FILED: NEW YORK COUNTY CLERK 03/19/ :01 PM INDEX NO /2020 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 03/19/2020

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1 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X ABEONA THERAPEUTICS INC., vs. Plaintiff, MATT GRAVITT, JOSEPH J. SPIEGEL, RICHARD UNDERBRINK, MAKO RESEARCH, and JOHN DOE AND JANE DOE #1 through #20, the last twenty (20) names being fictitious and unknown to the plaintiff, the persons or parties intended being the additional traders and/or additional author(s) behind Mako Research as described in the Complaint, Defendants X INDEX NO. SUMMONS TO THE ABOVE-NAMED DEFENDANTS YOU ARE HEREBY SUMMONED to answer the Complaint in this action and to serve a copy of your answer, or, if the Complaint is not served with this Summons, to serve a notice of appearance, on the Plaintiff s Attorney(s) within 20 days after service of this Summons, exclusive of the day of service (or within 30 days after the service is complete if this Summons is not personally delivered to you within the State of New York), and in case of your failure to appear or answer, judgment will be taken against you by default for the relief demanded in the complaint. Plaintiff designates New York County as the place of trial. Venue is proper pursuant to CPLR 503(a) and CPLR 503(c) because Plaintiff s principal place of business is in New York DB1/ of 42

2 County and because a substantial part of the events giving rise to the claims asserted in the Complaint occurred in New York County. Dated March 19, 2020 MORGAN, LEWIS & BOCKIUS LLP By /s/ Jordan D. Hershman Jordan D. Hershman Simon Chang jordan.hershman@morganlewis.com simon.chang@morganlewis.com 101 Park Ave New York, NY Michael D. Blanchard Christopher M. Wasil Christina M. Aylward michael.blanchard@morganlewis.com christopher.wasil@morganlewis.com christina.aylward@morganlewis.com One Federal Street Boston, MA Attorneys for Plaintiff DB1/ of 42

3 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X ABEONA THERAPEUTICS INC., Plaintiff, vs. MATT GRAVITT, JOSEPH J. SPIEGEL, RICHARD UNDERBRINK, MAKO RESEARCH, and JOHN DOE AND JANE DOE #1 through #20, the last twenty (20) names being fictitious and unknown to the plaintiff, the persons or parties intended being the additional traders and/or additional author(s) behind Mako Research as described in the Complaint, Defendants. X INDEX NO. COMPLAINT FOR COMMON LAW CLAIMS Jury Trial Demanded NATURE OF THE ACTION 1. Plaintiff Abeona Therapeutics Inc. ( Abeona ) is an early stage biopharmaceutical company focused on finding a cure for rare and horrific genetic skin disorders that primarily afflict children. Abeona is on the cusp of a breakthrough, having just received clearance from the FDA to proceed with a Phase 3 trial for one of its treatments. 2. On December 9, 2019, the FDA provided Abeona clearance to proceed with its pivotal Phase 3 trial for EB-101, a drug that Abeona hopes will treat patients with recessive dystrophic epidermolysis bullosa (RDEB), a horrible genetic skin disorder that afflicts children. 1 People suffering from RDEB are unable to produce a protein that is necessary to bind one s skin 1 See Press Release, Abeona Therapeutics Cleared to Initiate Pivotal Phase 3 Clinical Trial Evaluating EB-101 Gene Therapy for Recessive Dystrophic Epidermolysis Bullosa, Abeona (Dec. 9, 2019), https//investors.abeonatherapeutics.com/press-releases/detail/166/abeona-therapeutics-cleared-to-initiate-pivotalphase-3 DB1/ of 42

4 to subdermal layers, causing the top layer of skin simply to fall off. Mortality rates for children with RDEB are disturbingly high, and those who survive childhood lead lives marked by constant severe pain, open wounds, and fingers and toes fused together with scar tissue. If successful in this product development effort, Abeona will obtain FDA approval for the manufacture and sale of a drug to treat children and adults suffering from RDEB, for which no reliable treatment or cure now exists. 3. Abeona brings this action because the Defendants are engaging in an illicit and improper scheme that has impaired, and continues to impair, Abeona s ability to achieve this critically important goal. 4. Defendants are a coordinated group of stock market manipulators 2 who have been artificially depressing the Company s stock price, through their illegal misconduct, since at least December Defendants have been engaging in their fraudulent scheme to profit from illegal and manipulative short selling in Abeona s stock. They do so by coordinating the publication of false and misleading hit pieces, masquerading as stock research articles, with manipulative trading and quoting activity in Abeona s stock. 6. In particular, and as explained in much greater detail below, Defendants conspired to drive down the price of stock by timing the publication of false and misleading hit pieces with illicit, manipulative trading tactics and quoting activity, including naked short sales. Abeona takes Defendants illegal profit-scheme seriously, and intends to counter it on all fronts. Abeona brings the instant action seeking damages and injunctive relief. In addition to filing this 2 Plaintiffs conducted a diligent inquiry to ascertain the identities of the twenty unknown individuals and have included an affirmation to that effect, enclosed as Exhibit A. 3 All allegations in this Complaint concerning Abeona, its actions and conduct are based on personal knowledge; all other allegations herein are based upon information and belief. DB1/ of 42

