Ensysce Biosciences(ENSC) - 2023 Q4 - Annual Report

Financial Performance - The company has not generated any revenue from product sales since its inception in 2003 and may never commercialize a marketable product [346]. - The Company has not generated significant revenue and does not expect to do so in the near future [374]. - Federal grants revenue decreased to $2.2 million in 2023 from $2.5 million in 2022, a decline of $0.3 million due to timing of research activities [400]. - The net loss for 2023 was $10.6 million, an improvement of $13.6 million compared to a net loss of $24.2 million in 2022 [399]. - Cash used in operating activities was $10.8 million in 2023, a decrease from $17.9 million in 2022, reflecting improved cash flow management [418]. - As of December 31, 2023, the company had $1.1 million in cash and cash equivalents, with an accumulated deficit of $121.6 million [405][414]. - The company expects to continue incurring significant operating losses for the foreseeable future without additional capital [414]. Funding and Capital Requirements - The company requires substantial additional funding to support ongoing operations and growth strategies, with current cash expected to last until Q3 2024 [350][353]. - Ensysce completed a public offering on May 12, 2023, raising approximately $7.0 million before fees by selling 1,800,876 shares at a combined price of $3.887 per share [367]. - The company entered into an $8.0 million convertible financing agreement in June 2022, with gross cash proceeds of $4.0 million from two closings [357]. - The Company entered into a Securities Purchase Agreement for an aggregate financing of $1.7 million, including $0.2 million from a board member [371]. - Future funding requirements will depend on the advancement of clinical trials and the ability to raise additional capital [406][422]. - Remaining funding under approved federal research grants totals $2.2 million, expected to be utilized by August 2024 [407]. - The company has commitments of approximately $17.9 million related to open purchase orders and contractual obligations for research studies [423]. Research and Development - Ensysce's lead product candidate, PF614, is currently in Phase 2 clinical development, while PF614-MPAR is in Phase 1b, and nafamostat is moving towards Phase 2 [347]. - Ensysce has not yet completed any pivotal clinical trials or obtained regulatory approvals for its product candidates [347]. - The company plans to continue preclinical studies and initiate new clinical trials for its lead product candidates, while also expanding its intellectual property portfolio [349]. - Research and development expenses are expected to remain elevated due to ongoing clinical trials for product candidates, including PF614 and nafamostat [380]. - The company is currently focused on the research and development of product candidates, including preclinical and clinical trials, with associated costs and timelines being critical factors [425]. - The company estimates accrued research and development expenses based on contracts and services performed, which may lead to variations in reported amounts [428]. Operating Expenses - The company has incurred significant operating losses and expects to continue doing so for the foreseeable future, raising doubts about its ability to continue as a going concern [348][353]. - The company has incurred additional costs associated with operating as a public entity, including legal, accounting, and investor relations expenses [348]. - General and administrative expenses are anticipated to increase as the Company expands its headcount to support product development [385]. - General and administrative expenses decreased to $5.4 million in 2023 from $6.9 million in 2022, a decrease of $1.5 million attributed to reduced stock-based compensation and other costs [402]. Tax and Valuation - The Company maintains a full valuation allowance against all deferred tax assets due to uncertainty in generating future taxable income [395]. - The company recorded a loss on the issuance of convertible notes, reflecting the difference between gross proceeds and calculated fair value [386]. Market and Economic Conditions - The company does not believe inflation significantly impacted its results of operations for the periods presented [435]. - The company qualifies as a "smaller reporting company," allowing it to provide reduced disclosure obligations until certain market value or revenue thresholds are exceeded [432]. - As of December 31, 2023, the company's cash and cash equivalents included cash and a money market fund account, with minimal impact expected from changes in market interest rates [434].