- Intel whitepaper highlights case study on Enzolytics COVID-19 and HIV potential for neutralization of both viruses.
- Bear case is nothing but FUD.
- Fauci claimed years ago the technology may have “commercial value.”
- Convertible notes pressuring shares might be over.
Shares of Enzolytics (OTCMKTS: ENZC) have risen meteorically over the last year, (~40,000%) before and after the company joined forces with BioClonetics. The question on every investor’s mind, is this real or is it fluff?
The shares are down over 50% from recent highs as investor sentiment toward the COVID-19 wanes. The hysteria has worn off and convertible debt holders may still be selling shares after an unprecedented parabolic rise, so now investors want to know what is next.
The current price has pretty much reached an equilibrium point where the market cap is in alignment with the drug’s development stage. However, the recent price drop is not a cause for concern as some authors have speculated, and this will be detailed in this article.
Instead, exciting new developments at the company that have been met with some skepticism have been verified by a joint whitepaper between Enzolytics and Fortune 500 company Intel (NASDAQ: INTC).
The company has been developing an HIV therapeutic for advanced AIDS to restore immune function, essentially helping reverse AIDS. A few months ago, the company merged with monoclonal antibody developer BioClonetics, which is developing optimized antibodies for a variety of diseases including HIV and COVID-19.
The Bear Case—Filled With Holes, and Potentially Fabricated
A few months ago, two authors on Seeking Alpha raised red flags [1,2] against the company. One author implied that ENZC never worked with IMMB BG, which ENZC currently claims they own 49% of, and that author listed doubts as to whether these ENZC HIV/AIDS therapeutic (ITV-1) trials were ever completed at all, as claimed by the company.
Though one author was fairly neutral on the company and the other was very bearish, the press overall left ENZC investors feeling uneasy about the state of the company, due to some “inconsistencies” surrounding a subsidiary Enzolytics now has interest in, and the state of Enzolytics’ HIV immune booster product, ImmunH.
The authors conjured up a point that Enzoimmune Active, a supplement sold as a ‘dietary supplement’ is being distributed by Rosetta Lifecare Bulgaria. As innocuous as that sounds, some investors seem convinced that EnzoImmune Active is a product of Enzolytics. The author then points out that no revenue was observed in the company’s SEC filings, and therefore the supplement couldn’t be associated with the company.
While the supplement doesn’t seem to be associated with the company, it seems possible that the drug is marketed as a supplement and not a drug, for now. The question of why there is no revenue is a good question, but the supplement is clearly associated with the ITV-1, as the website references a patent owned by Harry Zabiliov, Enzolytics’ Chief Scientific Officer.
Authors on Seeking Alpha took this concept a step further by sowing doubt in investors minds that Harry Zhabilov, Enzolytic’s CSO and Founder, actually embezzled money through IMMB BG and ENZC:
The author linked Immunotech Laboratories BG’s Facebook page as the source. However, when one visits their Facebook page, no such post is visible, and there seems to be no other evidence to back up this claim. The foundation of the Bears argument is that the CEO, Harry Zhabilov is a fraudster, yet there is no evidence to back it up and furthermore it looks like the Facebook page might have been concocted. Regardless of what happened, this issue no longer appears to be a concern.
The author also stated that “There is very little information on BioClonetics and it looks like the drugs are in an early phase of development, so I doubt this business should be worth much at the current time.” While there was very little information on BioClonetics at the time, investors now know that the company truly is using AI to develop additional monoclonal antibodies against common binding sites on deadly viruses such as HIV and SARS-CoV-2.
Typically, companies creating these lifesaving drugs can be worth a fraction of their market potential as they take a lot of money to create and test, and then when they are proven to work and be safe, they can be marketed and sold for a lot of money. So it goes like this: spend hundreds of millions over the course of a few years, then make hundreds of millions or billions of dollars for the next decade.