5 complaint, Abeona has sent a letter to the Financial Industry Regulatory Authority (FINRA) the self-regulatory organization charged with regulating the exchanges. Abeona s letter to FINRA details Defendants abusive conduct and manipulative trading and quoting activity Short sellers like Defendants are stock traders who sell stock that they do not own to make a profit when the price of a stock goes down. In brief, a short seller locates stock to borrow, sells it for the current market price, and then hopes the price of that stock will decline so he can purchase it in the open market at a cheaper price before returning it to the borrower. 8. A short seller is required to locate stock to borrow before selling it to ensure that he has a reasonable belief that the stock can be delivered on a specific dates. While short selling itself is not illegal, naked short selling selling stock short without first borrowing shares is plainly illegal under the federal (and many state) securities laws. Naked short selling is sometimes coupled with efforts to fraudulently manipulate the market to drive down the stock price because short sellers need to be certain that the price of the stock will decrease. Most commonly, these efforts take the form of disseminating false negative information about the company to the investing public. If the short seller successfully convinces investors that the company represents a worthless investment, plummeting the company s stock price, the short seller can walk away with significant profits, while the company s financial well-being and reputation are severely and irreparably damaged. This type of fraudulent scheme has been an unfortunate element of the public stock markets for decades. 9. With the rise of the Internet and the advent of social media, short selling and attendant market manipulation has developed into a complex, highly sophisticated enterprise. Once a short seller establishes a short position (i.e., once he locates shares to borrow and sells a 4 A copy of the letter sent to FINRA is attached as Exhibit B. DB1/ of 42

6 stock), a network of individuals goes to work, writing, publishing, and promoting what appear to be legitimate works of journalism aimed at exposing negative facts about a company to the investing community, but are in fact complete fabrications. The conspirators benefit from the anonymity permitted by Internet-based publishing, and their hit pieces reach a vast audience almost instantaneously by linking to the articles on sites like Twitter and Facebook. These negative, false, and misleading articles naturally have the tendency to depress the price of the stock. Often, and as happened here, the trading defendants engage in market manipulation immediately preceding, or contemporaneously with, the publication of the article, further exerting downward price pressure on the stock all to the traders economic benefit while harming the legitimate investors economic interests. Before the company even realizes it has been victimized by a short attack, the company and its stockholders have suffered severe and irreparable harm. 10. Short attackers like Defendants are not shy about the real-world damage they cause, not just to the companies whose stock price they manipulate, but to innocent mom and pop investor-bystanders in fact, they revel in it. Many of the Defendants follow the Twitter highly popular among short sellers which posts verbatim quotes from unwitting investors who lost their savings due to short attacks (i.e., those left holding the bag ). For example, on March 28, tweeted a statement from a typical bagholder I set my retirement back 8 years for the amount I have lost on this stock in the past 3 years. Praying for a miracle now[.] Similarly, on March 29, quoted another individual as stating I hate thinking about what I d do if I had my 160k original investment and its followers find entertainment in reading such statements from those who have fallen victim to their market manipulation. DB1/ of 42

7 11. Plaintiff Abeona has been the victim of numerous short attacks at the hands of Defendants over the past four years. During that time, Defendants have published three hit pieces about Abeona on the website SeekingAlpha.com under the pseudonym Mako Research. 12. Defendants articles have sought to plunge the value of Abeona s stock by falsely presenting to the investing public unfounded accusations, including regarding the very science underlying Abeona s product development that its ongoing work has been validating. 13. At first blush, the Mako Research articles like those of all short attackers resemble legitimate exposé pieces. However, Mako Research is not in the field of investigative journalism, and its articles are not meant to educate. To the contrary, as described throughout this Complaint, Mako Research exists only as a mechanism to perpetrate market manipulation in aid of short selling. 14. One need only review the social media postings of those connected to Mako Research and other faux investment research outfits to gain clarity on their purpose. For example, on April 6, 2014, Defendant and Mako Research author Matt Gravitt, who had previously published hit pieces using his own name, gave advance notice of an article he was about to publish concerning TherapeuticsMD, tweeting wheewwwiieee this piece on txmd is gonna be naughty, followed by, if anyone on here that follows me is long on txmd, I am sorry in advance In conjunction with disseminating false or misleading negative information, short attackers engage in a host of deceptive and illegal trading practices that are designed to artificially manipulate stock prices. These tactics include (as explained in greater detail below) naked short selling, spoofing, layering and wash trades, all of which are plainly illegal 5 The stock ticker symbol for TherapeuticsMD is TXMD. DB1/ of 42

8 under the federal (and many state) securities laws. 16. The trader Defendants in this case engaged in a host of such illegal, manipulative trading tactics that were intended to, and had the effect of, artificially depressing Abeona s stock price so that these Defendants could profit from their illicit scheme, at the expense of Abeona s bona fide stockholders and to the detriment of Abeona and its business goals Since 2016, Defendants have schemed to depress the stock price of Abeona s stock through publishing hit pieces followed by manipulative short selling activity all to profit at the expense of the bagholder. But Defendants scheme also damages the primary target of the hit pieces Abeona. Abeona s real-world damages take many different forms. Abeona, as the issuer, transacts in its own stock, which means it uses its stock as compensation to pay employees and consultants. When Defendants manipulate the price of Abeona s stock downward, Abeona has to provide more stock for the same amount of compensation. Abeona s artificially depressed stock can also negatively impact Abeona s ability to finance its operations, which threatens its ability to complete costly efforts to develop a cure for RDEB. Abeona seeks here to redress these wrongs. 18. By this action, Abeona seeks injunctive, compensatory, punitive, and multiple damages from the individuals behind Mako Research and the individuals who engaged in trading activity to manipulate its stock price. As set forth below, Defendants engaged in a prolonged scheme to depress the price of Abeona s stock through the publication of hit pieces coordinated with manipulative trading and quoting activity. Plaintiff seeks damages related to its issuance of employee stock options granted in reliance on the artificially low stock price set by Defendants manipulative conduct. 6 Exhibit C is a list of ABEO s stock price and trading volume during the relevant period. DB1/ of 42

