          United States Court of Appeals
                        For the First Circuit

No. 16-2057

                       TERRY BRENNAN; RON KENNER;
                  KEVIN KOZIATEK; JEFFREY BUTERBAUGH;
              DRAGON GATE MANAGEMENT, LTD; VINCENT RAMPE,

                        Plaintiffs, Appellants,

     AVIAD BESSLER, individually and on behalf of all others
              similarly situated; THEODORE J. DALY,

                              Plaintiffs,

                                  v.

                    ZAFGEN, INC.; THOMAS E. HUGHES,

                        Defendants, Appellees.


           APPEAL FROM THE UNITED STATES DISTRICT COURT
                 FOR THE DISTRICT OF MASSACHUSETTS
         [Hon. F. Dennis Saylor, IV, U.S. District Judge]


                                Before

                        Kayatta, Circuit Judge,
                      Souter, Associate Justice,*
                       and Stahl, Circuit Judge.


     Jeffrey C. Block, with whom Joel A. Fleming, Block & Leviton
LLP, Jacob A. Goldberg, Gonen Haklay, and The Rosen Law Firm, P.A.
were on brief, for appellants.
     Deborah S. Birnbach, with whom Kevin P. Martin, Adam Slutsky,
Kate MacLeman, Joshua Bone, and Goodwin Procter LLP were on brief,
for appellees.

     * Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
April 7, 2017
           STAHL, Circuit Judge.   Following a significant drop in

the share price of Zafgen, Inc., a biopharmaceutical developer

based in Boston, Massachusetts, its investors brought a securities

fraud class action suit against the company and its Chief Executive

Officer,   Dr.   Thomas   Hughes   ("defendants"),    pursuant   to

Sections 10(b) and 20(a) of the Securities Exchange Act of 1934,

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

Commission Rule 10b-5, 17 C.F.R. § 240.10b-5.        The investors'

complaint1 focuses on several allegedly misleading statements made

by the defendants regarding Zafgen's anti-obesity drug Beloranib.

Specifically, the complaint alleges that the defendants disclosed

some, but not all, of the thrombosis-related adverse events that

occurred during Beloranib's clinical trials.   The investors claim

that these partial disclosures caused Zafgen's common stock to

trade at artificially-inflated prices -- prices that plunged after

a clinical patient taking Beloranib died and the Food and Drug

Administration ("FDA") placed the drug on a partial clinical hold.

           Despite these allegations, the district court granted

the defendants' motion to dismiss, concluding that the investors'

complaint did not contain facts giving rise to a "cogent and

compelling" inference of scienter as required under the Private


     1 The investors filed their original complaint on October 21,
2015, and amended that complaint on February 22, 2016. For the
sake of clarity, we refer to this amended complaint as the
"complaint" throughout this opinion.


                              - 3 -
Securities Litigation Reform Act of 1995 ("PSLRA").                        Brennan v.

Zafgen, Inc., 199 F. Supp. 3d 444, 471 (D. Mass. 2016) (quoting

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

(2007)).    We agree, and therefore affirm.

                                          I.

            We   recite      the   facts    as     alleged    in    the    complaint,

supplemented by certain "materials [the] defendants filed in the

district court in support of their motion to dismiss."                         Fire &

Police Pension Ass'n of Colo. v. Abiomed, Inc., 778 F.3d 228, 232

(1st Cir. 2015); see also Watterson v. Page, 987 F.2d 1, 3 (1st

Cir. 1993) (noting that courts, when ruling on a motion to dismiss

in   securities      fraud     cases,      often     consider      "documents         the

authenticity of which are not disputed by the parties," along with

"official public records; . . . documents central to plaintiffs'

claim[s];    [and]     documents        sufficiently       referred       to   in    the

complaint").

            Zafgen's stated goal is "to significantly improv[e] the

health and well-being of patients affected by obesity and complex

metabolic disorders."        To that end, Zafgen has focused its efforts

on   developing      Beloranib,     a     drug     aimed     at    combating        these

conditions.2     Hughes, as Zafgen's Chief Executive Officer, oversaw



     2 At all relevant times, Zafgen was a "one-drug company,"
meaning that Beloranib was Zafgen's only product candidate in
clinical development.