What the author doesn’t take into account is the severity of AIDS and other infections such as COVID-19. These take a large toll on people’s lives, and treatments for HIV carry expensive price tags—Gilead Sciences makes over $15 billion a year on HIV.
This indication carries a lot of value due to the sheer market size and the room in those markets for better products. In fact, a monoclonal antibody company using its discovery engine, Immunome (NASDAW: IMNM) screens antibodies from actual patient samples to discover optimal antibodies to copy for testing and production. This company has almost a $200 million market cap, yet has to find its antibodies using a laborious process involving gathering samples from patients. The company has two programs in discovery and they haven’t entered clinical trials for even one product.
Enzolytics, on the other hand, has already developed its HIV therapeutic ITV-1 which has proven efficacy in a phase 3 (late stage) trial, and is using AI through its subsidiary BioClonetics to develop antibody cocktails on immutable sites on various viruses. Thus, as BioClonetics is pursuing discovery of additional antibodies for COVID-19, HIV, and other diseases through AI, and it has a collaboration with giant Intel, and already has viable products for COVID-19 and HIV, it could roughly be worth twice as much, or $400 million. This is ignoring the company’s prior work in producing antibodies for rabies, influenza A, influenza B, tetanus, and diphtheria.
So, while there could be more readily available information on Enzolytics, BioClonetics, and their plans, the bear cases against the company are clearly and simply incorrect.
Validation of Enzolytics by Intel Corporation
Furthermore, it appears that Enzolytics is being recognized by industry leading technology company Intel Corporation. The two companies recently collaborated on a whitepaper, highlighting the use of AI to help with preventative and predictive healthcare, which is expected to help deal with health issues before they take a major toll on people’s lives. According to the Enzolytics and Intel whitepaper:
“Dr. Joseph Cotropia discovered a human cell line producing a specific human antibody that targets a genetic amino acid sequence designated KLIC on HIV’s outer envelope’s surface. Discovering this sequence is like finding a “needle in a haystack” and retrieving the needle. The immutable sites on the virus must be identified, and the fully human monoclonal antibodies that target those sites must be created and characterized. The amino acid sequence for the monoclonal (Clone 3) antibody has been determined and named by Dr. Cotropia. This antibody can lock onto the KLIC epitope. Once bound by the neutralizing antibody, the virus cannot infect a human cell and cannot ultimately reproduce. Directed against this highly conserved epitope on the HIV gp41 transmembrane protein, the monoclonal Clone 3 Antibody has been epitope-mapped and characterized. Pagented by Dr. Cotropia, this HIV monoclonal antibody has been successfully tested in five international labs. Clone 3 antibody neutralized [at an IC90] 95% of all HIV primary isolate strains (41/43)—across all clades and groups—against which it was tested.
To date, there are almost 6000 different strains of HIV-1 now listed in the Los Alamos National Laboratory HIV Database.
For an antibody to be effective, it has to attack a neutralizable site on the virus that is always present and does not mutate. Simply put, where a site on a virus is highly conserved and immutable from strain to strain. Knowing the binding site for the monoclonal Clone 3 antibody on the HIv-1 virus and then examining the Coronavirus amino acid sequence, a correlation in the structures has been identified by Dr. Joseph Cotropia and Dr. Gaurav Chandra.
An infinite number of distinct anti-HIV and anti-Coronavirus monoclonal antibodies exists—some disease neutralizing, some perhaps of no benefit, and some that may be disease enhancing. Thus, specific antibodies that broadly neutralize are necessary to provide effective therapy and prevention of disease. These applications in using a monoclonal antibody in passive immunotherapy are accomplished by using Enzolytics’ proprietary method of producing broadly neutralizing monoclonal antibodies that bind to such immutable site is required will universally and durably neutralize the SARS-CoV-2 virus. In this way, targeting highly conserved epitopes sites—the virus cannot mutate around the therapy and thereby escape effective passive immunotherapy protective and preventive treatment.