9 PARTIES 19. Plaintiff Abeona (formerly named PlasmaTech Biopharmaceuticals, Inc.) is a clinical-stage biopharmaceutical company focused on developing therapies for rare, lifethreatening genetic diseases. Abeona is a publicly traded company incorporated in Delaware and headquartered in New York. Abeona has approximately 87 employees. 20. Defendant Matt Gravitt is a resident of the State of Texas. Gravitt is a trader in Abeona stock and believed to be one of the authors of Mako Research. His twitter handle is believed to Twitter, https//twitter.com/psbcap (last visited Jan. 29, 2020). 21. Defendant Joseph J. Spiegel is a resident of the state of Wyoming. He is a trader in Abeona stock. His twitter handle is believed to Twitter, https//twitter.com/buyersstrike (last visited Mar. 3, 2020). He also has a blog, where he writes posts on biotechnology companies, including Abeona. BuyerStrike! A New Kind of Assassin, https//buyersstrike.wordpress.com/ (last visited Mar. 3, 2020). On January 2, 2007, Spiegel was charged by the Securities and Exchange Commission (SEC) with securities fraud in connection with naked short sales. http// Spiegel has engaged in manipulative trading in Abeona stock in coordination with the publication of hit pieces. 22. Defendant Richard Underbrink is a resident of Texas. Underbrink is a trader and has worked with Gravitt and others in connection with the operation of, and creation of hit piece articles by Mako Research. His twitter handle is believed to which has a bio stating Full Time Day Trader. Retired from career in pharmaceutical development. Short term technical swing trader utilizing options strategies. Twitter, https//twitter.com/skipjackrick (last visited Jan. 29, 2020). The twitter account states that it is based in Round Rock, TX. Id. 23. Defendants John and Jane Does 1-20 are individuals whose identities are not yet DB1/ of 42

10 known, but who have conspired with Defendants to execute the scheme described herein. Plaintiff has made a diligent inquiry to determine the parties identities and have included an affirmation to that effect at Exhibit A. 24. Defendants Gravitt, Spiegel, Underbrink, and Does 1-20 engaged in manipulative trading, including naked short selling and non-bona fide quoting activity in Abeona s stock. Defendants Gravitt, Spiegel, Underbrink, and Does 1-20 are collectively referred to as Defendant Traders. 25. Defendant Mako Research LLC ( Mako Research ) is a sham entity, directly or indirectly utilized by Gravitt, Spiegel, Underbrink, and Does 1-20 to perpetuate their fraud on the market as the purported author of web-published articles masquerading as investment analyses. Mako Research is not a legitimate registered investment analyst. Nor is it a FINRA member firm or registered in any capacity with the SEC. Plaintiff has made a diligent inquiry to determine contact information for Mako Research and has included an affirmation to that effect at Exhibit A. RELATED PERSON 26. William Bill Robert Hunter is believed to be behind the twitter which has a bio that says, Biotech trading addict with no hobbies. Twitter, http//twitter.com/getbillasap (last visited Jan. 29, 2020). The twitter account says that it is located in the Lone Star State. Id. JURISDICTION AND VENUE 27. This Court has specific personal jurisdiction over the Defendants pursuant to CPLR 302(a)(2) because, in connection with the claims, each Defendant committed acts in the state of New York for the purpose of carrying out the wrongful conduct described herein and the injuries occurred in New York. DB1/ of 42

11 28. Venue is proper pursuant to CPLR 503(a) and CPLR 503(c) because Plaintiff s principal place of business is in New York County. Venue is also proper pursuant to CPLR 503(a) because a substantial part of the events giving rise to the claims asserted herein occurred in this judicial district. 29. The Commercial Division of this Court has jurisdiction over this action pursuant to Section (a) and (b)(1) of the Uniform Rules for New York State Trial Courts, Rules of the Commercial Division because (i) the matter in controversy involves fraud and misrepresentation arising out of business dealings; and (ii) Plaintiff seeks injunctive relief and damages, exclusive of punitive damages, interest, cots, disbursements and counsel fees, in excess of $500,000. FACTS A. Background on Abeona Therapeutics Inc. 30. Abeona Therapeutics Inc. ( Company ) is a fully-integrated gene and cell therapy company at the forefront of the rapidly-advancing field of genetic medicine. The Company s expertise across research and development, manufacturing, and discovery of novel gene and cell therapies has it uniquely positioned to bring new medicines to patients in need. The Company works to deliver gene and cell therapies for people impacted by serious diseases. The Company s mission is to harness the promise of genetic medicine to transform the lives of patients inspired by its vision, to realize a world where cure is the new standard of care. 31. Abeona is succeeding in its mission. For example, on December 9, 2019, the FDA provided Abeona clearance to proceed with its pivotal Phase 3 trial for EB-101, a drug that Abeona hopes will treat patients with recessive dystrophic epidermolysis bullosa (RDEB), a horrible genetic skin disorder that afflicts children. Children suffering from RDEB are unable to produce a protein that is necessary to bind one s skin to subdermal layers, causing the top layer DB1/ of 42

