Caption: In re Gritstone Bio, Inc.
Lead Case No.: 24-cv-03640-CRB
Jurisdiction: U.S. District Court, Northern District of California
Judge: Hon. Charles R. Breyer
Order Date: July 24, 2025 
Court Grants Motion to Dismiss in Gritstone Securities Action
Judge Breyer dismissed a putative securities class action against Gritstone Bio executives Andrew Allen and Vassiliki Economides. Judge Breyer said plaintiffs’ complaint missed the mark for falsity, scienter, and loss causation. Dismissal was entered with prejudice as to Economides and without prejudice as to Allen.
Allegations Focused on Manufacturing Representations and BARDA Contract
Plaintiffs said Gritstone execs misled investors about a number of things: the company’s compliance with good manufacturing practices (cGMP), its BARDA contract, and the anticipated timeline for a Phase 2b trial on its COVID vaccine. Plaintiffs pointed to Gritstone’s statements in SEC filings, earnings calls, and press releases issued between March 2023 and February 2024.
Defense Contended No Actionable Misstatements, Scienter, or Causation
Defendants said the complaint was faulty, and needed to be dismissed, for three reasons:
- No actionable false or misleading statements
- Insufficient allegations of scienter
- Failure to plead loss causation
The Court addressed each in turn, focusing primarily on falsity and scienter.
Court Finds Limited Falsity in Pre-BARDA Manufacturing Statements
The Court held that most challenged statements were not misleading when read in context. Gritstone’s disclosures acknowledged reliance on third-party contractors and warned of potential noncompliance. However, the Court found one statement actionable:
“All internal and third-party contract manufacturing is performed under cGMP or similar guidelines.”
Plaintiffs adequately alleged that Gritstone’s contractors did not comply with cGMP at the time, and that risk disclosures framed this as hypothetical despite known deficiencies.
Statements regarding scientific publications, anticipated data releases, and general optimism were deemed puffery or forward-looking and not actionable.
BARDA Contract and Timeline Statements Not Actionable
Plaintiffs challenged statements about the $433 million BARDA contract and projected trial start dates. The Court found these were not false when made. Plaintiffs failed to allege that Gritstone or its executives knew the FDA would require cGMP-grade source materials prior to the January 2024 clinical hold. Expert opinions and regulatory guidelines cited in the complaint did not establish contemporaneous knowledge.
Scienter Allegations Deemed Insufficient
The Court found no strong inference of scienter for either defendant.
- As to Economides, the complaint lacked specific allegations tying her to the challenged statements or to knowledge of cGMP issues.
- As to Allen, the Court found the confidential witness account too indirect and lacking in detail to establish knowledge or deliberate recklessness.
General allegations about Allen’s role, experience, and SEC certifications were insufficient.
Procedural Outcome
The Court dismissed all claims under Section 10(b) and Rule 10b-5 for failure to plead falsity and scienter. The Section 20(a) claim was dismissed as derivative. Dismissal was entered with prejudice as to Economides and without prejudice as to Allen. Plaintiffs allowed to refile were granted 28 days to amend their complaint.
