Court Opinion

ID: 4702543
Source: CourtListenerOpinion
Date Created: 2021-07-09 20:00:40.521725+00
Date Added: 2024-06-11T08:06:25.635346
License: Public Domain

United States Court of Appeals
                     For the First Circuit

No. 19-1964

                           TIM KARTH,

                      Plaintiff, Appellant,

   ABRAHAM KISWANI; RICHARD J. ERICKSON; RICHARD B. KING, JR.;
                         TERRELL JACKSON,

                           Plaintiffs,

                               v.

                KERYX BIOPHARMACEUTICALS, INC.;
                 RON BENTSUR; SCOTT A. HOLMES;
              GREGORY P. MADISON; JAMES OLIVIERO,

                     Defendants, Appellees.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
               FOR THE DISTRICT OF MASSACHUSETTS

          [Hon. Denise J. Casper, U.S. District Judge]

                             Before

                  Thompson, Lipez, and Kayatta,
                         Circuit Judges.

     Jeffrey Craig Block, with whom Jacob A. Walker, Nathaniel
Silver, and Block & Leviton LLP were on brief, for appellant.
     Laurence Adam Schoen, with whom John F. Sylvia, Geoffrey A.
Friedman, and Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
were on brief, for appellees.
                          July 9, 2021
                       [REDACTED OPINION]*

*The full version of this opinion was filed on June 21, 2021,
and remains on file, under seal, in the Clerk's Office.
            THOMPSON, Circuit Judge.             Before us on appeal is a

dispute between Tim Karth, an investor who lost money when he

bought stock that saw its value plummet soon after that purchase,

and Keryx Biopharmaceuticals, Inc., and its executives, all of

whom allegedly swindled Karth out of his hard-earned cash by

misleading him about the likelihood that Keryx would be able to

continue to meet demand for its only drug product.                    Though, at

various   points,   the    case    contained      a   myriad   of    claims     and

experienced a long procedural history, the parties agree that the

entirety of the appeal is resolved by addressing one question:

did Keryx sufficiently warn investors about the vulnerability of

its   manufacturing   infrastructure        so    that   Karth      knew   of   the

investment risks when he purchased his shares?            The district court

answered that question in the affirmative and entered judgment for

the defendants, denied Karth's motion for class certification, and

denied Karth's motion to file a third amended complaint. Reviewing

the case with fresh eyes, we affirm.

                                  BACKGROUND

            We recite the alleged facts pertinent to our inquiry as

contained   in   Karth's    complaint    and      attachments       incorporated

therein in the light most favorable to the non-movant, Karth.                   See

Curran v. Cousins, 509 F.3d 36, 43-44 (1st Cir. 2007).                     Karth's

proposed class consists of anyone who purchased Keryx stock from

May 8, 2013, through August 1, 2016. Karth himself purchased Keryx

                                    - 3 -
stock     at   the    end    of   that    class    period,     on    July    19,   2016. 1

Accordingly, the following recitation of the facts is limited to

occurrences during the purported class period, with a particular

focus on the events of 2016, the year of Karth's stock purchase

and     Keryx's      supply       shortage.        We    set        forth    the   facts

chronologically,           interspersing      information      about      manufacturing

difficulties with information Keryx made known to the public.

               Keryx's Leadership and Manufacturing Process

               At    all    relevant      times,    Keryx      was    a     Boston-based

biopharmaceutical company.               The four individual defendants served

in different corporate roles.                  Ron Bentsur          was Keryx's CEO.

Gregory P. Madison was Keryx's COO starting February of 2014 and

took over for Bentsur as CEO at the end of April of 2015.                          James

Oliviero served as CFO for Keryx from May of 2003 until July of

2015, when he was replaced by Scott A. Holmes.

               During      the    proposed    class     period,      Keryx    commenced

production and sale of its only product, a drug named Auryxia.

There were two steps in the Auryxia production process.                        Step one

was manufacturing the active pharmaceutical ingredient ("API") and

      1Karth's First Amended Complaint (the operative pleading at
the time the district court granted judgment for the defendants)
pleads that the class period ends on August 1, 2016, but his
proposed Third Amended Complaint alleges a class period ending on
July 29, 2016, or July 31, 2016. We utilize the August 1, 2016,
date because that date seems to be the date he cites most
consistently, but the outcome would not be altered by the class
period ending on any of Karth's listed dates.

                                          - 4 -
step two was converting the API into its finished tablet form.

The tablet, when prescribed by a doctor, was used to treat kidney

disease.   Keryx lacked the ability to complete any manufacturing

itself and relied upon third-party contractors for each step of

the process.   Keryx appears to have enlisted several first-step

manufacturers to produce API. As for step two, during the relevant

time frame, Keryx only contracted with Norwich Pharmaceuticals,

Inc. ("Norwich"), whose principal place of business is Norwich,

New York, to complete the process of converting the API into the

final product, tablets of Auryxia.

                    The Early Days:    2013-2015

           On May 8, 2013, the first day of Karth's proposed class

period, Keryx released a 10-Q form2 that warned investors of the

following risk:

           We rely on third parties to manufacture and
           analytically test our drug candidate.      If
           these third parties do not successfully
           manufacture and test our drug candidate, our
           business will be harmed.     We have limited
           experience in manufacturing products for
           clinical or commercial purposes. We intend to
           continue, in whole or in part, to use third
           parties to manufacture and analytically test
           our drug candidate for use in clinical trials
           and for future sales. We may not be able to
           enter into future contract agreements with

     2 The SEC requires public companies to file a comprehensive
report about their financial performance, called a 10-Q, at the
end of the first three quarters of each fiscal year. 17 C.F.R.
§ 249.308a.

                               - 5 -
            these third[]parties on terms acceptable to
            us, if at all. (Emphases added.)

            Beginning in 2014, Norwich experienced problems with the

process of converting API into Auryxia tablets.                     In May, one API

contractor asked Keryx to "quarantine" the API that company had

produced pending the outcome of a quality control investigation.

In June, Norwich notified Keryx that it "rejected" two batches of

Auryxia due to contamination found in a tablet.                          In July, in

response    to       those    reports,   Keryx    instructed    Norwich      to    stop

production, but ordered it to resume the next day, which it did.

