Court Opinion

ID: 2777754
Source: CourtListenerOpinion
Date Created: 2015-02-06 22:00:36.568468+00
Date Added: 2024-06-11T10:53:25.915462
License: Public Domain

United States Court of Appeals
                       For the First Circuit

No. 14-1502

          FIRE AND POLICE PENSION ASSOCIATION OF COLORADO;
               CITY OF AUSTIN POLICE RETIREMENT SYSTEM,

                       Plaintiffs, Appellants,

                                 and

      KARSE SIMON, individually and on behalf of all others
         similarly situated; ARLENE SIMON, individually and
       on behalf of all others similarly situated; OKLAHOMA
     POLICE PENSION AND RETIREMENT SYSTEM; CITY OF HOLLYWOOD
    (FL) EMPLOYEES' RETIREMENT FUND; TULARE COUNTY EMPLOYEES'
        RETIREMENT ASSOCIATION; ORLANDO POLICE PENSION FUND,

                             Plaintiffs,

                                 v.

         ABIOMED, INC.; MICHAEL R. MINOGUE; ROBERT L. BOWEN,

                       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, Chief Judge,
                     Souter,* Associate Justice,
                      and Selya, Circuit Judge.

     *
          Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
     Patrick T. Egan, with whom Kristin J. Moody, Daryl DeValerio
Andrews, Berman DeValerio, Robert D. Klausner, and Klausner,
Kaufman, Jensen & Levinson were on brief, for appellants.
     John D. Donovan, Jr., with whom Daniel V. Ward, Matthew
Mazzotta, Elizabeth D. Johnston, Dara A. Reppucci, and Ropes & Gray
LLP were on brief, for appellees.

                         February 6, 2015
            LYNCH, Chief Judge.       Not all claims of wrongdoing by a

company make out a viable claim that the company has committed

securities fraud.       This case is an example.

            Institutional investors, asserting claims on behalf of a

putative class of purchasers of the stock of defendant Abiomed,

Inc.,1 brought suit against Abiomed and two of its officers,

Michael Minogue and Robert Bowen, alleging that all defendants

committed securities fraud in violation of section 10(b) of the

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

10b-5; and that the individual defendants violated section 20(a) of

the Act, 15 U.S.C. § 78t(a). The alleged misleading statements and

omissions concerned Abiomed's flagship product, a micro heart pump

called the Impella Recover LP 2.5.             The complaint alleges that

defendants told investors that its policy was to avoid off-label

marketing of the Impella 2.5, when in fact defendants "were

orchestrating     and     engaged    in     widespread    off-label     market

promotion."     And when the Food and Drug Administration (FDA)

initiated     inquiries    into     the     company's    marketing    tactics,

defendants told investors that it was "cooperating" with the agency

and "working to resolve [a] few discrete issues," when in fact the

     1
          The named plaintiffs are Fire and Police Pension
Association of Colorado, City of Austin Police Retirement System,
Oklahoma Police Pension and Retirement System, City of Hollywood
(FL) Employees' Retirement Fund, Tulare County Employees'
Retirement Association, Orlando Police Pension Fund, and individual
investors Karse and Arlene Simon.

                                      -3-
company was "trivializing the concerns" and "continuing to off-

label market."

            The district court dismissed the complaint on the ground

that plaintiffs had not pleaded facts giving rise to a "'cogent and

compelling'" inference of scienter, as is required under the

Private Securities Litigation Reform Act of 1995 ("PSLRA"), Pub. L.

No. 104-67, 109. Stat. 737.     Simon v. Abiomed, Inc., No. 12-12137-

FDS, 2014 WL 1413638 (D. Mass. Apr. 10, 2014) (citation omitted).

            We affirm.   The district court correctly held that the

pleadings are insufficient to establish the requisite inference of

scienter.    Even assuming that plaintiffs plausibly alleged that

defendants made false or misleading statements which had a material

effect on Abiomed's stock price -- a matter that is far from

clear -- plaintiffs have not sufficiently alleged that defendants

made those statements with the "conscious intent to defraud or 'a

high degree of recklessness.'"       ACA Fin. Guar. Corp. v. Advest,

Inc., 512 F.3d 46, 58 (1st Cir. 2008) (quoting Aldridge v. A.T.

Cross Corp., 284 F.3d 72, 82 (1st Cir. 2002)).

                         I.   Factual Background

            We draw the following statement of facts from plaintiffs'

Amended Class Action Complaint and from materials defendants filed

in the district court in support of their motion to dismiss.2

     2
          These materials consist of correspondence between the FDA
and Abiomed and public records, such as Abiomed's filings with the
SEC. Neither party disputes that the court may properly consider

                                   -4-
A.         The Parties

           Defendant     Abiomed   is    a   Massachusetts-based       company

employing approximately 150 people which develops, manufactures,

markets and sells medical devices designed for circulatory support.

Minogue is Abiomed's CEO, and Bowen is its CFO.             Plaintiffs are a

class of entities and individuals who purchased Abiomed stock from

August 4, 2011, to October 31, 2012 (the "Class Period").

           The allegations in the complaint are based in part on

interviews with confidential witnesses who are former employees of

Abiomed.        Confidential     Witness     1    ("CW1")    "worked    in     a

clincial/surgical support position as a clinical representative

from March 2011 until April 2012."               According to CW1, Abiomed

employees were in close proximity to one another, and Minogue and

Bowen were very "hands-on" leaders.

           The Impella 2.5, "a percutaneous micro heart pump with an

integrated motor and sensors" that "can pump up to 2.5 liters of

blood per minute," is Abiomed's most important product.            In fiscal

year (FY) 2012, 85% of Abiomed's revenues came from sales of

Impella products, and "most" of that revenue came from the sales of

the   Impella   2.5.   The     Impella    2.5's    main   competitor   is    the

these materials. See Watterson v. Page, 987 F.2d 1, 3 (1st Cir.
1993) (noting that, in ruling on a motion to dismiss, court may
consider "documents the authenticity of which are not disputed by
the parties; [] official public records; [] documents central to
plaintiffs' claim; or [] documents sufficiently referred to in the
complaint").

                                    -5-
intra-aortic balloon pump (IABP), which is much cheaper and more

widely used than the Impella 2.5.

B.           The FDA's Regulation of Medical Devices

             The FDA regulates the labeling and marketing of medical

devices pursuant to the Food, Drug, and Cosmetics Act (FDCA).

Under section 510(k) of the FDCA, the agency can "clear" a device

that is substantially equivalent in safety and effectiveness to an

existing approved device and thereby allow the device to be used

for the same intended purposes.           The FDA may also grant an

investigational device exemption ("IDE") to a company to allow it

to use a device in a clinical study to test its safety and

efficacy.

