UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ELI SPORN, Individually and on behalf of all others similarly situated, Plaintiff, v. 23 Civ. 9630 (DEH)

BRAINSTORM CELL THERAPEUTICS, OPINION INC., et al., AND ORDER Defendants.

DALE E. HO, United States District Judge: In this action, lead Plaintiff George Colby and named Plaintiffs Eli Sporn and Brett Shirley bring claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) against Defendants BrainStorm Cell Therapeutics Inc. (“BrainStorm”), Chaim Lebovits, Stacy Lindborg, and Ralph Kern. BrainStorm is a clinical stage biopharmaceutical company that developed a stem-cell-based product, “NurOwn,” for the purpose of treating various neurodegenerative and neurological disorders, including Amyotrophic Lateral Sclerosis (“ALS”). Am. Compl. ¶ 3, ECF No. 28. As of the second fiscal quarter of 2022, Lebovits served as BrainStorm’s Chief Executive Officer, Kern served as President and Chief Medical Officer, and Lindborg served as Executive VP and Chief Development Officer. Leiwant Decl. Ex. 6 at 3, ECF No. 33-6. Plaintiffs bring this securities class action on behalf of themselves and all other persons or entities who purchased publicly traded BrainStorm common stock during the period February 18, 2020 through September 27, 2023 (the “Class Period”), alleging that Defendants misrepresented, inter alia, the results of and the Food and Drug Administration’s (“FDA’s”) feedback regarding NurOwn’s Phase 2 and 3 Clinical Trials, and that after the truth was revealed, “Brain[S]torm’s stock price fell precipitously.” Pls.’ Opp’n to Defs.’ Mot. to Dismiss (“Pls.’ Opp.”) at 1-4, ECF No. 34. Defendants move to dismiss. See ECF No. 31. For the reasons given below, Defendant’s motion is GRANTED IN PART and DENIED IN PART. BACKGROUND

Unless otherwise stated, the following facts are taken from the Amended Complaint and are assumed to be true solely for purposes of adjudicating Defendants’ motion. See Buon v. Spindler, 65 F.4th 64, 69 n.1 (2d Cir. 2023). On November 21, 2016, BrainStorm had the first of a series of meetings with the FDA to discuss the results of the Phase 2 Trial of NurOwn, and its plans for a Phase 3 Trial. Am. Compl. ¶¶ 4, 8. For the Phase 3 Trial, BrainStorm proposed a primary efficacy endpoint measuring the rate of change in participants’ scores on the ALS Functional Rating Scale (“ALSFRS”), which “measures an ALS patient’s functional decline in various areas of motor functioning.” Id. ¶ 6. BrainStorm also determined that, for the Phase 3 Trial, it would enroll only “rapid progressors”—

i.e., patients with advanced ALS. Id. ¶¶ 7, 10. BrainStorm made this determination based on a post hoc subgroup analysis of the Phase 2 Trial purportedly showing that treated rapid progressors demonstrated “better results” than treated slow progressors. Id. ¶ 7. During the November 2016 meeting, the FDA stated that BrainStorm’s proposed primary efficacy endpoint “may potentially be acceptable for a Phase 3 study intended to support a market application,” Am. Compl. Ex. A at 52, but also told BrainStorm that it “strongly recommended” that BrainStorm instead use a primary efficacy endpoint “whose clinical meaningfulness is easier to interpret (e.g., survival . . . ).” Am. Compl. ¶¶ 9, 105. The FDA also told BrainStorm it should not enroll only rapid progressors, stating that doing so would not be scientifically justified because the apparently different effect of NurOwn on rapid progressors as compared to on slow progressors was “most likely spurious and misleading.” Id. ¶¶ 10, 112. Nevertheless, “in contravention of FDA’s explicit advice,” BrainStorm utilized its proposed primary efficacy endpoint and enrolled only rapid progressors. Id. ¶ 11. BrainStorm subsequently had additional meetings with the FDA on August 17, 2017;

