IN RE MYOVANT SCIENCES LTD. SECTION l6(b) LITIGATION, 513 F.Supp.3d 365

Derivative suit under Section 16(b) by Myovant shareholders against Roivant (beneficial owner of ~45% of Myovant) alleging short-swing profits from purchases and sales within six months.
Roivant and Sumitomo entered an MOU and then a Transaction Agreement for Sumitomo to acquire Roivant’s Myovant shares and other assets for a $3 billion package.
To enable consolidation, Roivant bought additional "Top‑Up" Myovant shares (≈4.24M shares) in Nov–Dec 2019 at prices between $11.80 and $18.85 (plus a private block at $15), then delivered those shares to Sumitomo at closing Dec 27, 2019; no cash changed hands for the Top‑Up Shares at closing; a Share Return Agreement gave Sumitomo legal title while Roivant retained pecuniary benefits and reacquisition rights.
Plaintiffs assert Roivant’s November–December purchases can be matched to Roivant’s sales in the Sumitomo transaction and that a control premium and undisclosed clinical information made the effective sale price higher, producing a disgorgeable profit.
Roivant moved to dismiss under Rules 12(b)(1) and 12(b)(6). Court held plaintiffs have Article III standing but failed to plausibly allege a disgorgeable profit; dismissal granted with leave to amend.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Article III standing to sue under Section 16(b)	Section 16(b) violations (short‑swing trading by a >10% holder) cause injury to issuer sufficient for standing (citing Bulldog)	Spokeo requires a concrete, non‑speculative injury beyond a bare statutory violation	Plaintiffs have standing: Bulldog remains consistent with Spokeo; Section 16(b) violations pose a risk of real harm to issuer interests, satisfying concreteness test
Matching purchases and sales under Section 16(b)	Top‑Up purchases may be matched to the sales in the Sumitomo transaction even if different shares	There is no proper match because purchases and sales are distinct	Matching permitted: shares are fungible and law allows arbitrary matching to compute profits when purchases and sales occur within six months
Existence of disgorgeable profit (failure to state a claim)	Effective sale price was much higher due to control premium and alleged insider knowledge of clinical results, creating profit despite market prices	Public market prices show Roivant paid more for Top‑Up Shares than the public sale price; plaintiffs’ premium/insider theories are speculative and unsupported	Plaintiffs failed to plausibly allege a profit subject to disgorgement; speculation about allocation or insider sharing is insufficient. Claim dismissed but plaintiffs may amend

Donoghue v. Bulldog Inv’rs Gen. P’ship, 696 F.3d 170 (2d Cir. 2012) (short‑swing trading by a 10% owner causes issuer injury sufficient for standing)
Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) (Article III requires a concrete injury; bare statutory violations sometimes insufficient)
Katz v. Donna Karan Co. Store, L.L.C., 872 F.3d 114 (2d Cir. 2017) (post‑Spokeo two‑part test for standing on procedural statutory claims)
Klein v. Qlik Techs., Inc., 906 F.3d 215 (2d Cir. 2018) (reiterating Bulldog on standing in Section 16(b) cases)
Newmark v. RKO Gen., Inc., 425 F.2d 348 (2d Cir. 1970) (elements required for liability under Section 16(b))
Gratz v. Claughton, 187 F.2d 46 (2d Cir. 1951) (shares are fungible; matching need not be same physical shares)
Feder v. Martin Marietta Corp., 406 F.2d 260 (2d Cir. 1969) (profits for §16(b) computed by matching purchases and sales to maximize disgorgement)
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (complaint dismissal standard; plausibility requirement)
Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (standing requires injury in fact, traceability, and redressability)