                                        - 4 -
Beloranib's clinical testing.            While doing so, Hughes also steered

Zafgen towards its initial public offering ("IPO"), which the

company completed on June 19, 2014.              The current dispute arises

from the intersection of these two strategic endeavors.

                 A.    Beloranib and the FDA Approval Process

                 As part of the development process, the FDA requires

that any new drug "go through a series of clinical trials before

it can be approved for marketing and sales in the United States."

N.J. Carpenters Pension & Annuity Funds v. Biogen IDEC Inc., 537

F.3d       35,    39   (1st   Cir.   2008)   (citation   omitted).   After   a

pharmaceutical developer finishes its initial testing of a drug on

animals, it must then "submit[] an application to the FDA for

approval to test the drug on humans."               Id.; see also 21 C.F.R.

§ 312.20.         If the FDA approves that request, human testing begins.

Typically, such testing consists of three phases of clinical

trials.3         Biogen IDEC, 537 F.3d at 39; see also 21 C.F.R. § 312.21.


       3
       Our decision in Biogen IDEC ably summarized the objectives
of these three phases:
                 Phase I studies generally involve twenty to
                 eighty subjects, and are designed to determine
                 how the drug works in humans and the side
                 effects associated with increasing doses.
                 Phase II studies usually involve no more than
                 several hundred subjects, and are designed to
                 evaluate the effectiveness of the drug, as
                 well as common short-term side effects and
                 risks.    Phase III studies are large-scale
                 trials, usually involving several hundred to
                 several thousand subjects, and are intended to
                 gather the information necessary to provide an


                                        - 5 -
Each phase "requires the company to test the drug on a broader

population      and      results   in    more     stringent   monitoring     and

evaluation."      Biogen IDEC, 537 F.3d at 39.           Throughout the course

of these trials, "the drug company must report to the FDA and to

all participating physicians any serious and unexpected adverse

drug       experiences     that    occur."         Id.   (citing    21   C.F.R.

§ 312.32(c)(1)(i)(A)).

              At the time the investors first brought this suit, Zafgen

had conducted three Phase I trials, four Phase II trials, and one

Phase III trial.         The investors' complaint, however, concentrates

on Zafgen's ZAF-201 trial, a Phase II trial that consisted of 160

patients and lasted from August 2012 to May 2013.              From this group

of 160 patients, Zafgen treated 122 of them with Beloranib.                  As

the ZAF-201 trial progressed, four of the patients given Beloranib

suffered      adverse     "thrombotic,"      or   blood-clotting,   events   of

varying severity.         Third-party clinical investigators classified

two of these adverse events as "superficial" and the other two as

"serious."4      Zafgen disclosed the two serious adverse events in


              adequate basis for labeling the drug. . . .
              After Phase III, the FDA considers the results
              of all the clinical trials in determining
              whether to approve a drug for market.
Id. (internal citations omitted).
       4
       An adverse event is "serious" if "it results in . . .
[d]eath,    a   life-threatening    adverse   event,    inpatient
hospitalization or prolongation of existing hospitalization, a
persistent or significant incapacity or substantial disruption of


                                        - 6 -
advance of its IPO, noting their occurrence in its April 18, 2014

Form S-1 Registration Statement.      The company did not, however,

directly disclose the two superficial adverse events at that time.

          B.   Zafgen's Stock Price Declines

          Zafgen's share price began to decline in October 2015.

On October 12th, Zafgen's share price closed at $34.76.      By the

close of trading the next day, Zafgen's share price had dropped to

$15.75.   On October 14th, Zafgen announced that a patient in its

ongoing Phase III trial had died, and confirmed on October 16th

that the patient had been treated with Beloranib, not a placebo,

and that the FDA had placed Beloranib on a partial clinical hold.

During a conference call held that same day, Dr. Dennis Kim,

Zafgen's Chief Medical Officer, likewise informed analysts that a

total of six adverse thrombotic events had occurred throughout the

course of Beloranib's clinical testing: two in the company's

ongoing clinical trials and four in the completed ZAF-201 trial.