            Shortly after Keryx began navigating these manufacturing

glitches,       it   was     also   preparing    to   meet   with    Food   and    Drug

Administration ("FDA") officials.               To that end Keryx enlisted the

help   of   a    consultant,        Parexel   International,        to   "assess    the

readiness [of Norwich] in preparation for an FDA pre-approval

inspection."         Parexel's work, which took place on August 14 and

15, 2014, consisted of a "conference room review of documentation

available relative to the production and controls [of Auryxia]

that would likely be reviewed during an FDA inspection."                     Parexel

did not visit Norwich's production facilities.                  Once it completed

its assessment, it sent Bentsur a report on August 22.                        In it,

Parexel found that Norwich had the "appropriate facilities and

expertise to meet the needs of Keryx," but warned that Norwich was

employing an uncommon system for validating the quality of each

                                         - 6 -
step of the production.      Given Norwich's approach, the Parexel

Report warned that "[i]t has not been demonstrated that the

manufacturing process will consistently produce product that meet

final specifications."

          The   FDA    approved    Auryxia     for   commercial    sales   in

September of 2014 and in December of 2014, sales began.              At that

time, the company had enough supply to meet patient demand.

Nevertheless, at a board of directors meeting, directors were

advised that investors had expressed disappointment that doctors

were not prescribing the drug at a high enough rate to make

investing in Keryx sufficiently profitable.

          Two     thousand   and     fifteen     brought   a      couple   of

manufacturing developments.        One of the API manufacturers had to

discard approximately one-third of the API it produced because of

quality issues.       API problems then caused batches of product

produced at Norwich to fail to meet quality standards, which caused

production to halt.     By October of 2015, however, production had

so outpaced sales that Keryx had "too much inventory" and planned

to destroy up to 1,632 bottles of Auryxia before their expiration

date in March of 2016 if sales didn't pick up.             In December of

2015, Keryx provided its board with an update on the company's

financial posture.     Of import, it learned that the company had an

inventory of 14,000 bottles for commercial sale and more than

                                   - 7 -
18,000 bottles for patient samples.3      Additionally, the board

learned that Keryx had to pay a contractual penalty of $2.6 million

to Norwich because Keryx did not sell enough Auryxia to utilize

Norwich's full production capacity.   During this same meeting, the

board discussed the company's draft five-year plan.   One presenter

(who was not clearly identified in the record) reported to the

board about risks related to the company's sale of Auryxia.   Among

those risks, the presenter identified that solely contracting with

Norwich for step two manufacturing posed a risk of a "[s]upply

disruption" and a "[l]oss of credibility with customers" and

characterized the "probability" of that risk materializing as

"medium." Because of this risk, the draft five-year plan contained

several "high" priorities, one of which was to contract with

additional second-step manufacturers.

          Publicly, Keryx made written disclosures relevant to

Karth's claims.   Through the end of 2015, whenever it informed

investors of the risks to the company's bottom line, Keryx used

the plural term "third parties" to characterize the number of

outside manufacturers responsible for producing Auryxia, just as

it had at the start of the class period.       In its 2015 annual

report, Keryx reported on the status of its drug supply, including

     3 Generally, each bottle of Auryxia for commercial sale
contained 200 pills and bottles for use as a sample contained 50
or 200 pills.

                              - 8 -
the value of its inventory of Auryxia pills and raw materials to

produce more Auryxia, and included the need to destroy its excess

stock before expiration.

             The Year of Keryx's Supply Shortage:         2016

            In January of 2016, Keryx conducted an internal review

and concluded that since sales began in 2014, Norwich had produced

ninety-three "batches" of Auryxia and, of those, five were rejected

for "varying reasons."        When February rolled around, one Keryx

employee sent an internal e-mail on the 16th, describing the

company's    supply   of   sample-size   bottles   of   Auryxia   as   "VERY

CRITICAL" because the stock was very low.

         February 2016 Disclosure and Concurrent Problems

            On February 25, 2016, Keryx issued a press release that

declared "the fundamentals of Auryxia are solid" and projected

between $31 million and $34 million in Auryxia sales in 2016.            The

next day, Keryx released its 2015 10-K (what we'll call the

"February 2016 Disclosure" from here on out).4              In it, Keryx

reported $10.1 million in net sales of Auryxia in 2015 and warned

investors:

            We currently depend on a single supply source
            for Auryxia drug product. If any of our
            suppliers   were   to  limit   or   terminate
            production, or otherwise fail to meet the

     4 A 10-K is a comprehensive report filed annually by public
companies about their financial performance.        The report is
required by the SEC and is far more detailed than an annual report.
17 C.F.R. § 249.310.

                                  - 9 -
           quality or delivery requirements needed to
           supply Auryxia at levels to meet market
           demand, we could experience a loss of revenue,
           which could materially and adversely impact
           our results of operations. (Emphasis added.)

The February 2016 Disclosure also announced that Keryx "believe[d]

that [it had] established contract manufacturing relationships for

the supply of Auryxia to ensure that [it would] have sufficient

material for clinical trials and ongoing commercial sales."   That

same day, on a conference call with investors, Holmes reiterated

the projected 2016 sales figures and reported that Keryx was

"encouraged with the solid fundamentals [of] Auryxia."

           The record is unclear as to how the sample-size shortage

got resolved but by the start of March of 2016, any previous issues

had been eliminated because Keryx recorded having a stock of 10,301

sample-size bottles to meet a projected demand of 5,574 bottles.5

Keryx also began March with 5,688 bottles of Auryxia for commercial

sale to meet a projected demand of 4,333 bottles. Keryx's internal

projections forecasted that, by the end of the month, Norwich would

produce an additional 12,540 bottles of Auryxia for commercial

use.

           On March 23, 2016, an inspection of some of the API

batches Norwich had received from a first-step contractor revealed

       Karth suggests that the sample-size bottle supply issue was
       5

never resolved, but the Keryx documents attached to Karth's
complaint include records of production having resumed by the end
of February.

                              - 10 -
they       were   contaminated   so   Norwich     halted     production   to

investigate.       The probe confirmed that one facility, referred to

as a "large batch" facility, was the source of contaminated API.

