Silverstrand Investments v. Amag Pharmaceuticals, Inc.

United States Court of Appeals
For the First Circuit

No. 11-2063

SILVERSTRAND INVESTMENTS; BRIARWOOD INVESTMENTS, INC.;
SAFRON CAPITAL CORPORATION, on behalf of themselves
and all others similarly situated,

Plaintiffs, Appellants,

v.

AMAG PHARMACEUTICALS, INC.; BRIAN J.G. PEREIRA, M.D.;
DAVID A. ARKOWITZ; JOSEPH V. BONVENTRE, M.D.;
MICHAEL NARACHI; ROBERT J. PÉREZ; LESLEY RUSSELL, M.D.;
DAVEY S. SCOON; RON ZWANZIGER; MORGAN STANLEY & CO.
INCORPORATED; J.P. MORGAN SECURITIES LLC; GOLDMAN,
SACHS & CO.; LEERINK SWANN LLC; ROBERT W. BAIRD & CO.
INCORPORATED; CANACCORD GENUITY INC.,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Nathaniel M. Gorton, U.S. District Judge]

Before
Torruella, Lipez, and Howard,
Circuit Judges.

Ian D. Berg, with whom Abraham, Fruchter & Twersky, LLP,
Mitchell M.Z. Twersky, Jack G. Fruchter, and Ximena R. Skovron,
were on brief for appellants.
John C. Dwyer, with whom Angela L. Dunning, Robert B. Lovett,
Gilles R. Bissonnette, Karen L. Burhans, and Cooley LLP, were on
brief for the AMAG appellees.
Tariq Mundiya, with whom Sameer Advani, Willkie Farr &
Gallagher LLP, Kevin J. O'Connor, and Hinckley, Allen & Snyder LLP,
were on brief for the Underwriter appellees.
February 4, 2013

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 TORRUELLA, Circuit Judge. This appeal arises from a

pleading-stage dismissal of a putative class action suit brought

under sections 11, 12, and 15 of the Securities Act of 1933, 15

U.S.C. §§ 77k, 77l(a)(2), 77o. Lead plaintiffs Silverstrand

Investments, Safron Capital Corporation, and Briarwood Investments

(collectively, "Plaintiffs") challenge the dismissal, arguing that

the Complaint plausibly pleads actionable omissions from a

prospectus and a registration statement (the "Offering Documents")

issued by AMAG Pharmaceutical, Inc. ("AMAG") in connection with a

secondary stock offering held on January 21, 2010 (the "Offering").

Specifically, Plaintiffs point to two omissions by AMAG: (1)

failure to disclose 23 reports of serious adverse effects

(including a death) linked to Feraheme, a make-or-break drug for

AMAG's future; and (2) failure to disclose information the Food and

Drugs Administration ("FDA") revealed in a Warning Letter issued

nine months after the Offering.

The district court premised the dismissal of the entire

Complaint on the relatively narrow ground that Plaintiffs failed to

sufficiently plead § 11 claims pursuant to Items 303 and 503 of

Securities and Exchange Commission ("SEC") Regulation S-K. We

affirm in part and reverse in part that dismissal. First, we

conclude that the Complaint states claims of actionable omissions

because the 23 undisclosed reports gave rise to (1) uncertainties

AMAG reasonably knew would adversely affect future revenues, see 17

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C.F.R. § 229.303(a)(3)(ii) (requiring disclosures of uncertainties

that reasonably will adversely affect a registrant's business); and

(2) risk factors that made the Offering risky and speculative, see

id. § 229.503(c) (requiring disclosure of risks that make an

offering risky or speculative). We, however, also hold that as to

the information the FDA revealed nine months after the Offering,

the Complaint failed to allege omissions sufficient to state a

claim. We thus affirm as to that claim.1

To get to our conclusion we first have to answer three

questions: (1) whether the district court's decision was consistent

with Items 303 and 503 of Regulation S-K; (2) whether the district

court properly dismissed Plaintiffs' §§ 12 and 15 claims based on

the determination that the complaint failed to allege claims under

§ 11; and (3) whether the district court erred in implicitly

denying a request for leave to amend by not addressing it. We

reach this latter issue only because Plaintiffs move us to grant

them leave to amend their allegations in connection with the

information revealed by the FDA, a request we deny.

1
The district court also dismissed a claim premised on AMAG's
failure to disclose that the FDA twice declined to approve Feraheme
due to safety concerns. Plaintiffs have not challenged that
determination; therefore, we summarily affirm it. See DeCaro v.
Hasbro, Inc., 580 F.3d 55, 64 (1st Cir. 2009)(stating that
"contentions not advanced in an appellant's opening brief are
deemed waived").

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 I. Background

A. The Parties

Plaintiffs filed this suit on behalf of themselves and

all other investors who purchased AMAG's shares pursuant or

traceable to the Offering Documents. Defendants-appellees are

AMAG, all officers and directors of AMAG who signed the Offering

Documents, as well as the investment firms that underwrote the

Offering (collectively, "Defendants").

