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What changed in Ensysce Biosciences, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Ensysce Biosciences, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+185 added−263 removedSource: 10-K (2025-03-10) vs 10-K (2024-03-15)

Top changes in Ensysce Biosciences, Inc.'s 2024 10-K

185 paragraphs added · 263 removed · 157 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

39 edited+5 added−28 removed275 unchanged
Biggest changeThe mailing address of our principal executive office is 7946 Ivanhoe Avenue, Suite 201, La Jolla, California 92037. Our corporate telephone number is (858) 263-4196. Our website address is www.ensysce.com. Information contained on our website, or connected thereto, does not constitute part of, and is not incorporated by reference into, this Annual Report on Form 10-K.
Biggest changeInformation contained on our website, or connected thereto, does not constitute part of, and is not incorporated by reference into, this Annual Report on Form 10-K.
Five-year and three-year exclusivity will not delay the submission or approval of a full NDA; however, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all of the non-clinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness. 28 Post-Marketing Requirements Following approval of a new product, a pharmaceutical company and the approved product are subject to continuing regulation by the FDA, including, among other things, monitoring and recordkeeping activities, reporting to the applicable regulatory authorities of adverse experiences with the product, providing the regulatory authorities with updated safety and efficacy information, product sampling and distribution requirements, and complying with promotion and advertising requirements, which include, among others, standards for direct-to-consumer advertising, restrictions on promoting drugs for uses or in patient populations that are not described in the drug’s approved labeling (known as “ off-label use ”), limitations on industry-sponsored scientific and educational activities and requirements for promotional activities involving the internet.
Five-year and three-year exclusivity will not delay the submission or approval of a full NDA; however, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all of the non-clinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness. 27 Post-Marketing Requirements Following approval of a new product, a pharmaceutical company and the approved product are subject to continuing regulation by the FDA, including, among other things, monitoring and recordkeeping activities, reporting to the applicable regulatory authorities of adverse experiences with the product, providing the regulatory authorities with updated safety and efficacy information, product sampling and distribution requirements, and complying with promotion and advertising requirements, which include, among others, standards for direct-to-consumer advertising, restrictions on promoting drugs for uses or in patient populations that are not described in the drug’s approved labeling (known as “ off-label use ”), limitations on industry-sponsored scientific and educational activities and requirements for promotional activities involving the internet.
In rare instances, a single Phase 3 trial may be sufficient when either (1) the trial is a large, multicenter trial demonstrating internal consistency and a statistically very persuasive finding of a clinically meaningful effect on mortality, irreversible morbidity, or prevention of a disease with a potentially serious outcome and confirmation of the result in a second trial would be practically or ethically impossible or (2) the single trial is supported by other confirmatory evidence. 24 In addition, the manufacturer of an investigational drug in a Phase 2 or Phase 3 clinical trial for a serious or life-threatening disease is required to make available, such as by posting on its website, its policy on evaluating and responding to requests for expanded access to such investigational drug.
In rare instances, a single Phase 3 trial may be sufficient when either (1) the trial is a large, multicenter trial demonstrating internal consistency and a statistically very persuasive finding of a clinically meaningful effect on mortality, irreversible morbidity, or prevention of a disease with a potentially serious outcome and confirmation of the result in a second trial would be practically or ethically impossible or (2) the single trial is supported by other confirmatory evidence. 23 In addition, the manufacturer of an investigational drug in a Phase 2 or Phase 3 clinical trial for a serious or life-threatening disease is required to make available, such as by posting on its website, its policy on evaluating and responding to requests for expanded access to such investigational drug.
These firms and, where applicable, their suppliers are subject to inspections by the FDA at any time, and the discovery of violative conditions, including failure to conform to cGMP, could result in enforcement actions that interrupt the operation of any such product or may result in restrictions on a product, manufacturer, or holder of an approved NDA, including, among other things, recall or withdrawal of the product from the market. 29 The CSA and DEA Regulation Our products are regulated as “ controlled substances ” as defined under the CSA and regulations promulgated by DEA.
These firms and, where applicable, their suppliers are subject to inspections by the FDA at any time, and the discovery of violative conditions, including failure to conform to cGMP, could result in enforcement actions that interrupt the operation of any such product or may result in restrictions on a product, manufacturer, or holder of an approved NDA, including, among other things, recall or withdrawal of the product from the market. 28 The CSA and DEA Regulation Our products are regulated as “ controlled substances ” as defined under the CSA and regulations promulgated by DEA.
The guideline addresses the following four areas: 1) determining whether or not to initiate opioids for pain, 2) selecting opioids and determining opioid dosages, 3) deciding duration of initial opioid prescription and conducting follow-up, and 4) assessing risk and addressing potential harms of opioid use. 31 ● FDA Drug Safety Communication: In April 2023, the FDA issued a communication that in the ongoing effort to address the nation’s opioid crisis, it was making several updates to the prescribing information of opioid pain medicines to provide additional guidance on their use.
The guideline addresses the following four areas: 1) determining whether or not to initiate opioids for pain, 2) selecting opioids and determining opioid dosages, 3) deciding duration of initial opioid prescription and conducting follow-up, and 4) assessing risk and addressing potential harms of opioid use. 30 ● FDA Drug Safety Communication: In April 2023, the FDA issued a communication that in the ongoing effort to address the nation’s opioid crisis, it was making several updates to the prescribing information of opioid pain medicines to provide additional guidance on their use.
Post-marketing studies may also be required to determine whether the marketing of a product with abuse-deterrent properties results in meaningful reductions in abuse, misuse, and related adverse clinical outcomes, including addiction, overdose, and death in the post-approval setting. 25 Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained or problems are identified following initial marketing.
Post-marketing studies may also be required to determine whether the marketing of a product with abuse-deterrent properties results in meaningful reductions in abuse, misuse, and related adverse clinical outcomes, including addiction, overdose, and death in the post-approval setting. 24 Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained or problems are identified following initial marketing.
Competitors may use this publicly available information to gain knowledge regarding the progress of clinical development programs as well as clinical trial design. 26 The Hatch-Waxman Amendments Under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Amendments, a portion of a product’s U.S. patent term that was lost during clinical development and regulatory review by the FDA may be restored.
Competitors may use this publicly available information to gain knowledge regarding the progress of clinical development programs as well as clinical trial design. 25 The Hatch-Waxman Amendments Under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Amendments, a portion of a product’s U.S. patent term that was lost during clinical development and regulatory review by the FDA may be restored.
If a pediatric study is requested by the FDA in a Pediatric Written Request, or PWR, and we complete the pediatric study according to the terms of the PWR, all unexpired Orange Book listed exclusivities (patent or regulatory) will be extended by six months. 27 Similar provisions are available in Europe, Japan, and certain other jurisdictions to extend the exclusivity of a patent that covers an approved drug.
If a pediatric study is requested by the FDA in a Pediatric Written Request, or PWR, and we complete the pediatric study according to the terms of the PWR, all unexpired Orange Book listed exclusivities (patent or regulatory) will be extended by six months. 26 Similar provisions are available in Europe, Japan, and certain other jurisdictions to extend the exclusivity of a patent that covers an approved drug.
Because PF614 is regulated as a Schedule II controlled substance, it is subject to the DEA’s aggregate, individual production, and procurement quota scheme. 30 Ordering and distribution of any Schedule I or II controlled substance are also subject to special ordering requirements under either the electronic Controlled Substance Ordering System (“ CSOS ”) or use of DEA Form 222s.
Because PF614 is regulated as a Schedule II controlled substance, it is subject to the DEA’s aggregate, individual production, and procurement quota scheme. 29 Ordering and distribution of any Schedule I or II controlled substance are also subject to special ordering requirements under either the electronic Controlled Substance Ordering System (“ CSOS ”) or use of DEA Form 222s.
Manufacturing and Supply We do not currently own or operate manufacturing facilities for the production of clinical or commercial quantities of our product candidates. Our drug substance and drug products are manufactured for us by contract manufacturing organizations, or CMOs, to our specifications. Any manufacturing problem or the loss of a CMO could be disruptive to our operations.
Manufacturing and Supply We do not currently own or operate manufacturing facilities for the production of clinical or commercial quantities of our product candidates. Our drug substance and drug products are manufactured for us by CMOs, to our specifications. Any manufacturing problem or the loss of a CMO could be disruptive to our operations.
The TAAP platform is designed to seek to improve the care of patients with chronic pain while reducing the human and economic costs associated with prescription opioid drug abuse. The MPAR® platform when combined with our TAAP prodrugs is designed not only to seek to prevent abuse of prescription drugs but also to reduce overdose occurrences.
The TAAP platform is designed to seek to improve the care of patients with severe pain while reducing the human and economic costs associated with prescription opioid drug abuse. The MPAR® platform when combined with our TAAP prodrugs is designed not only to seek to prevent abuse of prescription drugs but also to reduce overdose occurrences.
All development activities are undertaken at contract research organizations. The lease expires in October 2024. We believe that our current arrangements will be sufficient to meet our needs for the foreseeable future, and that, should it be needed, suitable space will be available to accommodate our administrative activities.
All development activities are undertaken at contract research organizations. The lease expires in October 2025. We believe that our current arrangements will be sufficient to meet our needs for the foreseeable future, and that, should it be needed, suitable space will be available to accommodate our administrative activities.
Serial PK sampling was performed after each study drug administration up to 120 hours postdose. Safety including regular assessments of AEs, vital signs (pulse rate, blood pressure, respiratory rate, and SpO 2 ), clinical laboratory tests, and 12-lead ECGs were monitored. Subjects were monitored for hypotension, hypopnea, apnea, and oxygen desaturation.
Serial PK sampling was performed after each study drug administration up to 120 hours post dose. Safety including regular assessments of AEs, vital signs (pulse rate, blood pressure, respiratory rate, and SpO 2 ), clinical laboratory tests, and 12-lead ECGs were monitored. Subjects were monitored for hypotension, hypopnea, apnea, and oxygen desaturation.
A second multi-ascending dose study with a bioequivalent arm was completed in July 2022 and a nasal human abuse potential (HAP) study was completed in October 2022. A second oral HAP study was completed in March 2023. Most recently, a study to evaluate efficacy was completed in December 2023.
A second multi-ascending dose study with a bioequivalent arm was completed in July 2022 and a nasal human abuse potential (HAP) study was completed in October 2022. A second oral HAP study was completed in March 2023. A study to evaluate efficacy was completed in December 2023.
For more information, please see “ Risk Factors—Risks Related to Our Intellectual Property .” TAAP and MPAR® Patents and Applications for Opioids Following our merger with Signature, we became the owner of patent families that include several granted U.S. patents, as well as granted patents and pending patent applications in numerous foreign jurisdictions, including Australia, Brazil, Canada, China, Europe, India, Japan, and Russia, relating to chemically modified opioids, such as oxycodone, methadone, and hydromorphone, covalently linked using specific linkers to a gastrointestinal enzyme-cleavable moiety and pharmaceutical compositions containing these modified opioids, pharmaceutical compositions containing these modified opioids and a gastrointestinal enzyme inhibitor, and methods of using the same to treat pain.
For more information, please see “ Risk Factors—Risks Related to Our Intellectual Property .” TAAP and MPAR® Patents and Applications for Opioids We are the owner of patent families that include several granted U.S. patents, as well as granted patents and pending patent applications in numerous foreign jurisdictions, including Australia, Brazil, Canada, China, Europe, India, Japan, and Russia, relating to chemically modified opioids, such as oxycodone, methadone, and hydromorphone, covalently linked using specific linkers to a gastrointestinal enzyme-cleavable moiety and pharmaceutical compositions containing these modified opioids, pharmaceutical compositions containing these modified opioids and a gastrointestinal enzyme inhibitor, and methods of using the same to treat pain.
For more information please see “— Patent and Patent Applications .” TAAP and MPAR® Patents and Applications for Amphetamines Following the merger with Signature, we became the owner of one patent family that includes pending applications in the United States and numerous European foreign jurisdictions relating to chemically modified amphetamines covalently linked to a gastrointestinal enzyme-cleavable moiety, pharmaceutical compositions containing the modified amphetamines, pharmaceutical compositions containing the modified amphetamines and a gastrointestinal enzyme inhibitor and methods of using the same to treat a subject.
For more information please see “— Patent and Patent Applications .” TAAP and MPAR® Patents and Applications for Amphetamines We are the owner of one patent family that includes pending applications in the United States and numerous European foreign jurisdictions relating to chemically modified amphetamines covalently linked to a gastrointestinal enzyme-cleavable moiety, pharmaceutical compositions containing the modified amphetamines, pharmaceutical compositions containing the modified amphetamines and a gastrointestinal enzyme inhibitor and methods of using the same to treat a subject.
High impact chronic pain affects over 10 million Americans and is characterized by extended periods of suffering which impair life quality to a severe degree. Prescription opioids drugs, such as morphine, hydromorphone, hydrocodone, and oxycodone, have a long history of use for the management of severe and chronic pain.
High impact chronic pain is characterized by extended periods of suffering which impair life quality to a severe degree. Prescription opioids drugs, such as morphine, hydromorphone, hydrocodone, and oxycodone, have a long history of use for the management of severe and chronic pain.
None of our employees is represented by a labor union or covered by collective bargaining agreements, and we believe our relationship with our employees is good. 32
None of our employees are represented by a labor union or covered by collective bargaining agreements, and we believe our relationship with our employees is good. 31
We believe that having prescription drug products available that have a reduced potential for abuse by crushing and injecting, snorting, and chewing could provide an even greater reduction of prescription opioid related deaths in the abuse of opioids or amphetamines. Nafamostat Nafamostat’s market opportunity is multifaceted.
We believe that having prescription drug products available that have a reduced potential for abuse by crushing and injecting, snorting, and chewing could provide an even greater reduction of prescription opioid related deaths in the abuse of opioids or amphetamines.