             Under FDA regulations, a company is not allowed to market

a device for a use for which it has not been approved -- that is,

an "off-label" use.     However, the FDA does not prohibit physicians

and hospitals from off-label use of medical devices, and a medical

device company is allowed to respond to unsolicited requests from

physicians     for   information   regarding   off-label   uses   of   the

company's products.     FDA regulations also prohibit a company with

an IDE from representing that the device is safe and effective for

the purpose for which it is being tested.

C.           The Protect II and Recover II Studies

             In August 2007, Abiomed received an IDE from the FDA that

allowed it to begin a clinical trial comparing the performance of

                                    -6-
the Impella 2.5 to that of the IABP during high-risk percutaneous

coronary interventions ("PCIs"), commonly known as angioplasties

(the "Protect II Study"). The study's purpose was to measure major

adverse    events   suffered   by    patients   30   days   after   the   PCI

procedure.

             On December 6, 2010, Abiomed terminated the Protect II

Study after finding that the Impella 2.5 did not achieve superior

outcomes compared with the IABP at the 30-day endpoint.             However,

Abiomed continued to collect and analyze data from the study, and

the study eventually yielded "exploratory" results "suggesting a

possible benefit for the device at 90 days."                The study was

published in September 2012 in Circulation, a peer-reviewed medical

journal.

             In March 2008, Abiomed received an IDE for a second study

(the "Recover II Study") designed to compare the Impella 2.5 to the

IABP in hemodynamically unstable patients undergoing a PCI due to

an acute myocardial infarction ("AMI"), more commonly known as a

heart attack. The Recover II Study was suspended in September 2009

and eventually terminated due to insufficient enrollment.

D.           510(k) Clearance for the Impella 2.5, the Alleged
             "Pervasive" Scheme of Off-Label Marketing, and the FDA's
             Response

             In June 2008, pursuant to the 510(k) process, Abiomed

received   clearance    from   the   FDA   to   market   and   commercially

distribute the Impella 2.5 for partial circulatory support for up

                                     -7-
to six hours.   Under FDA regulations, to repeat, Abiomed was not

permitted to market or promote the Impella 2.5 for any other use.

Plaintiffs allege that defendants flouted these regulations and

"engage[d] in widespread improper promotion and marketing of the

Impella 2.5."   They make the following specific allegations in

support of that claim.

          1.     The January 2010 Untitled Letter

          On January 28, 2010, the FDA sent Abiomed an Untitled

Letter objecting to certain of Abiomed's activities promoting the

Impella 2.5.    Untitled Letters are intended to address alleged

regulatory violations that do not meet the threshold for regulatory

significance warranting a Warning Letter.   They "do[] not include

a warning that a company's failure to take prompt corrective steps

could lead to an enforcement action."   Simon, 2014 WL 1413638, at

*3 n.2 (citing U.S. Food & Drug Admin., Regulatory Procedures

Manual: Advisory Actions, 2004 WL 3363386, at *24 (2010)).

          The FDA stated that Abiomed had improperly "promot[ed]

the Impella 2.5 for high risk PCI and AMI" and represented that the

Impella 2.5 was superior to the IABP in those uses.   Essentially,

in the FDA's view, Abiomed's promotional materials represented that

the device was effective for uses for which it was being tested

under the Protect II and Recover II IDEs, which constituted a

violation of FDA regulations.

                                -8-
            Abiomed responded to the FDA letter on March 4, 2010,

stating that it "now recognize[d]" that the challenged promotions

had made improper efficacy claims and that it would revise its

marketing materials in order to remove the offending statements.

Abiomed also represented that it had "strengthened its review

process" for promotional materials.

            The FDA viewed this response as inadequate, however, and

Abiomed made further changes to its advertisements and reviewed its

marketing materials and website to ensure that "there were no other

materials" beyond those identified by the FDA that made improper

safety or efficacy claims.        On April 20, 2010, the FDA wrote

Abiomed stating that its "response appear[ed] adequate" and that no

further action was necessary.      Abiomed did not publicly disclose

this correspondence with the FDA at that time.

            2.     The June 2011 Warning Letter

            Over a year later, on June 10, 2011, the FDA issued an

official Warning Letter to Abiomed stating that the company's

"marketing materials continued to improperly compare the Impella

2.5 to the IABP and promote the device for non-cleared uses."         A

Warning Letter is a step above an Untitled Letter in the FDA's

enforcement hierarchy.      It communicates that the FDA believes the

regulated    entity   has   committed    a   violation   of   regulatory

significance but does not commit the FDA to taking enforcement

action.   Simon, 2014 WL 1413638, at *3 n.2 (citing U.S. Food & Drug

                                   -9-
Admin., Regulatory Procedures Manual: Advisory Actions, 2004 WL
3363386, at *1-2 (2010)).

             The   Warning    Letter      criticized    an   Abiomed   magazine

advertisement that pictured a hand puncturing a red balloon and

suggested that the Impella 2.5 was superior to the IABP "for

circulatory support in the Cath lab."                  The FDA's letter also

complained about the Abiomed slogan, "Recovering Hearts, Saving

Lives," which the FDA stated would require a study under an IDE "to

evaluate    whether    the    device   could    salvage      heart   tissue   and

muscle."3     Finally, the agency took issue with a claim at a

conference of cardiovascular physicians that the Impella could

improve hemodynamics and cardiac output in AMI Shock patients,

since those indications also needed to be supported with a study

performed under an IDE.

             The Warning Letter was posted on the FDA's website.               An

Abiomed spokeswoman stated publicly that the "letter addresses

specific promotional items from 2010. . . .               We are working with

the FDA to ensure all of our promotional materials comply with the

agency moving forward."        According to CW1, however, Abiomed senior

management     did    not    take   the    warning     letter   seriously     and

"trivialized the FDA concerns."           CW2, "a senior quality compliance

     3
          The FDA subsequently revised its position on the slogan,
"stat[ing] that [it] had decided to leave the tagline issue alone"
and asking only that the company not claim that the Impella 2.5
could "Recover Heart Muscle."

                                       -10-
and validation engineer at Abiomed from April 2008 through March

2011," likewise said that "Abiomed 'didn't change anything' after

being notified by the FDA."

             In July 2011, at Abiomed's request, the FDA held a

"clarification call" with Abiomed to discuss the Warning Letter.

The   FDA   reminded    Abiomed    of    the   Impella   2.5's   very   limited

clearance and told them to refrain from comparing the device to the

IABP.   One agency member noted that Abiomed "should have had some

awareness of the issues given" the January 2010 Untitled Letter.

             In August 2011, Abiomed sent a formal response letter to

the FDA discussing the actions it had taken to address the FDA's

concerns.     The company stated that it would not run the balloon

advertisement again and would ensure that the advertisement did not

exist on Abiomed's website, and that it had removed materials

related to the cardiovascular conference from the website.                  The

letter also stated that Abiomed would put into place a plan to

prevent future violations.         Abiomed did not receive any follow-up

correspondence from the FDA for several months.