B. Events Leading up to Plaintiffs' Suit

As related in the Complaint and stated by the district

court, the events leading up to this appeal began with AMAG's

development of Feraheme, an intravenous iron-replacement drug used

to treat iron-deficiency anemia in adult patients with chronic

kidney disease. Although two competing FDA-approved iron-

replacement therapies dominated the market in which Feraheme

intended to compete, AMAG hoped to capitalize on the drug's faster

and shorter treatment turn-around time.2 In December 2007, AMAG

thus sought approval from the FDA to market Feraheme as an iron-

replacement treatment.

AMAG disclosed to investors details about Feraheme's FDA-

approval process. AMAG's disclosures included information

2
Feraheme could be administered in as little as 17 seconds, with
a complete course of treatment requiring two to four visits to a
physician. Competing alternatives, in contrast, would be
administered over a 15-to-60 minute interval and would require five
to ten visits to a physician.

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concerning "Serious Adverse Events" ("SAEs") that resulted during

Feraheme's clinical trials.3 For example, in a January 31, 2008

SEC 8-K Form, AMAG disclosed results of one of the phases of

Feraheme's clinical trials, including that "the SAE rate was 9.8%

among [Feraheme] subjects compared to 12.1% among oral subjects."

AMAG also apprised investors that "in the [Feraheme] clinical

development program that included 2,074 subjects, 31 deaths were

observed," but "[n]one of these deaths were considered to be

related to study treatment."

AMAG made similar disclosures in an SEC 10-K Form filed

for the fiscal year ending December 31, 2008. There, AMAG stated

that, "[a]cross all phases of the Feraheme clinical development

program with approximately 2,800 total administered doses of

Feraheme, there were no cases of anaphylaxis and no deaths

determined by the [FDA] investigators to be drug-related."4

3
SAEs are defined as "[a]ny adverse drug experience occurring at
any dose that results in any of the following outcomes: [d]eath, a
life-threatening adverse drug experience, in-patient
hospitalization or prolongation of existing hospitalization, a
persistent or significant disability/incapacity, or a congenital
anomaly/birth defect." 21 C.F.R. § 310.305(b). Pharmaceutical
companies are required to report to the FDA all SAEs of which they
become aware. See FDA, Guidance for Industry, Good
Pharmacovigilance Practice and Good Pharmacoepidemiologic
Assessment, 2005 WL 3628217, at *4 (Mar. 2005). Nevertheless, the
fact that an SAE is reported does not necessarily mean that a
specific drug caused it. See Matrixx Initiatives, Inc. v.
Siracusano, ___ U.S. ___, 131 S. Ct. 1309, 1318-19 (2011).
4
According to the Complaint, anaphylaxis is "a life-threatening
whole-body allergic reaction to a drug or allergen . . . . The
onset of anaphylaxis is rapid, and must be treated, typically . . .

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 AMAG's efforts to secure FDA approval for Feraheme

initially failed. By letter dated October 17, 2008, the FDA

declined to approve Feraheme due, in part, to a single occurrence

of anaphylaxis among 1,726 patients exposed to the drug. The

letter also expressed concerns with (1) the occurrence of "serious

hypotensive reactions" in approximately 0.3% of the exposed

population; (2) inconsistencies in the reports of SAEs;5 and (3)

systematic deficiencies in Feraheme's manufacturing process. The

FDA again declined to approve Feraheme on December 22, 2008. It

took AMAG until June 30, 2009 to finally obtain the FDA's

imprimatur for Feraheme.

In approving Feraheme, the FDA sanctioned a product

insert for AMAG to include with the drug. Among other things, the

product insert explicitly disclosed several safety risks associated

with the drug:

Feraheme may cause serious hypersensitivity
reactions, including anaphylaxis and/or
anaphylactoid reactions. In clinical studies,
serious hypersensitivity reactions were
reported in 0.2% (3/1,726) of subjects
receiving Feraheme. Other adverse reactions
potentially associated with hypersensitivity
(e.g., pruritus, rash, urticaria or wheezing)

by injection of epinephrine." The FDA eventually concluded that
Feraheme could cause anaphylaxis.
5
This is an example of an inconsistency the FDA cited: "To
illustrate, subject 554 appears to have experienced a serious
hypotensive event that prompted the delay of a second dose of
[Feraheme]. The adverse report denoted this event as a 'headache'
and did not describe the other clinical problems."

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 were reported in 3.7% (63/1,726) of these
subjects.

An SEC 8-K Form AMAG filed in July 1, 2009, announced the FDA's

approval of Feraheme and shared with potential investors the

information in Feraheme's FDA-approved package insert.

Feraheme hit the market in July 2009, and AMAG quickly

geared up for the Offering. On November 5, 2009, AMAG issued an

SEC 10-K Form which disclosed to investors that "Feraheme may not

receive the same level of market acceptance . . . as competing iron

replacement therapy products . . . . The iron replacement therapy

market is highly sensitive to several factors including . . . the

perceived safety profile of the available products . . . ."

The Offering Documents were issued in January 2010. The

Prospectus included detailed disclosures about the results of

Feraheme's clinical trials, the FDA approval process, and the FDA-

approved package insert. It also incorporated by reference some of

AMAG's filings with the SEC and contained a section regarding the

risk factors associated with the Offering, which, according to

AMAG, included "[o]ur ability to demonstrate to the medical

community . . . the clinical efficacy and safety of Feraheme as an

alternative to current treatments for iron deficiency anemia

. . . ." The Prospectus further appraised investors that

[AMAG is] subject to ongoing FDA regulatory
requirements . . . . Failure to comply with
such regulatory requirements or the later
discovery of previously unknown problems with
Feraheme . . . may result in restrictions on

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 our ability to market and sell Feraheme[;]
. . . FDA warning letters; . . . [and] FDA-
imposed label changes . . . . Any of these
sanctions would have a material adverse impact
on our ability to generate revenues and to
achieve profitability.

