Case: 21-1657 Document: 00117906273 Page: 1 Date Filed: 08/05/2022 Entry ID: 6512101
`
` United States Court of Appeals
`For the First Circuit
`
`
`
`
`No. 21-1657
`
`MYO THANT, Individually and on Behalf of All Others Similarly
`Situated,
`
`Plaintiff, Appellant,
`
`HEATHER MEHDI,
`
`Plaintiff,
`
`
`
`v.
`
`
`
` KARYOPHARM THERAPEUTICS INC.; MICHAEL G. KAUFFMAN; SHARON
`
`SHACHAM; JUSTIN A. RENZ; MICHAEL F. FALVEY; GAREN G. BOHLIN,
`
`MIKAEL DOLSTEN; SCOTT GARLAND; BARRY E. GREENE; MANSOOR RAZA
`
`MIRZA; DEEPA R. PAKIANATHAN; KENNETH E. WEG,
`
`
`Defendants, Appellees.
`
`
`APPEAL FROM THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF MASSACHUSETTS
`
`[Hon. Nathaniel M. Gorton, U.S. District Judge]
`
`
`
`Before
`
`Barron, Chief Judge,
`Gelpí, Circuit Judge,
`and Katzmann, Judge.
`
`
`
`
`
`
`
`
`
`Adam M. Apton, with whom Nicholas I. Porritt, Shannon L.
`
`
` Of the United States Court of International Trade, sitting
`by designation.
`
`
`
`
`
` United States Court of Appeals
`For the First Circuit
`
`
`
`
`No. 21-1657
`
`MYO THANT, Individually and on Behalf of All Others Similarly
`Situated,
`
`Plaintiff, Appellant,
`
`HEATHER MEHDI,
`
`Plaintiff,
`
`
`
`v.
`
`
`
` KARYOPHARM THERAPEUTICS INC.; MICHAEL G. KAUFFMAN; SHARON
`
`SHACHAM; JUSTIN A. RENZ; MICHAEL F. FALVEY; GAREN G. BOHLIN,
`
`MIKAEL DOLSTEN; SCOTT GARLAND; BARRY E. GREENE; MANSOOR RAZA
`
`MIRZA; DEEPA R. PAKIANATHAN; KENNETH E. WEG,
`
`
`Defendants, Appellees.
`
`
`APPEAL FROM THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF MASSACHUSETTS
`
`[Hon. Nathaniel M. Gorton, U.S. District Judge]
`
`
`
`Before
`
`Barron, Chief Judge,
`Gelpí, Circuit Judge,
`and Katzmann, Judge.
`
`
`
`
`
`
`
`
`
`Adam M. Apton, with whom Nicholas I. Porritt, Shannon L.
`
`
` Of the United States Court of International Trade, sitting
`by designation.
`
`
`
`
`
`Case: 21-1657 Document: 00117906273 Page: 2 Date Filed: 08/05/2022 Entry ID: 6512101
`
`Hopkins and Levi & Korsinksy, LLP, were on brief, for appellant.
`Michael G. Bongiorno, with whom Peter A. Spaeth, Allyson
`Slater, Jocelyn M. Keider, Joseph M. Levy, and Wilmer Cutler
`Pickering Hale and Dorr LLP were on brief, for appellees.
`
`
`
`August 5, 2022
`
`
`
`
`
`
`
`
`
`Case: 21-1657 Document: 00117906273 Page: 3 Date Filed: 08/05/2022 Entry ID: 6512101
`
`KATZMANN, Judge. Following a decline in the stock price
`
`of Karyopharm Therapeutics, Inc., investors (among them,
`
`plaintiff-appellant Dr. Myo Thant) filed suit against the company
`
`and its corporate officers (together "Karyopharm" or "defendants")
`
`alleging securities fraud in violation of Sections 10(b) and 20(a)
`
`of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b) and
`
`78t(a), and Securities and Exchange Commission ("SEC") Rule 10b-
`
`5, 18 C.F.R. § 240.10b-5. In relevant part, the complaint alleged
`
`that Karyopharm materially misled investors as to the safety and
`
`efficacy of Karyopharm's cancer-fighting drug candidate selinexor.