For the year ended December 31, 2023, we received federal grant funding totaling $2.2 million, $1.3 million from NIH related to the Phase 1 clinical trial for PF614-MPAR and $0.9 million from NIDA for preclinical development of our opioid use disorder-MPAR ® technology.
For the year ended December 31, 2024, we received federal grant funding totaling $5.2 million consisting of $3.1 million from NIH related to the Phase 1 clinical trial for PF614-MPAR and $2.1 million from NIDA for preclinical development of our opioid use disorder-MPAR ® technology.
Other companies offer products indicated for chronic, severe, long-term pain with various delivery technologies, but these products do not have abuse-deterrent claims on their labels. Vertex has recently announced a non-opioid pain product that inhibits NaV1.8 and has entered Phase 3 development.
Other companies offer products indicated for chronic, severe, long-term pain with various delivery technologies, but these products do not have abuse-deterrent claims on their labels. Vertex has recently announced the approval of a non-opioid pain product, suzetrigine, that inhibits NaV1.8.
As of Q4 2022, seventy-five percent of Adderall prescriptions are prescribed to the 10.5 million adults, age 22 or older, that are diagnosed with attention deficit hyperactivity disorder, or ADHD. ADHD is the most common neurodevelopment disorder in children.
As of late 2022, seventy-five percent of Adderall prescriptions are prescribed to the 10.5 million adults, age 22 or older, that are diagnosed with attention deficit hyperactivity disorder, or ADHD. The number of prescriptions have fallen in 2023 and 2024 due to shortages of the medication. ADHD is the most common neurodevelopment disorder in children.
While our principal focus and lead product candidates are geared towards combating abuse and overdose of opioid drugs, we have, over the years of research and development, discovered and recognized qualities and unique features of certain product candidates that may be useful in addressing other treatments.
While our principal focus and lead product candidates are geared towards combating abuse and overdose of opioid drugs, we have, over the years of research and development, discovered and recognized qualities and unique features of certain product candidates that may be useful in addressing other treatments. 10 PF614 PF614 is our lead TAAP prodrug candidate under development for the treatment of acute or chronic pain.
Item 1. Business Corporate Information We were originally incorporated in the State of Delaware in April 2003 as PharmacoFore, Inc. and, in January 2012, we changed our name from PharmacoFore, Inc. to Signature Therapeutics Inc. (“ Signature ”). On December 28, 2015, Signature, Signature Acquisition Corp., a wholly-owned subsidiary of Signature (“ SAQ ”), and Ensysce Biosciences, Inc.
Item 1. Business Corporate Information We were originally incorporated in the State of Delaware in April 2003 as PharmacoFore, Inc. and, in January 2012, we changed our name from PharmacoFore, Inc. to Signature Therapeutics Inc. (“ Signature ”). In December 2015, Signature merged with and into Ensysce Biosciences, Inc. (“ Former Ensysce ”).
Opioid abuse was declared a public-health emergency in 2017 when more than 91 people died each day from opioid-related overdoses. In 2021 the total number of opioid-related deaths rose to 109,600, with 45 people dying each day from a prescription opioid overdose.
Opioid abuse was declared a public-health emergency in 2017 when more than 91 people died each day from opioid-related overdoses. In 2021, the total number of opioid-related deaths rose to 109,600, whereas in 2022 that number had declined to 81,806.
This study was the first to successfully demonstrate the efficacy of PF614. Data was reported December 2023, stating the time-of-onset of pain relief from both doses of PF614 was identified, and PF614 did decrease the intensity of pain.
This study was the first to successfully demonstrate the efficacy of PF614. Data was reported December 2023, stating the time-of-onset of pain relief from both doses of PF614 was identified, and PF614 did decrease the intensity of pain. Next Steps An End of Phase 2 regulatory meeting was held on January 30, 2024.
The large increase in overall overdose deaths is now driven by use of synthetic opioids, in particular fentanyl, as prescription opioids have become harder to obtain. From 2017 to 2018 the prescription opioid-involved death rates decreased by 13.5% showing that attention to the problem had beneficial effect.
The large increase in overall overdose deaths is now driven by use of synthetic opioids, in particular fentanyl, as prescription opioids have become harder to obtain. Prescription opioid-involved death rates from 2019 to 2022 were relatively flat at 14,319 to 14,716, respectively, showing that attention to the problem had yielded a beneficial effect.
MPAR is being tested clinically in partnership with Quotient Sciences, using its integrated Translational Pharmaceutics® platform to search for a PF614-MPAR formulation that allows conversion into oxycodone within the prescribed dose range but reduces conversion to oxycodone at higher than prescribed dose levels in an overdose scenario.
MPAR is being tested clinically in partnership with Quotient Sciences, using its integrated Translational Pharmaceutics® platform to search for a PF614-MPAR formulation that allows conversion into oxycodone within the prescribed dose range but reduces conversion to oxycodone at higher than prescribed dose levels in an overdose scenario. 11 Market Opportunity Drug Abuse and Drug Overdose Opioid pain medications are essential for improving the care and outcomes of a majority of Americans who live with chronic pain.
However, 2.1 million people reported having opioid use disorder (“ Opioid Use Disorder ”) in 2019. Based on information from the CDC, the most common drugs involved in prescription opioid overdose deaths include Methadone, Oxycodone (such as OxyContin®), and Hydrocodone (such as Vicodin®).
However, 6.1 million Americans over the age of 12 were reported to be suffering from opioid use disorder (“ OUD ”) in 2024. Based on information from the CDC, the most common drugs involved in prescription opioid overdose deaths include Methadone, Oxycodone (such as OxyContin®), and Hydrocodone (such as Vicodin®).
A second part of this trial to confirm overdose protection from PF614-MPAR 25 mg was completed in 2023 and data reported in May 2023. PF614-MPAR was granted Breakthrough Therapy designation by the FDA in January 2024. Our pipeline has been developed over the course of 15 years of research and investment and includes three clinical-stage product candidates.
A second part of this trial to confirm overdose protection from PF614-MPAR 25 mg was completed in 2023 and data reported in May 2023. PF614-MPAR was granted Breakthrough Therapy designation by the FDA in January 2024.
For more information please see “— Patents and Patent Applications.” Nafamostat Patents Applications We own pending applications in the U.S., Canada and Europe directed to the use of orally administered nafamostat for the treatment of infections caused by coronaviruses, including COVID-19, and pending United States, PCT, and Taiwan patent applications directed to oral formulations of nafamostat.
For more information please see “— Patents and Patent Applications.” Nafamostat Patents Applications We own pending applications in the U.S., Canada and Europe directed to the use of orally administered nafamostat and extended-release formulations of nafamostat.
Prescriptions for opioid medications in 2021 totaled 153 million, with $4.2 billion in market size in the United States.
Prescriptions for opioid medications in 2023 totaled almost 140 million, with $3.8 billion in market size in the United States.
Additionally, nafamostat di-mesylate (“ nafamostat ”), which is an ingredient in our overdose protection combination products, is also being developed for the intended purpose of treating infection and pulmonary lung diseases. 9 The technology under the TAAP platform when applied to opioid drugs is designed to release clinically effective opioid drugs only when exposed to specific physiological conditions (i.e., when the drug is ingested and exposed to the digestive enzyme trypsin).
Each prodrug is intended to be able to be combined with our MPAR® technology for overdose protection. 9 The technology under the TAAP platform when applied to opioid drugs is designed to release clinically effective opioid drugs only when exposed to specific physiological conditions (i.e., when the drug is ingested and exposed to the digestive enzyme trypsin).
An NIH study, updated September 2018, reported that 25.3 million adults suffered from pain every day for the preceding three months and almost 40 million adults experience severe levels of pain, which is linked to worse health status.
In 2023, 34.9% of adults had chronic pain, with 8.5% of those having high impact chronic pain. Millions of adults suffered from pain every day for the preceding three months and almost 40 million adults experience severe levels of pain, which is linked to worse health status.
Next Steps An End of Phase 2 regulatory meeting request for PF614 IND 116794 was submitted on October 13, 2023, with a meeting was held on January 30, 2024. The meeting clarified the non-clinical and clinical Phase 3 study plans for the further development of PF614 which are expected to initiate in mid-2024.
The meeting clarified the non-clinical and clinical Phase 3 study plans for the further development of PF614 which are expected to initiate in mid-2025.
We do not believe there are other companies developing products that have an overdose mechanism similar to our MPAR ® technology.
The clinical data provided to date has indicated that suzetrigine did not provide superior pain relief compared to the opioid control arm of the Phase 3 study. We do not believe there are other companies developing products that have an overdose mechanism similar to our MPAR ® technology.
Restrictions pursuant to the terms of our recent financings may also affect our ability to use the GEM Facility. 23 Government Regulation In the United States, pharmaceutical products are subject to extensive regulation by the FDA, and those pharmaceutical products that are controlled substance are also subject to extensive regulation by the DEA.
We may apply for additional grant funding from these or similar governmental agencies in the future. 22 Government Regulation In the United States, pharmaceutical products are subject to extensive regulation by the FDA, and those pharmaceutical products that are controlled substance are also subject to extensive regulation by the DEA.
Any reliance on suppliers may involve several risks, including a potential inability to obtain critical materials and reduced control over production costs, delivery schedules, reliability, and quality. Purisys Purisys LLC manufactures PF614 and other clinical trial materials under cGMP conditions and provides stability studies with respect to our PF614 clinical trials.
Any reliance on suppliers may involve several risks, including a potential inability to obtain critical materials and reduced control over production costs, delivery schedules, reliability, and quality. Government Grants We have received funding under federal grant award programs through governmental agencies, such as the NIH and NIDA.
Current remaining funding under approved grants totaled $2.2 million as of December 31, 2023, covering the period through August 2024. We may apply for additional grant funding from these or similar governmental agencies in the future.
Current remaining funding under the PF614-MPAR grant totaled $1.6 million as of December 31, 2024, covering the period through May 2025. The PF614-MPAR grant includes a remaining $9.0 million of approved funding through May 2027.
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(“ EB ”) entered into an Agreement and Plan of Merger (“ EB-ST Agreement ”). Pursuant to the EB-ST Agreement, SAQ merged with and into EB with EB surviving the merger as a wholly-owned subsidiary of Signature.
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In June 2021, Former Ensysce merged with and into Leisure Acquisition Corporation (“ LACQ ”). As part of the transaction, LACQ changed its name to “Ensysce Biosciences, Inc.” The mailing address of our principal executive office is 7946 Ivanhoe Avenue, Suite 201, La Jolla, California 92037. Our corporate telephone number is (858) 263-4196. Our website address is www.ensysce.com.
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As part of the transaction, Signature changed its name to “Ensysce Biosciences, Inc.” (“ Former Ensysce ”) and changed EB’s name to EBI Operating Inc. On January 31, 2021, LACQ, Former Ensysce, and Merger Sub entered into the Merger Agreement.
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A second study, PF614-MPAR-102, designed to evaluate the overdose protection across a range of dosages, initiated enrollment of subjects in December 2024 and is continuing enrollment. Our pipeline has been developed over the course of 15 years of research and investment and includes three clinical-stage product candidates.
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On June 30, 2021, pursuant to the Merger Agreement, Merger Sub merged with and into Former Ensysce, with Former Ensysce surviving the transaction as a wholly-owned subsidiary of LACQ. As part of the transaction, LACQ changed its name to “Ensysce Biosciences, Inc.” and Former Ensysce changed its name to EBI OpCo, Inc.
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PF614-MPAR-102 Phase 1b Clinical Trial The primary objectives of the Phase 1b study are to assess the pharmacokinetics of oxycodone when PF614 is administered alone and with formulated nafamostat, evaluate a food effect, and explore PF614-MPAR delivered in a multi-ascending dose study. The study initiated in December 2024 and will continue through 2025.
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Each prodrug is intended to be able to be combined with our MPAR® technology for overdose protection.
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Some of the claims are directed to the use of oral nafamostat for the treatment of infections caused by coronaviruses, including COVID-19, and pending United States, PCT, and Taiwan patent applications directed to oral formulations of nafamostat.
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For example, we discovered the ability of nafamostat in inhibiting the action of enzymes associated with the COVID-19 infection, and, as such, have devoted efforts to develop an oral and inhalation drug product of nafamostat, for use against coronaviral infections and other pulmonary diseases such as cystic fibrosis. 10 PF614 PF614 is our lead TAAP prodrug candidate under development for the treatment of acute or chronic pain.
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The new guidance includes recommendations for managing acute (duration of 3 months) pain.
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Nafamostat Nafamostat is an enzyme inhibitor (protease inhibitor) used in our combination overdose protection technology, MPAR®. Due to its ability to inhibit the action of enzymes associated with the COVID-19 infection, we are also developing an oral drug product of nafamostat, for use against coronaviral infections and other pulmonary diseases such as cystic fibrosis.
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An IND was submitted (149877) for the evaluation of oral nafamostat in coronaviral infections. A Phase 1 trial to evaluate safety and PK was completed in 2021. 11 Market Opportunity Drug Abuse and Drug Overdose Opioid pain medications are essential for improving the care and outcomes of a majority of Americans who live with chronic pain.
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The oral form could be used alone or in combination with other antiviral drugs that target separate processes needed for virus product, such as RNA replication or viral protein processing.
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Nafamostat delivered orally was evaluated in a Phase 1 study for safety and tolerability with the anticipation of further evaluating an oral nafamostat drug product against COVID-19 in Phase 2 trials, however at this time the oral nafamostat program is not the company’s primary focus.
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We do not currently have a binding written agreement with Purisys. In the event that Purisys is unable to perform the services promised under future agreements, we may be subject to unforeseen costs and delays with respect to our clinical trials and may be unable to replace the Purisys arrangements on terms as favorable to us.
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See “ Risk Factors—We expect to be completely dependent on third parties to manufacture our product candidates, and our commercialization of our product candidates could be halted, delayed or made less profitable if those third parties fail to maintain a compliance status acceptable to the FDA or comparable foreign regulatory authorities, fail to provide to us with sufficient quantities of our product candidates or fail to do so at acceptable quality levels or prices ” for more information.