Dr. Kim's comments marked the first time that Zafgen or any of its

representatives had informed its investors of the two superficial

adverse thrombotic events that had occurred in the ZAF-201 trial.

By the close of trading on October 16th, Zafgen's share price




the ability to conduct normal life functions, or a congenital
anomaly/birth defect," or where it "may require medical or surgical
intervention to prevent one of [these] outcomes."        21 C.F.R.
§ 312.32(a).


                              - 7 -
plummeted to $10.36 per share, a nearly 51% decline from the

previous day's closing price.

            C.   Zafgen's Disclosures

            Based on these events, the investors brought a class

action suit against Zafgen and Hughes.            The complaint asserted

claims on behalf of a putative class consisting of all persons who

purchased   or   otherwise   acquired    Zafgen   common   stock   between

June 19, 2014, the date of Zafgen's IPO, and October 16, 2015, the

date the company announced the FDA's partial clinical hold.            In

the complaint, the investors claimed that the defendants made false

or misleading statements concerning the results of the ZAF-201

trial, to wit:

           As severely obese patients are at an increased
            risk for cardiovascular disease, we measured
            systemic biomarkers of cardiovascular disease
            risk, including low density lipoprotein
            cholesterol, HDL, CRP, triglycerides and blood
            pressure in trial participants, to determine
            [B]eloranib's impact on such biomarkers. The
            results of these biomarker measurements in
            this trial, as summarized below, suggest that
            [B]eloranib treatment does not increase the
            risk of cardiovascular disease and may be
            associated    with   reduced    cardiovascular
            disease risk.

           There were no deaths or any SAEs ["serious
            adverse events"] deemed to be possibly,
            probably,    or    definitely    related    to
            [B]eloranib, although there were two serious
            thrombotic adverse events which, while not
            attributed to [B]eloranib treatment, may point
            to the utility of assessment of prior history
            of thrombotic events in patients enrolled in
            subsequent trials and added vigilance for AEs


                                 - 8 -
             related to blood clotting during future
             clinical trials. The most commonly reported
             TEAEs ["treatment-emergent adverse events"]
             were   gastrointestinal   disorders,    mainly
             nausea, diarrhea, or vomiting, nervous system
             disorders, mainly dizziness, and psychiatric
             disorders, mainly insomnia, sleep disorder, or
             abnormal dreams. TEAEs were generally mild in
             severity and transient. Other frequently
             reported TEAEs were headaches and injection
             site    bruising/itching,     although     the
             incidences were comparable to placebo and not
             observed to be dose-related.

             The investors alleged that Zafgen made these statements

(and others that used substantially similar language) in ten

different     documents,        all   of    which     Hughes     signed.      These

disclosures, the investors maintained, were materially misleading

because "the FDA considers the frequency/rate of adverse events in

determining whether a drug is causing those adverse events,"

meaning   that      the   defendants       should    have   disclosed      even   the

superficial adverse thrombotic events.                 Similarly, the investors

alleged that "[a]t all times during the Class Period, [d]efendants

knew -- or were reckless in not knowing -- that there was a

significant risk of thrombotic adverse events in future clinical

trials of [B]eloranib."

             In     response     to   the     investors'       allegations,       the

defendants emphasize several other statements made by Zafgen in

its Form S-1 and its subsequent SEC filings, claiming that these

additional        disclosures    belie     the      investors'    accusations     of

fraudulent intent:


                                       - 9 -
             SAEs that are not characterized by clinical
              investigators    as   possibly    related   to
              [B]eloranib or SAEs that occur in small
              numbers may not be disclosed to the public
              until   such   time  the   various   documents
              submitted to the FDA as part of the approval
              process are made public.     We are unable to
              determine if the subsequent disclosure of SAEs
              will have an adverse effect on our stock
              price.

             Many companies in the pharmaceutical and
              biotechnology    industries    have   suffered
              significant setbacks in late stage clinical
              trials after achieving positive results in
              early-stage development, and we cannot be
              certain that we will not face similar
              setbacks. These setbacks have been caused by,
              among other things, pre-clinical findings made
              while clinical trials were underway or safety
              or efficacy observations made in clinical
              trials,   including    previously   unreported
              adverse events.

