A recent ruling from the U.S. District Court for the District of Massachusetts in the case of Shih v. Amylyx Pharmaceuticals, Inc.[i]  is a significant victory for investors, offering a powerful reminder that the Private Securities Litigation Reform Act’s (PSLRA) "safe harbor" for forward-looking statements is not a license to mislead. The decision illustrates that the safe harbor is not a blank check for projections, that context is king when presenting data, and that failing to disclose material, negative facts can render optimistic growth statements misleading.

     On September 30, 2025, the Court denied Defendant Amylyx Pharmaceuticals’s motion to dismiss, allowing the class action lawsuit to proceed to the discovery phase. The plaintiffs’ allegations of fraud center on Relyvrio, a drug developed by Amylyx for the treatment of amyotrophic lateral sclerosis (ALS), also known as “Lou Gerhig’s Disease.” The complaint alleges that, following Relyvrio’s commercial launch in late 2022, Amylyx and its top executives projected strong market performance and growth potential for the drug while omitting critical information that undercut those projections, causing the company's stock to trade at artificially inflated prices. When the company finally revealed the high rate of patient discontinuations on November 9, 2023, its stock price plummeted by over 30% in a single day.

A Story of Misleading Growth and Hidden Discontinuations

     Following the Relyvrio launch in late 2022, Amylyx reported seemingly strong initial uptake. For instance, the company reported that by March 31, 2023 "roughly 3,000 people" were on Relyvrio. By June 30, 2023, this number had grown to 3,800. These figures were presented as evidence of a successful launch and strong market demand, supporting the company's statements about a long "runway for growth."

     The core of the plaintiffs' allegations is that these figures were deceptively presented. The company reported "net patients" or "net patients on therapy," which, by its nature, factors in discontinuations. However, plaintiffs allege this net metric was used to conceal an alarmingly high discontinuation rate. According to a former high-level Regional Business Director, by the time the company was reporting 3,000-3,800 net subscribers, over 9,000 patients had already been prescribed the drug. This vast, undisclosed gap between total prescriptions and "net" patients denoted a massive discontinuation rate of over 50%.

     By omitting this crucial context, plaintiffs argue that Amylyx's statements about its growth potential were materially false and misleading. While investors were led to believe there was a "large untapped opportunity for growth," the undisclosed reality was that the drug had already reached a significant portion of the patient market (nearly one-third of the total addressable market), many of whom had already stopped taking it. This omission painted a picture of a “long runway” for growth when, in fact, the high dropout rate suggested a much more limited commercial future for Relyvrio.

The Court's Analysis: Where Optimism Ends and Fraud Begins

     In its decision, the court carefully parsed the company's statements. It dismissed claims related to general statements of corporate puffery—such as executives being "thrilled" or "encouraged" by the launch. Investors typically don’t rely on these vague expressions of optimism. The court also found that the company's statements about the initial "bolus," or surge in demand, were not misleading because defendants had adequately communicated their uncertainty about its duration.

     However, the court found that the plaintiffs had adequately pleaded that Amylyx's forward-looking statements about Relyvrio's growth potential, made in May and August of 2023, were actionably misleading.

     The court reasoned that by the time Amylyx was assuring investors of a "large untapped opportunity for growth" and suggesting a vast market of remaining ALS patients, it was allegedly aware of the massive, undisclosed discontinuation rate. This allegation was key, as the company's optimistic projections were based on the premise of a large, unreached market. The court found that knowledge of an over 50% discontinuation rate would fundamentally undermine that premise. Therefore, the court concluded that omitting this crucial fact could render the company's optimistic growth projections misleading to a reasonable investor.

     This analysis highlights the danger of selective disclosure, particularly when using "net" metrics. While Amylyx emphasized its growing "net subscribers," that number, presented in isolation, allegedly obscured a much darker reality. The court’s decision underscores a vital principle: a company cannot selectively present a metric to suggest success while hiding the alarming underlying components that tell a story of failure. The massive, undisclosed gap between total prescriptions and the "net" number of patients remaining on therapy was a critical piece of context that investors needed to properly evaluate the company's growth story.

     This case serves as a crucial reminder that under securities laws, statements can be literally true and still be misleading.[ii] This legal principle extends far beyond the pharmaceutical industry. For example, a tech company might tout its total "registered user" numbers, which are literally true, but that statement could be misleading if the company fails to disclose a simultaneous, massive collapse in its "active" or paying user base. Similarly, a retail chain could announce "strong new store openings" while omitting the material fact that it is closing even more unprofitable stores. The central question is whether the omitted information was material and necessary to make the statements that were made, in light of all the circumstances, not misleading.

Key Takeaways for Investors and Litigators

The Amylyx decision offers several key observations:

1. Context is King: A company cannot hide behind a seemingly positive "net" number if the gross numbers reveal a fundamentally weak product. The duty to be accurate and complete requires disclosing material facts that are necessary to make statements, even if literally true, not misleading.
2. Silence Can Be Misleading: When a company chooses to speak on a topic, such as its growth projections, it takes on a duty to disclose related, material facts that would make its statements misleading. Touting a "large untapped opportunity" while allegedly concealing that over 50% of initial patients had already quit the drug is a classic example of a misleading half-truth.
3. Forward-Looking Statements Aren't a Blank Check: The PSLRA's "safe harbor" for forward-looking statements has its limits. It does not protect projections made with knowledge of undisclosed, contrary facts that undermine their credibility.

     This ruling is a critical step forward for the shareholders of Amylyx. With the motion to dismiss denied, the case now proceeds to discovery, where plaintiffs will have the opportunity to obtain internal documents, emails, and testimony to prove these strong allegations of fraud.

[i] Shih v. Amylyx Pharms., Inc., No. CV 24-12068-NMG, 2025 WL 2807756 (D. Mass. Sept. 30, 2025).

[ii] E.g., Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27, 47 (2011) (omitting information that suggested primary source of revenue was at risk rendered positive statements about future revenue growth misleading); Kleinman v. Elan Corp., plc, 706 F.3d 145, 153 (2d Cir. 2013) (“Even a statement which is literally true, if susceptible to quite another interpretation by the reasonable investor[,] may properly be considered a material misrepresentation.”)