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Email On July 9, 2021, in Karth v. Keryx Biopharmaceuticals, Inc., the U.S. Court of Appeals for the First Circuit affirmed entry of judgment for the defendants in a putative class action asserting violations of Section 10(b) of the Securities Exchange Act of 1934 based on a pharmaceutical company’s alleged understatement of risks associated with its reliance on a single third-party manufacturer for the only drug it produced. In so ruling, the Court invoked a “Grand Canyon” metaphor for a company’s obligation to describe risks as active or imminent, as opposed to theoretical: “one cannot tell a hiker that a mere ditch lies up ahead, if the speaker knows the hiker is actually approaching the precipice of the Grand Canyon.” In this case, however, the Court held that the defendant’s risk disclosures—which stated that it “could experience a loss of revenue” if its supplier failed to perform—were not misleading https://www.cadwalader.com/resources/clients-friends-memos/securities-litigation-update-first-circuit-holds-that-future-focused-risk-disclosures-are-not-misleading-absent-grand-canyon-level-threat-to-company