A Maryland jury has convicted both former CytoDyn CEO Nader Pourhassan, Ph.D., and ex-Amarex CEO Kazem Kazempour on several charges tied to defrauding biotech investors.
Pourhassan was found guilty of four counts of securities fraud, two counts of wire fraud and three counts of insider trading, while Kazempour was convicted of one count of securities fraud and one count of wire fraud, according to a Dec. 10 release from the U.S. Department of Justice (DOJ).
Pourhassan is known for his decade serving as CytoDyn’s president and CEO until being ousted by the board in January 2022. Meanwhile, Kazempour is the co-founder and former CEO of Amarex Clinical Research, a CRO that managed CytoDyn’s trials and interactions with the FDA. Kazempour was also a member of CytoDyn’s disclosure committee, which approves the biotech’s filings with the U.S. Securities and Exchange Commission.
The two execs exaggerated the progress of CytoDyn’s leronlimab—an investigational monoclonal antibody being tested as a COVID-19 and HIV treatment—and deceived investors about the timeline and status of FDA submissions to boost the biotech’s stock price and reel in new investors, according to the DOJ.
Between 2018 and 2021, CytoDyn sought FDA approval for leronlimab. The two leaders made false and misleading representations about the status of the drug’s biologics license application (BLA) in efforts to sell personal shares of the biotech’s stock at artificially inflated prices, according to the release.
More specifically, the pair said the drug had been submitted for approval to treat HIV while knowing the submitted BLA was incomplete, and that the FDA wouldn’t accept it for review, according to the DOJ.
Ex-CytoDyn CEO Pourhassan also misrepresented the status of leronlimab’s development as a potential treatment for COVID-19, including clinical trial results and the likelihood of regulatory approval. Pourhassan knew that leronlimab’s clinical studies had failed and voiced concerns that the submitted data was misleading, according to the conviction.
During this timeframe, CytoDyn secured around $300 million from investors and funneled more than $22 million of that money to Amarex. Additionally, Pourhassan received $4.4 million and Kazempour made more than $340,000 from CytoDyn stock sales.
“These convictions demonstrate that those who make misleading statements about clinical trial results to the public—including to healthcare providers and patients—will be held accountable for their actions,” Robert Iwanicki, special agent in charge at the FDA Office of Criminal Investigations Los Angeles Field Office, said in the release. “The agency will continue to work with other agencies to bring to justice those who place profits above public health.”
The two former biopharma leaders will be sentenced by a federal judge. Both face up to 20 years in prison for each count of securities fraud, wire fraud and insider trading.