12 of skin simply to fall off. Mortality rates for children with RDEB are disturbingly high, and those who survive childhood lead lives marked by constant severe pain, open wounds, and fingers and toes fused together with scar tissue. The FDA s recent approval of Abeona s Phase 3 trial for EB-101 is a significant step toward providing necessary treatment for those suffering with RDEB. 32. Abeona focuses on developing therapies for life-threatening rare genetic diseases, such as Mucopolysaccharidosis (MPS) type III (MPS III or Sanfilippo syndrome) and Epidermolysis Bullosa (EB). A rare disease is one that affects fewer than 200,000 people in the United States. There are nearly 7,000 rare diseases, which may involve chronic illness, disability, and often, premature death. More than 25 million Americans have one. While rare diseases can affect any age group, about 50% of people affected are children (15 million in the United States); and rare diseases account for 35% of deaths in the first year of life. These rare diseases are often poorly diagnosed, very complex, and either have ineffective treatment or no treatment at all over 95% of rare diseases do not have a single FDA or EMA approved drug treatment. However, most rare diseases are often caused by changes in genes 80% are genetic in origin and can present at any stage of life. 33. MPS III is a group of four inherited genetic diseases (described as type A, B, C or D) that cause enzyme deficiencies. The incidence of MPS III (all four types combined) is estimated at 1 in 70,000 births. Children with MPS III are missing an enzyme which is essential in breaking down the used mucopolysaccharides called heparan sulfate. Babies may show little sign of the disease, but as more and more cells become damaged, symptoms start to appear. In MPS III, the predominant symptoms occur due to accumulation within the central nervous system, including the brain and spinal cord, resulting in cognitive decline, motor dysfunction, DB1/ of 42

13 and eventually, death. To date, there is no cure for MPS III. Abeona is currently conducting gene therapy clinical trials for ABO-102 in an active Phase I/II Gene Transfer Clinical Trial directed at Sanfilippo A Syndrome and anticipates beginning a Phase I/II Gene Transfer Clinical Trial for ABO-101 intended to treat Sanfilippo B Syndrome. 34. EB is a group of devastating, life-threatening genetic skin disorders impacting children that is characterized by skin blisters and erosions all over the body. One of the most severe forms is recessive dystrophic epidermolysis bullosa (RDEB), which is characterized by chronic skin blistering, open wounds, joint contractures, and a shortened life span. Patients with RDEB lack a certain collagen owing to gene mutation. EB patients suffer intense pain throughout their lives, with few or no effective treatments available to reduce the severity of their symptoms. Abeona s lead EB product, EB-101 (gene-corrected skin grafts), is a gene therapy currently in clinical trials for the treatment of RDEB patients. 35. Abeona s common stock is listed on the NASDAQ under the ticker symbol ABEO. With million shares outstanding, Abeona s total market capitalization as of March 9, 2020 is approximately $227 million. Abeona s public float is million shares ABEO is a thinly-traded security with an average daily volume of approximately 625,000 between January 4, 2016 and December 31, In a thinly-traded security, large volumes of short sales can easily drive the price of a stock downward. 37. ABEO stock is difficult or expensive to borrow, so any selling activity on the various exchanges may not have been long ABEO, and may not have obtained a locate for any short sales as required by Rule 200(g)(1) of Regulation SHO of the Exchange Act of Steven H. Rouhandeh has served as Abeona s Executive Chairman since January 7 The public float represents the number of shares that are available to trade. DB1/ of 42

14 1, Mr. Rouhandeh has been a director and Chairman of the Board since March 4, João Siffert, MD has served as Abeona s Chief Executive Officer since February Mr. Siffert joined Abeona as Head of Research and Development and Chief Medical Officer in B. Background on Legitimate Short Selling 40. Short selling is an investment strategy that seeks to profit from the decline in stock prices. A short sale is the sale of a stock that an investor does not own or a sale which is consummated by the delivery of a stock borrowed by, or for the account of, the investor. Brokerage firms typically lend stock to customers who engage in short sales, using the firm s own inventory, the margin account of another of the firm s customers, or another lender. Short sales are normally settled by the delivery of a security borrowed by or on behalf of the investor. The investor later closes out the position by returning the borrowed security to the stock lender, typically by purchasing securities on the open market. 41. Investors who sell stock short typically believe the price of the stock will fall and hope to buy the stock at the lower price and make a profit. 8 If the price of the stock rises, short sellers who buy it at the higher price will incur a loss. 42. Short selling, on its own, is legal and thought by many to serve useful purposes to the markets. Short sellers purportedly keep overvalued stock prices in check and provide a source of liquidity to the markets. However, short selling is also a practice subject to abuse. C. Background on Manipulative Trading Tactics 43. The stock of public companies like Abeona trade on securities exchanges, such as the NASDAQ, where the forces of supply and demand set the price for those stocks listed on the 8 Short selling is also used by market makers and others to provide liquidity in response to unanticipated demand, or to hedge the risk of an economic long position in the same security or in a related security. DB1/ of 42