Nonetheless, another facility, referred to as a "small batch" API

supplier could still provide Norwich with untainted API for Auryxia

production, so it shifted to using that "small batch" facility.6

              Despite this setback, Keryx's internal forecast at the

start of April projected that the company had enough supply to

meet commercial demand for the entire month.                This apparently

proved to be true as Karth complains of no supply interruption in

April or May of 2016 and the records attached to the complaint

plainly reflect Keryx's supply outpacing demand through August.7

              April 2016 Disclosure and Concurrent Problems

              By April 27, 2016, Norwich had notified Keryx that it

had    discovered    contamination    in   a   batch   of   API.8   Norwich

      There is nothing in the record that explains the differences
       6

between "large batch" and "small batch" facilities. As such, we
have no reason to assume (and Karth does not argue) that a "small
batch" facility produces a drastically different total amount of
API.
       At the start of March, Keryx had intended for Norwich to
       7

produce 3,300 bottles of Auryxia for commercial sale during the
month of April.    By the start of April, Keryx increased its
projections for Norwich's monthly production to 7,154 bottles.
Norwich actually produced 3,920 commercial-use bottles during that
month to add to Keryx's existing stock of 6,188 commercial-use
bottles. This exceeded April sales of 4,944 bottles.
       8 In
         the proposed Third Amended Complaint, Karth summarizes an
e-mail between two Keryx employees (but not the defendants here)

                                  - 11 -
communicated to Keryx that it had found contamination, but had not

yet determined why and stopped production to investigate.

          The next day, Keryx announced its financial results for

the first quarter of 2016 in a press release, a conference call,

and its 10-Q statement.   In the 10-Q statement (or the "April 2016

Disclosure," as we'll call it from here), Keryx again warned

investors:

          We currently depend on a single supply source
          for Auryxia drug product. If any of our
          suppliers, including the source of Auryxia
          drug product, were to limit or terminate
          production, or otherwise fail to meet the
          quality or delivery requirements needed to
          supply Auryxia at levels to meet market
          demand, we could experience a loss of revenue,
          which could materially and adversely impact
          our results of operations. (Emphases added.)

On the conference call, Madison told investors that Keryx was "off

to a good start" and that the company had "established solid

fundamentals for Auryxia, including enhancing brand awareness."

Madison further reported that Keryx had expanded its sales force

and was "confident in [its] ability to achieve [its] net sales

guidance."   At the same time, Keryx internally projected that it

in which those employees discussed Norwich's discovery of
contamination and noted Norwich's initial belief that this was "an
isolated incident." Karth does not allege that Keryx knew of the
contamination problem prior to those employees discussing the
problem via e-mail and his allegation, as best we tell, is that at
the time of the April 27, 2016, e-mail, Keryx thought Norwich had
found contamination and had stopped production to investigate the
cause of this problem.

                              - 12 -
would continue to have sufficient stock to meet upcoming demand so

long as some production occurred, even with a projected increase

in sales.

            The April 27, 2016, API issue at Norwich proved to not

be an   "isolated incident" as first thought.              The production

stoppage continued through May but was finally resolved and Norwich

planned to resume production on June 1, 2016.             On May 24, 2016,

Keryx internally reviewed the potential for a supply shortage and

concluded that there would be no shortage if Norwich could adhere

to the planned schedule for restoration.            However, if Norwich

experienced additional production issues, Keryx predicted its

supply of Auryxia would run out on June 19, 2016.              Norwich was

able to resume production as planned and continued to do so,

apparently    without   incident,   into   July.    Accordingly,      Keryx

experienced no supply shortages in June or July of 2016.

                   Summer 2016 Production Problems

            Notwithstanding   the   adequacy   of   the    actual   Auryxia

supply, July did usher in more production headaches.           On July 12,

2016, Norwich notified Keryx that it observed a structural problem

with some Auryxia tablets during one step of the manufacturing

process.     An investigation followed but production did not stop.

On July 22, Madison informed Keryx's board that Norwich's current

production run was proceeding without issue and that production

appeared to be on track for the next planned shipment of Auryxia.

                                - 13 -
Norwich continued producing Auryxia until July 26, 2016, when it

again discovered the same structural problem during a different

step of the manufacturing process.   Norwich then halted production

and commenced an exploration of the source of the structural

problem.

           Once drug production stopped, Keryx estimated it would

run out of its Auryxia supply in one to two weeks if nothing

changed.   Keryx wrote a letter to the FDA explaining as much and

describing the circumstances that led to this impending shortage.

Keryx reported that two problems with API in the Spring of 2016

had "constrained supply" but Keryx and Norwich had worked together

to correct and prevent the repetition of those API problems.    The

structural problem that arose for the first time in July of 2016

presented a different issue.    Because neither Norwich nor Keryx

had as yet identified its cause, they did not then have a solution.9

Meanwhile, on July 19, 2016, Karth enters the scene:   he purchased

his Keryx stock.    As of that date, Keryx had not released any

information to the public about these July production setbacks.

                        The Supply Shortage

           With the manufacturing problems unresolved, on August 1,

2016, Keryx issued a press release withdrawing its 2016 financial

     9 Keryx requested that the FDA expedite approval of an
alternative drug supplier or permit Keryx to use the sample-size
bottles to meet patient needs. The record does not contain the
FDA's response.

                               - 14 -
projections and characterizing an Auryxia supply interruption as

"imminent" due to "a production-related issue . . . at its contract

manufacturer."        On a call with investors that same day, Madison

explained      that    Norwich     "[had]   been      successfully        producing

commercial batches for approximately two years" and that "in [the]

past    few    months,    [Norwich]     began    experiencing       difficulties

converting [API] to finish[ed] drug product."                  Madison further

explained that, prior to that impending shortage, Keryx "had been

managing supply levels efficiently even with increased demand

. . . in the second quarter."               Keryx's stock value decreased

thirty-six percent.

                       Karth Sues for Securities Fraud

              From    Karth's    perspective     as      spelled    out    in   his

complaint, Keryx and the individual defendants knew that the

company only employed a single manufacturer, Norwich, and that

relying solely on Norwich for the second step of production created

a much greater risk of a supply interruption than Keryx admitted

to     investors.        Keryx's    inadequate        disclosures     about     its

manufacturing defects, says Karth, amounted to securities fraud.

Accordingly, Karth sued Keryx and the individual defendants for a

violation of §§ 10(b), 20(a) of the Securities Exchange Act of

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

Commission Rule 10b-5, 17 CFR § 240.10b-5.                As a reminder, Karth

brought the case as a class action with a putative class of

                                      - 15 -
investors who purchased Keryx stock between May 8, 2013, the day

Keryx first published a risk disclosure claiming, as Karth views

it, to have more than one second-step manufacturer, and August 1,

2016, the day Keryx announced an interruption of its supply of

Auryxia.