             3.       The Off-Label Marketing Allegedly Continues

             Plaintiffs allege that, even in the wake of the June 2011

Warning     Letter,    Abiomed    continued    to   "engage[]    in   pervasive

off-label marketing of the Impella 2.5 beyond its FDA cleared

indications."     For example, during a February 2012 episode of the

CNBC program "Mad Money," Minogue suggested that the Impella 2.5

                                        -11-
could be used in patients experiencing heart attacks, and he held

up an IABP and an Impella 2.5 side by side and stated that the

latter was "cost effective." Also, Abiomed made repeated claims in

SEC filings and conference calls regarding the efficacy of the

Impella 2.5 based on the results of the Protect II Study.

           Plaintiffs also allege that Abiomed trained its sales and

clinical staff to compare the Impella 2.5 to the IABP and to

"prompt and steer physicians to ask about off-label uses of the

Impella 2.5."     CW1 and CW5, a "clinical representative at Abiomed

from February 2012 until February 2013," said they were provided

with "talking points" about the Protect II Study and encouraged to

"discuss the superiority of the Impella 2.5 over the IABP."                  CW2

stated that Abiomed senior management "knew Abiomed did not have

the clinical studies to support the claims they were making." CW3,

"an account manager at Abiomed from September 2008 until the end of

March 2011," relayed similar concerns to senior management and was

"blown   off."         CW7,   "a   director     of   clinical   operations   for

Abiomed . . . from February 2009 until November 2011," stated that

Abiomed promoted the Impella 2.5 for use in procedures that take

longer   than    six    hours.      CW4,   "a    clinical   representative   in

cardiology at Abiomed . . . from August 2007 until September 2010,"

                                       -12-
stated that Abiomed "help[ed] doctors identify candidates to use

the Impella 2.5 on, including high-risk PCI patients."4

             On February 24, 2012, Abiomed and the FDA "had a meeting,

in    part   to   discuss   Abiomed's   improper   marketing    practices."

Plaintiffs allege that Abiomed "never disclosed the true purpose of

this meeting," instead stating in a later filing with the SEC that

the meeting was held to "present the final results of the Protect

II Study" and to discuss other unrelated matters.

             4.       The April 2012 Letter

             In April 2012, the FDA sent another letter to Abiomed

asserting that its promotional materials were still improperly

marketing the Impella 2.5. The FDA noted that the "AbiomedImpella"

YouTube channel included several videos discussing unapproved uses

of the Impella 2.5, and that the company's website contained a link

to "Patient Stories" describing unapproved uses of the device. The

agency also objected to Minogue's statements on the "Mad Money"

episode.     The letter stated that these examples "represent[ed] a

fraction of the objectionable claims regarding the Impella," and

the   agency      threatened   enforcement   action   "absent   prompt   and

effective corrections."

       4
          Plaintiffs include these allegations in the section of
the complaint detailing Abiomed's allegedly improper marketing
after the Warning Letter was issued, but they do not provide any
indication of the specific time period to which the confidential
witnesses' observations correspond.

                                    -13-
           Abiomed disclosed this FDA letter in its 2012 10-K, filed

with the SEC on June 4, 2012.          The company announced that it had

"received a follow up letter from the FDA stating that some of our

promotional materials continued to market the Impella 2.5 in ways

that are not compliant with FDA regulations" and that it was

"cooperating with the FDA in addressing its concerns."

           5.          The August 2012 Meeting with              the   FDA   and
                       Subsequent Compliance Audits

           On August 7, 2012, the FDA and Abiomed met again, again

at Abiomed's request.         "[T]he primary objective of the meeting was

to present Abiomed's actions to close-out the Warning Letter and

maintain compliance and then have a discussion as to whether

Abiomed was meeting FDA requirements."          After Abiomed detailed the

measures it was taking to ensure compliance with the regulations,

an FDA representative "suggested that Abiomed 'take a step back'"

because "[h]e saw the corrective actions as too targeted, and not

addressing the whole labeling program."             Another representative

commented that the FDA did "not think of the clearances of the

product in the same way Abiomed does."            The FDA was "frustrated"

because   it    felt   that    regulatory    violations   were    "happen[ing]

repeatedly."     Minogue responded that "Abiomed had to comply, and

will comply," but that, because Abiomed was such a small company,

it was "critical to market the device."             An FDA representative

opined that "it would involve 'walking a fine line' to stay in

compliance while marketing."           The meeting closed with the FDA

                                      -14-
admonishing Abiomed that it took the matter "very seriously," "that

a Warning Letter is the last communication given, [and] that

Abiomed needed to do a systemic review of its procedures in order

to give the [agency] a systemic response for compliance."

            In   the    late     summer   of   2012,   the    FDA    conducted   a

compliance audit of Abiomed, and Abiomed simultaneously conducted

its own internal audit.           After those audits, Abiomed pulled its

marketing and training materials "for compliance reasons" and did

not   put   up   replacement      materials     for    several      months.   The

replacement materials, according to CW5, were "extremely limited

compared to what they had previously" -- for example, they no

longer included slides about the Protect II Study.                        Abiomed

confirmed in a letter to the FDA dated August 20, 2012, that it

understood its prior approach to compliance was "too narrow in

focus" and so was "adopting a broad, systemic approach to address

the issues raised by FDA."          This approach included "destroy[ing]

the   Impella    marketing        brochures    cited     by   FDA,     stopp[ing]

distribution of all marketing labeling, recall[ing] all marketing

labeling held by Abiomed field personnel, and stopp[ing] any

planned updates to all labeling and the [Abiomed] website."

            6.         The U.S. Attorney's Office Investigation

            On November 1, 2012, Abiomed disclosed that the U.S.

Attorney's Office for the District of Columbia had begun an

investigation     into     its    marketing     and    promotional      practices

                                      -15-
regarding the Impella 2.5.     "Abiomed also maintained its Impella

revenue guidance at approximately 30% for the fiscal year, despite

45% growth through the first half of the year, implying a marked

slowdown during the second half of the year . . . ."              Minogue

disclosed the FDA's compliance audit in a conference call conducted

the same day and stated that Abiomed "ha[d] taken extensive actions

to correct [its] noted compliance issues identified in [its] annual

report."    Abiomed's stock price fell from $19.82 per share to

$13.61 per share on November 1, a drop of approximately 32%.

            7.      The February 2013 FDA Close-Out Letter

            On February 19, 2013, the FDA issued a "Close-Out Letter"

to Abiomed stating that the agency had completed its evaluation of

Abiomed's corrective actions taken in response to the Warning

Letter and had determined that Abiomed had adequately addressed

those   violations.     Abiomed's    stock   price   recovered   from   the

November 2012 fall.    As of May 20, 2013, the stock was trading at

$23.11 per share.

E.          Defendants' Allegedly False and Misleading Statements

            Plaintiffs allege that, between August 4, 2011, and

October 31, 2012, defendants made specific false and misleading

statements that "deceived the investing public" and caused the

plaintiffs to purchase Abiomed stock at artificially inflated

prices.    These statements fall into three principal categories.

