FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

IN RE NEKTAR THERAPEUTICS 

SECURITIES LITIGATION,

OKLAHOMA FIREFIGHTERS PENSION 

AND RETIREMENT SYSTEM; EL PASO 

FIREMEN & POLICEMENS PENSION 

FUND, Lead Plaintiffs,

Plaintiffs-Appellants,

v.

NEKTAR THERAPEUTICS; HOWARD 

W. ROBIN; STEPHEN K. DOBERSTEIN;

JONATHAN ZALEVSKY,

Defendants-Appellees.

No. 21-15170

D.C. No.

4:18-cv-06607-

HSG

OPINION

Appeal from the United States District Court

for the Northern District of California

Haywood S. Gilliam, Jr., District Judge, Presiding

Argued and Submitted December 10, 2021

Pasadena, California

Filed May 19, 2022

Before: Milan D. Smith, Jr., Kenneth K. Lee, and

Danielle J. Forrest, Circuit Judges.

Opinion by Judge Lee
2 IN RE NEKTAR THERAPEUTICS SECURITIES LITIG.

SUMMARY*

Securities Fraud

The panel affirmed the district court’s dismissal of a 

Second Amended Complaint in which two public pensions 

sued Nektar Therapeutics for securities fraud, alleging that 

Nektar misleadingly relied on outlier data from a single 

patient during the Phase 1 clinical trial of its anti-cancer 

drug, NKTR-214.

The panel affirmed for two reasons. 

First, Plaintiffs have not adequately alleged falsity under 

section 10(b) of the Securities Exchange Act of 1934, 15

U.S.C. § 78j(b), and Securities and Exchange Commission 

Rule 10b-5, 17 C.F.R. § 240.10b-5. The panel wrote that the 

complaint fails to articulate why Nektar’s statements about 

the Phase 1 clinical trial would be materially misleading to 

investors, even assuming Nektar relied on outlier data. The 

panel wrote that Plaintiffs do not sufficiently explain what 

the clinical trial would have shown without the alleged 

outlier data, nor do they specify how that would have 

affected the investing public’s assessment of the drug. The 

panel wrote that for all we know, the clinical trial could have 

still shown excellent results, even without the data from the 

supposed outlier patient.

Second, Plaintiffs did not plausibly allege loss causation. 

The panel wrote that nothing in the operative complaint 

suggests that Nektar’s disclosure of its later Phase 1/2 

* This summary constitutes no part of the opinion of the court. It 

has been prepared by court staff for the convenience of the reader.
IN RE NEKTAR THERAPEUTICS SECURITIES LITIG. 3

clinical trial results uncovered the “falsity” of the earlier 

Phase 1 trial, thus causing the drop in stock price. Rather, 

Plaintiffs’ factual allegations suggest a more mundane 

explanation: the different and more robust Phase 1/2 clinical 

trial merely showed that the drug may not be as effective as 

the initial – and limited – Phase 1 clinical trial had suggested. 

Further, Plaintiffs’ reliance on an anonymous and selfinterested short-seller’s internet musings about Nektar’s 

Phase 1 EXCEL clinical trial does not show loss causation.

COUNSEL

Alec T. Coquin (argued), Michael P. Canty, and Thomas G. 

Hoffman Jr., Labaton Sucharow LLP, New York, New 

York; James M. Wagstaffe, Wagstaffe von Loewenfeldt 

Busch & Radwick LLP, San Francisco, California; for 

Plaintiffs-Appellants.

Robin Wechkin (argued), Sidley Austin LLP, Issaquah, 

Washington; Sara B. Brody and Zarine S. Alam, Sidley 

Austin LLP, San Francisco, California; Matthew J. Dolan, 

Sidley Austin LLP, Palo Alto, California; for DefendantsAppellees.

OPINION

LEE, Circuit Judge:

Experimental drug candidates do not always live up to 

their potential, even if initial clinical trials yield highly 

promising results. But, as this case illustrates, that does not 

mean that a pharmaceutical company has defrauded the 

investing public.
4 IN RE NEKTAR THERAPEUTICS SECURITIES LITIG.