November 8, 2019; and February 5, 2020. Id. ¶ 8. At the November 2019 meeting, while the Phase 3 Trial was underway, the FDA noted that BrainStorm’s “Phase 2 study failed to show a statistically significant benefit of treatment . . . compared with [a] placebo.” Am. Compl. Ex. A at 52. But the FDA also recommended that BrainStorm “not change the existing primary and secondary efficacy endpoints” because the “study results would still be interpretable,” and “committed to review[] the data, once the study is completed, to determine if there is a regulatory path forward that could potentially lead to approval.” Am. Compl. Ex. A at 52-53. Several months later, Defendant Lebovits represented to investors during a February 18, 2020 quarterly earnings call that the Phase 3 Trial was “aligned with current FDA views” and that

the FDA “commented that this is a well-designed trial.” Am. Compl. ¶¶ 12, 116, 213. During the same call, Defendant Kern stated that the FDA: [C]onfirmed we’re completing a well-run study. It is a very high-quality study, and the data that will be collected at the end of this study is relevant and critical to the assessment of NurOwn efficacy. It’s an important confirmation for us . . . We obviously were very reassured by their position.

Id. ¶ 215. In response to a question whether there was “any one single endpoint . . . if you were to focus in on your FDA discussions,” Kern referred to the FDA’s “ALS guidance document” and stated that “the easiest thing to measure in a trial . . . is function,” and that “there’s a well enough appreciated scale called the ALS functional rating scale, which really forms the foundation of that.” Leiwant Decl. Ex. 4 at 18,1 ECF No. 33-4.2 He added that “[t]here are different ways to evaluate that data and different companies have looked at different aspects of it in terms of slope versus score. And I think that’s a really good discussion that we had with the FDA.” Id. However, during the call, Kern also cautioned, “based on the [Biologic License Application], the FDA will . . . review all the data supporting materials, and then they will make a decision to approve or

disapprove the application. And of course, we can’t speculate on the outcome of that review. . . .” Id. at 10. Kern further noted, “[o]f course, as is usually the case, [FDA] will look at the totality of our data.” Id. at 9. Ultimately, however, the Phase 3 Trial failed to reach statistical significance on its primary endpoint, and BrainStorm announced those results to the public on November 17, 2020. Am. Compl. ¶ 13. In the announcement, BrainStorm acknowledged that the overall population in the Phase 3 Trial failed to have statistically significant results, but represented that it had “identified a superior treatment response in a pre-specified subgroup of patients with less advanced disease.” Id. ¶¶ 14-15. The November 17, 2020 announcement also stated that “[t]he potential risks and

uncertainties include . . . the regulatory approval potential of BrainStorm’s NurOwn® treatment candidate, the success of BrainStorm’s product development programs and research, [and] regulatory and personnel issues . . . .” Leiwant Decl. Ex. 5 at 4, ECF No. 33-5. Plaintiffs point to two issues related to BrainStorm’s representation. First, the purportedly “pre-specified subgroup” was actually identified based on a post hoc exploratory analysis, which,

1 Pincites to the Leiwant Declaration Exhibits reference PDF pagination when internal pagination is not present. ^[2] On a motion to dismiss for failure to state a claim under Rule 12(b)(6), “a district court may consider the facts alleged in the complaint, documents attached to the complaint as exhibits, and documents incorporated by reference in the complaint.” United States ex rel. Foreman v. AECOM, 19 F.4th 85, 106 (2d Cir. 2021). according to FDA, “cannot be used to rescue the trial because of a large chance of a false positive finding.” Am. Compl. ¶ 15; see also id. ¶ 16. Second, this post hoc exploratory analysis “focus[ed] on what is referred to as [a] ‘floor effect,’” or the statistical phenomenon whereby bounded scales like the ALSFRS cannot detect further deterioration after a certain point. BrainStorm “conjectured that the lack of efficacy in the Phase 3 Trial overall was due to the inability to detect efficacy in a

subgroup that was supposedly impacted by [a] ‘floor effect.’” Id. ¶ 15; see also id. ¶ 17. During a February 21, 2021 teleconference with BrainStorm, the FDA gave additional feedback. Id. ¶ 18. First, the FDA told BrainStorm that it interpreted the Phase 3 Trial as a negative trial, that submission of a Biologic License Application (“BLA”) was not appropriate, and that the data did not meet the standard required for approval. Id. Second, with respect to the “floor effect” analysis, the FDA stated that the purported floor effect “did not appear consistent across the study population.” Id. Third, the FDA counseled BrainStorm to “conduct another Phase 3 study, this time incorporating [FDA] input regarding the study design.” Id. Fourth, the FDA expressed concern about the larger number of deaths among subjects treated with NurOwn compared to that