The use of AI helped to confirm the sequence determined throughout two decades of Dr. Cotropia’s career. Additionally, another seven conserved sequences have also been identified using AI technology, while in another breakthrough, 19 conserved sequences over the entirety of the 50,512 Coronavirus isolates analyzed have been identified. These immutable sites on the SARS-CoV-2 virus have also been confirmed as existing (100%) in the U.S. SARS-CoV-2 virus variants that have surfaced in the United Kingdom, Brazil, and South Africa. The Center for Disease Control (CDC) recently reported these Coronavirus variants as ‘variants of concern.’ These variants show ‘evidence of an increase in transmissibility, increased hospitalizations or deaths, a significant reduction in neutralization by antibodies generated during previous infection or vaccination, reduced effectiveness of treatments or vaccines, or failures in diagnostic detection.’ This report exemplifies the findings by Doctors, Cotropia and Chandra.”
Clearly, Enzolytics has developed a breakthrough antibody against HIV, and has found good antibodies to fight COVID-19, or else Intel would not have slapped their name on this whitepaper.
Conserved sites on viruses that coincide with neutralizing activity are the holy grail of antibodies against an evasive virus like HIV, and a cocktail of them might make it practically impossible for HIV to evade the antibodies. The neutralization of the virus is essentially the same thing that CytoDyn’s leronlimab, a HIV coreceptor CCR5 inhibitor does. It prevents the virus from infecting new cells.
CytoDyn (OTCMKTS: CYDY) sports a market cap of $1.7 billion, and is seeking regulatory approval for leronlimab (Vyrologix) for HIV combination therapy and monotherapy, and is also seeking regulatory approval for leronlimab as an immune modulator for severe COVID-19 patients. Therefore, CYDY’s market cap is probably a good comparator for ENZC.
It should also be assumed and reiterated that Intel would never associate itself on its own website with a company that was in any way fraudulent. A Twitter discussion between a Global Director of Intel and Enzolytics’ COO further validates the collaboration:
This underscores the validity of Enzolytics’ work with antibodies against COVID-19 and HIV, and by association, validates the vaccine work ENZC is doing in HIV.
How Well Does ITV-1, Enzolytics’ Lead Asset, Work in HIV/AIDS?
According to the ENZC website: “Inactivated Pepsin Fragment (IPF) Technology” is analogous to “ITV-1” and was invented by Dr. Harry Zhabilov. This technology
“includes a patented antiviral peptide that has been tested in clinical studies at the National Center of Infectious and Parasitic Diseases in Bulgaria. This therapeutic, known as ITV-1, is a suspension of Inactivated Pepsin Fragment (IPF), a purified extract of porcine pepsin. ITV-1 has been shown to strengthen the immune system and may be used to facilitate a broad range of applications. ITV-1 has been tested in HIV patients in a clinical trial conducted under the strict guidelines of the European Union. HIV patients tested in these trials showed the following beneficial outcomes:
Improvement in the immune indices in the absolute number of Ly, CD3 T, CD4 T, CD8 T, B Ly, NK and in the percentage of CD3 T, CD4 T, CD8 T, B Ly, NK, and of the index CD4/CD8.
Decrease in the viral load.
Demonstrated beneficial effect on opportunistic infections.
Demonstrated very good compatibility with all of the other modern antiretroviral drugs.
Demonstrated very good tolerance in all patients and complete absence of side effects.”
According to Enzolytics, the immune strengthening and HIV entry glycoprotein binding anti-HIV treatment ITV-1 is “now being advanced through the certification stage, after which it will be available for patient therapy,” presumably in Bulgaria. The company claims that “ITV-1 also has also demonstrated a positive effect on different kinds of cancer due to its ability to stimulate the immune system.”
When looking at the the aforementioned patent, it seems that the ITV-1 therapy stimulates the immune system by inducing dendritic cell maturation, cytokine production, and antigen presentation, key processes in adaptive immune system recognition and response to tumor associated antigens and tumor specific antigens.
