Ensysce Biosciences Inc

Previous wording

Ensysce is a clinical stage pharmaceutical company seeking to develop innovative solutions for severe pain relief while reducing the fear of and the potential for opioid misuse, abuse and overdose. Our lead product candidate, PF614, is an extended release TAAP prodrug of oxycodone. TAAP modification of prescription drugs removed the ability to crush, chew or manipulate and inject to achieve the effect of the medication more quickly than by swallowing. MPAR® adds a layer of overdose protection to each TAAP product.

Current wording

Ensysce is a clinical stage pharmaceutical company developing innovative solutions for severe pain relief while reducing the potential for opioid abuse and overdose. Our lead product candidate, PF614, is an extended release TAAP prodrug of oxycodone. TAAP modification of prescription drugs removes the ability to crush, chew or manipulate and inject to achieve the effect of the medication more quickly than by swallowing. Our MPAR® technology adds a layer of overdose protection to each TAAP product.

Previous wording

We have incurred significant operating losses since inception and we expect to continue to incur net losses for the foreseeable future. We expect that our expenses and capital requirements will increase substantially in connection with our ongoing development activities, particularly if and as we:

Current wording

We have incurred significant operating losses since inception and we expect to incur net losses for the foreseeable future. We expect that our expenses and capital requirements will increase substantially in connection with our ongoing development activities, particularly if and as we:

Previous wording

On February 12, 2024, the Company entered into an Inducement Letter with certain holders of existing warrants to purchase up to an aggregate of 3,601,752 shares of the Company’s common stock issued to the holders in connection with the 2023 May Offering. Pursuant to the Inducement Letter, the holders agreed to exercise for cash their existing warrants to purchase an aggregate of 3,601,752 shares of Common Stock at a reduced exercise price of $1.31 per share in consideration of the Company’s agreement to issue new unregistered Series A Warrants (the “Series A Warrants”) to purchase up to 3,601,752 shares of Common Stock and new unregistered Series B Warrants (the “Series B Warrants”) to purchase up to 3,601,752 shares of Common Stock (collectively, the “New Warrant Shares”). The Series A Warrants have an exercise price of $1.06 per share and have a term equal to eighteen months from the date of issuance. The Series B Warrants have an exercise price of $1.06 per share and will expire on May 12, 2028. The gross proceeds to the Company from the exercise of the warrants were approximately $4.7 million, prior to deducting placement agent fees and estimated offering expenses. The closing of the offering occurred on February 14, 2024.

Current wording

In February 2024, the Company entered into an Inducement Letter with certain holders of existing warrants to purchase up to an aggregate of 3,601,752 shares of the Company’s common stock issued to the holders in connection with the 2023 May Offering. Pursuant to the Inducement Letter, the holders agreed to exercise for cash their existing warrants to purchase an aggregate of 3,601,752 shares of Common Stock at a reduced exercise price of $1.31 per share in consideration of the Company’s agreement to issue new unregistered Series A Warrants to purchase up to 3,601,752 shares of Common Stock and new unregistered Series B Warrants to purchase up to 3,601,752 shares of Common Stock. The Series A Warrants have an exercise price of $1.06 per share and have a term equal to eighteen months from the date of issuance. The Series B Warrants have an exercise price of $1.06 per share and will expire on May 12, 2028. The gross proceeds to the Company from the exercise of the warrants were approximately $4.7 million, prior to deducting placement agent fees and estimated offering expenses.

Previous wording

In connection with the execution of the Inducement Letter, the Company entered into a waiver related to the 2023 Notes’ SPA it had entered into as of October 23, 2023. The SPA contained restrictions on the Company’s ability to undertake certain transactions, which included entering into the Inducement Letter. The Waiver permitted the Company to enter into the Inducement Letter but required repayment of the remaining $0.5 million of investor held notes issued under the SPA with a premium of $0.5 million following closing of the transaction contemplated thereby.

Current wording

In connection with the execution of the Inducement Letter, the Company entered into a waiver related to the 2023 Notes’ SPA it had entered into as of October 23, 2023. The SPA contained restrictions on the Company’s ability to undertake certain transactions, which included entering into the Inducement Letter. The Waiver permitted the Company to enter into the Inducement Letter but required repayment of the remaining $0.5 million of investor held notes issued under the SPA with a premium of $0.5 million following closing of the inducement transaction.

