Frank Reynolds (file photo)

Boston ju­ry finds biotech CEO guilty of fleec­ing in­vestors, ob­struc­tion of jus­tice

The biotech CEO who promised to end “thou­sands of years of mor­phine and opi­ate ad­dic­tion” and al­leged­ly told in­vestors they could re­al­ize huge gains by in­vest­ing in his com­pa­ny — which he said was worth $1 bil­lion dol­lars be­fore it rapid­ly ran out of cash — has been con­vict­ed of fraud by a Boston ju­ry.

Frank Reynolds, CEO of Pixar­Bio and for­mer head of In­Vi­vo Ther­a­peu­tics, was found guilty of ly­ing to in­vestors to dri­ve up the stock price, Law360 re­port­ed. He was con­vict­ed on all counts, in­clud­ing se­cu­ri­ties fraud, ma­nip­u­la­tive trad­ing and ob­struc­tion of jus­tice.

Pros­e­cu­tors ac­cused Reynolds of false­ly telling in­vestors that Pixar­Bio had raised $30 mil­lion and was with­in two years of bring­ing a re­place­ment for opi­oid painkillers to mar­ket. Ken­neth Strom­s­land, the for­mer VP of in­vestor re­la­tions at Pixar­Bio, tes­ti­fied that Reynolds led in­vestors to be­lieve that the com­pa­ny was in talks to be bought by Pur­due Phar­ma, the mak­ers of Oxy­Con­tin.

Strom­s­land, along with M Jay Herod, a friend of Reynolds, pled guilty to fraud charges ear­li­er this year.

Reynolds’ de­fense at­tor­ney, David Ax­el­rod, ar­gued Reynolds had an “hon­est­ly held, sin­cere be­lief” that the com­pa­ny would suc­ceed.

Found­ed in 2013, Pixar­Bio re­verse merged its way on­to the pub­lic mar­ket in 2016, while Reynolds tout­ed his con­nec­tions to the fa­mous MIT pro­fes­sor Robert Langer. Bare­ly a year af­ter they an­nounced their stock was over­sub­scribed with an ex­pect­ed $30 mil­lion raised, the com­pa­ny ap­peared to be in sham­bles. Amid an SEC in­ves­ti­ga­tion, they re­duced staff from 27 to 10 and were forced to leave their $23,341 per-month Med­ford of­fice for a $3,003 of­fice in Salem, New Hamp­shire. The in­dict­ments came in April 2018.

The three be­gan trad­ing de­cep­tive­ly to raise the stock price in 2016, pros­e­cu­tors al­leged, and con­tin­ued in­to 2017.  They co­or­di­nat­ed moves and at times paid ar­ti­fi­cial­ly high stock prices in or­der to raise the com­pa­ny’s val­ue, the gov­ern­ment said.

An SEC com­plaint said the com­pa­ny raised $12.7 mil­lion from 211 in­vestors. Some of those in­vestors launched a class ac­tion suit against the com­pa­ny.

In ad­di­tion to in­vestors, Strom­s­land and the pros­e­cu­tor de­scribed Reynolds mis­lead­ing em­ploy­ees in some­times fan­ci­ful ways. Strom­s­land said Reynolds told peo­ple he was par­a­lyzed from a back in­jury and gave em­ploy­ees a signed pic­ture of the ceil­ing he stared up at for 7 years, ac­cord­ing to Law360. US at­tor­ney Leslie Wright said Reynolds lied about cur­ing his own paral­y­sis.

Health­care Dis­par­i­ties and Sick­le Cell Dis­ease

In the complicated U.S. healthcare system, navigating a serious illness such as cancer or heart disease can be remarkably challenging for patients and caregivers. When that illness is classified as a rare disease, those challenges can become even more acute. And when that rare disease occurs in a population that experiences health disparities, such as people with sickle cell disease (SCD) who are primarily Black and Latino, challenges can become almost insurmountable.

Jacob Van Naarden (Eli Lilly)

Ex­clu­sives: Eli Lil­ly out to crash the megablock­buster PD-(L)1 par­ty with 'dis­rup­tive' pric­ing; re­veals can­cer biotech buy­out

It’s taken 7 years, but Eli Lilly is promising to finally start hammering the small and affluent PD-(L)1 club with a “disruptive” pricing strategy for their checkpoint therapy allied with China’s Innovent.

Lilly in-licensed global rights to sintilimab a year ago, building on the China alliance they have with Innovent. That cost the pharma giant $200 million in cash upfront, which they plan to capitalize on now with a long-awaited plan to bust up the high-price market in lung cancer and other cancers that have created a market worth tens of billions of dollars.