                                    -16-
           First, plaintiffs allege that several of defendants'

statements about the growth of Impella product revenues were false

and   misleading   because   Abiomed   "failed   to   disclose    that   the

reported revenue growth was substantially the result of off-label

marketing."   Defendants either provided no explanation for the

growth or attributed the revenues to sources such as "increased

Impella 2.5 utilization in the cath lab."        Plaintiffs allege these

statements were misleading because "they failed to disclose that

Abiomed's continued revenue . . . was at risk should the Company be

forced to discontinue [its marketing] practices."                Defendants

allegedly made these statements in an August 2011 press release and

conference call announcing Abiomed's first quarter 2012 ("Q1 2012")

earnings; in Abiomed's Q1 2012 10-Q; in a November 2011 press

release and conference call announcing Abiomed's Q2 2012 earnings;

in Abiomed's Q2 2012 10-Q; in a February 2012 press release and

conference call announcing Abiomed's Q3 2012 earnings; in Abiomed's

Q3 2012 10-Q; in a May 2012 press release and conference call

announcing Abiomed's Q4 2012 earnings; in Abiomed's 2012 Form 10-K;

and in an August 2012 press release and conference call announcing

Abiomed's Q1 2013 earnings.

           Second, defendants allegedly continued to compare the

Impella 2.5 to the IABP based on the results of the Protect II

Study, even though FDA regulations prohibited Abiomed from doing

so. For example, plaintiffs cite Minogue's statements in an August

                                  -17-
2011 conference call that, according to the study, Impella patients

"had significantly better outcomes at 90 days" relative to IABP

patients.        Defendants   allegedly       made   similar   statements      in

Abiomed's Q1 2012 10-Q; in Abiomed's Q2 2012 10-Q; in a February

2012 press release and conference call concerning Abiomed's Q3 2012

results;    on   the   February   7,    2012,   episode   of   Mad    Money;   in

Abiomed's 2012 Form 10-K; and in an August 2012 conference call.

Plaintiffs also allege that Abiomed's May 2012 disclosure of the

February 24, 2012, meeting with the FDA was false and misleading

because it "failed to disclose that the purpose of the meeting was

to discuss Abiomed's improper marketing of the Impella 2.5 . . .

and the FDA's safety concerns with the device related to the

Protect II Study."

            Third,     plaintiffs      allege   that   many    of    defendants'

statements concerning the regulatory back-and-forth between Abiomed

and the FDA were false and misleading.               Defendants claimed that

Abiomed policy was to refrain from off-label marketing and that

Abiomed was taking steps to resolve the FDA's concerns, but in fact

Abiomed was "engaged in widespread management-directed off-label

marketing and promotion of the Impella 2.5 . . . and was not

properly addressing the FDA's issues."           In particular, plaintiffs

cite the following statement, some version of which was contained

in Abiomed's Q1 2012 10-Q, Q2 2012 10-Q, and Q3 2012 10-Q:

            Although our policy is to refrain from
            statements that could be considered off-label

                                       -18-
          promotion of our products, the FDA or another
          regulatory agency could disagree and conclude
          that we have engaged in off-label promotion.
          In June 2011, we received a warning letter
          from the FDA stating that some of our
          promotional materials marketed the Impella 2.5
          for uses that had not been approved by the
          FDA.   We have cooperated with the FDA in
          addressing its concerns and believe that we
          have   resolved   the   matter   without   any
          penalties.    Although we believe that this
          issue has been resolved, if similar matters
          come up in the future, we may not be able to
          resolve them without facing significant
          consequences.

Abiomed's 2012 Form 10-K, filed on June 4, 2012, used similar

language, and added:

          [I]n April 2012, we received a follow up
          letter from the FDA stating that some of our
          promotional materials continued to market the
          Impella 2.5 in ways that are not compliant
          with FDA regulations. We are cooperating with
          the FDA in addressing its concerns. While we
          hope to be able to resolve this matter without
          incurring penalties, we may not be able to
          resolve it, or any similar matters that may
          come up in the future without facing
          significant consequences. Such matters could
          result in reduced demand for our products and
          would have a material adverse effect on our
          operations and prospects.

          Finally, the complaint alleges that the certifications of

Minogue and Bowen contained in the Form 10-Qs and the Form 10-K

were false and misleading because the forms did not "fairly present

in all material respects the financial condition [of Abiomed],

including the reliance on off-label marketing, and that the revenue

and growth reported therein was the result of undisclosed, illicit

and unsustainable off-label marketing."

                               -19-
          Plaintiffs make additional allegations that they argue

bolster the inference that defendants had the requisite scienter

(that is, that they had the conscious intent to defraud investors

or acted with a high degree of recklessness).          First, they contend

that Minogue, Bowen, and other senior Abiomed executives sold an

uncharacteristically large amount of stock during the Class Period.

Minogue   allegedly    sold    586,149    shares      of   Abiomed   stock,

representing 48% of his holdings, for a total of $9,636,124 from

January 2010 through the end of the Class Period.               Bowen sold

57,919 shares, representing 6.5% of his holdings, for $1,302,878

during that period, after having sold no stock before January 2010.

Plaintiffs   cite   similar   figures    for   five   other   non-defendant

Abiomed executives, who collectively earned approximately $5.6

million by selling stock during this period.

          Defendants counter that many of the trades cited by

plaintiffs were made pursuant to 10b5-1 plans which were entered

into before the Class Period (August 4, 2011, to October 31, 2012)

and Minogue in fact increased his holdings of Abiomed stock during

the Class Period.     Defendants also counter that the reason Bowen

made no trades prior to the cited period was because he only became

eligible to trade Abiomed stock during that period.

          Plaintiffs also allege that, because the Impella 2.5 was

part of Abiomed's "core business," Minogue and Bowen must have been

aware of the fact that Abiomed was unlawfully promoting the device,

                                  -20-
and that "the pervasiveness of the illicit and off-label marketing

and promotion of the Impella 2.5 . . . further supports a strong

inference of scienter."

F.          Summary

            Distilled to its essence, plaintiffs' complaint tells the

following story: For a 38-month period, beginning with the FDA's

Untitled Letter in January 2010 and ending with the FDA's Close-Out

Letter in February 2013, the FDA repeatedly raised concerns that

Abiomed's   marketing    of    the   Impella    2.5       did   not    comply   with

applicable regulations.        Abiomed responded to these concerns by

making limited changes to its promotional tactics, but the FDA was

not satisfied until the summer of 2012, when Abiomed conducted an

internal compliance audit and pulled all of its marketing and

training    materials,   to    be    replaced      with    entirely      new    ones.

Confidential witnesses cited in the complaint state that Abiomed's

senior management was aware that its promotional practices before

that audit were in violation of FDA regulations and willfully chose

not to alter them.       We note that might raise issues under FDA

regulations.

