Court Opinion

ID: 4168225
Source: CourtListenerOpinion
Date Created: 2017-05-12 21:03:33.533177+00
Date Added: 2024-06-11T14:38:37.492206
License: Public Domain

United States Court of Appeals
                       For the First Circuit

No. 16-1976

              IN RE: BIOGEN INC. SECURITIES LITIGATION

                          GBR GROUP, LTD.,

                       Plaintiff, Appellant,

                          NICOLE TEHRANI,

                             Plaintiff,

                                 v.

                  BIOGEN INC.; GEORGE A. SCANGOS;
                PAUL J. CLANCY; STUART A. KINGSLEY,

                       Defendants, Appellees.

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

        [Hon. F. Dennis Saylor, IV, U.S. District Judge]

                               Before

                     Lynch, Lipez, and Kayatta,
                           Circuit Judges.

     Michael P. Canty, with whom Jonathan Gardner, Guillaume
Buell, Labaton Sucharow LLP, Andrea M. Landry, Thornton Law Firm
LLP, Peretz Bronstein, Yitzchak E. Soloveichik, and Bronstein
Gewirtz & Grossman LLC were on brief, for appellants.
     James R. Carroll, with whom Michael S. Hines, Sara J. van
Vliet, and Skadden, Arps, Slate, Meagher & Flom LLP were on brief,
for appellees.
May 12, 2017
           LYNCH, Circuit Judge.         This securities case involves

allegations that corporate officials misled the public about the

effect of one patient's death on sales of Tecfidera, a drug for

multiple sclerosis ("MS") and the company's leading source of

revenue.

           GBR Group, Ltd. ("GBR") is the lead plaintiff in a

putative class action against Biogen Inc. ("Biogen") and three

Biogen executives (together, "the defendants") alleging violations

under Sections 10(b) and 20(a) of the Securities Exchange Act of

1934 (the "Exchange Act").     See 15 U.S.C. §§ 78j(b), 78t(a).        The

plaintiffs'      initial   amended     complaint    alleged   that,   from

December 2, 2014 to July 23, 2015 (the "Class Period"), the

defendants knowingly misled the investing public regarding the

impact that the death of a patient taking Tecfidera had on sales

of Tecfidera.

           The    district   court     dismissed    the   initial   amended

complaint with prejudice, for failure to meet the heightened

pleading requirements of the Private Securities Litigation Reform

Act ("PSLRA").      In re: Biogen Inc. Sec. Litig. (Biogen), 193 F.

Supp. 3d 5, 12–13 (D. Mass. 2016); see 15 U.S.C. §§ 78u-4, 78u-5.

The court then denied the plaintiffs' subsequent motion under

Federal Rules of Civil Procedure 59(e) and 60(b)(2) to vacate the

judgment and for leave to file a second amended complaint to

include purportedly new evidence.            GBR appeals the dismissal of

                                     - 3 -
the initial amended complaint and particularly emphasizes its

appeal from the denial of the motion to vacate the judgment and

for leave to amend the complaint.

           We reject these claims and affirm on both issues.                  We

agree, on de novo review, that the initial amended complaint fails

to plead particularized facts giving rise to a strong inference of

scienter, as required by the PSLRA.            And there was no error or

abuse of discretion in the denial of the motion to vacate the

judgment and for leave to file a second amended complaint.

                                         I.

           Biogen,    whose      stock    trades   on    the   NASDAQ,   is    a

biopharmaceutical company that develops, manufactures, and markets

medication for the treatment of neurological disorders.                  During

the relevant period, defendant George Scangos was Biogen's Chief

Executive Officer, defendant Paul Clancy was its Chief Financial

Officer and Executive Vice President of Finance, and defendant

Stuart   Kingsley    was   its    Executive   Vice      President   of   Global

Commercial Operations.      The Class Period is from December 2, 2014

to July 23, 2015.

           One of the four principal drugs Biogen markets for MS

treatment is Tecfidera, which the FDA approved for use in March

2013 and which Biogen began selling during the second fiscal

quarter of 2013.       Tecfidera has been a significant source of

revenue for Biogen, and it was regularly accounting for a third of

                                    - 4 -
Biogen's total quarterly revenues by the start of the Class Period.