`
`The district court dismissed the complaint, finding that
`
`plaintiffs failed to adequately plead scienter with respect to
`
`defendants' statements about the STORM1 trial: a single-arm study
`
`of the drug selinexor as a treatment for penta-refractory multiple
`
`myeloma. Plaintiff-appellant Thant timely appealed.
`
`We now affirm the district court's dismissal on
`
`different grounds, concluding that Thant has not plausibly alleged
`
`an actionable statement or omission with respect to the STORM trial
`
`disclosures.
`
`I.
`
`
`
`
`
`The complaint alleges the following. See Clorox Co.
`
`P.R. v. Proctor & Gamble Com. Co., 228 F.3d 24, 30 (1st Cir. 2000)
`
`
`1 "Selinexor Treatment of Refractory Myeloma."
`
`- 3 -
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`(noting that in reviewing a motion to dismiss, we accept all well-
`
`pleaded facts in the complaint as true). Karyopharm is a
`
`Massachusetts-based biopharmaceutical company that develops and
`
`commercializes treatments for cancer, among other serious
`
`diseases. One of the drugs in Karyopharm's portfolio is selinexor,
`
`a cancer-fighting drug now on the market as a fifth-line treatment
`
`(in combination with the steroid dexamethasone) for patients
`
`suffering from relapsed or refractory multiple myeloma and acute
`
`myeloid leukemia. In laymen's terms, a relapsed or refractory
`
`disease is one which has not been eradicated despite treatment, or
`
`which has returned at least once following initially successful
`
`treatment.
`
`
`
`
`
`Roughly a decade ago, Karyopharm began conducting
`
`clinical tests on selinexor to evaluate its safety and efficacy as
`
`a treatment for advanced cancers. The first such test was the Phase
`
`1 KCP-330-001 trial, which treated patients with multiple myeloma
`
`who had received at least three prior lines of treatment or therapy
`
`without success. The results of this trial were mixed. Patients
`
`in the monotherapy arm (treated with selinexor alone) largely saw
`
`no improvement in their disease, with only one of fifty-six
`
`patients experiencing a "partial response" -- in other words, a
`
`decrease in the extent of the patient's cancer. Patients in the
`
`combination therapy arm (treated with a combination of selinexor
`
`and dexamethasone) had somewhat more positive outcomes, with 8.6%
`
`- 4 -
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`of patients experiencing a partial response or full remission.
`
`Overall, most patients participating in the trial experienced
`
`stable or progressive disease. Importantly for the purposes of
`
`this case, data from the KCP-330-001 trial evinced a substantial
`
`level of toxicity attributable to selinexor.
`
`Phase 2 testing of selinexor began in June 2014 with the
`
`SOPRA2 trial, which treated patients with relapsed or refractory
`
`acute myeloid leukemia ("AML") aged sixty or above who were
`
`ineligible for standard chemotherapy or transplantation. The
`
`SOPRA trial was ultimately terminated before its completion on
`
`March 2, 2017 after "Karyopharm 'claimed at that time that it had
`
`determined, in concert with SOPRA's Independent Data Safety
`
`Monitoring Board, . . . that the study would not reach statistical
`
`significance for showing . . . the study's primary endpoint,'"
`
`namely, the superiority of selinexor alone as a treatment for AML.
`
`Indeed, the data obtained prior to SOPRA's termination showed a
`
`comparatively lower overall survival rate for patients treated
`
`with selinexor alone versus those receiving standard care (some
`
`combination of supportive care, azacitidine, decitabine, and low
`
`dose cytosine arabinoside).3 As with the KCP-330-001 trial,
`
`
`2 "Selinexor in Older Patients with Relapsed/Refractory AML."
`
`3 Azacitidine (also known by the brand name Vidaza) and
`decitabine (also known by the brand name Dacogen) are cytotoxic
`drugs which function by altering gene expression to reduce
`the growth
`of
`cancerous
`cells.
`PubChem,
`Decitabine,
`
`
`
`- 5 -
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`SOPRA's initial results also evinced substantial toxicity: 100% of
`
`the patients treated with selinexor suffered from adverse events
`
`("AEs") of varying degrees, including some which resulted in death.
