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

Two biotech lead­ers are fac­ing the pos­si­bil­i­ty of decades in prison af­ter a fed­er­al grand ju­ry in Mary­land in­dict­ed them on mul­ti­ple charges re­lat­ed to a scheme to de­fraud in­vestors about the po­ten­tial of the drug leron­limab, a mon­o­clon­al an­ti­body in­ves­ti­ga­tion­al drug al­so known as PRO 140.

Nad­er Pourhas­san

Cy­to­Dyn’s for­mer CEO Nad­er Pourhas­san drew at­ten­tion over the last two years for loud­ly tout­ing leron­limab as an ef­fec­tive treat­ment for HIV, can­cer and Covid-19, de­spite clin­i­cal da­ta that in­di­cat­ed the op­po­site.

A fed­er­al grand ju­ry in­dict­ed Pourhas­san, as well as the pres­i­dent of the com­pa­ny that man­aged the biotech’s clin­i­cal tri­als, on charges of ly­ing to the pub­lic and in­vestors about da­ta be­hind its drug tri­als and the sta­tus of its bi­o­log­ics li­cense ap­pli­ca­tion (BLA) in a scheme to raise its stock price.

Pourhas­san and Kazem Kazem­pour, the co-founder, pres­i­dent, and CEO of Amarex Clin­i­cal Re­search, have both been 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 an HIV BLA scheme.

Both Pourhas­san and Kazem­pour have caught ad­di­tion­al charges for oth­er al­leged con­spir­a­cies.

Pourhas­san has been charged with an­oth­er count of se­cu­ri­ties fraud and an ad­di­tion­al count of wire fraud re­lat­ed to a COVID-19 scheme al­so in­volv­ing the drug leron­limab, and three counts of in­sid­er trad­ing.

Kazem Kazem­pour

Kazem­pour was ad­di­tion­al­ly charged with one count of mak­ing false state­ments to fed­er­al law en­force­ment agents.

Kazem­pour’s com­pa­ny Amarex man­aged Cy­to­Dyn’s clin­i­cal tri­als and was the reg­u­la­to­ry agent in in­ter­ac­tions with the FDA. Kazem­pour al­so served on Cy­to­Dyn’s Dis­clo­sure Com­mit­tee.

Both biotech lead­ers could see decades be­hind bars if they’re con­vict­ed. Pourhas­san and Kazem­pour face a max­i­mum penal­ty of 20 years in prison on each se­cu­ri­ties fraud and wire fraud count, and five years in prison for con­spir­a­cy. Kazem­pour al­so faces a max­i­mum penal­ty of five years in prison for mak­ing false state­ments.

It all be­gan in 2020 when Cy­to­Dyn told share­hold­ers that it sub­mit­ted a com­plete BLA for leron­limab as a com­bi­na­tion ther­a­py with an an­ti­retro­vi­ral reg­i­men for HIV pa­tients who take sev­er­al med­ica­tions.

But ac­cord­ing to fil­ings in fed­er­al court, Pourhas­san told Kazem­pour to sub­mit the BLA to the FDA even if it was in­com­plete, al­though both men al­leged­ly knew the FDA would re­ject it. Cy­to­Dyn then al­leged­ly lied to in­vestors that a com­plete BLA had been sub­mit­ted, and sold mil­lions of dol­lars’ worth of com­pa­ny stock based on that lie.

Cy­to­Dyn re­ceived a refuse-to-file letter in Ju­ly 2020.

In Jan­u­ary of 2020, the com­pa­ny start­ed tout­ing leron­limab as a treat­ment for COVID-19, go­ing so far as to claim the an­ti­body had “saved” dy­ing Covid-19 pa­tients. The claims led to soar­ing stock prices, and Pourhas­san sold off mil­lions of dol­lars worth of stock.

These near-dai­ly claims via press re­leas­es and on YouTube at­tract­ed 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 pro­mo­tion and mar­ket­ing prac­tices.

De­spite the prob­ing, the com­pa­ny con­tin­ued to make claims about the drug’s im­pact on Covid-19, even though da­ta had shown it was in­ef­fec­tive.

At the be­gin­ning of this year, Cy­to­Dyn dumped Pourhas­san as CEO in an at­tempt to re­ha­bil­i­tate its im­age af­ter the dis­as­trous at­tempts to mar­ket leron­limab as a catch-all treat­ment for HIV, Covid-19 and can­cer.

Not long af­ter Pourhas­san was kicked out, the FDA is­sued a rare pub­lic warn­ing to the com­pa­ny when a pro­mo­tion­al video that ap­peared to look like a news re­port fea­tur­ing Pourhas­san “sig­nif­i­cant­ly” mis­char­ac­ter­ized the clin­i­cal da­ta for leron­limab’s ef­fec­tive­ness against Covid-19.

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

Ed­i­tor’s note: A pre­vi­ous ver­sion of this sto­ry in­cor­rect­ly stat­ed that a grand ju­ry found Pourhas­san and Kazem­pour guilty, when the grand ju­ry in­dict­ed them. The sto­ry has been cor­rect­ed; the head­line has been up­dat­ed. End­points News re­grets the er­ror. 

Illustration: Assistant Editor Kathy Wong for Endpoints News

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