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Unfortunately, COVID-19 is still a threat to humankind and has a dramatic impact on human health, social life, the world economy, and food security. With the limited number of suggested therapies under clinical trials, the discovery of novel therapeutic agents is essential. Here, a previously identified anti-SARS-CoV-2 compound named <b>Compound 13</b> (1,2,5-Oxadiazole-3-carboximidic acid, 4,4′-(methylenediimino) bis,bis[[(2-hydroxyphenyl)methylene]hydrazide) was subjected to an iterated virtual screening against SARS-CoV-2 M^pro using a combination of Ligand Designer and PathFinder. PathFinder, a computational reaction enumeration tool, was used for the rapid generation of enumerated structures via default reaction library. Ligand designer was employed for the computerized lead optimization and selection of the best structural modification that resulted in a favorable ligand–protein complex. The obtained compounds that showed the best binding to M^pro were re-screened against TMPRSS2, leading to the identification of 20 shared compounds. The compounds were further visually inspected, which resulted in the identification of five shared compounds <b>M1–5</b> with dual binding affinity. In vitro evaluation and enzyme inhibition assay indicated that <b>M3</b>, an analogue of <b>Compound 13</b> afforded by replacing the phenolic moiety with pyridinyl, possesses an improved antiviral activity and safety. <b>M3</b> displayed in vitro antiviral activity with IC₅₀ 0.016 µM and M^pro inhibition activity with IC₅₀ 0.013 µM, 7-fold more potent than the parent <b>Compound 13</b> and potent than the antivirals drugs that are currently under clinical trials. Moreover, <b>M3</b> showed potent activity against human TMPRSS2 and furin enzymes with IC₅₀ 0.05, and 0.08 µM, respectively. Molecular docking, WaterMap analysis, molecular dynamics simulation, and R-group analysis confirmed the superiority of the binding fit to <b>M3</b> with the target enzymes. WaterMap analysis calculated the thermodynamic properties of the hydration site in the binding pocket that significantly affects the biological activity. Loading <b>M3</b> on zinc oxide nanoparticles (ZnO NPs) increased the antiviral activity of the compound 1.5-fold, while maintaining a higher safety profile. In conclusion, lead optimized discovery following an iterated virtual screening in association with molecular docking and biological evaluation revealed a novel compound named <b>M3</b> with promising dual activity against SARS-CoV-2. The compound deserves further investigation for potential clinical-based studies.