United States Court of Appeals
For the First Circuit
No. 25-1383
IN RE: APELLIS PHARMACEUTICALS, INC. SECURITIES LITIGATION
RAY PELECKAS; MICHIGAN LABORERS’ PENSION FUND,
Plaintiffs, Appellants,
JUDITH M. SODERBERG, individually and on behalf of all others
similarly situated; RAUL PRADO RUIZ,
Plaintiffs,
v.
APELLIS PHARMACEUTICALS, INC.; CEDRIC FRANCOIS,
Defendants, Appellees,
FEDERICO GROSSI; TIMOTHY SULLIVAN,
Defendants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Julia E. Kobick, U.S. District Judge]
Before
Aframe, Lynch, and Kayatta,
Circuit Judges.
Andrew S. Love, with whom Robert M. Rothman, Mark T. Millkey,
Alan I. Ellman, and Robbins Geller Rudman & Dowd LLP were on brief,
for appellants.
Peter J. Kolovos, with whom Daniel W. Halston, Dan Willey,
Edward W. Hasen, and Wilmer Cutler Pickering Hale and Dorr LLP
were on brief, for appellees.
August 19, 2026
AFRAME, Circuit Judge. This appeal challenges the
dismissal of a putative class action claiming securities fraud
under sections 10(b) and 20(a) of the Securities Exchange Act of
1934 and Securities and Exchange Commission Rule 10b-5. In their
amended complaint, plaintiffs-appellants alleged that
defendants-appellees Apellis Pharmaceuticals, Inc., and Dr. Cedric
Francois, Apellis's Chief Executive Officer, made several
materially misleading statements about the findings of two
clinical trials for its drug SYFOVRE, which was approved by the
Food and Drug Administration ("FDA") and is in use today.
According to the plaintiffs, the statements were half-truths
rendered misleading by omissions from the defendants' public
statements about the results of the trials.
The defendants moved to dismiss under Federal Rule of
Civil Procedure 12(b)(6), and the district court granted the motion
on two independent grounds. First, the court concluded that the
plaintiffs' allegations did not support a plausible inference that
the omissions in question caused the challenged statements to be
materially misleading. Second, it determined that the plaintiffs'
allegations fell short of establishing that the challenged
statements were made with the scienter required by applicable law.
We agree that the challenged statements cannot plausibly
be viewed as materially misleading and affirm on that basis without
ruling on the issue of scienter. After summarizing the case on
- 3 -the basis of the well-pleaded allegations, as supplemented by
"documents the authenticity of which are not disputed," "official
public records," and "documents sufficiently referred to" in the
amended complaint, Premca Extra Income Fund LP v. Angle, 178 F.4th
712, 718 (1st Cir. 2026) (citation modified), we explain our
reasoning.
On August 2, 2023, plaintiffs Ray Peleckas and the
Michigan Laborers' Pension Fund brought this action in the U.S.
District Court for the District of Delaware on behalf of all
purchasers of Apellis common stock during the class period, which
ran from January 28, 2021, until July 28, 2023. On June 3, 2024,
the presiding judge transferred the case to the U.S. District Court
for the District of Massachusetts to satisfy venue requirements.
Apellis is a biopharmaceutical company that developed a
drug known as pegcetacoplan to treat geographic atrophy (“GA”), an
advanced form of age-related macular degeneration ("AMD") that can
ultimately cause blindness. Pegcetacoplan is administered through
a series of intravitreal injections, i.e., injections directly
into the eye. The drug does not improve eyesight but rather seeks
to slow GA's progression. On February 17, 2023, the FDA approved
pegcetacoplan under the commercial name of SYFOVRE as a treatment
for GA.