In 2017, Nektar Therapeutics touted the results from a 

Phase 1 clinical trial (dubbed “EXCEL”) of its anti-cancer 

drug. The next year, however, a different and more 

comprehensive Phase 1/2 clinical trial (called “PIVOT”) 

showed that the drug was not as effective as the initial trial 

had suggested. Nektar’s share price plunged over 40 

percent. Two public pensions then sued Nektar for securities 

fraud, alleging that Nektar misleadingly relied on outlier 

data from a single patient during the Phase 1 EXCEL clinical 

trial. The district court dismissed their operative complaint 

with prejudice.

We affirm for two reasons. First, Plaintiffs have not 

adequately alleged falsity under section 10(b) of the 

Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and 

Securities and Exchange Commission Rule 10b-5, 17 C.F.R. 

§ 240.10b-5. The complaint fails to articulate why Nektar’s 

statements about the Phase 1 EXCEL clinical trial would be 

materially misleading to investors, even assuming Nektar 

relied on outlier data. Plaintiffs do not sufficiently explain 

what the clinical trial would have shown without the alleged 

outlier data, nor do they specify how that would have 

affected the investing public’s assessment of the drug. For 

all we know, the clinical trial could have still shown 

excellent results, even without the data from the supposed 

outlier patient. Without specific allegations to connect the 

dots, Plaintiffs’ theory fails to plead securities fraud.

Second, Plaintiffs have not plausibly alleged loss 

causation. Nothing in the operative complaint suggests that 

Nektar’s disclosure of its later Phase 1/2 PIVOT clinical trial 

results uncovered the “falsity” of the earlier Phase 1 EXCEL 

trial, thus causing the drop in stock price. Rather, Plaintiffs’ 

factual allegations suggest a more mundane explanation: the 

different and more robust Phase 1/2 PIVOT clinical trial 
IN RE NEKTAR THERAPEUTICS SECURITIES LITIG. 5

merely showed that the drug may not be as effective as the 

initial—and limited—Phase 1 EXCEL clinical trial had 

suggested. Further, Plaintiffs’ reliance on an anonymous 

and self-interested short-seller’s internet musings about 

Nektar’s Phase 1 EXCEL clinical trial does not show loss 

causation.

BACKGROUND

I. Nektar’s NKTR-214 anti-cancer drug does not 

replicate the results from the first Phase 1 EXCEL 

clinical trial in its later Phase 1/2 PIVOT trial.

Nektar researches and develops new drugs for cancer, 

autoimmune disease, and chronic pain.1 Its flagship drug 

candidate is NKTR-214, a modified version of a human 

protein that activates the body’s production of cancerfighting cells. NKTR-214 stimulates the production of 

CD8+ T cells, which kill infected or malignant cells.

As part of NKTR-214’s development, Nektar carried out 

a Phase 1 clinical trial dubbed EXCEL. During the EXCEL 

trial, 28 cancer patients received dosages of NKTR-214 

every two or three weeks, and then tissue samples were 

collected, divided, and analyzed to assess the drug’s 

effectiveness.

As the EXCEL trial progressed, Nektar reported interim 

results at various points. At a healthcare conference in 2017, 

Nektar’s CEO Howard Robin presented a chart that 

displayed data from EXCEL showing that “cancer-fighting 

cells increased by an average of 30-fold in tumors of 

1 These facts come from the second amended complaint and are 

accepted as true for this appeal. See Nguyen v. Endologix, Inc., 962 F.3d 

405, 408 (9th Cir. 2020).
6 IN RE NEKTAR THERAPEUTICS SECURITIES LITIG.

purportedly ten patients dosed with NKTR-214.” This socalled “30-fold chart” undergirds this securities fraud 

lawsuit.

Because the 30-fold chart underpins this case, we will 

describe it in some detail. As alleged in the complaint, the 

chart first appeared under the title “Analysis of T cell 

Populations in Tumor”:
IN RE NEKTAR THERAPEUTICS SECURITIES LITIG. 7

It shows the “fold change”2 of two types of cells: CD8+ 

and Tregs.3 Thus, the x-axis displays the cell type, while the 

y-axis displays the fold change. The chart shows a 29.8-fold 

change for CD8+ cells. The chart includes information 

explaining that the fold change was calculated by measuring 

the cells “predose” and then at Week 3 of dosing. It also 

explains that the chart reflects data from “N = 10 patients.” 

