Vancouver-based biotechnology company CytoDyn has reached a $12 million settlement with its former research contractor Amarex Clinical Research. CytoDyn has spent years developing leronlimab, an antibody drug that could be used to treat HIV and potentially other diseases. But it became entangled in legal issues, as its former CEO faced a federal indictment and the U.S. Food and Drug Administration placed a hold on its HIV drug program. The company alleged its contractor failed to perform at an acceptable professional standard. Current CytoDyn CEO Dr. Jacob Lalezari said the settlement is an excellent outcome for the company’s shareholders and improves the company’s balance sheet.

“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,” Lalezari added. CytoDyn said the settlement eliminates $14 million in accounts payable, releases a $6.5 million surety bond to CytoDyn and resolves all legal claims between the companies. A representative for Amarex did not immediately respond to a request for comment. Both CytoDyn’s former CEO, Nadar Pourhassan, and the head of Amarex were indicted in federal court in 2022 for allegedly defrauding investors. Amarex managed CytoDyn’s clinical trials and served as its regulatory agent in interactions with the FDA. Amarex CEO Kazem Kazempour also served on CytoDyn’s Disclosure Committee, which was responsible for reviewing and approving CytoDyn’s periodic filings with the U.S. Securities and Exchange Commission.

Pourhassan was ultimately ousted as CEO in early 2022. The federal case against Pourhassan and Kazempour is set to go to trial in November, according to court documents. CytoDyn sued Amarex in 2021. The company said in July 2023 it was seeking $100 million from the Maryland-based research company. The FDA spoke out against CytoDyn’s testing of leronlimab to treat COVID-19 in 2021, alleging the company was using results from a small test group to suggest leronlimab had a “mortality benefit in certain patients.” The FDA said, “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 placed a clinical hold on CytoDyn’s HIV and COVID-19 programs the following year. The agency lifted the hold on the HIV program in February. The company is still pursuing leronlimab and started preclinical mouse studies in June to evaluate the drug’s potential use in preventing or reversing liver fibrosis.