Tecfidera's revenue growth depended on three factors: (1) the

number of patients recently diagnosed with MS who started their

treatment on Tecfidera ("new starts"); (2) the number of patients

who switched over to Tecfidera from other drugs; and (3) the growth

of the MS drug market.

            Biogen released its third-quarter 2014 financial results

on October 22, 2014.    The company reported total revenues of $2.51

billion, an increase of 3.7% from the previous quarter, as well as

third-quarter revenue from Tecfidera alone of $787.1 million: a

12.4% increase from the previous quarter, but a lower growth rate

than those of the previous four quarters (growth rates of 49.1%,

39.0%, 27.1%, and 38.5%, respectively).       On the same date, Biogen

held an earnings call to discuss the third-quarter report and

announced, for the first time, that an MS patient had died of

progressive multifocal leukoencephalopathy (the "PML death" or

"PML incident").    The patient had taken Tecfidera for more than

four years in a clinical study.     At the time this information was

released,   Kingsley   stated   publicly   that   Tecfidera   growth   was

"moderat[ing]."

            The FDA issued a warning to the public about the PML

death on November 25, 2014, and Tecfidera's label in the United

States was updated to describe the risk of PML death on December

3, 2014, one day after the beginning of the Class Period.               On

                                 - 5 -
December 2, 2014, the first day of the Class Period, Clancy told

analysts that investors should be "mindful" of the fact that

Tecfidera    discontinuation     rates   (the   rates   at   which    patients

discontinued use of Tecfidera) were higher than the company had

hoped.

            On January 29, 2015, Biogen issued full-year revenue

guidance for 2015, in which it stated that it expected overall

revenue growth of 14% to 16%.            The initial amended complaint

alleges     that   the    "[d]efendants     reiterated       that    Tecfidera

performance remained strong and stated that they had not seen any

meaningful    change     in   discontinuation   rates,"      and    that   stock

analysts accepted this characterization.            At the time of this

announcement, Kingsley also stated that there was a moderation in

new Tecfidera starts and cited, among other things, the updated

label describing the PML incident.          He then made similar remarks

during a conference on February 25, 2015 -- that is, about halfway

through the first quarter of 2015.

            On April 24, 2015, Biogen released its first-quarter

results for 2015, announcing Tecfidera revenue of $825 million,

"below the market's consensus estimates."          Scangos stated at that

time that "Tecfidera had a more challenging quarter, due to a

number of issues, including an overall slowing of the MS market,

the recent launch of Plegridy, the single PML case reported last

year, and some first-quarter financial dynamics . . . ."                      He

                                    - 6 -
emphasized that "our long-term outlook for Tecfidera, and for our

entire MS portfolio, remains strong."         From April to July, the

defendants continued to express optimism about Tecfidera, stating

that its performance had "stabilized" since the announcement of

the PML incident and that data suggested positive "momentum."        At

four analyst conferences in May 2015, Biogen executives noted that

Tecfidera's growth was slowing and named the PML incident as one

factor in that slowed growth.

           On July 24, 2015, the day after the end of the Class

Period,   Biogen   released   its    second-quarter   earnings   report.

Biogen announced revenue of $883 million from Tecfidera, which was

a 7.1% increase from the first quarter but less than the $916

million of Tecfidera revenue from the last quarter of 2014.         Also

that day, the company revised its 2015 revenue guidance, lowering

its estimate of overall revenue growth from 14–16% to 6-8%.          The

decrease in the guidance was "based largely on revised expectations

for the growth of Tecfidera."       Biogen's stock fell over 20% in one

day in response to the announcement.

           Nearly two months after the end of the Class Period, on

September 18, 2015, Kingsley stated at a health care conference

that "some kind of a downtick in the safety profile that would

have some kind of an impact on physician behavior" had been

expected in the wake of the PML incident, but that "we couldn't

tell," and that the PML incident was "a pretty big change statement

                                    - 7 -
for a broad base of physicians."         [The plaintiffs characterize

these as "evidentiary admissions."]       On October 9, 2015, Biogen

announced that Kingsley was leaving the company.       On October 21,

2015, Biogen announced cuts that would eliminate about 11% of its

workforce.