In layman’s language, the chart shows that cancer-fighting 

cells increased an average of about 30-fold among 10 

patients after taking Nektar’s drug. Nektar presented this 30-

fold chart at many conferences.

After the promising results from the Phase 1 EXCEL

trial, Nektar launched a second clinical trial called PIVOT. 

PIVOT evaluated the effectiveness of NKTR-214 when 

dosed along with another drug called Opdivo. Nektar 

released Phase 1/2 data from PIVOT on Saturday, June 2, 

2018. The reported data showed that “the overall response 

rate for NKTR-214 in treating melanoma had declined from 

the 85% rate presented the previous November to 50%.” 

When the markets opened on Monday, Nektar’s stock price 

plummeted from $90.35 to $52.57, a dip of about 42%.

II. Anonymous short-shellers accuse Nektar of relying 

on outlier data in its first Phase 1 EXCEL clinical 

trial.

About four months later, anonymous short-sellers 

released a report, dubbed the Plainview Report, that outlined 

2 Fold change measures how much a quantity changes between an 

initial and final measurement. It is derived by dividing the final 

measurement by the initial measurement.

3 Tregs are Regulatory T cells that regulate and suppress the immune 

system. They are not at issue in this case.
8 IN RE NEKTAR THERAPEUTICS SECURITIES LITIG.

why its authors believed NKTR-214 to be less effective than 

Nektar claimed. The Plainview Report claimed that a 

different chart displayed by Nektar—“Figure 6”—

demonstrated the falsity of the 30-fold chart. Figure 6 

presented data on CD8+ T Cell changes in 7 of the 28 

patients in the EXCEL trial.

Figure 6 showed that one patient in the EXCEL trial, 

Patient 14, saw an increase in CD8+ T cells of roughly 300-

fold, while the other six patients saw more modest increases.

The Plainview Report claimed that Patient 14 was among the 

10 patients reflected in the 30-fold chart, thus skewing the 

data in that chart. The Plainview Report also contained a 

disclaimer that its authors “make no representation, express 

or implied, as to the accuracy, timeliness, or completeness of 

any such information” in the report. On the same day that 

the Plainview Report was published, Nektar’s stock price 

declined by seven percent.

III. Two public pensions sue Nektar for securities 

fraud.

The Oklahoma Firefighters Pension and Retirement 

System, along with the El Paso Firemen & Policemen’s 
IN RE NEKTAR THERAPEUTICS SECURITIES LITIG. 9

Pension Fund (collectively, “the Pensions”) sued Nektar and 

some of its current and former employees in October 2018. 

They then filed an amended complaint after being appointed 

lead plaintiffs. The district court, however, granted Nektar’s 

motion to dismiss the first amended complaint without 

prejudice.

The Pensions then filed a second amended complaint. 

The complaint alleged that Nektar made materially 

misleading statements or omissions by touting its 30-fold 

chart without disclosing that Patient 14’s outlier data was 

included in the average. To support that allegation, the 

complaint cited the Plainview Report and its analysis linking 

Figure 6 to the 30-fold chart.

The complaint also included statements by Confidential 

Witness #2 (“CW #2”), who worked in Clinical 

Development Operations at Nektar throughout the Class 

Period and “closely monitored the incoming data” for 

NKTR-214. CW #2 stated that Patient 14 was the sole 

outlier included in the EXCEL trial, and that the 30-fold 

increase would have been “nowhere near” as large without 

Patient 14’s data. CW #2 also described how Nektar 

changed trial reporting deadlines for the PIVOT trial so that 

positive results would make their way into presentations 

while negative results would be left out. Further, CW #2 

stated that scientists working at Nektar disagreed with these 

practices and with the inclusion of outlier data in 

presentations on trial results.

The district court again dismissed the complaint, this 

time with prejudice. The district court held that the Pensions 

failed to adequately plead falsity, scienter, or loss causation. 

