Corrected: Facing decades in prison, two biotech leaders charged with wire and stock fraud, lying to investigators

Two biotech leaders face the possibility of decades in prison after they were indicted by a Maryland federal grand jury on multiple counts related to a scheme to defraud investors about the potential of leronlimab, a monoclonal investigational drug also known as PRO 140.

Nader Bourhassan

Nader Bourhassan, former CEO of CytoDyn, has drawn attention over the past two years for loudly touting leronlimab as an effective treatment for HIV, cancer and Covid-19, despite clinical data to the contrary.

A federal grand jury indicted Bourhassan, as well as the head of the company that ran the biotech’s clinical trials, on charges of lying to the public and investors about the data behind drug trials and the status of its Biopharmaceutical License (BLA) application in a scheme to drive up its share price.

Bourhassan and Kazem Kazempour, Co-Founder, President and CEO of Amarex Clinical Research, were each charged with one count of conspiracy to commit securities fraud and wire fraud, three counts of securities fraud, and two counts of wire fraud related to the BLA HIV scheme. .

Both Bourhassan and Kadhempur brought additional charges for other alleged plots.

Bourhassan is charged with another count of securities fraud and an additional number of wire fraud related to the COVID-19 scheme that also includes the drug leronlimab, and three counts of insider trading.

Kazem Kazempur

In addition, Kazempour was charged with making false statements to federal law enforcement agents.

Kazempur’s subsidiary, Amarex, administered the clinical trials for CytoDyn and was the regulatory agent in interactions with the FDA. Kazempour also served on CytoDyn’s disclosure committee.

Biotech leaders could see decades behind bars if convicted. Bourhassan and Kazempour face a maximum sentence of 20 years in prison for both securities fraud and wire fraud, and five years in prison for conspiracy. Kazhimpour also faces a maximum penalty of five years in prison for making false statements.

It all started in 2020 when CytoDyn told contributors that 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 filings in federal court, Pourhassan told Kazempour to submit the anti-terror law to the FDA even if it was incomplete, even though the two men knew the FDA would reject it. CytoDyn then allegedly lied to investors about filing a full BLA, and sold millions of dollars’ worth of company stock based on that lie.

CytoDyn received a denial letter on file in July 2020.

In January of 2020, the company began promoting leronlimab as a treatment for COVID-19, going so far as to claim that the antibody had “saved” dying Covid-19 patients. The claims sent share prices soaring, and Bourhassan sold millions of dollars’ worth of shares.

These near-daily allegations via press releases and on YouTube have caught the attention of federal investigators. In 2021, CytoDyn announced that both the Department of Justice and the Securities and Exchange Commission had subpoenaed the company and some of its executives as part of an investigation into the company’s solicitation and marketing practices.

Despite the investigation, the company continued to make claims about the drug’s effect on Covid-19, even though data showed it was ineffective.

At the beginning of this year, CytoDyn shed Pourhassan as CEO in an effort to rehabilitate its image after disastrous attempts to market leronlimab as a panacea for HIV, Covid-19 and cancer.

Shortly after Pourhassan was fired, the US Food and Drug Administration (FDA) issued a rare public warning to the company when a promotional video surfaced that looked like a news report showing Pourhassan “dramatically” describing clinical data for leronlimab’s efficacy against Covid-19.

Three separate agencies are investigating, including the FBI’s Baltimore Field Office, FDA-OCI, and USPIS.

Editor’s note: An earlier version of this story incorrectly stated that a grand jury found Bourhassan and Kazempour guilty, when the grand jury indicted them. The story has been corrected. Address has been updated. Endpoints News regrets the error.

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