Shash v. Biogen Inc.

United States Court of Appeals
For the First Circuit

No. 22-1773

NADIA SHASH, individually and on behalf of all others similarly
situated; AMJAD KHAN, individually and on behalf of all others
similarly situated,

Plaintiffs, Appellants,

VICTOR D. MENASHE,
individually and on behalf of all others similarly situated,

Plaintiff,

v.

BIOGEN, INC.; MICHEL VOUNATSOS; ALFRED W. SANDROCK, JR.;
SAMANTHA BUDD HAEBERLEIN,

Defendants, Appellees,

JEFFREY D. CAPELLO; MICHAEL R. MCDONNELL,

Defendants.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Indira Talwani, U.S. District Judge]

Before

Barron, Chief Judge,
Howard and Gelpí, Circuit Judges.

Robert K. Kry, with whom Fu Shek Rocky Li, Sara E. Margolis,
Swara Saraiya, MoloLamken LLP, Laurence M. Rosen, and The Rosen
Law Firm, P.A. were on brief, for appellants.
 Audra J. Soloway, with whom Daniel S. Sinnreich, Danielle J.
Marryshow, Paul, Weiss, Rifkind, Wharton & Garrison LLP, William
J. Trach, and Latham & Watkins LLP were on brief, for appellees.

October 11, 2023
 GELPÍ, Circuit Judge. Following a significant drop in

Biogen Inc.'s stock price, Plaintiff-Appellant Nadia Shash and

other investors (collectively, "investors") brought a securities

fraud class action alleging that Defendants-Appellees1

("Defendants") violated sections 10(b) and 20(a) of the Securities

Exchange Act of 1934. Specifically, investors contend that

Defendants concealed data that, if revealed, would have

established that Defendants' statements about its Alzheimer's

disease drug's clinical trials were misleading. Defendants moved

to dismiss, and the district court granted the motion, concluding

that investors failed to adequately allege a misleading statement

or omission, scienter, and loss causation. For the reasons

explained herein, we affirm the district court's dismissal of

investors' securities fraud claims, except with respect to one

particular statement for which we conclude that investors'

pleadings adequately stated a claim.

I. Background

When reviewing a motion to dismiss, we recount the

underlying facts as alleged in the complaint, "supplemented by

certain materials the [D]efendants filed in the district court in

1 The Defendants are Biogen, Inc. ("Biogen") and three of
Biogen's then-upper-level executives, Michel Vounatsos, Alfred W.
Sandrock, Jr., and Samantha Budd Haeberlein.

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support of their motion to dismiss."2 Constr. Indus. & Laborers

Joint Pension Tr. v. Carbonite, Inc., 22 F.4th 1, 4 (1st Cir. 2021)

(quoting Mehta v. Ocular Therapeutix, Inc., 955 F.3d 194, 198 (1st

Cir. 2020)). Our recitation refers to the investors' second

amended complaint and omits any conclusory allegations. See

Ponsa-Rabell v. Santander Sec. LLC, 35 F.4th 26, 30 n.2 (1st Cir.

2022).

A. Facts

Biogen is a publicly traded biotechnology company

headquartered in Cambridge, Massachusetts, that develops and

manufactures products to treat a variety of diseases and disorders.

This case revolves around Biogen's Alzheimer's disease treatment,

aducanumab.

Alzheimer's disease is a neurodegenerative disease of

the brain, characterized by the progressive loss of cognitive

function. Although the progression of the disease is well

understood, its cause remains unknown. A leading hypothesis

theorizes that the protein amyloid beta builds up in the brain and

forms into larger structures called plaques, which interfere with

2 Before the district court, investors moved to exclude
certain documents offered by Defendants. Investors did not
contest, however, the court's consideration of full transcripts of
calls and presentation slides where Defendants made the allegedly
misleading statements. Thus, we consider these exhibits when
necessary to contextualize the statements at issue. See Clorox
Co. P.R. v. Proctor & Gamble Com. Co., 228 F.3d 24, 32 (1st Cir.
2000).

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synaptic connections, resulting in loss of cognition and other

symptoms.

Aducanumab is a monoclonal antibody that specifically

targets aggregated amyloid beta. Biogen believed that aducanumab

could slow the progression of Alzheimer's disease by removing the

amyloid plaque present in patients' brains. Before Biogen could

seek approval from the Food and Drug Administration ("FDA") to

market the antibody, aducanumab had to go through a series of

studies to establish its tolerability, safety, and efficacy. At

issue here are the reported results of aducanumab's Phase III

trials: ENGAGE and EMERGE.

ENGAGE (Study 301) and EMERGE (Study 302) were

identically designed, double-blinded, placebo-controlled studies

that were conducted independently, with ENGAGE beginning one month

ahead of EMERGE. Each study had three dosage arms: placebo,

aducanumab low dose, and aducanumab high dose. Two-thirds of the

studies' participants carried the APOE4 gene ("carriers"), which

predisposes a carrier to developing both Alzheimer's disease and

ARIA,3 an aducanumab side effect. APOE4 carriers were equally

distributed across the studies' three arms. While the studies

were ongoing, Biogen amended the dosing protocol for carriers

3 ARIA is an acronym for Amyloid Related Imaging
Abnormalities, which include fluid buildup in the brain and
bleeding due to microhemorrhages.

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twice. The first amendment, Protocol Version 3 ("PV3"), allowed

carriers to titrate (gradually increase) to their target dose

following an ARIA event once their symptoms resolved.4 The second

amendment, Protocol Version 4 ("PV4"), increased the maximum high

dose of aducanumab for carriers from 6 mg/kg to 10 mg/kg, meaning

that, after the amendment, all high dose patients were titrated to

10 mg/kg regardless of carrier status.

To test aducanumab's efficacy over the course of the

studies, Biogen selected five assessment tools, which measured a

patient's cognition and function, and used biomarker tracking and

special imaging to measure amyloid plaque reduction in patients'

brains.5 Patients were evaluated upon entering the study and then

again at six months, twelve months, and eighteen months. The

studies' protocol required an independent group to perform a

futility analysis once 50% of the participants had the opportunity

to complete the primary efficacy assessment at the end of eighteen

months (Week 78). If the analysis showed that aducanumab was

unlikely to prove effective, meaning that the studies had less

4 Prior to PV3, patients who experienced ARIA could only
resume treatment at the next lower dose once ARIA resolved. The
amendment also allowed more patients to continue treatment by
suspending dosing rather than discontinuing treatment permanently.
5 These assessments are referred to as clinical endpoints.

The CDR-SB scale, which measures both cognition and function, was
designated as the primary endpoint for both studies.

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than a 20% chance of meeting their primary endpoint, the studies

were to be terminated early.

ENGAGE and EMERGE began in August 2015 and September

2015, respectively. The cutoff date for data used in the futility

analysis was December 28, 2018; however, Biogen continued to

collect data beyond that point. On March 21, 2019, Biogen publicly

announced that the studies met the futility criteria and were being

terminated. Subsequently, Biogen's stock price fell over 29%.

