Reconciling FDA ‘Radical Transparency’ and SEC Disclosure Requirements

Publicly traded life sciences companies operate under dual regulatory oversight with respect to communications about drugs and devices. The U.S. Food and Drug Administration (“FDA”) oversees the entire product lifecycle, from development and clinical trials to manufacturing, labeling, marketing, and promotional communications, while the U.S. Securities and Exchange Commission (“SEC”) governs public disclosures, requiring timely and complete disclosure of material information.

The intersection between FDA regulatory processes and SEC disclosure requirements creates complexity. While the FDA traditionally treats investigational drug and device applications as confidential proprietary information, giving sponsors discretion over disclosure, the SEC expects timely communication of material developments to investors. Since 2004, a coordination mechanism between the agencies has allowed the FDA to refer potential securities law violations to the SEC and share nonpublic information upon request.^[1] With both regulators increasingly engaged, companies must tread carefully: every disclosure decision is subject to scrutiny, and missteps can trigger SEC enforcement. This dynamic compels companies to continuously assess how and when to communicate regulatory milestones and clinical progress to the market, while simultaneously protecting their confidential and proprietary information.

In July 2025, the FDA flipped the script by announcing its commitment to “radical transparency,” signaling a new era of visibility into regulatory decision-making.^[2] For public life sciences companies, this shift, paired with the SEC’s enforcement stance, raises the stakes in navigating disclosure obligations with precision and care.

SEC Materiality Standard

The SEC enforces disclosure requirements to protect investors, prevent fraud, and ensure market integrity. SEC regulations require that material information be disclosed in annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, and that such disclosure is not materially misleading. Information is deemed material if there is substantial likelihood that the disclosure would be viewed by a reasonable investor as having significantly altered the total mix of information made available.^[3]

The uncertainty inherent in the materiality standard can be problematic for life sciences companies. The historic secrecy of the FDA approval process has afforded companies with broad discretion over when and how to disclose regulatory developments. For example, executives may genuinely believe that a setback, such as a clinical hold or a negative FDA communication, is temporary or based on a misunderstanding that can be resolved through further dialogue with the agency. In that moment, they may conclude the issue is immaterial and choose not to disclose it, hoping to avoid unnecessary investor panic. But this decision could carry significant risk.

Delaying disclosure can result in public statements that misrepresent the company’s regulatory status, either by omission or by painting an overly optimistic picture. Investors may also be misled into believing that development timelines are intact or that approval is imminent, when in fact a product is facing regulatory headwinds.

SEC Enforcement: Case Review^[4]

In December 2024, the SEC announced settled charges against Kiromic BioPharma, Inc. (“Kiromic”) and its former chief executive officer (“CEO”) and chief financial officer (“CFO”) for failing to disclose material information about the status of two of its pending investigational new drug (“IND”) applications.

In June 2021, the FDA called Kiromic and informed the company that the agency was placing two of its drug development programs on clinical hold. Two weeks after the call, Kiromic raised $40 million through a common stock offering, and it did not disclose the clinical holds during investor roadshows, on due diligence calls, or in SEC filings. Kiromic’s subsequent Form 10-Q also omitted information about the FDA clinical hold, and its press release following receipt of an official letter from the FDA downplayed the news, stating simply that the “FDA returned with comments.”

Two internal whistleblowers reported their concerns about Kiromic’s SEC disclosures and public statements. A special committee of the board was formed to review the complaints. Kiromic self-reported to the SEC and took remedial actions, including terminating the CEO and appointing an interim CEO trained in disclosure controls and procedures, establishing a disclosure committee, appointing two new independent directors, voluntarily self-reporting to the SEC, and cooperating with the SEC’s investigation. The CEO and CFO agreed to civil penalties, and the CEO agreed to a three-year director and officer bar.

FDA’s Move Towards Transparency

The dynamics related to disclosure of FDA interactions are shifting. In July 2025, the FDA announced a significant change in its transparency practices, stating that “[b]ecause the FDA has historically refrained from publishing [complete response letters (“CRLs”)] for pending applications, sponsors often misrepresent the rationale behind FDA’s decisions to their stakeholders and the public.”^[5]

In a departure from longstanding policy, the FDA has now released more than 200 CRLs and signaled its intent to begin publishing them in real time. CRLs are decision letters issued when the FDA determines it cannot approve a drug or device application in its current form. These letters outline deficiencies, ranging from safety and efficacy concerns to manufacturing and bioequivalence issues, and often include recommendations for remediation.^[6]

The FDA believes that public disclosure of CRLs will help prevent other companies from repeating similar mistakes and accelerate the development and delivery of effective treatments. While this new approach may face judicial scrutiny, its immediate impact is clear: information that was once confidential until approval may now be available to the public in real time, creating a new layer of visibility that companies must reconcile with their own disclosure practices.

Best Practices

To navigate these regulatory dynamics, companies should consider implementing the following best practices:

1. Strengthen FDA Meeting Preparation: Given the increasing emphasis on transparency, invest in thorough preparation for FDA interactions to align messaging and anticipate regulatory concerns. Ensure that all FDA meeting minutes are accurate and complete and reflect the company’s positions clearly.
2. Audit Historical Disclosures: Review prior public disclosures to identify any inconsistencies with potential interpretations of CRLs. Where necessary, consider issuing clarifications to maintain credibility.
3. Monitor the Release of CRLs: Review any released CRLs for confidential information, and assess any implications for investor relations and litigation exposure.
4. Establish a Disclosure Governance Framework: Implement a formal disclosure review process—such as a disclosure committee—comprising legal, regulatory, and investor relations professionals, to evaluate the timing, accuracy, and completeness of public statements, especially those related to FDA communications and clinical developments.
5. Ensure Compliance with Regulation FD: Align investor communications with Regulation FD requirements to avoid enforcement action. In 2019, the SEC charged TherapeuticsMD Inc. with violating Regulation FD after the company privately described an FDA meeting as “very positive and productive” to sell-side analysts without issuing a public statement. The company agreed to pay a $200,000 penalty.^[7]
6. Ensure Clarity and Objectivity in Communications: Craft public statements about FDA processes with precision and balance. Avoid promotional language or attempts to downplay unfavorable developments. All claims should be evidence-based and presented in a way that supports informed investor decision-making.
7. Monitor External Communications for Consistency: Regularly review external communications, including websites and social media posts, to ensure consistency across platforms.

Conclusion

As FDA policy and the SEC’s enforcement priorities evolve, life sciences companies must remain informed and proactive in their disclosure practices. Optimism won’t satisfy regulators. Silence can mislead. Transparency is no longer optional. And precision matters more than ever.

1. U.S. Sec. & Exch. Comm’n, SEC and FDA Take Steps to Enhance Inter-Agency Cooperation (Feb. 5, 2004). ↑

2. U.S. Food & Drug Admin., FDA Embraces Radical Transparency by Publishing Complete Response Letters (July 10, 2025) (“Radical Transparency Announcement”). ↑

3. TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449 (1976) (“[A]n omitted fact is material if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote.”). ↑

4. U.S. Sec. & Exch. Comm’n, SEC Charges Kiromic BioPharma and Two Former C-Suite Executives with Misleading Investors about Status of FDA Reviews (Dec. 3, 2024). ↑

5. U.S. Food & Drug Admin., Radical Transparency Announcement, supra note 2. ↑

6. Id. ↑

7. U.S. Sec. & Exch. Comm’n, SEC Charges TherapeuticsMD With Regulation FD Violations (Aug. 20, 2019). ↑