Ensysce Biosciences, Inc. SEC 10-K Report

Ensysce Biosciences, Inc., a clinical-stage pharmaceutical company dedicated to developing innovative solutions for severe pain relief while mitigating the risks of opioid misuse, abuse, and overdose, has released its annual Form 10-K report. The report provides a comprehensive overview of the company's financial performance, business operations, strategic initiatives, and the challenges it faces.

Financial Highlights

• Federal Grants: $5.21 million, reflecting an increase due to the timing of research activities eligible for funding, with increased activities under the OUD grant and new funding under the MPAR grant.
• Loss from Operations: $(6.73) million, an improvement from the previous year due to reduced operating expenses.
• Net Loss: $(7.99) million, showing a reduction in net loss compared to the previous year, primarily due to increased grant revenue and decreased operating expenses.
• Net Loss Per Share: $(11.45), reflecting the impact of the net loss on a per-share basis, improved from the previous year's $(70.40) due to a higher number of shares outstanding.

Business Highlights

• Business Overview: Ensysce Biosciences, Inc. is focused on developing innovative solutions for severe pain relief while reducing the potential for opioid misuse, abuse, and overdose. The company is advancing two primary drug platforms: the Trypsin Activated Abuse Protection (TAAP) platform and the Multi-Pill Abuse Resistant (MPAR®) platform.
• Product Development: The company's lead product candidate, PF614, is a TAAP oxycodone prodrug designed to release oxycodone only under specific physiological conditions, aiming to resist both oral and non-oral modes of prescription drug abuse. PF614-MPAR, a combination of PF614 and nafamostat, is designed to provide overdose protection by limiting the bioavailability of active opioids when multiple doses are ingested.
• Clinical Trials: Ensysce has completed several clinical trials for PF614, including Phase 1 and Phase 1b studies, which demonstrated safety and pharmacokinetic profiles comparable to existing oxycodone products. The company has also conducted human abuse potential studies to assess the potential for abuse of PF614 via intranasal and oral routes.
• Regulatory Milestones: PF614-MPAR was granted Breakthrough Therapy designation by the FDA in January 2024, highlighting its potential to offer significant improvements over existing therapies for opioid abuse and overdose prevention.
• Future Outlook: The company plans to initiate Phase 3 clinical trials for PF614 in mid-2025, following an End of Phase 2 regulatory meeting held in January 2024. Ensysce is also exploring the development of additional TAAP and MPAR® opioid and amphetamine products to expand its pipeline.
• Market Opportunity: The company is addressing a significant market need, with opioid pain medications being essential for many Americans suffering from chronic pain. The development of abuse-deterrent and overdose-protective opioid products is seen as a critical step in combating the opioid crisis.
• Intellectual Property: Ensysce holds numerous patents and applications in key markets, including the United States, Europe, China, and Japan, covering its TAAP and MPAR technologies. These patents are projected to expire between 2028 and 2042, providing a strong intellectual property position.
• Manufacturing and Supply: The company does not own manufacturing facilities and relies on contract manufacturing organizations (CMOs) for the production of clinical and commercial quantities of its product candidates. PF614, being a controlled substance, requires CMOs to be registered with the DEA.
• Government Grants: Ensysce has received federal grant funding from agencies such as the NIH and NIDA, totaling $5.2 million for the year ended December 31, 2024, to support the development of its opioid use disorder-MPAR® technology.

Strategic Initiatives

• Strategic Initiatives: Ensysce Biosciences, Inc. is focused on advancing its clinical-stage programs, particularly the development of its abuse and overdose-resistant pain technology, including PF614 and PF614-MPAR. The company is also working on a methadone prodrug for Opioid Use Disorder. Strategic initiatives include securing federal grants to support research and development, with a new multi-year MPAR Grant awarded in August 2024, providing $14 million in funding through May 2027.
• Capital Management: The company has engaged in several capital management activities, including multiple public offerings and warrant inducements to raise funds. In August 2024, Ensysce entered into a Securities Purchase Agreement, issuing shares and pre-funded warrants, raising approximately $1.7 million. Additionally, warrant inducements in February and August 2024 generated gross proceeds of $3.4 million and $4.7 million, respectively. The company also managed its debt through convertible notes, with significant conversions into common stock to reduce outstanding liabilities. As of December 31, 2024, the company had $3.5 million in cash and cash equivalents.
• Future Outlook: Ensysce anticipates continued operating losses and significant expenses related to research and development, regulatory approvals, and potential commercialization activities. The company plans to finance its operations through additional equity offerings, debt financings, or strategic collaborations. Without additional capital, current cash resources are expected to fund operations only into the second quarter of 2025, raising substantial doubt about the company's ability to continue as a going concern. The company is focused on securing further funding to support its strategic initiatives and sustain operations.

Challenges and Risks

• Going Concern: The company faces substantial doubt about its ability to continue as a going concern due to the lack of revenue-generating activities and dependence on additional financing. This raises significant liquidity issues and operating losses, potentially leading to a reduction in operating plans and product development activities.
• Limited Operating History: The company is a clinical-stage pharmaceutical entity with a limited operating history, having incurred significant financial losses since inception. It anticipates continued losses due to ongoing research and development expenses without any products approved for commercial sale.
• Funding Requirements: The company requires substantial additional funding to continue operations and advance its clinical-stage product candidates. Failure to secure additional capital could force delays or termination of product discovery and development programs.
• Product Dependency: The success of the company is highly dependent on its lead product candidates, PF614 and PF614-MPAR. Any delays or failures in clinical development, regulatory approval, or commercialization could materially harm the business.
• Competition: The company faces significant competition in the pharmaceutical industry, particularly in the development of opioid abuse and drug overdose solutions. Competitors with greater resources may develop more effective or safer products, impacting the company's market position.
• Operational Risks: Operational risks include reliance on third-party providers for clinical trials and manufacturing. Any failure by these third parties to meet regulatory requirements or contractual obligations could adversely affect product development and commercialization efforts.
• Regulatory Risks: Regulatory risks are significant, with the company needing to navigate complex FDA approval processes. Changes in regulatory requirements or failure to meet FDA standards could delay or prevent product approvals.
• Product Liability: The company is exposed to potential product liability risks inherent in pharmaceutical development. Any adverse events or side effects could lead to significant legal and financial liabilities.
• Management Strategies: Management acknowledges the need for additional funding to support ongoing clinical trials and commercialization efforts. Strategies to address these challenges include seeking additional capital and exploring potential collaborations or partnerships.
• Market Risks: The company is subject to market risks, including fluctuations in interest rates and potential changes in regulatory environments that could impact financial performance and operational flexibility.

SEC Filing: Ensysce Biosciences, Inc. [ ENSC ] - 10-K - Mar. 10, 2025