The Pensions timely appealed, and we have jurisdiction to 

review the dismissal order under 28 U.S.C. § 1291.
10 IN RE NEKTAR THERAPEUTICS SECURITIES LITIG.

STANDARD OF REVIEW

We review de novo the district court’s dismissal of the 

complaint. Levi v. Atossa Genetics, Inc. (In re Atossa 

Genetics Inc. Sec. Litig.), 868 F.3d 784, 793 (9th Cir. 2017). 

The court must accept all well-pleaded allegations as true. 

Lloyd v. CVB Fin. Corp., 811 F.3d 1200, 1205 (9th Cir. 

2016). We also consider the complaint as a whole. Tellabs, 

Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 

(2007).

To survive a Rule 12(b)(6) motion, a plaintiff must plead 

“enough facts to state a claim to relief that is plausible on its 

face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). 

A claim is facially plausible when a plaintiff pleads “factual 

content that allows the court to draw the reasonable 

inference that the defendant is liable for the misconduct 

alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

Securities fraud complaints face heightened pleading 

requirements. “At the pleading stage, a complaint stating 

claims under section 10(b) and Rule 10b-5 must satisfy the 

dual pleading requirements of Federal Rule of Civil 

Procedure 9(b) and the [Private Securities Litigation Reform 

Act (PSLRA)].” Zucco Partners, LLC v. Digimarc Corp., 

552 F.3d 981, 990 (9th Cir. 2009). Rule 9(b) requires that a 

party “state with particularity the circumstances constituting 

fraud or mistake.” The PSLRA requires that “the complaint 

shall specify each statement alleged to have been 

misleading, the reason or reasons why the statement is 

misleading, and, if an allegation regarding the statement or 

omission is made on information and belief, the complaint 

shall state with particularity all facts on which that belief is 

formed.” 15 U.S.C. § 78u-4(b)(1)(B). “By requiring 

specificity, [the PSLRA] prevents a plaintiff from skirting 

dismissal by filing a complaint laden with vague allegations 
IN RE NEKTAR THERAPEUTICS SECURITIES LITIG. 11

of deception unaccompanied by a particularized explanation 

stating why the defendant’s alleged statements or omissions 

are deceitful.” Metzler Inv. GMBH v. Corinthian Colls., 

Inc., 540 F.3d 1049, 1061 (9th Cir. 2008).

ANALYSIS

To plead a claim under § 10(b) and Rule 10b-5, a 

plaintiff must allege “(1) a material misrepresentation or 

omission [falsity]; (2) scienter; (3) a connection between the 

misrepresentation or omission and the purchase or sale of a 

security; (4) reliance; (5) economic loss; and (6) loss 

causation.” Nguyen, 962 F.3d at 413 (quoting Or. Pub. 

Emps. Ret. Fund v. Apollo Grp. Inc., 774 F.3d 598, 603 (9th 

Cir. 2014)). Each of these elements must be independently 

satisfied. See Or. Pub. Emps. Ret. Fund, 774 F.3d at 607 

(explaining that failure to adequately plead an element “is an 

independent basis” on which to affirm dismissal of the 

complaint).

As explained below, we hold that Plaintiffs have failed 

to establish falsity and loss causation under the applicable 

pleading standards. For that reason, we need not address the 

remaining elements.

I. The Complaint Does Not Adequately Allege Why 

Nektar’s Statements About Phase 1 EXCEL Trial 

Results Are False or Misleading.

To satisfy the falsity element, the Pensions point to 

Nektar’s use of the 30-fold chart to tout the effectiveness of 

NKTR-214. The Pensions’ arguments lack merit because 

they fail to specify why the chart would have deceived a 

reasonable investor under § 10(b) or Rule 10b-5.
12 IN RE NEKTAR THERAPEUTICS SECURITIES LITIG.

A. The complaint fails to explain why the alleged 

outlier data in the Phase 1 EXCEL clinical trial 

constituted a material misrepresentation.

The parties dispute whether Patient 14’s outlier data was 

in fact included in the 30-fold chart’s calculations. But even 

assuming it was, the complaint fails to explain why its 

inclusion was materially misleading. Simply put, the 

complaint does not allege with specificity what the Phase 1 

EXCEL results would have been without outlier data. Nor 

does it provide context about why investors would have felt 

misled had they received Phase 1 EXCEL results without the 

outlier data.