`
`After the start of the SOPRA trial (but before its
`
`termination) Karyopharm initiated Phase 2b testing with the STORM
`
`trial, which was conducted between May 2015 and April 2018. STORM
`
`assessed the safety and efficacy of combination treatment with
`
`selinexor and dexamethasone in patients with relapsed or
`
`refractory myeloma who had received at least three prior lines of
`
`treatment or therapy. Unlike SOPRA, the STORM trial was a single-
`
`arm study, i.e., one without a control group. Ultimately, STORM
`
`resulted in a roughly 25% response rate, but again clearly
`
`demonstrated the toxicity of the selinexor dosage administered.
`
`In relevant part, 88.6% of patients modified their selinexor dose
`
`due to a treatment emergent adverse event ("TEAE") -- the name
`
`given to any AE that is not present prior to the initiation of
`
`
`(last
`https://pubchem.ncbi.nlm.nih.gov/compound/Decitabine
`Azacitidine,
`visited
`Aug.
`3,
`2022);
`PubChem,
`https://pubchem.ncbi.nlm.nih.gov/compound/azacitidine
`(last
`visited Aug. 3, 2022); Science Direct, Antineoplastic Drugs,
`https://www.sciencedirect.com/topics/neuroscience/antineoplastic
`-drugs (last visited Aug. 3, 2022).
`
`Cytosine arabinoside is another cytotoxic drug which, while
`
`largely fatal as an intensive treatment, has been determined to
`induce remission in hematologic cancers when administered in low
`doses.
`
`Science
`Direct,
`Cytarabine,
`https://www.sciencedirect.com/topics/neuroscience/cytarabine
`(last visited Aug. 3, 2022).
`
`- 6 -
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`treatment, or that worsens in intensity or frequency following
`
`treatment, regardless of cause. Some TEAEs were even fatal, with
`
`the study involving eighteen TEAE-related deaths (as well as
`
`twenty-two from disease progression).
`
`Roughly a year before the conclusion of the STORM trial,
`
`Karyopharm initiated another clinical trial of selinexor: the
`
`Phase 3 BOSTON trial, which measured the efficacy of combination
`
`treatment with selinexor, dexamethasone, and bortezomib (a
`
`chemotherapy drug also known as Velcade) against treatment with
`
`dexamethasone and bortezomib alone.4 Unlike the STORM study, the
`
`BOSTON trial was intended to allow evaluation of selinexor in
`
`comparison to a control group.
`
`
`
`
`
`On August 5, 2018, following the conclusion of the STORM
`
`trial but prior to the end of the BOSTON trial, Karyopharm
`
`submitted a New Drug Application ("NDA") for selinexor to the U.S.
`
`Food and Drug Administration ("FDA"). Shortly thereafter, on
`
`November 20, 2018, the FDA convened a post mid-cycle review meeting
`
`with Karyopharm to discuss outstanding issues that could impact
`
`selinexor's approval -- most notably the FDA's concern that the
`
`STORM study alone, as a single-arm trial, might not be adequate to
`
`
`4 To manage the toxicity of the control drugs, dexamethasone
`and bortezomib, and better assess the toxicity of selinexor, the
`study also reduced the dosage of dexamethasone and bortezomib in
`the selinexor arm by 25% and 40% respectively.
`
`- 7 -
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`demonstrate selinexor's safety or efficacy vis-à-vis other
`
`available treatments.
`
`Subsequently, the FDA arranged for a meeting of its
`
`Oncologic Drug Advisory Committee ("ODAC") to take place on
`
`February 26, 2019, for an advisory vote on the selinexor NDA. On
`
`February 22, 2019, in anticipation of the ODAC meeting, the FDA
`
`publicly released a briefing document addressing the results of
`
`the STORM study and the merits of the NDA broadly. In relevant
`
`part, this briefing document highlighted three primary issues with
`
`the submitted study data: first, that the single-arm nature of the
`
`STORM trial could not provide conclusive data regarding the
`
`efficacy of selinexor; second, that the single-arm nature of the
`
`STORM trial could not provide conclusive data regarding the
`
`toxicity of selinexor; and finally, that while the STORM trial
`
`indicated that lower doses of selinexor were better-tolerated, it
`
`did not conclusively establish an optimal dose. In response to
`
`the briefing document, Karyopharm's stock price fell from a closing
`
`price of $8.97 per share on February 21, 2019, to a closing price
`
`of $5.07 per share on February 22. ODAC ultimately voted to delay
`
`approval of selinexor pending the results of the BOSTON trial,
`
`which caused the stock price to decline further to a low of $4.13
`
`per share on February 28, 2019.