            What   raises     securities     law    concerns,         according    to

plaintiffs, is that management allegedly misled investors during

this period by (1) failing to attribute the growth in Impella

revenues to unlawful off-label marketing practices; (2) improperly

comparing the Impella 2.5 to the IABP by touting the results of the

                                      -21-
Protect II Study; (3) stating that it had a policy of not engaging

in off-label marketing; and (4) stating that Abiomed was taking

steps to address the agency's concerns, when in fact the company

was engaged in intentional and pervasive off-label marketing,

contrary to its stated policy.

                  II.   Litigation Procedural History

             On November 16, 2012, two individuals filed a complaint

on behalf of all purchasers of Abiomed stock during the Class

Period. Simon, 2014 WL 1413638, at *10.         In February 2013, the

district court appointed the two appealing institutional investors

as lead plaintiffs, and the lead plaintiffs filed an amended

complaint on May 20, 2013.     Id.

             On April 10, 2014, the district court, in a thorough

opinion, granted defendants' motion to dismiss.         The court found

that plaintiffs had plausibly alleged that Abiomed engaged in

off-label marketing practices and that those practices materially

affected the stock price.     Id. at *12-16.    It also held that the

plaintiffs      had     plausibly     alleged    several     actionable

misrepresentations: (1) Abiomed's statements that its policy was to

refrain from off-label marketing; (2) Abiomed's statements that

Impella revenue growth was attributable to "particular primary

source[s]" other than off-label uses; and (3) Abiomed's statements

about the Protect II Study "[t]o the extent [they were made] to

promote off-label marketing."       Id. at *16-20.   However, the court

                                    -22-
found that the complaint's allegations of scienter were not "cogent

and compelling," as is required for pleadings in securities fraud

cases.     Id. at *20-23.            The court also dismissed plaintiffs'

§ 20(a) claims because such a violation "depend[s] on an underlying

violation of the Exchange Act."             Id. at *23.

            This appeal followed. Plaintiffs argue that the district

court erred in holding that they failed to adequately plead

scienter and that the court should have granted them leave to file

an amended complaint.

                III.       Section 10 and Rule 10b-5 Claim

A.          Legal Standard

            "Section 10(b) of the Securities Exchange Act of 1934

forbids the 'use or employ, in connection with the purchase or sale

of   any   security    .    .   .,   [of]   any   manipulative   or   deceptive

device . . . ."   Tellabs, Inc. v. Makor Isssues & Rights, Ltd., 551
U.S. 308, 318 (2007) (first and second alterations in original)

(quoting 15 U.S.C. § 78j(b)).               SEC Rule 10b-5 implements that

statute by making it unlawful, inter alia,

            [t]o make any untrue statement of a material
            fact or to omit to state a material fact
            necessary in order to make the statements made
            . . . not misleading, or . . . [t]o engage in
            any act, practice, or course of business which
            operates or would operate as a fraud or deceit
            upon any person, in connection with the
            purchase or sale of any security.

Id. (second alteration in original) (quoting 17 C.F.R. § 240.10b-5)

(internal quotation marks omitted).

                                        -23-
              "To state a claim for securities fraud under Section

10(b), a plaintiff must allege: (1) a material misrepresentation or

omission; (2) scienter, or a wrongful state of mind; (3) in

connection with the purchase or sale of a security; (4) reliance;

(5) economic loss; and (6) loss causation."                 Deka Int'l v. Genzyme

Corp. (In re Genzyme Corp. Sec. Litig.), 754 F.3d 31, 40 (1st Cir.

2014).

              The    PSLRA   requires     a    securities     fraud    complaint   to

"'specify each statement alleged to have been misleading [and] the

reason or reasons why the statement is misleading.'" ACA Fin., 512
F.3d     at   58     (alteration     in       original)     (quoting       15   U.S.C.

§ 78u-4(b)(1)). While this case turns on scienter, we also discuss

the requirements for materiality, as the materiality and scienter

inquiries are linked.         See City of Dearborn Heights Act 345 Police

& Fire Ret. Sys. v. Waters Corp., 632 F.3d 751, 756-58 & n.2 (1st

Cir. 2011).         "A fact is material when there is 'a substantial

likelihood' that a reasonable investor would have viewed it as

'significantly        alter[ing]    the       total   mix   of     information    made

available.'"        Id. at 756 (alteration in original) (quoting Basic

Inc. v. Levinson, 485 U.S. 224, 231–32 (1988) (internal quotation

marks omitted)). "A statement can be 'false or incomplete' but not

actionable          'if    the     misrepresented           fact      is    otherwise

insignificant.'"          Id. at 756-57 (quoting Basic, 485 U.S. at 238).

                                          -24-
            "The PSLRA also separately imposes a rigorous pleading

standard on allegations of scienter."              ACA Fin., 512 F.3d at 58.

"Scienter     is    a   'mental    state    embracing     intent    to    deceive,

manipulate, or defraud.'"          Waters Corp., 632 F.3d at 757 (quoting

Ernst & Ernst v. Hochfelder, 425 U.S. 185, 193 n.12 (1976)).                     A

complaint will survive a motion to dismiss only if it states with

particularity facts giving rise to a "strong inference" that

defendants acted with a conscious intent "to deceive or defraud

investors by controlling or artificially affecting the price of

securities" or "acted with a high degree of recklessness."                    Id.

(citations omitted) (internal quotation marks omitted); accord ACA

Fin., 512 F.3d at 58-59.           Recklessness, as used in this context,

"does not include ordinary negligence, but is closer to being a

lesser form of intent."           Greebel v. FTP Software, Inc., 194 F.3d
185, 188 (1st Cir. 1999).

            An inference of scienter is "strong" if "a reasonable

person would deem [it] cogent and at least as compelling as any

opposing    inference     one     could    draw   from    the    facts   alleged."

Tellabs, 551 U.S.   at    324.      "When   there    are    equally   strong

inferences for and against scienter, the draw is awarded to the

plaintiff."       Waters Corp., 632 F.3d at 757.          "[S]cienter should be

evaluated with reference to the complaint as a whole rather than to

piecemeal allegations."           ACA Fin., 512 F.3d at 59.         "There is no

set pattern of facts that will establish scienter; it is a case-by-

                                       -25-
case inquiry."   Id. at 66.   We review de novo the district court's

dismissal of the complaint for failure to state a claim.     Id. at

58.