The Pensions say that the 30-fold chart was misleading 

because Nektar failed to inform investors that it included 

outlier data. An omission is materially misleading if “there 

is ‘a substantial likelihood that [it] would have been viewed 

by the reasonable investor as having significantly altered the 

“total mix” of information made available’ for the purpose 

of decisionmaking by stockholders concerning their 

investments.” Retail Wholesale & Dep’t Store Union Loc. 

338 Ret. Fund v. Hewlett-Packard Co., 845 F.3d 1268, 1274 

(9th Cir. 2017) (quoting Basic Inc. v. Levinson, 485 U.S. 

224, 231–32 (1988)); accord Atossa, 868 F.3d at 795 

(quoting same). So, “once defendants [choose] to tout 

positive information to the market, they [are] bound to do so 

in a manner that wouldn’t mislead investors, including 

disclosing adverse information that cuts against the positive 

information.” Khoja v. Orexigen Therapeutics, Inc., 899 

F.3d 988, 1009 (9th Cir. 2018) (quoting Schueneman v. 

Arena Pharm., Inc., 840 F.3d 698, 705–06 (9th Cir. 2016)).

Here, the Pensions have not pleaded specific facts 

articulating why Nektar’s 30-fold chart about the Phase 1 

EXEL clinical results was materially misleading. See
IN RE NEKTAR THERAPEUTICS SECURITIES LITIG. 13

Metzler, 540 F.3d at 1061. The complaint merely alleges 

that outlier data drove the 30-fold change claim without 

providing any meaningful context or information about why 

an investor’s assessment of Nektar would have changed if 

Patient 14’s alleged outlier data had been excluded.4 Put 

another way, we simply do not know what the results would 

have been without the outlier data or what those results 

would mean as a medical matter.

The Pensions take three stabs at what the fold change 

would have been without Patient 14’s outlier data, but they 

all fall short of the heightened pleading standard imposed by 

Rule 9(b) and the PSLRA.

First, the Pensions rely on the Plainview Report to allege 

that the result “would look very different” if one calculated 

the fold change based on only three patients found in Figure 

6 who were dosed every three weeks. The complaint claims 

that the fold change for that calculation would be “~1.8 

fold.” But cherry-picking data from only three patients does 

not plausibly show the falsity of the 30-fold claim. Indeed, 

the complaint never explains or justifies why it excluded the 

other remaining patients (at least six more in the 30-fold 

chart). And it is not even apparent from the complaint 

whether any patients from Figure 6 are in the 30-fold chart, 

as the latter included data from only ten out of the twentyeight patients in the EXCEL trial.

Second, the complaint states that CW #2 contended that 

the results would have been “nowhere near” the 30-fold 

4 In their briefs, the Pensions maintained that Patient 14’s outlier 

(positive) data should have been excluded because it skewed the results. 

But if so, it would also allow companies to discard outlier (negative) data 

claiming that it distorts the results. The Pensions presumably would 

consider such exclusion of negative data to be misleading.
14 IN RE NEKTAR THERAPEUTICS SECURITIES LITIG.

result without Patient 14’s data, but it does not specify any 

further details. Instead, CW #2 relies on vague and 

hyperbolic assertions, describing the 30-fold chart as 

“misleading,” “deceitful,” and “lacking scientific integrity.” 

But conclusory adjectives do not meet the PSLRA’s

heightened pleading requirements. Metzler, 540 F.3d at 

1061. In the highly technical task of evaluating scientific 

studies and their impact on investment decisions, plaintiffs 

must provide some specificity to anchor their contentions 

that investors would find one study outcome to be 

meaningfully different from another. The Pensions’ 

complaint fails to do that.

Third, the Pensions rely on a statistical analysis by an 

expert who estimates, after making many assumptions, that 

the fold change experienced by the other patients in the 30-

fold chart could not have topped 5.55. Yet again, we are 

provided no plausible justification for the assumptions 

underlying how this expert precisely derived that 5.55-fold 

estimate.5

 Plaintiffs cannot evade the PSLRA’s exacting 

pleading standards by merely citing an expert who makes 

assertions about falsity based on questionable assumptions 

and unexplained reasoning.