`
`On March 13, 2019, Karyopharm submitted an amendment to
`
`its selinexor NDA which proposed to limit the drug's indication to
`
`- 8 -
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`relapsed or refractory multiple myeloma who had received four,
`
`rather than three, prior lines of treatment or therapy -- a
`
`population for which there was at the time no approved therapy.
`
`Following this amendment and the subsequent submission of the
`
`BOSTON trial data, the FDA approved the selinexor NDA on July 2,
`
`2019, roughly eleven months after its initial submission.
`
`II.
`
`
`
`
`
`Two months after the FDA's approval of the selinexor
`
`NDA, on September 17, 2019, the initial complaint in this action
`
`was filed before the district court. Following the appointment of
`
`Dr. Myo Thant ("Thant") as lead plaintiff, the operative complaint
`
`was filed on October 22, 2020.
`
`Plaintiff-appellant Thant is a Maryland resident who
`
`purchased and retained Karyopharm securities between March 2,
`
`2017, and February 22, 2019. Given the substantial drop in
`
`Karyopharm's stock price following the release of the ODAC briefing
`
`document in February of 2019, Thant alleges that he and the class
`
`of similarly situated investors were harmed by their purchases of
`
`Karyopharm stock at prices that were artificially inflated by
`
`Karyopharm's materially misleading statements and omissions
`
`regarding the safety and efficacy of selinexor.5 While in his
`
`
`5 As stated above, Thant alleges violations of Sections 10(b)
`and 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. §§
`78j(b) and 78t(a), which prohibit the use of manipulative or
`
`
`- 9 -
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`complaint, Thant challenged numerous statements concerning all of
`
`the clinical trials described, he limits his appeal to Karyopharm's
`
`STORM-related statements.
`
`Thant takes issue with Karyopharm's public statements
`
`regarding the STORM trial, which he argues were both materially
`
`misleading and made with scienter. He points first to the April
`
`30, 2018 press release announcing top-line data from the second
`
`half of the STORM trial, which stated in relevant part that:
`
`Oral selinexor demonstrated a predictable and
`manageable tolerability profile, with safety
`results that were consistent with those
`previously reported from Part I of this study
`. . . and from other selinexor studies. As
`anticipated, the most common [AEs] were
`nausea, vomiting, fatigue and reduced appetite
`and were primarily low grade and manageable
`with standard supportive care and/or dose
`modification.
`
`Thant also highlights statements made to investors by Karyopharm
`
`co-founder and CEO Dr. Michael G. Kauffman ("Kauffman") on a May
`
`1, 2018 conference call. Specifically, Thant points to Kauffman's
`
`statement that "[t]he success of the STORM study is an important
`
`
`deceptive devices and extend liability to individuals, and
`Securities and Exchange Commission ("SEC") Rule 10b-5, 18 C.F.R.
`§ 240.10b-5, which likewise prohibits the use of manipulative and
`deceptive devices. While Thant's complaint before the district
`court also alleged violations of §§ 11 and 15 of the Securities
`Act of 1933, 15 U.S.C. §§ 77k, 77o, those allegations are not at
`issue on appeal. The only allegations currently before the court
`are Thant's Sections 10(b) and 20(a) and Rule 10b-5 claims stemming
`from Karyopharm's public statements concerning the STORM trial.
`
`
`
`- 10 -
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`milestone for Karyopharm[, a]nd these data represent a significant
`
`step in establishing the efficacy and safety of selinexor as a new
`
`treatment option for patients with myeloma."6 Thant argues that
`
`each of these disclosures "falsely represented to the public" that
`
`selinexor trials had consistently yielded positive data, when in
`
`fact selinexor "was extremely toxic, not well tolerated, and
`
`ineffective." In so representing, Thant contends, Karyopharm
`
`artificially inflated its stock price.
