Zentek (ZTEK) Stock: Advanced Nanotech Healthcare Solutions

Zentek, Ltd. (ZTEK) is a Canadian intellectual property (‘IP) development and commercialization company advancing next-generation healthcare solutions based on nanotechnology for the detection, prevention, and treatment of infectious diseases. The Company is presently focused on commercializing ZenGUARD that has shown 99% activity against microbes including COVID-19. Zentek also has a global agreement as an exclusive commercializing partner for a newly developed rapid pathogen detection technology. The Company’s common stock was approved to be listed and commenced trading on the Nasdaq Capital Market under the symbol “ZTEK” from 3/22/2022.

Technology

Zentek’s technology is based on graphene, a single layer of graphite or carbon atoms arranged in a honeycomb lattice, with a high surface area to mass ratio (more than 2,600 square meters per gram) that can be stretched up to 120% without disintegrating. Graphene is also the world’s thinnest (1 millionth of a human hair) and strongest (200 times stronger than steel) nanomaterial, making it one of the most promising discoveries. It is also the most conductive material for heat and electricity, with near-zero visibility, absorbing only 2.3% visible light. Although technically graphene is a single layer of carbon atoms, multi-layer variations are possible but they cannot be used in the safety-sensitive healthcare or electronics sectors that require higher quality, fewer layer graphene. The International Standards Organization (‘ISO) has defined five variations of graphene based on the number of layers.

• 1 – Graphene (monolayer)

• 1-3 – Very few layer graphene (vFLG)

• 2-5 – Few layer graphene (FLG)

• 2-10 – Multilayer graphene (MLG)

• >10 – Exfoliated graphite or Graphene Nanoplatelets (GNP)

Zentek is presently commercializing vFLG and developing technology for the production of monolayer graphene.

Healthcare Applications

Zentek’s trademarked ZenGUARD is a hydrophilic coating of antimicrobial agent attached to the surface of graphene utilizing its high surface area to mass ratio to advantage. The coating adsorbs bacteria and virus laden aerosols and deactivates the pathogen with proven effectiveness of more than 99.99% bacterial filtration efficiency (‘BFE) and viral filtration efficiency (‘VFE).

Zentek has a 25,680 square feet manufacturing facility in the newly built industrial zoning space in Guelph, Ontario. The Company’s industrial plant with an estimated capacity to coat the equivalent of 800 million masks per month, is expected to be built out and commissioned in 1Q-2022. The Company believes that the same technology can enhance air filtration media in HVAC systems, deactivating pathogens and improving air quality to the highest possible standard. The technology is also usable in other PPE applications such as gloves, aprons, gowns, surgical caps and footwear coverings, as well as preventing and treating pathogenic diseases in livestock and crops.

Detection Technology

The Company has exclusive worldwide rights to commercialize a rapid, saliva-based COVID-19 antigen testing technology that uses aptamers, which are “single-stranded DNA molecules capable of binding specifically with target molecules called antigens to detect if a person has COVID-19.” Zentek is presently adopting this technology that uses saliva instead of nasal swab to detect COVID-19, for commercial prototyping readiness by 2022. The technology uses impedance allowing higher sensitivity and accuracy, and provides results in less than 10 minutes. The technology is mobile allowing point-of-care testing, and scalable to quickly develop new aptamers at low cost to detect various pathogens other than COVID.

Treatment Paradigm

The Company’s patent-pending graphene based formulation has shown broad-spectrum effectiveness against bacteria, fungi and viruses, with excellent safety results observed in cytotoxicity studies. In-vitro testing showed 99.9% effectiveness against the pathogens at extremely low minimum inhibitory concentrations (‘MIC). The formulation could be a game changer with potential to fight a wide range of infections in the respiratory tracts, eye, ear, skin etc. Zentek is presently testing a topical formulation on methicillin-resistant staphylococcus aureus (‘MRSA) and psoriasis, with future plans for testing on acne, diabetic foot etc.

Other Applications

Zentek’s graphene nanotechnology has applications in non-healthcare sectors too. One such application is in the fossil fuel industry. “Graphene nanoparticles in fuel improves heat transfer and combustion by increasing the burning rate leading to increased power. The graphene fuel additive can be introduced to the fuel from the refinery to the fuel tank and is anticipated to be cost-effective in the reduction in GHG emissions.” The Company has filed a provisional patent for the graphene additive technology and is preparing for its optimization and commercialization.

Another application is Zentek’s patent-pending icephobic coating that provides de-icing and anti-icing solution for aircraft, drones, sea-faring vessels, oil rigs, powerlines, wind turbines, etc., which are exposed to freezing rain and extreme icing conditions. The proprietary coating is undergoing real-world testing and has shown positive results so far. Other uses of graphene include making metals, plastics and other materials lighter and stronger, and more conductive and durable. It also has great potential in enhancing microchip technology and energy storage.

Intellectual Property

The Company announced on 3/24/2022 that the international patent application under the Patent Cooperation Treaty (‘PCT) for its ZenGUARD technology has been published by the World Intellectual Property Office (‘WIPO).

The Company on 3/28/2022 announced filing of a provisional patent with the United States Patent and Trademark Office (‘USPTO) for an innovative Graphene Oxide-Metal-Organic Framework (‘GO-MOF) compound for use in fire retardant products.

A provisional patent for a novel electrochemical exfoliation (‘ECE) process to produce graphene oxide (‘GO) from natural graphite has been filed by Zentek and the University of Guelph (‘Guelph). The Company also has an exclusive global license from Guelph for the IP related to the ECE process developed by Prof. Aicheng Chen and his team. The process is scalable and environment friendly by design, and produces few-layer GO of high quality at the Company’s Guelph facility.

Financials

Zentek has a debt-free market capitalization of ~$286 million, on a price of $2.88, and ~99 million shares outstanding. Insiders hold 3.85% of the shares. The stock commenced trading on NASDAQ from 3/22/2022. The Company had a pro forma cash balance of ~$35 million as of 9/30/2021, providing a cash runway of at least 12 months.

Risks

The Company is an “emerging growth company” and a “foreign private issuer” who may take advantage of reduced reporting requirements.

The Company has incurred losses since inception and has an accumulated deficit of approximately $51 million as of 9/30/2021.

The Company’s management team is almost entirely composed of professionals with more experience of finance and materials management. The team has just one person with exposure to the healthcare sector that too with marginal experience.

The Company started business as a mining company in 2008. The Company changed its classification to a life sciences company only in October 2021.

Bottomline

Zentek’s immediate focus is on penetrating the PPE market worth more than $52 billion, and the indoor air quality market worth over $66 billion. With an international patent just published for ZenGUARD, they are on solid footing, but the Company may need to bring in substantial healthcare expertise to make the most of it.