Following the termination of aducanumab's Phase III

studies, Biogen conducted its own internal review of the clinical

data, including the data collected in the interim between the

futility cutoff and when the studies ended. Said review revealed

that when ENGAGE and EMERGE were analyzed independently -- as

opposed to together, with their data being pooled as the futility

analysis called for -- EMERGE's high dose arm met the primary and

secondary efficacy endpoints. Biogen shared this with the FDA and

in June 2019 met with the agency to discuss pathways to approval

for aducanumab. The end result was a collaborative Biogen/FDA

working group dedicated to analyzing and understanding

aducanumab's Phase III clinical data.

On October 22, 2019,6 seven months after Biogen

terminated the ENGAGE and EMERGE studies, Biogen announced, during

6 This is the first day of the class period for the current
litigation.

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a third-quarter earnings call, its belief that post hoc analysis

(conducted after futility was announced) of the Phase III clinical

data supported a regulatory filing for aducanumab. Specifically,

Alfred W. Sandrock, Jr. ("Sandrock"), Biogen's then-Chief Medical

Officer and Executive Vice President of Research and Development,

told investors:

Our primary learning from these data is that
sufficient exposure to high dose aducanumab
reduced clinical decline across multiple
clinical endpoints. This reduction in
clinical decline was statistically
significant in EMERGE, and we believe that
patients -– that the data from patients who
achieved sufficient exposure to high dose
aducanumab in ENGAGE support the findings of
EMERGE. After consultation with the FDA, we
believe that the totality of these data
support a regulatory filing.

He explained the changed perspective on aducanumab's futility as
follows:

[P]atients included in the futility analysis
were those who had enrolled early in the
trials and those early enrolling patients had
a lower average exposure to aducanumab in
large part due to two protocol amendments that
occurred sometime after the start of the
trials. These two protocol amendments were
put in place precisely to enable more patients
to reach high dose aducanumab, and for a
longer duration. As a consequence, the larger
dataset available after trial cessation
included more patients with sufficient
exposure to high dose aducanumab.

Sandrock also told investors "that there is a very sort of sharp

dose response" and that "you have to get to high dose aducanumab"

because "intermediate dosing at least in an 18-month trial is not

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enough." During the same call, Samantha Budd Haeberlein ("Budd

Haeberlein"), Biogen's then-Vice President of Clinical Development

and later Senior Vice President/Head of the Neurodegeneration

Development Unit, agreed with Sandrock and stated:

Although the primary and secondary endpoints
were not met in ENGAGE in post analysis, the
subset of patients who received sufficient
exposure to 10 milligram per kilogram
aducanumab in this case, at least 10 doses of
10 milligram per kilogram showed similar
results to the comparable population from
EMERGE, in terms of both amyloid plaque
reduction and reduced clinical decline on CDR-
SB. . . . I think what we have learned clearly
is that dose is very important, but that if
individuals do receive 10 milligrams per
kilogram then they do have an efficacious
response.

The next day, during an interview on MSNBC, Michel Vounatsos

("Vounatsos"), Biogen's then-Chief Executive Officer, said the

following:

What we demonstrate is that
[aducanumab] . . . is able to erode and
eliminate the plaque leading to the benefits
we see in terms of cognition for the patients.
It reduces basically the decline and we can
see effects such as on memory orientation,
language, but also functionally the ability to
take care of oneself.

After Biogen's positive public statements about

aducanumab in October 2019, the company presented its topline Phase

III results on December 5, 2019, at an Alzheimer's disease

conference. During said presentation, Budd Haeberlein stated:

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 To summarize, the aducanumab Phase III
[topline] results. Following early
termination based on futility, we analyzed a
larger dataset. And this showed that in
EMERGE, the high dose reduced clinical decline
as measured by the primary and secondary
endpoints. In ENGAGE, aducanumab did not
reduce the clinical decline. In a post-hoc
analysis, data from a subset of patients
exposed to the high dose of aducanumab support
the positive findings of EMERGE.

Biogen repeated these aducanumab findings on several subsequent

occasions: during a question-and-answer session with investors on

December 5, 2019; during a 2019 fourth-quarter earnings call on

January 30, 2020; during a presentation of aducanumab's Phase III

topline results on April 2, 2020; during a 2020 second-quarter

earnings call on July 22, 2020; during a presentation of

aducanumab's Phase III topline results at an Alzheimer's disease

conference on July 29, 2020; and during a presentation of

aducanumab's Phase III topline results at the Chinese National

Conference on Neurology on September 19, 2020. During the 2020

second-quarter earnings call, Sandrock took his aducanumab

statements further when he said, "[Y]ou really need to get to the

higher dose" and "I think our data are all consistent with that."

In July 2020, Biogen applied for FDA approval of

aducanumab. The FDA convened an Advisory Committee, whose primary

role generally is "to provide independent advice that will

contribute to the quality of the agency's regulatory

decision-making and lend credibility to the product review

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process." Given the controversy surrounding the clinical trials,

stock analysts believed that the Advisory Committee's decision was

critical for aducanumab's future.

Prior to the Advisory Committee meeting, Biogen and the

FDA jointly prepared briefing materials, which the FDA published

on its website on November 4, 2020. The materials laid out

Biogen's position -- largely mirroring its public statements about

aducanumab -- followed by the FDA's responses. The FDA's

commentary was overwhelmingly favorable, stating, among other

things, that "the applicant has provided substantial evidence of

effectiveness to support approval." The notable exception was a

report prepared by the FDA's statistical reviewer, Tristan Massie

("Massie"). The report's opening summary stated Massie's belief

that "the totality of the data does not seem to support the

efficacy of the high dose" and that "there is no compelling

substantial evidence of treatment effect or disease slowing and

that another study is needed to confirm or deny the positive study

and the negative study." The report went on to detail

subgroup-level analyses supporting Massie's conclusions.7

7Massie's report revealed, among other things, that clinical
outcomes for high dose noncarriers, who received the greatest
number of 10 mg/kg doses of aducanumab and experienced fewer
treatment interruptions, were statistically insignificant when
compared to placebo; that carriers achieved better clinical
outcomes than noncarriers in EMERGE; that carriers had worse
clinical outcomes following the PV4 dose increase; that, in both
studies, high dose patients whose treatment was interrupted by

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 On November 4, 2020 -- the day the briefing materials

were released -- Biogen's stock price closed at $355.63 a share.

A day later, the stock price fell to $328.90 a share. On

November 6, 2020,8 trading in Biogen stock was halted while the

Advisory Committee met to discuss aducanumab. After a full day of

review, the Advisory Committee voted almost unanimously that it

was unreasonable to consider EMERGE as "primary evidence of

effectiveness of aducanumab for the treatment of Alzheimer's

disease," even in light of the post hoc analyses from ENGAGE and

support from an aducanumab Phase I study. The next trading day,

November 9, 2020, Biogen's stock closed at $236.26 a share. The

FDA ultimately approved aducanumab under an accelerated approval

pathway in June 2021.