`
`
`
`
`
`To support his allegations, Thant relies not only on the
`
`STORM study data itself, but also on a purported history of
`
`concealment on the part of Karyopharm executives. The complaint
`
`alleges that in August 2016, almost two years before the start of
`
`the class period, two high-ranking Karyopharm employees discovered
`
`that 353 AEs relating to selinexor (and in part arising from the
`
`SOPRA study) had been recorded in Karyopharm's internal records
`
`without being reported to the necessary regulatory agencies. Upon
`
`
`6 The complaint also notes Kauffman's statement that:
`
`This duration of response in the PR group is -- even at
`this early date, it's already associated with
`statistically significant improvement in overall
`survival as compared to the patients who had stable
`disease or worse. So we do know that patients staying on
`the drug who have a response will live longer than those
`that are -- unfortunately do not respond to the
`drug . . . .
`
`As Thant advances no distinct argument regarding this portion
`of the press release on appeal, any potential argument is
`waived.
`
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`discovering the omission of these AEs, one of these employees --
`
`Karyopharm's Global Head of Pharmacovigilance and Drug Safety,
`
`referred to as "Former Employee 1" or "FE1" -- convened a meeting
`
`with Kauffman and other Karyopharm executives. At the meeting,
`
`FE1 conveyed that each unreported event would need to undergo a
`
`lengthy medical review, and that conducting such review in-house
`
`would unfortunately preclude submission of selinexor's NDA by the
`
`planned deadline of January 2017. FE1 proposed, as an alternative,
`
`that an external clinical research organization be engaged to
`
`review the unreported events at the cost of $200,000–$300,000.
`
`Kauffman, upset by the delay and cost, insisted that review could
`
`be done in-house in time for the January 2017 deadline. FE1
`
`strongly disagreed, and ultimately quit following the meeting.
`
`Shortly after FE1's departure, he was contacted by
`
`Karyopharm's Medical Director of Safety ("FE2") who claimed that
`
`Ran Frenkel ("Frenkel"), Karyopharm's Chief Development Officer,
`
`was pressuring FE2 to falsify study data by characterizing various
`
`AEs as unrelated to selinexor. FE2 further indicated that Frenkel
`
`identified Dr. Sharon Shacham ("Shacham"), Karyopharm's co-
`
`founder, president, and Chief Scientific Officer, as the source of
`
`the falsification pressure. FE1 recommended that FE2 carefully
`
`record her concerns and report Karyopharm's practices to the FDA.
`
`In January of 2017, two FDA criminal investigators came
`
`to FE1's home to ask questions about whether Karyopharm was
`
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`falsifying adverse event reports to "jack up the price of the
`
`stock." FE1 conveyed to the investigators that Karyopharm was
`
`"completely out of compliance" during his tenure, and that FE1 had
`
`been concerned that the FDA "would put us on a clinical hold" due
`
`to lack of internal controls.
`
`Indeed, as FE1 had predicted, the FDA issued a partial
`
`clinical hold on Karyopharm's existing selinexor trials on March
`
`3, 2017, thereby temporarily suspending the ongoing STORM trial.
`
`The hold was issued over concerns that Karyopharm had incompletely
`
`or erroneously reported study data, including the AEs associated
`
`with selinexor. Ultimately, following corrective action by
`
`Karyopharm, the clinical hold was fully lifted on April 5, 2017.
`
`Thant also recounts two additional former employee
`
`allegations regarding events which took place after the conclusion
`
`of the STORM trial (and the start of the class period) in April
`
`2018. FE3 was a consulting physician assisting with the selinexor
`
`NDA who was tasked with reviewing and confirming field medical
`
`investigators' reports of selinexor AEs. FE3 indicated that
`
`Karyopharm's Vice President of Pharmacovigilence, Kumiko Yanase
`
`("Yanase"), regularly questioned FE3's reports and on two
`
`occasions asked him to revise his determination that an AE was
`
`related to selinexor -- requests he refused. FE4, a clinical
`
`research scientist who was employed by Karyopharm following the
`
`submission of the selinexor NDA, further reported that
`
`- 13 -
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`Karyopharm's submissions to the FDA were missing information
`
`regarding "preceding" AEs. For example, the data would indicate
`
`that a patient experienced sepsis without noting the presence of
`
`a prior, less severe infection. Upon reporting this apparent
`
`omission to her supervisor, Maitreyi Sharma ("Sharma"), FE4 was
`
`informed that Sharma did not agree with FE4's analysis and was
`
`concerned that earlier-stage AEs would be treated as separate AEs
`
`by the FDA.