5 The expert apparently assumes that Patient 14’s starting CD8+ 

count was 10 cells/mm2

. But this is seemingly estimated from visually 

looking at Figure 6, which is a tiny graphic whose y-axis is marked by 

large increments of 500 (0, 500, 1000, etc.). The dot representing Patient 

14’s starting CD8+ count is near zero, but the dot itself is big enough 

visually relative to the compressed y-axis that one could reasonably 

conclude that Patient 14’s actual starting count is anywhere from zero to 

50. Using the same logic as the expert, choosing a starting count 

somewhere between 11 and 50 would mean that the fold change 

experienced by the other patients in the 30-fold chart could be anywhere 

from ~8-fold to ~27-fold.
IN RE NEKTAR THERAPEUTICS SECURITIES LITIG. 15

Even assuming the Pensions had adequately alleged 

what the fold change would have been without Patient 14’s 

data, they have failed to explain why that difference would 

be material to a reasonable investor. See Retail Wholesale, 

845 F.3d at 1274; Atossa, 868 F.3d at 795. Consider this 

analogy on why context matters in determining the falsity of 

statements based on highly technical information: Suppose a 

smartphone maker touts that the microchip in its newest 

phone is 300 times faster than its predecessor chip based on 

multiple technical tests. But if we take out one outlier test, 

it turns out that the new microchip is 200 times faster. It may 

well be that consumers cannot tell the difference between 

200 times and 300 times faster in real-life because 200 times 

is blazingly fast for any conceivable task on a smartphone. 

And in such a scenario, the average investor may not care 

whether the new microchip is 200 times or 300 times faster 

because it makes no material difference to consumers.

Likewise, we do not know from the complaint whether a 

somewhat lower fold-change would have been material to 

investors. For example, without Patient 14’s data, perhaps 

the number of cancer-fighting cells would have increased 

15-fold. Is that an excellent result from a medical 

perspective? Is there any material difference between a 15-

fold increase and a 30-fold increase? And how would an 

average investor assess such a difference? Perhaps investors 

would not care about such a difference if it turned out that a 

30-fold increase provides little marginal benefit over a 15-

fold increase for most cancer patients. We cannot answer 

any of these questions because the complaint has failed to 

plead sufficient facts to provide context that would allow us 

to assess the alleged falsity of Nektar’s statements.
16 IN RE NEKTAR THERAPEUTICS SECURITIES LITIG.

B. The purported inclusion of patients with different 

dosing schedules does not render the 30-fold chart 

materially misleading.

The Pensions also allege that Nektar “falsely claimed 

that the patients in the trial were dosed with NKTR-214 

every three weeks when, in fact, two of the patients used to 

support the 30-fold increase claim—including the outlier 

patient—were dosed every two weeks.” But the Pensions 

plead no facts suggesting why the one-week difference in 

dosing “would have been viewed by the reasonable investor 

as having significantly altered the ‘total mix’ of information 

made available.” Atossa, 868 F.3d at 795 (quoting Basic, 

485 U.S. at 231–32). It might be inferred that needing a 

higher frequency of dosing suggests a lower potency of the 

drug, but it is unclear how that relates to the viability of 

NKTR-214 on the market or, as a result, Nektar’s 

attractiveness as an investment. The Pensions thus have not 

plausibly alleged a materially false statement about dosing 

frequency.

II. The Complaint Does Not Plausibly Establish Loss 

Causation.

The Pensions have also failed to allege loss causation. 

When considering loss causation, “the ultimate issue is 

whether the defendant’s misstatement, as opposed to some 

other fact, foreseeably caused the plaintiff’s loss.” Lloyd, 

811 F.3d at 1210. The “burden of pleading loss causation is 

typically satisfied by allegations that the defendant revealed 

the truth through ‘corrective disclosures’ which ‘caused the 

company’s stock price to drop and investors to lose money.’” 

