Reported by: U.S. Department of Justice

A federal grand jury in the District of Maryland returned an indictment that was unsealed today charging two men for their roles in schemes to defraud investors in CytoDyn Inc., a publicly traded biotechnology company (OTCQB: CYDY) based in Vancouver, Washington.

According to court documents, Nader Pourhassan, 59, of Lake Oswego, Oregon, and Kazem Kazempour, 69, of Potomac, Maryland, allegedly engaged in a conspiracy to defraud investors through false and misleading representations and material omissions relating to CytoDyn’s development of leronlimab, a monoclonal antibody investigational drug also known as PRO 140, as a potential treatment for human immunodeficiency virus (HIV). Pourhassan and Kazempour allegedly deceived investors about the timeline and status of CytoDyn’s regulatory submissions to the U.S. Food and Drug Administration (FDA) to artificially inflate and maintain the price of CytoDyn’s stock and attract new investors, and for their personal benefit, including by selling their personal shares of CytoDyn stock.

Pourhassan was CytoDyn’s president and CEO at the time of the alleged fraud. Kazempour is the co-founder, president, and CEO of Amarex Clinical Research LLC (Amarex), a private company with offices in Germantown, Maryland, that managed CytoDyn’s clinical trials, and was CytoDyn’s regulatory agent in interactions with the FDA. Kazempour also served on CytoDyn’s Disclosure Committee, which was responsible for reviewing and approving CytoDyn’s periodic filings with the U.S. Securities and Exchange Commission.

The indictment alleges that Pourhassan and Kazempour made and caused CytoDyn to make materially false and misleading representations about the timelines by which CytoDyn and Amarex would complete and submit CytoDyn’s biologics license application (BLA) for leronlimab’s treatment of HIV to the FDA. In April 2020, after CytoDyn and Amarex repeatedly missed publicized timelines, Pourhassan allegedly directed Kazempour and Amarex to submit the BLA – even if it was incomplete – so that Pourhassan and CytoDyn could announce to investors that the BLA had been submitted. Pourhassan and Kazempour allegedly knew that the FDA would refuse to review an incomplete BLA.

After Kazempour and Amarex allegedly submitted the incomplete BLA at Pourhassan’s direction, Pourhassan and CytoDyn misrepresented in a press release that a “complete” BLA had been submitted to the FDA when, in truth and in fact, it had not. Pourhassan then allegedly sold millions of dollars’ worth of CytoDyn stock based on material non-public information, including information about the fact that the BLA was, in truth and in fact, incomplete when submitted.

Read full report: https://www.justice.gov/opa/pr/two-biotech-ceos-charged-securities-fraud-schemes