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Societal CDMO Societal CDMO manufactures PF614 and other clinical trial drug products under cGMP conditions and provides stability studies with respect to our PF614 clinical trials. Societal has completed the manufacture of PF614 50 and 100 mg capsules that have been used in clinical studies PF614-102, PF614-103, PF614-104 and PF614-201.
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We expect to enter into additional related agreements with Societal CDMO as we manufacture future batches of PF614. In the event that Societal is unable to perform the services anticipated under future agreements, we may be subject to unforeseen costs and delays with respect to our clinical trials.
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See “ Risk Factors—We expect to be completely dependent on third parties to manufacture our product candidates, and our commercialization of our product candidates could be halted, delayed or made less profitable if those third parties fail to maintain a compliance status acceptable to the FDA or comparable foreign regulatory authorities, fail to provide to us with sufficient quantities of our product candidates or fail to do so at acceptable quality levels or prices ” for more information. 22 Government Grants We have received funding under federal grant award programs through governmental agencies, such as the NIH and NIDA.
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GEM Facility Pursuant to the GEM Agreement, we are entitled to draw down up to $60 million of gross proceeds (“ Aggregate Limit ”) from GEM Global in exchange for shares of our common stock, subject to meeting the terms and conditions of the GEM Agreement.
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This equity line facility is available for a period of 36 months from the closing date of the Merger.
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A draw down is subject to limitations on the amount that is drawn under the facility and must comply with certain conditions precedent including the listing of our shares on a principal market (which includes Nasdaq), having the necessary number of shares that are issuable pursuant to the draw down registered under an effective registration statement, and other notice and timing requirements.
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Upon our valid exercise of a draw down, pursuant to delivery of a notice and in accordance with other conditions, GEM Global is required to pay, in cash, a per-share amount equal to 90% of the average closing bid price of the shares of our common stock recorded by Nasdaq during the 30 consecutive trading days commencing on the first trading day that is designated on the draw down notice.
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In no event may our draw down requests exceed 400% (“ Draw Down Limit ”) of the average daily trading volume for the 30 trading days immediately preceding the date we deliver the draw down notice.
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Further, upon the closing of the Merger, GEM Global became entitled to a commitment fee in the form of cash or freely tradeable shares of our common stock in an amount equal to 2% of the Aggregate Limit or $1.2 million to be paid in two tranches. The commitment fees have been paid in full.
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Additionally, we issued a warrant with a 36-month term at the closing of the Merger granting GYBL the right to purchase 4,608 shares of our common stock at a strike price per share equal to $1.5675, after several downward adjustments to the strike price.
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Any failure by us to timely transfer the shares under the warrant pursuant to GYBL’s exercise will entitle GYBL to compensation in addition to other remedies. The number of shares underlying the warrant as well as the strike price is subject to adjustments for recapitalizations, reorganizations, change of control, stock split, stock dividend and reverse stock splits.
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The strike price is subject to adjustment for issuances of additional common shares at a price per share less than the strike price. The GEM Agreement contains certain negative covenants restricting us from securing an equity line similar to the financing provided under the GEM Agreement and requiring prompt notice of events constituting an alternate transaction.
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An “ alternate transaction ” includes an issuance of common stock at a price less than the then current market price, an “ at-the-market ” offering of securities, and an issuance of options, warrants, or similar rights of subscription or the issuance of convertible equity or debt securities.
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See “ Risks Related to Our Business, Financial Condition and Capital Requirements ” for additional information.
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Finally, pursuant to the terms of the GEM Agreement, we are required to indemnify GEM Global for any losses it incurs as a result of a breach by us or of our representations and warranties and covenants under the GEM Agreement or for any misstatement or omission of a material fact in a registration statement registering those shares pursuant to the GEM Agreement.
Removed
Also, GEM Global is entitled to be reimbursed for legal or other costs or expenses reasonably incurred in investigating, preparing, or defending against any such loss. To date, we have not raised any capital pursuant to the GEM facility and we may not raise any capital pursuant to it prior to its expiration.
Removed
The new guidance includes recommendations for managing acute (duration of 3 months) pain. The guideline addresses the following four areas: 1) determining whether or not to initiate opioids for pain, 2) selecting opioids and determining opioid dosages, 3) deciding duration of initial opioid prescription and conducting follow-up, and 4) assessing risk and addressing potential harms of opioid use.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

46 edited+1 added−35 removed372 unchanged
Biggest changePart A of the study completed enrollment in December 2021 and Part B was completed mid-year 2022. Two Human Abuse Potential clinical studies were completed in 2023. An efficacy Phase 2 study of PF614 was completed in December 2023.
Biggest changeTwo Human Abuse Potential clinical studies were completed in 2023. An efficacy Phase 2 study of PF614 was completed in December 2023. A Phase 1 trial for PF614-MPAR was completed in May 2023 and a Phase 1b trial for PF614-MPAR was initiated in December 2024. A Phase 1 safety study of nafamostat was completed in 2020.
Even if clinical trials are completed, we may experience other issues that may delay or prevent regulatory approval of, or our ability to commercialize, our product candidates, including: ● inability to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that our product candidates are safe and effective; ● insufficiency of our financial and other resources to complete the necessary clinical trials and preclinical studies; ● negative or inconclusive results from our clinical trials, preclinical studies or the clinical trials of others for product candidates that are similar to ours, leading to a decision or requirement to conduct additional clinical trials or preclinical studies or abandon a program; ● product-related adverse events experienced by subjects in our clinical trials, including unexpected toxicity results, or by individuals using drugs or therapeutic biologics similar to our product candidates; ● delays in submitting an Investigational New Drug application, or IND, or comparable foreign applications or delays or failure in obtaining the necessary approvals from regulators to commence a clinical trial or a suspension or termination, or hold, of a clinical trial once commenced; ● conditions imposed by the FDA, the European Medicines Agency, or EMA, or comparable foreign regulatory authorities regarding the scope or design of our clinical trials; ● poor effectiveness of our product candidates during clinical trials; ● better than expected performance of control arms, such as placebo groups, which could lead to negative or inconclusive results from our clinical trials; ● delays in enrolling subjects in clinical trials; ● high drop-out rates of subjects from clinical trials; ● inadequate supply or quality of product candidates or other materials necessary for the conduct of our clinical trials; ● greater than anticipated clinical trial or manufacturing costs; ● unfavorable FDA, EMA or comparable regulatory authority inspection and review of a clinical trial site; ● failure of our third-party contractors or investigators to comply with regulatory requirements or the clinical trial protocol or otherwise meet their contractual obligations in a timely manner, or at all; ● unfavorable FDA, EMA or comparable regulatory authority inspection and review of manufacturing facilities or inability of those facilities to maintain a compliance status acceptable to the FDA, EMA or comparable regulatory authorities; ● delays and changes in regulatory requirements, policy and guidelines, including the imposition of additional regulatory oversight around clinical testing generally or with respect to our therapies in particular; or ● varying interpretations of data by the FDA, EMA and comparable foreign regulatory authorities. 37 Our product candidates will require additional, time-consuming development efforts prior to commercial sale, including preclinical studies, clinical trials and approval by the FDA and applicable foreign regulatory authorities.
Even if clinical trials are completed, we may experience other issues that may delay or prevent regulatory approval of, or our ability to commercialize, our product candidates, including: ● inability to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that our product candidates are safe and effective; ● insufficiency of our financial and other resources to complete the necessary clinical trials and preclinical studies; ● negative or inconclusive results from our clinical trials, preclinical studies or the clinical trials of others for product candidates that are similar to ours, leading to a decision or requirement to conduct additional clinical trials or preclinical studies or abandon a program; ● product-related adverse events experienced by subjects in our clinical trials, including unexpected toxicity results, or by individuals using drugs or therapeutic biologics similar to our product candidates; ● delays in submitting an Investigational New Drug application, or IND, or comparable foreign applications or delays or failure in obtaining the necessary approvals from regulators to commence a clinical trial or a suspension or termination, or hold, of a clinical trial once commenced; ● conditions imposed by the FDA, the European Medicines Agency, or EMA, or comparable foreign regulatory authorities regarding the scope or design of our clinical trials; ● poor effectiveness of our product candidates during clinical trials; ● better than expected performance of control arms, such as placebo groups, which could lead to negative or inconclusive results from our clinical trials; ● delays in enrolling subjects in clinical trials; ● high drop-out rates of subjects from clinical trials; ● inadequate supply or quality of product candidates or other materials necessary for the conduct of our clinical trials; ● greater than anticipated clinical trial or manufacturing costs; ● unfavorable FDA, EMA or comparable regulatory authority inspection and review of a clinical trial site; ● failure of our third-party contractors or investigators to comply with regulatory requirements or the clinical trial protocol or otherwise meet their contractual obligations in a timely manner, or at all; ● unfavorable FDA, EMA or comparable regulatory authority inspection and review of manufacturing facilities or inability of those facilities to maintain a compliance status acceptable to the FDA, EMA or comparable regulatory authorities; ● delays and changes in regulatory requirements, policy and guidelines, including the imposition of additional regulatory oversight around clinical testing generally or with respect to our therapies in particular; or ● varying interpretations of data by the FDA, EMA and comparable foreign regulatory authorities. 35 Our product candidates will require additional, time-consuming development efforts prior to commercial sale, including preclinical studies, clinical trials and approval by the FDA and applicable foreign regulatory authorities.
Our quarterly and annual operating results may fluctuate significantly in the future due to a variety of factors, many of which are outside of our control and may be difficult to predict, including the following: ● the timing and success or failure of clinical trials for our product candidates or competing product candidates, or any other change in the competitive landscape of our industry, ● our ability to successfully recruit and retain subjects for clinical trials, and any delays caused by difficulties in such efforts; ● the risk/benefit profile, cost and reimbursement policies with respect to our product candidates, if approved, and existing and potential future therapeutics that compete with our product candidates; ● our ability to obtain marketing approval for our product candidates and the timing and scope of any such approvals we may receive; ● the timing and cost of, and level of investment in, research and development activities relating to our product candidates, which may change from time to time; ● the cost of manufacturing our product candidates, which may vary depending on the quantity of production and the terms of our agreements with manufacturers; ● our ability to attract, hire and retain qualified personnel; ● expenditures that we will or may incur to develop additional product candidates; ● the level of demand for our product candidates should they receive approval, which may vary significantly; ● the changing and volatile U.S. and global economic environments; and ● future accounting pronouncements or changes in our accounting policies. 64 The cumulative effects of these factors could result in large fluctuations and unpredictability in our quarterly and annual operating results.
Our quarterly and annual operating results may fluctuate significantly in the future due to a variety of factors, many of which are outside of our control and may be difficult to predict, including the following: ● the timing and success or failure of clinical trials for our product candidates or competing product candidates, or any other change in the competitive landscape of our industry, ● our ability to successfully recruit and retain subjects for clinical trials, and any delays caused by difficulties in such efforts; ● the risk/benefit profile, cost and reimbursement policies with respect to our product candidates, if approved, and existing and potential future therapeutics that compete with our product candidates; ● our ability to obtain marketing approval for our product candidates and the timing and scope of any such approvals we may receive; ● the timing and cost of, and level of investment in, research and development activities relating to our product candidates, which may change from time to time; ● the cost of manufacturing our product candidates, which may vary depending on the quantity of production and the terms of our agreements with manufacturers; ● our ability to attract, hire and retain qualified personnel; ● expenditures that we will or may incur to develop additional product candidates; ● the level of demand for our product candidates should they receive approval, which may vary significantly; ● the changing and volatile U.S. and global economic environments; and ● future accounting pronouncements or changes in our accounting policies. 60 The cumulative effects of these factors could result in large fluctuations and unpredictability in our quarterly and annual operating results.
We cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of any product candidate we develop and we will require substantial additional funding to complete the development and commercialization of our product candidates. 34 Our future need for additional funding depends on many factors, including: ● the scope, progress, results and costs of researching and developing our current product candidates, as well as other additional product candidates we may develop and pursue in the future, including the costs related to preclinical and clinical development of the product; ● the timing of, and the costs involved in, obtaining marketing approvals for our product candidates and any other additional product candidates we may develop and pursue in the future; ● the number of future product candidates that we may pursue and their development requirements; ● subject to receipt of regulatory approval, the costs of commercialization activities for our product candidates, to the extent such costs are not the responsibility of any future collaborators, including the costs and timing of establishing product sales, marketing, distribution and manufacturing capabilities; ● subject to receipt of regulatory approval, the amount of revenue, if any, received from commercial sales of our product candidates or any other additional product candidates we may develop and pursue in the future; ● the extent to which we in-license or acquire rights to other products, product candidates or technologies; ● our ability to establish collaboration arrangements for the development of our product candidates on favorable terms, if at all; ● dependent on financing, our headcount growth and associated costs as we expand our research and development and establishes a commercial infrastructure; ● the costs of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights, including enforcing and defending intellectual property related claims; and ● the costs of operating as a public company.
We cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of any product candidate we develop and we will require substantial additional funding to complete the development and commercialization of our product candidates. 33 Our future need for additional funding depends on many factors, including: ● the scope, progress, results and costs of researching and developing our current product candidates, as well as other additional product candidates we may develop and pursue in the future, including the costs related to preclinical and clinical development of the product; ● the timing of, and the costs involved in, obtaining marketing approvals for our product candidates and any other additional product candidates we may develop and pursue in the future; ● the number of future product candidates that we may pursue and their development requirements; ● subject to receipt of regulatory approval, the costs of commercialization activities for our product candidates, to the extent such costs are not the responsibility of any future collaborators, including the costs and timing of establishing product sales, marketing, distribution and manufacturing capabilities; ● subject to receipt of regulatory approval, the amount of revenue, if any, received from commercial sales of our product candidates or any other additional product candidates we may develop and pursue in the future; ● the extent to which we in-license or acquire rights to other products, product candidates or technologies; ● our ability to establish collaboration arrangements for the development of our product candidates on favorable terms, if at all; ● dependent on financing, our headcount growth and associated costs as we expand our research and development and establishes a commercial infrastructure; ● the costs of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights, including enforcing and defending intellectual property related claims; and ● the costs of operating as a public company.
