CytoDyn catches SEC, DOJ scrutiny over public claims about COVID-19 drug's viability

Securities Exchange Commission
CytoDyn has faced a barrage of shareholder lawsuits and investor criticism over its claims about a COVID-19 drug. Now, the SEC and DOJ are involved. (BCFC/Getty Images)

The blows keep coming for CytoDyn. After the FDA blasted the company for pumping up their unapproved and unproven COVID-19 therapeutic, the Department of Justice and the Securities and Exchange Commission (SEC) is now subpoenaing the company and its executives.

Two investigations were disclosed in an SEC filing dated July 30. Both subpoenas seek documents and information related to CytoDyn’s public statements about leronlimab, which is being developed to treat patients with severe COVID-19.

In May, CytoDyn faced a rare public rebuke from the FDA, which accused the company of cherry-picking data from a failed phase 3 trial to claim the drug was effective in some populations.

“It has become clear that the data currently available do not support the clinical benefit of leronlimab for the treatment of COVID-19,” the FDA said in the public statement. “None of these analyses met statistical significance when using established and reliable analytical methods that correct for multiple comparisons.”

Phase 3 trial results released in March showed that leronlimab failed on the primary goal of reducing symptoms and all secondary goals, including one that questioned whether the therapy could reduce mortality. The company instead focused its data release on a subgroup of 62 mechanically ventilated, critically ill COVID-19 patients, claiming that the drug spurred a 24% reduction in all-cause mortality and a six-day reduction in hospitalization, among other trial wins. 

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Later, CytoDyn performed an “age adjustment” analysis claiming to show that leronlimab reduced mortality in older patients.

CytoDyn has since faced a barrage of lawsuits and investor criticism. Now, the SEC and DOJ are involved.

The SEC has asked CytoDyn to hand over communications about leronlimab with the FDA, investors and others trading the company’s securities. The SEC has told CytoDyn that “this inquiry should not be construed as an indication that any violations of law have occurred or that the SEC has any negative opinion of any person, entity or securities trading activity,” according to the filing.

As for the DOJ query, which CytoDyn did refer to as an investigation, the agency is seeking testimony and records from the company and executives regarding leronlimab, the company’s public statements on the therapy regarding its use for treating COVID-19 and related communications similar to the SEC’s request.

“The company is cooperating fully with these nonpublic, fact-finding investigations, and as of the date of this filing, the company is unable to predict the ultimate outcome and cannot reasonably estimate the potential possible loss or range of loss, if any,” CytoDyn's SEC filing dated July 30 stated.

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CytoDyn was already facing class action lawsuits over the public statements, and the filing revealed more shareholder suits starting in June. One complaint alleges that current and former officers, board members and the company breached their duties by making “false and misleading statements about the viability of leronlimab.” The complaint further states that the company failed to “maintain an adequate system of oversight and internal controls.”

A second complaint received in June piles on to those claims, while also alleging insider trading was committed by some officers of the company.

“The company and the individual defendants deny any allegations of wrongdoing in the complaints and intend to vigorously defend the litigation,” the filing said.