ENOB stock is plummeting more than 30% today after Hindenburg Research released a short report on the company. Enochian Biosciences’ co-founder and largest shareholder, Serhat Gumrukcu, was arrested last week over allegations of a murder-for-hire plot.
Victim Gregory Davis was murdered back in 2018, 19 days before Gumrukcu was set to appear in court for fraud related to a deal with Davis. The court argued that the potential merger deal eventually resulted in Enochian going public, serving as a “key motive for the murder.”
Enochian’s biotechnology products are all preclinical and focused on diseases like HIV, cancer and Covid-19. After the murder-for-hire news broke, the company claimed Gumrukcu “has had no formal role in the Company.” However, Hindenburg believes Enochian is “completely dependent” on the co-founder.
Hindenburg says every product in the company’s pipeline appears to be either licensed by a Gumrukcu-controlled or affiliated entity or based on his research. Meanwhile, the murder-for-hire charge isn’t the only charge levied against Gumrukcu.
Let’s get into the details.
Hindenburg Releases Short Report on ENOB Stock
In 2012, officials arrested Gumrukcu in Turkey for posing as a doctor. Allegedly, he charged a patient $275,000 for cancer treatments and substances that an oncologist later described as “useless.” The patient eventually died.
With an outstanding warrant on his back, Gumrukcu fled to the United States. In 2017, authorities arrested him for 14 felonies, including fraud and identity theft. Enochian hired Gumrukcu as a consultant just two months after the arrest.
Enochian seems to have been aware of Gumrukcu’s criminal past. CEO Mark Dybul wrote a letter of recommendation to a Turkish criminal court for the co-founder. Chairman Rene Sindlev also told Hindenburg he knew of Gumrukcu’s felony counts but “moved forward with the deal and expanded the relationship anyway.”
Despite his criminal past, Gumrukcu has continued to sell unlicensed “miracle” treatments. His private practice office is even in the same building as the company’s headquarters. Since joining Enochian, Gumrukcu has earned many cash consulting and licensing contracts. Hindenburg estimates that the co-founder has siphoned $20 million in cash from ENOB stock shareholders.
Hindenburg Questions Gumrukcu’s Academic History
Lastly, Hindenburg questions Gumrukcu’s education status in the short report. The co-founder claims to have spent over 12 years earning multiple doctorate degrees in Russia and Turkey. However, his name is not in the official Russian national degree database. Further, the school he claims to have graduated from told Hindenburg he never enrolled. Hindenburg believes that Gumrukcu bough a fake medical degree.
Some Enochian executives seemed to have caught onto Gumrukcu’s lies. One former executive told the short seller:
“I left because I lost scientific trust in what [Gumrukcu] was promoting […] I had a few facts that corroborated that he lied to me and when scientists start to lie a little bit and massage the data, then I am afraid to have another Elizabeth Holmes story.”
Gumrukcu and his spouse own the largest single stake in ENOB stock. Hindenburg believes the co-founder will have to “sell shares to fund his legal expenses.”
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On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.