              D.   The District Court's Dismissal of the Complaint

              On August 9, 2016, the district court granted Zafgen and

Hughes's motion to dismiss on the ground that the investors had

failed   to    adequately   plead   scienter.5     With   respect   to   the

investors' Section 10(b) claim, the district court determined that

the complaint's allegations were only marginally material, thus

weakening any inference of scienter.         The district court then also




     5The district court found that the only materially misleading
statements alleged in the complaint concerned the defendants'
failure to disclose the non-serious adverse thrombotic events.
Neither the investors nor the defendants dispute this feature of
the district court's ruling.


                                    - 10 -
dismissed the investors' Section 20(a) claim against Hughes.                      This

appeal followed.

                                            II.

              The investors argue that the district court improperly

heightened        the    PSLRA's     pleading     requirements,     applied      these

heightened requirements to its complaint, and then mistakenly

dismissed both their claims for failing to plead facts giving rise

to a "strong inference" of scienter. We review whether a complaint

meets the PSLRA's pleading requirements de novo, accepting all

well-pled factual allegations as true and making all reasonable

inferences in a plaintiff's favor.                  See Miss. Pub. Emps.' Ret.

Sys. v. Bos. Sci. Corp., 523 F.3d 75, 85 (1st Cir. 2008).                        Even

through this lens, we agree with the district court that the facts

alleged      in    the    investors'    complaint     do   not    give   rise    to   a

sufficiently strong inference of scienter.

              A.        Section 10(b) and Rule 10b-5

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

the 'use or employ, in connection with the purchase or sale of any

security . . . , [of] any manipulative or deceptive device.'"

Tellabs, Inc., 551 U.S. at 318 (alterations in original) (quoting

15 U.S.C. § 78j(b)).               Pursuant to this statute, SEC Rule 10b-5

makes   it    unlawful       to,    among   other   things,      "make   any    untrue

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

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


                                        - 11 -
the circumstances under which they were made, not misleading."                17

C.F.R. § 240.10b-5(b).        Therefore, to state a claim for securities

fraud under Section 10(b) and Rule 10b-5, "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."      In re Genzyme Corp. Sec. Litig., 754 F.3d 31, 40 (1st

Cir. 2014).

            B.     Scienter and the PSLRA

            Scienter encompasses a "mental state embracing [an]

intent to deceive, manipulate, or defraud."                  Ernst & Ernst v.

Hochfelder, 425 U.S. 185, 193 n.12 (1976).           At the pleading stage,

the PSLRA requires plaintiffs to "state with particularity facts

giving rise to a strong inference that the defendant acted with"

scienter.      15 U.S.C. § 78u-4(b)(2)(A); see also ACA Fin. Guar.

Corp. v. Advest, Inc., 512 F.3d 46, 58 (1st Cir. 2008) (describing

the PSLRA's pleading standard for scienter as "rigorous").                 In the

current setting, scienter encompasses both a "conscious intent to

defraud" and, alternatively, a "high degree of recklessness."                ACA

Fin. Guar. Corp., 512 F.3d at 58 (quoting Aldridge v. A.T. Cross

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

recklessness      involves    "a   highly    unreasonable      omission"    that

involves "not merely simple, or even inexcusable, negligence, but

an extreme departure from the standards of ordinary care, and which


                                    - 12 -
presents a danger of misleading buyers and sellers that is either

known to the defendant or is so obvious that the actor must have

been aware of it."      Greebel v. FTP Software, Inc., 194 F.3d 185,

198 (1st Cir. 1999) (quoting Sundstrand Corp. v. Sun Chem. Corp.,

553 F.2d 1033, 1045 (7th Cir. 1977)).6

           Meanwhile, "[t]o qualify as 'strong' . . . an inference

of scienter must be more than merely plausible or reasonable -- it

must be cogent and at least as compelling as any opposing inference

of   nonfraudulent    intent."         Tellabs,   551   U.S.   at   314.   When

evaluating   a    complaint      for     compliance     with   this   demanding

standard, a court "must consider the complaint in its entirety

. . . [Courts must ask] whether all the facts alleged, taken

collectively, give rise to a strong inference of scienter, not

whether any individual allegation, scrutinized in isolation, meets

that standard."      Id. at 322-23.      To that effect, we have found the

standard met where a complaint "contains clear allegations of

admissions, internal records or witnessed discussions suggesting

that at the time they made the statements claimed to be misleading,

the defendant[s] were aware that they were withholding vital

information or at least were warned by others that this was so."