B. Procedural History

Investors commenced the current class action seven days

after the Advisory Committee meeting, alleging violations of

section 10(b) of the Securities Exchange Act of 1934 ("Exchange

Act"), codified at 15 U.S.C. § 78j(b), as implemented by Securities

and Exchange Commission ("SEC") Rule 10b-5, codified at 17 C.F.R.

§ 240.10b-5 ("section 10(b) claim"), and section 20(a) of the

ARIA had numerically better outcomes; that more high doses did not
result in better clinical outcomes; and that there was no
correlation between amyloid plaque reduction and clinical
outcomes.
8 This is the last day of the class period for the pending

litigation.

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Exchange Act, codified at 15 U.S.C. § 78t(a) ("section 20(a)

claim"). Specifically, investors claimed that Biogen made

misleading statements about aducanumab's dose-response

relationship and about the correlation between plaque removal and

clinical improvement by concealing subgroup-level clinical data

("subgroup data") that demonstrated that Biogen's statements were

false.9 Following an agreed upon transfer to the District of

Massachusetts,10 Defendants moved to dismiss the investors' second

amended complaint, claiming that investors failed to sufficiently

plead a materially false or misleading statement or omission,

scienter, loss causation, and reliance for their section 10(b)

claim.11 The district court held, in a detailed opinion, that the

pleadings were lacking as to a misleading statement or omission,

9 Investors' complaint also claimed that Biogen made
misleading statements about regional variations in aducanumab's
clinical data and about the correlation of EMERGE's secondary
clinical endpoints; however, those arguments are not pressed on
appeal and are therefore waived. See Vargas-Colón v. Fundación
Damas, Inc., 864 F.3d 14, 24 (1st Cir. 2017) (deeming waived
arguments that a party fails to develop on appeal).
10 Investors originally filed their complaint in the United

States District Court for the Central District of California. The
case was transferred pursuant to 28 U.S.C. § 1404(a), which
provides that "[f]or the convenience of parties and witnesses, in
the interest of justice, a district court may transfer any civil
action to any other district or division where it might have been
brought or to any district or division to which all parties have
consented."
11 The Defendants also moved to dismiss investors' section

20(a) claim based on their assertion that the required underlying
securities law violation -- investors' section 10(b)
claim -- failed.

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scienter, as well as loss causation, and allowed Defendants' motion

to dismiss, extinguishing both of investors' securities fraud

claims. This timely appeal followed.

II. Standard of Review

"To survive a motion to dismiss, a complaint must contain

sufficient factual matter, accepted as true, to 'state a claim to

relief that is plausible on its face.'" Mehta, 955 F.3d at 205

(quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). In a

securities case, the complaint must also satisfy the Private

Securities Litigation Reform Act's ("PSLRA") heightened pleading

requirements. Thant v. Karyopharm Therapeutics Inc., 43 F.4th

214, 222 (1st Cir. 2022). We review de novo a Federal Rule of

Civil Procedure 12(b)(6) dismissal. Id.

III. Discussion

Given that investors' section 20(a) claim is dependent

on the existence of an underlying securities violation, this appeal

turns on whether investors adequately pled their section 10(b)

claim. See Metzler Asset Mgmt. GmbH v. Kingsley, 928 F.3d 151,

158 n.3 (1st Cir. 2019); Carbonite, Inc., 22 F.4th at 6.

"Section 10(b) of the Securities Exchange Act of 1934

forbids the 'use or employ, in connection with the purchase or

sale of any security . . . , [of] any manipulative or deceptive

device . . . .'" Tellabs, Inc. v. Makor Issues & Rts., Ltd., 551

U.S. 308, 318 (2007) (alteration in original) (quoting § 78j(b)).

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SEC Rule 10b-5, which implements section 10(b), makes it unlawful

"[t]o make any untrue statement of a material fact or to omit to

state a material fact necessary in order to make the statements

made, in the light of the circumstances under which they were made,

not misleading." § 240.10b–5.

Accordingly, plaintiffs asserting a section 10(b) claim

"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.'" Thant, 43 F.4th at 222 (quoting In re Biogen Inc.

Sec. Litig., 857 F.3d 34, 41 (1st Cir. 2017)). The first, second,

and sixth requirements are at issue here: material

misrepresentation or omission, scienter, and loss causation.

In addition to pleading the elements for a section 10(b)

claim, the PSLRA requires that plaintiffs "specify each statement

alleged to have been misleading, [and] the reason or reasons why

the statement is misleading." Carbonite, Inc., 22 F.4th at 6

(alteration in original) (quoting 15 U.S.C. § 78u-4(b)(1)). The

PSLRA further requires that a complaint "state with particularity

facts giving rise to a strong inference that the defendant acted

with [scienter]," the second element of a section 10(b) claim.

Id. at 9 (alteration in original) (quoting § 78u-4(b)(2)(A)). The

PSLRA does not specify the pleading standard applicable to the

other elements of a section 10(b) claim, such as loss causation,

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see Katyle v. Penn Nat'l Gaming, Inc., 637 F.3d 462, 471 n.5 (4th

Cir. 2011); however, as we explain later, we need not decide that

particular issue here. See infra note 15.

Before turning to the case at hand, we pause to chart

our analytical course. One of Defendants' allegedly misleading

statements -- "So consistent with the findings from ENGAGE and

EMERGE, you really need to get to the higher dose. And I think

our data are all consistent with that." -- stands out from the

rest. As discussed, infra, we conclude that investors adequately

alleged a section 10(b) claim as to this particular statement.

Because the remainder of Defendants' allegedly misleading

statements fail to clear the PSLRA's heightened pleading standard

for scienter, we simply assume, without deciding, that those

statements are materially misleading before proceeding to our

scienter analysis. See Mehta, 955 F.3d at 207; In re Ariad

Pharms., Inc. Sec. Litig., 842 F.3d 744, 750 (1st Cir. 2016). We

conclude our analysis by addressing investors' loss causation

allegations. Having established these guideposts, we proceed to

our analysis.

A. Material Misrepresentation or Omission

"To survive a motion to dismiss under the securities

law, a complaint must adequately plead statements [or omissions]

that were 'misleading as to a material fact.'" Thant, 43 F.4th at

222 (quoting Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27,

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38 (2011)). Thus, a violation requires "a false, or misleadingly

omitted, statement of fact." Carbonite, Inc., 22 F.4th at 7.

Here, the district court found, and the parties do not dispute,

that the statements at issue constitute opinions. While the

Supreme Court has distinguished opinions from statements of fact,

Omnicare, Inc. v. Laborers Dist. Council Constr. Indus. Pension

Fund, 575 U.S. 175, 183 (2015) ("[A] statement of fact ('the coffee

is hot') expresses certainty about a thing, whereas a statement of

opinion ('I think the coffee is hot') does not."), the Court has

also explained that couching a statement in terms of an opinion,

by using language like "I think" or "I believe," does not

automatically render the statement not misleading, id. at 193.