among subjects treated with a placebo. Id. The next day, on February 22, 2021, BrainStorm represented to investors that although the FDA concluded that “the current level of clinical data does not provide the threshold of substantial evidence that FDA is seeking to support a [BLA],” the FDA had advised that that this “does not preclude BrainStorm from submitting a BLA.” Id. ¶ 19 (alteration in original). All the while, BrainStorm “concealed FDA’s concerns about the number of deaths in the Phase 3 Trial’s treatment group, the existence of the deaths themselves, FDA’s invalidation of Brain[S]torm’s ‘floor effect’ analysis, [and] FDA’s recommendation that Brain[S]torm conduct a new trial . . . .” Id. ¶ 21. Eighteen months later—on August 15, 2022—BrainStorm announced that it would go forward and submit a BLA, emphasizing its purportedly “prespecified” efficacy subgroup analysis. Id. ¶¶ 22-23. BrainStorm also highlighted new biomarker analyses from the Phase 3 Trial showing a reduction in a biomarker called Neurofilament Light (“NfL”) thought to be associated with neurodegeneration. Id. ¶ 24. However, Plaintiffs allege that in BrainStorm’s Phase 3 Trial, a

reduction in NfL actually correlated with a worse clinical efficacy outcome and thus amounted to an unexpected and undesirable result. Id. Nevertheless, Defendants touted the data as “going in the direction that we expected with NurOwn and stability.” Id. BrainStorm ultimately submitted its BLA on September 9, 2022. Id. ¶ 25. On November 8, 2022, FDA issued a “refuse to file” (“RTF”). Am. Compl. Ex. A at 54. The RTF informed BrainStorm that its BLA submission was “scientifically incomplete to demonstrate substantial evidence of effectiveness, and that the manufacturing information was grossly deficient to ensure product quality.” Am. Compl. ¶ 28. It noted the absence of “critical information,” including “control materials,” “validation of methods,” and “data demonstrating manufacturing

consistency.” Id. On November 10, 2022, BrainStorm issued a press statement about the RTF. Id. ¶ 26. BrainStorm represented that the RTF discussed only “one item related to the trial not meeting the standard for substantial evidence of effectiveness and Chemistry, Manufacturing and Controls (“CMC”) related items.” Id. ¶ 27. BrainStorm characterized the BLA’s deficiencies as “easily fixable” and CMC issues as “trivial.” Id. ¶ 30. Former senior employees at BrainStorm stated that Individual Defendants “didn’t want anybody to know” about the contents of the RTF, which was “highly unusual and frustrating” because the RTF was directly relevant to these senior employees’ job functions. Id. ¶ 29. On January 11, 2023, BrainStorm met with the FDA to discuss the BLA’s deficiencies. Id. ¶ 31. One week prior to the meeting, BrainStorm’s Chief Medical Officer—Ralph Kern— resigned. Id. At the January meeting, FDA stated “that the lack of efficacy of NurOwn over placebo cannot be explained by a floor effect,” and that the exploratory subgroup analysis “can only be used for hypothesis generation, not as evidence of effectiveness to support approval.” Id.

¶ 32. FDA offered BrainStorm two options—either submit a new BLA with data from new, adequate, and well-controlled clinical investigations, or request that the BLA be filed over protest. Id. On March 27, 2023, BrainStorm informed the public that it used the file-over-protest procedure. Id. ¶ 33. BrainStorm represented that “there was no downside utilizing the File Over Protest pathway,” that BrainStorm had “filed an amendment to the BLA” responding to “most of the outstanding questions the FDA has posed,” that the Phase 3 Trial had “fewer deaths than we expected,” and that “[we] have a very strong safety profile.” Id. When asked by an analyst how the FDA felt about the floor effect analysis, BrainStorm responded that “FDA has certainly seen