                                  II.

             Nicole Tehrani filed the initial "bare-bones" complaint

alleging securities fraud on August 18, 2015.         After a status

conference on November 17, 2015, the district court appointed GBR

as the lead plaintiff and granted the plaintiffs an additional

sixty days, as they requested, to file an amended complaint.

             The plaintiffs filed their amended complaint on January

19, 2016.      The amended complaint alleges claims under Section

10(b) of the Exchange Act and Rule 10b-5 thereunder (Counts I &

II), and under Section 20(a) of the Exchange Act (Count III).

             The amended complaint alleges that throughout the Class

Period, the defendants knowingly misled the investing public by

never "provid[ing] any indication that the PML death had materially

impacted Tecfidera sales, or caused physicians to stop prescribing

Tecfidera or [to] switch patients onto other therapies out of

safety concerns."     The complaint specifies over twenty allegedly

misleading statements that the defendants made across ten dates

during the Class Period.

                                 - 8 -
            As proof that the statements were misleading and made

with scienter, the complaint makes several other allegations, many

of which are based on statements from ten confidential witnesses

("CWs").      The    confidential     witness     statements    purportedly

establish   that    Biogen     experienced    a   significant   decline   in

Tecfidera sales following the announcement of the PML incident and

throughout the Class Period.       The confidential witness statements

also describe corporate events and policy changes that purportedly

establish the defendants' private acknowledgment of this decline

in Tecfidera sales and its connection to the PML death.1

            The    complaint    further     alleges   that   Tecfidera    was

Biogen's core product and that the defendants had access to sales

data and physician feedback following the PML death.             It alleges

that Kingsley, due to his proximity to the sales team, would have

been aware of the significant impact the PML death had on Tecfidera

sales.   Finally, it alleges that Scangos and Clancy had motive and

     1    For example, CW 2 alleges that during a November 2014
Biogen town hall meeting, Scangos gave a presentation stating that
"the overall sense of the trajectory [at Biogen] was changing,"
and that another speaker talked of "potential organizational
changes," which CW 2 understood to come from "executive
management's expectation that the PML death would have 'an impact
on performance.'" CW 1 and CW 3 reported attending a March 2015
national sales meeting at which the PML incident was described as
a "market event." "[S]peakers at the meeting stated that sales
would need to pick up again if [Biogen] was going to meet expected
14–16% revenue growth [forecast publically in January]" and
unidentified "senior Biogen leaders at the meeting acknowledged
that the PML death definitely was impacting Tecfidera sales."

                                    - 9 -
opportunity to make false statements concerning Tecfidera sales

because they had personal bonus targets based on revenue growth,

which in turn depended on Tecfidera sales.

             The   defendants   moved   to   dismiss   the   complaint   with

prejudice.     The plaintiffs conceded in their opposition to the

motion to dismiss that Count II should be dismissed.

             The district court granted the motion to dismiss in a

careful and thoughtful opinion filed on June 23, 2016.              Biogen,
193 F. Supp. 3d at 12–13.        Drawing all reasonable inferences in

favor of the plaintiffs, the court determined that, of the more

than twenty statements alleged to be material misstatements or

omissions, three were plausibly misleading or false.2            Id. at 42–

     2    These three statements, all made in the first quarter of
2015, were:
     •    Kingsley on the January 29, 2015 earnings call:
"Importantly, we have not noticed a meaningful change in
[Tecfidera] discontinuation rates."
     •    Kingsley on the same earnings call: "[T]he lack of any
meaningful change that we see -- or we believe we're seeing -- in
the discon[tinuation] rate is encouraging, because it doesn't
suggest there's such a change in the profile that people are
anxious to pull patients out, but on the contrary."
     •     Kingsley at the February 25, 2015 health care
conference: "We have not seen any change in the discontinuation
rate. There is a natural discontinuation rate for a product like
Tecfidera in terms of tolerability and other things.        You'd
obviously get very concerned if you saw a spike in the
discontinuation rate.     No evidence of that. . . . [The
discontinuation rate has] been consistent with -- I mean, we look
at it relative to the growth of the product.      There's nothing
that's a signal that says it's not consistent with historical
averages."

