- within Insurance, Real Estate and Construction and Consumer Protection topic(s)
On October 30, 2025, Chief Judge Richard Seeborg of the United States District Court of the Northern District of California granted a motion to dismiss a putative securities class action alleging a biopharmaceutical company (the "Company") and its officers ("Individual Defendants" and, collectively, "Defendants") violated Sections 11 and 15 of the Securities Act of 1933 (the "Securities Act"). Soto v. BioAge Labs, Inc., et al., No. 25-cv-00196-RS (N.D. Cal. Oct. 30, 2025). Plaintiffs alleged that Defendants misled investors by omitting from risk disclosures an allegedly "inevitable" side-effect of the Company's leading drug candidate. The Court dismissed the claims, finding (1) Defendants did not have any obligation under Section 11 to make the allegedly absent disclosure and (2) plaintiffs failed to plausibly allege the side-effect was inevitable.
The Company holds an exclusive license to research, develop, and commercialize a weight-loss drug that is its leading product. Roughly two months before the Company's initial public offering ("IPO"), it began a Phase 2 clinical trial on that drug. At the time of the IPO, the Company warned in its offering documents that "unexpected" or "atypical adverse events or side-effects" discovered during the ongoing trial could pose a risk to the Company and the drug's developmental efforts. Approximately nine weeks after the IPO, the Company announced that some Phase 2 trial patients allegedly developed transaminitis (or elevated liver enzyme levels), prompting the Company to discontinue the trial and abandon the drug's development. Plaintiffs alleged that transaminitis was a "typical" and "virtually certain" side-effect given the trial's design and the drug's properties and that Defendants' failure to disclose this information caused their investments in the Company to suffer.
The Court first held that, because the Company did not speak in its offering documents about transaminitis—or otherwise minimize a specific, known risk of the condition—Plaintiffs could not identify any statement rendered misleading by that alleged omission as required to state a Section 11 claim. The Court also rejected plaintiffs' implication theory—that by disclosing possible "atypical" side-effects, the Company suggested no "typical" side effects posed a risk—as incompatible with In re Rigel Pharms., Inc., 687 F.3d 869 (9th Cir. 2012), which forecloses the notion an issuer must "disclose everything on a certain topic once [the issuer] disclose[s] anything on that topic" to avoid Section 11 liability.
Separately, the Court held plaintiffs did not plead facts supporting a reasonable inference that transaminitis was "inevitable." The Court found that the data from a pre-clinical animal study and the Phase 1 trial did not show transaminitis was likely, let alone "inevitable." As to plaintiffs' Phase 2 design-flaw allegations—such as that the Company enrolled participants who might have had elevated liver enzymes due to environmental and life-style factors—the Court found it could infer at most a possibility, not a near certainty, transaminitis would emerge to derail the trial.
Concluding that the Section 11 claim failed, the Court did not address the Section 15 claim, but granted Plaintiffs leave to amend their complaint.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