Serious adverse events, or SAEs, or other adverse effects, as well as tolerability issues, could hinder or prevent market acceptance of the product candidate at issue. 44 Our current and future product candidates could fail to receive regulatory approval for many reasons, including the following: ● the FDA or comparable foreign regulatory authorities may disagree as to the design or implementation of our clinical trials; ● we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for our proposed indication; ● the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval; ● we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; ● the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from clinical trials or preclinical studies; ● the data collected from clinical trials of our product candidates may not be sufficient to support the submission of an NDA to the FDA or other submission or to obtain regulatory approval in the United States, the European Union or elsewhere; ● the FDA or comparable foreign regulatory authorities may find deficiencies with the manufacturing processes of third-party manufacturers with which we contract for clinical and commercial supplies; and ● the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.
Serious adverse events, or SAEs, or other adverse effects, as well as tolerability issues, could hinder or prevent market acceptance of the product candidate at issue. 42 Our current and future product candidates could fail to receive regulatory approval for many reasons, including the following: ● the FDA or comparable foreign regulatory authorities may disagree as to the design or implementation of our clinical trials; ● we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for our proposed indication; ● the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval; ● we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks; ● the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from clinical trials or preclinical studies; ● the data collected from clinical trials of our product candidates may not be sufficient to support the submission of an NDA to the FDA or other submission or to obtain regulatory approval in the United States, the European Union or elsewhere; ● the FDA or comparable foreign regulatory authorities may find deficiencies with the manufacturing processes of third-party manufacturers with which we contract for clinical and commercial supplies; and ● the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.
In addition, as a public company, we incur significant additional legal, accounting and other expenses that we did not incur as a private company as we: ● meet the requirements and demands of being a public company; ● expand our operational, financial and management systems and increase personnel to support our operations; ● hire additional clinical, quality control, medical, scientific and other technical personnel to support our clinical operations; ● advance our clinical-stage product candidate PF614 through clinical development; ● advance our preclinical stage product candidates into clinical development; ● seek regulatory approvals for any product candidates that successfully complete clinical trials; 33 ● undertake any pre-commercialization activities to establish sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products on our own or jointly with third parties; ● maintain, expand and protect our intellectual property portfolio; and ● make milestone, royalty or other payments due under any future in-license or collaboration agreements.
In addition, as a public company, we incur significant additional legal, accounting and other expenses that we did not incur as a private company as we: ● meet the requirements and demands of being a public company; ● expand our operational, financial and management systems and increase personnel to support our operations; ● hire additional clinical, quality control, medical, scientific and other technical personnel to support our clinical operations; ● advance our clinical-stage product candidate PF614 through clinical development; ● advance our preclinical stage product candidates into clinical development; ● seek regulatory approvals for any product candidates that successfully complete clinical trials; 32 ● undertake any pre-commercialization activities to establish sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products on our own or jointly with third parties; ● maintain, expand and protect our intellectual property portfolio; and ● make milestone, royalty or other payments due under any future in-license or collaboration agreements.
As a result, we may (i) fail to capitalize on viable commercial products or profitable market opportunities, (ii) be required to forego or delay pursuit of opportunities with other product candidates or other diseases and disease pathways that may later prove to have greater commercial potential than those we choose to pursue, or (iii) relinquish valuable rights to such product candidates through collaboration, licensing, or other royalty arrangements in cases in which it would have been advantageous for us to invest additional resources to retain sole development and commercialization rights. 38 Our PF614 and PF614-MPAR product candidates may not be successful in limiting or impeding abuse, overdose or misuse or providing additional safety upon commercialization.
As a result, we may (i) fail to capitalize on viable commercial products or profitable market opportunities, (ii) be required to forego or delay pursuit of opportunities with other product candidates or other diseases and disease pathways that may later prove to have greater commercial potential than those we choose to pursue, or (iii) relinquish valuable rights to such product candidates through collaboration, licensing, or other royalty arrangements in cases in which it would have been advantageous for us to invest additional resources to retain sole development and commercialization rights. 36 Our PF614 and PF614-MPAR product candidates may not be successful in limiting or impeding abuse, overdose or misuse or providing additional safety upon commercialization.
If these facilities do not maintain a compliance status acceptable to the FDA, Drug Enforcement Agency, or DEA, or comparable regulatory authorities, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market our product candidates, if approved. 42 Our contract manufacturers, including Purisys and Societal, will be subject to ongoing periodic unannounced inspections by the FDA, DEA and corresponding state and foreign agencies for compliance with cGMPs, security, recordkeeping and similar regulatory requirements.
If these facilities do not maintain a compliance status acceptable to the FDA, Drug Enforcement Agency, or DEA, or comparable regulatory authorities, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market our product candidates, if approved. 40 Our contract manufacturers, including Purisys and Societal, will be subject to ongoing periodic unannounced inspections by the FDA, DEA and corresponding state and foreign agencies for compliance with cGMPs, security, recordkeeping and similar regulatory requirements.
If any of our product candidates encounter safety or efficacy problems, development delays or regulatory issues or other problems, our development plans and business would be materially harmed. 36 We may not have the financial resources to continue development of our product candidates.
If any of our product candidates encounter safety or efficacy problems, development delays or regulatory issues or other problems, our development plans and business would be materially harmed. We may not have the financial resources to continue development of our product candidates.
Delays in patient enrollment may result in increased costs, negatively affect the timing or outcome of the planned clinical trials, delay the product candidate development and approval process and jeopardize our ability to seek and obtain the regulatory approval required to commence product sales and generate revenue, which could cause our value to decline and limit our ability to obtain additional financing if needed. 49 Fast Track designation by the FDA for PF614 for chronic pain may not lead to a faster development or regulatory review or approval process and does not assure FDA approval.
Delays in patient enrollment may result in increased costs, negatively affect the timing or outcome of the planned clinical trials, delay the product candidate development and approval process and jeopardize our ability to seek and obtain the regulatory approval required to commence product sales and generate revenue, which could cause our value to decline and limit our ability to obtain additional financing if needed. 47 Fast Track designation by the FDA for PF614 for chronic pain may not lead to a faster development or regulatory review or approval process and does not assure FDA approval.
In addition, even if we are able to utilize the Section 505(b)(2) regulatory pathway, there is no guarantee this would ultimately lead to accelerated product development or earlier approval. 50 Moreover, even if our product candidates are approved under Section 505(b)(2), the approval may be subject to limitations on the indicated uses for which the products may be marketed or to other conditions of approval, or may contain requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the products.
In addition, even if we are able to utilize the Section 505(b)(2) regulatory pathway, there is no guarantee this would ultimately lead to accelerated product development or earlier approval. 48 Moreover, even if our product candidates are approved under Section 505(b)(2), the approval may be subject to limitations on the indicated uses for which the products may be marketed or to other conditions of approval, or may contain requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the products.
If we do not file a patent infringement lawsuit within the required 45-day period, the third party’s ANDA will not be subject to the 30-month stay of FDA approval. 61 Moreover, a third party may challenge the current patents, or patents that may be issued in the future, within our portfolio which could result in the invalidation of some or all the patents that might otherwise be eligible for listing in the Orange Book for one of our products.
If we do not file a patent infringement lawsuit within the required 45-day period, the third party’s ANDA will not be subject to the 30-month stay of FDA approval. 57 Moreover, a third party may challenge the current patents, or patents that may be issued in the future, within our portfolio which could result in the invalidation of some or all the patents that might otherwise be eligible for listing in the Orange Book for one of our products.
We could be adversely affected if we are subject to negative publicity associated with illness or other adverse effects resulting from patients’ use or misuse of our products or any similar products distributed by other companies. 52 Although we maintain product liability insurance coverage consistent with industry norms, including clinical trial liability, this insurance may not fully cover potential liabilities that we may incur.
We could be adversely affected if we are subject to negative publicity associated with illness or other adverse effects resulting from patients’ use or misuse of our products or any similar products distributed by other companies. 50 Although we maintain product liability insurance coverage consistent with industry norms, including clinical trial liability, this insurance may not fully cover potential liabilities that we may incur.
Any such reductions could delay the development of our product candidates and the introduction of new products. 41 Risks Related to Our Dependence on Third-Party Providers We currently rely on, and expect to rely on in the future, third parties to conduct our clinical trials, and those third parties may not perform satisfactorily, including failing to meet deadlines for completing such trials, failing to satisfy legal or regulatory requirements or terminating the relationship.
Any such reductions could delay the development of our product candidates and the introduction of new products. 39 Risks Related to Our Dependence on Third-Party Providers We currently rely on, and expect to rely on in the future, third parties to conduct our clinical trials, and those third parties may not perform satisfactorily, including failing to meet deadlines for completing such trials, failing to satisfy legal or regulatory requirements or terminating the relationship.
If any of our trade secrets were to be disclosed to or independently developed by a competitor, our business and competitive position could be harmed. 59 Trade secrets and know-how can be difficult to protect as trade secrets and know-how will over time be disseminated within the industry through independent development, the publication of journal articles, and the movement of personnel skilled in the art from company to company or academic to industry scientific positions.
If any of our trade secrets were to be disclosed to or independently developed by a competitor, our business and competitive position could be harmed. 56 Trade secrets and know-how can be difficult to protect as trade secrets and know-how will over time be disseminated within the industry through independent development, the publication of journal articles, and the movement of personnel skilled in the art from company to company or academic to industry scientific positions.
In addition, we may seek additional capital due to favorable market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans. 62 To the extent that we raise additional capital through the sale of common stock, convertible securities or other equity securities as we have done in the past, our stockholders’ ownership interest has been, and may in the future be, diluted.
In addition, we may seek additional capital due to favorable market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans. 58 To the extent that we raise additional capital through the sale of common stock, convertible securities or other equity securities as we have done in the past, our stockholders’ ownership interest has been, and may in the future be, diluted.
The timing of the scheduling process is uncertain and may delay our ability to market any product candidate that we successfully developed and approved. 45 If our clinical trials fail to replicate positive results from earlier preclinical studies or clinical trials conducted by us or third parties, we may be unable to successfully develop, obtain regulatory approval for, or commercialize our product candidates.
The timing of the scheduling process is uncertain and may delay our ability to market any product candidate that we successfully developed and approved. 43 If our clinical trials fail to replicate positive results from earlier preclinical studies or clinical trials conducted by us or third parties, we may be unable to successfully develop, obtain regulatory approval for, or commercialize our product candidates.
In such an event, we would be unable to further practice our technologies or develop and commercialize any of our product candidates at issue, which could harm our business and financial condition significantly. 55 Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our product candidates, if approved.
In such an event, we would be unable to further practice our technologies or develop and commercialize any of our product candidates at issue, which could harm our business and financial condition significantly. 53 Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our product candidates, if approved.
These third parties compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites, as well as in acquiring technologies complementary to, or necessary for, our programs. 40 Our business could be harmed if we lose the services of our key personnel or if we are unable to hire additional highly qualified employees.
These third parties compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites, as well as in acquiring technologies complementary to, or necessary for, our programs. 38 Our business could be harmed if we lose the services of our key personnel or if we are unable to hire additional highly qualified employees.
If we experience delays in obtaining manufacturing approval or if we fail to obtain manufacturing approval of any product candidates we may develop, the commercial prospects for those product candidates may be harmed, and our ability to generate revenues will be materially impaired. 47 We may incur unexpected costs or experience delays in completing, or ultimately be unable to complete, the preclinical and clinical studies necessary for development and commercialization of our product candidates.
If we experience delays in obtaining manufacturing approval or if we fail to obtain manufacturing approval of any product candidates we may develop, the commercial prospects for those product candidates may be harmed, and our ability to generate revenues will be materially impaired. 45 We may incur unexpected costs or experience delays in completing, or ultimately be unable to complete, the preclinical and clinical studies necessary for development and commercialization of our product candidates.
Adverse differences between preliminary or interim data and final data could significantly harm our reputation and business prospects. 46 Even if we complete the necessary preclinical studies and clinical trials, the marketing approval process is expensive, time-consuming and uncertain and may prevent us from obtaining approvals for the commercialization of our product candidates.
Adverse differences between preliminary or interim data and final data could significantly harm our reputation and business prospects. 44 Even if we complete the necessary preclinical studies and clinical trials, the marketing approval process is expensive, time-consuming and uncertain and may prevent us from obtaining approvals for the commercialization of our product candidates.
Even if we ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings. 56 The expiration or loss of patent protection may adversely affect our future revenues and operating earnings.
Even if we ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings. 54 The expiration or loss of patent protection may adversely affect our future revenues and operating earnings.
The laws of foreign countries may not protect our rights to the same extent as the laws of the United States, and many companies have encountered significant difficulties in protecting and defending such rights in foreign jurisdictions. 54 We cannot be certain that our patents and patent rights will be effective in protecting our product candidates and technologies.
The laws of foreign countries may not protect our rights to the same extent as the laws of the United States, and many companies have encountered significant difficulties in protecting and defending such rights in foreign jurisdictions. 52 We cannot be certain that our patents and patent rights will be effective in protecting our product candidates and technologies.
If we are unable to regain compliance with the listing standards of Nasdaq, our common stock could be delisted and may become subject to “penny stock” rules, which could have a material adverse effect on the liquidity of our common stock, the ability of investors to sell their shares and our ability to raise funding.
If we are unable to maintain compliance with the listing standards of Nasdaq, our common stock could be delisted and may become subject to “penny stock” rules, which could have a material adverse effect on the liquidity of our common stock, the ability of investors to sell their shares and our ability to raise funding.
