Shares of Enochian Biosciences plunged more than 36% after the Justice Department announced company cofounder Serhat Gumrukçu was arrested in a sordid 2018 murder-for-hire scheme.
Enochian Co-founder Serhat Gumrukçu/Seraph Research Institute
Shares of Enochian Biosciences plunged more than 36% Wednesday after the U.S. Department of Justice announced company cofounder Serhat Gumrukçu was arrested in a sordid 2018 murder-for-hire scheme that resulted in the death of a Vermont man.
Gumrukçu, 39, along with Berk Eratay, 35, was arrested for the scheme that allegedly resulted in the death of Vermont resident Gregory Davis, 49. The men were charged by a federal grand jury with conspiring to use interstate commerce facilities in the commission of murder-for-hire, along with the state charges of murder. If convicted, Gumrukçu and Eratay face mandatory life in prison or the death penalty. Gumrukçu appeared in U.S. District Court for the District of California, while Eratay appeared in the U.S. District Court in Nevada on Wednesday.
According to the DOJ, on Jan. 6, 2018, Davis had been kidnapped from his home in Vermont by Colorado resident Jerry Banks, 34. Davis was found dead the following morning in a snowbank near his home. Banks was not charged with the murder, however, the government has alleged that Banks was the one who killed Davis, the DOJ said Wednesday.
Also arrested in the scheme was Aron Lee Etheridge, 41, of Nevada. He was charged with conspiring to kidnap Davis and is alleged to have communicated with Banks before and after the kidnapping and murder, the government said.
Few details of the scheme were released by the DOJ in its announcement, including the motive behind the alleged murder-for-hire scheme.
On the same day the charges against Gumrukçu were announced, Enochian sought to put some distance between itself and its cofounder. In a brief statement from the company’s board of directors, Enochian said Gumrukçu has had no formal role with the company and no involvement with its management, scientific team or collaborations.
In its announcement, the board called the charges against the cofounder “unexpected” and “shocking.”
“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,” Enochian said in a statement.
Gumrukçu has been credited with the creation of methods for treating chronic infectious diseases and cancer. Last month, he delivered the concluding Plenary Lecture at the Innate Killer Summit in San Diego. According to an announcement issued by Enochian Biosciences, Gumrukçu’s scientific presentation focused on innovative clinical strategies he designed to hyper-stimulate various components of the immune system, including those that are part of innate killer immunity through a technique that uses Natural Killer cells and Gamma Delta T-cells. Enochian Biosciences owns the exclusive license for the technology that Gumrukçu was highlighting.
Enochian CEO Mark Dybul said the company’s promising approach to treating disease has not been altered by the recent news.
“We are fully committed to advancing, and in fact, accelerating, the development of potential commercial products that could potentially save and lift up many millions of lives. The personal life of the inventor and co-founder does not alter those fundamental facts. Indeed, there has never been a formal role for Dr. Gumrukçu in the company and his remaining informal role as a scientific advisor has concluded. We look forward to the work ahead,” Dybul said in a statement.
The Wall Street Journal reported that Gumrukçu is the largest shareholder of Enochian, owning about one-third of the company’s shares. Gumrukçu sold about 253,000 shares last week, grossing over $2 million according to the U.S. Securities and Exchange Commission. The value of his remaining shares is about $108.7 million after Wednesday’s stock drop, according to WSJ.
Insider Trading
In other biopharma crime news, Frank Glassner, 68, a principal of an executive compensation consulting firm based in Novato, California, has been charged with securities fraud in connection with a scheme to commit insider trading.
Glassner, whose firm served as a consultant to Kadmon, is alleged to have illegally taken advantage of his access to nonpublic information regarding the company’s acquisition to front-run trades for himself, the government said. He is alleged to have made about $405,000 off the sale of stocks.
Glassner has been charged with two counts of securities fraud, one of which carries a maximum sentence of 20 years in prison and another that carries a maximum sentence of 25 years in prison.
