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. 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 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 - (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 - 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 - 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
https://pubchem.ncbi.nlm.nih.gov/compound/Decitabine (last visited Aug. 3, 2022); PubChem, Azacitidine, 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 - 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 - 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
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 - 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
5As 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 - 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 - 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.
- 11 - 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
- 12 - 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 - 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
- 14 - ("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
- 15 - 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 - 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 - 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 - '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 - 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
when [Karyopharm] represented that "selinexor 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 - 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
We note that, while the press release states that "the most 7
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% of patients). In any case, Thant does not contend that Karyopharm's account of the most common selinexor AEs was materially misleading. We thus conclude that because Thant did not make any specific allegations as to why the omission of AEs more common than those listed would materially mislead investors, any claim predicated on the "most common AEs" portion of the STORM press release should be dismissed.
- 21 - succumb[ing] to their disease." Not only that, but the latter
half of the STORM trial specifically focused on treatment of
"heavily pretreated patients with penta-refractory myeloma" --
i.e., patients whose cancer had continued to progress despite
extensive and varied treatment and who were ultimately left with
no other medical options. It is hardly surprising, then, that the
"positive top-line data" announced in Karyopharm's STORM press
release reflects a median response duration of only 4.4 months in
those patients for whom selinexor was effective. These disclosures
are ample evidence that the patients participating in the STORM
trial were, as Thant himself notes, "very sick patients" pursuing
their "last chance" for survival.
Likewise, Karyopharm proactively and regularly informed
investors, through Form 10-Ks issued both before and during the
class period, that treatment with selinexor had resulted in
"serious" AEs in at least a "small percentage" of patients. The
10-Ks filed in March of 2016, 2017, and 2018, each clarify that
such serious AEs are those which "result in death, are life
threatening, require hospitalization or prolonging of
hospitalization, or cause a significant and permanent disruption
of normal life functions." Each report further states that "as a
result of these adverse events or further safety or toxicity issues
. . . we may not receive approval to market any drug candidates."
Finally, Karyopharm notes in each 10-K that "[t]he FDA . . . may
- 22 - disagree with our or our clinical trial investigators'
interpretation of data from clinical trials and the conclusion by
us or our clinical trial investigators that a serious adverse
effect or unacceptable side effect was not drug-related."
Because it is "not a material omission to fail to point
out information of which the market is already aware," Thant has
not plausibly alleged a material omission with respect to the STORM
press release. Baron, 380 F.3d at 57. Any investor reading that
selinexor demonstrated a "predictable and manageable tolerability
profile, with safety results that were consistent with those
previously reported" had also been informed that (1) the STORM
trial administered selinexor to severely ill patients facing a
real risk of death from multiple myeloma; (2) selinexor had
consistently precipitated serious AEs in at least a "small
percentage" of patients treated across prior studies; and (3) any
assessment by Karyopharm regarding the prevalence or acceptability
of serious AEs was in no way a guarantee that the FDA would have
a similar view of the safety profile of selinexor. Given this
background information, it is difficult to imagine that any
investor would read the defendants' statements that Karyopharm had
a "predictable," "manageable," and "consistent" tolerability
- 23 - profile to indicate that selinexor was benign, or that the FDA
would find it so.
Even if Thant had plausibly alleged a material omission
with respect to the April 30, 2018 press release, he has not
alleged that such omission was misleading. He argues, citing In
re Ariad Pharms., Inc. Sec. Litig., 842 F.3d 744 (1st Cir. 2016),
that it was "'misleading for [Karyopharm] to express optimism'
about the STORM-related data 'after learning [about selinexor's
toxicity].'" However, this case is not Ariad.
In Ariad, the eponymous pharmaceutical company submitted
a proposed label for its candidate drug ponatinib to the FDA.
Despite that label being rejected, and ARIAD being directly
informed by the FDA the rejection was due to "inadequate safety
disclosures" regarding the risk of severe cardiovascular events,
ARIAD's executives publicly "express[ed] optimism about
ponatinib's chances for approval with a 'favorable label.'" Ariad,
842 F.3d at 753. At the same time as it elided the FDA's outright
rejection of the proposed label, ARIAD publicly identified
"pancreatitis as 'the most prevalent' serious adverse event
(occurring in 5% of patients) and noted 'low rates of
cardiovascular issues'" in patients taking ponatinib. Id. In
reality the most prevalent serious AEs were cardiovascular,
occurring in 8% of patients. Id. It is undoubtedly misleading for
a pharmaceutical company to, as ARIAD did, fail to disclose
- 24 - material communications with the FDA and overtly mischaracterize
the prevalence of [AEs].
Here, on the other hand, Karyopharm neither failed to
disclose FDA concerns nor falsely omitted selinexor's most-
prevalent risks. While the press release indicated that Karyopharm
was in communication with the FDA, it expressly noted that "there
can be no guarantee that . . . any feedback from regulatory
authorities will ultimately lead to the approval of selinexor."
Similarly, Karyopharm proactively couched its optimism regarding
the forthcoming NDA by noting that "accelerated approval," as it
was seeking for selinexor, "carries a high regulatory threshold."
In addition, there is no indication that Karyopharm
mischaracterized the STORM data by stating that "nausea, vomiting,
fatigue and reduced appetite" were the "most common adverse
events," without mention of specific serious AEs. Rather, the
FDA's independent evaluation of the STORM data seems to bear out
Karyopharm's statement, indicating that the most common non-
hematologic AEs (fatigue, nausea, appetite loss, weight loss, and
various digestive issues) occurred in a minimum of 37.4% of
patients, while the most common serious AE (pneumonia) occurred in
only 11.4% of patients.
Although investors may have been interested in the
specific serious AEs experienced by STORM trial participants, we
have conclusively established that a company is not, by virtue of
- 25 - making some disclosures about its products, obligated to disclose
all potentially interesting information. Backman, 910 F.2d at 16.
While Thant may have wished to know more about the total landscape
of AEs associated with selinexor, that alone is not enough to
render Karyopharm's disclosures materially misleading. Nor does
Karyopharm's decision not to include data on the prevalence of
serious AEs in its STORM press release rise to the level the
misstatements and omissions in Ariad.
Given that Thant has thus not plausibly alleged a
material misstatement with respect to the May 1, 2018 conference
call or the April 30, 2018 press release, his associated Section
10(b) claim must be dismissed. Likewise, he has not alleged a
materially misleading statement sufficient to sustain a claim
pursuant to SEC Rule 10b-5. With the dismissal of his Section
10(b) claim, Thant's Section 20(a) claim necessarily fails as well,
because he has not stated an underlying violation of the Securities
Exchange Act of 1934. See In re Biogen, 857 F.3d at 44–45 (citing
ACA Fin. Guar. Corp., 512 F.3d at 67–68). Having determined that
dismissal is appropriate, we need not examine Thant's arguments
with respect to scienter.
CONCLUSION
For the foregoing reasons, the district court's
dismissal of Thant's second amended complaint for failure to state
a claim is affirmed.
- 26 -