              After litigation and quite a bit of discovery, the

defendants moved for judgment on the pleadings.                         The defendants

characterized        the    February         and     April    2016    Disclosures    as

"corrective disclosures" and argued that, even if Keryx had misled

investors about the number of third-party manufacturers and the

appurtenant risk in earlier disclosures, those misrepresentations

were clearly corrected in February and April of 2016.10                       So, the

argument goes, when Karth purchased Keryx stock in July of 2016,

he was fully informed about Keryx's single-manufacturer process

and   the     investment's        resultant          risk.      Therefore,     Keryx's

statements were not misleading when Karth purchased his stock.

Karth,     naturally,      disagreed         and    contended    that    Keryx's    risk

disclosures     from       May   8,    2013,       onward    misled   investors     into

believing      that     the      company       employed       multiple     second-step

manufacturers when, in reality, it only contracted with Norwich.

And   while    the    February        and    April    2016    Disclosures    may    have

       To remind, each of those disclosures included the following
      10

statement:   "We currently depend on a single supply source for
Auryxia drug product." (Emphasis added.)

                                            - 16 -
accurately quantified the number of second-step manufacturers as

one, each undersold the true degree of investment risk because

Keryx knew that Norwich was having production problems when it

released those disclosures.     As a result, Karth alleged, investors

purchased Keryx stock without appreciating the fragility of its

manufacturing infrastructure and the precarious nature of its

ability to consistently turn a profit.            Therefore, he argues,

Keryx's August 1, 2016, revelation that it only contracted with

one second-step manufacturer, who was struggling to meet demand,

caused the stock price to precipitously drop.               In addition to

opposing    the   defendants'     motion,   Karth    moved     for   class

certification and to file a Third Amended Complaint (his motion to

file a second amended complaint having already been denied).           The

proposed Third Amended Complaint relied on many of the same

documents as the operative complaint and beefed up the allegations

regarding   the   defendants'   knowledge   of    Keryx's    manufacturing

infrastructure struggles.       These augmentations, Karth claimed,

were enough to demonstrate that the February and April 2016

Disclosures were insufficient.

            When analyzing all of the pending motions, the district

court assumed, without deciding, that Keryx's risk disclosures

issued prior to February of 2016 were misleading but held that the

February    and    April   2016     Disclosures     cured      any   prior

misrepresentations because each accurately stated that Keryx only

                                  - 17 -
employed one manufacturer, Norwich, for the second step of the

production process.11      Since Karth purchased his stock in July of

2016,     after   Keryx   published   both   curative    disclosures,   the

district court held that Karth could not plead any relationship

between his own financial loss and the defendants' prior alleged

misrepresentations or omissions.

             With the "corrective disclosures" at the core of its

reasoning, the district court issued an omnibus order, denying

both of Karth's motions and allowing the defendants' motion for

judgment on the pleadings. Specifically, the district court denied

Karth's motion for class certification because it found Karth to

be an atypical and inadequate class representative, reasoning that

Karth's claims would be too different from the claims of any

potential class members who purchased stock prior to the release

of the February and April 2016 Disclosures.             The district court

allowed the defendants' motion for judgment on the pleadings

because Karth could not plead that he relied upon misleading

statements when he purchased his stock.        Finally, citing futility,

the district court denied Karth's motion to file a Third Amended

     11Early in the litigation, the defendants moved to dismiss,
arguing, among other things, that the plural "third-party
manufacturers" language could refer to Keryx's multiple first-step
manufacturers and was therefore not misleading. For reasons that
need not be detailed here, the district court did not allow the
defendants' motion on these grounds and neither side wrestles with
that contention before us.

                                  - 18 -
Complaint because nothing in the proposed Third Amended Complaint

changed the court's conclusion that the February and April 2016

Disclosures cured any earlier misrepresentations.          After resolving

each of those motions, the district court entered judgment for the

defendants.      Karth timely appealed.

                                OUR TAKE

           Karth's notice of appeal lists all three decisions of

the district court as the orders he wants reversed.         Typically, we

would   review    each   decision   thoroughly,   likely   beginning       our

analysis by reviewing whether the district court erred in entering

judgment for the defendants on Karth's First Amended Complaint and

then turning to questions of class certification and the proposed

Third   Amended    Complaint.       However,   Karth   appears   to   be   as

dissatisfied with his First Amended Complaint as the district court

was because he makes no argument here that the district court's

grant of judgment on that pleading was erroneous.          Karth also does

not contend that the motion for class certification, which was

analyzed based upon the allegations in the First Amended Complaint,

should have been granted.       Rather, Karth is solely interested in

his case moving forward via the proposed Third Amended Complaint.

To that end, his only request for relief is that we declare the

February and April 2016 Disclosures to be "misleading" and remand

the case to the district court to proceed with the Third Amended

                                    - 19 -
Complaint.12      We accept Karth's invitation to focus on the proposed

Third Amended Complaint and freshly evaluate whether the district

court properly denied the motion to amend or whether the proposed

Third Amended Complaint does indeed state a claim.

                      Standard of Review and Analysis

             Where the district court's denial of a motion to amend

is   based   on    the   legal   conclusion   that   the   proposed   amended

complaint fails to state a claim, we review that decision de novo.

D'Agostino v. ev3, Inc., 845 F.3d 1, 6 (1st Cir. 2016).           Where, as

here, there has been considerable written discovery (Karth calls

it "significant"), we "look more closely at the factual allegations

to see if they support the legal conclusions pled."             Glassman v.

Computervision Corp., 90 F.3d 617, 628 (1st Cir. 1996) (evaluating

proposed amended complaint in securities fraud action after "three

years of litigation and full discovery").            In conducting our de

novo review, "we assume as true the raw facts as alleged in the

      12Lest we think Karth believes his First Amended Complaint
does state a claim, the defendants note in their brief that Karth
offers us no reason to vacate the judgment on the pleadings or
reverse the motion for class certification. Karth, for his part,
does not bother to dispute this waiver argument in his reply brief.
Seeing no need to dig any deeper, we deem any challenges to the
district court's decisions, other than to the denial of the motion
to amend, waived and, consequently, affirm across the board.
United States v. Zannino, 895 F.2d 1, 17 (1st Cir. 1990) ("[T]he
settled appellate rule [is] that issues adverted to in a
perfunctory manner, unaccompanied by some effort at developed
argumentation, are deemed waived.").