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So what hap­pened with No­var­tis' gene ther­a­py group? Here's your an­swer

Over the last couple of days it’s become clear that the gene therapy division at Novartis has quietly undergone a major reorganization. We learned on Monday that Dave Lennon, who had pursued a high-profile role as president of the unit with 1,500 people, had left the pharma giant to take over as CEO of a startup.

Like a lot of the majors, Novartis is an open highway for head hunters, or anyone looking to staff a startup. So that was news but not completely unexpected.

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David Meek, new Mirati CEO (Marlene Awaad/Bloomberg via Getty Images)

Fresh off Fer­Gene's melt­down, David Meek takes over at Mi­rati with lead KRAS drug rac­ing to an ap­proval

In the insular world of biotech, a spectacular failure can sometimes stay on any executive’s record for a long time. But for David Meek, the man at the helm of FerGene’s recent implosion, two questionable exits made way for what could be an excellent rebound.

Meek, most recently FerGene’s CEO and a past head at Ipsen, has become CEO at Mirati Therapeutics, taking the reins from founding CEO Charles Baum, who will step over into the role of president and head of R&D, according to a release.

Who are the women su­per­charg­ing bio­phar­ma R&D? Nom­i­nate them for this year's spe­cial re­port

The biotech industry has faced repeated calls to diversify its workforce — and in the last year, those calls got a lot louder. Though women account for just under half of all biotech employees around the world, they occupy very few places in C-suites, and even fewer make it to the helm.

Some companies are listening, according to a recent BIO survey which showed that this year’s companies were 2.5 times more likely to have a diversity and inclusion program compared to last year’s sample. But we still have a long way to go. Women represent just 31% of biotech executives, BIO reported. And those numbers are even more stark for women of color.

Vicente Anido (University of West Virginia via YouTube)

Aerie fires CEO af­ter lead pro­gram flop, com­ments about pri­ma­ry end­points be­ing 'not re­quired'

Aerie Pharmaceuticals CEO Vicente Anido has left the company less than a week after trying to chart a Phase III study in the wake of a serious Phase IIb flop.

Anido’s last day at Aerie was Friday, the biotech announced in a news release Tuesday morning, and Benjamin McGraw is taking his place in an interim role. The now former CEO was terminated without cause, according to an SEC filing.

The board has started looking for a full-time chief to take his place.

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When ef­fi­ca­cy is bor­der­line: FDA needs to get more con­sis­tent on close-call drug ap­provals, agency-fund­ed re­search finds

In the exceedingly rare instances in which clinical efficacy is the only barrier to a new drug’s approval, new FDA-funded research from FDA and Stanford found that the agency does not have a consistent standard for defining “substantial evidence” when flexible criteria are used for an approval.

The research comes as the FDA is at a crossroads with its expedited-review pathways. The accelerated approval pathway is under fire as the agency recently signed off on a controversial new Alzheimer’s drug, with little precedent to explain its decision. Meanwhile, top officials like Rick Pazdur have called for a major push to simplify and clarify all of the various expedited pathways, which have grown to be must-haves for sponsors of nearly every newly approved drug.

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Lat­est news: It’s a no on uni­ver­sal boost­ers; Pa­tient death stuns gene ther­a­py field; In­side Tril­li­um’s $2.3B turn­around; and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

Next week is shaping up to be a busy one, as our editor-in-chief John Carroll and managing editor Kyle Blankenship lead back-to-back discussions with a great group of experts to discuss the weekend news and trends. John will be spending 30 minutes with Jake Van Naarden, the CEO of Lilly Oncology, and Kyle has a brilliant panel lined up: Harvard’s Cigall Kadoch, Susan Galbraith, the new head of cancer R&D at AstraZeneca, Roy Baynes at Merck, and James Christensen at Mirati. Don’t miss out on the action — sign up here.

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Jay Bradner (Jeff Rumans for Endpoints News)

Div­ing deep­er in­to in­her­it­ed reti­nal dis­or­ders, No­var­tis gob­bles up an­oth­er bite-sized op­to­ge­net­ics biotech

Right about a year ago, a Novartis team led by Jay Bradner and Cynthia Grosskreutz at NIBR swooped in to scoop up a Cambridge, MA-based opthalmology gene therapy company called Vedere. Their focus was on a specific market niche: inherited retinal dystrophies that include a wide range of genetic retinal disorders marked by the loss of photoreceptor cells and progressive vision loss.

But that was just the first deal that whet their appetite.

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