CytoDyn Inc. (CYDY) Misled Shareholders About the Viability of its Drug for the Treatment of COVID-19
CytoDyn is a biotech company that – prior to the COVID-19 pandemic – was focusing on the development and commercialization of the drug “Leronlimab” for the treatment of patients with HIV. Since the beginning of the COVID-19 pandemic, CytoDyn has aggressively touted Leronlimab as a treatment for COVID-19, including that it had sought emergency use authorization (“EUA”) from the U.S. Federal Drug Administration (“FDA”) and planned to move forward with Operation Warp Speed. This, in turn, caused CytoDyn’s stock price to skyrocket. Having traded at less than $1 per share throughout 2019, CytoDyn’s stock reached its peak on June 30, 2020, trading at over $10 per share. While the stock price was artificially inflated, insiders dumped millions of shares for almost $26 million.
Thereafter, the Company’s scheme began to unravel. On August 26, 2020, The Wall Street Journal reported that CytoDyn was not being considered for Operation Warp Speed. On September 16, 2020, CytoDyn’s CEO admitted the Company had not actually made the request for EUA from the FDA. Beginning on March 5, 2021, the Company revealed that the primary endpoints of its Phase IIb/III data on Leronlimab was not statistically significant. On this news, CytoDyn’s stock plummeted over several trading days, to close at just $2.35 on March 9. 2021.
