It seems CytoDyn Inc. (OTCQB: CYDY) is ready to extend an olive branch to its former chief medical officer. The firm announced on Sunday that it had reached a non-cash settlement with Dr. Richard Pestell related to the latter’s breach of contract and defamation suit against his former company.
The settlement entails a quitclaim from both parties. The company is also giving Dr. Pestell 8.3 million company shares and a purchase warrant for 7.0 million more shares at $0.37 per share.
The Australian oncologist joined the firm in January 2019 when CytoDyn bought his firm ProstaGene. He was then appointed vice-chairman of the board and the chief medical officer, leading the firm’s push for its investigational drug leronlimab as a possible treatment for COVID-19.
But due to a “deteriorating relationship” with the company, Dr. Pestell sent his resignation. Three days later, he received an email from the board terminating his employment for “cause”. He was replaced by Chairman Dr. Scott Kelly as chief medical officer.
Dr. Pestell then filed a breach of contract and defamation lawsuit against the company, its former CEO Dr. Nader Pourhassan, and Kelly. In the suit, he claims that he is entitled to “separation obligations” since he was fired. He also claimed that Dr. Pourhassan “embarked on an effort to retaliate” when Dr. Pestell raised safety concerns related to the firm’s US FDA drug application.
Dr. Pourhassan responded, saying Dr. Pestell is the “most lying, deceiving person in the world.”
“The reason he’s saying I’m putting lives in jeopardy is because he doesn’t want to work, he just wants to get paid,” said Dr. Pourhassan.
In January 2022, the company’s board removed Dr. Pourhassan as its CEO.
Part of the settlement agreement with Dr. Pestell is transferring back the ProstaGene assets acquired that were subsequently written off by the firm already. The company said it is exploring ways in which the former chief medical officer “can reengage with the company to help realize leronlimab’s full potential in oncology.”
“CytoDyn regrets Dr. Pestell’s departure from the Company and the subsequent public statements made by its former CEO about Dr. Pestell,” the company said in its statement.
In March 2022, the company relayed that the FDA has put the current clinical trials for leronlimab on partial hold for its HIV program and full hold on its COVID-19 program.
CytoDyn last traded at $0.33 on the OTCQB.
Information for this briefing was found via Sedar, Portland Business Journal, and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.