| COMPANY |
CytoDyn, Inc. |
| COURT |
United States District Court for the Western District of Washington |
| CASE NUMBER |
21-cv-05190 |
| JUDGE |
The Honorable Benjamin H. Settle |
| CLASS PERIOD |
March 27, 2020 - March 9, 2021 |
| SECURITY TYPE |
Common Stock |
Case Background:
CytoDyn is a biotechnology company that has focused on the development and commercialization of a drug named “Leronlimab” which has long been promoted as a potential therapy for HIV patients. Since the beginning of the global COVID-19 pandemic, CytoDyn began aggressively touting Leronlimab as a treatment for COVID-19. Following CytoDyn’s pivot to hyping Leronlimab as a treatment for COVID-19, CytoDyn’s stock price rose exponentially.
The Class Period commences on March 27, 2020, when CytoDyn issued a press release regarding Leronlimab’s use in treating COVID-19 patients entitled “Leronlimab Used in Seven Patients with Severe COVID-19 Demonstrated Promise with Two Intubated Patients in ICU, Removed from ICU and Extubated with Reduced Pulmonary Inflammation.” Throughout the Class Period, CytoDyn continued to tout Leronlimab as a potential treatment for COVID-19 and to pump up the stock price of CytoDyn while executives aggressively sold shares. Indeed, while CytoDyn’s stock price was sufficiently pumped with the COVID-19 cure hype, long-term shareholders, including defendants Nader Z. Pourhassan, CytoDyn’s Chief Executive Officer, and Michael Mulholland, CytoDyn’s Chief Financial Officer, dumped millions of shares.
Following the cash-out by CytoDyn insiders and long-term shareholders, the defendants’ scheme began to unravel. On Friday, March 5, 2021 after the close of trading, and continuing over that weekend, CytoDyn issued press releases describing the results of the Phase IIb/III data on Leronlimab. The press releases had titles such as “Cytodyn to File Accelerated Rolling Review with MHRA and Interim Order (IO) with Health Canada for COVID-19” and “Cytodyn’s Phase 3 Trial Demonstrates Safety, a 24% Reduction in Mortality and Faster Hospital Discharge for Mechanically Ventilated Critically Ill COVID-19 Patients Treated with Leronlimab.” However, hidden in the press releases was a disclosure that the primary endpoint of the study—lowering all-cause mortality at Day 28— was not statistically significant. Following the issuance of its press releases, CytoDyn was accused of “massaging the data” and squeezing good news out of a failed study, the results of which CytoDyn reportedly sat on pending regulatory discussions.
Followed the release of the data, the price of CytoDyn’s common stock fell over 28% to close at $2.91 on March 8, 2021. On March 9, 2021, the price of CytoDyn’s common stock continued to fall, dropping an additional 19% to close at $2.35.
The complaint alleges that, throughout the Class Period, the defendants made false and/or misleading statements and/or failed to disclose that CytoDyn’s development and marketing of Leronlimab as a treatment for COVID-19 was not commercially viable.y as possible.
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