Ensysce Biosciences(ENSC) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements for the quarter ended March 31, 2025, reflecting a net loss of $1.95 million and a cash position of $3.1 million, with management noting substantial doubt about the company's ability to continue as a going concern Consolidated Balance Sheets Total assets decreased to $4.6 million as of March 31, 2025, from $5.6 million at year-end 2024, primarily due to reduced cash and cash equivalents, leading to a decline in total stockholders' equity Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $3,052,491 | $3,502,077 | | Total current assets | $4,400,991 | $5,344,682 | | Total assets | $4,611,874 | $5,597,232 | | Total current liabilities | $1,761,176 | $2,207,197 | | Total liabilities | $1,891,356 | $2,217,293 | | Total stockholders' equity | $2,720,518 | $3,379,939 | Consolidated Statements of Operations The company reported a net loss of $1.95 million for Q1 2025, a significant improvement from $3.12 million in Q1 2024, primarily driven by reduced interest expense despite increased R&D costs Quarterly Operating Results (Unaudited) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Federal grants | $1,319,772 | $305,722 | | Research and development | $1,885,528 | $778,904 | | General and administrative | $1,401,756 | $1,369,782 | | Loss from operations | $(1,967,512) | $(1,842,964) | | Interest expense, net | $(3,856) | $(1,248,065) | | Net loss | $(1,945,573) | $(3,116,563) | | Net loss per share, basic and diluted | $(1.39) | $(8.21) | Consolidated Statements of Cash Flows Net cash used in operating activities significantly decreased to $1.7 million in Q1 2025 from $3.4 million in Q1 2024, while financing activities provided $1.3 million, resulting in a $0.45 million decrease in cash and cash equivalents Quarterly Cash Flow Summary (Unaudited) | Cash Flow Activity | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,707,412) | $(3,408,403) | | Net cash provided by financing activities | $1,257,826 | $5,689,148 | | Net increase (decrease) in cash | $(449,586) | $2,280,745 | | Cash and cash equivalents, end of period | $3,052,491 | $3,404,349 | Notes to Consolidated Financial Statements (Unaudited) Key disclosures include the company's clinical-stage biotech status, a 1-for-15 reverse stock split, substantial doubt about its going concern ability, and details on federal grants, debt, and recent equity financing activities, including a $2.2 million raise in April 2025 - The company is a clinical-stage biotech developing abuse-resistant (TAAP) and overdose-resistant (MPAR®) pain technologies[28] - Management has concluded there is substantial doubt about the Company's ability to continue as a going concern for the next 12 months, as it is dependent on obtaining additional financing[33][34] - A 1-for-15 reverse stock split of common stock was completed in December 2024, and all share and per-share amounts have been retrospectively restated[31] - In March 2025, the company raised approximately $1.1 million in gross proceeds through a registered direct offering and concurrent private placement of warrants[83][84] - As of March 31, 2025, the company had purchase commitments of an estimated $7.9 million related to open purchase orders and contractual obligations with CROs[68] - Subsequent to the quarter end, in April 2025, the company raised gross proceeds of $2.2 million through the exercise of warrants and issuance of new warrants[102] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial results, liquidity, and operational outlook, highlighting its clinical-stage nature, dependence on external funding, and the going concern issue, with current cash funding operations only into Q3 2025 - The company is a clinical-stage entity focused on developing safer pain relief drugs (PF614, PF614-MPAR) and has not yet generated any product revenue[105][106] - Management has substantial doubt about the company's ability to continue as a going concern, with current cash expected to fund operations only into the third quarter of 2025[113][151] Key Changes in Operating Results (Q1 2025 vs Q1 2024) | Item | Change | Reason | | :--- | :--- | :--- | | Federal Grants | +$1.0M | Increased activities under the new MPAR grant | | R&D Expenses | +$1.1M | Increased pre-clinical activity for PF614-MPAR | | Interest Expense | -$1.2M | Full amortization of 2023 Notes' discount and issuance costs in 2024 | - The company has actively raised capital through multiple offerings and warrant inducements in 2024 and 2025 to fund operations, including a $1.1 million offering in March 2025[116][119][123] - As of March 31, 2025, the company had commitments of approximately $8.1 million, primarily for multi-year pre-clinical and clinical research studies with CROs[157] Quantitative and Qualitative Disclosures About Market Risk The company identifies interest rate and inflation as primary market risks, but management believes these are not material due to the short-term nature of cash equivalents and minimal impact of inflation on operations - The company's exposure to interest rate risk is considered minimal due to the short-term nature of its cash and cash equivalents[169] - Management does not believe that inflation has not had a significant impact on the company's results of operations[170] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[171] - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[172] PART II. OTHER INFORMATION Legal Proceedings The company reports no pending legal proceedings expected to have a material adverse effect on its financial condition or operations, noting a $0.2 million settlement with a former contractor in April 2025 - As of the reporting date, there were no pending legal proceedings expected to have a material adverse effect on the company[69][173] - In April 2025, a dispute with a former contractor was settled for a total value of $0.2 million, which includes the issuance of 20,000 shares of stock[70] Risk Factors This section refers investors to the detailed discussion of risk factors in the company's 2024 Annual Report on Form 10-K - For a detailed discussion of risk factors, the company refers to its 2024 Annual Report on Form 10-K[174] Unregistered Sales of Equity Securities and Use of Proceeds The company entered a product development and supply agreement with Galephar Pharmaceutical Research, Inc. in January 2025, where Galephar will fund up to $10 million for R&D and manufacturing in exchange for unregistered common stock, exempt from Securities Act registration - In January 2025, the company entered into a Master Services Agreement with Galephar Pharmaceutical Research, Inc. to support the development and manufacturing of its PF614 and PF614-MPAR products[175] - Galephar will expend up to $10 million, and in return, Ensysce will issue unregistered common stock, including an initial grant of 13,801 restricted shares and further milestone-based payments[175] - The issuance of these securities was exempt from registration under Section 4(a)(2) of the Securities Act[175] Defaults Upon Senior Securities This item is not applicable - Not applicable[176] Mine Safety Disclosures This item is not applicable - Not applicable[177] Other Information There is no other information to disclose for this item - None[178]