          Plaintiffs seize on several purported legal errors made

by the district court.   They argue, for example, that the district

court had an erroneous conception of the scienter required for a

violation of the securities laws, failed to make a recklessness

finding, and failed to properly weigh competing evidence.     Since

our review of the dismissal is de novo, however, we need not attend

separately to each of these arguments.5   Instead, we explain why we

      5
          We are skeptical of the merits of the arguments, in any
event.   Plaintiffs contend that the district court erroneously
required them to show that defendants had actual knowledge that
their representations or omissions were misleading. But the court
stated the correct standard ("a conscious intent to defraud or a
high degree of recklessness") at the outset of its scienter
discussion. Simon, 2014 WL 1413638, at *20. True, the court then
stated that the defendant must have "actual knowledge that the
representation of omission was misleading," see id. at *20-21, but
the focus on actual knowledge almost certainly reflects the fact
that plaintiffs' theory of the case consistently has been that the
higher-ups at Abiomed knew full well that what they were doing was
wrong, and yet did it anyway.    Plaintiffs have not relied on a
recklessness theory, and it is thus unsurprising that the district
court spent little space in its opinion on the concept of
recklessness.
     Plaintiffs also argue that the district court found that the
inferences for and against scienter were equally strong and
erroneously awarded that tie to the defendant. This contention
wrests loose language from the district court's opinion out of
context. The court did state that "it is equally reasonable to
infer that senior management was merely negligent, inattentive, or
even incompetent, rather than engaged in deliberate acts of
securities fraud," id. at *21, and that the insider sales provided
"at best equivocal support of the proposition that defendants
intended to defraud investors," id. at *23. But elsewhere, the
court correctly stated that a "tie goes to the plaintiff," id. at
*11, and its analysis, considered as a whole, shows that the
inference of scienter was in fact less plausible than competing

                                 -26-
agree       with      the       district      court's       ultimate      conclusion      that

plaintiffs' complaint fails to state a claim under the PLSRA's

pleading standards.6                 See Bryceland v. Minogue, 557 F. App'x 1, 3

(1st       Cir.    2014)        (Souter,     J.)   ("[B]ecause      our    review    of    the

dismissal         .   .     .    is    de    novo,     rather   than      answer    each    of

[plaintiff]'s assignments of error, it will suffice to highlight

the    deficiencies             in    her   complaint."      (citation     omitted));      cf.

Aldridge v. A.T. Cross Corp., 284 F.3d 72, 84 (1st Cir. 2002)

(noting that an appellate court may affirm a district court's

decision on any grounds supported by the record).                          Plaintiffs have

failed to show that defendants made the challenged statements with

a     conscious       intent          to    defraud    or    with   a     high   degree     of

recklessness.

B.                Application

                  Plaintiffs allege that defendants made the following

misrepresentations that deceived investors: (1) statements about

growth in Impella revenues that did not disclose that the growth

was due to off-label marketing; (2) statements about the 90-day

results of the Protect II Study that improperly compared the

inferences. Cf. Connor B. ex rel Vigurs v. Patrick, 774 F.3d 45,
54 n.9 (1st Cir. 2014) (determining, based on a reading of the
district court's opinion as a whole, that the "court did not
misapprehend the correct [legal] standard," despite some isolated
language suggesting otherwise).
       6
          Our discussion applies to the scienter analysis with
respect to the individual defendants, Minogue and Bowen, as well as
the corporate defendant, Abiomed.

                                                -27-
Impella 2.5 to the IABP; (3) statements that Abiomed had a policy

of not engaging in off-label marketing; and (4) statements that

Abiomed was taking steps to address the FDA's concerns, when in

fact the company was engaged in intentional and pervasive off-label

marketing, contrary to its stated policy.           Plaintiffs' counsel

conceded at oral argument that plaintiffs' case depends on the

first, third, and fourth categories of statements.         Statements in

the second category are simply examples of improper off-label

marketing; those are relevant to this case only insofar as they

show that the defendants' statements that they were not engaged in

off-label marketing were untrue.7

          We   therefore   focus   on     defendants'   statements   about

increased Impella revenues and their statements that Abiomed's

policy was to comply with FDA regulations concerning off-label

marketing and that the company was taking steps to address the

agency's concerns regarding promotion of the Impella 2.5.              We

address the revenue-related statements first, then turn to the

statements regarding Abiomed's interactions with the FDA, and

finally address the complaint's insider trading allegations.

          1.      Statements Regarding Increased Revenues

     7
          The district court reached the same conclusion.       See
Simon, 2014 WL 1413638, at *20 (finding that, "[t]o the extent that
defendants made statements concerning the Protect II study in order
to promote off-label marketing, the statements may be actionable"
because Abiomed claimed that it did not engage in off-label
marketing, "[b]ut to the extent defendants simply gave accurate
information about the study, it cannot form the basis of a claim of
misrepresentation").

                                   -28-
          We assume arguendo that the district court correctly

found that plaintiffs had alleged enough to survive dismissal on

claims that Abiomed provided false explanations for Impella revenue

growth.   See Simon, 2014 WL 1413638, at *17.            We hold that the

statements are not actionable on scienter grounds.          We do address

the strength of the materiality of the statements because "[t]he

question of whether a plaintiff has pled facts supporting a strong

inference of scienter has an obvious connection to the question of

the extent to which the omitted information is material."           Waters

Corp., 632 F.3d at 757.   "If it is questionable whether a fact is

material or its materiality is marginal, that tends to undercut the

argument that defendants acted with the requisite intent or extreme

recklessness in not disclosing the fact."         Id.

          The   materiality   of    the     impugned    omission   here   --

Abiomed's failure to state that some of the increased revenues were

due to off-label marketing -- is marginal at best.            Plaintiffs'

contention that the omission would have mattered to a reasonable

investor depends on a long chain of inferences, most of which are

not sufficiently substantiated by the allegations in the complaint.

          First, we would have to infer that, of the 85% of Abiomed

revenue due to sales of Impella products, a substantial portion is

due to sales of the Impella 2.5.          The complaint alleges that the

Impella 2.5 accounted for "most" of that revenue, but provides no

specifics.   Second, we would have to infer that, of the revenues

                                   -29-
from the Impella 2.5, a substantial portion was due to purchases

for off-label use by health care professionals.              The complaint

provides no indication of the proportion of Impella 2.5 use that

was off-label. Third, we would have to infer that, of the revenues

from off-label use, a substantial portion of that use was due to

off-label marketing of the device, and, further, that the portion

was so significant as to undercut the company's projected growth

figures.    And fourth, we would have to infer that the resulting

undercutting of the growth figures was substantial enough to have

a material effect on the stock price.               Again, the complaint

provides no basis in fact for making these inferences.

            Plaintiffs    do   allege   that    off-label    promotion   was

widespread, but they do not state or even suggest what proportion

of sales were made as a result of such efforts, or the significance

of the contribution of those sales to Abiomed's stock price.             The

marginal    materiality   of   the   alleged    statements   and   omissions

concerning revenues weighs against an argument that defendants here

possessed the requisite scienter.           See Waters Corp., 632 F.3d at

757.8

        8
          Plaintiffs' counsel contended at oral argument that we
can infer that Abiomed's failure to disclose its off-label
marketing activities was material because the company scaled back
its revenue projections on November 1, after it "purged all of its
off-label marketing materials." We think that unlikely, but more
than that, it is much more plausible to infer that Abiomed lowered
its revenue projections in light of the simultaneous announcement
that the U.S. Attorney's Office had begun an investigation into the
company.