On July 15, 2023, following Apellis's commercialization
and distribution of SYFOVRE as an FDA-approved treatment for GA,
- 4 -the American Society of Retinal Specialists ("ASRS") published a
letter stating that physicians had reported six incidents of
retinal vasculitis in patients treated with SYFOVRE. Retinal
vasculitis is an inflammation of the vessels of the retina that
can cause significant vision loss. Two weeks later, Apellis
confirmed a seventh case and stated that it was investigating a
potential eighth case. During this period, Apellis's stock price
declined significantly. In November 2023, SYFOVRE's label was
updated to include a warning listing retinal vasculitis as a
potential side effect. On December 21, 2023, an ASRS committee
published a second letter stating that, while "[t]here were no
reported cases of retinal vasculitis . . . in the clinical
trials," there also was "no defined protocol in these studies to
obtain angiography in cases of intraocular inflammation," which is
a possible symptom for retinal vasculitis.
At the beginning of the class period, in 2021, Apellis
was conducting two Phase III clinical studies, known as the OAKS
and DERBY studies, to test the use of pegcetacoplan as a treatment
for GA. OAKS and DERBY were two-year studies that between them
enrolled more than a thousand participants aged sixty and older
who had been diagnosed with GA. Study participants randomly
received either pegcetacoplan injections or sham treatments.
This case involves more than a dozen statements by the
defendants during the class period touting the absence of
- 5 -occurrences of retinal vasculitis among trial participants. Most
of the challenged statements asserted that no cases of retinal
vasculitis had been observed among participants during the OAKS
and DERBY clinical trials, although two of the statements could be
understood to have asserted more categorically that there were no
cases of retinal vasculitis among participants. The plaintiffs
alleged that these statements, although not themselves false,
could plausibly be found to have been materially misleading. Why?
Because they were unaccompanied by an express acknowledgment that
the trials were not designed to detect retinal vasculitis, and
reasonable investors would have failed to understand that they
were not so designed.1
The plaintiffs further alleged that, for interrelated
reasons, the defendants were concerned about the possibility of
pegcetacoplan injections causing retinal vasculitis as a side
effect. First, the defendants regarded pegcetacoplan as a "lead
product candidate" that was crucial to Apellis's future. Second,
the defendants were aware that side effects such as retinal
1 The defendants say that the plaintiffs did not make this
precise argument about study design to the district court and thus
did not preserve it for our review. The plaintiffs disagree,
arguing that this argument was the clear upshot of their pleaded
case theory, as elaborated in their opposition to the defendants'
motion to dismiss. We bypass any issue of forfeiture because, as
we will explain, the plaintiffs' design-of-the-study argument
fails on its merits. See Lafortune v. Garland, 110 F.4th 426, 432
n.2 (1st Cir. 2024) (engaging in a similar bypass of a potential
forfeiture issue).
- 6 -vasculitis were likely to make doctors and patients hesitant to
try pegcetacoplan because the drug has only moderate benefits and
is administered through an unpleasant eye injection. Third, the
defendants knew that not long before the class period began,
emerging evidence that retinal vasculitis was a side effect of a
competitor's FDA-approved intravitreal AMD treatment had caused an
adverse impact on both the market for that treatment and the
competitor's stock price.
Several important facts were either conceded by the
plaintiffs or are undisputed. First, the fluorescein angiogram is
the most common and accepted test used to detect retinal
vasculitis. Second, the protocols for the OAKS and DERBY
trials -- which were approved by the FDA and made publicly
available on ClinicalTrials.gov -- required that fluorescein
angiograms be administered to trial participants on three separate
occasions during the two-year trial course: at the outset, at the
midpoint, and at the trials' conclusion. The protocols also
required that fluorescein angiograms be given to participants who
dropped out of the trials, but not for at least thirty days after
they stopped participating. In addition, participating clinicians
were free to order fluorescein angiograms for trial participants
whenever they thought that doing so was warranted by a
participant's symptoms. Third, there is no evidence that any trial
participants developed retinal vasculitis during or after the
- 7 -trials. Indeed, there is no evidence of retinal vasculitis
occurring in test subjects during the more than ten years that
Apellis developed and tested pegcetacoplan prior to the drug's FDA
approval. Fourth, and finally, Apellis conducted the OAKS and
DERBY trials by following the FDA-approved protocols.