. . . .

[AMAG's] ability to generate future revenue is
solely dependent on our successful
commercialization and development of Feraheme
. . . . Accordingly, if we are unable to
generate sufficient revenues from sales of
Feraheme, we may never be profitable, our
financial condition will be materially
adversely affected, and our business prospects
will be limited.

The Offering Documents, however, did not mention that

AMAG had reported to the FDA at least 23 reports of SAEs since

Feraheme's inception to the market. Two of those reports

documented, respectively, anaphylactic reactions in two female

patients with a "life-threatening" outcome requiring

hospitalization. Fourteen of the other 23 reports stated that SAEs

had resulted in hospitalizations due to one or more symptoms

associated with anaphylaxis, including cardiac arrest, shortness of

breath, a reduction in blood pressure, loss of consciousness,

hives, dizziness, or vomiting. The Offering Documents similarly

failed to mention that on December 31, 2009, AMAG had reported to

the FDA that a 70-year-old patient died following one 510 mg

injection of Feraheme and that the drug had been identified by the

treating physician as the "Primary Suspect" for the fatality.

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 The Offering took place on January 21, 2010. Over three

million shares of AMAG's common stock were sold to the public at

$48.25 per share, bringing AMAG approximately $174 million in net

proceeds and over $7.8 million in fees to the underwriters. Within

weeks, however, the market value of AMAG's shares began to plummet.

On February 4, 2010, a securities analyst reported that

several patients using Feraheme had experienced adverse reactions

to the drug and that at least one patient had died for reasons that

"may or may not be directly related to Feraheme." The report also

stated that it was impossible to determine whether those incidents

fell within the occurrence rate of SAEs disclosed in Feraheme's

package insert and that "consultants continu[ed] to use Feraheme

but adoption rates were slowing." AMAG's shares closed at $38.12

after the issuance of the report.

The next day, AMAG issued a press release stating, among

other things, that the SAEs identified by the analyst were

consistent with the rates disclosed in Feraheme's package insert.

According to AMAG's press release, "[o]f the estimated 35,000

patient exposures to date, 40 serious adverse events have been

reported . . . . No mortality signal has been observed. A single

reported death occurred in a patient two days post-Feraheme

treatment, which the Company does not believe was the result of

Feraheme." Notwithstanding, AMAG's shares still dropped an

additional 35 cents at market end.

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 The market price of AMAG's shares took another hit on

February 8, 2010. That day, a follow-up analyst report expressed

skepticism regarding AMAG's representations as set forth in its

press release and stated that one of Feraheme's competing

alternatives had been associated with only one SAE and one death

during its ten-year market life. AMAG's shares slipped to $36.67.

C. Plaintiffs File Suit

Plaintiffs filed the Complaint on March 18, 2010. They

sought compensatory damages under § 11 of the Securities Act,

claiming, in essence, that AMAG failed to disclose in the Offering

Documents "the existing fact that Feraheme users had already

suffered adverse reactions to Feraheme requiring hospitalization."

AMAG's shares continued to perform poorly in the market

after Plaintiffs' suit. On October 18, 2010, the FDA issued a

Warning Letter to AMAG, stating that AMAG's website had

misrepresented Feraheme's approved uses. The Letter also asserted

that AMAG's website had failed "to communicate any of the risks

associated with the drug," suggesting that Feraheme was "safer than

ha[d] been demonstrated and therefore plac[ing] the public at

risk." Ten days later, AMAG "announced for the first time that (1)

the FDA had created a Tracked Safety Issue for Feraheme's cardiac-

related SAEs; (2) the FDA had met with the company in September

[2010] to discuss SAEs; and (3) the Company was in discussions with

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the FDA concerning labeling changes." AMAG's shares fell from

$19.30 to $15.91 on that day.

On November 26, 2010, prompted by the FDA, AMAG announced

changes in Feraheme's package insert. The changes included

warnings of post-Offering SAEs as well as a requirement that

physicians increase the observation period after administering

Feraheme to patients. When that news hit the market, AMAG's shares

fell to $14.05, a 71% decrease from the Offering price of $48.25

per share.

Plaintiffs filed a Second Amended Complaint on

December 17, 2010. This time the Complaint pled causes of action

under §§ 11, 12 and 15 of the Securities Act and advanced the two

claims of omissions at issue here. Among other things, the

Complaint alleged that between Feraheme's approval and the Offering

"AMAG [had] reported to the FDA (but failed to disclose to

investors) twenty-three (23) SAEs associated with Feraheme's use,

including documented anaphylactic reactions in two female patients

. . . with a life-threatening outcome requiring hospitalization

. . . ." According to the Complaint, AMAG had a duty to disclose

the 23 SAEs under Item 303, 17 C.F.R. § 229.303(a)(3)(ii), because

the SAEs gave rise to uncertainties that AMAG knew would reasonably

have a negative impact on its business. Similarly, the Compliant

alleged that the 23 SAEs made the Offering risky or speculative,

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and therefore, that AMAG had a duty to disclose them under Item

503. 17 C.F.R. § 229.503(c).