Id. at 1209 (quoting Halliburton Co. v. Erica P. John Fund, 

Inc., 573 U.S. 258, 264 (2014)). Plaintiffs thus must show a 

“causal connection between the fraud and the loss by tracing 

the loss back to the very facts about which the defendant 
IN RE NEKTAR THERAPEUTICS SECURITIES LITIG. 17

lied.” Mineworkers’ Pension Scheme v. First Solar Inc., 881 

F.3d 750, 753 (9th Cir. 2018) (internal quotation marks and 

citations omitted).6

A. The later Phase 1/2 PIVOT trial result was not a 

corrective disclosure that exposed the alleged 

falsity of the earlier Phase 1 EXCEL trial data.

As discussed above, after earlier reporting on the highly 

promising data from the Phase 1 EXCEL clinical trial, 

Nektar later revealed results from the Phase 1/2 PIVOT trial 

that somewhat took the shine off the initial trial data. Nektar 

reported that the overall response rate in patients was 50%, 

down from 85% reported in data collected in the year before. 

The next business day on June 4, Nektar’s stock dropped 

over 40%. The Pensions argue that the inclusion of 

misleading outlier data in the Phase 1 EXCEL trial inflated 

investor expectations, and then the results of the Phase 1/2 

PIVOT trial revealed the falsity of the earlier Phase 1 

EXCEL trial data.

This claim fails because only a tenuous causal 

connection exists between the alleged falsehoods from the 

Phase 1 EXCEL trial and the Phase 1/2 PIVOT trial data 

announcement that preceded the June 4 stock drop. The use 

6 The Pensions also rely on a “zone of risk” theory to argue loss 

causation. See, e.g., Lentell v. Merrill Lynch & Co., Inc., 396 F.3d 161,

173 (2d Cir. 2005). Our court has never expressly adopted that theory, 

though other circuits have. See Nuveen Mun. High Income Opportunity 

Fund v. City of Alameda, 730 F.3d 1111, 1120 (9th Cir. 2013). We have 

continued to require securities fraud plaintiffs to allege that the defendant 

lied about “the very facts” causing the plaintiffs’ losses, and it is unclear 

in any event that courts employing the “zone of risk” theory require any 

lesser showing. See id. (quoting McCabe v. Ernst & Young, LLP, 494 

F.3d 418, 425, 431 (3d Cir. 2007)).
18 IN RE NEKTAR THERAPEUTICS SECURITIES LITIG.

of outlier data alleged in the complaint relates to the Phase 1 

EXCEL trial, which focused only on NKTR-214. In 

contrast, the Phase 1/2 PIVOT trial tested patients who 

received both NKTR-214 and Opdivo, another anti-cancer 

drug. The Phase 1/2 PIVOT trial thus tested a different 

treatment and used a different diagnostic measure than the 

Phase 1 EXCEL trial (tumor shrinkage rather than biomarker 

data).

Of course, the two trials are related in that they both 

involved NKTR-214. But the inquiry is whether the 

Pensions have traced their losses “back to the very facts 

about which the defendant lied.” Mineworkers, 881 F.3d at 

753 (quotation omitted). The Pensions’ allegations focus on 

data from the earlier Phase 1 EXCEL trial, rather than the 

later Phase 1/2 PIVOT data. The announcement of the Phase 

1/2 results did not suggest that the EXCEL data were 

improperly manipulated, or that the methodology for 

collecting and analyzing that data was flawed. Indeed, 

Nektar’s announcement merely integrated newly collected 

data from the Phase 1/2 PIVOT trial into its reporting. It did 

not correct or revise previous patient data.

The Phase 1/2 PIVOT result was not a corrective 

disclosure that exposed the alleged falsity in the Phase 1 

EXCEL trial data, causing the drop in stock price. Rather, it 

merely showed that results from a different and more 

comprehensive test were not as promising as those from the 

more limited Phase 1 EXCEL data. Thus, the Pensions’ 

factual allegations most plausibly suggest that relatively 

disappointing test results, not any revelation of earlier 

falsehoods, caused Nektar’s share price to plunge.
IN RE NEKTAR THERAPEUTICS SECURITIES LITIG. 19

B. The Plainview Report Does Not Establish Loss 

Causation.