15 exchange. In a perfect world, accurate information regarding a company or its business is disseminated rapidly to investors and stock analysts who in turn make trading decisions based upon their assessment of how the information impacts the stock s value, good or bad. Recognizing the central role that accurate information plays in the efficient and fair setting of market prices, the securities laws are intended to encourage or require companies to disclose certain information that is material to investors trading decisions. 44. Because the securities markets do not, however, operate in a perfect world, there are many methods by which scammers may game the system. Unscrupulous investors often seek to exploit the markets reliance upon information in setting stock prices by disseminating misinformation regarding a particular stock. For instance, in the classic pump and dump scheme, insiders or others will, after buying some of the company s stock, leak positive rumors regarding the company in the hopes the price increases, at which time the stock can be sold for a profit. 45. The opposite of a pump and dump scheme though no less fraudulent, manipulative, and harmful to the companies targeted as victims are schemes to short and distort a company s stock, also known as a bear raid or short attack. In a short attack, dishonest investors, acting alone or in collusion, will sell a company s stock short, and then employ various methods designed to drive the price down so the short positions can be bought-in or covered with lower priced stock, netting a contrived profit for the short seller. 46. Typically, the short attacker will disseminate false and misleading rumors about the company on internet chat boards and similar sites under a pseudonym. The short attackers will often pose as investment research analysts or use names or credentials that imply they are connected to regulators or the securities industry, lending false credibility to the disparaging DB1/ of 42

16 rumors they spread. In the spirit of fake news, the short attackers might pen seemingly legitimate articles presenting their purported opinions about the company, often referred to as hit pieces. 47. The net effect is that those holding the stock may sell it based on the misinformation, potentially at a loss. At the same time, the short attack scammers cover their short positions at these deflated prices, turning for themselves a handsome profit. 48. While short selling is legal (if not in connection with a coordinated effort to manipulate a company s stock price, such as through false and misleading hit pieces ) there are methods of short selling that are plainly illegal, namely naked short selling. Naked short selling is the term used to describe short selling that is done without first locating or borrowing the shares that the trader intends to sell short, and is a violation of 17 CFR (b)(1). A trader who naked shorts a stock is likely to fail to deliver the stock to the buyer, because the short seller has not located or borrowed stock to deliver to the buyer. This can lead to additional violations of the federal securities laws. See 17 CFR Market manipulators have other means to illicitly and artificially manipulate stock prices available to them. For example, layering and spoofing are forms of market manipulation that typically involve the placement of non-bona fide orders intended to create the appearance of trading activity. Layering involves placing limit orders on one side of the market to create the appearance of a change in the supply or demand for the stock. Spoofing involves placing an order with the intention of causing a reaction in the market, canceling that order before it is filled, and entering an order on the other side of the market. 50. Market participants can use layering or spoofing to drive down the price of a stock. They can do so by layering non-bona fide limit orders on the sell side of the market to DB1/ of 42

17 create the appearance of an increase in the supply of stock for sale. This will cause the price of the stock to decline. In much the same vein, market participants can use spoofing to place numerous non-bona fide orders to trigger trading algorithms to sell stock, which causes the price of the stock to decline. Layering and spoofing are well-recognized as illegal tactics used to manipulate securities markets. 51. Pre-arranged cross-trading or wash trades is a form of market manipulation where one or more related market participants arrange to buy and sell stock between related accounts or to each other to create the false appearance of volume and price movement. This type of market manipulation occurs most frequently in thinly traded securities because the lower daily volume makes it more likely the conspiring cross-traders will trade with each other. Prearranged cross-trades can be used to drive down a stock s price when the cross traders arrange for the transaction to occur below the market price. Numerous pre-arranged cross-trades at declining prices can create the appearance of a sell-off in the stock and cause other traders, or algorithms, to join in the sell-off, creating an even larger decline in the stock s price. While wash trades creates the appearance of volume, in reality, the cross-traders are trading the same shares back and forth between themselves. Pre-arranged cross trading, or wash trades, is a well known tactic employed for the purpose of illegal market manipulation. D. Defendants and Related Person Openly Discuss Manipulating Biotech Stocks on Twitter. 52. Defendants and Related Person are active on Twitter, where they discuss trading in biotechnology companies, such as Abeona. Tweets by Defendants and Related Person are often disparaging of the retail investors who fall for their schemes. On September 5, (believed to be Richard Underbrink) tweeted that retail investors should be defined as a person affected with extreme mental retardation. These unwitting investors who DB1/ of 42

18 are left holding the bag after a short attack are a source of great entertainment for Defendants. 53. Defendant Matt Gravitt follows the Twitter which posts verbatim quotes from these victimized investors. For example, on January 23, tweeted a statement from a bagholder Dang, I am regretting that I decided to go into this stock. Hoping that it will bounce but it keeps on going down. On August 2, tweeted Weak hands will be leaving today so that we can buy more. $SQ along with an animated image of a struggling weightlifter. 9 This post was liked by Defendant Gravitt (@PSBCap). 54. On Twitter, Defendants and Related Person are open about their recurring manipulative short attack scheme to write an article for Seeking Alpha to put downward pressure on a stock. 10 On January 10, 2014, Richard Underbrink tweeted and Bill Hunter (@getbillasap), can one of you guys bust out your seeking alpha pen on IMMU? I m short 4k from $6.00 Need a flush. 11 In this tweet, Underbrink is unequivocally asking for his friends to write a hit piece on IMMU to drive the price down so he can buy back his 4,000-share short position at a profit. Moreover, he is specific about the price below which he needs the stock to fall. Bill Hunter and Matt Gravitt (@PSBCap) both liked the post. A screenshot of this post is below at Figure 1. 9 SQ is the stock ticker symbol for Square, Inc., a technology company. 10 Seeking Alpha is a crowd-sourced content service that publishes articles on financial markets. 11 IMMU is the symbol for Immunomedics Inc., a biotechnology company. DB1/ of 42

