||Courter, et al. v. CytoDyn, Inc., et al.
||United States District Court for the Western District of Washington
||Honorable Benjamin H. Settle
||Court-appointed Lead Plaintiff Brian Joe Courter and Courter and Sons LLC, and Additional Plaintiffs Diane M. Hooper, Thomas McGee and Candra E. Evans
||CytoDyn, Inc. Nader Z. Pourhassan, Michael Mulholland, and Scott A. Kelly
||March 27, 2020 and May 17, 2021, inclusive
This securities fraud class action arises out of Defendants’ public conduct and misrepresentations concerning CytoDyn’s only prospective drug, leronlimab, during 2020-2021. Defendants’ fraudulent misconduct came in several forms: materially false and misleading statements concerning CytoDyn’s application to the United States Food and Drug Administration (“FDA”) for the use of leronlimab to treat HIV; material misstatements concerning purported data and information showing leronlimab’s safety and efficacy as a treatment for COVID-19; and Defendants’ scheme to directly and indirectly promote leronlimab’s promise as a COVID-19 treatment and thus pump up CytoDyn’s common stock price, after which Defendants “dumped,” or rapidly sold, millions of dollars’ worth of their personally-held shares at inflated prices.
Adverse facts known to Defendants, but concealed from investors throughout the Class Period, showed that CytoDyn’s data regarding leronlimab was nowhere near sufficient to support an application for regulatory approval of the drug for HIV indications, nor to support claims that leronlimab was efficacious in treating any type of COVID-19 patient. Indeed, at the end of the Class Period and afterwards, Defendants received communications from the FDA and/or the U.S. Securities and Exchange Commission (“SEC”) indicating that Defendants’ public representations touting leronlimab and its potential FDA approval and COVID-19 application were not supported by data and accepted analyses. The truth regarding Defendants’ misrepresentations came onto the market in a set of disclosures in 2020 and 2021 that led to sharp declines in CytoDyn’s stock price, causing significant losses and damages to the Company’s investors. On July 30, 2021, CytoDyn disclosed that it was being investigated by both the SEC and the United States Department of Justice.
Plaintiffs successfully moved to modify the automatic discovery stay under the Private Securities Litigation Reform Act of 1995, and received documents from Defendants starting in early 2022, before any motion to dismiss was adjudicated. On June 24, 2022, Plaintiffs filed a 228-page amended complaint, under seal, on behalf of a putative class of investors against CytoDyn and its executives, including CEO Nader Pourhassan, CFO Michael Mulholland, and CMO Scott A. Kelly. Plaintiffs claim Defendants violated Section 10(b) of the Securities Exchange Act by making false and misleading statements and concealing material facts about CytoDyn’s data and regulatory actions and prospects concerning the investigational drug leronlimab, and engaging in a fraudulent promotional scheme regarding the same. Plaintiffs also claim Defendants Pourhassan, Mulholland and Kelly are liable as control persons of CytoDyn under Section 20(a) of the Exchange Act, and that they violated Section 20A of the Exchange Act by selling personally held shares of CytoDyn common stock while aware of material nonpublic information concerning leronlimab. In August, Defendants moved to dismiss the amended complaint. The parties are currently engaged in briefing on that motion.
Read Amended Class Action Complaint Here
Read Second Amended Class Action Complaint Here
View the Press Releases Chart