                                     -30-
           Plaintiffs attempt an argument that defendants made

statements about Abiomed's revenues with the intent to deceive

investors or with reckless disregard as to whether investors would

be deceived.     The argument is undercut by the fact that Abiomed

explicitly warned investors both (a) that the FDA might disagree

with the company's assessment of the legality of its marketing

practices and (b) that, if the FDA took enforcement action against

it, that "could result in reduced demand for our products and would

have a material adverse effect on our operations and prospects."

See Genzyme Corp., 754 F.3d at 42-43 (noting that a corporation's

informative disclosures "undercut any inference of fraudulent

intent on the part of defendants"); Waters Corp., 632 F.3d at 760

("'[A]ttempts to provide investors with warnings of risks generally

weaken   the   inference   of   scienter.'"   (alteration   in   original)

(quoting Ezra Charitable Trust v. Tyco Int'l, Ltd., 466 F.3d 1, 8

(1st Cir. 2006))).

           Further, the company did not withhold information about

the FDA's concerns once the FDA issued a Warning Letter.9          Abiomed

promptly disclosed receipt of the June 2011 Warning Letter and

stated repeatedly throughout the Class Period that the FDA "could

     9
          "Section 10(b) does not create an affirmative duty to
disclose." Genzyme Corp., 754 F.3d at 41. Thus, there is no per
se rule that a company immediately disclose receipt of any
correspondence with the FDA. See id. at 42 (holding that a company
need not immediately disclose a Form 483 issued by the FDA because
it was "merely observational in nature, and d[id] not represent the
FDA's final word").

                                   -31-
disagree [with Abiomed's position that its marketing was lawful]

and conclude that we have engaged in off-label promotion." Abiomed

did not promise a positive resolution of the matter; rather, it

acknowledged that "if similar matters come up in the future, we may

not    be      able   to   resolve   them   without   facing   significant

consequences."        These are not the actions of a company bent on

deceiving investors as to their future earnings prospects.10

               Under plaintiffs' theory of the case, Abiomed should have

affirmatively admitted widespread wrongdoing rather than stating

that the outcome of its regulatory back-and-forth with the FDA was

uncertain.       That would be a perverse result; such an admission

would have been misleading, since the off-label marketing issues

had the potential to be resolved with no adverse action from the

FDA.        We made a similar point in In re Boston Scientific Corp.

Securities Litigation, 686 F.3d 21 (1st Cir. 2012), where we noted

that "a company may behave 'irresponsibly' if it issues an ominous

warning about an uncertain risk that 'had not yet been adequately

investigated.'"        Id. at 31 (quoting N.J. Carpenters Pension &

Annuity Funds v. Biogen IDEC Inc., 537 F.3d 35, 58 (1st Cir.

       10
          This court reached a similar conclusion in the parallel
derivative action brought by Abiomed shareholders against Abiomed
and its directors. See Bryceland, 557 F. App'x at 5 (holding that
the shareholders' complaint did not "allege facts showing that the
directors hid from investors the trouble that th[e alleged off-
label] marketing had created; indeed, as the reproduced sections of
Abiomed's SEC filings make clear, the company was not shy in
disclosing its exposure to liability").

                                     -32-
2008)).        There must be some room for give and take between a

regulated entity and its regulator.11

               2.       Statements About Abiomed's Policy with Respect to
                        Off-Label Marketing and its Interaction with the
                        FDA

               Again, we assume arguendo that "Abiomed had an actual

policy    or    practice    of   off-label       marketing,      while     its   public

statements       were    that    its    policy    was    to    refrain     from    such

marketing," Simon, 2014 WL 1413638, at *17, and that defendants

stated that they were cooperating with the FDA when they were not

doing so.       But we conclude that plaintiffs have failed to allege

that defendants made these statements with the requisite scienter.

               First, there are Abiomed's substantial disclosures about

its correspondence with the FDA.                  As said, these disclosures

undercut any inference of scienter. Plaintiffs' brief glosses over

these disclosures in an effort to make the case for scienter more

compelling.         According to the brief, Abiomed said that it did not

engage in off-label marketing and that all of the FDA's concerns

"had been resolved." But this characterization is inaccurate, both

as to the complaint and as to what the actual statements were.                     The

complaint actually says that Abiomed stated its policy was to

"refrain       from   statements       that   could     be    considered    off-label

     11
          That the company did not disclose the receipt of the
Untitled Letter from the FDA is not proof of scienter. The FDA
gradates its levels of inquiry and does not itself make Untitled
Letters public.

                                         -33-
promotion," but that the FDA could disagree with Abiomed's view on

that question; and that while it "believe[d]" the issue had been

resolved, it could come up again in the future and could entail

"significant consequences." In resolving this appeal, we focus, as

did the district court, on the allegations of the complaint, not on

plaintiffs' characterization of those allegations.

             Other evidence supports Abiomed's argument that it was

not involved in a scheme to defraud investors but rather in finding

a solution amenable to the FDA while meeting its need to market its

products.     It was Abiomed which asked for meetings with the FDA.

And an agreement was reached.          The FDA in fact sent a close-out

letter in February 2013 saying that Abiomed's corrective actions

undertaken    in   response    to    the    June    2011   Warning     Letter   had

adequately    addressed   the    FDA's      concerns.      This   significantly

undercuts any inference that defendants purposefully or recklessly

misled investors about the extent of Abiomed's cooperation with the

FDA.

             Scienter is not established because there were statements

from confidential witnesses that Abiomed management was in fact

intentionally violating FDA regulations. These witnesses said that

Abiomed   senior    management       knew    that    Abiomed     was   improperly

marketing    the   Impella    2.5,    did    not    take   the   FDA's   warnings

                                      -34-
seriously, and "blew off" the concerns of lower-level employees.12

The   confidential   witnesses   are   not   described   with   sufficient

particularity for their statements to give rise to the requisite

"strong inference" of scienter on the part of Abiomed and its

management.   As the district court noted, none of the witnesses

"were in senior management positions, and they appear to have had

relatively little ongoing contact with senior management."          Simon,

2014 WL 1413638, at *14.    CW2, CW3, CW4, and CW6 did not even work

at Abiomed during the Class Period and so would not have had

firsthand knowledge of the state of mind of Abiomed's management

during that period.     And CW1, CW5, and CW7, who stated that the

training and marketing materials Abiomed provided were "improper"

under FDA regulations, did not identify the time period to which

most of their statements related. Cf. Biogen IDEC, 537 F.3d at 52-

      12
           That the witnesses were confidential did not disqualify
them.

           [W]here   plaintiffs   rely  on   confidential
           personal sources but also on other facts, they
           need not name their sources as long as the
           latter facts provide an adequate basis for
           believing that the defendants' statements were
           false.   Moreover, even if personal sources
           must be identified, there is no requirement
           that they be named, provided they are
           described in the complaint with sufficient
           particularity to support the probability that
           a person in the position occupied by the
           source would possess the information alleged.