19 Figure 1 E. Defendant Spiegel attacks Abeona on Twitter and His Blog 55. Defendant Spiegel has attacked Abeona on both his Twitter and his blog. In May 2015, he engaged in a twitter exchange about his determination that Plasmatech Pharmaceuticals (Abeona s predecessor) has its corporate headquarters in a UPS office in Dallas, TX. See Figure 2. This claim, that Abeona is based out of a strip mall in Dallas, Texas, also appears in one of the hit pieces written by Mako Research. See Mako Research, Collision With Reality Sends Abeona Stock Spiraling Lower (July 31, 2019), Exhibit F. In the article, Mako Research states, Just a few years ago before the current biotech bubble reached 1999 levels of mania, Abeona (then known as Plasmatech Biopharmaceuticals), was run out of a strip mall in Dallas. Id. Abeona once had a research facility and headquarters in Dallas, however the company has been headquartered in New York City since DB1/ of 42

20 Figure 2 BuyersStrike BuyersStrikeA 27May2015 Howto doactualdd.step1,veryfirstthingto do,putco addressintogooglemaps.here's$ptbi 'e 4848LemmonAve 4648LemmonAve.DallasṬX75219 googlecom T Huckabee ThatwhereI dropoffmyupsl Buyers5trike BuyersSirikea 2? Ifyoucananspa plcof MarkAhnand/or StevenRouhandshnexttimeyouamthere,pleasepost! T Huckabee.thuckabëGdds O,@BuyersStrike $PTBI Less than 24 hours before Marcam MicroCap Conference check out corp headquarters/ups store S00PM- 2 May 201S Reply10@thuckabeadds@BuyersStrike BuyersStrike--BuyersStrikea SweetSulte5171Thankst Sp3cular --.sp3cutor 28May2015 athuckaneeddsobuyersstrikelou 56. When Piss-stcch Pharmaceuticals became Abeona, Spiegel was quick to call the transition a cover-up, tweeting, "Old scam not working anymore? Just change the compairf name for a new lease on life and new suckers to fleece. $ABEO." Def-ndant Gravitt (@PSBCap) replied "lol."12 see Figure Lol is co--.mañ slang st=di-g for "1=ghing out loud." DB1/ of 42

21 Figure Jun 2015 Old scam not working anymore? Just change the Company name for a new lease on Ilfe and new suckers to fleece. $ABEO Chet lol 254 PM - 22 Jun On July 10, 2017, Spiegel conti-wd his anti-abeo twitter campaign, tweeting, "Scam $ABEO used to be scam $PTBI read a little bit about it here from the archives" and 4=--' d a link to a BuyerStrike! Blog post. See Figure 4. Figure 4 Scam $ABEO used to be scam $PBTl, read a little bit about it here from the archives -- *,,,,,,,," Anagrelide CR Another Dud from Galena - GALE '"* Recently, dreadful, scandal-plagued, bio-dreck Galena "'", "", Biopharma (GALE)released results (here)from their Phase2..,- study of GALE-401 aka Ar.âgrâ ka CR. This is a new "Controll... buyersstrike.wordpress.com 1108 AM - 10 Jul Throughout 2018, Spiegel continued spreading his message that he believed ABEO was a scam. On May 18, 2018, he responded to a tweet about Abeona, "$ABEO has been a scam since day (and name and ticker 1). It is a multiple reverse merger piece of shit." See Figure 5. On November 26, 2018, Spiegel responded to another tweet about Abeona, "It is not possible to erase the filth at $ABEO. $ABEO was born of filth, of Mark Ahn and Steve DB1/ of 42

22 Reha-dch. Past is always prologue. Pedigree always counts. And ALL reverse mergers are scams, in one way or another..." See Figure 6. Figure 5 May 18, 2018 I thought things would improve with a seasoned CEO the PR is quite lacking in explaining missing data and absolutely no neurocog info. Not a good way to treat Q 3 G Q $ABEO has been a scam since day (and name and ticker 1). It is a multiple reverse merger piece of shit put together by this sleazebag wsj.com/articles/sb AM. May 18, Twitter Web Client Figure 6. Elizabeth Holmes for - Nov 26, 2018 Wasn't this the CEO that was supposed to clean up the image of $ABEO after the Jeff Davis regime? $- Nov 26, 2018 $ABEO CEO terminated immediately for 'personal misconduct that violated the co's cod of business conduct and ethics' Q1 G O 2 1 Replying It is not possible to erase the filth at $ABEO. $ABEO was born of filth, of Mark Ahn and Steve Rouhandeh. Past is always prologue. Pedigree always counts. And ALL reverse mergers are scams, in one way or another AM Nov 27, 2018 Twitter Web Client DB1/ of 42

