Silverstrand Investments v. Amag Pharmaceuticals, Inc.
2013 U.S. App. LEXIS 2525
1st Cir.2013Background
- AMAG developed and marketed Feraheme, an iron-replacement drug; AMAG's Offering Documents omitted 23 SAEs including a death and life-threatening events.
- The Offering occurred Jan. 21, 2010, with AMAG's revenues dependent on Feraheme's market success.
- FDA twice declined approval due to safety concerns; later FDA warning letters issued after Offering.
- Allegations centered on omissions under Item 303 (uncertainties) and Item 503 (risks) of Regulation S-K.
- District court dismissed §11 claims for lack of plausible omissions; §12 and §15 claims were also dismissed; leave-to-amend was denied implicitly.
- The First Circuit vacated the district court’s judgment, remanding for further proceedings; it affirmed the §11 omissions related to the 23 SAEs but rejected the FDA Warning Letter omissions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §11 claims survive for undisclosed SAEs under Items 303/503 | Plaintiffs plead 23 SAEs created uncertainties/risks | Defendants argue SAEs were consistent with prior disclosures | Yes; omissions plausible for Item 303/503 regarding 23 SAEs |
| Whether FDA Warning Letter information supports §11 omission | FDA Warning Letter data should have been disclosed | Complaint lacked allegations tying Letter to Offering time | No; insufficient pleadings linking FDA Letter to Offering |
| Whether §12 and §15 claims fail due to §11 ruling | §12/§15 depend on §11 viability | Reversed; §12 and §15 depend on §11 viability and are viable on remand | |
| Whether leave to amend should have been granted | Opportunity to replead website-misrepresentation | Amendment inadequately developed; not justified | Denied; amendment not adequately described; court did not abuse discretion |
Key Cases Cited
- In re Morgan Stanley Info. Fund Secs. Ltdg., 592 F.3d 347 (2d Cir. 2010) (§11 omissions with Regulation S-K standards; parallel §§ 11/12 elements)
- Panther Partners, Inc. v. Ikanos Commc'ns, Inc., 681 F.3d 114 (2d Cir. 2012) (Item 303/502 flexibility; materiality does not hinge on simple arithmetic)
- Matrixx Initiatives, Inc. v. Siracusano, 131 S. Ct. 1309 (U.S. 2011) (materiality under securities laws; SAEs may be material absent statistical significance)
- Shaw v. Digital Equip. Corp., 82 F.3d 1194 (1st Cir. 1996) (Item 303 governs disclosure obligations for Form S-3 registrants)