Securities Regulation Daily Wrap Up, FRAUD AND MANIPULATION—D. Mass.: Biopharma company didn’t mislead about new drug, (Sep 17, 2026)

By Anne Sherry, J.D.

The FDA’s approval of a drug for clinical trials rendered statements about the drug’s safety per se reasonable.

A complaint failed to plead that a pharmaceutical company misled about the safety profile of a muscular dystrophy treatment. The vast majority of the 59 alleged misstatements were nonactionable opinion, puffery, or simply not false. While the court found that two statements were materially misleading, the complaint did not establish a strong inference of scienter. The court dismissed the amended complaint with prejudice (In re Sarepta Therapeutics Securities Litigation, No. 25-13530 (D. Mass. Sept. 15, 2026)).

Allegations. Sarepta Therapeutics develops products in two categories: gene therapies and RNA, or “exon-skipping,” therapies. The plaintiffs alleged that the defendants made material misstatements about products in both categories.

The largest category of challenged statements pertained to the safety profile of Elevidys, a gene therapy treatment for Duchenne Muscular Dystrophy (DMD). While preclinical data raised safety concerns for the treatment, the FDA narrowly approved the drug because of the urgent medical need. The approval was conditioned on Sarepta confirming that Elevidys was safe via further testing.

During testing of the treatment on both ambulatory and non-ambulatory patients, two non-ambulatory patients died from liver failure. A third non-ambulatory patient who was in treatment for a different type of muscular dystrophy (LGMD) and was taking a different drug—that used the same vector as Elevidys—also died.

The plaintiffs alleged that the defendants misled about Elevidys’s safety. They also alleged that the defendants overstated the progress of the LGMD program. Finally, the defendants allegedly misled about disruptions to a trial for exon-skipping therapies for DMD.

Not a puzzle. The court quickly dispensed with the defendants’ argument that the complaint was impermissible “puzzle pleading.” True, the complaint was dense, but the plaintiffs identified specific statements, categorized them by time period and product type, and explained why each was misleading. The court could parse the plaintiffs’ claims, and the defendants were able to do the same and create a chart of the allegations.

Only two misstatements. The defendants fared better in countering the allegations that they made misleading statements, convincing the court as to 57 of the 59 challenged statements.

The plaintiffs challenged many statements about Elevidys, such as that an “enormous amount” of data supported the conclusion that Elevidys had “one of the most impressive safety profiles in the context of AAV-mediated gene therapy that has ever existed.” Because these characterizations of the data had a reasonable basis, they were non-actionable opinions, the court determined. Critically, the FDA’s approval of the drug for clinical trials rendered the statements about the drug’s safety per se reasonable.

The plaintiffs’ claim that Sarepta’s Chief Scientific Officer “flatly lied” when she told investors that Sarepta had not seen signs of acute liver failure among LGMD patients was not well supported. The plaintiffs alleged that Sarepta knew a patient with LGMD had died of liver failure but did not allege when. Without establishing that the patient had died as of the challenged statement or that the CSO knew of that death, the allegation did not meet heightened pleading standards.

The bulk of the defendants’ statements about the LGMD program were non-actionable puffery. Beyond that, the former employees lacked sufficient reliability to plausibly allege that the statements were false or misleading. As for Sarepta’s difficulties with trials for an exon-skipping therapy, the plaintiffs selectively pulled quotes from multiple SEC filings to suggest that the defendants were not forthcoming about the impact of COVID-19 while omitting the defendants’ clear disclosures in the same documents that the pandemic had caused disruptions.

However, two statements about similar outcomes for ambulatory and non-ambulatory Elevidys patients were materially misleading. It was not fraud to say that Sarepta had not observed any difference in the adverse event rates at the time of a conference; this was objective fact. But the CEO twice asserted that there was no difference in the risk of elevated liver enzymes or liver injury between ambulatory and non-ambulatory patients. Even if plausibly opinion, this did not align with Sarepta’s data, which at that time indicated a significantly greater risk of liver issues in non-ambulatory compared to ambulatory patients.

Scienter. Scienter was the final insurmountable hurdle for the amended complaint. Without an admission of intent, insider stock sales, a credible financial incentive, or reliable former employees with actual knowledge of the defendants’ mental states, there was at best weak circumstantial evidence of scienter. Countering this evidence were repeated public disclosures of liver toxicity risk, including in both the ambulatory and non-ambulatory populations. The innocent inference, that Sarepta’s executives genuinely and reasonably believed what they were saying was true, was the more likely one.

The case is No. 25-13530.

Judge: Murphy, B.

Attorneys: Daniel Dolgicer, pro se. Karin Elizabeth Fisch (Grant & Eisenhofer P.A.) for Anthony Defilippis, Nicholas Barrass, Robert Feldstein and William Wrede. Michele D. Johnson (Latham & Watkins) for Sarepta Therapeutics, Inc., Douglas S. Ingram, Dallan Murray, Louise Rodino-Klapac and Ian M. Estepan.

Companies: Sarepta Therapeutics, Inc.

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