CytoDyn secures $12M as dispute with CRO reaches settlement: Positive impact on antibody drug trials
Amarex and CytoDyn had worked together for eight years with the CRO managing many of the latter’s clinical trials. However, CytoDyn filed a complaint against the CRO in 2021 alleging that Amarex failed to perform its obligations as agreed. In a court filing, CytoDyn requested access to clinical trial data that were withheld by Amarex and alleged in an arbitration demand that Amarex billed CytoDyn for services that were not performed and caused delays in the regulatory approval process for its antibody drug leronlimab with the US Food and Drug Administration.
As part of the settlement, CytoDyn will receive a cash payment of $12 million, made up of an initial $10 million payment and another $2 million payable within the next year. Another $14 million of payment liability to Amarex will also be removed from CytoDyn’s balance sheet.
Security bond
In addition, Amarex will release $6.5 million to CytoDyn that was paid as a surety bond – a legal contract that mandates one party to pay if the other fails to live up to the agreement. In return, the companies resolve their legal claims against each other.
“The terms of the settlement provide an immediate influx of non-dilutive cash and eliminates $14 million of accounts payable,” said Jacob Lalezari, CEO of CytoDyn, in a public release. “Importantly, the settlement ends the potential distraction and uncertainty associated with protracted litigation and allows the Company to immediately advance its clinical trials and research and development initiatives.”
CytoDyn is developing an antibody drug called leronlimab for the treatment of infectious disease, oncology, and autoimmune conditions, with programs in phase 2 development for the treatment of nonalcoholic steatohepatitis (NASH), NASH in people infected with human immunodeficiency virus (HIV) and solid tumors. The antibody is designed to block a protein on the surface of immune cells called C-C chemokine receptor type 5 (CCR5), which plays a role in inflammation and cancer.
Historical challenges
CytoDyn has faced other obstacles in the mission to commercialize leronlimab. In 2022, the US FDA slapped a partial clinical hold on its HIV program and a full clinical hold on a program to develop a Covid-19 treatment for undisclosed reasons, and the hold was only lifted this year.
Additionally, the former CEOs of CytoDyn and Amarex, Nader Pourhassan and Kazem Kazempour, were charged in the US in 2022 for allegedly engaging in a conspiracy to artificially inflate CytoDyn’s stock and sell off their shares. The trial is set for later this year.
In a letter to shareholders in May, Lalezari acknowledged that “the company’s historical challenges may have tested” their confidence but sees a turnaround on the horizon. The company plans to launch phase 2 trials of leronlimab for the treatment of a form of colorectal cancer and in inflammation, and is seeing increased partnering interest since the lifting of the US FDA’s clinical hold, he added.