this data and clearly . . . has not disagreed with the statements we made.” Id. ¶ 34. On September 25, 2023, the FDA released the Briefing Document regarding NurOwn. Id. ¶ 36. Two days later, the FDA’s Advisory Committee meeting voted 17:1 against FDA approval of NurOwn. Id. At the meeting, a BrainStorm representative—when asked about CMC deficiencies—acknowledged that “additional work needs to be done and complete[d] to fully satisfy the FDA requirements.” Id. ¶ 37. The Briefing Document and Advisory Committee transcript described FDA’s various concerns. Id. ¶ 38. BrainStorm’s share price fell from $11.90 on November 16, 2020—the day before BrainStorm announced that the Phase 3 Trial failed to reach statistical significance on its primary endpoint—to $0.20 on September 28, 2023—the day after the FDA Advisory Committee meeting. Id. ¶¶ 13, 40. During the Class Period (i.e., from February 18, 2020 through September 27, 2023), BrainStorm sold over $73 million in common stock to investors in at-the-market (ATM) offerings, and BrainStorm’s CEO Defendant Leibovits sold nearly $1 million worth of his own BrainStorm stock. Id. ¶¶ 41-42.

LEGAL STANDARDS3 A. Pleading Standards “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Sacerdote v. N.Y. Univ., 9 F.4th 95, 106 (2d Cir. 2021) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). “In assessing the complaint, [a court] must construe it liberally, accepting all factual allegations therein as true and drawing all reasonable inferences in the plaintiffs’ favor.” Id. at 106-07. However, the court must disregard any “conclusory allegations, such as ‘formulaic recitations of the elements of a cause of action.’” Id. at 107 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

A complaint alleging securities fraud must also satisfy heightened pleading requirements set forth in Rule 9(b) and the Private Securities Litigation Reform Act of 1995 (“PSLRA”). Set Cap. LLC v. Credit Suisse Grp. AG, 996 F.3d 64, 75 (2d Cir. 2021). Rule 9(b) requires that “a party . . . state with particularity the circumstances constituting fraud or mistake.” In concrete terms. this means that “a complaint must (1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent.” Emps.’ Ret. Sys. of Gov’t of the V.I. v. Blanford, 794

3 All references to Rules are to the Federal Rules of Civil Procedure. In all quotations from cases, the Court omits citations, alterations, emphases, internal quotation marks, and ellipses, unless otherwise indicated. F.3d 297, 305 (2d Cir. 2015). The PSLRA “expanded on the Rule 9(b) standard.” Anschutz Corp. v. Merrill Lynch & Co., Inc., 690 F.3d 98, 108 (2d Cir. 2012). The PSLRA requires that a plaintiff “(1) specify each misleading statement, (2) set forth the facts on which a belief that a statement is misleading was formed, and (3) state with particularity facts giving rise to a strong inference that the defendant acted with scienter—the required state of mind.” Set Cap. LLC, 996 F.3d at 75.

B. Section 10(b) “To state a cause of action under Section 10(b) . . . , a plaintiff must plead [1] that the defendant made a false statement or omitted a material fact, [2] with scienter, and [3] that plaintiff's reliance on defendant’s action caused plaintiff injury.” Rombach v. Chang, 355 F.3d 164, 169 n.4 (2d Cir. 2004). SEC Rule 10b-5 implements Section 10(b)’s prohibition on false or misleading statements and makes it unlawful for issuers of registered securities to “make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.” 17 C.F.R. § 240.10b-5(b) (2022). The Supreme Court “has found a right of action implied in the words of [§

10(b) of the Exchange Act] and its implementing regulation.” Stoneridge Inv. Partners, LLC v. Sci.-Atlanta, Inc., 552 U.S. 148, 157 (2008). DISCUSSION Defendants argue that the Amended Complaint fails to adequately plead: (1) a false statement or material omission, (2) facts to support a strong inference of scienter, and (3) loss causation, required elements for each of Plaintiffs’ causes of action. As explained below, the Court agrees with Defendants that certain statements fail to satisfy the first element, but it holds that for the remainder of the statements Plaintiffs have adequately pleaded all three elements. I. Section 10(b) Defendants argue that the Complaint fails to adequately plead any of the three elements of a 10(b) claim. The Court considers each in turn. A. False or Misleading Statement analyses.” Pls.’ Opp’n at 11 (citing Am. Compl. ¶¶ 213-17). And with respect to the endpoint, the FDA told Defendants that using rate of change in the ALSFRS-R score was “of unclear clinical significance and therefore not suitable as the primary efficacy endpoint in a study intended to provide primary evidence of effectiveness.” Am. Compl. ¶ 217. The challenged statements are therefore actionable because they “plausibly contradict the FDA’s immediately preceding