According to the Ezolytics and BioClonetics merger press release, the drug works very well in reversing immune dysfunction associated with AIDS:
“the therapeutic, known as ITV-1, demonstrated effectiveness in the treatment of HIV patients in various stages of the disease. In trials conducted in 31 patients, the therapeutic showed efficacy, with 68% of those individuals tested experiencing an increase in CD4 + T lymphocytes. This increase was accompanied by an increase in the CD4/CD8 index and CD4% in over 50% of those tested. The increase in these parameters demonstrated statistical significance compared to the control group. The absolute number and the relative percent of CD8 + T lymphocytes were also decreased. And the viral load in 80.5% of those tested was below the threshold of detection. This Enzolytics anti-HIV treatment is now being advanced through the certification stage to thereafter be made available for patient therapy.”
CD4+ T cells are the lymphocytes infected with HIV and are the key “helper” immune cells in orchestrating and sustaining the adaptive immune response, as they cross talk with antigen presenting cells such as dendritic cells and they can also facilitate the expansion and proliferation of the CD8+ “killer” T cells. When the CD4+ T cells are infected, they are destroyed over time and since these are cells absolutely critical for the adaptive (specific) immune system to respond to infectious diseases and also are important in fighting off cancers, AIDS, or “acquired immunodeficiency syndrome” can develop, leaving the patient vulnerable to opportunistic infections, which is why HIV/AIDS is so deadly.
So, the fact that Enzolytics showed improvements in immunological markers as well as reducing the viral load to undetectable levels in advanced-stage AIDS shows that the therapy has a profound and broad effect in that it helps reverse the immune dysfunction that progresses with HIV, as well as helps reduce the viral load significantly. While this is a small group of patients, and the exact mechanism by which ITV-1 stimulates the immune system but can also bind to HIV glycoproteins to block HIV is a bit unclear, it is a very difficult indication to show any efficacy in AIDS, and so the clinical trial results of reducing viral load and revitalizing the immune system speak for themselves.
Coup for the ITV-1 Intellectual Property Years Ago
These arguably amazing clinical results beg the question: wouldn’t big pharma or the government be interested in this technology?
The answer is “yes.”
In fact, it appears that years ago, the government, with vested interest in royalties from antiretroviral drugs sold by big pharma, attempted to file a patent covering the invention of Dr. Cotropia. Dr. Anthony Fauci was listed as one of the inventors…
“To put it simply, Cotropia discovered a human cell line producing a specific human antibody that targets a genetic sequence designated KLIC on the surface of HIV’s outer envelope. Dr. Cotropia named it Clone 3. This antibody can lock onto the KLIC epitope (the epitope is a key spot on the envelope where the virus is vulnerable to antibody action) in such a way that the virus is unable to reproduce, and ultimately cannot infect a human cell. Cotropia patented his discovery in 1989
My column had already been reporting on vaccine research…and on the mounting record of failures. Most spectacular, back in 2003, was the furor around VaxGen and its AIDSVAX. This vaccine was supposedly designed to spark antibodies to gp120, a protein found in the surface of HIV viruses. Previous research along this line had not looked promising. But VaxGen pulled political strings and the AIDSVAX trial got funded, including a healthy grant by the CDC. And indeed, in early 2003, the first clinical reports revealed that AIDSVAX was a dud.
Since that first call from Fellegy, I’ve had ample opportunity to look at the science around Clone 3, as well as observe the political antics around it. Though NIH had funded one of the initial studies of Clone 3, in 2004 the agency said no to funding a Phase I clinical trial. “Lack of innovation,” the NIH reviewers sniffed.