See Carbonite, Inc., 22 F.4th at 7. "[A] reasonable investor may,

depending on the circumstances, understand an opinion statement to

convey facts about how the speaker has formed the opinion -- or,

otherwise put, about the speaker's basis for holding that view."

Omnicare, Inc., 575 U.S. at 188; see Carbonite, Inc., 22 F.4th at

7 ("[A] statement in the form of an opinion . . . may convey three

facts: that the speaker has such a belief; that the belief fairly

aligns with the facts known to the speaker; and . . . that the

speaker has made the type of inquiry that a reasonable investor

would expect given the circumstances."). Thus, "if the real facts

are otherwise, but not provided, the opinion statement will mislead

its audience." Omnicare, Inc., 575 U.S. at 188.

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 The statement that concerns us here is the following:

"So consistent with the findings from ENGAGE and EMERGE, you really

need to get to the higher dose. And I think our data are all

consistent with that." (Emphasis added). We hereinafter refer to

this remark as the "all data" statement. Per Carbonite, the "all

data" statement plausibly conveyed three facts: that Sandrock

genuinely believed all of Biogen's data was "consistent with"

needing to get to high dose aducanumab to benefit clinically; that

Sandrock's opinion "fairly align[ed] with the facts known" to him

when he made the statement; and that Sandrock's opinion was

informed by "the type of inquiry that a reasonable investor would

expect given the circumstances." See 22 F.4th at 7. Investors

point to certain subgroup data as evidence that Sandrock's "all

data" statement did not "fairly align[]" with the facts known to

Biogen at the time.

Specifically, investors allege that subgroup data

revealed the following: noncarriers, who received high dose

aducanumab from the start and who had fewer treatment

interruptions, did not achieve better clinical outcomes, and, when

compared to placebo, the benefit for this group was "virtually

nil"; carriers, who received high dose aducanumab following PV4,

did not experience better clinical outcomes after the dosing

protocol change (in EMERGE, carriers' CDR-SB scores got slightly

worse); and carriers in ENGAGE are the only subgroup who "did

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better" on high dose aducanumab. Investors contend that by failing

to disclose this subgroup data, Defendants "omitted material

information necessary to render [their] statement[] not

misleading."12 We agree. Taking these allegations as true, as we

must on a motion to dismiss, Brennan v. Zafgen, Inc., 853 F.3d

606, 613 (1st Cir. 2017), the complaint plausibly alleges that not

all of Biogen's data was "consistent with" "need[ing] to get to

the higher dose" of aducanumab -- some patients did better on a

lower dose and others experienced the same lack of clinical benefit

whether they were on the higher dose or not. Thus, by failing to

disclose the subgroup data, which would have contextualized their

"all data" claim, the complaint plausibly alleges that Defendants'

omission misled investors.

Nevertheless, to survive a motion to dismiss, the

misleading statement must also be material. See Thant, 43 F.4th

at 222 (noting "neither factor alone is sufficient"). "A fact is

material if it is substantially likely 'that the disclosure of the

omitted [or misrepresented] fact would have been viewed by the

reasonable investor as having significantly altered the "total

mix" of information made available.'" Carbonite, Inc., 22 F.4th

12Defendants do not plead ignorance of said subgroup data,
and, based on their statements, cited by investors in the
complaint, it is reasonable to infer that they knew the results of
subgroup analysis. For example, Defendants implicitly referred to
the carrier subgroup when discussing PV4's impact on data, given
that carriers were the only patient population impacted by PV4.

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at 8 (alteration in original) (quoting Basic Inc. v. Levinson, 485

U.S. 224, 231–32 (1988)).

We conclude that investors met the materiality burden

here as to the "all data" statement. Per investors, Defendants

premised their explanation of why ENGAGE failed on the importance

of reaching high dose aducanumab. And FDA approval of aducanumab

was dependent on ENGAGE's data providing some support for EMERGE's

positive results or, at the very least, being "understood well

enough to be dismissible." It logically follows then that whether

all of Biogen's data supported high dose aducanumab, or only some,

was "a significant part of the mix of information [a reasonable

investor would have] considered in evaluating [Biogen] as an

investment," given that FDA approval of aducanumab had not yet

occurred when the statement was made. See id. Thus, investors

have adequately alleged that Sandrock's "all data" statement was

a "material misrepresentation or omission." And, as explained

supra, we simply assume arguendo that Defendants' remaining

statements are misleading, insofar as they relate to aducanumab's

general efficacy, and proceed to investors' next pleading hurdle,

scienter.

B. Scienter

Scienter is "a mental state embracing intent to deceive,

manipulate, or defraud." Mehta, 955 F.3d at 206 (quoting Tellabs,

Inc., 551 U.S. at 319). "To establish scienter, [a] plaintiff

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must 'show either that the defendants consciously intended to

defraud, or that they acted with a high degree of recklessness.'"

Carbonite, Inc., 22 F.4th at 8 (quoting Kader v. Sarepta

Therapeutics, Inc., 887 F.3d 48, 57 (1st Cir. 2018)). In this

context, recklessness requires more than "simple, or even

inexcusable, negligence"; rather, recklessness is "a highly

unreasonable omission" amounting to "an extreme departure from the

standards of ordinary care, and which presents a danger of

misleading buyers and sellers that is either known to the defendant

or is so obvious that the actor must have been aware of it."

Mehta, 955 F.3d at 206 (quoting Brennan, 853 F.3d at 613).

To determine whether an inference of scienter is

"strong," a court must engage in "a comparative evaluation" by

weighing the "inferences urged by the plaintiff" against

"competing inferences rationally drawn from the facts alleged."

Tellabs, Inc., 551 U.S. at 314. This evaluation must be done

holistically, viewing the complaint in its entirety, as opposed to

examining individual claims in isolation. Id. at 322-23. Only

where a reasonable person would deem the inference of scienter

"cogent and at least as compelling as any opposing inference of

nonfraudulent intent," will the pleading survive the PSLRA's

exacting standard. Id. at 309, 314 (explaining that an inference

of scienter that is "merely plausible or reasonable" will not

suffice). Having laid out some of the basic principles governing

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section 10(b) claims, we return to the case at hand, beginning

with Sandrock's "all data" statement.

1. Sandrock's "All Data" Statement

Having concluded, supra, that Sandrock's "all data"

statement was misleading given the nature of the statement and the

existence of at least some contradictory subgroup data, we next

ask whether, as investors claim, Defendants' failure to disclose

said subgroup data amounted to "an extreme departure from the

standards of ordinary care . . . which presents a danger of

misleading buyers and sellers that is either known to the

[Defendants] or is so obvious that the [Defendants] must have been

aware of it." Mehta, 955 F.3d at 206 (quoting Brennan, 853 F.3d

at 613). We conclude that it was such a departure.