Further, the Complaint alleged that AMAG failed to

disclose that a material portion of its revenues was derived from

the internet practices highlighted in the FDA's October 18, 2010

Warning Letter, and thus, implied that AMAG was already engaging in

such practices when the Offering took place nine months earlier.

D. Plaintiffs' Suit is Dismissed

In February 2011, Defendants moved to dismiss under Fed.

R. Civ. P. 12(b)(6). Plaintiffs opposed and moved to amend the

Complaint. In dismissing Plaintiffs' § 11 claims, the court

concluded that the 23 SAEs neither were a "known trend or

uncertainty" pursuant to Item 303 nor made the Offering

"speculative or risky" pursuant to Item 503, because "the 23 SAEs

that occurred after the launch of Feraheme but prior to the

Offering were consistent with the previously . . . publicly-

disclosed rates observed in the clinical trials." The court also

remarked that "one death does not a trend make."

Plaintiffs' contentions regarding the information

underlying the October 18, 2010 FDA Letter were also dismissed.

According to the district court, no allegation in the Complaint

linked the internet practices questioned in the Letter to AMAG's

business practices at the time of the Offering.

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 Plaintiffs' claims under §§ 12 and 15 fared no better.

The district court dismissed Plaintiffs' § 12 claims under the same

reasoning used to dismiss the § 11 claims, noting that both

sections require a showing of an actionable omission. The district

court also dismissed Plaintiffs' § 15 claims, on the basis that

Plaintiffs failed to state requisite claims under either §§ 11 or

12. The court made no ruling in connection with Plaintiffs'

request for leave to amend the Complaint, and thus implicitly

denied it. This appeal timely followed.

II. Standard of Review

We review a dismissal under Rule 12 (b)(6) de novo. Gray

v. Evercore Restructuring L.L.C., 544 F.3d 320, 324 (1st Cir.

2008). To do so, we first discard bald assertions and conclusory

allegations. Ocasio-Hernández v. Fortuño-Burset, 640 F.3d 1, 12

(1st Cir. 2011). Then we "view the well-pleaded facts in the light

most favorable to the non-moving party, drawing all reasonable

inferences in its favor." Gray, 544 F.3d at 324. In performing

this analysis, we cannot dismiss a "complaint [that] satisfies Rule

8(a)(2)'s requirement of a 'short and plain statement of the claim

showing that the pleader is entailed to relief.'" Ocasio-

Hernández, 640 F.3d at 11 (quoting Fed. R. Civ. P. 8(a)(2)). In

other words, a complaint passes muster at the pleading stage if we

find that it contains "enough detail to provide a defendant with

'fair notice of what the . . . claim is and the grounds upon which

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it rests.'" Id. at 12 (quoting Bell Atlantic Corp. v. Twombly, 550

U.S. 544, 555 (2007)).

In contrast, we review for abuse of discretion denials of

motions for leave to amend the pleadings, and "will affirm if any

adequate reason for the denial is apparent from the record."

O'Connell v. Hyatt Hotels of P.R., 357 F.3d 152, 154 (1st Cir.

2004).

III. Analysis

A. Plaintiffs' § 11 claims and Items 303 and 503

In their first point of error, Plaintiffs challenge the

district court's determination that AMAG was not duty-bound to

disclose the 23 SAEs and the information the FDA revealed in the

Warning Letter issued nine months after the Offering.

Specifically, Plaintiffs find error in the district court’s

determination that said information did not constitute

uncertainties or risks under Items 303 and 503, both of which are

actionable through § 11.

"Section[] 11 . . . [is an] enforcement mechanism[] for

the mandatory disclosure requirements of the Securities Act."

Glassman v. Computervision Corp., 90 F.3d 617, 623 (1st Cir. 1996)

(internal quotation marks omitted). As relevant here, § 11 is

triggered "[i]n case any part of [a] registration statement, when

such part became effective . . . omitted to state a material fact

required to be stated therein . . . ." 15 U.S.C. § 77k(a). Section

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11 is "notable . . . for the limitations on [its] scope as well as

the interrorem nature of the liability [it] create[s]." In re

Morgan Stanley Info. Fund Secs. Litig., 592 F.3d 347, 359 (2d Cir.

2010). When applicable, it imposes strict liability on issuers of

a security, and any "remaining [] defendants . . . may be held

liable for mere negligence." Id. Moreover, unlike § 10(b) of the

Securities and Exchange Act, § 11 does not have a scienter or

reliance requirement, and neither the heightened pleading standard

of Fed. R. Civ. P. 9(b) nor of the Private Securities Litigation

Reform Act applies unless a § 11 claim sounds in fraud. Id.;

Glassman, 90 F.3d at 628 n.13.6 "Thus, the provision[] place[s] a

relatively minimal burden on a plaintiff," who need only satisfy

the notice-pleading standard of Fed. R. Civ. P. 8(a). Panther

Partners, Inc. v. Ikanos Commc'ns, Inc., 681 F.3d 114, 120 (2d Cir.

2012) (internal quotation marks and alteration omitted).