If later-stage clinical trials do not produce favorable results, our ability to obtain regulatory approval for our product candidates will be adversely impacted. 48 Our failure to successfully initiate and complete clinical trials and to demonstrate the efficacy and safety necessary to obtain regulatory approval to market our product candidates would significantly harm its business.
If later-stage clinical trials do not produce favorable results, our ability to obtain regulatory approval for our product candidates will be adversely impacted. 46 Our failure to successfully initiate and complete clinical trials and to demonstrate the efficacy and safety necessary to obtain regulatory approval to market our product candidates would significantly harm its business.
These products may compete with our product candidates, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. 57 Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
These products may compete with our product candidates, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. 55 Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions.
Any of these occurrences may adversely affect our business, financial condition and prospects significantly. 51 Moreover, clinical trials of our product candidates are conducted in carefully defined sets of patients who have agreed to enter into clinical trials.
Any of these occurrences may adversely affect our business, financial condition and prospects significantly. 49 Moreover, clinical trials of our product candidates are conducted in carefully defined sets of patients who have agreed to enter into clinical trials.
To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible. 63 Our internal controls over financial reporting currently may not meet all of the standards contemplated by Section 404 of Sarbanes-Oxley Act, and failure to achieve and maintain effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could impair our ability to produce timely and accurate financial statements or comply with applicable regulations and have a material adverse effect on our business.
To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible. 59 Our internal controls over financial reporting may not meet all of the standards contemplated by Section 404 of Sarbanes-Oxley Act, and failure to maintain effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could impair our ability to produce timely and accurate financial statements or comply with applicable regulations and have a material adverse effect on our business.
Please see the risk factors under “ Risks Related to the Ownership of Common Stock and Financial Reporting .” We believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements into the third quarter of 2024, while advancing our main product candidates such as, PF614 and PF614-MPAR and nafamostat through their respective next phases of clinical development.
Please see the risk factors under “ Risks Related to the Ownership of Common Stock and Financial Reporting .” We believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements into the second quarter of 2025, while advancing our main product candidates such as, PF614 and PF614-MPAR and nafamostat through their respective next phases of clinical development.
Also, in October 2018, Congress passed the SUPPORT Act which requires the DEA to consider potential diversion in establishing quotas for narcotic drugs which could lead to continued decreases in quota available to API manufacturers and dosage form manufacturers of these substances. 53 In future years, we may need greater amounts of controlled substances that are subject to the DEA’s quota system to sustain our development program.
Also, in October 2018, Congress passed the SUPPORT Act, updated in 2019, which requires the DEA to consider potential diversion in establishing quotas for narcotic drugs which could lead to continued decreases in quota available to API manufacturers and dosage form manufacturers of these substances. 51 In future years, we may need greater amounts of controlled substances that are subject to the DEA’s quota system to sustain our development program.
The regulations applicable to penny stocks may severely affect the market liquidity for our common stock and could limit the ability of stockholders to sell their common stock in the secondary market. 65
The regulations applicable to penny stocks may severely affect the market liquidity for our common stock and could limit the ability of stockholders to sell their common stock in the secondary market. 61
There are several large pharmaceutical and biotechnology companies that currently market and sell drugs or are pursuing the development of product candidates for the treatment of the indications that we are pursuing. These companies include, but are not limited to, Purdue Pharma, LP, and Collegium Pharmaceutical, Inc.
There are several large pharmaceutical and biotechnology companies that currently market and sell drugs or are pursuing the development of product candidates for the treatment of the indications that we are pursuing. These companies include, but are not limited to, Purdue Pharma, LP, Collegium Pharmaceutical, Inc. and Vertex Pharmaceuticals Incorporated.
Please see “ Business ” for more information. 39 Competitive products may reduce or eliminate commercial opportunity for our product candidates, if approved.
Please see “ Business ” for more information. 37 Competitive products may reduce or eliminate commercial opportunity for our product candidates, if approved.
Our contract manufacturing organizations, or CMOs, who manufacture and distribute PF614 are required to be registered with DEA and relevant state authorities and comply with all security, recordkeeping and reporting requirements. Manufacturers and distributors are subject to routine inspections and audits by the DEA related to compliance with security, recordkeeping and reporting requirements.
Our CMOs, who manufacture and distribute PF614 are required to be registered with DEA and relevant state authorities and comply with all security, recordkeeping and reporting requirements. Manufacturers and distributors are subject to routine inspections and audits by the DEA related to compliance with security, recordkeeping and reporting requirements.
Risks Related to the Ownership of Common Stock and Financial Reporting Raising additional capital has caused, and may in the future cause, dilution to our stockholders, adversely affect the market price of our common stock, restrict our operations or require us to relinquish rights to our technologies or product candidates.
Risks Related to the Ownership of Common Stock and Financial Reporting Raising additional capital has caused, and may in the future cause, dilution to our stockholders, adversely affect the market price of our common stock, restrict our operations or require us to relinquish rights to our technologies or product candidates. Our expenses have increased in connection with our planned operations.
Our future success and ability to generate significant revenue from our product candidates, which we do not expect will occur for several years, is dependent on our ability to successfully develop, obtain regulatory approval for and commercialize one or more of our product candidates. A Phase 1b study of PF614 was initiated in 2021.
Our future success and ability to generate significant revenue from our product candidates, which we do not expect will occur for several years, is dependent on our ability to successfully develop, obtain regulatory approval for and commercialize one or more of our product candidates. A Phase 1b study of PF614 was completed mid-year 2022.
We have issued warrants to purchase shares of our common stock in connection with various financing transactions.
We have issued a significant amount of warrants to purchase shares of our common stock in connection with various financing transactions.
We expect our expenses to increase in connection with our planned operations. Unless and until we can generate a substantial amount of revenue from our product candidates, we expect to finance our future cash needs through public or private equity offerings, debt financings, collaborations, licensing arrangements or other sources, or any combination of the foregoing.
Unless and until we can generate a substantial amount of revenue from our product candidates, we expect to finance our future cash needs through public or private equity offerings, debt financings, collaborations, licensing arrangements or other sources, or any combination of the foregoing.
We are exposed to the risk that we and our contract research organizations’ (“ CROs ”) employees and contractors, including principal investigators, consultants, commercial collaborators, service providers and other vendors may engage in fraudulent or other illegal activity.
We are exposed to the risk that we and our CROs’ employees and contractors, including principal investigators, consultants, commercial collaborators, service providers and other vendors may engage in fraudulent or other illegal activity.
We cannot be sure that we will receive these necessary approvals or that these approvals will be granted in a timely fashion. We also cannot guarantee that we will be able to enhance and optimize output in our commercial manufacturing process. If we cannot enhance and optimize output, we may not be able to reduce our costs over time.
We cannot be sure that we will receive these necessary approvals or that these approvals will be granted in a timely fashion. We also cannot guarantee that we will be able to enhance and optimize output in our commercial manufacturing process.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. Intellectual property rights do not necessarily address all potential threats to our business.
Our failure to raise capital as and when needed or on acceptable terms would have a negative impact on our financial condition and our ability to pursue our business strategy, and we may have to delay, reduce the scope of, suspend or eliminate one or more of our platforms, programs, planned clinical trials or future commercialization efforts. 35 There may be no proceeds under the GEM Agreement or proceeds may be less than anticipated.
Our failure to raise capital as and when needed or on acceptable terms would have a negative impact on our financial condition and our ability to pursue our business strategy, and we may have to delay, reduce the scope of, suspend or eliminate one or more of our platforms, programs, planned clinical trials or future commercialization efforts. 34 Our business is highly dependent on the success of our product candidates.
Accordingly, we and our licensees’ or any future licensors’ efforts to enforce intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we own or license. Changes in European law have caused uncertainty about our European patent portfolio and may result in additional costs to us.
Accordingly, we and our licensees’ or any future licensors’ efforts to enforce intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we own or license.
Any failure or delay in the development of our or third parties’ internal sales, marketing and distribution capabilities would adversely impact the commercialization of PF614, our other product candidates and other future product candidates. 43 Factors that may inhibit our efforts to commercialize our product candidates on our own include: ● our inability to recruit and retain effective sales and marketing personnel; ● the inability of sales personnel to obtain access to or persuade physicians to prescribe any future products; ● the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and ● unforeseen costs and expenses associated with creating an independent sales and marketing organization.
If we cannot enhance and optimize output, we may not be able to reduce our costs over time. 41 Factors that may inhibit our efforts to commercialize our product candidates on our own include: ● our inability to recruit and retain effective sales and marketing personnel; ● the inability of sales personnel to obtain access to or persuade physicians to prescribe any future products; ● the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and ● unforeseen costs and expenses associated with creating an independent sales and marketing organization.
The DEA has decreased the aggregate quota for certain narcotic drugs, including oxycodone over the last five years.
The DEA has decreased the aggregate quota for certain narcotic drugs, including oxycodone from 2015 to 2024.
On November 13, 2023, we received notice from the Listing Qualifications department of Nasdaq stating that, due to our non-compliance with the $2.5 million stockholders’ equity requirement set forth in Nasdaq Listing Rule 5550(b)(1) as of September 30, 2023, we were subject to delisting unless we timely request a hearing before the Nasdaq Hearings Panel (the “Panel”), which we did, resulting in a hearing before the Panel in early February 2024.
On November 14, 2024, we received notice from Nasdaq stating that we had demonstrated compliance with the $2.5 million stockholders’ equity requirement set forth in Nasdaq Listing Rule 5550(b)(1) as of September 30, 2024. On December 20, 2024, we received notice from Nasdaq that we had regained compliance with the bid price requirement set forth in Nasdaq Listing Rule 5550(a)(2).
Removed
The issuances of common stock pursuant to the GEM Agreement would result in dilution of existing stockholders and could have a negative impact on the market price of our common stock.
Added
There can be no assurance that we will be able to maintain compliance with such Nasdaq Listing Rules and our common stock could be delisted.
Removed
Additionally, the negative covenants under the GEM Agreement are onerous and any breach by us thereunder may entitle GEM Global and GYBL to indemnification payments, reimbursements of legal and other expenses and other compensation thereby diverting our time and resources. While we have raised capital from other sources, we have not used the GEM Facility to date.
Removed
Under a Share Purchase Agreement between us, GEM Global Yield LLC SCS (“ GEM Global ”) and GEM Yield Bahamas Limited (“ GYBL ”), dated as of December 29, 2020, including a Registration Rights Agreement between the same parties and dated as of the same date (the “ GEM Agreement ”), we are entitled to draw down up to $60 million of gross proceeds from GEM Global in exchange for shares of our common stock at a price equal to 90% of the average closing bid price of the shares of our common stock on Nasdaq for a 30 day period, subject to meeting the terms and conditions of the GEM Agreement.
Removed
This equity line facility is available for a period of 36 months from the closing date of the Merger. However, we have not been able to make use of the GEM Facility and we may not be able to do so before it expires. Please see the section entitled “Item1. Business ” for additional information.
Removed
The limitations on the amount and frequency of the draws that we can make pursuant to the GEM Agreement, which include the requirement that (i) there be an effective registration statement and (ii) size restrictions relating to our trading volume, may affect the ability to draw under the GEM Agreement and result in proceeds that are less than anticipated.
Removed
In addition, the occurrence of the Merger triggered (i) payment of a commitment fee of $1.2 million to GEM Global payable in either our common stock or cash, of which all has been satisfied with 3,838 shares of common stock transferred from related parties in July 2022 and an additional 44,444 shares of common stock issued in January 2023 and (ii) the issuance of a warrant granting GYBL the right to purchase 4,608 shares of our common stock, at a strike price per share reset to $1.5675.
Removed
The number of shares underlying the warrant as well as the strike price is subject to adjustments for recapitalizations, reorganizations, change of control, stock split, stock dividend, reverse stock splits and certain issuances of additional shares of our common stock.
Removed
The issuances of shares at discount under the GEM Agreement and the anti-dilution protection granted to GEM Global in connection with issuances of additional shares of our common stock, would result in dilution of existing stockholders and have a negative impact on the market price of our common stock and our ability to obtain equity financing.
Removed
In addition, the negative covenants under the GEM Agreement are onerous and any breach thereof may trigger indemnification, reimbursement of losses and other liability for us thereby diverting our time and resources. To date, we have not used the GEM facility to raise capital. Our business is highly dependent on the success of our product candidates.
Removed
A Phase 1 trial was also initiated for PF614-MPAR in December 2021 and the clinical portion of Part A of that trial was completed in December 2022. The clinical portion of Part B was initiated in January 2023 and enrollment completed in March 2023. A Phase 1 safety study of nafamostat was completed in 2020.
Removed
If we are unable to develop our sales, marketing and distribution capability on our own or through collaborations with marketing partners, we will not be successful in commercializing our product candidates. We currently have no marketing, sales or distribution capabilities.
Removed
We intend to establish a sales and marketing organization, either on our own or in collaboration with third parties, with technical expertise and supporting distribution capabilities to commercialize PF614 or one or more of our other product candidates that may receive regulatory approval in key territories.
Removed
These efforts will require substantial additional resources, some or all of which may be incurred in advance of any approval of the product candidate.
Removed
In 2012, the European Patent Package, or EU Patent Package, regulations were passed with the goal of providing for a single pan-European Unitary Patent, and a new European Unified Patent Court, or UPC, for litigation of European patents. The EU Patent Package was ratified in February 2023 and currently covers 17 member states.
Removed
On June 1, 2023, all European patents, including those issued prior to ratification, will by default automatically fall under the jurisdiction of the UPC and allow for the possibility of obtaining pan-European injunctions, and further will be at risk of a central revocation proceeding at the UPC in participating UPC states.
Removed
Under the EU Patent Package, patent holders are permitted to “opt out” of the UPC on a patent-by-patent basis during an initial seven year period after the EU Patent Package is ratified, with the proviso that an “opt-out” is no longer available for EP patents for which a revocation has been initiated before the UPC.
