The United States District Courts for the District of New Jersey and the Southern District of New York recently dismissed putative securities class action complaints filed against life science companies in Smith v. Antares Pharma, Inc., et al. and Schaffer v. Nabriva Therapeutics PLC, et al.1  The decisions make clear that the duty to disclose, imposed on life science companies by the federal securities laws, does not cover all conceivable information investors may find or consider relevant.  Moreover, both courts held life science companies are not prohibited from expressing optimism about the prospects of FDA approval for products simply because of less-than-positive feedback from the regulator during the review process.  The decisions, and their implications, are discussed below.  

Antares Pharma Complaint

On December 21, 2016, Antares Pharma, Inc. (“Antares”) announced it submitted a New Drug Application (“NDA”) with respect to Phase 3 clinical studies, conducted in 2014 and 2015, for a testosterone replacement therapy (“TRT”) drug called QuickShot Testosterone which is currently marketed as Xyosted.  Its stock price increased with the announcement.  In October 2017, after Antares announced an October 11 FDA letter identifying deficiencies with the NDA, its common stock fell 37.80%.  One week later, the FDA issued a Complete Response Letter (“CRL”) that rejected the NDA and identified clinically meaningful increases in blood pressure and incidents of depression and suicide.  On January 11, 2018, Antares disclosed a 12.7% rate of hypertension observed in one of its Phase 3 studies.

Antares submitted a revised NDA in April 2018, which was approved by the FDA on October 1, 2018 with a black boxed warning for “blood pressure increases,” as well as warnings for risks of depression and suicide.  Plaintiff contends Antares's stock price decreased 3% “[o]n the heels of the revelation of approval with the requirement of a black box warning and risk of depression and suicide.”

Nabriva Therapeutics Complaint

During the class period, Nabriva Therapeutics PLC (“Nabriva”) had only two products being considered by the FDA for marketing approval; it was not generating revenues from product sales, and did not expect to, unless one of the two drug candidates received approval.  In October 2018, Nabriva filed a NDA with respect to Contepo, a drug intended to treat complicated urinary tract infections; this prompted FDA review, which would conclude with a final decision from the FDA by April 30, 2019.  On December 14, 2018, the FDA issued a “Form 483” letter2 identifying inspectional observations it made, after visiting the manufacturing plant, that suggested the plant was not in compliance with applicable standards.  Nabriva made several statements regarding the Contepo NDA during the class period, none of which mentioned the FDA's Form 483.  Ultimately, the FDA did not approve the Contepo NDA.  Instead, it issued a CRL withholding approval based substantially on the issues identified in the Form 483 letter.  Upon this news, Nabriva's share price declined over 27%. 

On August 16, 2019, Nabriva announced it would resubmit the Contepo NDA after rectifying the issues identified in the CRL.  Because resubmission would retrigger a six-month review cycle, the FDA would likely not approve Contepo in 2019.  Plaintiff alleged statements Nabriva made during the class period were misleading because they led investors to believe the FDA would approve the Contepo NDA in 2019, even though the Form 483 demonstrated that approval would be delayed beyond that year.       

Dismissals of the Complaints

In both cases, the complaints were dismissed in their entireties, emphasizing that a life science company's duty to disclose is not unlimited and that it is not enough to plead that an optimistic forward-looking statement regarding approval prospects or timing of approval turns out to be incorrect.    

Duty to Disclose

The Supreme Court has made clear that Section 10(b) of the Securities Exchange Act and Rule 10b–5 “do not create an affirmative duty to disclose any and all material information.  Disclosure is required . . . only when necessary to make . . . statements made, in the light of the circumstances under which they were made, not misleading.”3    

In this vein, the Antares decision rejected plaintiff's argument that the failure to “disclose the exact statistical risk of any adverse event” was not actionable where the specific adverse event was identified as a common side-effect.  The court similarly rejected plaintiff's allegation regarding the failure to provide data demonstrating the adverse event risks of its drug compared to the risks of other TRT treatments on the market, emphasizing that there was no duty to disclose such information unless Antares had disclosed “some other comparative safety data that would render this omission misleading.” 