                                   - 10 -
43.         But     the   court    found     that,   although    the   complaint's

allegations,          including    the     statements   from     the   confidential

witnesses, gave rise to a plausible inference of scienter, they

did not give rise to the strong one required by the PSLRA.                      Id.

at 45.       Moreover, the court found that the record gave rise to

compelling inferences in the defendants' favor.                  Id. at 51–54.

                  The district court dismissed Count I's allegations under

Section 10(b) with prejudice on June 23, 2016.                   Id. at 54.    Given

that the plaintiffs had not adequately pled an underlying violation

of the Exchange Act, the district court also dismissed Count III's

allegations under Section 20(a) with prejudice.3                  Id. at 54–55.

                  On July 21, 2016, the plaintiffs filed a proposed second

amended complaint and moved under Federal Rules of Civil Procedure

59(e)       and    60(b)(2)   to    vacate    the    dismissal    based   on   newly

discovered scienter evidence.                  The court found that the new

evidence could have been discovered earlier with the exercise of

reasonable diligence and denied the plaintiffs the "extraordinary"

Id. at 42–43.
        3 The district court noted that the plaintiffs had
requested, on the final page of their opposition to the motion to
dismiss, that they be given leave to amend their complaint if the
motion to dismiss were granted. Id. at 55. The court refused,
noting that the plaintiffs had had over five more months after the
filing of the initial complaint to investigate and that the
plaintiffs had not moved for leave to amend either after the filing
of the motion to dismiss or after the motion hearing, during which
the court had expressed skepticism about the complaint's
viability. Id.

                                         - 11 -
relief requested under Rules 59(e) and 60(b)(2).                   GBR's timely

appeal followed.

                                       III.

A.      Allowance of Motion to Dismiss the Initial Amended Complaint

               GBR argues that the district court erred by dismissing

its claims under Sections 10(b) and 20(a) of the Exchange Act.               In

particular, GBR contends that the district court wrongly held that

two statements4 specified in the complaint were inadequately pled

as misleading and that the complaint failed to give rise to a

strong inference of scienter.            We disagree.        Our review is de

novo.       See ACA Fin. Guar. Corp. v. Advest, Inc., 512 F.3d 46, 58

(1st Cir. 2008).

               Plaintiffs alleging violations of Section 10(b) must

plead (1) a material misrepresentation or omission; (2) scienter;

(3) a       connection   with   the   purchase   or   sale    of   a   security;

(4) reliance; (5) economic loss; and (6) loss causation.                 Fire &

        4 GBR argues that the district court improperly rejected
the following two statements by defendants specified in the
complaint: Kingsley's statement on April 24, 2015, that "internal
market research" suggested that physician intent to prescribe
Tecfidera was improving; and a May 13, 2015 statement by Doug
Williams (Biogen's Executive Vice President of Research &
Development) that "survey work" showed that "physicians have kind
of digested" the PML death and that physician "perspective about
the safety profile of the drug" was "back to where it was before
the PML event." We agree with the district court that there were
no allegations supporting any inference that these statements were
misleading.   But even assuming GBR were correct, the complaint
would still fail to meet the PSLRA's requirements as to scienter.

                                      - 12 -
Police Pension Ass'n of Colo. v. Abiomed, Inc. (Fire & Police

Pension), 778 F.3d 228, 240 (1st Cir. 2015).             A complaint alleging

a violation of Section 10(b) must also meet the heightened pleading

standards of the PSLRA, which requires that the complaint "specify

each statement alleged to have been misleading" as well as "the

reason or reasons why the statement is misleading."                    15 U.S.C.

§ 78u-4(b)(1).

             As to scienter, the PSLRA requires that a complaint

allege specific facts giving rise to a "strong inference," id.

§ 78u-4(b)(2)(A),       either    of     "intentional    or    willful    conduct

designed    to   deceive   or    defraud     investors    by    controlling    or

artificially affecting the price of securities," City of Dearborn

Heights Act 345 Police & Fire Ret. Sys. v. Waters Corp., 632 F.3d
751, 757 (1st Cir. 2011) (quoting Ernst & Ernst v. Hochfelder, 425
U.S. 185, 199 (1976)), or of "a high degree of recklessness," id.

