Shares of Enochian Biosciences were down more than 20% in the pre-market session and 40% during the cash session after research firm Hindenburg Research released a scathing report on the company and its co-founder called "Miracle Cures and Murder For Hire: How A Spoon-Bending Turkish Magician Built A $600 Million Nasdaq-Listed Scam Based On A Lifetime Of Lies".
In the report, Hindenburg notes that the company's co-founder, “scientific founder”, “inventor”, and largest shareholder, Serhat Gumrukcu, was arrested by Federal authorities over allegations that he conspired in a plot to murder a Vermont father of six.
"The victim, Gregory Davis, was murdered on January 6th, 2018, just 19 days before Gumrukcu was scheduled to appear in court to defend himself against felony fraud allegations related to a 2016 deal with Davis. Federal prosecutors argued that the prospective merger deal that eventually resulted in Enochian going public served as a key motive for the murder," the report said.
Hindenburg characterized Enochian as "a biotech company with an entirely preclinical pipeline of claimed miracle cures, vaccines and treatments for HIV, Influenza, Hepatitis, Cancer, and COVID-19" and noted that while the company "claimed last week that Gumrukcu 'has had no formal role in the Company' and that the incident was 'completely unrelated to the Company', Enochian's own disclosures indicate that the company and its pipeline are completely dependent on Gumrukcu."
"Every product Enochian is investigating appears to have been licensed to it by Gumrukcu-controlled or affiliated entities or are otherwise based on his research," the report says. It also alleges that the co-founder's arrest "is simply the most recent in a string of alleged crimes by Gumrukcu.
The report also alleges that Enochian knew of the founder's criminal history, stating: "Our research indicates that Enochian executives knew about Gumrukcu’s criminal history. Mark Dybul, CEO of Enochian, wrote a glowing letter of recommendation to a Turkish criminal court on behalf of Gumrukcu."
"Dybul served as a HIV research fellow at the National Institute for Allergy and Infectious Diseases (NIAID) under director Dr. Anthony Fauci in the late 1990s," his Georgetown bio says. The same bio says "He went on to lead President George W. Bush’s International Prevention of Mother and Child HIV initiative for the Department of Health and Human Services (HHS), and in 2006 was named U.S. Global AIDS Coordinator".
And that key executives who had relationships with people like Dr. Anthony Fauci and Bill Gates supported the now-indicted co-founder:
Invoking his close friendship and mentee relationship with Dr. Anthony Fauci and his relationship with Bill Gates, Dybul called Gumrukcu a “rare genius” who had come up with platforms to cure HIV, hepatitis B, all strains of influenza, Zika, dengue fever, and COVID. Dybul also wrote that the now-accused murderer was “deeply compassionate, empathetic, and approachable”, providing his “strongest recommendation”.
In a phone interview, Chairman Rene Sindlev admitted to us “I knew that he had been charged for 14 (felony) counts” but moved forward with the deal and expanded the relationship anyway.
In the years since, Enochian has awarded lucrative cash consulting and licensing contracts to entities controlled by Gumrukcu and his husband. Enochian executives have repeatedly failed to disclose Gumrukcu’s criminal activity to shareholders.
The report also alleges that Gumrukcu has faked his medical credentials and that the company's former CFO claimed he was fired for asking about “serious financial improprieties” and large payments to Gumrukcu.
"With its founder and main source of scientific discoveries jailed on murder-for-hire allegations, this cash-burning company without peer-reviewed research and no genuine clinical prospects is now a “catch me if you can” story that we believe has finally reached the end-phase," wrote Hindenburg.
Enochian Biosciences commented last week on the arrest of Gumrukcu, stating:
The Board of Directors of Enochian BioSciences Inc. met today and expressed unanimous and strong affirmation of the current position of the Company, the Management and the promising advancement of the Research and Development pipeline.
The strong affirmation of the Company by the Board follows the unexpected and shocking press release by the Department of Justice that Dr. Serhat Gumrukçu, an inventor and co-founder of the Company, has been arrested and charged with serious crimes (link to release) that are reported to have occurred prior to the merger which created the Company of today. The Board reviewed what is known and concluded without reservation that there is no link between the criminal charges and any actions of the Company.
Earlier this year, we reported that Hindenburg had tipped off regulators to an alleged Ponzi scheme, which resulted in a shootout taking place between the FBI and an alleged perpetrator in Las Vegas.