The problem, the plaintiffs argued, is that the trial
protocols did not require prompt follow-up fluorescein angiograms
for retinal vasculitis when study participants developed
intraocular inflammation or ischemic neuropathy, which can be
symptoms of retinal vasculitis and which occurred with greater
frequency in study participants who received pegcetacoplan than in
those who received the sham treatment.2 Nor did they require
immediate follow-up fluorescein angiograms when participants
dropped out of the studies. The plaintiffs alleged that, because
the defendants would have required these actions had they designed
the trials to test for retinal vasculitis, the defendants'
statements about the absence of retinal vasculitis in trial
participants constitute misleading half-truths.3 The plaintiffs
2 This argument was supported by the plaintiffs' expert,
Dr. Demetrios Vavvas, who is the Solman and Libe Friedman Professor
of Ophthalmology and Co-Director of the Ocular Regenerative
Medicine Institute at Harvard Medical School. Dr. Vavvas also is
the Director of the Retina Service at Massachusetts Eye and Ear.
3 The plaintiffs appear to presume, but plead no facts to
support the assumption that, trial participants -- including those
dropping out of the trials -- could have developed vasculitis but
- 8 -argued that to have made these statements in a non-misleading
manner, the defendants would have needed to advise investors that
the protocols were not designed to test for retinal vasculitis.
The absence of such a statement was thus, according to the
plaintiffs, an actionable material omission.
The defendants moved to dismiss the amended complaint
for, inter alia, a failure to plausibly allege a material
misrepresentation or omission and a failure to plausibly allege
that they had acted with the requisite scienter. See Premca, 178
F.4th at 723 ("A plausible § 10(b) claim requires well-pleaded
allegations of: (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." (citation
omitted)). The district court agreed with both arguments and
accordingly granted the defendants' motion. As noted above, we
confine our focus to whether the court committed error in
concluding as a matter of law that the plaintiffs failed to
identify a material misrepresentation or omission. See id.
(applying de novo review to the grant of a motion to dismiss a
securities fraud action under § 10(b)).4
that it resolved on its own before their next scheduled fluorescein
angiogram.
4 A claim for securities fraud under section 10(b) is also
subject to the heightened pleading requirements of Federal Rule of
Civil Procedure 9(b) and the Private Securities Litigation Reform
Act of 1995 ("PSLRA"), 15 U.S.C. §§ 78u-4, 78u-5. See Premca, 178
- 9 -In ruling on the defendants' motion to dismiss, the
district court identified two alleged omissions as grounding the
plaintiffs' liability theory. First, the defendants failed to
state how frequently Apellis used fluorescein angiography to test
for retinal vasculitis. Second, defendants failed to state that
their testing protocols were inadequate to detect that condition.
The court then held, as a matter of law, that neither omission
made the challenged statements misleading. The first omission was
not actionable because the frequency of testing under the protocols
was fully disclosed to investors in public statements well before
the defendants made the challenged statements. The second was not
actionable because it was rooted only in a disagreement about the
adequacy of the scientific methodology employed in the studies,
which under prevailing law cannot give rise to a securities fraud
claim.
On appeal, the plaintiffs argue that the district court
misunderstood and therefore did not address their material
misrepresentation theory. That theory is, again, that the
defendants' statements about the absence of occurrences of retinal
vasculitis among OAKS and DERBY study participants during the class
period, while literally true, were misleading half-truths because
the defendants failed to disclose that the studies were not
F.4th at 723. But these additional requirements do not factor
into our analysis.
- 10 -designed to test for that condition. In our view, the plaintiffs'
theory fails to ground a viable securities fraud claim because,
under the circumstances as alleged, the challenged statements are
not actionable half-truths.
"Half truths . . . are 'representations that state the
truth only so far as it goes, while omitting critical qualifying
information.'" Macquarie Infrastructure Corp. v. Moab Partners,
L.P., 601 U.S. 257, 263 (2024) (quoting Universal Health Servs.,
Inc. v. United States ex rel. Escobar, 579 U.S. 176, 188 (2016)).