The two dismissals also reiterate that “puffery” or vague statements of corporate optimism are not actionable under Section 10(b) and Rule 10b-5 because they are so general that a reasonable investor would not rely on them. 

For example, the Antares court deemed statements that the drug “was found to be safe,” showed “positive . . . safe data” and that “nothing unusual” occurred regarding the FDA's review of the drug as “vague and general statements of optimism.”  The court explained statements “cannot be read in a vacuum,” concluding a reasonable investor “would understand Antares's statements on the drug's safety in light of the disclosure of adverse events.”  The Nabriva court similarly held company press release statements describing Contepo's NDA submission as “another major milestone,” and Contepo as a “first in class” antibiotic, as “classic examples of puffery” because both are “vaguely optimistic descriptions that make no particularly definite assertions of existing fact and thus provide little basis to mislead a reasonable investor.”

Forward-Looking Statements

The dismissals also emphasized the protections afforded forward-looking statements under the safe harbor provision of the Private Securities Litigation Reform Act (“PSLRA”).

The Nabriva court rejected challenges to statements made by the company in its March 12, 2019 10-K regarding the risk of delay in FDA approval.  Plaintiff argued that the characterization of the delay as a risk rather than a certainty was misleading in light of the concerns raised in the FDA's December 2018 Form 483 and that as a result the statement was not a forward-looking statement but rather a misstatement of existing fact.  The court rejected the contention that the risks identified had already materialized, reasoning that the expected approval date was still over four months away and that the Form 483 reflected interim feedback and not a final decision. 


In dismissing the complaints, the courts reiterated that interpretations of clinical data are opinions and emphasized the heightened pleading requirements with respect to opinion statements following the Supreme Court's decision in Omnicare.4

In Antares, the court rejected plaintiff's argument regarding the falsity of the company's opinion about the “physiologically normal” benefits of the drug, concluding that plaintiff had failed to allege that the opinion was either objectively or subjectively false.  The court explained that incidents of hypertension, depression or suicide did not render false the company's opinion regarding the drug's ability to provide patients with “physiologically normal and steady levels of testosterone.”  

The court also held a statement regarding the “positive safety data” resulting from the study was an interpretation of the clinical trial data and as such an opinion.  It reasoned the statement was not actionable absent facts showing Antares did not “honestly believe the studies produced positive safety data and lacked a reasonable basis.” 5  Similarly, the court held plaintiff failed to allege Antares lacked a reasonable basis for its opinion that the drug was “safe,” and noted a failure to allege that Antares was “aware of this comparative risk data when [it] made the statement.”


Antares and Nabriva are helpful precedents for pharmaceutical companies defending against securities class action lawsuits based on optimistic statements made about products undergoing FDA approval.  The decisions emphasize that alleged misstatements “cannot be read in a vacuum,” and indicate that plaintiffs cannot simply rely on less-than-stellar feedback from the FDA, coupled with statements of corporate optimism made during the drug approval process.  


1 No. 17-8945, 2020 WL 2041752 (D. N.J. Apr. 28, 2020); No. 19-4183 (S.D.N.Y. Apr. 28, 2020).

2 The court explained while a “Form 483 is a form of interim feedback rather than final FDA decision on an NDA, it lists ‘significant conditions' that may indicate a drug is being prepared in ways that do not comply with FDA regulations.”  The FDA discusses its Forms 483 “with a company's management at the end of an inspection, and the company is then responsible for taking corrective action to address any significant conditions identified.”

3 Matrixx Initiatives, Inc., v. Siracusano, 563 U.S. 27, 44 (2011) (quoting 17 C.F.R. § 240.10b–5(b)).

4 The Supreme Court held a statement of opinion does not constitute "an untrue statement of material fact" unless (i) the maker of the statement does not have the subjective belief she espouses or (ii) the opinion contains embedded facts that are untrue.  Omnicare, Inc. v. Laborers Dist. Council Const. Industry Pension Fund, 575 U.S. 175 (2015).

5 The court employed the same rationale in rejecting a challenge to a statement that “nothing unusual” had occurred with respect to the FDA's review of the drug.

Originally published 6 May, 2020

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