feedback.” In re Y-mAbs Therapeutics, Inc. Sec. Litig., No. 23 Civ. 431, 2024 WL 451691, at[*11] (S.D.N.Y. Feb. 5, 2024). Defendants’ principal argument in response is that their statements about the Clinical Trial—in terms of both the soundness of its methodology and the conclusions that they drew from its results—constitute non-actionable opinion statements. See Defs.’ Br. at 19-20 (citing In re Philip Morris Int’l Inc. Sec. Litig., 2021 WL 4135059, at *9). “[S]ecurities law is not “a tool to second guess how clinical trials are designed and managed.” In re Keryx Biopharmaceuticals, Inc., Sec. Litig., No. 13 Civ. 1307, 2014 WL 585658, at *1 (S.D.N.Y. Feb. 14, 2014); see also Kleinman v. Elan Corp., plc, 706 F.3d 145, 154 (2d Cir. 2013) (finding that plaintiffs’ disagreement

with drug trial methodology and allegation that company “deviated from the established protocol” for such trials were insufficient to allege falsity). But at least some of the statements challenged by Plaintiffs are not Defendants’ own opinions as to the soundness of their trial design—rather, they are Defendants’ statements of fact about the FDA’s views on their trial design, and whether the FDA agreed with Defendants’ views. And Plaintiffs have sufficiently alleged that the FDA did not. Defendants point to what they characterize as “encouraging feedback” from the FDA, such as: (1) the FDA’s recommendation at the November 2019 meeting that BrainStorm “not change the existing primary and secondary efficacy endpoints” because the “study results would still be interpretable”; and (2) the FDA’s stated “commit[ment] to reviewing the data, once the study is completed, to determine if there is a regulatory path forward that could potentially lead to approval.” Am. Compl. Ex. A at 52-53. But this feedback falls far short of the FDA stating that Defendants’ Phase 3 Trial was “well- designed,” or that the FDA “confirmed” that it was “well-run”—which Plaintiffs’ allegations as a whole tend to contradict. See Abramson v. Newlink Genetics Corp., 965 F.3d 165, 178 (2d Cir.

2020) (concluding that statements were actionable because a “jury could conclude that the sheer volume of competing facts required” the defendant “either to speak less confidently” about the results or “to disclose the existence of” contrary information). Defendants also note that they are not required to disclose interim feedback from the FDA. See Defs.’ Br. at 21 n.21. See In re Sanofi Sec. Litig., 87 F. Supp. 3d 510, 534 (S.D.N.Y. 2015) (“The law [does] not impose an affirmative duty to disclose the FDA’s interim feedback just because it would be of interest to investors.”). But “[h]ere, Defendants made several public statements concerning the back-and-forth with the FDA, which indicates that Defendants themselves understood that the FDA’s feedback was material. Having done this, Defendants were not permitted to disclose this interim feedback in a

partial and misleading manner.” In re Y-mAbs Therapeutics, Inc. Sec. Litig., 2024 WL 451691, at[*11] . Accordingly, the Court concludes that Plaintiffs have adequately alleged false or misleading statements as to the FDA’s views on trial design. b. Statements about “prespecified subgroup results.” Plaintiffs point to various statements referencing “prespecified subgroup results,” including: e Lebovits’s statement on November 17, 2020 that trial participants in a “prespecified subgroup of patients with less advanced disease” exhibited a superior treatment response. Am. Compl. 218-220. e BrainStorm’s statements in a press release on August 15, 2022 that a correction to the statistical analysis produced “newly published results . . . employ[ing] the efficacy model as prespecified in the statistical analysis plan” and “result[ing] in a statistically significant treatment difference . . . in the prespecified efficacy subgroup”; and statements on an investor call the same day that the correction led to “statistical significance in . . . the trial’s pre-specified efficacy subgroup” and had “meaningful positive implications.” Jd. 225-29. e Lindborg’s statement that “these “pre-specified analyses [are] important” and “give objectivity and a different level of rigor to being able to draw conclusions from the trial” and “carry a different level of credence.” Jd. ¥ 231. Plaintiffs maintain that these statements were false because “these subgroup analyses were not prespecified for hypothesis testing,” but rather were “exploratory and hypothesis generating and do not constitute evidence [of] effectiveness.” Pls.’ Opp’n at 12. Defendants argue that they “did not falsify any facts about the analysis of the trial data,” and that they accurately described the subgroup as “participants with a baseline score of at least 35.” Def. Br. at 20 n.20 (quoting Ex. 6 at 6). That may be true, but Defendants do not directly address Plaintiffs’ point that it was incorrect to describe this subgroup as “pre-specified.” As the FDA briefing document clearly explains, “it is important to note that these subgroup analyses were not prespecified ....” See Am. Compl. § 145 (citing Ex. A at 37). And Defendants’ mischaracterization of the subgroup analysis as pre-specified was important—i.e., material— because, as the FDA explained, “[p]respecification is the cornerstone of reliable regulatory evidence,” and that, “[i]n the presence of an overall negative trial result,” a post-hoc subgroup analysis like the one at issue here “cannot be used to rescue the trial because of a large chance of a false positive finding.” /d. § 146 (quoting Ex. B at 123). Defendants could have stated the results of their subgroup analysis without characterizing it as “pre-specified,” which it plainly was not.

