In Sneed v. Talphera, Inc., 2025 WL 2406424 (9th Cir. Aug. 20, 2025), the United States Court of Appeals for the Ninth Circuit affirmed the dismissal of a securities fraud suit against Talphera, Inc. (formerly AcelRx Pharmaceuticals; the “Company”) and two top executives, holding that a company slogan used in investor presentations — “Tongue and Done” — was not misleading to reasonable investors, especially in light of accompanying disclosures. This opinion clarifies the interplay between marketing materials, context and the reasonable investor standard for reliance and materiality in claims under Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. § 78j(b), and Securities and Exchange Commission Rule 10b-5, 17 C.F.R. § 240.10b-5.
The Company developed an under-the-tongue opioid for pain medication, called DSUVIA. DSUVIA’s oral delivery distinguished it from other opioids that must be administered intravenously. Due to concerns about potential misuse, the Food & Drug Administration (“FDA”) required a strict Risk Evaluation and Mitigation Strategy (“REMS”), restricting DSUVIA’s use to certain healthcare settings and licensing protocols. To emphasize DSUVIA’s oral administration as a key distinguishing feature, the Company adopted the slogan “Tongue and Done” in its materials used at investor conferences. Notably, though, the tabletop displays and banners bearing the slogan at these conferences directed investors to additional information available at the booths, expressly provided product safety warnings and noted the REMS plan.
At one particular investor conference, the Company’s CEO gave a speech in which he specifically stated that the Company’s products are limited to medically-supervised settings. He also broadly described the process for administering DSUVIA, but omitted certain obvious steps such as opening the box and discarding the single dose applicator in biohazard waste after administration.
The FDA issued warning letter about the propriety of the slogan under the Federal Food, Drug, and Cosmetic Act (“FDCA”). The FDA concluded the slogan was misleading because it did not provide a balanced description of the drug’s risks and benefits, as required by 21 C.F.R. § 202.1(e)(5)(ii). The Company then ceased using the slogan.
After the warning letter, investors sued, alleging claims under Sections 10(b) and 20(a) of the Exchange Act, 15 U.S.C. § 78t, and Rule 10b-5. They alleged that the slogan, coupled with the CEO’s descriptions in his speech, misled the market about the complexity of DSUVIA’s administration and its limitation to medically-supervised healthcare settings. The United States District Court for the Northern District of California dismissed the complaint with prejudice for failure to adequately plead facts giving rise to a strong inference of scienter. The district court did not rule on the issue of falsity. Plaintiffs appealed.
The Ninth Circuit held that the plaintiffs failed to adequately plead both falsity and a strong inference of scienter. First, the Court explained that Section 10(b) and Rule 10b-5 do not impose a duty to disclose all material information, but only require the disclosures necessary to make statements not misleading in light of the circumstances. The Ninth Circuit then emphasized that a reasonable investor is presumed to act with care and to seek out relevant information. When assessing whether a statement or omission could mislead investors, courts consider the full context in which it was made, including any related disclosures, disclaimers and other available information. Consequently, courts focus on what a reasonable investor would understand when looking at the “total mix” of information, rather than any isolated phrase or document.
The Ninth Circuit explained that reasonable investors do not blindly accept marketing slogans when they have access to other contextual information. The Court noted that the Company provided copious clarifying information next to the “Tongue and Done” slogan: (i) the tabletop and banner ads at the investor conferences included text that disclosed the REMS plan for DSUVIA; (ii) staff at the booth could have answered questions about DSUVIA; and (iii) the Company provided additional information both in its SEC disclosures and its dedicated REMS website. Further, the Ninth Circuit explained that a reasonable investor would not expect minute details of the REMS plan in the CEO’s “TED-like talk” and would know that they could find such information elsewhere.
Moreover, the Ninth Circuit did not hold the FDA warning letter dispositive of falsity under the Exchange Act because the FDCA and Exchange Act target different audiences. In securities cases, courts evaluate whether a statement is misleading based on what a reasonable investor would find material, whereas FDA regulations focus on providing the information necessary for consumers (here, patients) and “prescribers of drugs.” Plaintiffs alleged that the CEO omitted certain steps of DSUVIA’s administration from his speech, such as how to open the box and discard the product after use. The Ninth Circuit disagreed: “Just because the FDA requires disclosure of specific instructions to healthcare providers does not make the omission of that information relevant for investors.” Further, the Company had previously warned investors of the risks of such an FDA warning letter. For these reasons, the Ninth Circuit held the “Tongue and Done” slogan would not mislead a reasonable investor.
Next, the Ninth Circuit explained that a strong inference of scienter only exists if that inference is at least as compelling as any reasonable alternative. Because Company repeatedly disclosed the REMS and usage restrictions for DSUVIA, the Court determined that the more likely explanation was that the Company’s officers made a good-faith decision to use the “Tongue and Done” slogan to highlight the drug’s key marketing advantage, rather than to mislead investors. Because plaintiffs failed to plead either a Section 10(b) or Rule 10b-5 claim, they were precluded as a matter of law from pleading their Section 20(a) claim.
Sneed underscores the importance of the context of public statements, particularly for biotechnology and pharmaceutical companies facing dual regulatory scrutiny. When investor-facing materials pair promotional language with fulsome disclosures about risks, restrictions and market realities — even in separate formats or contexts, such as websites — courts should be less likely to hold those materials misleading to investors.