Biotech company executive testifies that CEO mislead investors, claimed he could cure paralysis

John Joseph Moakley United States Courthouse, Sept. 18 2019, Boston, MA. Photo by Chris O'Brien/BU News Service

By Stella Lorence
BU News Service

BOSTON — A former vice president of a biotechnology company whose president has been accused of securities fraud testified Friday that the president mislead investors with bizarre claims, including comparing himself to Jesus Christ and claiming he could cure paralysis.

Prosecutors called Steven Chartier to the witness stand to testify before a jury at a U.S. District Court about his 13 months as the former vice president of regulatory and clinical affairs at PixarBio, a biotechnology company that operated out of Medford.

PixarBio was founded and run by Francis Reynolds, who has been accused of lying to investors about the company’s finances and the development progress of the product “NeuroRelease,”  a post-surgery pain reliever, according to the federal complaint filed in April 2018.

Chartier said Reynolds began meetings with investors by talking about his personal life, including his own medical history. Reynolds explained how he had been paralyzed and then educated himself and put together a treatment plan that “basically cured his paralysis,” Chartier said in testimony Friday.

Reynolds told investors “that he was the Steve Jobs of biotech,” Chartier said. “That only two people had cured paralysis: him and Jesus Christ. He compared himself to Donald Trump. He claimed that the Vatican had done a study and he was the most educated man in the world.”

Reynolds spread this information in both face-to-face meetings with investors as well as through “press releases, internet postings, emails, promotional materials, offering documents” and PixarBio’s filings with the Securities and Exchange Commission, according to the complaint.

Chartier said the product NeuroRelease was in the “proof of concept stage,” and being tested in rats when he joined PixarBio. Reynolds told investors the product would be approved by the Food and Drug Administration in less than two years, despite animal testing being a relatively early step in the clinical trial process, Chartier said.

“I felt like the timelines were very aggressive,” Chartier said. “Based on my prior experience I thought it was extremely aggressive.”

While Chartier and his team struggled on the clinical side of PixarBio, Reynolds engaged in fraudulent trading behaviors, according to the complaint.

PixarBio released several press releases that inflated the sums of their fundraising efforts in addition to falsely reporting the product development, according to the prosecution. Chartier said he was never asked to review the press releases for accuracy before their release.

In reality, PixarBio did not have enough money to get through clinical trials, Chartier said.

“[Reynolds] always claimed the valuation in the billions,” Chartier said.  “He was always very optimistic about fundraising.”

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