6
In their motion to dismiss, Defendants argued that the Complaint
sounded in fraud, but the district court declined to reach this
argument, concluding that "[D]efendants frame their arguments
primarily with respect to Fed. R. Civ. P. 8 and [P]laintiffs'
Second Amended Complaint fails to state a claim even under that
standard . . . ." Defendants did not brief us on this issue, and
we do not decide it here. In any case, "[i]t is up to the district
court in the first instance to weigh the adequacy of the complaint
for purposes of Rule 9(b) and, if appropriate, to provide 'an
opportunity to correct [any] pleading deficiencies.'" United
States ex rel. Hutcheson v. Blackstone Med., Inc., 647 F.3d 377,
384 n.8 (1st Cir. 2011) (quoting United States ex rel. Poteet v.
Bahler Med., Inc., 619 F.3d 104, 115 (1st Cir. 2010)). We do not
decide whether Plaintiffs may assert any waiver arguments.

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 As Plaintiffs correctly point out, an actionable § 11

omission may arise when a registration statement fails to comply

with Item 303 or 503 of SEC Regulation S-K. Shaw v. Digital Equip.

Corp., 82 F.3d 1194, 1202 n.3 (1st Cir. 1996)(stating that a duty

to disclose under § 11 arises "when a . . . regulation requires

disclosure") abrogated on other grounds by 15 U.S.C. § 78u-4(b)(2).

Item 303 imposes upon registrants of securities a series of

disclosure duties "intended to give the investor an opportunity to

look at the company through the eyes of management," so that they

may "assess the financial condition and results of operations of

the registrant, with particular emphasis on the registrant's

prospects for the future." Mgmt.'s Discussion and Analysis of Fin.

Conditions and Results of Operations; Certain Inv. Co. Disclosures,

SEC Release No. 6835, 1989 WL 1092885, at *3 (May 18, 1989). For

that purpose, Item 303 requires the disclosure of "any known . . .

uncertainties that . . . the registrant reasonably expects will

have a material . . . unfavorable impact on net sales[,]

revenues[,] or income from continuing operations." 17 C.F.R.

§ 229.303(a)(3)(ii). To plausibly plead such a failure to disclose

claim, a complaint must allege (1) that a registrant knew about an

uncertainty before an offering; (2) that the known uncertainty is

"reasonably likely to have material effects on the registrant's

financial condition or results of operation"; and (3) that the

offering documents failed to disclose the known uncertainty.

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Mgmt.'s Discussion and Analysis of Fin. Conditions and Results of

Operations, SEC Release No. 6835, 1989 WL 1092885, at *4.

Item 503, in turn, is intended "to provide investors with

a clear and concise summary of the material risks to an investment

in the issuer's securities." Securities Offering Reform, SEC

Release No. 8501, 2004 WL 2610458, at *86 (Nov. 3, 2004).

Accordingly, it requires that a prospectus include "a discussion of

the most significant factors that make the offering speculative or

risky." 17 C.F.R. § 229.503(c). The discussion must "describe the

most significant factors that may adversely affect the issuer's

business . . . or its future financial performance." In re

WorldCom, Inc. Secs. Litig., 346 F. Supp. 2d 628, 690 (S.D.N.Y.

2004) (quoting Securities Offering Reform, SEC Release No. 8501,

2004 WL 2610458, at *86). Moreover, the "discussion of risk

factors . . . 'should explain how the risk affects the . . .

securities being offered. Generic or boilerplate discussions do

not tell the investors how the risks may affect their investment.'"

Id. (quoting Statement of the Commission Regarding Disclosure of

Year 2000 Issues and Consequences by Public Companies, Investment

Advisers, Investment Companies, and Municipal Securities Issuers,

SEC Release No. 7558, 1998 WL 455894, at *14 (July 29, 1998)). In

other words, to withstand dismissal at the pleading stage, a

complaint alleging omissions of Item 503 risks needs to allege

sufficient facts to infer that a registrant knew, as of the time of

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an offering, that (1) a risk factor existed; (2) the risk factor

could adversely effect the registrant's present or future business

expectations; and (3) the offering documents failed to disclose the

risk factor.

(i) The 23 SAEs

Our de novo review satisfies us that the allegations in

the Complaint, when read in context, plausibly plead Item 303 and

503 omissions in connection with the 23 SAEs. The relevant

allegations for this analysis are the following: (1) that as of the

time of the Offering, Feraheme had been in the market for six

months; (2) that Feraheme was sold in a market dominated by well-

known alternatives with proven safety and efficacy records; (3)

that AMAG's profitability entirely depended on Feraheme's

commercial success; (4) that the FDA twice declined to approve

Feraheme due to safety concerns, which included one incident of

anaphylaxis; (5) that during Feraheme's clinical trials "there were

no deaths determined by the [FDA] investigators to be drug-

related"; (6) that as of the time of the Offering, AMAG had

disclosed to the FDA 23 SAEs, including one death in which Feraheme

had been identified by a reporting physician as the "Primary

Suspect," two incidents of "life-threatening" anaphylactic

reactions attributed to Feraheme, and fourteen hospitalizations

caused by anaphylactic symptoms attributed to Feraheme; and (7)

that AMAG's Offering Documents did not disclose either the death,

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the "life-threatening" incidents, or the fourteen hospitalizations

attributed to Feraheme.

