Enzolytics Inc (ENZC)

[foxi]

I saw a discussion circulating on Twitter about ENZC's claims that it owns the patent rights to ITV-1.

The issue is that these two company statements appear to contradict:

These records verify ownership of the subject patent is held in the name of The Zhabilov Trust.

For U.S. Patent No. 7479538 [...]
For U.S. Patent No. 8066982

https://www.otcmarkets.com/stock/enzc/news/Virogentics-and-Enzolytics-Refute-Misleading-Information-Being-Circulated-on-Social-Media-and-Other-Internet-Outlets-Bio?id=401452

And:

Enzolytics is the owner of the following issued U.S. Patents covering its technology relating to a peptide that has been demonstrated in clinical trials to provide anti-HIV-1 retroviral benefit in vivo.

U.S. Patent No. 7,479,538 [...]
U.S. Patent No. 8,066,982 [...]

https://enzolytics.com/enzolytics-inc-intellectual-property/

It could appear that one or the other of these statements is materially false. They cannot both be correct.



From the latest financials:

Patent License Agreement
Also on November 30, 2020, Virogentics, Inc., a wholly-owned subsidiary of Enzolytics, Inc., entered into a Patent License Agreement with the Zhabilov Trust in order to license the U.S. Patent No. 7,479538, entitled Irreversibly - Inactivated pepsinogen fragment a nd Pharmaceutical composition the same for detecting preventing and treating HIV; U.S. Patent No. 8,066982, Irreversibly - Inactivated pepsinogen fragment and Pharmaceutical composition compressing the same for detecting preventing and treating HIV, including all patents issuing therefrom and any foreign counterpartsthereof.

https://www.otcmarkets.com/otcapi/company/financial-report/371665/content

If ENZC owns the patents, why is there a "License fee payable" of $1,550,000 on Page 30? It seems clear that they are indeed licensing the Trust's patents.


For more insight, we can dig back into an old Immunotech document from 2014 starting on Page 2:

The Issuer's primary asset is an exclusive license to utilize these pharmaceutical compositions in connection with its HIV/AIDS drug development efforts.5 A true and accurate copy of the license is attached as Annex A hereto. These proprietary compositions are covered by two (2) patents and three (3) patent applications, to wit:

a. U.S. Patent No. US 7479538 B2: Improved in Vitro Binding Affinity for HIV-1 gp 120 and gp41 and Human CD4 Cells;

[...]

e. U.S. Patent Application No. US 8066982 B2: Irreversibly-Inactivated Pepsinogen Fragment and Pharmaceutical Compositions Comprising the Same for Detecting, Preventing and Treating HIV

[...]

The underlying technologies covered by the above-referenced patents and patent applications was invented and developed by Mr. Harry Zhabilov, the Issuer's Chief Scientific Officer and Director. The intellectual property is titularly owned by The Zhabilov Trust, of which Diana Zhabilov, HruTy Zhabilov's wife, is the Trustee and her children the beneficiary thereof.

Thus, there exists a comity of interest between Mr. Zhabilov, the Trust and the Issuer. The Trust has never sought to license its technology to any other third party other than the Issuer.

https://www.sec.gov/litigation/apdocuments/3-16321-event-1.pdf

As I understand it, a "comity of interest" is granted out of respect, deference, or friendship, rather than as an obligation. i.e. it's mutually beneficial for both parties to continue transacting.

We can read the details of this old agreement (between Zhabilov Trust and Immunotech Laboratories) starting on Page 10 of the same document.

As far as I know, a license is a contract. An agreement by the owner of some IP and someone who wishes to use that IP. There is no automatic transfer of ownership, even for an exclusive license.

Looking in USPTO, indeed Zhabilov Trust is listed as the assignee for the 8066982 and 7479538 patents. ENZC is not listed. There cannot be phantom owners.

Thoughts?