                                    - 20 -
[proposed Third Amended Complaint] and draw reasonable inferences

in favor of [Karth]."       In re Bos. Sci. Corp. Sec. Litig., 686 F.3d

21, 27 (1st Cir. 2012).       We "may supplement the facts contained in

the    pleadings    by    considering    documents        fairly    incorporated

therein."    R.G. Fin. Corp. v. Vegara-Nuñez, 446 F.3d 178, 182 (1st

Cir. 2006).        There is no one-size-fits-all way of analyzing

securities    fraud      cases;   rather,    we    take     a   "'fact-specific

approach' that proceeds case by case." In re Cabletron Sys., Inc.,

311 F.3d 11, 38 (1st Cir. 2002).            All of this is to say that we

evaluate all facts in the complaint and the incorporated documents

to determine whether Karth's proposed Third Amended Complaint

states a claim.

            The Private Securities Litigation Reform Act ("PSLRA")

plays an important role in our review.            The PSLRA was "enacted 'to

curb    frivolous,       lawyer-driven   litigation,        while     preserving

investors' ability to recover on meritorious claims.'"                In re Bos.

Sci. Corp. Sec. Litig., 686 F.3d at 29–30 (quoting Tellabs, Inc.

v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007)).                    To

effectuate that goal, the PSLRA requires a plaintiff to "specify

each statement alleged to have been misleading, the reason or

reasons why the statement is misleading, [and to] state with

particularity facts giving rise to a strong inference that the

defendant acted with the required state of mind." 15 U.S.C. § 78u–

4(b); see In re Bos. Sci. Corp. Sec. Litig., 686 F.3d at 30 ("Taken

                                    - 21 -
together, the [PSLRA] requirements make it easier to identify the

issues and to dismiss flawed complaints at the complaint stage.").

"[A]lthough       'the    PSLRA      does    not     require    plaintiffs     to    plead

evidence . . . a significant amount of "meat" is needed on the

"bones" of the complaint.'"              Ganem v. InVivo Therapeutics Holdings

Corp., 845 F.3d 447, 455 (1st Cir. 2017) (quoting Hill v. Gozani,

638 F.3d 40, 56 (1st Cir. 2011)).

                          The Securities Exchange Act

             Section 10(b) of the Securities Exchange Act makes it

unlawful for any person to "use or employ, in connection with the

purchase     or   sale    of       any   security     . . .     any   manipulative        or

deceptive device or contrivance in contravention of such rules and

regulations       as   the    Commission       may    prescribe       as   necessary     or

appropriate in the public interest or for the protection of

investors."       15 U.S.C. § 78j(b).              The Commission has promulgated

such a regulation, making it illegal to "make any untrue statement

of a material fact or to omit to state a material fact necessary

in   order   to    make      the    statements       made,     in   the    light    of   the

circumstances under which they were made, not misleading."                          17 CFR

§ 240.10b–5(b).          Taken together, this means that a successful

securities fraud complaint will allege the following six elements:

"(1) a material misrepresentation or omission by the defendant[s];

(2) scienter; (3) a connection between the misrepresentation or

omission and the purchase or sale of a security; (4) reliance upon

                                            - 22 -
the misrepresentation or omission; (5) economic loss; and (6) loss

causation."       Amgen Inc. v. Conn. Ret. Plans & Tr. Funds, 568 U.S.

455, 460-61 (2013) (citation omitted).13

             "To establish a material misrepresentation or omission,

[Karth] must show that [the] defendants made a materially false or

misleading statement or omitted a material fact necessary to make

a statement not misleading."        Ganem, 845 F.3d at 454 (citation

omitted).        "[W]hether a statement is misleading depends on the

perspective of a reasonable investor."        Omnicare, Inc. v. Laborers

Dist. Council Constr. Indus. Pension Fund, 135 S. Ct. 1318, 1327

(2015).     Information is material "if a reasonable investor would

have viewed it as 'having significantly altered the total mix of

information made available.'"      Miss. Pub. Emps.' Ret. Sys. v. Bos.

Sci. Corp., 523 F.3d 75, 85 (1st Cir. 2008) (quoting Basic, Inc.

v. Levinson, 485 U.S. 224, 232 (1988)).         We consider the entirety

of the relevant facts available at the time of the allegedly

misleading statement, not simply the words of the statement itself.

See In re Smith & Wesson Holding Corp. Sec. Litig., 669 F.3d 68,

75-77     (1st   Cir.   2012).   "[I]f   an   alleged   omission   involves

speculative judgments about future events, materiality will depend

     13 Karth's claim against the individual defendants pursuant
to § 20(a) is for each individual's alleged role in violations of
§ 10(b) and Rule 10b-5. See 15 U.S.C. § 78t. Therefore, if Karth
cannot make out a § 10(b) violation, his § 20(a) claim fails as
well.

                                  - 23 -
at   any   given   time    upon   a   balancing   of   both   the   indicated

probability that the event will occur and the anticipated magnitude

of the event in light of the totality of the company activity."

Hill, 638 F.3d at 57 (alterations adopted) (emphases omitted)

(internal quotation marks and citations omitted).             We review that

"totality" from the perspective of what the defendants knew at the

time, meaning "[Karth] may not plead 'fraud by hindsight'; i.e.,

a complaint 'may not simply contrast a defendant's past optimism

with less favorable actual results' in support of a claim of

securities fraud."        ACA Fin. Guar. Corp. v. Advest, Inc., 512 F.3d

46, 62 (1st Cir. 2008) (quoting Shaw v. Dig. Equip. Corp., 82 F.3d

1194, 1223 (1st Cir. 1996)).

                                  Karth's Case

            Our analysis focuses on the "total mix of information

. . . available" to Karth at the time of his stock purchase in

July of 2016.      See Basic, 485 U.S. at 232.          The district court

based its decisions upon its conclusion that the February and April

2016 Disclosures cured any prior misrepresentations and the fact

that those disclosures (and the concurrent comments to investors)

were among the last public statements made by Keryx prior to

Karth's purchase.14       So, those statements are a large part of that

      14The defendants argue that Karth waived any argument that
the February and April 2016 Disclosures were misleading because he
did not specifically allege that those disclosures were misleading

                                      - 24 -
"total mix of information" available to Karth at the time of his

purchase.     See id.     Karth concedes that the singular language in

each of those risk disclosures resolved any confusion about how

many second-step manufacturers Keryx engaged but argues that those

risk     disclosures     were   nonetheless   misleading        because   each

understated the true risk of solely relying upon Norwich.