`
`III.
`
`Ruling on Karyopharm's motion to dismiss for failure to
`
`state a claim, the district court found Karyopharm's statement
`
`that "selinexor demonstrated a predictable and manageable
`
`tolerability profile," made while highlighting the prevalence of
`
`low-grade AEs and omitting the high instance of TEAEs and TEAE-
`
`related deaths, indeed constituted an arguably incomplete
`
`disclosure. Likewise, the district court concluded that
`
`Kauffman's description of STORM as successful, and "an important
`
`milestone for Karyopharm," likely "skewed" the data such that it
`
`"present[ed] a rosy picture" to investors. Accordingly, the court
`
`indicated that Thant had plausibly alleged the existence of
`
`materially misleading statements.
`
`Nevertheless, the district court found that Thant failed
`
`to adequately plead scienter. Noting that the Private Securities
`
`Litigation Reform Act of 1995, Pub. L. No. 104–67, 109 Stat. 737
`
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`("PSLRA") requires a plaintiff to "state with particularity facts
`
`giving rise to a strong inference" of scienter -- i.e., that "the
`
`defendant acted with 'either conscious intent to defraud
`
`[investors] or a high degree of recklessness,'" – the court
`
`concluded that Thant had not pleaded facts supporting such a strong
`
`inference. In re Karyopharm Therapeutics Inc., Sec. Litig., 552 F.
`
`Supp. 3d 77, 90 (D. Mass. 2021) (alteration in original) (quoting
`
`ACA Fin. Guar. Corp. v. Advest, Inc., 512 F.3d 46, 58 (1st Cir.
`
`2008)). In so finding, the district court highlighted Karyopharm's
`
`argument that "no reasonable investor would interpret their
`
`statement that selinexor's safety profile was 'predictable' or
`
`'manageable' to mean the drug was benign," in the context of its
`
`treatment of a "very ill patient cohort." The district court
`
`further concluded that Karyopharm's voluntary disclosure of the
`
`2017 clinical hold, as well as the "high risk of failure" of
`
`selinexor (largely due to the risk of side effects), counseled
`
`against a finding of scienter. Finally, the district court found
`
`that none of the former employee allegations evinced "a desire of
`
`defendants to mislead investors" -- and indeed, neither of the
`
`accounts relating to events during the class period allege any
`
`contact with those Karyopharm officials responsible for the
`
`allegedly misleading statements.
`
`Thant now appeals the dismissal of his complaint,
`
`arguing that the district court erred by determining Karyopharm's
`
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`public statements regarding the STORM trial were not made knowingly
`
`or with deliberate recklessness. Karyopharm contends that the
`
`district court did not err with respect to scienter and further
`
`requests on appeal that the court find the contested statements
`
`"were not materially false or misleading in the first instance."
`
`IV.
`
`We review de novo whether the complaint meets the
`
`heightened pleading requirements of the PSLRA. ACA Fin. Guar.
`
`Corp., 512 F.3d at 58 (citing Aldridge v. A.T. Cross Corp., 284
`
`F.3d 72, 78 (1st Cir. 2002)). Those requirements necessitate that,
`
`to state a claim for fraud under Section 10(b) of the Securities
`
`Exchange Act of 1934, a complaint must adequately plead "(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." In re Biogen Inc.
`
`Sec. Litig., 857 F.3d 34, 41 (1st Cir. 2017). Only two of these
`
`six requirements
`
`are now before the court: material
`
`misrepresentation and scienter. We conclude that, regardless of
`
`whether Thant adequately pleaded facts to support a finding of
`
`scienter,
`
`he
`
`failed
`
`to
`
`plausibly
`
`allege
`
`a
`
`material
`
`misrepresentation
`
`sufficient
`
`to
`
`sustain
`
`his
`
`complaint.
`
`Accordingly, we affirm.