Removed
Owners of European patent applications who receive notice of grant after the EU Patent Package is ratified could, for the UPC contracting states, either obtain a Unitary Patent or validate the patent nationally and file an opt-out demand.
Removed
The EU Patent Package may increase the uncertainties and costs surrounding the enforcement or defense of our issued European patents and pending applications.
Removed
The full impact on future European patent filing strategy and the enforcement or defense of our issued European patents in member states and/or the UPC is not known. 58 We may be subject to claims that we or our employees, consultants, contractors or advisors have infringed, misappropriated or otherwise violated the intellectual property of a third party, or claiming ownership of what we regard as our own intellectual property.
Removed
Many of the contributors to our intellectual property, including patents and applications, were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors.
Removed
Although we try to ensure that our employees do not use the intellectual property and other proprietary information, know-how or trade secrets of others in their work for us, we may be subject to claims that we or these employees have used or disclosed such intellectual property or other proprietary information. Litigation may be necessary to defend against these claims.
Removed
In addition, while we typically require our employees, consultants and contractors who may be involved in the development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we regard as our own.
Removed
For example, we have not obtained assignments for certain patent applications relating to abuse-resistant amphetamines.
Removed
To the extent that we fail to obtain such assignments, such assignments do not contain a self-executing assignment of intellectual property rights or such assignments are breached, we may be forced to bring claims against third parties, or defend claims they may bring against us, to determine the ownership of what we regard as our intellectual property.
Removed
We may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent, which might adversely affect our ability to develop and market our product candidates.
Removed
To the extent undertaken, we cannot guarantee that any of our patent searches or analyses, including the identification of relevant patents, the scope of patent claims or the expiration of relevant patents, are complete or thorough, nor can we be certain that we have identified each and every third-party patent and pending application in the United States and abroad that is or may be relevant to or necessary for the commercialization of our product candidates in any jurisdiction.
Removed
Patent applications in the United States and elsewhere are not published until approximately 18 months after the earliest filing for which priority is claimed, with such earliest filing date being commonly referred to as the priority date. In addition, certain United States patent applications can remain confidential until patents issue.
Removed
Therefore, patent applications covering our products could have been filed by others without our knowledge. Additionally, pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that could cover our product candidates or the use of our product candidates.
Removed
The scope of a patent claim is determined by an interpretation of the law, the written disclosure in a patent and the patent’s prosecution history. Our interpretation of the relevance or the scope of a patent or a pending application may be incorrect, which may negatively impact our ability to market our product candidates.
Removed
We may incorrectly determine that our product candidates are not covered by a third-party patent or may incorrectly predict whether a third party’s pending application will issue with claims of relevant scope.
Removed
Our determination of the expiration date of any patent in the United States or abroad that we consider relevant may be incorrect, and our failure to identify and correctly interpret relevant patents may negatively impact our ability to develop and market our product candidates.
Removed
If we fail to identify and correctly interpret relevant patents, we may be subject to infringement claims. We cannot guarantee that we will be able to successfully settle or otherwise resolve such infringement claims.
Removed
If we fail in any such dispute, in addition to being forced to pay damages, we may be temporarily or permanently prohibited from commercializing any of our product candidates that are held to be infringing. We might, if possible, also be forced to redesign product candidates or services so that we no longer infringe the third-party intellectual property rights.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe have not identified risks from known cybersecurity threats that have materially affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. See Item 1A.
Biggest changeWe have no t identified risks from known cybersecurity threats that have materially affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition . See Item 1A.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our principal executive office is located at 7946 Ivanhoe Ave., Suite 201 in La Jolla, California, where we lease a total of 850 square feet of office space that we use for our administrative activities. All development activities are undertaken at contract research organizations. The lease expires in October 2024.
Biggest changeItem 2. Properties Our principal executive office is located at 7946 Ivanhoe Ave., Suite 201 in La Jolla, California, where we lease a total of 850 square feet of office space that we use for our administrative activities. All development activities are undertaken at contract research organizations. The lease expires in October 2025.
We believe that our current arrangements will be sufficient to meet our needs for the foreseeable future, and that, should it be needed, suitable space will be available to accommodate our administrative activities. 66
We believe that our current arrangements will be sufficient to meet our needs for the foreseeable future, and that, should it be needed, suitable space will be available to accommodate our administrative activities. 62

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeChanges in and Disagreements with Accountants on Accounting and Financial Disclosure 84 Item 9A. Controls and Procedures 84 Item 9B. Other Information 85 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 85 PART III 86 Item 10. Directors, Executive Officers and Corporate Governance 86 Item 11. Executive Compensation 91 Item 12.
Biggest changeChanges in and Disagreements with Accountants on Accounting and Financial Disclosure 79 Item 9A. Controls and Procedures 79 Item 9B. Other Information 80 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 80 PART III 81 Item 10. Directors, Executive Officers and Corporate Governance 81 Item 11. Executive Compensation 86 Item 12.
Item 4. Mine Safety Disclosures 67 PART II 67 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 67 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 69 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 84 Item 8. Financial Statements and Supplementary Data 84 Item 9.
Item 4. Mine Safety Disclosures 63 PART II 63 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 63 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 65 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 79 Item 8. Financial Statements and Supplementary Data 79 Item 9.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 96 Item 13. Certain Relationships and Related Transactions, and Director Independence 97 Item 14. Principal Accounting Fees and Services 99 PART IV 100 Item 15. Exhibits and Financial Statement Schedules 100
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 91 Item 13. Certain Relationships and Related Transactions, and Director Independence 92 Item 14. Principal Accounting Fees and Services 94 PART IV 95 Item 15. Exhibits and Financial Statement Schedules 95

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHolders As of March 8, 2024, there were approximately 71 holders of record of our common stock. Such numbers do not include beneficial owners holding our securities through nominee names. Dividends We have not paid any cash dividends on our common stock to date.
Biggest changeOver-the-counter market quotations on the OTC Pink Open Market reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. Holders As of March 7, 2025, there were approximately 73 holders of record of our common stock. Such numbers do not include beneficial owners holding our securities through nominee names.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Price and Ticker Symbol Our common stock is currently listed on the Nasdaq Stock Market under the symbol “ENSC.” Our Public Warrants are currently listed on the OTC Pink Open Market under the symbol “ENSCW.” The closing price of our common stock and Public Warrants on March 8, 2024, was $0.7852 and $0.041, respectively.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Price and Ticker Symbol Our common stock is currently listed on the Nasdaq Stock Market under the symbol “ENSC.” Our Public Warrants are currently listed on the OTC Pink Open Market under the symbol “ENSCW.” The closing price of our common stock and Public Warrants on March 7, 2025, was $5.02 and $0.176, respectively.
We may retain future earnings, if any, for future operations, expansion and debt repayment and has no current plans to pay cash dividends for the foreseeable future.
Dividends We have not paid any cash dividends on our common stock to date. We may retain future earnings, if any, for future operations, expansion and debt repayment and has no current plans to pay cash dividends for the foreseeable future.
We do not anticipate declaring any cash dividends to holders of our common stock in the foreseeable future. 67 Securities Authorized for Issuance under Equity Compensation Plans The following table provides information as of December 31, 2023, with respect to securities that may be issued under our equity compensation plans: Plan Category Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights Weighted Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in the First Column) Equity compensation plans approved by security holders 581,314 $ 33.15 2,112 Equity compensation plans not approved by security holders - - - Total 581,314 $ 33.15 2,112 Recent Sales of Unregistered Securities and Use of Proceeds On October 23, 2023, we entered into a Securities Purchase Agreement for an aggregate financing of $1.7 million with investors.
We do not anticipate declaring any cash dividends to holders of our common stock in the foreseeable future. 63 Securities Authorized for Issuance under Equity Compensation Plans The following table provides information as of December 31, 2024, with respect to securities that may be issued under our equity compensation plans: Plan Category Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights Weighted Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in the First Column) Equity compensation plans approved by security holders 38,785 $ 501.65 10,596 Equity compensation plans not approved by security holders - - - Total 38,785 $ 501.65 10,596 Recent Sales of Unregistered Securities and Use of Proceeds Sales of unregistered securities during 2024 have been disclosed in 10-Q Report for the quarter ending September 30 2024.
Removed
The Company issued to the investors (i) 2023 Notes in the aggregate principal amount of $1.8 million for an aggregate purchase price of $1.7 million and (ii) warrants to purchase 3.8 million shares of the Company’s common stock in the aggregate at an exercise price of $1.5675 per share.
Added
Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. 64
Removed
The first funding of $0.6 million occurred on October 25, 2023 and the second funding of $1.1 million occurred on November 28, 2023. Pursuant to the 2023 Notes, shares of Company common stock were issued to these investors in satisfaction of principal and interest payments. The proceeds are being used for working capital purposes subject to certain customary restrictions.
Removed
See, “ Liquidity and Capital Resources ” for a detailed description of the 2023 Notes. None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering.
Removed
Unless otherwise set forth above, we believe each of these transactions was exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act (and Regulation D promulgated thereunder) as transactions by an issuer not involving any public offering or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer under benefit plans and contracts relating to compensation as provided under Rule 701.
Removed
The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed on the share certificates issued in these transactions.
Removed
All recipients had adequate access, through their relationships with us, to information about us. The sales of these securities were made without any general solicitation or advertising. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. 68

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table summarizes our results of operations for the years ended December 31, 2023 and 2022: 77 Results of Operations Comparison of the Years ended December 31, 2023 and 2022 Year Ended December 31, 2023 2022 Change Federal grants $ 2,230,520 $ 2,523,383 $ (292,863 ) Operating expenses: Research and development $ 7,587,473 $ 19,835,875 $ (12,248,402 ) General and administrative 5,361,234 6,909,603 (1,548,369 ) Total operating expenses 12,948,707 26,745,478 (13,796,771 ) Loss from operations (10,718,187 ) (24,222,095 ) 13,503,908 Other income (expense): Loss on issuance of convertible notes - (3,609,944 ) 3,609,944 Issuance costs for convertible notes - (1,137,740 ) 1,137,740 Loss on conversions and change in fair value of convertible notes 146,479 1,792,154 (1,645,675 ) Issuance of liability classified warrants - (3,737,371 ) 3,737,371 Change in fair value of liability classified warrants 283,958 6,730,613 (6,446,655 ) Interest expense (353,945 ) (109,525 ) (244,420 ) Other income and expense, net 15,420 86,223 (70,803 ) Total other income/(expenses), net 91,912 14,410 77,502 Net loss $ (10,626,275 ) $ (24,207,685 ) $ 13,581,410 Net loss attributable to noncontrolling interests (13,201 ) (35,393 ) 22,192 Deemed dividend related to warrants down round provision 12,937 913,204 (900,267 ) Net loss attributable to common stockholders $ (10,626,011 ) $ (25,085,496 ) $ 14,459,485 Federal Grants Revenue from federal grants totaled $2.2 million for the year ended December 31, 2023, compared to $2.5 million for the year ended December 31, 2022.
Biggest changeTo date, no amounts are being presented as an uncertain tax position. 73 The following table summarizes our results of operations for the years ended December 31, 2024 and 2023: Results of Operations Comparison of the Years ended December 31, 2024 and 2023 Year Ended December 31, 2024 2023 Change Federal grants $ 5,210,031 $ 2,230,520 $ 2,979,511 Operating expenses: Research and development $ 7,219,437 $ 7,587,473 $ (368,036 ) General and administrative 4,720,728 5,361,234 (640,506 ) Total operating expenses 11,940,165 12,948,707 (1,008,542 ) Loss from operations (6,730,134 ) (10,718,187 ) 3,988,053 Other income (expense): Loss on conversions and change in fair value of convertible notes - 146,479 (146,479 ) Change in fair value of liability classified warrants 16,292 283,958 (267,666 ) Interest expense (1,290,444 ) (353,945 ) (936,499 ) Other income and expense, net 17,277 15,420 1,857 Total other income (expenses), net (1,256,875 ) 91,912 (1,348,787 ) Net loss $ (7,987,009 ) $ (10,626,275 ) $ 2,639,266 Net loss attributable to noncontrolling interests (74 ) (13,201 ) 13,127 Deemed dividend related to warrants down round provision 290 12,937 (12,647 ) Net loss attributable to common stockholders $ (7,987,225 ) $ (10,626,011 ) $ 2,638,786 Federal Grants Revenue from federal grants totaled $5.2 million for the year ended December 31, 2024, compared to $2.2 million for the year ended December 31, 2023, respectively.
Our future funding requirements will depend on and could increase significantly as a result of many factors, including: ● the scope, progress, results and costs of researching and developing our product candidates, and conducting preclinical and clinical trials; ● the costs, timing and outcome of regulatory review of our product candidates; ● the costs, timing and ability to manufacture our product candidates to supply our clinical and preclinical development efforts and our clinical trials; ● the costs of future activities, including product sales, medical affairs, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing approval; ● the costs of manufacturing commercial-grade product and necessary inventory to support commercial launch; ● the ability to receive additional non-dilutive funding, including grants from organizations and foundations; ● the revenue, if any, received from commercial sale of our products, should any of our product candidates receive marketing approval; ● the costs of preparing, filing and prosecuting patent applications, obtaining, maintaining, expanding and enforcing our intellectual property rights and defending intellectual property-related claims; ● our ability to establish and maintain collaborations on favorable terms, if at all; and ● the extent to which we acquire or in-license other product candidates and technologies. 82 Critical Accounting Policies and Significant Judgments and Estimates Our consolidated financial statements are prepared in accordance with GAAP.