            This is not our first occasion to consider whether a

risk     disclosure     sufficiently   advised    investors      of   possible

negative outcomes.       Primarily, all agree, two decisions guide our

analysis here:        Hill v. Gozani, 638 F.3d 40 (1st Cir. 2011) and

Tutor Perini Corp. v. Banc of Am. Sec. LLC, 842 F.3d 71 (1st Cir.

2016).

            Hill involved a medical device company, NeuroMetrix,

whose profits were dependent on doctors purchasing the device and

receiving sufficient reimbursement from patients' health insurance

carriers.     638 F.3d at 46-49.       For various reasons, there were

concerns     that     insurance   providers      would   stop     reimbursing

physicians for use of NeuroMetrix's product, which would lead to

in his proposed Third Amended Complaint and the high pleading
standard for Karth's claim requires him to specify each allegedly
misleading statement. Rather than wade into the nuances of that
argument, we address the issue directly because Karth's argument
"is wrong on the merits." United States v. Leavitt, 925 F.2d 516,
517 (1st Cir. 1991).

                                   - 25 -
a drop in purchases, and, ultimately, profit.15   Id. at 50-51.   The

plaintiffs alleged that, though the company "specifically . . .

disclosed" a possibility of that insurance risk materializing,

those disclosures were too vague to properly warn investors of

what could occur.   Id. at 60.   We affirmed dismissal, holding that

"although knowledgeable employees . . . believed the [insurance

reimbursement] strategy was both losing and potentially dangerous,

there is simply nothing in the complaint to suggest that . . . the

danger posed by the reimbursement strategy was, at the time the

statement was made, a near certainty of ruin."    Id. at 59 (emphasis

added).   Considering that, we held that while a generic, formulaic

disclosure of risk does not necessarily absolve the speaker of

liability, "neither does it create liability simply because it

does not disclose, at the level of detail the plaintiffs request

     15 In Hill, NeuroMetrix staff attempted to advise physicians
about how to report procedures to insurance companies in ways that
maximized the likelihood of reimbursement, but there was internal
disagreement about whether that strategy was legal. 638 F.3d at
47-49. NeuroMetrix did warn investors that, if insurance companies
denied coverage of the procedures at issue, physicians would be
unlikely to purchase the product on a widespread basis.
NeuroMetrix presented this risk as something that "may" occur which
"could potentially adversely impact [its] future revenues." Id.
at 56, 66. When NeuroMetrix made these disclosures, some insurance
companies had already declined to reimburse physicians. Id. at
48-49.    One employee at NeuroMetrix even began logging all
instances where reimbursement was an issue but was ordered to stop
so as not to create an obligation for NeuroMetrix to disclose any
of this to physicians. Id. at 49.

                                 - 26 -
in retrospect, all of the factors that contribute to the risk

assessment."    Id. at 60 (emphasis omitted).

             In Tutor Perini Corp., the defendant, Banc of America

Securities, LLC ("BAS"), serving as the special banking advisor to

the plaintiff, Tutor, a giant construction company, recommended

investments    that   were   intended   to   satisfy   Tutor's   investment

priorities of "avoiding risks and illiquidity."           842 F.3d at 76-

78.   After a few years of guiding Tutor's investment strategies,

BAS persuaded Tutor to purchase auction rate securities ("ARS").16

Id. at 78.     Eventually, the ARS market turned sour and BAS knew

that the market was on the "brink of collapse."           Id. at 88.   BAS

"knew about an impending collapse" and instructed its own personnel

to "protect" the company by encouraging investors to purchase ARS,

so that BAS would not be left holding these securities when the

market imploded. Id. at 81-83. Following that internal directive,

BAS sold quite a bit of ARS to Tutor and at the same time, assured

Tutor that it would continue to support ARS auctions, so that Tutor

would never be stuck with these investments when it needed cash.

Id. at 83.    At the height of Tutor's ARS shopping spree, the market

      16 ARS are investment vehicles that are bought and sold at
nonpublic auctions and, if an auction fails because there are not
enough bids within the applicable parameters, the ARS owner is
left holding onto its investment until the next auction. Id. at
77-79. If Tutor wanted to sell its ARS in order to have more cash
on hand and auctions for Tutor's ARS were to fail, Tutor would be
left illiquid, unable to sell its investment on its preferred
timeline. Id.

                                  - 27 -
collapsed entirely (just as BAS knew it would).             "Tutor Perini was

left holding 'illiquid' investments—its nightmare scenario."                  Id.

at 83.

          With   each   of    those        ARS   sales,    BAS   had     included

disclosures that stated, "BAS offers 'no assurances' about the

outcome of any auction."      Id. at 83.         Tutor sued for securities

fraud and argued that those warnings, though they technically put

Tutor on notice that purchasing ARS was a risk, were insufficient

to absolve BAS of liability.         Id.     We agreed and held that BAS's

particular relationship with Tutor required far more than general

disclosures.     Id.    BAS    had    expressly      promised      to    "provide

investment solutions that [met Tutor's] needs by clearly defining

the risk/reward of particular securities."                Id. at 87 (internal

quotation marks omitted).      Yet, when BAS saw the risk-to-reward

ratio of ARS shifting, it did not say so. Id. Rather, it continued

to push ARS on Tutor as if nothing had changed.              Id.   Considering

all of that, we held that BAS "knew (but elected not to disclose)

that the ARS market teetered on the brink of collapse when it

encouraged Tutor Perini to snatch up more ARS."                    Id. at 91.

Therefore, BAS could not hide behind generic disclosures and, when

it communicated the risk of purchasing ARS to Tutor, it had a duty

to disclose that the risks had "dramatically changed."                  Id. at 87.

          Each of these cases, at least in their reasoning, invoke

the "Grand Canyon" metaphor, where one cannot tell a hiker that a

                                 - 28 -
mere ditch lies up ahead, if the speaker knows the hiker is

actually approaching the precipice of the Grand Canyon.                See id.

at 90.    That (non-existent) Grand Canyon in Hill was the "near

certainty" (or lack thereof) that insurers would stop covering

NeuroMetrix's product and that physicians thereafter would not

purchase it.    See Hill, 638 F.3d at 59.      In Tutor Perini, the Grand

Canyon was the meltdown of the ARS market that BAS was so certain

was imminent that it pushed ARS onto Tutor to save itself.                 See

Tutor Perini, 842 F.3d at 93.         Moreover, BAS knew Tutor's specific

financial goals, level of risk tolerance, and precisely what it

feared:     illiquidity.   Id.   So, Tutor was more than just a hiker

near the Grand Canyon; it was a hiker that had hired BAS as a

wilderness guide with the explicit instruction to steer clear of

cliffs because of a fear of heights.

