Nader Z. Pourhassan, PhD, the former CEO of CytoDyn, was sentenced yesterday to 30 months in prison, more than a year after he was convicted on charges that included four counts of securities fraud, two counts of wire fraud, and three counts of insider trading.
Pourhassan, 62, of Lake Oswego, OR, was convicted of misleading investors about his company’s development of leronlimab, then selling his personal stock in the company at artificially inflated prices, in the process lying to investors so he could engage in insider trading, the U.S. Department of Justice (DoJ) announced.
Pourhassan sold his 4.8 million shares of CytoDyn stock after making false announcements to investors, pocketing $4.4 million by doing so, federal prosecutors alleged according to their indictment, other court documents, and evidence presented at trial.
Pourhassan was sentenced yesterday by U.S. District Judge Paula Xinis of the U.S. District Court for the District of Maryland. Xinis was appointed to her position by President Barack Obama in 2015 and confirmed the following year by the U.S. Senate.
“Pourhassan exploited a deadly public health crisis to intentionally deceive investors and the public out of millions—all so that he could enrich himself,” Kelly O. Hayes, U.S. Attorney for the District of Maryland, said in a DoJ statement issued yesterday. “As this sentence makes clear, executives who mislead investors and manipulate the truth for personal gain will be held accountable. Our office will continue to aggressively pursue those who put greed ahead of honesty and the rule of law.”
$5.3M+ restitution, $4.4M+ forfeit
At his sentencing in December 2024, Pourhassan was ordered to pay more than $5.3 million in restitution, and to forfeit more than $4.4 million.
Added Assistant Attorney General A. Tysen Duva of the Justice Department’s Criminal Division: “This type of fraud exploits vulnerable Americans, undermines the integrity of our financial markets, and erodes the trust that investors place in public companies.”
The FBI, the FDA’s Office of Criminal Investigations (OCI), and the U.S. Postal Inspection Service investigated the case against Pourhassan, who had been convicted with Kazem Kazempour, the former CEO of Amarex Clinical Research. Amarex is a Germantown, MD-based contract research organization hired to conduct Cytodyn’s clinical trials and serve as the company’s representative with the FDA.
On January 16, Xinis denied a motion by Pourhassan for judgment of acquittal or a new trial and denied Kazempour’s motion for acquittal.
But Xinis did grant Kazempour’s motion for a new trial and vacated the two counts on which he was convicted at the original trial—one count of securities fraud and one count of wire fraud related to his submission of the application for approval from the FDA and attempt to trade Cytodyn shares the following day. Xinis concluded that Kazompour was prejudiced by being tried alongside Pourhassan.
“Kazempour contends that a joint trial with Pourhassan unfairly confused the jury and prejudiced Kazempour such that the jury likely convicted him on an insider trading theory, even though he had not been charged with insider trading. The Court agrees,” Judge Xinis wrote in her memorandum opinion.
CytoDyn is a publicly traded drug developer based in Vancouver, WA. Leronlimab is a humanized IgG4 monoclonal antibody candidate initially designed to treat HIV by blocking signaling by the CCR5 receptor. CytoDyn shifted development of leronlimab to COVID-19 during the pandemic.
According to CytoDyn’s current pipeline posted on its website, leronlimab is in development for numerous indications in oncology and inflammation in addition to HIV, with a long-acting version of leronlimab in preclinical phase.
Between 2018 and 2021, federal prosecutors alleged that Pourhassan intentionally misled investors about leronlimab’s prospects for FDA approval, in order to artificially inflate the price of CytoDyn’s stock and attract new investors.
FDA rebuke
However, in May 2021, the FDA issued a statement rebuking some claims made by CytoDyn about its leronlimab program (then called Vyrologix) after the company said results of two trials showed clinical benefits for the COVID-19 treatment.
At issue were results from the 86-patient Phase II CD10 study (NCT04343651), which studied Vyrologix’s effect on mild-to-moderate COVID-19; and the 394-patient, Phase IIb/III CD12 trial (NCT04347239), which studied the drug’s effect on severe symptoms of respiratory illness associated with COVID-19.
In CD10, the FDA reported, Vyrologix showed no clinically meaningful differences in average change in “total clinical symptom score” from baseline to Day 14 between study arms (-3.5 in the leronlimab group versus -3.4 in the placebo group). Also, CD10 met none of its secondary endpoints—including mortality, time to symptom resolution, and time to return to normal activity.
In CD12, the FDA continued, no difference was seen in mortality (20.5% in the leronlimab treatment group and 21.6% in the placebo treatment group); or on any of the secondary endpoints, for example, with no difference on the average length of hospitalization (21.4 days in both the leronlimab and the placebo treatment groups). CytoDyn, however, cited a sub-group analysis showing that Vyrologix decreased mortality at 14 days by 82% in 62 critically ill patients (hospitalized patients receiving invasive mechanical ventilation (IMV) or ECMO (extracorporeal membrane oxygenation)).
“With the conclusion of both the CD10 and CD12 clinical trials, it has become clear that the data currently available do not support the clinical benefit of leronlimab for the treatment of COVID-19,” the FDA declared in a statement that was unusual because the agency typically does not comment on unapproved drug candidates.
In 2022, CytoDyn’s board terminated Pourhassan as CEO and president, with CFO Antonio Migliarese succeeding him as interim president. CytoDyn disclosed no reason for the leadership change.
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