552 F.Supp.3d 77
D. Mass.2021Background:
- Plaintiff (Dr. Thant) brought a putative securities-fraud class action against Karyopharm and certain officers, alleging that public statements and omissions about selinexor’s safety and efficacy inflated Karyopharm’s stock price during March 2, 2017–February 22, 2019.
- Key clinical trials: SOPRA (terminated Mar. 2, 2017; failed primary endpoint), STORM (single-arm Phase 2 with high reported toxicity), and BOSTON (ongoing Phase 3 used to supplement FDA review).
- Karyopharm filed an NDA for selinexor in Aug. 2018; on Feb. 22, 2019 the FDA’s public briefing disclosed significant toxicity and limited efficacy, the stock dropped sharply, and ODAC delayed approval pending BOSTON results.
- Karyopharm had included a real‑world data (RWD) analysis in the NDA; FDA questioned its comparability/methodology and ultimately declined to rely on it for approval.
- Plaintiff asserted claims under the Securities Act (Sections 11 and 15) and the Exchange Act (Section 10(b), Rule 10b‑5, and Section 20(a)). The district court allowed defendants’ motion to dismiss the SAC without prejudice.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Accuracy/disclosure re SOPRA results | SOPRA statements omitted material toxicity and efficacy details that made disclosures misleading | Press release disclosed termination for failure to meet OS endpoint and qualified any OS "benefit" as limited to the small subgroup achieving CR | Court: SOPRA disclosures were not misleading given context and disclosed negative OS findings |
| Accuracy/disclosure re STORM results | STORM was presented as a success; omitted high rates of AEs, serious AEs, discontinuations, and on‑study deaths | Disclosed common AEs; statements were contextually reasonable about tolerability for a very ill cohort | Court: STORM disclosures were arguably incomplete (could have skewed the mix), but this alone did not carry plaintiff’s case absent scienter |
| RWD inclusion and survival comparisons | RWD was methodologically flawed and defendants misrepresented following FDA guidance and survival advantage | RWD was submitted as supportive; FDA reviewed and adjusted estimates; differences are a scientific dispute/opinion | Court: RWD statements were non‑actionable opinions/scientific disagreement; no plausible allegation defendants knew conclusions were false |
| Scienter (intent/recklessness) | Executives knowingly minimized toxicity to mislead investors; FE accounts support reckless concealment | Allegations lack particularized facts tying defendants to any scheme; many disclosures and FDA interactions undercut scienter | Court: Plaintiff failed to plead a strong inference of scienter; FE statements did not tie executives to misleading investors |
| Securities Act (Sections 11/15) — standing/traceability | Plaintiff’s shares are traceable to April 2017 and May 2018 offerings | Plaintiff did not buy at offering prices or on offering dates; pleaded only "on information and belief" without facts showing traceability | Court: Plaintiff lacked traceability/standing to sue under Section 11; Securities Act claims dismissed |
| Section 20(a) control person liability | Individual defendants controlled Karyopharm and are liable | Underlying §10(b) claims fail, so control‑person claim fails | Court: Section 20(a) claim dismissed as derivative of failed §10(b) claim |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (establishes the plausibility standard for pleadings)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading standard requiring plausibility)
- Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (standard for evaluating competing inferences of scienter)
- Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27 (elements of securities‑fraud claim under Rule 10b‑5)
- Dura Pharm., Inc. v. Broudo, 544 U.S. 336 (loss causation and economic loss principles)
- Hill v. Gozani, 638 F.3d 40 (1st Cir.) (duty to disclose and when partial disclosures can mislead)
- ACA Fin. Guar. Corp. v. Advest, Inc., 512 F.3d 46 (1st Cir.) (elements of Rule 10b‑5 claim and scienter evaluation)
- In re Boston Sci. Corp. Sec. Litig., 686 F.3d 21 (1st Cir.) (internal documents and "smoking gun" evidence for scienter)
- Local No. 8 IBEW Ret. Plan & Tr. v. Vertex Pharm., Inc., 838 F.3d 76 (1st Cir.) (company conduct showing belief in positive trial outcomes)
- In re Ariad Pharm., Inc. Sec. Litig., 842 F.3d 744 (1st Cir.) (traceability requirement for Section 11 standing)
- Mehta v. Ocular Therapeutix, Inc., 955 F.3d 194 (1st Cir.) (FDA investigations and their effect on scienter inference)
- Abiomed, Inc. v. Fire & Police Pension Ass’n of Colo., 778 F.3d 228 (1st Cir.) (disclosures undercut inference of fraudulent intent)