District of Massachusetts Dismisses Class Action Against Gene Editing Company

On June 18, 2026, Judge Denise J. Casper of the United States District Court for the District of Massachusetts dismissed a putative class action asserting claims against a clinical-stage gene editing company (“Company”) and several of its officers (collectively, “Defendants”) under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5.  Plaintiffs alleged that Defendants misrepresented the development of, and timeline for, the Company’s gene-insertion therapy for Alpha-1 Antitrypsin Deficiency (“AATD”)-associated lung disease, including by omitting to disclose that underlying preclinical studies allegedly failed before the program was discontinued.  Although the Court found one category of statements actionable, it held that Plaintiffs failed to plead facts giving rise to a strong inference of scienter or loss causation and dismissed the complaint with prejudice.

In November 2021 the Company announced its lead gene-insertion candidate for AATD-associated lung disease and allegedly presented preclinical data from a nonhuman primate study purportedly showing durable, normal human AAT levels after 52 weeks.  According to a confidential witness, however, the Company’s 2023 clinical studies, including its own mouse studies and outsourced nonhuman primate studies, allegedly showed no indication of efficacy, results allegedly discussed internally around April 2024.  Plaintiffs alleged that the Company represented that it was on track to dose its first patient, touting the success of preclinical primate data.  Yet, the Company allegedly decided internally to discontinue the program in December 2024 and publicly announced the discontinuation on January 9, 2025.

Plaintiffs alleged a series of misrepresentations about the gene-insertion therapy, which the Court categorized as misstatements regarding (i) the treatment’s timeline and (ii) the treatment’s success.

The Court first found that Plaintiffs failed to plausibly plead falsity as to the alleged treatment timeline statements.  It found that a number of identified statements, such as those characterizing the candidate as the “next wave of innovation” and “DDNA writing technology,” were inactionable opinion or puffery.  While the Court agreed that other alleged statements relating more directly to the therapy’s launch, such as alleged statements the candidate was “on track to dose” in 2024, were specific and thus not puffery, Plaintiffs failed to allege that the Company did not actually anticipate beginning clinical trials in 2024.  The Court also held that the statements were forward-looking and immunized by the PSLRA’s safe-harbor provision given accompanying cautionary language.  

The Court did find actionable alleged post-April 2024 statements touting preclinical nonhuman primate “success” because they allegedly omitted the negative 2023 results.  However, the Court held Plaintiffs failed to plead facts giving rise to a strong inference of scienter.  The confidential-witness allegations were held to be insufficient because the witness supporting the allegations with respect to this alleged misstatement, a former in vivo study technician, did not occupy a position at the Company that would enable the witness to speak to Defendants’ states of mind.  Plaintiffs did not otherwise allege Defendants knew of or had access to the negative results when the allegedly false statements were made.  The Court also found that Plaintiffs’ motive-and-opportunity theory was belied by the Company’s strong financial status and rejected Plaintiffs’ core-operations theory, noting the absence of alleged “plus factors” from which the Court could impute knowledge of the alleged study failures to Defendants. 

Finally, the Court found that Plaintiffs failed to connect the Company’s January 9, 2025, stock decline to any alleged corrective disclosure, holding that, absent an adequately pleaded false statement made with scienter, there can be no revelation of a previously concealed truth.  The Court found that the stock decline instead reflected the materialization of a previously disclosed risk that development of the drug might be discontinued. 

Because Plaintiffs failed to plead ta primary violation, the Court also dismissed their Section 20(a) control-person claim.  The Court dismissed the action in its entirety, with prejudice.