Stranger still—in 1999, the government had made a patent application that overlapped an area covered by Dr. Cotropia’s 1989 patents. The government listed NIAID director Anthony Fauci and others as the “inventors.” In the affidavit required by the filing process, Fauci, et al., declared under oath that the neutralizing technology in question had “utility” and “commercial value.” But the U.S. Patent Examiner threw out the government’s bid to own the key area covering Clone 3. He pointed out that Dr. Cotropia and BioClonetics had a prior claim.
So if Clone 3 had “commercial value” according to Fauci himself, why was the discovery viewed by others as lacking “innovation?” Talking heads in the AIDS industry, including Fauci himself, have said that the best way to end the AIDS epidemic is an effective AIDS vaccine. Just recently, Fauci discussed the current effort to intensify conventional drug treatment globally, but wrote in conclusion, “An effective HIV vaccine would get us to an AIDS-free generation faster and, more important, help sustain that accomplishment.” Other antibodies, and other vaccine approaches, have been granted their chance at clinical trials. So far, all have failed to deliver real promise.
Then, in August 2010, came another landmark for Clone 3. The U.S. government’s Los Alamos HIV Clinical Database published a review of Clone 3 antibody’s capacity to bind directly with the 2,229 (then) known strains of HIV around the world. By searching the surface (amino acid) composition of these 2,229 HIV isolates, Los Alamos found that ninety-eight percent of them have an exact match—or conservative amino-acid substitution—for the minimal essential “core” epitope KLIC to which the CLONE 3 antibody binds. In other words, Clone 3 epitope KLIC has the potential to elicit, in active vaccination, a protective antibody (“CLONE 3”) that broadly neutralizes ninety-eight percent of all known HIV strains. This is more than any other vaccine candidate whose study results have been published.
Clearly this 2010 government data should have put the Clone 3 KLIC epitope at the front of the pack. But it didn’t—not even today, when HIV strains now total 4,009. Yet Clone 3 still holds its ninety-eight percent position.
Later in September 2010, I wrote a Left Field expressing my bafflement, followed by a longer piece posted at Bilerico Project in October. I had concluded that Dr. Cotropia’s discovery was being viewed as a “disruptive technology.” Humanist-sounding statements by the AIDS industry notwithstanding, a cost-effective vaccine that saves millions of people from being infected would eliminate the industry’s golden chance to sell many years of ARV drug treatments to these millions (or to their governments, or their insurance providers) after they get infected.
And, as I commented in the Bilerico piece: “The U.S. government is anxious to protect its own vested interest in ARV cash-flow. The FDA collects millions in user fees from pharmaceutical companies. The Dept. of Treasury collects additional taxes on pharmaceuticals. Plus there are royalties from medical inventions created by government scientists.
So I wonder what the government would have done with Cotropia’s patent—if anything—if they had won their 1999 legal battle.”
While one might not want to easily succumb to tinfoil hat conspiracy theories, the rationale and evidence in this story seems really suspicious. And, it somewhat validates the science of what BioClonetics and Enzolytics are doing, for those who may not fully understand the science.
Why the Selloff?
The recent pressure on the stock is likely due to convertible noteholders selling stock as their stock converts at 50% of the closing bid for the previous 10 days. The noteholder (Livington Asset Management) can’t own more than 10% of the company, and the recent settlement, converted into shares, is over 20% of the company’s current shares outstanding.
All this has to do with is the noteholder getting paid, and doesn’t signal that anything is inherently wrong with the company. The noteholder might be steadily selling shares into the market to reduce the massive portfolio exposure to ENZC, while retaining just under 10% of the company.
It’s hard to say exactly why the shares are selling off, but given the massive amount of shares given in the settlement to this debtholder, and the debtholder’s inability to actually own all those shares at the same time, the steady decline in share price, which will end at some point, is expected.
Other Important Developments
The company tested ITV-1 compared to Tamiflu, sold by Roche (OTCMKTS: RHHBY), on human coronavirus strain 229E (HCoV-229E) in vitro. ITV-1 displayed comparable efficacy but with 5% of the toxicity.