The Pensions also argue that the Plainview Report—in 

which anonymous short-sellers claimed that Patient 14’s 

outlier data from Figure 6 were incorporated into the 30-fold 

chart—served as a corrective disclosure that caused Nektar’s 

stock to drop by seven percent on October 1. That argument 

fails.

Our court recently analyzed when a short-seller’s report 

can satisfy the loss causation element in Houston Mun. 

Employees Pension System v. BofI Holding, Inc. (In re BofI 

Holding, Inc. Securities Litigation), 977 F.3d 781 (9th Cir. 

2020). The inquiry begins with whether the court can 

“plausibly infer that the alleged corrective disclosure 

provided new information to the market that was not yet 

reflected in the company’s stock price.” Id. at 795. This is 

normally difficult with a short-seller report that uses publicly 

available information because a corrective disclosure “must 

by definition reveal new information to the market that has 

not yet been incorporated into the [stock] price.” Id. at 794. 

But if the report “required extensive and tedious research 

involving the analysis of far-flung bits and pieces of data,” 

then “[t]he time and effort it took to compile this information 

make it plausible that the posts provided new information to 

the market, even though all of the underlying data was 

publicly available.” Id. at 797.

BofI underscored the high bar that plaintiffs must meet 

in relying on self-interested and anonymous short-sellers. 

We acknowledged that it was “plausible” that the short-seller 

blog posts at issue “provided new information to the 

market,” but “nonetheless conclude[d]” that the plaintiffs 

“ha[d] not plausibly alleged that these posts constituted 

corrective disclosures.” Id. We explained that “it is not 
20 IN RE NEKTAR THERAPEUTICS SECURITIES LITIG.

plausible that the market reasonably perceived these posts as 

revealing the falsity of [the defendant’s] prior 

misstatements” because:

The posts were authored by anonymous 

short-sellers who had a financial incentive to 

convince others to sell, and the posts included 

disclaimers from the authors stating that they 

made “no representation as to the accuracy or 

completeness of the information set forth in 

this article.” A reasonable investor reading 

these posts would likely have taken their 

contents with a healthy grain of salt.

Id.

We hold that the same reasoning applies to the Plainview 

Report. Perhaps the Plainview Report did provide new 

information to the market. Its analysis pulled together 

disparate sources and connected data in ways that were not 

plainly obvious. For example, it compared statements made 

by Nektar at different conferences and it cross-checked 

sources provided by Nektar. Yet the Plainview Report was 

“authored by anonymous short-sellers who had a financial 

incentive to convince others to sell, and the posts included 

disclaimers from the authors stating that they made ‘no 

representation as to the accuracy or completeness of the 

information set forth in this article.’” BofI, 977 F.3d at 797. 

As a result, it is not plausible that the market would perceive 

the Plainview Report as revealing false statements because 

the nature of the report means that investors would have 

taken its “contents with a healthy grain of salt.” Id.

The Pensions attempt to distinguish BofI by arguing that 

the reports in that case had only a tangential relationship to 

the false statements at issue, while here the Plainview Report 
IN RE NEKTAR THERAPEUTICS SECURITIES LITIG. 21

relates directly to the alleged false statements. It is true that 

information’s “relationship to the alleged misstatements” 

was a factor considered in BofI. Id. at 795. But the central 

holding in the case was that the character of the report—

anonymous and self-interested short-sellers who disavowed 

any accuracy—rendered it inadequate. Whether a report is 

tangential or direct in relation to the misstatements does not 

change that fact.

In sum, the Plainview Report does not establish loss 

causation for the October 1 stock drop.

CONCLUSION

Pharmaceutical companies often suffer setbacks in their 

clinical trials after earlier testing offered highly promising 

results. That is the nature of the industry, and—without 

more—it does not necessarily mean that a pharmaceutical 

company committed securities fraud. The Pensions’ 

operative complaint does not provide anything “more” here 

under the applicable legal standards, and so the Pensions 

have failed to state a claim for securities fraud. As a result, 

we AFFIRM the district court’s dismissal of the Second 

Amended Complaint.