            Examining Hill and Tutor Perini, as well as other,

similar cases, we can understand the contours of what makes a risk

so great that it is akin to the Grand Canyon (and therefore a

disclosure     is   misleading   if    it   frames   the   risk   as    merely

hypothetical) and what makes a situation merely risky (i.e., simply

a ditch).    A securities fraud defendant is at the edge of the Grand

Canyon where the alleged risk had a "near certainty" of causing

"financial disaster" to the company.           Hill, 638 F.3d at 59-60;

accord Tutor Perini, 842 F.3d at 90.            Of course, the defendant

company must have understood the near certainty of the risk at the

                                  - 29 -
time it made the statements at issue.              ACA Fin. Guar. Corp., 512

F.3d at 62.       Such knowledge is often evidenced by a company's

frenzied,      underhanded     efforts      "to   keep    the     house   of   cards

standing."      In re Cabletron Sys., Inc., 311 F.3d at 24.                     If a

company   is    "desperate[ly]"      working      to     "protect    itself"    from

rapidly approaching harm, then it is at the edge of the Grand

Canyon and must warn investors of an imminent cliff. Tutor Perini,

842 F.3d at 88-91.          A company must also disclose a relevant risk

if that risk had already begun to materialize.                    See id. at 86-88

(holding defendant company could be liable where warned-of risk

was actually occurring, but risk disclosures remained vague and

hypothetical); see also Berson v. Applied Signal Tech., Inc., 527

F.3d   982,    986   (9th    Cir.   2008)    (holding      risk    disclosure    was

insufficient where company warned revenue could fall short of

projection, but omitted that it had already had its revenue stream

"immediately interrupt[ed]" by stop-work orders).

              In contrast, a defendant company is merely approaching

a ditch where, internally, there was no "widely-accepted certainty

of failure" or "comprehensive cover-up."                 Hill, 638 F.3d at 59.

If the company did not "kn[ow] with certainty" that a risk would

materialize, it is not necessarily liable for characterizing that

risk as a "future risk."         Wilson v. Merrill Lynch & Co., Inc., 671

F.3d 120, 130-31 (2d Cir. 2011).             This standard does not require

a company to be omniscient, even if the company looks foolish in

                                     - 30 -
hindsight for not properly predicting whatever harm befell it.

Greenstone v. Cambex Corp., 975 F.2d 22, 25-26 (1st Cir. 1992).

As we have said before, "fraud by hindsight" is not enough to

sustain a claim.     ACA Fin. Guar. Corp., 512 F.3d at 62.

                       What This Means for Karth

          The Grand Canyon in this case, according to Karth, is

the "supply interruption" that Keryx announced was imminent on

August 1, 2016.     According to Karth, Keryx knew it was approaching

a cliff and failed to warn investors.        Specifically, Karth argues

here that the February and April 2016 Disclosures were too general

and were misleading because each characterized the risk of a supply

interruption   as    hypothetical   when,   according   to   Karth,   that

disruption was actively occurring.          Karth additionally contends

that Keryx undersold the true risk of using a single manufacturer

by declaring in the February 2016 Disclosure that Keryx had enough

contract manufacturers.     Karth also calls misleading various press

releases and statements made during conference calls in 2016, where

Keryx, generally, and Holmes and Madison, individually, touted the

"solid fundamentals" of Auryxia and reported that the company was

"off to a good start."      Reading the allegations in the complaint

and attached records in the light most favorable to Karth's case,

we conclude that the facts alleged do not indicate that a supply

interruption was happening or was even close to a "near certainty."

Nor do they indicate a "widely-accepted certainty of failure" at

                                 - 31 -
the time any of Keryx's statements were made.     See Hill, 638 F.3d

at 59-60.

     The February 2016 Disclosure and Concurrent Statements

            Karth claims the February 2016 Disclosure and concurrent

statements were misleading because none informed investors that

Norwich was struggling to produce Auryxia.17     However, Karth sets

forth no facts in his complaint showing that a supply interruption

was looming at that time.    Indeed, our review of the record shows

that in the month prior, Keryx's assessment of its manufacturing

protocol demonstrated that over ninety percent of the batches of

Auryxia produced at Norwich met all quality standards.     Plus, it

shows Keryx was having no issues with production of Auryxia for

commercial sales and finished February of 2016 with over one

thousand commercial-use bottles beyond what the company predicted

it needed for the coming month.         See id. at 57 (holding that

information may not be material if company did not internally

predict the event in question would come to pass).

            The only production issue that Karth plausibly pleads is

that in early February, Norwich was struggling to produce enough

     17As a reminder, on February 25, 2016, Keryx issued a press
release describing Auryxia's "fundamentals [as] solid" and its
leadership made similarly positive public statements; and on
February 26, 2016, Keryx released the February 2016 Disclosure,
which included a disclosure to investors that Keryx was relying on
"a single supply source."

                               - 32 -
sample-size bottles of Auryxia.18          Yet, Karth does not plead that

a supply interruption actually occurred (including of sample-size

bottles), that anyone at Keryx thought such an interruption was

approaching, or that these production problems impacted Keryx's

revenue at all.        See Williams v. Globus Med., Inc., 869 F.3d 235,

242-43    (3d   Cir.    2017)   (holding   that,     where   securities   fraud

defendant warned of hypothetical risk to revenue, company was not

liable for failing to disclose the risk had actually occurred if

the risk did not impact revenue).          Instead, Keryx understood from

historical experience that          occasional     production stoppages at

Norwich had not caused shortages of Auryxia.            Recall that in 2014,

2015, and several times in 2016, Norwich stopped production, often

due to issues with API produced by first-step manufacturers, and

each time, Norwich resumed production before any supply shortage

panned out.      Those stoppages were apparently so inconsequential

that Keryx had an excess stock of 1,632 bottles of Auryxia slated

for destruction by March of 2016. Karth pleads no facts suggesting

Keryx should have thought, for the first time, that a production

stoppage    would       necessarily     yield   an     uncorrectable      supply

interruption.       See Hill, 638 F.3d at 59 (holding that omitted

     18Karth pleads that one employee characterized the supply of
sample-size bottles as "very critical" but the records of the
actual number of sample-size bottles exceeded predicted demand and
(after that month ended) actual demand. Karth says nothing about
the supply of full-size commercial-use bottles at the time of the
February 2016 Disclosure.