Previous wording

The Company utilized an exclusive placement agent for the 2024 Warrant Inducement and incurred approximately $0.5 million in legal fees and other closing costs. Additionally, the Company issued to the placement agent as compensation unregistered warrants to purchase up to 252,123 shares of Common Stock, equal to 7.0% of the aggregate number of shares of Common Stock (or warrants) placed in the transaction. The placement agent warrants expire on May 12, 2028, and have an exercise price of $1.6375 per share of Common Stock (equal to 125% of the reduced exercise price per Existing Warrant).

Current wording

The Company utilized an exclusive placement agent for the 2024 Warrant Inducement and incurred approximately $0.3 million in legal fees and other closing costs. Additionally, the Company issued to the placement agent as compensation unregistered warrants to purchase up to 252,123 shares of Common Stock, equal to 7.0% of the aggregate number of shares of Common Stock (or warrants) placed in the transaction. The placement agent warrants expire on May 12, 2028, and have an exercise price of $1.6375 per share of Common Stock (equal to 125% of the reduced exercise price per Existing Warrant).

Previous wording

We have received funding under federal grants from the NIH through NIDA. In September 2018, we were awarded a research and development grant related to the development of our MPAR® overdose prevention technology (the “MPAR Grant”). In September 2019, we were awarded a second research and development grant related to the development of our TAAP/MPAR abuse deterrent technology for Opioid Use Disorder (“OUD”) (the “OUD Grant”). Grant funds are awarded annually through a Notice of Award which contains certain terms and conditions including, but not limited to, complying with the grant program legislation, regulation and policy requirements, complying with conditions on expenditures of funds with respect to other applicable statutory requirements such as the federal appropriations acts, periodic reporting requirements, and budget requirements.

Current wording

We have received funding under federal grants from the NIH through NIDA. In September 2018 and August 2024, we were awarded research and development grants related to the development of our MPAR® overdose prevention technology. In September 2019, we were awarded a second research and development grant related to the development of our TAAP/MPAR abuse deterrent technology for Opioid Use Disorder (“OUD”). Grant funds are awarded annually through a Notice of Award which contains certain terms and conditions including, but not limited to, complying with the grant program legislation, regulation and policy requirements, complying with conditions on expenditures of funds with respect to other applicable statutory requirements such as the federal appropriations acts, periodic reporting requirements, and budget requirements.

Previous wording

General and administrative expenses consist primarily of employee-related expenses, including salaries and related benefits, travel and stock-based compensation for personnel in executive, business development, finance, human resources, legal, information technology, and administrative functions. General and administrative expenses also include direct and allocated facility-related costs as well as insurance costs and professional fees for legal, patent, consulting, investor and public relations, accounting and audit services. We expense general and administrative costs as incurred.

Current wording

General and administrative expenses consist primarily of employee-related expenses, including salaries and related benefits, travel and stock-based compensation for personnel in executive, business development, finance, human resources, legal, information technology, and administrative functions. General and administrative expenses also include insurance costs and professional fees for legal, patent, consulting, investor and public relations, accounting and audit services. We expense general and administrative costs as incurred.

Previous wording

Interest expense consists of interest accrued on our financed directors’ and officers’ insurance, and accumulated interest from the 2023 Notes based on the stated interest rate. In addition, the 2023 Notes balances reflect amortization of the debt discount from the original issuance and a discount associated with the warrant issuances and amortization of the associated debt issuance costs that are all recorded as interest expense. Interest expense related to the 2021 Notes and 2022 Notes was included in the estimate of fair value of the convertible notes.

Current wording

Interest expense consists of interest accrued on our financed directors’ and officers’ insurance, and accumulated interest from the 2023 Notes based on the stated interest rate. In addition, the 2023 Notes balances reflect amortization of the debt discount from the original issuance and a discount associated with the warrant issuances and amortization of the associated debt issuance costs that are all recorded as interest expense. Interest expense related to the 2022 Notes was included in the estimate of fair value of the convertible notes.

Previous wording

Funding from federal grants for the three months ended June 30, 2024 and 2023 totaled $0.2 million and $0.5 million, respectively. The difference is due to the timing of research activities eligible for funding, as current funding under the MPAR grant was completed in December 2023. We expect funding from federal grants to increase in the third quarter due to increased preclinical activities under the OUD grant following the recent selection of a lead drug candidate.