Our future funding requirements will depend on and could increase significantly as a result of many factors, including: ● the scope, progress, results and costs of researching and developing our product candidates, and conducting preclinical and clinical trials; ● the costs, timing and outcome of regulatory review of our product candidates; ● the costs, timing and ability to manufacture our product candidates to supply our clinical and preclinical development efforts and our clinical trials; ● the costs of future activities, including product sales, medical affairs, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing approval; ● the costs of manufacturing commercial-grade product and necessary inventory to support commercial launch; ● the ability to receive additional non-dilutive funding, including grants from organizations and foundations; ● the revenue, if any, received from commercial sale of our products, should any of our product candidates receive marketing approval; ● the costs of preparing, filing and prosecuting patent applications, obtaining, maintaining, expanding and enforcing our intellectual property rights and defending intellectual property-related claims; ● our ability to establish and maintain collaborations on favorable terms, if at all; and ● the extent to which we acquire or in-license other product candidates and technologies. 77 Critical Accounting Policies and Significant Judgments and Estimates Our consolidated financial statements are prepared in accordance with GAAP.
The timing and amount of our operating expenditures will depend largely on our ability to: ● advance preclinical development of our early-stage programs and clinical trials of our product candidates; ● manufacture, or have manufactured on our behalf, our preclinical and clinical drug material and develop processes for late state and commercial manufacturing; ● seek regulatory approvals for any product candidates that successfully complete clinical trials; ● establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any product candidates for which we may obtain marketing approval and intend to commercialize on our own; ● hire additional clinical, quality control and scientific personnel; 81 ● expand our operational, financial and management systems and increase personnel, including personnel to support our clinical development, manufacturing and commercialization efforts and our operations as a public company; ● obtain, maintain, expand and protect our intellectual property portfolio; ● manage the costs of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights, including enforcing and defending intellectual property related claims; and ● manage the costs of operating as a public company.
The timing and amount of our operating expenditures will depend largely on our ability to: ● advance preclinical development of our early-stage programs and clinical trials of our product candidates; ● manufacture, or have manufactured on our behalf, our preclinical and clinical drug material and develop processes for late state and commercial manufacturing; ● seek regulatory approvals for any product candidates that successfully complete clinical trials; ● establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any product candidates for which we may obtain marketing approval and intend to commercialize on our own; ● hire additional clinical, quality control and scientific personnel; 76 ● expand our operational, financial and management systems and increase personnel, including personnel to support our clinical development, manufacturing and commercialization efforts and our operations as a public company; ● obtain, maintain, expand and protect our intellectual property portfolio; ● manage the costs of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights, including enforcing and defending intellectual property related claims; and ● manage the costs of operating as a public company.
For example, if the FDA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect or if we experience significant delays in enrollment in any of our planned clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development of that product candidate. 75 General and Administrative Expenses 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.
For example, if the FDA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect or if we experience significant delays in enrollment in any of our planned clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development of that product candidate. 71 General and Administrative Expenses 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.
A holder of a warrant issued in the offering will not have the right to exercise any portion of its warrants if the holder, together with its affiliates, would beneficially own in excess of 4.99% (or 9.99% at the election of the holder prior to the date of issuance) of the number of shares of Common Stock outstanding immediately after giving effect to such exercise; provided, however, that upon 61 days’ prior notice to the Company, the holder may increase or decrease the beneficial ownership limitation, provided that in no event shall the beneficial ownership limitation exceed 9.99%.
A holder of a warrant issued in the offering will not have the right to exercise any portion of its warrants if the holder, together with its affiliates, would beneficially own in excess of 4.99% (or 9.99% at the election of the holder prior to the date of issuance) of the number of shares of Common Stock outstanding immediately after giving effect to such exercise; provided, however, that upon 61 days’ prior notice us, the holder may increase or decrease the beneficial ownership limitation, provided that in no event shall the beneficial ownership limitation exceed 9.99%.
A holder of a common warrant will not have the right to exercise any portion of its warrants if the holder, together with its affiliates, would beneficially own in excess of 4.99% (or 9.99% at the election of the holder prior to the date of issuance) of the number of shares of common stock outstanding immediately after giving effect to such exercise; provided, however, that upon 61 days’ prior notice to the Company, the holder may increase or decrease the beneficial ownership limitation, provided that in no event shall the beneficial ownership limitation exceed 9.99%.
A holder of a common warrant will not have the right to exercise any portion of its warrants if the holder, together with its affiliates, would beneficially own in excess of 4.99% (or 9.99% at the election of the holder prior to the date of issuance) of the number of shares of common stock outstanding immediately after giving effect to such exercise; provided, however, that upon 61 days’ prior notice to us, the holder may increase or decrease the beneficial ownership limitation, provided that in no event shall the beneficial ownership limitation exceed 9.99%.
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. 73 Operating Expenses Research and Development Expenses Research and development expenses consist primarily of costs incurred for research activities, including drug discovery efforts and the development of our product candidates.
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. 69 Operating Expenses Research and Development Expenses Research and development expenses consist primarily of costs incurred for research activities, including drug discovery efforts and the development of our product candidates.
We expense research and development costs as incurred, which include: ● expenses incurred to conduct the necessary preclinical studies and clinical trials required to obtain regulatory approval; ● expenses incurred under agreements with contract research organizations (“ CROs ”) that are primarily engaged in the oversight and conduct of our drug discovery efforts and preclinical studies, clinical trials and contract manufacturing organizations (“ CMOs ”) that are primarily engaged to provide preclinical and clinical drug substance and product for our research and development programs; ● other costs related to acquiring and manufacturing materials in connection with our drug discovery efforts and preclinical studies and clinical trial materials, including manufacturing validation batches, as well as investigative sites and consultants that conduct our clinical trials, preclinical studies and other scientific development services; ● payments made in cash or equity securities under third-party licensing, acquisition and option agreements; ● employee-related expenses, including salaries and benefits, travel and stock-based compensation expense for employees engaged in research and development functions; ● costs related to compliance with regulatory requirements; and ● allocated facilities-related costs, depreciation and other expenses, which include rent and utilities.
We expense research and development costs as incurred, which include: ● expenses incurred to conduct the necessary preclinical studies and clinical trials required to obtain regulatory approval; ● expenses incurred under agreements with CROs that are primarily engaged in the oversight and conduct of our drug discovery efforts and preclinical studies, clinical trials and CMOs that are primarily engaged to provide preclinical and clinical drug substance and product for our research and development programs; ● other costs related to acquiring and manufacturing materials in connection with our drug discovery efforts and preclinical studies and clinical trial materials, including manufacturing validation batches, as well as investigative sites and consultants that conduct our clinical trials, preclinical studies and other scientific development services; ● payments made in cash or equity securities under third-party licensing, acquisition and option agreements; ● employee-related expenses, including salaries and benefits, travel and stock-based compensation expense for employees engaged in research and development functions; ● costs related to compliance with regulatory requirements; and ● allocated facilities-related costs, depreciation and other expenses, which include rent and utilities.
Off-Balance Sheet Arrangements We do not have during the periods presented, and do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC. 83 Recently Issued Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 3 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Off-Balance Sheet Arrangements We do not have during the periods presented, and do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC. 78 Recently Issued Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 3 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
We have incurred and expect to continue to incur additional costs associated with operating as a public company, including significant legal, accounting, insurance, investor relations and other expenses. We may never become profitable. 69 We require substantial additional funding to support our continuing operations and pursue our growth strategy.
We have incurred and expect to continue to incur additional costs associated with operating as a public company, including significant legal, accounting, insurance, investor relations and other expenses. We may never become profitable. 65 We require substantial additional funding to support our continuing operations and pursue our growth strategy.
We have received funding under federal grants from the National Institutes of Health (“NIH”) through the National Institute on Drug Abuse (“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”).
We have received funding under federal grants from the National Institutes of Health (“NIH”) through the National Institute on Drug Abuse (“NIDA”). In September 2018 and August 2024, we were awarded a research and development grant related to the development of our MPAR® overdose prevention technology (the “MPAR Grant”).
These employees work across multiple programs and, therefore, we do not track our costs by program and cannot state precisely the total costs incurred for each of our clinical and preclinical programs on a project-by-project basis. 74 Research and development activities are central to our business model.
These employees work across multiple programs and, therefore, we do not track our costs by program and cannot state precisely the total costs incurred for each of our clinical and preclinical programs on a project-by-project basis. 70 Research and development activities are central to our business model.
As a result, we expect that our research and development expenses will remain elevated as we continue our existing, and commences additional, planned clinical trials for PF614, PF614-MPAR® and nafamostat, as well as conduct other preclinical and clinical development, including submitting regulatory filings for our other product candidates, subject to our ability to obtain financing.
As a result, we expect that our research and development expenses will remain elevated as we continue our existing, and commence additional, planned clinical trials for PF614, PF614-MPAR® and nafamostat, as well as conduct other preclinical and clinical development, including submitting regulatory filings for our other product candidates, subject to our ability to obtain financing.
The notes mature on April 25, 2024 and May 28, 2024, respectively. The combined notes are subject to an original issue discount of 8%, have a term of six months from their respective date of issuance and accrue interest at the rate of 6.0% per annum.
The notes matured on April 25, 2024 and May 28, 2024, respectively. The combined notes are subject to an original issue discount of 8%, have a term of six months from their respective date of issuance and accrue interest at the rate of 6.0% per annum.
This has not impacted our effective tax rate or our cash tax payable in 2023; however, if the requirement to capitalize Section 174 expenditures is not modified, it may also impact our effective tax rate and our cash tax liability in future years.
This has not impacted our effective tax rate or our cash tax payable in 2024; however, if the requirement to capitalize Section 174 expenditures is not modified, it may also impact our effective tax rate and our cash tax liability in future years.
Gross proceeds from this offering are approximately $7.0 million before the deduction of placement agent fees and related costs of $0.7 million. The Series A-1 and Series A-2 warrants were repriced to $1.31 per share and exercised in February 2024. H.C. Wainwright & Co. acted as the exclusive placement agent for the offering.
Gross proceeds from this offering are approximately $7.0 million before the deduction of placement agent fees and related costs of $0.7 million. The Series A-1 and Series A-2 warrants were repriced to $19.65 per share and exercised in February 2024. H.C. Wainwright & Co. acted as the exclusive placement agent for the offering.
We do not have any products approved for sale and we have not generated any revenue from product sales. We may never be able to develop or commercialize a marketable product. Our lead product candidate, PF614, is in Phase 2 clinical development, PF614-MPAR is in Phase 1b clinical development and nafamostat is proceeding towards Phase 2 clinical development.
We do not have any products approved for sale and we have not generated any revenue from product sales. We may never be able to develop or commercialize a marketable product. Our lead product candidate, PF614, is in Phase 3 clinical development, PF614-MPAR is in Phase 1b clinical development and nafamostat is proceeding towards Phase 1 clinical development.
The closing of the Offering occurred on February 6, 2023. 71 In a concurrent private placement, the Company issued to the institutional investors, for each share of common stock purchased in the offering, a common warrant to purchase one share of common stock. The common warrants are exercisable immediately upon issuance and terminate five and one-half years following issuance.
The closing of the Offering occurred on February 6, 2023. In a concurrent private placement, we issued to the institutional investors, for each share of common stock purchased in the offering, a common warrant to purchase one share of common stock. The common warrants are exercisable immediately upon issuance and terminate five and one-half years following issuance.
We also anticipate that we will continue to incur significant accounting, audit, legal, regulatory, compliance and director and officer insurance costs as well as investor and public relations expenses as a public company.
We also anticipate that we will continue to incur significant accounting, audit, legal, regulatory, compliance and director and officer insurance costs as well as investor and public relations expenses.
As of December 31, 2023 and 2022, we continue to maintain a full valuation allowance against all of our deferred tax assets based on our evaluation of all available evidence.
As of December 31, 2024 and 2023, we continue to maintain a full valuation allowance against all of our deferred tax assets based on our evaluation of all available evidence.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview 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.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview Ensysce is a clinical stage pharmaceutical company developing 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.
Without raising additional capital through a future offering, we believe that current cash on hand is sufficient to fund operations into the third quarter of 2024. We based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.
Without raising additional capital through a future offering, we believe that current cash on hand is sufficient to fund operations into the second quarter of 2025. We based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.
Beginning ninety days following issuance of the notes at the first closing and second closing, respectively, the Company is obligated to redeem monthly one third of the original principal amount under the applicable note, plus accrued but unpaid interest, liquidated damages and any other amounts then owing to the holder of such note.
Beginning ninety days following issuance of the notes at the first closing and second closing, respectively, we are obligated to redeem monthly one third of the original principal amount under the applicable note, plus accrued but unpaid interest, liquidated damages and any other amounts then owing to the holder of such note.
Our tax return period for United States federal income taxes for the tax years since 2020 remain open to examination under the statute of limitations by the Internal Revenue Service and state jurisdictions are open for examination from 2019. We record reserves for potential tax payments to various tax authorities related to uncertain tax positions, if any.
Our tax return period for United States federal income taxes for the tax years since 2021 remain open to examination under the statute of limitations by the Internal Revenue Service and state jurisdictions. We record reserves for potential tax payments to various tax authorities related to uncertain tax positions, if any.
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.
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 second quarter of 2025, which raises substantial doubt about our ability to continue as a going concern.
H.C. Wainwright & Co. acted as the exclusive placement agent (the “ Placement Agent ”) for the offering. We issued placement agent warrants to purchase up to 20,832 shares of common stock to the Placement Agent (including its designees).
H.C. Wainwright & Co. acted as the exclusive placement agent (the “ Placement Agent ”) for the offering. We issued placement agent warrants to purchase up to 1,389 shares of common stock to the Placement Agent (including its designees).
The Series A-1 warrants have an exercise price of $3.64 per share, are exercisable immediately upon issuance and expire five years from the date of issuance, and the Series A-2 warrants have an exercise price of $3.64 per share, are exercisable immediately upon issuance and expire eighteen months from the date of issuance.
The Series A-1 warrants have an exercise price of $54.60 per share, are exercisable immediately upon issuance and expire five years from the date of issuance, and the Series A-2 warrants have an exercise price of $54.60 per share, are exercisable immediately upon issuance and expire eighteen months from the date of issuance.
We use internal resources primarily to conduct our research and development as well as for managing our preclinical development, process development, manufacturing and clinical development activities.
