Two biotech leaders are facing the possibility of decades in prison after a federal grand jury in Maryland indicted them on multiple counts related to a scheme to defraud investors about the potential of the drug leronlimab, an experimental monoclonal antibody drug also known as PRO 140. .
Former CytoDyn CEO Nader Pourhassan has garnered attention over the past two years for touting leronlimab as an effective treatment for HIV, cancer and Covid-19 despite clinical data to the contrary.
A federal grand jury indicted Pourhassan, as well as the president of the company that managed the biotech’s clinical trials, on charges of lying to the public and investors about the data behind its drug trials and the status of its biologics license application. (BLA) in a scheme to boost its share price.
Pourhassan and Kazem Kazempour, co-founder, chairman and CEO of Amarex Clinical Research, were charged with one count of conspiracy to commit securities fraud and wire fraud, three counts of securities fraud, and two counts of related wire fraud. to an HIV BLA regimen.
Both Pourhassan and Kazempour faced additional charges for other alleged conspiracies.
Pourhassan was charged with another count of securities fraud and an additional count of wire fraud related to a COVID-19 scheme also involving the drug leronlimab, and three counts of insider trading.
Kazem KazempourKazempour was also accused of making false statements to federal law enforcement officials.
Kazempour’s company, Amarex, managed CytoDyn’s clinical trials and was the regulatory agent in interactions with the FDA. Kazempour also served on the CytoDyn Disclosure Committee.
Both biotech leaders face decades behind bars if convicted. Pourhassan and Kazempour face a maximum sentence of 20 years in prison for each securities fraud and wire fraud, and five years in prison for conspiracy. Kazempour also faces a maximum sentence of five years in prison for making false statements.
It all started in 2020 when CytoDyn told shareholders it had submitted a full BLA for leronlimab as a combination therapy with an antiretroviral regimen for HIV patients taking multiple medications.
But according to federal court records, Pourhassan told Kazempour to send the BLA to the FDA, even though it was incomplete, even though they both knew the FDA would reject it. CytoDyn allegedly lied to investors that a full BLA had been submitted and sold millions of dollars worth of company stock based on this lie.
CytoDyn received a letter of refusal to file in July 2020.
In January 2020, the company began touting leronlimab as a treatment for COVID-19, even claiming that the antibody had “saved” dying patients from Covid-19. The claims led to rising share prices and Pourhassan sold millions of dollars worth of shares.
These almost daily claims through press releases and on YouTube have attracted the attention of federal investigators. In 2021, CytoDyn announced that both the Department of Justice and the Securities and Exchange Commission subpoenaed the company and some of its executives as part of an investigation into the company’s promotion and marketing practices.
Despite the investigation, the company continued to make claims about the drug’s impact on Covid-19, even though data showed it was ineffective.
Earlier this year, CytoDyn dismissed Pourhassan as CEO in a bid to rehabilitate its image after disastrous attempts to market leronlimab as a comprehensive treatment for HIV, Covid-19 and cancer.
Shortly after Pourhassan was ousted, the FDA issued a rare public warning to the company when a promotional video that read like a news report featuring Pourhassan “significantly” mischaracterized clinical data of leronlimab’s effectiveness against Covid-19.
Three separate agencies are investigating, including the FBI Field Office in Baltimore, FDA-OCI and USPIS.
Editor’s Note: An earlier version of this story incorrectly stated that a grand jury found both Pourhassan and Kazempour guilty when the grand jury indicted them. The story has been corrected; the title has been updated. Endpoints News regrets the error.