Here, investors sufficiently alleged facts from which we

can infer that Defendants were aware of the contradictory subgroup

data and that their failure to disclose said data was "a highly

unreasonable omission," giving rise to a strong inference of

scienter. Loc. No. 8 IBEW Ret. Plan & Tr. v. Vertex Pharms., Inc.,

838 F.3d 76, 80 (1st Cir. 2016) (quoting In re Smith & Wesson

Holding Corp. Sec. Litig., 669 F.3d 68, 77 (1st Cir. 2012)). The

complaint plausibly claims that Biogen invested tremendous

resources into carefully analyzing aducanumab's Phase III data.

Moreover, Defendants repeatedly discussed PV4's impact on said

data. Since PV4 only impacted carriers of the APOE4 gene, the

- 22 -
logical inference is that Biogen analyzed aducanumab's data based

on carrier/noncarrier subgroups and therefore knew that at least

some data did not support high dose aducanumab. Given Defendants'

awareness of the inconsistent subgroup data, it follows that

Defendants must have known that their failure to disclose said

data risked misleading investors precisely because of what the

"all data" statement represented -- that their "data [was] all

consistent with" "need[ing] to get to the higher dose" of

aducanumab. (Emphasis added); see Mehta, 955 F.3d at 206 (quoting

Brennan, 853 F.3d at 613).

It is also clear that Defendants' failure to disclose

said subgroup data was "an extreme departure from the standards of

ordinary care." Id. (quoting Brennan, 853 F.3d at 613). In

December 2019, Defendants explained that they were presenting

topline results but were intentionally withholding

carrier/noncarrier subgroup data pending regulatory review of

aducanumab and that Biogen "look[ed] forward to presenting all the

data" "in due time." Months later, in July 2020, Sandrock made

the "all data" statement, despite Defendants knowing that at least

some contradictory subgroup data existed, which undermined said

claim. Defendants then continued to withhold the subgroup data,

despite publicly presenting aducanumab's topline results, until

November 2020, when the Advisory Committee briefing materials were

made public. Taken together, these allegations establish that

- 23 -
Defendants knew they had subgroup data inconsistent with the "all

data" statement and consciously chose to hold back only the data

that was inconsistent with their public claim. Such conduct is

akin to the "bad faith misrepresentation of scientific data" that

the Third Circuit, in Alaska Electrical Pension Fund v. Pharmacia

Corp., held established scienter. 554 F.3d 342, 344, 352 (3d Cir.

2009) (deciding that scienter was sufficiently pled where a company

allegedly distorted its drug's clinical results by presenting only

six months of favorable data from a thirteen-month study, without

revealing that the dataset presented was incomplete). Thus, we

similarly hold that investors adequately alleged scienter as to

Sandrock's "all data" statement. See id. at 352.

2. Defendants' Remaining Statements

As we explain, infra, we reach the opposite conclusion

for Defendants' other statements pertaining to aducanumab's

general efficacy, which we assume are misleading for purposes of

our scienter analysis. Said statements could only be made with

scienter if Defendants "knew or should have known that their

failure to disclose [the subgroup data] 'present[ed] a danger of

misleading buyers or sellers'" as to aducanumab's clinical effect.

City of Dearborn Heights Act 345 Police & Fire Ret. Sys. v. Waters

Corp., 632 F.3d 751, 758 (1st Cir. 2011) (second alteration in

original) (quoting Greebel v. FTP Software, Inc., 194 F.3d 185,

198 (1st Cir. 1999)). Our review leads us to conclude that, even

- 24 -
if Defendants were aware of the subgroup data, it is not evident

or inferable from the complaint that Defendants knew or believed

that said data undermined their statements about aducanumab's

general efficacy.

Investors' complaint lacks allegations similar to those

that we have previously found sufficient for scienter:

"admissions, internal records or witnessed discussions suggesting

that at the time they made the statements claimed to be misleading,

the defendant officers were aware that they were withholding vital

information or at least were warned by others that this was so."

In re Ariad Pharms., Inc. Sec. Litig., 842 F.3d at 751 (quoting In

re Bos. Sci. Corp. Sec. Litig., 686 F.3d 21, 31 (1st Cir. 2012)).

First, despite the resources Defendants allegedly committed to

reviewing the clinical data, there is no allegation that

Defendants -- or anyone else at Biogen for that matter -- knew

that the subgroup data undermined aducanumab's effectiveness when

Defendants made their public statements. See Maldonado v.

Dominguez, 137 F.3d 1, 9-10 (1st Cir. 1998) (explaining that

"scienter 'may not rest on a bare inference that a defendant "must

have had" knowledge of the facts'" (quoting Barker v. Henderson,

Franklin, Starnes & Holt, 797 F.2d 490, 497 (7th Cir. 1986))). We

have previously remarked that a defendant's close attention to

clinical data "is only helpful in establishing scienter if that

close attention would have revealed an incongruity so glaring as

- 25 -
to make the need for further inquiry obvious." Vertex Pharms.,

Inc., 838 F.3d at 82; see Metzler Asset Mgmt. GmbH, 928 F.3d at

162 (explaining that the fact that leadership monitored data does

not alone create a strong inference of scienter). Here, we find

it difficult to say that the "incongruity" between the subgroup

data and Biogen's conclusion as to aducanumab's efficacy was

"glaring" where it involved the interpretation of significant

amounts of data through complex statistical analysis.13

Second, the complaint does not claim that, at the time

Biogen made the efficacy statements at issue, Biogen had been

warned that the subgroup data undermined its conclusion about

aducanumab's clinical effect.14 In fact, the complaint is devoid

13Massie's report, which revealed the allegedly contradictory
subgroup data, "contained almost one hundred pages of statistical
analyses" and was "dense to the point of being impenetrable."
14 Investors' appellate briefs assert that Massie warned

Biogen about his concerns, however, the complaint contains no such
allegation, so "we do not consider this argument in assessing
whether the complaint has stated a claim." See Vertex Pharms.,
Inc., 838 F.3d at 83-84 (setting aside an argument that the
plaintiff raised only in their appellate brief when considering a
failure-to-state-a-claim motion).
Investors ask us to take judicial notice of a congressional
report detailing the contact between the FDA and Biogen, but, even
if we were to do so, said report does little to move the needle.
Per the report, the Division of Biometrics (Massie's group) "raised
concerns about the analyses" and conveyed to their FDA counterparts
and Biogen their belief that "substantial evidence of
effectiveness was not met." Staff of H.R. Comm. on Oversight &
Reform & Comm. on Energy & Commerce, 117th Cong., Rep. on The High
Price of Aduhelm's Approval: An Investigation into FDA's Atypical
Review Process and Biogen's Aggressive Launch Plans, at 20 n.80
(Dec. 2022). Even accepting these facts as true, we are still
left to guess what specific concerns Massie's group raised and

- 26 -
of any allegation about how or when Defendants learned that the

subgroup data potentially undermined their conclusion about

aducanumab's efficacy. See In re Ariad Pharms., Inc. Sec. Litig.,

842 F.3d at 751 (explaining that the complaint failed to create a

strong inference of scienter where it lacked specific allegations

about when the defendant learned the facts at issue). Massie's

report was published, along with the other Advisory Committee

briefing material, on November 4, 2020 -- about a month and a half

after the last allegedly misleading statement was made. And we

have previously made clear that fraud cannot be established by

hindsight. See id.

