Ensysce Biosciences(US:ENSC)2023-11-08 16:00Financial Performance - Ensysce has incurred significant operating losses since its inception and expects to continue incurring net losses for the foreseeable future[119]. - The company has not generated any revenue from product sales and may never be able to commercialize a marketable product[117]. - The Company has generated limited revenue since inception and does not expect to generate revenue from product sales in the near future[144]. - The net loss for the three months ended September 30, 2023, was $2.7 million, significantly improved from a net loss of $9.9 million in the same period of 2022, representing a change of $7.2 million[165]. - The net loss for the nine months ended September 30, 2023, was $7.1 million, an improvement of $11.6 million compared to a net loss of $18.7 million in the same period of 2022[170]. - As of September 30, 2023, the company had an accumulated deficit of $118 million and expects to continue incurring significant operating losses[194]. Funding and Financial Agreements - Ensysce requires substantial additional funding to support ongoing operations and growth strategy, with current cash expected to be insufficient to fund operations through the end of Q1 2024[124][121]. - The company completed a public offering on May 12, 2023, raising approximately $7.0 million before fees, by issuing 1,800,876 shares of common stock[138]. - In February 2023, Ensysce raised approximately $3.0 million through a registered direct offering of 297,619 shares at $10.08 per share[133]. - The Company entered into a Securities Purchase Agreement for an aggregate financing of $1.7 million, with the first closing on October 25, 2023, issuing senior secured convertible promissory notes totaling $612,000 and warrants for 1,255,697 shares[141]. - The Company has entered into various financing agreements, including an $8.0 million convertible financing agreement in June 2022[128]. - Without proceeds from the GEM facility or other financing, existing cash resources are insufficient to fund planned operations for the next 12 months, raising doubts about the company's ability to continue as a going concern[195]. Research and Development - The lead product candidate, PF614, is in Phase 2 clinical development, while PF614-MPAR is in Phase 1b, and nafamostat is moving towards Phase 2[118]. - The company has not yet completed any pivotal clinical trials or obtained regulatory approvals for its product candidates[118]. - Research and development expenses are expected to remain elevated due to ongoing clinical trials for product candidates, including PF614, PF614-MPAR, and nafamostat[149]. - Research and development expenses decreased to $1.9 million in Q3 2023 from $4.8 million in Q3 2022, a reduction of $2.9 million[167]. - Research and development expenses for the nine months ended September 30, 2023, were $5.4 million, down from $13.4 million in 2022, a decrease of $8.0 million[172]. - The company anticipates substantial increases in expenses related to ongoing preclinical activities and clinical trials, as well as costs associated with operating as a public company[191]. Administrative Expenses - General and administrative expenses are anticipated to increase as the Company expands its headcount to support product development[153]. - General and administrative expenses for Q3 2023 were $1.2 million, down $0.5 million from $1.7 million in Q3 2022[168]. - General and administrative expenses for the nine months ended September 30, 2023, were $3.9 million, a decrease of $1.8 million from $5.7 million in 2022[173]. Grants and Other Income - The Company has received federal grants from the NIH for the development of overdose prevention technology and abuse deterrent technology for Opioid Use Disorder[145]. - Federal grants for the three months ended September 30, 2023, totaled $0.4 million, an increase of $0.1 million from $0.3 million in 2022[166]. - For the nine months ended September 30, 2023, federal grants amounted to $1.7 million, up from $1.1 million in 2022, an increase of $0.6 million[171]. Cash Flow and Liquidity - As of September 30, 2023, the company had $1.5 million in cash and cash equivalents and entered into a financing agreement for $1.7 million on October 23, 2023[175]. - For the nine months ended September 30, 2023, net cash used in operating activities was $8.98 million, a decrease from $14.59 million in the same period of 2022[186]. - Net cash provided by financing activities for the nine months ended September 30, 2023, was $7.29 million, compared to $6.83 million in 2022, primarily from proceeds of $9.1 million from offerings[189]. Tax and Valuation - The Company maintains a full valuation allowance against all deferred tax assets due to uncertainty in generating future taxable income[162]. - The Company has not recorded significant income tax expenses or reserves related to uncertain tax positions due to net losses incurred to date[161]. - The issuance of liability classified warrants is accounted for using a Black-Scholes option pricing model, with changes in fair value recognized through earnings[158]. Company Classification - The company is classified as an "emerging growth company" and a "smaller reporting company," allowing it to take advantage of certain reduced disclosure obligations[209][210].