      6 "Even   if   plaintiffs  wish   to   prove    scienter   by
'recklessness,'   they   still  must   allege,   with    sufficient
particularity, that defendants had full knowledge of the dangers
of their course of action and chose not to disclose those dangers
to investors."   Maldonado v. Dominguez, 137 F.3d 1, 9 n.4 (1st
Cir. 1998).


                                       - 13 -
In re Bos. Sci. Corp. Sec. Litig., 686 F.3d 21, 31 (1st Cir. 2012).

Likewise, a plaintiff "may combine various [other] facts and

circumstances      indicating   fraudulent     intent,"    including    those

demonstrating "motive and opportunity," to satisfy the scienter

requirement.      Aldridge, 284 F.3d at 82.

             Here, the investors maintain that they met the PSLRA's

requirements for pleading scienter.           They hinge this argument on

their allegations that the defendants (1) knew, or were reckless

in not knowing, about news and scientific articles that purportedly

established a "link" between Beloranib and the occurrence of

thrombotic    adverse   events;   and   (2)    had   a    motive   to   commit

securities fraud, as shown by Zafgen's compensation structure and

the "heavy" insider sales that occurred before the patient death.

We find these arguments unpersuasive, and therefore hold that the

complaint's allegations, viewed holistically, do not support a

strong inference of scienter under either a conscious intent or

recklessness theory.

             1.    News and Scientific Articles

             To start, the investors' reliance on news and scientific

articles analyzing the effects of angiogenesis inhibitors, the

class of drug to which Beloranib belongs, is misplaced.             "The key

question in this case is not whether defendants had knowledge of

certain undisclosed facts, but rather whether the defendants knew

or should have known that their failure to disclose those facts"


                                  - 14 -
risked misleading investors.    City of Dearborn Heights Act 345

Police & Fire Ret. Sys. v. Waters Corp., 632 F.3d 751, 758 (1st

Cir. 2012) (internal citation omitted).   Here, though the articles

may suggest that the defendants had an awareness of some connection

between Beloranib and thrombotic events, they do not show that the

defendants deliberately or recklessly risked misleading investors

by not disclosing the two superficial adverse thrombotic events

from the ZAF-201 study until October 16, 2015.    See In re NVIDIA

Corp. Sec. Litig., 768 F.3d 1046, 1060 (9th Cir. 2014) (noting

that the articles cited by the plaintiffs did not contribute to a

strong inference of scienter, in part because they "d[id] not

reflect [the defendants'] knowledge" at the time of the alleged

misstatements).

           For example, two of the cited articles simply analyze

the general effects of angiogenesis inhibitors.        Three other

articles, meanwhile, examine clinical trials conducted for drugs

other than Beloranib which were used to treat cancer, not severe

obesity.    Moreover, developers often administered these other

drugs at significantly higher dosage levels compared to those

dispensed in the ZAF-201 study.7 Of those articles that did discuss

Beloranib, several suggested that lower doses of the drug reduced



     7 For instance, doses in the cancer trials often exceeded
50 mg of angiogenesis inhibitors, while Beloranib doses in the
2012-2013 ZAF-201 clinical trial, ranged from 0.6 mg to 2.4 mg.


                               - 15 -
the risk of potential thrombotic-related side effects in patients

being treated for obesity-related ailments.