`
`Where, as here, our review is de novo, we are permitted
`
`to "affirm on any ground appearing in the record -- including one
`
`- 16 -
`
`
`
`Case: 21-1657 Document: 00117906273 Page: 17 Date Filed: 08/05/2022 Entry ID: 6512101
`
`that the [district] judge did not rely on." Rivera-Colón v. AT&T
`
`Mobility P.R., Inc., 913 F.3d 200, 207 (1st Cir. 2019) (alteration
`
`in original) (quoting Lang v. Wal-Mart Stores E., L.P., 813 F.3d
`
`447, 454 (1st Cir. 2016)). This is what Karyopharm now suggests
`
`we do, arguing that because "the market could not have
`
`misinterpreted [Karyopharm's] statements," Karyopharm "had no duty
`
`to disclose [the AE] data, even if [investors] would have wanted
`
`to know that information and even if it could have been deemed
`
`material," because disclosure is only required where it is
`
`necessary to ensure statements are not misleading.
`
`To survive a motion to dismiss under the securities law,
`
`a complaint must adequately plead statements that were "misleading
`
`as to a material fact" -- neither factor alone is sufficient.
`
`Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27, 38 (2011)
`
`(quoting Basic Inc. v. Levinson, 485 U.S. 224, 238 (1988)). With
`
`respect to materiality, it is well established that the requirement
`
`is satisfied when there is "a substantial likelihood that the
`
`disclosure of the omitted fact would have been viewed by the
`
`reasonable investor as having significantly altered the 'total
`
`mix' of information made available." Id. at 38 (quoting Basic,
`
`485 U.S. at 231–32); see also Ponsa-Rabell v. Santander Sec. LLC,
`
`35 F.4th 26, 33 (1st Cir. 2022). It follows that "[i]t is not a
`
`material omission to fail to point out information of which the
`
`market is already aware." Baron v. Smith, 380 F.3d 49, 57 (1st
`
`- 17 -
`
`
`
`Case: 21-1657 Document: 00117906273 Page: 18 Date Filed: 08/05/2022 Entry ID: 6512101
`
`Cir. 2004) (citing In re Donald Trump Casino Sec. Litig., 7 F.3d
`
`357, 377 (3d Cir. 1993)).
`
`Even where the materiality requirement is met, a
`
`statement or omission must still be misleading. Disclosure of
`
`specific information is only required when "necessary 'to
`
`make . . . statements made, in the light of the circumstances
`
`under which they were made, not misleading.'" Matrixx, 563 U.S. at
`
`44 (alteration in original) (quoting 17 C.F.R. § 240.10b–5(b))).
`
`This means that, if a company proactively discloses some facts
`
`about its product, it is not thereby obliged to disclose all
`
`information that "would be interesting" to potential investors.
`
`Backman v. Polaroid Corp., 910 F.2d 10, 16 (1st Cir. 1990) (en
`
`banc). Rather, a company must only disclose those facts "that are
`
`needed so that what [has been] revealed would not be 'so incomplete
`
`as to mislead.'" Id. (quoting SEC v. Tex. Gulf Sulphur Co., 401
`
`F.2d 833, 862 (2d Cir. 1968)).
`
`Finally, we have clearly held that "'upbeat statements
`
`of optimism and puffing about [a] company's prospects' are not
`
`actionable" and thus cannot constitute material misstatements.
`
`Yan v. ReWalk Robotics Ltd., 973 F.3d 22, 32 (1st Cir. 2020)
`
`(alteration in original)(quoting Greebel v. FTP Software, Inc.,
`
`194 F.3d 185, 207 (1st Cir. 1999)). Such non-actionable statements
`
`have included assertions by a robotics company that its device was
`
`"a 'breakthrough product,' with 'compelling clinical data'
`
`- 18 -
`
`
`
`Case: 21-1657 Document: 00117906273 Page: 19 Date Filed: 08/05/2022 Entry ID: 6512101
`
`'demonstrat[ing] the functionality and utilization' of the
`
`device," id. at 28 (alteration in original); statements by a
`
`software company that it would "lead the market in providing
`
`applications and support" and that its "new products have been
`
`well received by [its] channel partners and customers," Greebel,
`
`194 F.3d at 190; and statements by a design company that its
`
`software was likely "to broaden the number of customers in existing
`
`accounts as well as attract new customers," Glassman v.
`
`Computervision Corp., 90 F.3d 617, 635 (1st Cir. 1996); among
`
`others.