Taking the preceding factual allegations as true, we have

no trouble drawing the reasonable inference that before the

Offering AMAG knew that a death, two life-threatening reactions,

and fourteen hospitalizations would have been relevant to consumers

when deciding whether to use Feraheme, as opposed to another proven

and safer alternative. The Offering Documents stated as much:

"The iron replacement therapy market is highly sensitive to several

factors including . . . the perceived safety profile of the

available products." Common sense also dictates that AMAG knew

that the riskier Feraheme appeared, the less attractive the drug

would be as a method of treatment, and the less likely an investor

would be to invest in AMAG, whose profits entirely depended on

Feraheme's commercial success.

The allegations also allow the reasonable inference that,

before the Offering, AMAG knew that the 23 SAEs could have prompted

FDA action in connection with Feraheme. If the FDA initially

declined to approve Feraheme due to a single case of anaphylaxis

during clinical trials, a death, two life-threatening anaphylactic

reactions, and fourteen hospitalizations undoubtedly could have

raised red flags with the agency. Moreover, because the FDA

investigators had found no drug-related deaths as of the time of

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Feraheme's approval, we can reasonably infer that the FDA could

have sprung into action due to a Feraheme-related death.

Similarly, the allegations allow us to reasonably infer

that FDA intervention due to the 23 SAEs would have meant trouble

for AMAG. We need go no further than the excerpts of the Offering

Documents cited above to get an idea of one of at least two

possible consequences: FDA action "may result in restrictions on

[AMAG's] ability to market and sell Feraheme," the issuance of "FDA

warning letters," and "FDA-imposed label changes. Any of th[o]se

sanctions would have a material adverse impact on [AMAG's] ability

to generate revenues and to achieve profitability. . . . [AMAG's]

ability to generate future revenue is solely dependent on [its]

successful commercialization and development of Feraheme."

Regarding the other possible consequence, let's just say that we

doubt that AMAG believed that an untimely FDA intervention would

positively impact the Offering. To plead plausible claims for

omissions under § 11 due to undisclosed Item 303 uncertainties and

undisclosed Item 503 risks, the type of allegations and inferences

just described more than suffice.

The district court, however, concluded otherwise

primarily because "the 23 SAEs that occurred after the launch of

Feraheme but prior to the Offering were consistent with the

previously . . . publicly-disclosed rates observed in the clinical

trials." Defendants invite us to affirm that conclusion, arguing

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that "it is a matter of simple math that the rate of post-marketing

SAEs alleged by Plaintiff . . . is dramatically less than the SAE

rate observed during clinical trials and disclosed to the public

. . . ."7 We cannot accept Defendants' invitation.

To reach its conclusion, the district court compared the

information disclosed prior to the Offering with the data disclosed

in the press release AMAG issued on February 5, 2010 -- that is,

35,000 patient exposures to Feraheme and 40 serious adverse events

reported. This comparison is problematic for at least three

reasons.

First, the Complaint alleges that AMAG misleadingly

calculated the rate of occurrence of post-marketing SAEs. In its

press release, AMAG reported the rate as 0.1% based on the

estimated 35,000 injections of Feraheme to date, rather than based

on the number of patients, the metric used during the clinical

trials. Because Feraheme is administered in as many as four

injections, the changed metric understated the rate of SAEs. The

7
Defendants also move us to conclude that Item 303 does not apply
in this case because "AMAG filed an SEC Form S-3 registration
statement, not an S-1 . . . . [and] Item 303 does not apply to
Forms S-3." In support they cite Shaw, 82 F.3d at 1205. However,
Shaw clearly states that Form S-3 registrants are required to
comply with Regulation S-K, which, among other things, specifically
requires that "the prospectus provides investors with an update of
the information required to be disclosed in the incorporated
Exchange Act filings, including the information provided in those
filings concerning 'known trends and uncertainties' with respect to
'net sales or revenues or income from continuing operations.'" Id.
(quoting 17 C.F.R. § 229.303(a)(3)(ii)).

-22-
Complaint alleges that the "true" rate of post-marketing SAEs is as

high as 0.45% based on the per patient metric. Defendants

apparently succeeded in convincing the district court to compare

that rate with a 2.9% rate of occurrence reported during one of the

many phases of Feraheme's clinical trials.8 But in so doing,

Defendants did not reveal, either to the district court or to us,

that the disclosure documents also set forth a separate category

for "drug-related SAEs," which were reported as occurring only in

0.17% of the patients in the clinical trials. Since Plaintiffs

allege that the unreported SAEs were all drug-related, the 0.45%

rate alleged in the Complaint appears to have been over two times

higher than what AMAG had previously reported, which negates the

district court's conclusion.

Second, AMAG's press release refers to the state of

affairs two weeks after the Offering. That two-week gap is

dispositive in itself, as the inquiry under § 11, as well as under

Items 303 and 503, requires us to assess the information a

registrant knows exclusively as of the time of the stock offering.

8
Without explaining its rationale, the district court appears to
have made the sweeping inference that investors can always predict
how a drug would behave after FDA approval by analyzing scattered
data regarding SAE rates observed during clinical trials, in a
controlled environment, while a drug is being developed and has yet
to be approved by the FDA. We cannot subscribe to that inference
without knowing its underlying basis. However, because Plaintiffs
do not raise a point of error on this front, and because the
district court's decision is reversed on other grounds, we do not
address this issue further.