23 59. On November 5, 2018, Spiegel taunted shareholders of ABEO when he tweeted, $ABEO getting bagholders ready for the pivot to the next hype-filled thing..... while burning their cash.... See Figure 7. Figure On August 23, 2019, Spiegel created a blog post sarcastically entitled Well Done Abeona (ABEO). Well Done Abeona (ABEO), BuyerStrike! (Aug. 23, 2019), http//buyersstrike.wordpress.com. The blog post called Abeona a reverse merger mega stinker, and chastised Abeona s management for the stock price hitting a new low. Id. The post ended by reminding readers that ALL REVERSE MERGERS ARE SCAMS. ALL OF THEM. EVERY SINGLE ONE. IN ONE WAY OR ANOTHER. Id. (capitalization in original). F. Defendant Joel Spiegel was Previously Charged by the SEC for Similar Manipulative Conduct 61. On January 4, 2007, the SEC charged Defendant Joseph Spiegel with securities fraud in connection with his activity when he was a portfolio manager for Spinner Global Technology Fund, Ltd. ( SGTF ), a $200 million hedge fund. See Complaint, SEC v. Joseph J. Spiegel, https// (Jan. 4, 2007). According to the SEC Complaint, Spiegel engaged in an unlawful trading scheme... in violation of the antifraud and registration provisions of the federal securities laws in connection DB1/ of 42

24 with three unregistered securities offerings, which are commonly referred to as PIPEs (Private Investment in Public Equity). Id. at 1. After Spiegel agreed to invest in three PIPE transactions, he sold short the PIPE issuer s stock through naked short sales in Canada. Id. at 2. Later, Siegel used the PIPE shares to close out some or all of the... short positions a practice Spiegel knew or was reckless in not knowing was prohibited by the registration provisions of the federal securities laws. In connection with each of the three PIPEs, to avoid detection and regulatory scrutiny, Spiegel employed wash sales and matched orders to make it appear that he was covering SGTF s pre-effective date short positions with open market stock purchases when in fact the covering transactions were not done with open market shares because the hedge fund was on both sides of the trades and covered the short positions with its PIPE shares. Id. 62. On January 24, 2007, Spiegel entered a settlement agreement with the SEC for the conduct described in the above paragraph. In re Joseph Spiegel, Investment Advisors Act Release No. 2585, https// (Jan. 24, 2007). Under the SEC settlement order, Spiegel agreed to be barred from association with any investment advisor for three years. Id. at 3. G. Since At Least December 2016, Defendants Have Published Numerous Hit Pieces Targeting Abeona And Have Engaged In Manipulative Short Selling Of Abeona s Stock. 63. Defendant Traders have engaged in a pattern of manipulative trading in ABEO since at least December As set forth in more detail below, the general practice of Defendant Traders was to conspire with Defendant Mako Research to engage in manipulative short selling activity of ABEO ahead of a Mako Research article to profit off the stock market s reaction to the article. Defendant Traders would sell short ABEO stock, without first borrowing it before Defendant Mako Research published a negative research article. Defendant Traders DB1/ of 42

25 profited from this scheme when Mako Research s negative news article drove down the price of ABEO stock. Defendant Traders would further depress the price of ABEO by their involvement in the display of large non bona fide quotes well outside the range of publicly displayed quotes in ABEO. After successfully depressing ABEO s stock price, Defendant Traders were able to profit by closing out their short position by buying ABEO at a lower price than the price at which they sold short, a lower price that was the direct result of their coordinated, manipulative tactics. December 2016 Article 64. On Monday December 12, 2016, Seeking Alpha published an article written by Defendant Mako Research entitled Abeona Stock Promotions, Fraud Convictions, and Demonstrably Unviable Science A Sell With 92% Downside (the December 2016 Article ). See Ex. D. This negative, false, and misleading article was a hit piece on Abeona. 65. The article claims that the science behind Abeona s drugs in development is demonstrably unviable with numerous irrefutable flaws that will lead to failure. December 2016 Article at Ex. D. 66. Specifically, the article attempts to show multiple serious flaws in Abeona s trial design, but the purported flaws are simply made up. Id. Mako Research attempts to scare its readers by suggesting ABEO is only hoping or praying that its method for treating Sanfilippo will be successful. Id. It further alleges that Abeona made a rookie mistake by the choices the company made in formulating its gene therapy approach. Id. The article claims that Abeona has set a bar for itself that is so low, whatever their trial shows should be clinically worthless. Id. 67. According to the article, the Company s competitors offer superior treatments in an already miniscule total addressable market, making the Company s market valuation unstainable even if the gene therapy treatments worked. The article concludes that the price of DB1/ of 42

26 ABEO is inflated, and as a result, is set to decline 92% as its science fails. Id. 68. Important for Defendants scheme, the article goes to great lengths to use technical scientific terms and graphics to appear legitimate to the average reader. However, the article is purposefully designed to scare ABEO shareholders into selling their stock for the benefit of Defendant Traders. 69. The article also attacks Abeona s management, calling them the worst biotech executives of the last 20+ years, who have accumulated multi-decade track records of shareholder wreckage. Id. 70. The December 2016 Article was, at a minimum, grossly misleading, if not outright fraudulent. To start, the article gets the science wrong. The numerous PhD scientists employed by Abeona to work on its MPS III gene therapy did not choose the wrong promoter in formulating their gene therapy approach. Nor is it correct to characterize the rigorous approach and decision making by Abeona PhD scientists as hoping or praying, or rookie. The article also gets a number of facts wrong. For example, it claims that National Children s Hospital is the sole clinical site, when the company also has clinical sites in Spain and Australia. In addition, the article makes false accusation about Abeona s leadership and the involvement of David Blech. 71. Defendant Traders began their manipulative trading in ABEO on the trading day prior to the release of the December 2016 Article i.e., December 9, That morning, ABEO opened at $5.85, which was consistent with its prior open and closing prices. Minutes before the market close (from to ), however, Defendant Traders sold short more than 84,400 shares of ABEO, at prices between $5.12 and $5.17. Over the course of the trading day, the price of ABEO declined approximately 13% to close at $5.12. This precipitous DB1/ of 42

