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CytoDyn, Inc. Class Action Lawsuit

Company Name
CytoDyn, Inc.
Stock Symbol
CYDY
Class Period
March 27, 2020 to March 9, 2021
Motion Deadline
May 17, 2021
Court
Western District of Washington
35 days left to seek lead plaintiff status

Case Summary

The CytoDyn, Inc. class action lawsuit charges CytoDyn and certain of its executives with violations of the Securities Exchange Act of 1934 and seeks to represent purchasers or acquirers of CytoDyn common stock between March 27, 2020 and March 9, 2021, inclusive (the “Class Period”).  The CytoDyn class action lawsuit was commenced on March 17, 2021 in the Western District of Washington and is captioned Lewis v. CytoDyn, Inc., No. 21-cv-05190.

CytoDyn is a biotechnology company focused on the development and commercialization of a drug named “Leronlimab” which has long been promoted as a potential therapy for HIV patients.

The CytoDyn class action lawsuit alleges that since the beginning of the global COVID-19 pandemic, CytoDyn has made an about-face and has begun to aggressively tout Leronlimab as a treatment for COVID-19.  Consequently, after CytoDyn’s pivot to hyping Leronlimab as a treatment for COVID-19, CytoDyn’s stock price rose exponentially.  The CytoDyn class action lawsuit further alleges that while CytoDyn’s stock price was sufficiently pumped with the COVID-19 cure hype, defendants dumped millions of shares at artificially inflated prices.  Moreover, the CytoDyn class action lawsuit alleges that CytoDyn also engaged in a wrongful scheme with its lender, Iliad Research and Trading L.P. (“Iliad”) and its principal John Fife whereby Iliad and other Fife entities operated as an unregistered securities dealer for CytoDyn.  In connection with Iliad lending funds to CytoDyn, Iliad obtained a convertible promissory note from CytoDyn and converted the note into newly issued shares of CytoDyn and sold those shares into the public market at a profit, in violation of the dealer registration requirements of the federal securities laws.

On August 26, 2020, The Wall Street Journal reported that, despite earlier representations, CytoDyn was not being considered for Operation Warp Speed.  According to a senior administration official interviewed by The Wall Street Journal, “CytoDyn had only completed a preliminary qualification for being included in the initiative.”  On this news, the price of CytoDyn shares dropped over 17% over the next two trading days.

Then, on September 3, 2020, the U.S. Securities and Exchange Commission (“SEC”) filed suit against Iliad, Fife, and related entities, calling Fife a “recidivist violator of the federal securities laws.”  Specifically, the SEC alleged that Iliad and its related entities operated as unregistered securities dealers in violation of the federal securities laws by buying convertible promissory notes, converting the notes into newly issued shares of stock, then rapidly selling those shares into the public at a profit.

On November 10, 2020, CytoDyn entered into an amended $28.5 million Secured Convertible Promissory Note with Fife’s company, Streeterville Capital LLC, a related entity that was not specifically named in the SEC action against Iliad and Fife.  On this news, the price of CytoDyn’s shares fell.

Finally, on March 5, 2021, and continuing over the weekend, CytoDyn issued a flurry of press releases describing the results of Phase IIb/III data on Leronlimab.  Hidden in press releases with titles like “Cytodyn to File Accelerated Rolling Review with MHRA and Interim Order (IO) with Health Canada for COVID-19” and “Cytodyn’s Phase 3 Trial Demonstrates Safety, a 24% Reduction in Mortality and Faster Hospital Discharge for Mechanically Ventilated Critically Ill COVID-19 Patients Treated with Leronlimab,” however, was a disclosure that the primary endpoint of the study -lowering all-cause mortality at Day 28 - was not statistically significant.  Following the flurry of press releases, CytoDyn was accused of “massaging the data” and squeezing good news out of a failed study, the results of which CytoDyn reportedly sat on pending regulatory discussions.  On this news, the price of CytoDyn’s shares fell more than 28%, further damaging investors.

The Private Securities Litigation Reform Act of 1995 permits any investor who purchased CytoDyn common stock during the Class Period to seek appointment as lead plaintiff in the CytoDyn class action lawsuit.  A lead plaintiff is generally the movant with the greatest financial interest in the relief sought by the putative class who is also typical and adequate of the putative class.  A lead plaintiff acts on behalf of all other class members in directing the CytoDyn class action lawsuit.  The lead plaintiff can select a law firm of its choice to litigate the CytoDyn class action lawsuit.  An investor’s ability to share in any potential future recovery of the CytoDyn action lawsuit is not dependent upon serving as lead plaintiff.  If you wish to serve as lead plaintiff of the CytoDyn class action lawsuit or have questions concerning your rights regarding the CytoDyn class action lawsuit, please provide your information here or contact counsel, J.C. Sanchez of Robbins Geller, at 800/449-4900 or 619/231-1058 or via e-mail at jsanchez@rgrdlaw.com.  Lead plaintiff motions for the CytoDyn class action lawsuit must be filed with the court no later than May 17, 2021.

Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities class action litigation.  With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history.  For eight consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements.  Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims.  Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide.  Robbins Geller attorneys are consistently recognized by courts, professional organizations and the media as leading lawyers in the industry.

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