             Taken together, the articles do not add much support for

the complaint's allegation that the defendants knew, or were

reckless in not knowing, that they risked misleading investors

unless    they   disclosed   the   two    superficial    adverse   thrombotic

events.      See In re Ariad Pharm., Inc. Sec. Litig., 842 F.3d 744,

751   (1st    Cir.   2016)   (noting     that   "[a]   statement   cannot   be

intentionally misleading if the defendant did not have sufficient

information at the relevant time to form an evaluation that there

was a need to disclose certain information and to form an intent

not to disclose it" (alteration in original) (quoting Biogen IDEC,

537 F.3d at 45)).      This conclusion is especially warranted where,

as here, the complaint contains no specific facts about any

"warnings by subordinates or expressions of concern by executives"

regarding the propriety of allegedly deceptive disclosures.                 See

Auto Indus. Pension Tr. Fund v. Textron Inc., 682 F.3d 34, 39 (1st

Cir. 2012).8


      8This is not to say that a plaintiff in a securities case
governed by the PSLRA must plead the existence of direct evidence
of scienter to avoid dismissal. As the investors point out, an
investor's access to such information prior to discovery will often
be limited at best. Nonetheless, it stands to reason that where
a complaint is devoid of any direct-evidence allegations, the
indirect-evidence allegations in the complaint will need to do
more work to carry the burden of raising a "strong inference of
scienter" on their own. See Local No. 8 IBEW Ret. Plan & Tr. v.
Vertex Pharm., Inc., 838 F.3d 76, 83 n.9 (1st Cir. 2016)


                                   - 16 -
              2.     Motive and Insider Trading Allegations

              The     complaint's    motive        allegations     are    similarly

deficient.         First, the investors focus on Zafgen's compensation

structure, namely that "a significant portion of [its] executives'

annual compensation consists of 'Option Awards' and 'Non-Equity

Incentive      Plan    Compensation'        (i.e.,     'performance-based      cash

bonuses')."         They allege that this structure resulted in Zafgen

insiders, armed with undisclosed information regarding the ZAF-

201 study results, selling substantial amounts of company shares

in September 2015. Hughes, for instance, sold 22,500 of his Zafgen

shares   on    September      17,   2015,    and     another   23,126    shares    on

September     18,     2015,   generating     approximately       $1.8    million   in

personal proceeds.

              Of course, even "weak[]" insider trading allegations

provide "some support against the defendants' motion to dismiss."

Miss. Pub. Emps.' Ret. Sys., 523 F.3d at 92 (quoting Shaw v. Dig.

Equip. Corp., 82 F.3d 1194, 1224 (1st Cir. 1996)).                  Still, "[t]he

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

can range from marginal to strong."                Greebel, 194 F.3d at 197-98

(internal citations omitted).          Here, the district court found that


(acknowledging that "prior to discovery, few plaintiffs will be in
a position to make specific allegations about the form of internal
documents" or discussions, but also noting that Congress has
nonetheless "deliberately raised the entry bar to discovery . . .
through the PSLRA's heightened pleading standards" (alteration in
original) (quoting Textron, 682 F.3d at 40)).


                                      - 17 -
the insider trading alleged in the complaint was insubstantial.

On appeal, the investors do not challenge the district court's

finding to that effect, instead arguing that the district court

erroneously drew a negative inference against scienter based on

the weakness of their allegations.       Not so.    Rather, the district

court observed that the insider trading allegations in this case

"are relatively weak" and therefore found that the allegations

"d[id] not alter the conclusion that the complaint as a whole fails

to raise a strong inference of scienter."          Brennan, 199 F. Supp.

3d at 468.

             In any event, we agree with the district court that the

strength of the insider trading allegations drifts toward the

marginal end of that spectrum because Hughes and all other Zafgen

insiders kept the vast majority of their Zafgen holdings.          After

accounting for Hughes's vested options, he retained at least 93%

of his Zafgen holdings even after the September 2015 sales, and

every other insider identified in the complaint retained at least

85%.   See Waters Corp., 632 F.3d at 760-61 ("In calculating the

percent of holdings sold, . . . it is appropriate to consider not

only the shares of stock that [the defendants] held prior to their

sales, but also the shares that they could have sold through the

exercise of options . . . .").    Moreover, all of the insider sales

happened before the patient death that occurred during Zafgen's

Phase III testing.    As the district court noted:


                                - 18 -
            During the October 16 conference call, which
            occurred almost a month after the final
            insider sale on September 18, Hughes stated
            that Zafgen disclosed the patient death to the
            FDA approximately two weeks earlier, and "well
            within" the one week requirement from the
            death to the FDA disclosure.       Thus, even
            liberally    construed,     the    complaint's
            allegations support an inference that the
            patient death occurred at least a week after
            the final insider sale.