                                      - 33 -
information may not be material if the event was unlikely to

occur).   For the same reasons, Karth has no case based upon the

February 25, 2016, public statements.           Considering what Keryx and

the individual defendants knew at the time, those statements are

merely expressions of "past optimism" that Karth may not turn into

"fraud by hindsight."        See Shaw, 82 F.3d at 1223.

       The April 2016 Disclosure and Concurrent Statements

          Moving closer to the time of Karth's stock purchase,

Karth pleads that for several reasons, the April 2016 Disclosure

and concurrent press statements touting Auryxia's viability were

inadequate, but as we view it, he sets forth insufficient facts as

to why that is so.       For instance, Karth characterizes Norwich's

production stoppage on March 24, 2016, as yet another ongoing

supply interruption which should have caused Keryx to provide

heightened risk information to investors in its April disclosures.

But Karth's own complaint pleads that Norwich addressed that issue

by switching its source of API.           Also, our record review shows

that just like in February of 2016, Keryx's internal forecast for

production   in   May   of   2016,   written    in   the   middle   of   April,

projected that the company had enough supply to meet commercial

demand for the entire month of May.           That prediction came true and

Keryx's supply exceeded demand until August.               Therefore, at the

time the April disclosures were made, it seemed Keryx had solved

any production problem before anyone in the company thought the

                                     - 34 -
patient supply of Auryxia was at risk.   See Tutor Perini, 842 F.3d

at 90 (holding risk disclosures insufficient where company knew

with "near certainty" that risk was going to materialize).    Karth

himself describes the risk as conditional, not impending, alleging

that, in March, the defendants "knew that if full production did

not resume within April, a supply interruption would occur by mid-

May."   Appellant's Opening Br. at 31.

          In further support of his argument to us that the April

2016 Disclosure is misleading, Karth repeatedly characterizes it

as being published "in the middle of a 5-week production stoppage."

However, his own complaint and its appended documents tell a very

different story.   In truth, the earliest Karth alleges that Keryx

knew of the problem that yielded a five-week production stoppage

was April 27, 2016, and the April 2016 Disclosure was released the

next day, far from the middle of a production interruption.   Plus,

at the time Keryx released the April 2016 Disclosure, Norwich, as

we gather from Karth's complaint, had given Keryx no reason to

think there was a likely systemic production problem.        Compare

Wilson, 671 F.3d at 133-34 (affirming dismissal where defendants

did not "kn[ow] with certainty" that warned-of risk would occur),

with Berson, 527 F.3d at 986 (holding that hypothetical warning

was insufficient when defendant company knew that revenue was

already impacted at time of disclosure).    Even Karth pleads that

Keryx "assum[ed] that the Norwich production issues would be

                              - 35 -
resolved."        A risk disclosure is not fraudulent simply because a

company makes reasonable assumptions that, in retrospect, prove

incorrect.    See ACA Fin. Guar. Corp., 512 F.3d at 62.

           For that same reason, Keryx's positive public statements

about Auryxia in April are just as benign as the statements in

February — Keryx's own manufacturer, Norwich, from what we can

discern from the record before us, thought this might have been an

"isolated incident" and was investigating the issue.                         See Shaw, 82

F.3d at 1223.       Further, at the point of the April 2016 Disclosure

and related public statements, Keryx had even more reason than in

February     of     2016     (when       it     published      the   other    challenged

disclosure) to think that Norwich would rectify any production

problems     before        they     impacted         supply,     because    Norwich   had

successfully done so in February and March.                      See Tutor Perini, 842

F.3d at 90.

                                    A Few Loose Ends

           Karth      raises        two       more     arguments     that    merit    some

discussion.       First, he highlights the Parexel Report from 2014 as

evidence   that      Keryx        knew   all     along    that    Norwich     would   have

production problems.              This does not align with the text of the

Report, appended to the complaint.                       In reality, Parexel, after

conducting a "conference room review of documentation" but not

visiting Norwich, concluded that Norwich had the "appropriate

facilities and expertise to meet the needs of Keryx," but cautioned

                                              - 36 -
that, because of Norwich's uncommon validation system, it "ha[d]

not    been   demonstrated        that   the   manufacturing   process   w[ould]

consistently produce product that [met] final specifications."                 At

best (for Karth's case), the Parexel Report warned Keryx that 1)

Norwich's production process was not guaranteed to be flawless

and, 2) at least by implication, if Norwich experienced enough

production problems, Keryx's bottom line could suffer.19                 This is

precisely the risk Keryx warned investors, like Karth, about in

the February and April 2016 Disclosures:               if Norwich were to "fail

to meet the quality or delivery requirements needed to supply

Auryxia at levels to meet market demand, [Keryx] could experience

a     loss    of     revenue."       Therefore,     even    accepting    Karth's

characterization of the 2014 Parexel Report, we do not see how it

amounts to any certainty that a 2016 supply interruption was

imminent.      See Tutor Perini, 842 F.3d at 90.

              Second, as to the February and April 2016 Disclosures,

Karth's argument that the language was "too boilerplate" simply

does not align with text of the disclosures.               A disclosure can be

insufficient where it does not include any "meaningful cautionary

language,"         but   merely   warns    investors    that   no   results   are

guaranteed.         Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 244-45

       If Keryx did not pick that up from the Parexel Report in
       19

2014, it had certainly learned by 2016 that Norwich's work could
be inconsistent.

                                         - 37 -
(5th Cir. 2009).   In contrast, the disclosures here specifically

identify the risk — the use of a single manufacturer who could

fail to produce enough Auryxia "to meet market demand" — and

explained what that would mean for investors — "a loss of revenue."

Relatedly, Karth argues that the risk disclosures should have

specifically included the language "supply interruption."    It is

difficult to see how that particular phrasing would be material to

investors, but the synonymous warning that the company might fail

"to meet market demand" would not be.   See Basic, 485 U.S. at 232

(holding information is material if it would have "significantly

altered the total mix of information made available" (internal

quotation marks omitted)).

          Though it may be a tough pill to swallow, the district

court properly denied Karth's motion to amend as futile.    Karth's

proposed Third Amended Complaint fails to state a claim because

the pleadings and attachments, when appropriately scrutinized,

fail to show Keryx made material misrepresentations or omissions

upon which Karth relied when he purchased Keryx's stock.

                             WRAP UP

          We affirm the entry of judgment and award costs to the

defendants.

                              - 38 -