Accordingly, the Court concludes that Plaintiffs have adequately alleged a false or misleading statement with respect to pre-specification. c. Statements about a “floor effect.” Plaintiffs point to various statements referencing a “floor effect” in their clinical trials, including: e Apress release issued on November 14, 2022 stating that “after controlling for the impact of the ALSFRS-R floor effect, participants treated with NurOwn had a higher rate of clinical response and less function lost across 28 weeks compared to placebo.” Am. Compl. § 239. e Astatement by Lindborg on March 27, 2023 that the Trial’s failure to demonstrate efficacy was “driven by participants who entered the trial with advanced ALS, who fell victim to the floor effect... .” Jd. 4251. In response to a question about the floor effect, Lindborg added, “the FDA certainly has seen this data and clearly has not disagreed with the statements we’ve made.” Jd. 252-53. e Astatement by Lindborg during a quarterly earnings call on May 15, 2023 that the Phase 3 Trial’s findings as to a pre-specified subgroup of participants with less advanced disease “enabled us to focus on data that is not as impacted by the floor effect in the scale. ...” Jd. 265. Plaintiffs maintain that these statements were false because, “on February 16, 2021”—i.e., long before the challenged statements quoted above—the “FDA told Defendants the Trial’s failure to demonstrate efficacy was not due to supposed floor effects, because the floor effect was inconsistent across the study population.” Pls.’ Opp’n at 12. (citing Am. Compl. § 130). According to Plaintiffs, the FDA explained that, “if a ‘floor-effect’ accounted for the study’s failure, a similar floor effect would be present in both the treatment and placebo arm (it was not).” /d. The FDA reiterated this view at the meeting on January 11, 2023. See id. (citing Am. Compl. J 166). Defendants may have disagreed with the FDA’s assessment—and, as noted supra, differences of opinion about the results of a clinical trial are generally not actionable. But here, Lindborg stated that “the FDA certainly has seen this data [on floor effects] and clearly has not disagreed with the statements we’ve made,” id. ¶¶ 252-53 (emphasis added), which was not correct. The Court therefore concludes that Plaintiffs have adequately alleged false or misleading statements regarding the FDA’s views as to floor effects. Defendants nevertheless contend that these statements were not false or misleading, because the FDA’s feedback regarding the floor effect was not as unequivocal as Plaintiffs suggest.

According to Defendants, the FDA stated only that the “‘floor effect’ did not appear to be consistent.” Def. Br. at 20 (quoting Leiwant Decl. Ex. 16 at 53, ECF No. 33-16) (emphasis added). Defendants also emphasize that feedback from the FDA at the February 16, 2021 meeting was not final and therefore not material, see id., as a “defendant pharmaceutical company does not have a duty to reveal interim FDA criticism regarding study design or methodology.” Gillis v. QRX Pharma Ltd., 197 F. Supp. 3d 557, 584 n.13 (S.D.N.Y. 2016). The February 16, 2021 feedback from the FDA was arguably equivocal (as Defendants suggest) and interim in nature, but the January 11, 2023 feedback was neither of those things: the FDA stated conclusively that NurOwn’s lack of efficacy “cannot be explained by a floor effect.”