(quoting Aldridge v. A.T. Cross Corp., 284 F.3d 72, 82 (1st Cir.

2002)).     "Recklessness, as used in this context, 'does not include

ordinary negligence, but is closer to being a lesser form of

intent.'"     Fire & Police Pension, 778 F.3d at 240 (quoting Greebel

v. FTP Software, Inc., 194 F.3d 185, 188 (1st Cir. 1999)).                    For

an inference of scienter to be strong, "a reasonable person would

[have to] deem [it] cogent and at least as compelling as any

opposing    inference    one     could    draw   from   the    facts     alleged."

                                       - 13 -
Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 324

(2007).

            The complaint fails to meet this rigorous standard.                       The

confidential witness statements are insufficiently particular, do

not make misleading the defendants' public disclosures, and do not

speak     with    specificity     as    to     why   the      defendants'        alleged

misstatements       were    untrue      or     misleading.              Likewise,     the

complaint's "core operations" allegations are consistent with the

defendants'      statements     to     investors.          And    the     most     cogent

inferences from the record favor the defendants.

            1.    Confidential       Witness    Statements        and     "Evidentiary
                  Admissions"

            The     complaint's        allegations      as       to     scienter     rest

substantially on the confidential witness statements and on the

core operations allegations.              The statements, very often made

about events occurring after the defendants' statements at issue,

are so lacking in connecting detail that they cannot give rise to

a strong inference of scienter.              At bottom, the majority of the

confidential      witness   statements       say     merely      that    Biogen     sales

regions experienced a serious decline in Tecfidera sales after the

PML incident and after the purportedly misleading statements were

made, that corporate changes were discussed at company events in

                                       - 14 -
relation to the PML incident, and that the company changed the

sales goals of at least some employees.5

          The   statements   do    not   even   begin   to   quantify   the

magnitude of the sales decline at the company level.          They do not

explain with any precision whether the sales decline resulted from

higher discontinuations, fewer new starts, changes in the market,

or some combination of these factors.6          Nor do they purport to

contradict any of the financial information released by Biogen in

its quarterly and yearly reports during the Class Period.

     5    GBR's own briefing only confirms this point.      In its
argument that the confidential witness statements are sufficiently
particularized to give rise to a strong inference of scienter, GBR
writes "the seven former [Area Business Managers] indicate that
sales 'dropped steeply and immediately,' [that] there was a 'large
drop in new prescription sales,' that 'sales dropped dramatically'
and 'appreciably,' [and] that there was a 'big slowdown' in market
expansion and a 'serious downturn' in new prescriptions."
     6    Similarly, the internal meetings and policy changes
described by the confidential witness statements do not make up
for the complaint's deficiencies.     Scangos's statement at the
November 2014 town hall meeting that the "trajectory" of the
company was changing has no content about that change or its
connection to the PML incident. Likewise, the presentation at the
November 2014 meeting that suggested there may be "organizational
changes" and that the PML death had an "impact" on sales does
nothing to show that the defendants' public statements were made
with any knowledge of falsity.
          The statements by unidentified "senior Biogen leaders"
at the March 2015 national sales meeting that the PML event
"definitely was impacting sales" and that the PML death was a
"market event" are no more concrete, and, coming as they do in the
middle of the Class Period, they shed no light on the alleged
misrepresentations that occurred before March 2015.            The
confidential witness statements about lowered sales goals are not
connected to the defendants.

                                  - 15 -
             Indeed,    the   confidential        witness     statements      are

consistent with the defendants' public disclosures.                   See In re

Genzyme Corp. Sec. Litig., 754 F.3d 31, 42–43 (1st Cir. 2014)

(noting that prompt disclosures by corporate defendants "undercut

any inference of fraudulent intent"); Auto. Indus. Pension Tr.

Fund v. Textron Inc., 682 F.3d 34, 40 (1st Cir. 2012) (declining

to find a strong inference of scienter where confidential witness

allegations     and    defendants'    public   statements      were    "not   in

conflict").     As the district court observed, the "defendants were

cautious in projecting Tecfidera's growth, and they repeatedly

warned investors about the downside risks, including moderating

growth and the PML label change."         Biogen, 193 F. Supp. 3d at 51–

52.   The defendants made such warnings on the first day of the

Class Period and continued to make them throughout.                See Fire &

Police Pension, 778 F.3d at 243 ("The argument is undercut by the

fact that [defendant] explicitly warned investors . . . .").