-23-
See 15 U.S.C. § 77k(a) ("In case any part of the registration

statement, when such part became effective . . . .") (emphasis

supplied).

Last but not least, our analysis under Items 303 and 503

cannot be limited to simple arithmetical computations. The

question is not whether the 23 SAEs comported with past experiences

but rather whether the 23 SAEs, in the context in which they

occurred, created uncertainties or risks that AMAG needed to

disclose under Items 303 and 503. Panther Partners, 681 F.3d at

114, a decision issued after the district court's dismissal, offers

guidance on this issue.

In that case, investors brought §§ 11, 12 and 15 claims

following a secondary stock offering by a manufacturer of

programmable semiconductors. Their complaint alleged that the

offering documents ran afoul of Item 303 in failing to disclose

known defects, and thus possible recalls, on all semiconductors

sold in a transaction representing 72% of the company's yearly

revenues. The district court dismissed the complaint under Rule

12(b)(6), finding that "[i]t is no secret that chips are subject

to some percentage of failure . . . . The plaintiff must tell the

Court what was going on . . . and how much the defect experienced

actually differed from the norm." Id. at 118 (quoting Panther

Partners, Inc. v. Ikanos Commc'ns, Inc., No. 06 Civ. 12967, 2008 WL

2414047, at *3 (S.D.N.Y. June 12, 2008) (internal citations

-24-
omitted)). The Second Circuit granted a motion for leave to amend

the complaint, but the district court, on remand, still found the

proposed amendments insufficient to allege that defendants "knew

the defect rate was above average" before filing the registration

statement. Id. In reversing, the Second Circuit stated:

We believe that, viewed in the context of Item
303's disclosure obligations, the defect rate,
in a vacuum, is not what is at issue.
Rather, it is the manner in which uncertainty
surrounding that defect rate, generated by an
increasing flow of highly negative information
from key customers, might reasonably be
expected to have a material impact on future
revenues.

. . . .

In focusing on whether plaintiff alleged that
[defendants] knew the defect rate was "above
average" before the Secondary Offering, the
district court construed the proposed
complaint and our remand order too narrowly.
Item 303's disclosure obligations, like
materiality under the federal securities laws'
anti-fraud provisions, do not turn on
restrictive mechanical or quantitative
inquiries.

Id. at 120, 122 (internal citations omitted)(citing Matrixx

Initiatives, Inc. v. Siracusano, ___ U.S. ___, 131 S. Ct. 1309

(2011) (rejecting contention that SAEs associated with

pharmaceutical company's product could not be material absent a

statistically significant number of reports establishing a causal

link between the product and the SAEs)).9

9
The parties heavily relied on Matrixx in their briefs and oral
arguments to the Court. Matrixx, however, addressed claims of

-25-
 Under the foregoing analysis, the statistical comparison

Defendants advance, even if it worked in their favor, is not

dispositive. Rather, at this stage, we are more concerned with the

allegation that, when the Offering took place, the news that

Feraheme had possibly caused a death, as well as the other serious

side effects reported in the 23 SAEs, was already circulating

within the medical community AMAG needed to win over to remain as

a going concern. Because the Complaint alleged that AMAG failed to

disclose the 23 SAEs, even though it knew about them, we cannot

conclude that it failed to state plausible § 11 claims for

omissions of Item 303 uncertainties and Item 503 risks.

(ii) The FDA's Warning Letter

The claim that Item 503 required AMAG to disclose the

information revealed in the FDA Warning Letter issued nine months

after the Offering is a completely different story. Not much

elaboration is needed on this front. As the district court

correctly noted, the Complaint is devoid of factual allegations to

allow the inference that AMAG's website contained the problematic

information when the Offering took place. The Complaint also lacks

omissions under § 10(b) of the Securities and Exchange Act of 1934,
which imposes completely different exigencies than those of Items
303 and 503. See Mgmt.'s Discussion and Analysis of Fin. Conditions
and Results of Operations, SEC Release No. 6835, 1989 WL 1092885,
at *6 n.27 (stating that "[t]he probability/magnitude test for
materiality approved by the Supreme Court in Basic, Inc. v.
Levinson, 485 U.S. 224 (1988), [a test Matrixx reaffirmed] is
inapposite to Item 303 disclosure").

-26-
allegations to support the inference that as of the time of the

Offering AMAG derived a significant amount of revenue from internet

sales. Without such allegations, Plaintiffs' contentions amount to

nothing more than dispensable unsupported conclusions. See Ocasio-

Hernández, 640 F.3d at 12.

B. Plaintiffs' §§ 12 and 15 Claims

Plaintiffs' second and third points of error challenge

the dismissal of their §§ 12 and 15 causes of action, arguing that

the district court exclusively premised its decision on the

erroneous determination that the Complaint had failed to plead a

cause of action under § 11. Given our conclusion regarding the

claims under § 11, Plaintiffs are correct. See In re Morgan Stanley

Info. Fund Secs. Litig., 592 F.3d at 359 ("Claims under sections 11

and 12(a)(2) are . . . Securities Act siblings with roughly

parallel elements . . . .") (citing Pinter v. Dahl, 486 U.S. 622,

646 (1988)); see also Plumbers' Union Local No. 12 Pension Fund v.