`
`We find that the contested statements are not materially
`
`misleading. Beginning with Thant's allegations regarding the May
`
`1, 2018 conference call, we conclude that defendants' statements
`
`were non-actionable puffery. Kauffman's assertions that the
`
`results of the STORM study constitute "an important milestone for
`
`Karyopharm" and represent "a significant step in establishing the
`
`efficacy and safety of selinexor as a new treatment option for
`
`patients with myeloma," are no more actionable misstatements than
`
`claims made by the defendant in Yan v. ReWalk Robotics Ltd., 973
`
`F.3d 22 (1st Cir. 2020), that its high-risk robotic exoskeleton
`
`constituted a scientific "breakthrough" supported by "compelling
`
`clinical data." 973 F.3d at 28. Such vague optimism about a
`
`product's future, even when touting "successful" or "compelling"
`
`clinical support, cannot constitute a material misstatement for
`
`- 19 -
`
`
`
`Case: 21-1657 Document: 00117906273 Page: 20 Date Filed: 08/05/2022 Entry ID: 6512101
`
`purposes of the pleading requirements set by the PSLRA. We thus
`
`conclude that Thant has failed to allege a materially misleading
`
`statement sufficient to survive a motion to dismiss with respect
`
`to the May 1, 2018 conference call.
`
`Proceeding to the April 30, 2018 press release, we agree
`
`with defendants (and indeed with the district court) that "no
`
`reasonable investor would interpret [Karyopharm's] statement that
`
`selinexor's safety profile was 'predictable' and 'manageable' to
`
`mean the drug was benign." In re Karyopharm, 552 F. Supp. 3d at
`
`90–91. Accordingly, we conclude that the STORM press release was
`
`likewise not materially misleading.
`
`As a threshold matter, we note that Thant's claim (both
`
`before the district court and on appeal) is that the April 30,
`
`2018 press release was materially misleading because it omitted
`
`known information regarding the serious risks of selinexor
`
`treatment. Specifically, Thant notes that
`
`"selinexor
`that
`represented
`[Karyopharm]
`when
`demonstrated a predictable and manageable tolerability
`profile" and that "nausea, vomiting, fatigue and reduced
`appetite" were the most common adverse events, [it]
`already knew that "100% of the enrolled patients
`experienced [AEs], nearly 60% experienced a severe [AE],
`more than 25% of patients permanently discontinued the
`drug due to its side effects and approximately 18 on-
`study deaths were attributed to it."
`
`
`He argues that sharing this information with investors would have
`
`"significantly altered the 'total mix' of information . . .
`
`available" such that its omission was materially misleading.
`
`- 20 -
`
`
`
`Case: 21-1657 Document: 00117906273 Page: 21 Date Filed: 08/05/2022 Entry ID: 6512101
`
`Matrixx, 563 U.S. at 38 (quoting Basic, 485 U.S. at 231–32). Thant
`
`does not claim that the information provided regarding the "most
`
`common AEs" was itself materially misleading, nor does he claim
`
`that knowledge of additional common AEs would also have
`
`significantly altered the information available to investors.
`
`Thus, there is no argument before us that omission or misstatement
`
`of the "most common" AEs rendered the STORM press release
`
`materially misleading.7
`
`To evaluate whether Karyopharm's omission of data
`
`regarding the prevalence and severity of AEs was materially
`
`misleading, we begin with the context of the STORM trial.
`
`Selinexor was undergoing clinical testing primarily as a treatment
`
`for relapsed or refractory multiple myeloma, a disease which
`
`Karyopharm explicitly acknowledged in public filings typically
`
`results in "nearly all patients . . . eventually relaps[ing] and
`
`
`7 We note that, while the press release states that "the most
`common [AEs] were nausea, vomiting, fatigue and reduced appetite"
`and "[t]he most common hematologic AEs were Grade ≥3 cytopenias"
`this appears to diverge from the data presented elsewhere. The
`ODAC briefing document indicates that the most common AEs included
`not only fatigue (79.7% of patients), nausea (69.9% of patients),
`and reduced appetite (53.7% of patients), but also hematologic AEs
`thrombocytopenia (71.5% of patients) and anemia (65.9
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