An antiviral pill for coronaviruses such as SARS-CoV-2 (COVID-19) and common colds has long been elusive, but some recent studies have suggested that Tamiflu can block coronavirus enzymes that are critical for viral replication potentially due to their similarity to influenza enzymes that are blocked by Tamiflu, and that this translates to clinical outcomes—improved recoveries.
So, it is possible that ITV-1 could potentially replace Tamiflu in the treatment of influenza, or it could become a common method of care for those who are suffering from colds or COVID-19.
ITV-1 is anticipated to enter clinical trials in the EU and data gathered should be acceptable with the FDA.
Using AI, the company has recently discovered more conserved, and expected to be immutable, sites on HIV, and are working on similar sites for COVID-19. These sites are expected to be patented and the goal of this work is to make antibody cocktails against HIV and COVID-19, such that viral escape will be statistically impossible, as multiple immutable, neutralizing sites will be targeted. If a virus actually mutates the “immutable” site, it will be statistically impossible for a number of other immutable sites to simultaneously mutate to avoid the antibody cocktail completely. The company is also pursuing this strategy for a variety of other viruses including HIV-2, Influenza A and B, H1N1 influenza, Respiratory syncytial virus (RSV), Small-Pox, Ebola Virus, Tetanus, Diphtheria, HTLV-1/2, Rabies, Herpes zoster, Varicella zoster, Anthrax, Mason-Pfizer monkey virus (MPMV) and Visna virus (VISNA).
Enzolytics also intends to combine ITV-1 and the antibody cocktails for a combination therapy for HIV. In order for this antibody treatment to be an HIV cure, though, patients will likely have to take the therapy for a number of years, the true time of which may be unknown, until the viral reservoir, where latent cells reside in tissue, infected with dormant HIV, is fully depleted and renewed. It is unknown whether this is completely possible yet, but nonetheless the monoclonal antibody therapies, with or without combination with ENZC’s ITV-1, could offer a safer, more well-tolerated therapy against HIV without the use of toxic antiretrovirals made by big pharma like AstraZeneca (AZN) and Gilead Sciences (GILD).
Future Outlook & Catalysts
With shares trading near the 200DMA, a months-long somewhat oversold RSI, and a potential divergence away from the bearish trend on the (12, 26, 9) MACD, ENZC shares could be ripe for the picking.
The company has an HIV treatment entering a possible phase 2 in the coming months and is making headway with its COVID-19 drug. Production of the drug should be over the next couple of months and then be ready for clinical trials. Based on their ability to enroll patients it could take 1 to 1.5 years until it’s ready for marketing approval. They have a 50/50 JV with some European partners that are responsible for funding the trial. Not much is known about these partners and that is perhaps one of the greatest risk factors. If they fund the trial as the proposed Enzolytics could be a major player in virology as they apply their HIV technology to COVID-19 and other viruses. This could be a very large platform technology because binding to a spot on the spike protein that doesn’t change makes a lot of sense.
The specific anticipated timelines for monoclonal antibody development against specific viruses can be found in this recent press release.
Whether you are a fan of Fauci or not he staked his reputation on this technology. Additionally, anyone skeptical of the company should note that their lab is located at Texas A&M University, and Dr. Cotropia used to work at M.D. Anderson Cancer Center as well as the Food and Drug Administration Center, and the Food and Drug Administration Center for Biologics Evaluation and Research. These are well respected immunology hubs. ENZC is difficult to get information on, but it seems to be opening up more. It recently presented at the Emerging Growth Virtual Conference and is collaborating with top-notch academic institutions. They also have European Partners funding the clinical trials of ITV-1 due to start in the next 3-4 months. The bearish claims against the company are simply untrue. Their molecule could be the new and improved version of Tamiflu that also works with COVID-19. With shares oversold and the company using its development platform to first target HIV/AIDS and COVID-19 with a collaboration with INTC, the company seems to have a bright future.
As always, good luck to all (except the shorts)!
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