Brennan, 199 F. Supp. 3d at 469.              Therefore, neither the timing

nor   the   amount   of   insider     sales    is    particularly    unusual   or

suspicious.9

            Second, the complaint asserts that Zafgen was a one-drug

company, meaning Zafgen and Hughes had a motive to "shade the

truth" since all of the company's hopes, and a significant portion

of Hughes's compensation, hinged on Beloranib's success.               However,

such "catch-all allegations," which merely assert the existence of

a motive and an opportunity to engage in fraudulent behavior, do

not satisfy the PSLRA "without something more."                In re Cabletron

Sys., Inc., 311 F.3d 11, 39 (1st Cir. 2002) (quoting Greebel, 194

F.3d at 197); see also Aldridge, 284 F.3d at 83 (noting that

generalized financial incentive allegations are relevant to the

scienter    analysis      only   if   they     "go    far   beyond   the   usual

arrangements of compensation based on the company's earnings").


      9We decline to address the parties' arguments concerning the
defendants' 10b5-1 trading plans, see 17 C.F.R. § 240.10b5-1(c),
because the investors' allegations regarding the purported insider
trading are insufficient even without considering those plans.


                                      - 19 -
Here,   the     complaint   only   identifies   "the   usual    concern   by

executives to improve financial results."        Cabletron, 311 F.3d at

39.   Given that we must take into account the opposing inferences

stemming from a complaint's allegations, we find it difficult to

infer   fraudulent        intent   simply   because     the     defendants'

compensation structure rewards the achievement of corporate goals.

See In re Rigel Pharm., Inc. Sec. Litig., 697 F.3d 869, 884 (9th

Cir. 2012) (noting that "it is common for executive compensation

. . . to be based partly on the executive's success in achieving

key corporate goals" and that it would be improper to "conclude

that there is fraudulent intent merely because a defendant's

compensation was based in part on such successes").            Consequently,

we assign these allegations little weight in the scienter calculus.

              3.    Other Considerations

              Several other considerations also bolster our conclusion

that the complaint's allegations do not give rise to a sufficiently

strong inference of scienter.        To start, the marginal materiality

of the two superficial adverse thrombotic events undermines such

a finding.         As we have previously noted, "the materiality and

scienter inquiries are linked," Abiomed, 778 F.3d at 240, since

"the marginal materiality of an omitted fact 'tends to undercut

the argument that the defendants acted with the requisite intent

. . . in not disclosing' it," Ariad, 842 F.3d at 750 (citing

Abiomed, 778 F.3d at 242).         Thus, we must consider whether there


                                   - 20 -
is "a substantial likelihood that" a reasonable investor would

have    viewed     the    disclosure     of     the   two    superficial      adverse

thrombotic events "as having significantly altered the total mix

of information made available."            Basic Inc. v. Levinson, 485 U.S.

224, 231-32 (1988).

            The      investors'        arguments        to    this    effect        are

unconvincing.        "Adverse event reports are daily events in the

pharmaceutical       industry."           Matrixx       Initiatives,         Inc.   v.

Siracusano, 563 U.S. 27, 43 (2011).              To be sure, these reports may

be     material    even    if   they    "d[o]     not      provide   statistically

significant evidence of a causal link."                 Id. at 44.    Nonetheless,

it remains unlikely that a reasonable investor in this case would

have viewed the two superficial adverse thrombotic events, at the

time     they     occurred,     as     having     significantly       altered       the

information available to them.            Zafgen forthrightly disclosed the

two serious adverse thrombotic events to investors, and third-

party    investigators      never    linked     any   of     the   adverse    events,

including the serious ones, to Beloranib.                Indeed, the superficial

adverse thrombotic events took on the bulk of their significance

only after the patient death.            See ACA Fin. Guar. Corp., 512 F.3d

at 62 ("A plaintiff may not plead 'fraud by hindsight'; i.e., a

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

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

securities fraud." (quoting Shaw, 82 F.3d at 1223)).