Notably, even if the Defendants were on notice of

Massie's analyses at the time of their public statements, the

complaint lacks any allegation that the Defendants honestly

believed Massie's interpretation of the data over their own. See

Vertex Pharms., Inc., 838 F.3d at 82 (concluding scienter

inadequately pled, in part, because the complaint lacked

allegations that the defendants disbelieved their publicly

reported study results or viewed the results as contradictory);

Yan v. ReWalk Robotics Ltd., 973 F.3d 22, 41 (1st Cir. 2020)

(explaining that "mere knowledge" of a fact is insufficient for

whether the basis for Massie's effectiveness conclusion was the
subgroup data now at issue. Such "guesswork [is] inconsistent
with the PSLRA['s] pleading standard." Vertex Pharms., Inc., 838
F.3d at 86.

- 27 -
scienter, absent an "allegation strongly implying that defendants

had reason to believe their omission[] [of the fact] to be

fraudulent"); Metzler Asset Mgmt. GmbH, 928 F.3d at 162 (concluding

scienter insufficiently pled, in part, because the complaint's

allegations did not reveal whether what was publicly said by

defendants was "known by them to be misleading"). The fact that

the FDA, minus Massie's group, agreed with Biogen's interpretation

of the data -- while not a section 10(b) liability

shield -- supports the inference that Biogen sincerely disbelieved

Massie's interpretation of the subgroup data as undermining

aducanumab's efficacy and that the failure to disclose said data

in this context was not made with the requisite "intent to deceive,

manipulate, or defraud." Mehta, 955 F.3d at 206 (quoting Tellabs,

Inc., 551 U.S. at 319).

Despite the lack of direct evidence of scienter as to

Defendants' efficacy statements, see Brennan, 853 F.3d at 615 n.8,

investors contend that the complaint still states facts from which

we can infer that Biogen intentionally, or at least recklessly,

withheld clinical data to mislead investors about aducanumab's

clinical effect. We note that "where a complaint is devoid of any

direct-evidence allegations, the indirect-evidence allegations in

the complaint will need to do more work to carry the burden of

raising a 'strong inference of scienter' on their own." Id.

Cognizant that "[e]ach individual fact about scienter may provide

- 28 -
only a brushstroke," we assess each asserted fact individually

before considering "the resulting portrait" and weighing them

cumulatively. Vertex Pharms., Inc., 838 F.3d at 81 (alteration in

original) (quoting In re Cabletron Sys., Inc., 311 F.3d 11, 40

(1st Cir. 2002)).

First, investors -- citing Pharmacia Corp., 554 F.3d at

344-45, 352 -- allege that Biogen's selective reporting of

aducanumab's clinical data contributes to a strong inference of

scienter. While we agree with investors' reasoning as to the "all

data" statement, we find the case less persuasive when applied to

Defendants' general efficacy statements. Biogen explained, during

its first public statement about aducanumab after announcing

futility, that the "details of subgroups is something that will

come . . . later." Then, following the company's initial

statements in October 2019, Biogen made clear that it was

presenting only aducanumab's topline results publicly. While

investors take issue with Biogen's decision not to release all

patient-level data, unlike the defendant in Pharmacia Corp.,

Biogen was transparent about what data it was withholding from

investors. And in contrast to the "all data" statement, the

complaint lacks any indication that Defendants believed the

subgroup data undermined their efficacy statements. In that

regard, scienter cannot be inferred from the failure to disclose

the subgroup results at the time the general statements about

- 29 -
aducanumab's efficacy were made because Biogen's own analysis of

the data is not fully discredited by the subgroup data. "[A]

legitimate disagreement over scientific data does not give rise to

a securities fraud claim . . . ." Id. at 352; see Carbonite, Inc.,

22 F.4th at 9-10; Vertex Pharms., Inc., 838 F.3d at 81-83 (finding

that the defendants' attention to a drug study would not have

revealed any obvious incongruity in the publicly announced study

results that turned out to be erroneous, in part, because the

complaint did not allege that "scientists in general, much less

those at Vertex, regarded the reported results as implausible").

In contrast, as explained supra, Biogen's "all data" statement

does not amount to "a legitimate disagreement over scientific

data," Pharmacia Corp., 554 F.3d at 352, as that statement is

necessarily discredited by Biogen's knowledge that its subgroup

data was not all consistent with needing to take a higher dose.

Thus, we cannot conclude that Defendants' selective reporting of

data amounted to a "bad faith misrepresentation" in the general

efficacy context.

Next, investors contend that Biogen's willingness to

manipulate its statistical data makes it more likely that the

company deliberately or recklessly withheld subgroup data. As

support, investors point to the fact that Biogen tasked its

statisticians with reviewing the failed Phase III studies to

"salvage any data that could support aducanumab's approval."

- 30 -
Additionally, investors allege that Biogen diverged from its

prespecified analysis plan for evaluating the correlation between

clinical outcomes and amyloid beta levels after unblinding the

data. These acts, according to investors, allowed Biogen to

conceal unfavorable data, which supports an inference of scienter.

The negative inference investors urge us to draw from

Biogen's alleged data manipulation is undercut, however, by the

fact that Biogen disclosed its use of post hoc analyses, which the

FDA assisted with and endorsed, following the Phase III studies'

failure. See Mehta, 955 F.3d at 208 (explaining that a company's

informative disclosure cuts against an inference of scienter). In

Biogen's very first statement about pursuing a regulatory filing

for aducanumab, the company explained that its team had spent

months analyzing the original and expanded dataset following the

termination of the studies, including performing "exploratory

analysis." Biogen reiterated that its conclusions were based on

post hoc analyses on subsequent occasions as well. The mere fact

that Biogen engaged in post hoc analysis cannot support a strong

inference of scienter where Biogen did not mislead investors about

the methodology employed. See Kleinman v. Elan Corp., 706 F.3d

145, 155-56 (2d Cir. 2013) (concluding that a plaintiff's objection

to a pharmaceutical company's use of post hoc analysis as

methodologically unsound does not give rise to a strong inference

of scienter).

- 31 -
 Investors next assert that Biogen's departure from its

past reporting practices when it came to aducanumab's Phase III

data contributes to a strong inference of scienter. Specifically,

the complaint alleges that when Biogen presented the results of an

earlier aducanumab study (Study 103), the company released the raw

data, whereas they declined to do so with the Phase III results.