Mesko v. Cabletron Sys., Inc. (In re Cabletron Sys., Inc.), 311
F.3d 11, 29 (1st Cir. 2002) (alteration in original) (quoting Novak
v. Kasaks, 216 F.3d 300, 314 (2d Cir. 2000)).

                                  -35-
53 (discounting probative value of observations by confidential

sources in part because the sources did not disclose when those

observations were made).   The CWs' statements are also undermined

by the fact that the FDA eventually closed out its investigation of

Abiomed without taking any action adverse to the company.

          More fundamentally, even if the CWs' statements plausibly

suggest that Abiomed was acting improperly, they do not show that

defendants' statements about company policy and the FDA's inquiries

were made with conscious intent to defraud or recklessly.    As we

said in Waters Corp., "[t]he key question . . . is not whether

defendants had knowledge of certain undisclosed facts, but rather

whether defendants knew or should have known that their failure to

disclose those facts 'present[ed] a danger of misleading buyers or

sellers.'" 632 F.3d at 758 (third alteration in original) (emphasis

added) (citation omitted) (quoting Greebel, 194 F.3d at 198).   For

example, CW7's statements, far from suggesting an intent to defraud

investors, suggest instead that Abiomed was aggressively marketing

the Impella 2.5 "every which way" in order to sell more units.13

          3.     Insider Trading Allegations

          The plaintiffs' allegations of insider trading do not

alter our conclusion as to lack of scienter.        "Depending on

     13
          At oral argument, plaintiffs' counsel disavowed any
reliance on the argument, based on an efficient market hypothesis,
that any statements regarding the Impella 2.5 aimed at potential
buyers of the device were also effectively aimed at investors in
Abiomed.

                               -36-
context, allegations of insider trading may offer some support for

inferences of scienter."     Waters Corp., 632 F.3d at 760.   "'The

vitality of the inference to be drawn depends on the facts, and can

range from marginal to strong.'" Id. (quoting Greebel, 194 F.3d at

197–98).   For stock sales by corporate officials to bolster an

inference of scienter, the trading must be, "[a]t a minimum, . . .

unusual, well beyond the normal patterns of trading by those

defendants."    Id. at 761 (quoting Greebel, 194 F.3d at 198)

(internal quotation marks omitted); accord Greebel, 194 F.3d at

206-07 (sales must be "out of the ordinary or suspicious").

           Here, the trading cited in the complaint was neither

unusual nor suspicious.    Minogue increased his holdings of Abiomed

stock by 9.2% during the Class Period, which negates any inference

that he had a motive to artificially inflate Abiomed's stock during

that period.   Cf. ACA Fin., 512 F.3d at 66-67 (declining to find a

strong inference of scienter in part because defendants would not

have been personally enriched by defrauding investors). Bowen made

his first sales of Abiomed stock (totaling 6.5% of his holdings)

between January 2010 and the end of the Class Period.     But those

sales are hardly suspicious given that he had just joined the

company in December 2008 and first became eligible to trade in

December 2009.14   Plaintiffs list the amounts of stock sales made

     14
          We need not address the parties arguments concerning
defendants' 10b5-1 trading plans because plaintiffs' arguments
concerning the purported insider trading fail even without

                                 -37-
by other senior executives during that period, but they do not

provide sufficient evidence about those trades to allow the court

to draw from them a strong inference of scienter. For example, the

complaint is silent as to the percentage of holdings sold or the

circumstances surrounding the trades.             It is also unclear whether

all of the cited executives would have had detailed knowledge about

Abiomed's marketing practices.           Cf. Waters Corp., 632 F.3d at 762

n.5 (finding that allegations regarding non-defendant insider sales

were not probative because the complaint listed "only bare facts

about the shares sold").

             4.         Conclusion

             Abiomed's promotional and marketing activities for its

core product might have been a risky course in terms of its

likelihood        of   prompting     sanctions    from      the    FDA.       Still,

"[a]llegations of corporate mismanagement are not actionable under

Rule 10b-5.       Nor are allegations of mere negligence."                Id. at 760

(citations omitted); see also Greebel, 194 F.3d at 188 (noting that

the mens rea required for securities fraud "does not include

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

intent"). As the district court correctly noted, "this case is not

about   whether        or   not   defendants     violated    the    FDCA     or   FDA

regulations.           It   concerns   alleged    violations       of     securities

considering those plans.

                                       -38-
law . . . ."   Simon, 2014 WL 1413638, at *14.        Plaintiffs' Rule

10b-5 claim fails.

                     IV.    Section 20(a) Claim

          Section 20(a) of the Securities Exchange Act imposes

joint and several liability on persons in control of entities that

violate securities laws.        15 U.S.C. § 78t(a).   A section 20(a)

claim is derivative of an underlying violation of the securities

laws.   ACA Fin., 512 F.3d at 67-68.       Because the district court

correctly dismissed plaintiffs' claims under Rule 10b-5, it also

correctly dismissed plaintiffs' section 20(a) claims.       See id.

                           V.   Leave To Amend

          On a hopeless quest, plaintiffs argue we should remand to

allow them amend the complaint.      No proper request was made to the

district court, only a mention in a footnote in their opposition to

dismissal. See Joblove v. Barr Labs, Inc. (In re Tamoxifen Citrate

Antitrust Litig.), 466 F.3d 187, 220 (2d Cir. 2006) ("It is within

the court's discretion to deny leave to amend implicitly by not

addressing the request when leave is requested informally in a

brief filed in opposition to a motion to dismiss."), abrogated on

other grounds by F.T.C. v. Actavis, Inc., 133 S. Ct. 2223 (2013);

Calderon v. Kan. Dep't of Soc. & Rehab. Servs., 181 F.3d 1180,

1185-87 (10th Cir. 1999) (noting with approval an earlier holding

that a district court need not grant leave to amend if plaintiffs

make a "bare request in their response to a motion to dismiss").

                                   -39-
           In any event, it is far too late; plaintiffs were put on

notice of the deficiencies in the complaint by the motion to

dismiss.   If they had something relevant to add, they should have

moved to add it then.    See ACA Fin., 512 F.3d at 57 (rejecting

plaintiffs' argument that the district court erred in denying them

leave to amend because "[p]laintiffs took no action to add new

allegations" in response to defendants' motion to dismiss "even

though they knew what they would add if they amended," and noting

that   allowing   such   a     practice    would   "lead   to    delays,

inefficiencies, and wasted work"). And even now there is no

suggestion that amendment would be anything other than futile.

See, e.g., HSBC Realty Credit Corp. (USA) v. O'Neill, 745 F.3d 564,

578 (1st Cir. 2014); Braunstein v. McCabe, 571 F.3d 108, 127 (1st

Cir. 2009); Universal Commc'n Sys., Inc. v. Lycos, Inc., 478 F.3d
413, 418 (1st Cir. 2007).     We wish to discourage this practice of

seeking leave to amend after the case has been dismissed.

                             VI.   Conclusion

           We affirm the judgment of the district court.        Costs are

awarded to Abiomed.

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