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First Circuit Affirms Dismissal Of Putative Class Action Against Pharmaceutical Company
09/01/2026On August 19, 2026, the United States Court of Appeals for the First Circuit affirmed the dismissal of a putative class action asserting claims under the Securities Exchange Act of 1934 against a biopharmaceutical company and its CEO. In re Apellis Pharms., Inc. Sec. Litig., —F.4th—, 2026 WL 2425924 (1st Cir. Aug. 19, 2026). Plaintiffs alleged that the company made misrepresentations regarding clinical trials for a drug that was ultimately approved by the Food and Drug Administration (“FDA”). The Court held that literally true statements that plaintiffs contended were misleading were not actionable half-truths and affirmed the district court’s dismissal on that basis, without addressing the scienter requirement, which was the district court’s alternative basis for dismissal.
The company developed a drug administered through intravitreal injections to slow the progression of geographic atrophy, an advanced form of age-related macular degeneration that can cause blindness. Id. at *1. Before the FDA granted approval, the company conducted two Phase III clinical studies to test the drug. Id. at *2. Plaintiffs’ allegations concerned more than a dozen statements by defendants during the class period concerning the absence of cases of retinal vasculitis (an inflammation of the vessels of the retina that can cause significant vision loss) among trial participants—asserting either that no such cases had been observed or that there were no such cases. Id. The FDA-approved protocols for the trials, which were publicly available, required fluorescein angiograms—the most common and accepted test for detecting retinal vasculitis—at three points during the trials: at the outset, at the midpoint, and at conclusion. Id. In addition, the protocols required fluorescein angiograms for participants who dropped out (though not until at least thirty days after departure from the trial), and participating clinicians were free to order angiograms at any time if warranted by a participant’s symptoms. Id.
Plaintiffs conceded that the company followed the protocols for the trials and that the statements were not themselves false. However, plaintiffs alleged that the statements amounted to misleading half-truths because the Phase III studies were not designed to detect retinal vasculitis. Plaintiffs contended that, had the studies been designed to detect retinal vasculitis, they would have required prompt follow-up fluorescein angiograms for retinal vasculitis when study participants developed intraocular inflammation or ischemic neuropathy, which can be symptoms of retinal vasculitis. Id. at *3. Plaintiffs also contended the trials should have required immediate follow-up fluorescein angiograms when participants dropped out of the studies. Id.
In support, plaintiffs pointed to a letter published by the American Society of Retinal Specialists (“ASRS”), reporting six incidents of retinal vasculitis in patients treated with the drug. Id. at *1. The company subsequently confirmed a seventh case and stated that it was investigating a potential eighth. The company’s stock price declined significantly, and the company updated the drug’s label to include retinal vasculitis as a potential side effect. Id. Subsequently, the ASRS committee published another letter indicating that, while there were “no reported cases of retinal vasculitis … in the clinical trials,” there was “no defined protocol in these studies to obtain angiography in cases of intraocular inflammation.” Id.
The First Circuit affirmed that the challenged statements were not actionable half-truths under the framework set forth by the U.S. Supreme Court in Macquarie Infrastructure Corp. v. Moab Partners, L.P., which defines half-truths as “representations that state the truth only so far as it goes, while omitting critical qualifying information.” Id. at *4 (quoting 601 U.S. 257, 263 (2024)). The Court explained that, while the company did not explicitly state certain circumstances in which fluorescein angiograms were not automatically provided for testing, defendants made “full and complete disclosures of when fluorescein angiograms would be given to trial participants,” and that investors therefore “knew what the defendants were doing and the outcomes arising from those actions.” Id. at *4 (emphasis in original). The First Circuit also emphasized that, unlike in other cases where it had held half-truths to be actionable, the challenged statements were not contradicted by facts. Here, the trial protocols were public and followed and there were “neither contradictions nor undisclosed facts.” Id. at *4–5.
The Court acknowledged plaintiffs’ suggestion that investors might lack the scientific expertise to understand whether the protocols’ testing procedures were sufficient to detect retinal vasculitis. The Court noted that it was not foreclosing the possibility that, in another case on other facts, “the scientific details might be so complex that the hypothetical reasonable investor might be misled by a defendant’s more accessible plain-English statements notwithstanding the public availability of technically dense documents describing the testing protocols.” Id. at *4 n.5. However, the Court concluded that the information provided by defendants here “was accurate and did not conceal material information.” Id. at *5.
Securities Litigation