Here, there was no omission of such information. Although the
plaintiffs frame their appellate argument in terms of the omission
being a statement regarding the intentions of the study designers,
their theory of deception actually rests on two more specific
omissions: (1) omitting a statement that the OAKS and DERBY
protocols left to treating clinicians the decision whether to order
a fluorescein angiogram upon the appearance of inflammation and
ischemic neuropathy in study participants, rather than requiring
one in all such cases; and (2) omitting a statement that the
protocols did not require that participants who left the studies
to receive fluorescein angiograms until more than thirty days after
their departures.
True, the defendants did not explicitly state that
fluorescein angiograms were not automatically given to all
sufferers of inflammation and ischemic neuropathy or that
- 11 -fluorescein angiograms were not given to those leaving the OAKS
and DERBY studies within thirty days of their exits. Nevertheless,
the defendants disclosed both facts by providing full and complete
disclosures of when fluorescein angiograms would be given to trial
participants. In other words, investors knew what the defendants
were doing and the outcomes arising from those actions.5 In this
way, the present situation materially differs from SEC v. Lemelson,
57 F.4th 17 (1st Cir. 2023), and SEC v. Johnston, 986 F.3d 63 (1st
Cir. 2021), two cases on which the plaintiffs rely.
Lemelson supports the premise that technically true but
misleading "half-truths" can give rise to liability. See 57 F.4th
at 23-25. In Lemelson, the defendant stated, inter alia, that a
biopharmaceutical company did not intend to conduct clinical
trials but failed to disclose that the company instead planned to
hire a third party to conduct the trials. Id. at 24. This Court
first determined that a reasonable jury could have concluded that
the defendant's statement was a factual assertion, not a statement
of opinion, because it "expressed certainty" and was not prefaced
5 The plaintiffs suggest that investors might not have had
the scientific expertise to understand whether the protocols'
testing procedures were sufficient to detect retinal vasculitis.
We do not foreclose the possibility that, in some other case, 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.
- 12 -by "I think" or "I believe." Id. (citation modified). The Court
then determined that the offending statement was "factually
contradicted" by the company's plan to hire a third party to
conduct the trials. Id. Thus, while it was true that the company
would not conduct trials itself, that was an actionable half-truth
because the company omitted to state that it was going to hire a
third party to conduct the trials on its behalf.
Johnston is similar. Like Lemelson, it supports the
premise that technically true but misleading half-truths can form
the basis of a securities-fraud claim. 986 F.3d at 72. In
Johnston, a company executive stated that he could not speculate
whether the FDA would require the company to conduct a second
clinical trial and that there had been no formal discussions with
the FDA about a second trial. Id. at 72-73. But the executive
did not disclose that the FDA had recommended a second trial. Id.
As in Lemelson, the Court concluded that this omission rendered
the statement made a misleading half-truth. Id. at 73-74.
Here, in contrast, there were neither contradictions nor
undisclosed facts. The defendants reported that their clinical
studies found two side effects that are symptomatic of retinal
vasculitis: retinal inflammation and ischemic neuropathy. The
defendants then announced that there were no observed cases of
retinal vasculitis. These facts provide some basis for reasonable
investors to infer that the defendants were testing for retinal
- 13 -vasculitis. But they do not create a factual contradiction because
both the OAKS and DERBY studies employed fluorescein angiography
at set times and fluorescein angiography is the most common method
used to test for retinal vasculitis.
In short, there is no actionable claim here because the
information provided by the defendants was accurate and did not
conceal material information. The trial protocols were public and
followed, the tests used in the studies would detect retinal
vasculitis, and no retinal vasculitis was detected in any study
participant. Because everything disclosed was accurate and no
"critical qualifying information" was withheld, Macquarie
Infrastucture Corp., 601 U.S. at 263 (citation modified), the
district court properly dismissed the complaint.
Affirmed.
- 14 -