27 decline cannot be explained by negative publicity related to Abeona, as there was no companyspecific or industry news on that day. 72. On December 12, 2016, ABEO opened at $5.05. The Seeking Alpha article was released at 930 a.m. and ABEO s stock price declined by 12% to $4.45 on volume of more than 2.2 million shares, representing a 964% increase in volume from the prior two trading days. Throughout the day, Defendant Traders engaged in quoting and trading large, outsized offers (some of which were never executed) that corresponded with the dramatic decline in ABEO s share price. Other than the hit piece on Seeking Alpha, there was no company-specific or industry news on December 12, The dramatic spike in ABEO s volume that occurred on December 12 can be seen in Figure 8. When compared to the volume in the two weeks before and after the Seeking Alpha article, it is clear that the article had an enormous impact on the trading in ABEO on December 12, This, of course, was all part of Defendant s plan to drive down the price of ABEO. DB1/ of 42

28 Figure Defendant Traders sold ABEO short ahead of the Seeking Alpha article s publication. Defendant Traders short selling activity was done without obtaining a locate prior to each short sale. 75. On December 12, 2016, after the publication of the article, Defendant Traders provided sham quotations in ABEO, using market manipulation techniques such as spoofing, layering, and wash trades to further drive down the price of ABEO. 76. After the December 2016 Article was published, and the price of ABEO had fallen by about $1.40 per share, Defendant Traders purchased shares of ABEO to cover their short positions. As a direct result of their coordinated manipulation, they were able to purchase ABEO at a lower price than the price at which they sold their shares, thereby profiting off of the decline in ABEO that resulted from the December 2016 Article. DB1/ of 42

29 January 2017 Article 77. A similar event occurred a month later when, on Monday, January 9, 2017, Seeking Alpha published an article by Defendant Mako Research entitled Abeona Director Implicated In Pump And Dump Lawsuit with SEC Investigation, Price Target of Zero (the January 2017 Article ). See Ex. E. This second hit piece contained numerous negative, false, and misleading statements about Abeona and its board of directors. 78. The article stated that Abeona s board was comprised of stock promoters and that one of its directors was involved in an SEC investigation into a pump and dump scheme at that director s prior company. January 2017 Article at Ex. E. 79. Based on this accusation, Mako Research claims that shares of Abeona (NASDAQ ABEO) are objectively without value and apparently exist to enrich insiders at the expense of investors. Id. The article purports that it will publish future reports that will further elaborate on why ABEO s science is unviable and set to fail. Id. 80. The article also mocks legitimate Wall Street analysts, from Cantor Fitzgerald and Jefferies, who called Mako Research s prior ABEO analysis factually incorrect and misleading, weaving a theory that these analysts have a history of promoting fraudulent companies. Id. 81. Mako Research concludes by downgrading ABEO to a Strong Sell from a Sell, and reducing its price target to zero. Id. At the time the article was written, ABEO was trading around $6.00 per share. 82. The January 2017 Article was, at minimum, grossly misleading, if not outright fraudulent. Abeona s board is not filled with stock promoters. The company s board of directors consists of numerous accomplished scientists and doctors. The article accuses Abeona (and its predecessor) of paying a company called Mission IR to publish positive news articles DB1/ of 42

30 about itself. However, neither Abeona nor its predecessors paid or otherwise influenced Mission IR to write positive articles about the company. 83. Defendant Traders began manipulating the price of ABEO on January 6, 2017 the trading day prior to the release of the January 2017 Article. Defendant Traders were involved in the display of large outsized quotes and were behind the execution of several large block size transaction indicative of manipulative trading activity. Defendant Traders executed multiple naked short sale transactions on January 6, Defendant Traders executed these short sale transactions without first locating the shares of ABEO to borrow. 84. On January 9, 2017, after the Seeking Alpha article was published, ABEO dropped 10% to an intraday low of $5.46. Defendant Traders were able to profit off the decline in ABEO s share price by buying-in their short position at a lower price than their short sales. 85. In February 2017, Mako Research posted a comment in the comments section of its January 2017 Article in which it admitted that its anonymous author was short ABEO If ABEO returns to where I shorted it in the $8s, I ll just add to the position aggressively. In the mean time [sic], it s chopping around with a downtrend and the stock remains worthless. Id., comment on Feb. 14, p.m. 86. The activity described above serves as background of a pattern of manipulative trading and quoting activity by Defendants upon the stock of Abeona since H. In 2019, Defendants Continued to Coordinate Their Manipulative Trading With Defendant Mako Research s Articles to Profit Off the Resulting Decline in ABEO Stock 87. Defendants have continued to engage in manipulative trading and quoting activity in ABEO, with more recent attacks in July and December DB1/ of 42