
*755 Plaintiffs’ insider trading allegations with respect to the post-approval period do not fare any better. For one thing, • the post-approval trades, by definition, occurred after the December 14, 2012 disclosure of the black box warning and the corresponding decline in share price. Additionally, Berger, Fitzgerald, Haluska, and Clackson are all alleged to have entered into the operative 10b5-l plans within days of that disclosure. At this early date, any information about an undisclosed increase in the rate of serious adverse events would likely have been minimal. Where, as here, the complaint is otherwise devoid of facts supporting the defendants’ knowledge of material non-public information, these alleged insider sales are insufficient to salvage the plaintiffs’ fraud claims.
IV. Securities Act Claims
The second set of claims allege- violations of Section 11 of the. Securities Act stemming from a January 2013 common stock offering. The Securities Act “was designed to provide investors with full disclosure of material information concerning public offerings.” Ernst & Ernst v. Hochfelder,
The right to sue under Section 11 is limited to “any person acquiring such security.” Id. Thus, “an action ... may be maintained only by' those who purchase securities that are the direct subject of the prospectus and registration statement.” Plumbers’ Union Local No. 12 Pension Fund v. Nomura Asset Acceptance Corp.,
This “statutory standing”
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inquiry becomes more complicated where, as here, the company has issued sharеs under multiple registration statements. In these circumstances, “the plaintiff must prove that [his or] her shares were issued under the allegedly false hr misleading registration statement, rather 'than some other registration statement.” Century,
Twombly teaches that, in order to survive a motion to dismiss, a complaint must include “enough facts to state a claim to relief that is plausible on its face.”
We find this binding precedent difficult to square with the plaintiffs’ contention that general allegations of traceability, without more, are sufficient at the pleading stage. Indeed, traceability is an element of a Section 11 claim. See, e.g., Nomura,
The question now becomes whether the complaint sets forth sufficient facts to plausibly suggest that the shares purchased- by the plaintiffs were issued as part of the January 2013 offering. The plaintiffs could have met this bar by pleading that they “purchased their shares directly in the secоndary offering itself.” Century,
*757 V. Conclusion
For the foregoing reasons we REVERSE the district court’s dismissal of the Section 10(b), Rule 10b-5, and Section 20(a) claims predicated upon the Décem-ber 11, 2012 press release. We otherwise AFFIRM the dismissal of the fraud claims. Similarly, we AFFIRM the dismissal of the Section 11 and Section 15 claims. The сase is remanded for further proceedings consistent with this opinion. The parties shall bear their own costs.
Notes
. ARIAD markets and sells ponatinib under the moniker "Iclusig.”
. Because our review is de novo, we need not specifically address each of the plaintiffs’ quibbles with the district court’s analysis. See Fire & Police Pension Ass'n of Colo, v. Abiomed, Inc.,
. The plaintiffs point -to two other purported misstatements between October 25 and December 11, 2012. The complaint fails to cre■ate an inference that these statements were knowingly false.
First, the plaintiffs cite Berger’s November 7 response on an analyst conference сall, “I
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can't speak to what the label [for ponatinib] is going to look like.” Because ARIAD was, at the time, in negotiations with the FDA about the label, this statement was literally true. Nor was it materially misleading for Berger to omit certain details of the company's interactions with the FDA. See Abiomed,
Second, the plaintiffs take issue with AR-IAD’s November 9, -2012 Form 10-Q, which indicated that there had been "no material changes to. the risk factors” included in the prior Form 10-K. Even assuming that this statement was materially misleading, the plaintiffs point to no allegation that Berger оr CFO Fitzgerald, the two defendants who signed the document, were involved in the October 25 or November 1 communications with the FDA. Accordingly, the complaint fails to support a compelling inference of scienter.
. Because the district court dismissed the Section 10(b) and Rule. 1 Ob-5 claims, it also dismissed the derivative Section 20(a) claims without any additional analysis. We vacate that dismissal with respect to the December 11, 2012 release.
. The plaintiffs cite the FDA’s finding that, "[i]n some patients,” adverse events "occurred as early as 2 weeks” after taking pona-tinib. But the agency’s indication that somе patients experienced adverse events as early as two weeks into therapy tells us nothing about whether the rate of overall adverse events had increased and, if so, by how much as of the relevant dates.
. We note at the outset that the defendants’ use of 10b5-l trading plans, see 17 C.F.R. § 240.10b5-l(c), is not dispositive in light of the plaintiffs’ allegation that those plans were executed after the beginning of the fraudulent scheme. See Emps. Ret. Sys. of Gov't of the V.I. v. Blanford,
. The parties refer to this issue as statutory standing, and the district court correctly noted that it does not implicate Article III. See Cooperman v. Individual Inc.,
. The complaint also includes derivative claims under Section 15. See Shaw v. Dig. Equip. Corp,,
. The complaint fails to allege traceability sufficient to state a Section 11 claim for any *757 member .of the purported class; accordingly, we need not address the lead plaintiffs' contention that they should be permitted to pursue such a claim on behalf of the class irrespective of their individual statutory standing.