             We emphasize that there is a significant timing problem.

The later confidential witness statements do not go to how the

defendants' statements, which were earlier, were knowingly or

recklessly misleading at the time they were made.                     The three

statements    found    plausibly     misleading    by   the   district     court

concerned Tecfidera discontinuation rates and were made in January

and February 2015.      The confidential witness statements concerning

drops in Tecfidera sales after these months do not address what

                                     - 16 -
the defendants knew about discontinuation rates at the time they

spoke to the public.        And none of the earlier confidential witness

statements go specifically to what the defendants knew at the time

they made those three statements.

            One example suffices.             Two of the statements that the

district court found to be plausibly misleading were Kingsley's

remark at a January 29, 2015 health care conference that the

company     had    not    seen       a   "meaningful   change      in   [Tecfidera]

discontinuation rates," and his remark at a February 25, 2015

health care conference that discontinuation rates were "consistent

with historical averages."               Clancy had told investors on December

2, 2014, the first day of the Class Period, that investors should

be "mindful" of the fact that Tecfidera's discontinuation rates

were "tracking in the teens," higher than the company had hoped.

So scienter allegations would have to suggest strongly that between

Clancy's statement on December 2, 2014 and Kingsley's statements

in   January      and    February,        Kingsley   came   into    possession   of

information that the Tecfidera discontinuation rates had risen

above the teens and were clearly inconsistent with historical

averages.      The confidential witness statements provide no such

particularized allegations.

            As    in     Fire    &   Police    Pension,     confidential    witness

statements are "not described with sufficient particularity," 778
F.3d at 245, to give rise to a strong inference of scienter as to

                                          - 17 -
senior management if none of the witnesses were senior managers

and they had little contact with such managers.      The statements

here fail to give rise to a strong inference of scienter because

they lack "specific descriptions of the precise means through which

[the defendants' alleged fraud] occurred."7   In re: Cabletron Sys.,

Inc., 311 F.3d 11, 30 (1st Cir. 2002); see also Brennan v. Zafgen,

Inc., No. 16-2057, 2017 WL 1291194, at *5 (1st Cir. Apr. 7, 2017)

(news articles insufficient for scienter because they did not

"support . . . the complaint's allegation that the defendants knew,

or were reckless in not knowing, that they risked misleading

     7    It is true that CW 10 served as an executive assistant
in Biogen's "program leadership and management team," and had
responsibilities   including   supporting  Uthra   Sundaram,   the
Tecfidera program director. Sundaram was a "dotted line" report
to Scangos. According to CW 10, "Biogen's sales and commercial
teams monitored sales numbers through various reports" after the
PML incident and the company "reached out to the top prescribing
doctors as well as big pharmaceutical companies such as CVS
Caremark and Walgreens."      CW 10 further asserted that the
company's commercial team performed "deep drill downs" into sales
data, and that Sundaram accompanied Biogen medical-science
liaisons on "ride-alongs" to meet doctors and "discuss the PML
death." CW 10 said that the Tecfidera team met weekly to discuss
sales data and the effect of the PML death on sales, and that
Sundaram regularly communicated with Scangos and senior management
following that meeting.
     But although CW 10's information has a tighter connection to
the defendants, it still lacks the necessary particularity. And
nothing about CW 10's statements contradicts the company's public
position or gives further context to the alleged misstatements.
The fact that the company's Tecfidera team was actively monitoring
sales in the wake of the PML incident and reported findings to
senior management is unremarkable.        It comports with the
defendants' public statements, which repeatedly returned to the
PML incident as one factor impacting Tecfidera's performance.

                              - 18 -
investors"    and     they    had   no    particularized        connection   to   the

defendants).