Current wording

Funding from federal grants for the three months ended September 30, 2024 and 2023 totaled $3.4 million and $0.4 million, respectively. The increase is due to the timing of research activities eligible for funding, with increased activities under the OUD grant following the selection of a lead drug candidate in June 2024 and funding under the newly awarded MPAR grant commencing in September 2024. We expect revenue from federal grants to decrease in coming quarters due to the completion of the OUD grant in August 2024 and the timing of research activities under the MPAR grant.

Previous wording

Research and development expenses for the three months ended June 30, 2024 and 2023 were $0.9 million and $1.6 million, respectively, representing a decrease of $0.7 million. The decrease was primarily the result of reduced external research and development costs related to clinical and pre-clinical programs for PF614 and PF614-MPAR. We do not currently track expenses on a program-by-program basis. We expect future research and development expenses to approximate current levels but may need to adjust the timing of research and development based on our ability to raise capital sufficient to fund these expenses.

Current wording

Research and development expenses for the three months ended September 30, 2024 and 2023 were $1.7 million and $1.9 million, respectively, representing a decrease of $0.2 million. The decrease was primarily the result of reduced external research and development costs related to clinical and pre-clinical programs for PF614 and PF614-MPAR. We do not currently track expenses on a program-by-program basis. We expect future research and development expenses to increase from current levels with the availability of funding from the new MPAR grant.

Previous wording

General and administrative expenses for the three months ended June 30, 2024 and 2023 were $1.2 million and $1.1 million, respectively, representing an increase of $0.1 million. We expect future general and administrative expenses to approximate current levels.

Current wording

General and administrative expenses for the three months ended September 30, 2024 and 2023 were $1.1 million and $1.2 million, respectively, representing an decrease of $0.1 million. We expect future general and administrative expenses to approximate current levels.

Previous wording

Other income and expense for the three months ended June 30, 2024, consisted primarily of interest expenses associated with the amortization of the original issue discount and the debt issuance costs associated with the 2023 Notes. The comparative period for 2023 consisted primarily of changes in fair value associated with the Company’s liability-classified warrants.

Current wording

Other income and expense for the three months ended September 30, 2024, consisted primarily of interest income from cash and cash equivalents. The comparative period for 2023 consisted primarily of changes in fair value associated with the Company’s liability-classified warrants.

Previous wording

Funding from federal grants for the six months ended June 30, 2024 and 2023 totaled $0.5 million and $1.3 million, respectively. The difference is due to the timing of research activities eligible for funding, as current funding under the MPAR grant was completed in December 2023. We expect funding from federal grants to increase in the second half of 2024 due to increased preclinical activities under the OUD grant following the recent selection of a lead drug candidate.

Current wording

Funding from federal grants for the nine months ended September 30, 2024 and 2023 totaled $3.9 million and $1.7 million, respectively. The difference is due to the timing of research activities eligible for funding, with increased activities under the OUD grant following the selection of a lead drug candidate in June 2024 and funding under the newly awarded MPAR grant which began in September 2024.

Previous wording

Research and development expenses for the six months ended June 30, 2024 and 2023 were $1.7 million and $3.4 million, respectively, representing a decrease of $1.7 million. The decrease was primarily the result of reduced external research and development costs related to clinical and pre-clinical programs for PF614 and PF614-MPAR. We do not currently track expenses on a program-by-program basis. We expect future research and development expenses to approximate current levels but may need to be adjusted based on our ability to raise capital sufficient to fund these expenses.

Current wording

Research and development expenses for the nine months ended September 30, 2024 and 2023 were $3.4 million and $5.4 million, respectively, representing a decrease of $2.0 million. The decrease was primarily the result of reduced external research and development costs related to clinical and pre-clinical programs for PF614 and PF614-MPAR, with decreased clinical trial activity for both programs in the 2024 period. We do not currently track expenses on a program-by-program basis.

Previous wording

Other income and expense for the six months ended June 30, 2024, consisted primarily of interest expense associated with the amortization of the original issue discount and the debt issuance costs associated with the 2023 Notes and represented a net change in other income and expense of $1.3 million compared to the six months ended June 30, 2023. The comparative period for 2023 consisted primarily of changes in fair value associated with the 2022 Notes and the Company’s liability-classified warrants.

Current wording

Other income and expense for the nine months ended September 30, 2024, consisted primarily of interest expense associated with the amortization of the original issue discount and the debt issuance costs for the 2023 Notes and represented a net change in other income and expense of $1.3 million compared to the nine months ended September 30, 2023. The comparative period for 2023 consisted primarily of changes in fair value associated with the 2022 Notes and the Company’s liability-classified warrants.