Investors contend that this change gives rise to an inference that

Biogen intentionally withheld the data because said data would

have otherwise undercut its public statements about aducanumab's

efficacy. They further claim that when Biogen stated, "We have

nothing to hide," Biogen was falsely reassuring investors that it

was withholding subgroup data for regulatory reasons only. This

is investors' most compelling argument for scienter.

Nevertheless, investors' allegations cannot be viewed in a vacuum

and must be compared to the innocent inferences drawn from the

same facts. See Tellabs, Inc., 551 U.S. at 314.

We are not left to wonder why Biogen changed its

reporting practices. The company explained its decision during a

question-and-answer session with investors on December 5, 2019:

"[L]ook, this will soon be under review at regulatory authorities.

And so for that reason, we're very sensitive about what we want to

present now." There is merit to Defendants' justification for

withholding aducanumab's Phase III subgroup data. Unlike when

Biogen released the Study 103 results, Biogen was facing an

- 32 -
impending regulatory filing for "the first Alzheimer's disease

therapy that does more than treat symptoms." And, as investors'

complaint mentions, Biogen was not the only company developing

Alzheimer's therapies. Further, crediting investors' theory

implies that Biogen was more concerned about the public's reaction

to the subgroup data than the FDA's, who had access to all of

Biogen's data and was ultimately responsible for deciding

aducanumab's fate. This defies common sense, even considering

investors' claims about collusion between Biogen and the FDA, which

we proceed to next. See Nguyen v. Endologix, Inc., 962 F.3d 405,

415 (9th Cir. 2020) (explaining that "the PSLRA neither allows nor

requires us to check our disbelief at the door" in concluding that

it was illogical for a company to promise FDA approval of a medical

device that they knew was really "unapprovable"). Thus, we find

the deceitful inference investors urge from Biogen's change in

reporting practices less compelling when compared to the competing

innocent explanation, particularly given the absence of any

allegation that Defendants believed the subgroup data contradicted

their efficacy statements.

Investors also point to the many irregularities in

aducanumab's FDA approval process as evidence of scienter. They

note, for example, that Biogen and the FDA met or communicated

almost daily for three months to analyze aducanumab's data, that

Biogen and the FDA worked together to prepare "highly atypical

- 33 -
joint briefing materials" for the Advisory Committee, that the FDA

submitted leading questions designed to support approval to said

committee, and that the FDA decided as early as June 2019 to push

aducanumab through the approval process. Investors suggest,

citing Aldridge v. A.T. Cross Corp., 284 F.3d 72 (1st Cir. 2002),

that Biogen's willingness to bend rules makes it more likely that

the company intentionally or recklessly concealed the subgroup

data to mislead investors about aducanumab's clinical effect. It

is not clear from the complaint, however, what rule investors

allege Biogen violated. In fact, investors' irregularity

allegations focus more on the FDA's conduct throughout the approval

process than Biogen's and thus offer little meaningful insight

into whether Defendants knew, or recklessly disregarded, that they

would mislead investors about aducanumab's efficacy by failing to

disclose the subgroup data.

Finally, investors ask us to infer that Biogen's

leadership knew about the problematic subgroup data, or were

reckless for not investigating it further, given that aducanumab's

approval was "critical to Biogen's financial success." Per

investors, the fact that aducanumab "would be the most profitable

treatment ever approved by the FDA" and was "make-or-break for the

company" indicates that Biogen was paying close attention to the

clinical data. But, as we explained supra, "close attention" is

not enough where, as here, the "incongruity" between the subgroup

- 34 -
data and Defendants' efficacy statements was not obvious. See

Vertex Pharms., Inc., 838 F.3d at 82. Scienter requires more than

"simple, or even inexcusable, negligence." Mehta, 955 F.3d at 206

(quoting Brennan, 853 F.3d at 613).

Viewed collectively, investors' allegations fail to

raise a strong inference that Defendants intentionally or

recklessly withheld subgroup data so as to mislead investors about

aducanumab's efficacy. The complaint contains no allegation that

Defendants knew the subgroup data undermined their efficacy

statements; that they were warned that this was so prior to making

said statements; that, even if Defendants were aware of Massie's

analyses, they credited his conclusion as to aducanumab's clinical

effect over their own; or that the inconsistency between the

subgroup data and Defendants' efficacy statements was glaringly

obvious to Defendants. Additionally, Defendants' explanation for

their decision to withhold the subgroup data and public

disclosures -- about what data was released and about their use of

post hoc analyses -- undercut the negative inferences investors

ask us to draw. Investors' scienter allegations with respect to

Defendants' general efficacy statements are simply not as

compelling as the opposing, innocent inferences drawn from the

facts. See Tellabs, Inc., 551 U.S. at 314.

Nevertheless, having concluded, supra, that investors'

claim, pertaining to Sandrock's "all data" statement, cleared the

- 35 -
first two section 10(b) pleading hurdles, we proceed to the final

leg of our analysis.

C. Loss Causation

To survive a Rule 12(b)(6) motion as to loss causation,

a plaintiff must "provide a defendant with some indication of the

loss and the causal connection that the plaintiff has in mind."

Dura Pharms., Inc. v. Broudo, 544 U.S. 336, 347 (2005); see

Bricklayers & Trowel Trades Int'l Pension Fund v. Credit Suisse

Sec. (USA) LLC, 752 F.3d 82, 86 (1st Cir. 2014) ("To prove loss

causation, a plaintiff must show a sufficient connection between

the fraudulent conduct and the losses suffered." (cleaned up)).15

A plaintiff may do so by:

(1) identifying a "corrective disclosure" (a
release of information that reveals to the
market the pertinent truth that was previously
concealed or obscured by the company's fraud);

(2) showing that the stock price dropped soon
after the corrective disclosure; and

(3) eliminating other possible explanations
for this price drop, so that the factfinder
can infer that it is more probable than not
that it was the corrective disclosure -- as
opposed to other possible depressive

15 While the precise pleading standard for loss causation
remains unsettled in our circuit, we need not decide whether "a
short and plain statement of the claim showing that the pleader is
entitled to relief" suffices, Fed. R. Civ. P. 8(a)(2), or whether
"a party must state with particularity the circumstances
constituting fraud," Fed. R. Civ. P. 9(b), because, here,
investors' complaint satisfies either standard. See Mass. Ret.
Sys. v. CVS Caremark Corp., 716 F.3d 229, 239 n.6 (1st Cir. 2013).

- 36 -
 factors -- that caused at least a
"substantial" amount of the price drop.

CVS Caremark Corp., 716 F.3d at 237-38 (quoting FindWhat Inv. Grp.

v. FindWhat.com, 658 F.3d 1282, 1311-12 (11th Cir. 2011)). Said

allegations must be plausible, meaning "supported by 'factual

content that allows the court to draw the reasonable inference

that the defendant is liable for the misconduct alleged.'" Id. at

237 (quoting Iqbal, 556 U.S. at 678). With this standard in mind,

we proceed to investors' claimed chain of events.