Am. Compl. ¶ 166 (quoting Ex. A at 37-38). Thus, Lindborg’s statement that the FDA “clearly has not disagreed with the statements [Defendants] made” regarding floor effects, id. ¶¶ 252-53, was plainly not correct. And given that Defendants made “several public statements concerning the back-and-forth with the FDA” about this issue, they cannot claim now that the FDA’s feedback on this point was immaterial. In re Y-mAbs Therapeutics, Inc. Sec. Litig., 2024 WL 451691, at[*11] . Indeed, the materiality of the FDA’s views on floor effects is evidenced by the fact that an investor posed a question specifically about it. See Shapiro, 652 F. Supp. 3d at 421 (defining materiality of an omitted fact as something that a “reasonable investor” would regard as “significantly alter[ing] the total mix of information made available.”). d. Statements about biomarker data. Plaintiffs point to various statements concerning biomarker data, including: e A statement by Kern during an investor conference call on August 15, 2022 that “we consistently see biomarkers that are statistically relevant to clinical endpoints,” including “increasing markers of neuro protection” that “appear to be important in explaining the clinical response that we have observed.” Am. Compl. § 232. e Apress release issued on November 14, 2022 stating that “new biomarker data” “provided further evidence confirming NurOwn’s multifaceted mechanism of action.” Id. ¥ 240. e Astatement by Lindborg during a quarterly earnings call on May 15, 2023 that “we are further encouraged by the strong and consistent biomarker data, which are predictive of clinical response,” and that “we have clinical and biomarker data that demonstrate evidence of significantly better outcomes in participants treated with NurOwn.” Id. 264-65. Plaintiffs maintain that these statements were false, as the FDA’s September 2023 briefing document ultimately concluded that Defendants’ biomarker data “was associated with a worse clinical outcome,” “greater loss of function” and was “the opposite of what would be expected.” Pls.” Opp’n at 12-13 (quoting Am. Compl. 150, 204). But “Plaintiff[s] do[] not dispute Defendants’ representations” regarding the presence of the referenced biomarker; rather “Plaintiff[s] argue[] that [the referenced biomarker] is not an appropriate or accurate barometer for [NurOwn’s] efficacy.” Zagami v. Cellceutix Corp., No. 15 Civ. 7194, 2016 WL 3199531, at[*12] - 13 (S.D.N.Y. June 8, 2016). While the FDA did not agree with Defendants’ interpretation of the biomarker data, Plaintiffs do not allege that Defendants misrepresented that particular fact. Defendants only offered their own interpretation of the biomarker data. As noted above, differences of opinion about the design or results of a clinical trial do not establish a false or misleading statement. Accordingly, the Court concludes that Plaintiffs have not alleged a misstatement with respect to biomarker data.

e. Statements about safety. Plaintiffs point to various statements concerning safety and patient deaths, including: e Astatement by Lindborg on March 27, 2023 that “[w]e have fewer deaths than we expected. We have a very strong safety profile.” Am. Compl. § 247. e A statement by Lindborg during a quarterly earnings call on March 30, 2023 that “the physician’s [sic] closest to our trial, including our Data Safety Monitoring Board, have continued to express that there were no safety concerns... .” Jd. 262. Plaintiffs maintain that these statements were false, because in February 2021, “FDA told BrainStorm it was concerned about the large number of deaths,” as “there were over three times the number of deaths in the Trial’s treatment arm, higher numbers of serious adverse events, higher incidence of respiratory failure and pain.” Pls.’ Opp’n at 13 (quoting Am. Compl. 4 131, 198- 99). Overall, “[s]urvival in the [Trial] was worse at study completion for subjects who received NurOwn.” /d. (citing Am. Compl. § 132). In their briefs Defendants do not address Plaintiffs’ arguments about these particular statements head-on; here, the Court concludes that Plaintiffs have adequately alleged misstatements regarding safety and that such misstatements were plainly material. x x x In sum, the Court concludes that Plaintiffs have sufficiently alleged false or misleading statements with respect to the FDA’s views on trial design; pre-specification; the FDA’s views on floor effects; and safety. Accordingly, as further discussed below, Defendants’ motion to dismiss is denied with respect to any claims arising from those particular categories of statements. But Defendant’s statements regarding biomarker data and any other opinion statements regarding Defendants’ own interpretation of their clinical trial, as well as any statements properly characterized as forward-looking or puffery regarding the likelihood of FDA approval, are not actionable. Accordingly, Defendant’s motion is granted as to such statements.

B. Scienter