             Likewise,       the    various     "evidentiary      admissions"     GBR

points to as indicative of scienter all involve statements made by

the defendants, well after the end of the Class Period, that do

not provide particularized insight into the defendants' knowledge

at the time of the alleged misstatements.                See In re: Ariad Pharm.,

Inc. Sec. Litig., 842 F.3d 744, 751 (1st Cir. 2016) (finding no

strong inference of scienter where complaint failed to plead "any

specific facts about when the defendants learned of the[] adverse

events or even when the adverse events occurred").                        The use of

these statements amounts to little more than pleading fraud by

hindsight.        See Miss. Pub. Emps.' Ret. Sys. v. Bos. Sci. Corp.,

523 F.3d 75, 90 (1st Cir. 2008) ("Fraud by hindsight refers to

allegations       that   assert     no   more     than   that   because    something

eventually went wrong, defendants must have known about the problem

earlier."); M. Gulati et al., Fraud by Hindsight, 98 Nw. U. L.

Rev. 773, 787 (2004) (discussing hindsight bias).

             2.     "Core Operations" Allegations

             GBR claims that the district court wrongly discounted

the amended complaint's "core operations" allegations because

there was no "smoking gun" or "plus factor," and argues that to

                                         - 19 -
impose such a requirement runs afoul of the Supreme Court's

guidance in Tellabs.

             We    need   not   resolve      the   standard    by     which    "core

operations" allegations may give rise to a strong inference of

scienter, because the allegations here clearly fall short.                       The

allegations are inapt because the evidence does not establish that,

at the time the challenged statements were made, there existed

reasonably        accessible    data    within      the     company    materially

contradicting those statements.

             The    defendants'     compensation          structure    and     stock

holdings also weaken any inference of scienter.                As the complaint

says, Scangos's and Clancy's compensation was keyed in part to

revenue growth.         But the complaint never alleges that there was

any misreporting of revenue.            Further, the individual defendants

increased their stock holdings in Biogen during the Class Period,

and the defendants in fact suffered losses as a result of Biogen's

decline in stock price.         This too cuts against scienter.           See Fire

& Police Pension, 778 F.3d at 246 (finding that an increase in

stock holdings during the Class Period on the part of a defendant

"negate[d] any inference that he had a motive to artificially

inflate [the company's] stock during that period"); Maldonado v.

Dominguez, 137 F.3d 1, 12 n.9 (1st Cir. 1998) (defendants' personal

losses cut against inference of scienter); cf. Brennan, 2017 WL
1291194,   at      *6   (finding   insider      trading    allegations    of   only

                                       - 20 -
"marginal" benefit because the corporate "insiders [had] kept the

vast majority of their [stock] holdings").

             Ultimately, the scienter analysis involves evaluating

the   complaint        as     a    whole,      including     "plausible          opposing

inferences."       Tellabs, 551 U.S. at 323.               Here, we agree with the

district court that the strongest inferences are in favor of the

defendants.       See Brennan, 2017 WL 1291194, at *8 ("[T]he facts

alleged in the complaint at the very least support a strong

competing    inference        that      the   defendants     disclosed         what   they

considered        to    be,        at    the      time,      the        most     relevant

information . . . .").

             3.    Section 20(a) Claim

             Given that the Section 10(b) claim fails, GBR's Section

20(a) claim necessarily fails as well, because GBR has not stated

an underlying violation of the Exchange Act.                      See ACA Fin. Guar.

Corp., 512 F.3d at 67–68.

B.    Denial of Motion to Vacate and for Leave to File Second
      Amended Complaint

             GBR argues that the district court erred by not granting

its motion to vacate the judgment and for leave to file a second

amended   complaint.          It     insists    it   was    put    in    an    impossible

situation.     GBR claims that it diligently secured new evidence and

that it could not have done so earlier.                [The district court found

to the contrary].       GBR argues that the obligations of Federal Rule

                                         - 21 -
of Civil Procedure 11 -- which requires parties to "certif[y] that

to the best of [their] knowledge, information, and belief, formed

after an inquiry reasonable under the circumstances . . . the

factual contentions [in the motion] have evidentiary support,"

Fed. R. Civ. P. 11(b) -- precluded the plaintiffs from raising

this new information until they had completed an ethics review of

the new materials and completely vetted the allegations.               GBR

argues that the district court did not properly evaluate the

timeline in which the plaintiffs could reasonably secure and vet

this new evidence in compliance with Rule 11 before moving for

leave to amend the complaint.     The argument fails.