                                       - 21 -
            In response, the investors claim that because the FDA

looks to the overall frequency of adverse thrombotic events when

evaluating a drug's safety, all adverse thrombotic events must be

material.    This argument, however, ignores the Supreme Court's

observation that "the mere existence of reports of adverse events

-- which says nothing in and of itself about whether the drug is

causing the adverse events -- will not satisfy" the materiality

standard.     Matrixx   Initiatives,       563   U.S.   at   44.     Instead,

"[s]omething more is needed."       Id.      In this case, neither "the

source, content, [nor] context of the reports" provides that

"[s]omething more."     Id.   Although a pharmaceutical developer must

report all adverse events when filing a New Drug Application with

the FDA, it need not disclose every superficial adverse event until

it reaches that stage of clinical development.               See 21 C.F.R. §

312.33(b)(1) (stating that developers, in their annual reports to

the FDA, must disclose summary information "showing the most

frequent and the most serious" adverse events observed during that

year's clinical and nonclinical drug investigations).              Thus, even

the accuracy of the investors' core assumption, that the FDA cared

about the superficial adverse thrombotic events at the time they

occurred, seems doubtful, further diminishing the materiality of

these events to reasonable investors.            See Bos. Sci. Corp., 686

F.3d at 31 (stating that "marginal materiality not only defeats

any independent inference of deliberate withholding but also makes


                                  - 22 -
the pled facts insufficient for a fact finder to find the 'extreme

recklessness in not disclosing the fact' that is the least that is

required to establish scienter" (quoting Waters Corp., 632 F.3d at

757)).

            We also note that Zafgen's own disclosures both before

and   during   the   class   period   weaken   the   complaint's    scienter

showing.    The defendants disclosed to investors the two serious

adverse thrombotic events, and noted on several occasions that the

company was not going to disclose all the adverse events as they

occurred.       Although     "[f]ragmentary    information    may    be   as

misleading . . . as active misrepresentation," V.S.H. Realty, Inc.

v. Texaco, Inc., 757 F.2d 411, 414-15 (1st Cir. 1985) (alteration

in original) (citation omitted), the 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 about Beloranib's clinical trials.

            The investors respond by pointing to literature from the

Centers for Disease Control and Prevention ("CDC") that they claim

suggests that it is merely "fortuitous" for a blood clot to be

non-serious.     According to the investors, this report, coupled

with the defendants' statement acknowledging the possible "utility

of assessment of prior history of thrombotic events . . . and added

vigilance for [adverse events] related to blood clotting during

future clinical trials," shows that their decision to not disclose


                                  - 23 -
the two non-serious thrombotic events was made intentionally or

recklessly.     However, while the CDC's language cited in the

complaint suggests that it may be true that "[h]ow a clot affects

the body depends on the type and location of the clot," it does

not mean that good fortune is all that separates a superficial

thrombotic adverse event from a more serious one.              Instead, the

FDA's regulations, which do not require the disclosure of all

thrombotic events, see 21 C.F.R. 312.33(b)(1), and the defendants'

own disclosures, which informed investors of the most serious

adverse events and warned investors that Zafgen would not disclose

all adverse events as they occurred, undercut the investors'

efforts to make this showing.

          In short, although the investors maintain that Zafgen's

statements prove the company acknowledged that even superficial

adverse events were important to investors, the totality of the

company's disclosures produces a compelling counter-inference that

the company wished to "provide investors with warnings of risks,"

actions which "generally weaken the inference of scienter." Waters

Corp., 632 F.3d at 760 (quoting Ezra Charitable Tr. v. Tyco Int'l,

Ltd., 466 F.3d 1, 8 (1st Cir. 2006)).                Thus, the defendants'

disclosures    both   before   and    during   the   class   period   further

"undercut any inference of fraudulent intent on the part of

defendants."    Genzyme Corp., 754 F.3d at 42.




                                     - 24 -
                                 III.

             The investors concede that their Section 20(a) claim

against Hughes is derivative of their Section 10(b) and Rule 10b-5

claim.   Because we hold that the complaint, considered as a whole,

does   not   present   allegations   giving   rise   to   a   "cogent   and

compelling" inference of scienter, Tellabs, 551 U.S. at 324, we

conclude that the district court properly dismissed both claims.

Therefore, the judgment of the district court is affirmed.




                                - 25 -