Nomura Asset Acceptance Corp., 632 F.3d 762, 776 (1st Cir. 2011)

(stating that a liability finding under either §§ 11 or 12 is a

prerequisite for success under § 15).10

10
In dismissing Plaintiffs' claims, the district court sidestepped
the issue whether Plaintiffs have standing to assert § 12 claims
against some of the Defendants. Although the parties briefed us on
that issue, Defendants move us to exercise our discretion not to
address it at this juncture. See St. Marys Foundry, Inc. v. Emp'rs
Ins. of Wausau, 332 F.3d 989, 995-96 (6th Cir. 2003) (stating the
general rule that courts of appeal "exercise [their] discretion to
rule on an issue not decided below only in 'exceptional cases'").
Because there are no exceptional circumstances requiring us to

-27-
 C. Plaintiffs' Leave to Amend Request

As stated above, in their third point of error,

Plaintiffs challenge the district court's failure to allow a third

amended complaint and move us to grant them "leave to replead [the]

allegations regarding AMAG's misrepresentations on its website."

Plaintiffs included their request for another attempt at making a

plausible claim on this front within their submission opposing

dismissal, but failed to provide the district court with the

reasons supporting their request and with the substance of

possible amendments. Instead, Plaintiffs relied on four

boilerplate sentences stating the well-settled "freely given"

standard under which a request for leave to amend is generally

analyzed. The district court never addressed the request, and

Plaintiffs believe that that constituted a reversible error.

Plaintiffs' request for leave to amend had one basic

problem: it failed to abide by our oft-quoted maxim that litigants

should not seriously expect to obtain a remedy without doing the

necessary leg work first. See, e.g., United States v. Zannino, 895

F.2d 1, 17 (1st Cir. 1990)("It is not enough to mention a possible

argument in the most skeletal way, leaving the court to do

counsel's work, create the ossature for the argument, and put flesh

on its bones."). Not much is needed to satisfy this rule.

decide the issue now, and because the case will continue onward at
the district court level regardless of how the issue is decided, we
see no reason to entertain it here.

-28-
Litigants simply have to set forth the factual and legal predicate

for the remedy sought. See Rodríguez-Machado v. Shinseki, 700 F.3d

48 (1st Cir. 2012)(per curiam).

This is for good reason. On the one hand, "busy judges,

faced with lengthy and growing dockets, necessarily must rely on

litigants to present the relevant facts and law governing the

disputes that the judges are asked to resolve." Powers v. Hamilton

County Public Defender Com'n, 501 F.3d 592, 610 (6th Cir. 2007).

And on the other, federal litigation "is less a game of blind man's

buff and more a fair contest with the basic issues [of] facts [and

law] disclosed to the fullest practicable extent," United States

v. Procter & Gamble Co., 356 U.S. 677, 682 (1958), so as to give

each party a meaningful opportunity to present its case. Truncated

at the factual end, Plaintiffs' request for leave to amend ran

afoul of both of these principles. The district court therefore

acted well within its discretion when completely disregarding the

request. See In re Olympic Mills Corp., 477 F.3d 1, 17 (1st Cir.

2007) (finding a damages claim waived because "as presented to the

district court . . . the argument was fatally undeveloped,

comprising only four sentences, a citation to a district court

opinion, and no analysis whatsoever"); see also In re Tamoxifen

Citrate Antitrust Litig., 466 F.3d 187, 220 (2d Cir. 2006) ("It is

within the [district] court's discretion to deny leave to amend

implicitly by not addressing the request when [it is presented]

-29-
informally in a brief filed in opposition to a motion to

dismiss.").

All the same, we have no basis under which to assess

Plaintiffs' request at this juncture, as they failed to provide us

with any information from which to conclude that their already

fatally flawed claim can somehow spring back to life. Plaintiffs'

main contention on this front is that Matrixx "overturned decades

of existing case law interpreting the materiality [standard] . . .

for purposes of the federal securities laws. Plaintiffs [therefore]

should, at least, be given the opportunity to replead in light of

this significant intervening change in law." But Matrixx, which is

not controlling here, did not have such a far-reaching effect. See

Hill v. Gozani, 651 F.3d 151, 152 (1st Cir. 2011) ("Matrixx . . .

reaffirmed the long-standing rule that the possession of material,

non-public information does not create a duty to disclose.").

Moreover, we have been provided with no explanation whatsoever as

to why any additional facts Plaintiffs might add now were not

included in the Complaint or in the two amendments preceding it.

See Foman v. Davis, 371 U.S. 178, 182 (1962) (stating that

"repeated failure to cure deficiencies by amendments previously

allowed" constitutes an appropriate ground to deny leave to amend).

And because Plaintiffs failed to even generally describe their

intended amendments, we do not know what sort of new facts they may

allege now to cure the deficiencies in their twice-amended

-30-
complaint. See Mann v. Chase Manhattan Mortg. Corp., 316 F.3d 1,

6-7 (1st Cir. 2003) (stating that leave to amend may be denied "as

a matter of law, where a proposed amendment would not cure the

deficiencies in the original complaint").

IV. Conclusion

For the foregoing reasons, the district court's judgment

dismissing the case is vacated and the case is remanded for further

proceedings consistent with this opinion. Each party shall bear

their own costs.

Vacated and Remanded.

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