          "We review a district court's decision to grant or deny

a motion for reconsideration under Rules 59(e) and 60(b) of the

Federal Rules of Civil Procedure for manifest abuse of discretion."

Ruiz Rivera v. Pfizer Pharm., LLC, 521 F.3d 76, 81 (1st Cir. 2008).

There was no abuse of discretion at all in denying the motion.

GBR has not shown either that the purportedly new evidence would

have made a difference to the district court's decision whether to

grant the motion to dismiss or that the plaintiffs could not have

gotten the evidence earlier.       GBR's argument that the district

court abused its discretion by failing to account for the time

needed for the plaintiffs to comply with Rule 11 is misplaced.

          The   new   evidence   consisted   of   allegations   from   two

additional confidential witnesses, CW 11 and CW 12, and a sworn

                                 - 22 -
declaration by Dr. Ben Thrower, Medical Director of the Shepherd

Center Multiple Sclerosis Institute in Atlanta.

            Dr.   Thrower's    declaration     states   that   the    Shepherd

Center determined "in approximately August 2014 that Tecfidera

compromised patients' immune systems (as was reinforced by the PML

death    announced   on   October   22,   2014),"   and    that   the   Center

immediately    "completely     stopped    prescribing     Tecfidera     for   MS

patients" and "discontinued at least half of the 400 patients

taking Tecfidera."8       As counsel for GBR conceded at oral argument,

Dr. Thrower does not say that the Shepherd Center took its actions

in response to the PML incident.             His statement merely alleges

that the Shepherd Center stopped prescribing Tecfidera and took

many patients off the drug around August 2014, which was well

before the PML incident and the start of the Class Period.9              There

can be no abuse of discretion in denying the motion, and GBR's

Rule 11 argument does nothing to address this.

            The district court also acted well within its discretion

by denying the motion because the plaintiffs could have presented

     8    CW 12, a former Biogen Area Business Manager in Atlanta,
alleges that Biogen was aware of the Center's decision.
     9    The information from CW 11, a former Biogen Senior
Territory Business Manager in Pennsylvania, is also inadequate.
CW 11's information does not quantify the impact of the PML
incident on Tecfidera sales nationally, it has no particularized
connection to the defendants, and it does not contradict the
defendants' public positions.

                                    - 23 -
the evidence earlier.10           It is undisputed that the plaintiffs were

aware of all three of the new sources they now identify before the

district court entered its order of dismissal.                   And GBR does not

offer        a   "cogent   reason"   for   why   it   could   not   have   obtained

information          about     Tecfidera    discontinuations        from    medical

institutions sooner.            Fisher v. Kadant, Inc., 589 F.3d 505, 513

(1st Cir. 2009).             Without showing that the plaintiffs could not

in the exercise of reasonable diligence have obtained this new

evidence earlier, GBR's argument that the district court abused

its discretion by failing to account for the time the plaintiffs

needed to vet the evidence to meet their Rule 11 obligations has

no force.

                 The district court did not err in denying the second

motion to amend, which was filed post-dismissal.                     It commented

that     the      plaintiffs    could   have     alerted   the   court     to   their

intentions earlier, but did not.                 Here, the district court gave

the plaintiffs the full time they requested in order to file the

initial amendment and allowed that amended complaint, and the

plaintiffs had the motion to dismiss in hand for nearly four months

        10See Fed. R. Civ. P. 60(b)(2) (court may relieve party
from final judgment if party presents "newly discovered evidence
that, with reasonable diligence, could not have been discovered in
time to move for a new trial under Rule 59(b)"); Emmanuel v. Int'l
Bhd. of Teamsters, Local Union No. 25, 426 F.3d 416, 422 (1st Cir.
2005) (Rule 59(e) motions on the basis of new evidence succeed
only when evidence could not "have been presented earlier" "in the
exercise of due diligence").

                                        - 24 -
before the district court ruled.      As we have said before, under

circumstances like these, we wish to discourage any expectation

that there will be "leisurely repeated bites at the apple." ACA

Fin. Guar. Corp., 512 F.3d at 57.

                                IV.

          Affirmed.   Costs are awarded to the defendants.

                              - 25 -