Investors' complaint alleges the following: Massie's

report was released on November 4, 2020, as part of the joint

briefing material; the report, which revealed the truth about

Biogen's prior fraudulent statements about aducanumab, was

"dense," "written for . . . world-renowned experts," followed 246

pages of effusive briefing material, and bore a "DRAFT" watermark;

investors purchased Biogen stock on the same day that the report

was released or, at most, a day later; the stock price did not

drop immediately following the release of the report because, for

the foregoing reasons, it took time for the market to appreciate

the merits of Massie's report; the market's delayed reaction to

the report is corroborated by analysts' coverage of the briefing

materials; and Biogen's stock price began to drop on November 5,

2020, and "collapsed" on November 9, 2020, the next possible

trading day for Biogen stock, when the market fully grasped the

- 37 -
significance of Massie's report. The district court declined to

credit these allegations, asserting that "causation is not tied to

when the market reacts to information, but rather when that

information became available to the public." The court then

concluded that investors failed to adequately plead loss causation

because the alleged corrective disclosure, Massie's report, was

published before investors purchased Biogen stock. Implicit in

the district court's decision is the presumption that any hit to

Biogen's stock price would have immediately followed the

Defendants' corrective disclosure and thus was already accounted

for in the stock's price when investors purchased shares. Finding

no such per se rule in our circuit's loss causation precedent, we

conclude otherwise.

At the outset, we pause to note that the district court

did not reach the questions of whether the Massie report was a

corrective disclosure, insofar as it "reveal[ed] to the market [a]

pertinent truth that was previously concealed or obscured by

[Biogen]'s [alleged] fraud," or whether investors sufficiently

"eliminat[ed] other possible explanations for [Biogen stock's]

price drop." Id. (quoting FindWhat.com, 658 F.3d at 1311-12).

Because Defendants' arguments as to loss causation largely mirror

the district court's decision -- focusing on the timing of the

alleged corrective disclosure -- any argument that the Massie

report did not otherwise meet the definition of a corrective

- 38 -
disclosure by revealing new information to the market or that other

"depressive factors" caused the stock price to drop are thus

waived. See United States v. Zannino, 895 F.2d 1, 17 (1st Cir.

1990). And because we find that investors' loss causation

allegations plausibly indicate that Biogen's stock price dropped

after Massie's report revealed the company's misstatements about

aducanumab, our loss causation determination turns exclusively on

whether a gap in time, between when said misstatements were exposed

and the subsequent price drop, nevertheless renders the investors'

theory of loss causation per se implausible.

Having reviewed our circuit's loss causation precedent,

we find nothing requiring that a stock's price must drop

immediately following a corrective disclosure for loss causation

to be sufficiently pled. Nor did the district court cite any

support for this premise. Investors assert that our decision in

In re Xcelera.com Securities Litigation, 430 F.3d 503 (1st Cir.

2005), stands for the proposition that markets may take more than

one day to absorb information. But we disagree with their

assessment of our holding there.16 Nevertheless, precedent from

16In In re Xcelera.com Securities Litigation, while
addressing the reliance element of a securities fraud claim, we
credited plaintiffs' expert's event study, which showed "the
effect of company-specific information over longer windows of two,
three, and five days"; however, we did so "because Plaintiffs'
event study capture[d] the same-day reaction of Xcelera's stock
price to company-specific events." 430 F.3d at 513 n.11. While
we went on to positively cite authority discussing marketplace

- 39 -
other circuits, which we find persuasive, addresses delayed market

reactions in the loss causation context.

The Fifth Circuit, discussing loss causation in Lormand

v. US Unwired, Inc., explained that where a "disclosure was

followed immediately by a stock price increase rather than a

decrease," loss causation could still be adequately pled because

"[t]he market could plausibly have had a delayed reaction" and

"[t]he actual timing [of a loss] is a factual question," disputes

over which are "not enough to dismiss a complaint that alleges a

specific causal link." 565 F.3d 228, 267 n.33 (5th Cir. 2009).

The Ninth Circuit held similarly, in In re Gilead Sciences

Securities Litigation, when the court explained that "[a] limited

temporal gap between the time a misrepresentation is publicly

revealed and the subsequent decline in stock value does not render

a plaintiff's theory of loss causation per se implausible." 536

F.3d 1049, 1058 (9th Cir. 2008); see also Mineworkers' Pension

Scheme v. First Solar Inc., 881 F.3d 750, 754 (9th Cir. 2018)

("That a stock price drop comes immediately after the revelation

of fraud can help to rule out alternative causes. But that

sequence is not a condition of loss causation." (citations

omitted)). The Tenth Circuit agreed in Nakkhumpun v. Taylor. 782

cause-and-effect relationships over two-day windows, id., such was
not essential to our holding. Thus, In re Xcelera.com Securities
Litigation does not settle this matter as investors suggest.

- 40 -
F.3d 1142, 1154 (10th Cir. 2015) (concluding that loss causation

was adequately pled despite a "concern about the attenuated

relationship between the false statement and materialization of

the risk . . . because the significance of intervening events[,]

[if any existed,] created a fact issue that could not be resolved

in a motion to dismiss under Rule 12(b)(6)"). And in Singer v.

Reali, the Fourth Circuit concluded that plaintiffs had adequately

alleged loss causation where the complaint stated that the

company's stock price dropped on October 18, 2011, in part, because

of a corrective disclosure revealed the day prior in a Form 8-K

filing. 883 F.3d 425, 447 (4th Cir. 2018). These cases are

instructive.

Here, the issue of when Biogen's stock price actually

dropped is a question of fact. See Lormand, 565 F.3d at 266 n.33.

Given that such questions are not properly resolved by the court

on a motion to dismiss, id.; Nakkhumpun, 782 F.3d at 1154,

investors' allegations cannot be per se implausible simply because

a gap in time separates the price drop from the corrective

disclosure. Thus, dismissal of investors' complaint was not

warranted where the allegations contained therein otherwise

plausibly established that Biogen's stock price dropped after

Massie's report revealed the company's misstatements about

aducanumab. See CVS Caremark Corp., 716 F.3d at 242 (concluding

that "allegations [we]re sufficiently plausible to foreclose

- 41 -
dismissal" where they "indicate[d] that the drop in CVS Caremark's

share price was causally related to its misstatements").

IV. Conclusion

For the foregoing reasons, we REVERSE the district

court's dismissal of the section 10(b) and section 20(a)17 claims

predicated upon Sandrock's "all data" statement. We otherwise

AFFIRM the dismissal of investors' remaining fraud claims. The

case is remanded for further proceedings consistent with this

opinion. No costs are awarded.

17 The district court dismissed the section 20(a) claim
without analysis based upon its finding that investors' section
10(b) claim failed. As such, we vacate that dismissal insofar as
it pertains to the "all data" statement. See In re Ariad Pharms.,
Inc. Sec. Litig., 842 F.3d at 753 n.4.

- 42 -