Previous wording

As of June 30, 2024, we had $1.0 million of cash and cash equivalents. Since inception, we have generated limited revenues and have incurred significant operating losses and negative cash flows from our operations, and we anticipate that we will continue to incur losses for the foreseeable future. We have not yet commercialized any of our product candidates and we do not expect to generate revenue from sales of any product candidates for several years, if at all.

Current wording

As of September 30, 2024, we had $4.2 million of cash and cash equivalents. Since inception, we have generated limited revenues and have incurred significant operating losses and negative cash flows from our operations, and we anticipate that we will continue to incur losses for the foreseeable future. We have not yet commercialized any of our product candidates and we do not expect to generate revenue from sales of any product candidates for several years, if at all.

Previous wording

Remaining cash funding under two approved federal research grants totaled $1.9 million at June 30, 2024 and is expected to be utilized by August 31, 2024. Pursuant to the terms and conditions of the two grants, we are required to submit progress reports to NIDA on an annual basis and a final research performance progress report within 120 days of the performance period end date.

Current wording

The remaining cash funding under the MPAR federal research grant totaled $14 million at September 30, 2024 and is expected to be utilized by May 31, 2027. Pursuant to the terms and conditions, we are required to submit progress reports to NIDA on an annual basis and a final research performance progress report within 120 days of the performance period end date.

Previous wording

We have generated limited revenues and have incurred significant operating losses since our inception. We expect to continue to incur significant expenses and operating losses for the foreseeable future. Without capital raised through financing transactions, existing cash resources are sufficient to allow us to fund current planned operations into the third quarter of 2024, which raises substantial doubt about the Company’s ability to continue as a going concern.

Current wording

We have generated limited revenues and have incurred significant operating losses since our inception. We expect to continue to incur significant expenses and operating losses for the foreseeable future. Without capital raised through financing transactions, existing cash resources are sufficient to allow us to fund current planned operations into the first quarter of 2025, which raises substantial doubt about the Company’s ability to continue as a going concern.

Previous wording

During the six months ended June 30, 2024 and 2023, we used cash in operating activities of $5.7 million and $6.7 million, respectively. The decrease primarily resulted from the timing of vendor invoicing and payments and a reduction in research and development activities in the 2024 period.

Current wording

During the nine months ended September 30, 2024 and 2023, we used cash in operating activities of $6.7 million and $9.0 million, respectively. The decrease primarily resulted from the timing of vendor invoicing and payments and a reduction in research and development activities in the 2024 period.

Previous wording

During the six months ended June 30, 2024, net cash provided by financing activities was $5.6 million, primarily consisting of net proceeds from warrant exercises and the warrant inducement, less repayment of convertible notes and financed insurance premiums. During the six months ended June 30, 2023, net cash provided by financing activities was $7.4 million, primarily consisting of net proceeds from the 2023 February and 2023 May Offerings, less repayment of convertible notes and financed insurance premiums.

Current wording

During the nine months ended September 30, 2024, net cash provided by financing activities was $9.8 million, primarily consisting of net proceeds from the August 2024 public offering $1.7 million, warrant exercises and the warrant inducement, net transaction costs $8.9 million, less repayment of convertible notes of $0.5 million and financed insurance premiums of $0.3 million. During the nine months ended September 30, 2023, net cash provided by financing activities was $7.3 million, primarily consisting of proceeds from 2023 February and 2023 May offerings of $9.1 million, net of transaction costs of $0.4 million and the repayment of financed insurance premiums of $0.3 million and cash payment of 2022 Notes of $1.0 million.

Previous wording

Our commitments as of June 30, 2024, included approximately $16 million related to open purchase orders and contractual obligations that occurred in the ordinary course of business, including commitments with contract research organizations for multi-year pre-clinical and clinical research studies. Although open purchase orders are considered enforceable and legally binding, the terms generally allow us the option to cancel, reschedule, and adjust requirements based on our business needs prior to the delivery of goods or the performance of services.

Current wording

Our commitments as of September 30, 2024, included approximately $13.3 million related to open purchase orders and contractual obligations that occurred in the ordinary course of business, including commitments with contract research organizations for multi-year pre-clinical and clinical research studies. Although open purchase orders are considered enforceable and legally binding, the terms generally allow us the option to cancel, reschedule, and adjust requirements based on our business needs prior to the delivery of goods or the performance of services.