We use internal resources primarily to conduct our research and development as well as to manage our preclinical development, process development, manufacturing and clinical development activities.
Commitments Our commitments as of December 31, 2023 included an estimated $17.9 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.
Commitments Our commitments as of December 31, 2024 included an estimated $12.0 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.
These warrants have an exercise price equal to $12.60 per share and are exercisable for five years from the commencement of sales in the offering.
These warrants have an exercise price equal to $189.00 per share and are exercisable for five years from the commencement of sales in the offering.
At the second closing under the SPA, which occurred on November 28, 2023, the Company issued to the investors referenced above, (i) additional notes in the aggregate principal amount of $1,224,000 for an aggregate purchase price of $1,133,333 and (i) additional warrants to purchase 2,511,394 shares of the common stock in the aggregate.
At the second closing under the SPA, which occurred on November 28, 2023, we issued to the investors referenced above, (i) additional notes in the aggregate principal amount of $1,224,000 for an aggregate purchase price of $1,133,333 and (i) additional warrants to purchase 167,427 shares of the common stock in the aggregate.
Each common warrant is exercisable immediately at an exercise price of $16.80 per share and will expire five years following the date of issuance.
Each common warrant is exercisable immediately at an exercise price of $252.00 per share and will expire five years following the date of issuance.
We were obligated under the 2022 Notes to pay additional cash as true-up payments for interest or redemption amounts that we paid in shares of common stock that were valued below $24.07 or the lower conversion price of $9.01 in effect between January 12, 2023 and May 12, 2023.
We were obligated under the 2022 Notes to pay additional cash as true-up payments for interest or redemption amounts that we paid in shares of common stock that were valued below $361.05 or the lower conversion price of $135.15 in effect between January 12, 2023 and May 12, 2023.
The Company is required to pay the redemption amount in cash with a premium of 10% or, at the election of the investor at any time, some or all of the principal amount and interest may be paid by conversion of shares under the note into common stock based on a conversion price equal to $1.5675.
We are required to pay the redemption amount in cash with a premium of 10% or, at the election of the investor at any time, some or all of the principal amount and interest may be paid by conversion of shares under the note into common stock based on a conversion price equal to $23.51.
The public purchase price of one share of common stock and accompanying common warrant to purchase two shares of Common Stock is $16.80 and the combined purchase price of one pre-funded warrant and accompanying common warrant to purchase two shares of common stock is $16.80.
The public purchase price of one share of common stock and accompanying common warrant to purchase two shares of Common Stock is $252.00 and the combined purchase price of one pre-funded warrant and accompanying common warrant to purchase two shares of common stock is $252.00.
At the first closing under the SPA, which occurred on October 25, 2023, the Company issued to the investors (i) senior secured convertible promissory notes in the aggregate principal amount of $612,000 for an aggregate purchase price of $566,667 and (ii) warrants to purchase 1,255,697 shares of the Company’s common stock in the aggregate.
At the first closing under the SPA, which occurred on October 25, 2023, we issued to the investors (i) senior secured convertible promissory notes in the aggregate principal amount of $612,000 for an aggregate purchase price of $566,667 and (ii) warrants to purchase 83,714 shares of our common stock in the aggregate.
Conversions and repayments of principal and interest on the notes in January and February 2024 totaled $1.7 million. The warrants have an exercise price of $1.5675 and are exercisable for five years following issuance on each of the first and second closing dates under the SPA. Warrants for 1.3 million shares of common stock were exercised in January 2024.
Conversions and repayments of principal and interest on the notes in January and February 2024 totaled $1.7 million. The warrants have an exercise price of $23.51 and are exercisable for five years following issuance on each of the first and second closing dates under the SPA.
The notes are convertible into common stock, at a per share conversion price equal to $1.5675.
The notes are convertible into common stock, at a per share conversion price equal to $23.51.
The common warrants have an exercise price of $8.58 per share and are exercisable to purchase an aggregate of up to 297,619 shares of Common Stock and expire on August 7, 2028.
The common warrants have an exercise price of $128.70 per share and are exercisable to purchase an aggregate of up to 19,842 shares of Common Stock and expire on August 7, 2028.
Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses and prepaid expenses.
Funding Requirements Our primary use of cash is to fund operating expenses, primarily related to our research and development activities. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses and prepaid expenses.
For additional information on risks associated with our substantial capital requirements, please read the section titled “ Risk Factors ” included elsewhere in this Annual Report on Form 10-K. 80 Cash Flows for the years ended December 31, 2023 and 2022 The following table summarizes our cash flows for each of the periods presented: Year Ended December 31, 2023 2022 Net cash used in operating activities $ (10,779,982 ) $ (17,887,439 ) Net cash provided by investing activities - 4,500 Net cash provided by financing activities 8,755,884 8,765,905 Net decrease in cash and cash equivalents $ (2,024,098 ) $ (9,117,034 ) Operating Activities During the years ended December 31, 2023 and 2022, we used cash in operating activities of $10.8 million and $17.9 million, respectively.
For additional information on risks associated with our substantial capital requirements, please read the section titled “ Risk Factors ” included elsewhere in this Annual Report on Form 10-K. 75 Cash Flows for the years ended December 31, 2024 and 2023 The following table summarizes our cash flows for each of the periods presented: Year Ended December 31, 2024 2023 Net cash used in operating activities $ (7,502,700 ) $ (10,779,982 ) Net cash provided by financing activities 9,881,173 8,755,884 Net increase (decrease) in cash and cash equivalents $ 2,378,473 $ (2,024,098 ) Operating Activities During the years ended December 31, 2024 and 2023, we used cash in operating activities of $7.5 million and $10.8 million, respectively.
The decrease was primarily the result of changes in timing of external research and development costs related to the clinical programs for PF614 and PF614-MPAR. We do not currently track expenses on a program-by-program basis.
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.
The Company also registered warrants issued to the placement agent to purchase 126,061 shares of common stock at a per share exercise price of $4.8588, which is 125% of the price of the shares in the offering.
We also registered warrants issued to the placement agent to purchase 8,404 shares of common stock at a per share exercise price of $72.882, which is 125% of the price of the shares in the offering.
We used a discounted cash flow model and a Monte Carlo simulation to estimate the fair value of the notes, both of which rely on unobservable Level 3 inputs. The loss on issuance of convertible notes represents the difference between the gross proceeds received and the calculated fair value on the issuance date of the notes.
We used a discounted cash flow model and a Monte Carlo simulation to estimate the fair value of the notes, both of which rely on unobservable Level 3 inputs.
Potential interest and penalties associated with such uncertain tax positions is recorded as a component of our provision for income taxes. To date, no amounts are being presented as an uncertain tax position.
Potential interest and penalties associated with such uncertain tax positions is recorded as a component of our provision for income taxes.
Liquidity and Capital Resources Sources of Liquidity and Capital As of December 31, 2023, we had $1.1 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 at least the foreseeable future.
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 at least the foreseeable future.
Changes in the fair value of the notes are recognized through earnings for each reporting period. Issuance of liability classified warrants The warrants issued with the 2021 Notes and 2022 Notes are liability classified due to certain cash settlement features. We use a Black-Scholes option pricing model to estimate the fair value of the warrants.
Changes in the fair value of the notes are recognized through earnings for each reporting period. 72 Change in fair value of liability classified warrants We use a Black-Scholes option pricing model to estimate the fair value of the warrants. Changes in the fair value of the warrants are recognized through earnings for each reporting period.
In addition, the 2023 Notes balance at December 31, 2023 reflects 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.
In addition, the 2023 Notes reflects 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.
The 2021 Notes were satisfied on October 10, 2022. 70 2022 Notes On June 30, 2022, we entered into an $8.0 million convertible financing agreement with institutional investors. The agreement provided for two closings, each for notes payable of $4.24 million (resulting in gross cash proceeds of $4.0 million).
The offering closed on December 9, 2022 and we received aggregate gross proceeds of approximately $4.1 million from the Offering. 2022 Notes On June 30, 2022, we entered into an $8.0 million convertible financing agreement with institutional investors. The agreement provided for two closings, each for notes payable of $4.24 million (resulting in gross cash proceeds of $4.0 million).
Our officers and directors agreed, subject to limited exceptions, for a period of 90 days after the closing of the offering, to not offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, with respect to, any shares of common stock or securities convertible, exchangeable or exercisable into, shares of common stock beneficially owned, held or thereafter acquired by them. 2023 May Offering On May 12, 2023, the Company completed a public offering of an aggregate of 1,800,876 shares of its common stock at par value $0.0001 per share (including pre-funded warrants in lieu thereof), Series A-1 warrants to purchase up to 1,800,876 shares of common stock and Series A-2 warrants to purchase up to 1,800,876 shares of common stock, at a combined public offering price of $3.887 per share (or pre-funded warrant in lieu thereof) and accompanying warrants.
Our officers and directors agreed, subject to limited exceptions, for a period of 90 days after the closing of the offering, to not offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, with respect to, any shares of common stock or securities convertible, exchangeable or exercisable into, shares of common stock beneficially owned, held or thereafter acquired by them. 68 2022 December Offering On December 7, 2022, we entered into an underwriting agreement with Lake Street Capital Management, LLC (the “ Underwriter ”), pursuant to which we agreed to issue and sell (i) 12,667 shares of our common stock, par value $0.0001 per share, (ii) pre-funded warrants to purchase 3,445 shares of common stock and (iii) warrants to purchase 32,223 shares of common stock to the Underwriter in a public offering.
Other Income (Expense) Loss on issuance of convertible notes The 2022 Notes were accounted for under ASC 480 – Distinguishing Liabilities from Equity, due to share settlement features contained within the notes. As a result, the 2022 Notes were recorded as liabilities at fair value upon initial recognition and at the balance sheet date.
Other Income (Expense) Change in fair value of convertible notes The 2022 Notes were accounted for under ASC 480 – Distinguishing Liabilities from Equity, due to share settlement features contained within the notes.
The offering closed on December 9, 2022 and we received aggregate gross proceeds of approximately $4.1 million from the Offering. 2023 February Offering On February 2, 2023, we entered into a definitive Securities Purchase Agreement with certain institutional investors , pursuant to which the Company agreed to issue and sell in a registered direct offering, priced “at-the-market” under the rules of The Nasdaq Stock Market, an aggregate of 297,619 shares of common stock of the Company, par value $0.0001 per share, at an offering price of $10.08 per share, for gross proceeds of approximately $3.0 million before the deduction of placement agent fees and related costs of $0.3 million.
In connection with the offering, we amended certain existing warrants to purchase up to an aggregate of 14,006 shares of our common stock that were previously issued in September 2021 through December 2022 to purchasers in the offering at exercise prices ranging from $252.00 to $2,808.00 per share, such that the amended warrants have a reduced exercise price of $54.60 per share, at an additional offering price of $1.875 per amended warrant. 2023 February Offering On February 2, 2023, we entered into a definitive Securities Purchase Agreement with certain institutional investors , pursuant to which we agreed to issue and sell in a registered direct offering, priced “at-the-market” under the rules of The Nasdaq Stock Market, an aggregate of 19,842 shares of our common stock, par value $0.0001 per share, at an offering price of $151.2 per share, for gross proceeds of approximately $3.0 million before the deduction of placement agent fees and related costs of $0.3 million.
Changes in the fair value of the warrants are recognized through earnings for each reporting period. Interest Expense 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.
Interest Expense Interest expense consists of interest accrued on our financed directors’ and officers’ insurance, and interest from the 2023 Notes based on the stated interest rate.
In addition, the Company granted the Underwriter the option, for 45 days from the closing of the offering, to purchase up to 28,500 additional shares of common stock and common warrants to purchase up to an additional 72,500 shares of common stock.
In addition, we granted the Underwriter the option, for 45 days from the closing of the offering, to purchase up to 1,900 additional shares of common stock and common warrants to purchase up to an additional 4,834 shares of common stock. The Underwriter agreed to purchase our shares pursuant to at a price of $234.30 per share.
For 2023, net cash proceeds from 2023 February and 2023 May offerings of $9.1 million, net of transaction costs of $0.4 million, net cash proceeds from 2023 Notes of $1.6 million, and the repayment of financed insurance premiums of $0.5 million and cash payment of 2022 Notes of $1.0 million.
During the year ended December 31, 2023, net cash provided by financing activities was $8.8 million, primarily consisting of net proceeds from 2023 February and 2023 May offerings of $8.7 million and net proceeds from 2023 Notes of $1.6 million, less the repayment of financed insurance premiums of $0.5 million and cash payment of 2022 Notes of $1.0 million.
In connection with each of the first and second closings of the 2022 Notes we also issued warrants to purchase 38,900 shares of the Company’s common stock.
In connection with each of the first and second closings of the 2022 Notes we also issued warrants to purchase 2,594 shares of our common stock. The warrants have a current exercise price of $54.60 and are exercisable for five years following issuance of the 2022 Notes.
Remaining funding under approved federal research grants totals $2.2 million and is expected to be utilized by August 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.
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. Going Concern We have generated limited revenues and have incurred significant operating losses since our inception.
In connection with the offering, the Company amended certain existing warrants to purchase up to an aggregate of 210,085 shares of the Company’s common stock that were previously issued in September 2021 through December 2022 to purchasers in the offering at exercise prices ranging from $16.80 to $187.20 per share, such that the amended warrants have a reduced exercise price of $3.64 per share, at an additional offering price of $0.125 per amended warrant. 72 2023 Notes On October 23, 2023, the Company entered into a Securities Purchase Agreement (the “SPA”) for an aggregate financing of $1.7 million with investors, including $0.2 million with a board member.
The placement agent warrants expire on May 12, 2028, and have an exercise price of $24.5625 per share of Common Stock (equal to 125% of the reduced exercise price per Existing Warrant). 2023 Notes On October 23, 2023, we entered into a Securities Purchase Agreement (the “SPA”) for an aggregate financing of $1.7 million with investors, including $0.2 million with a board member.
Revenue decreased $0.3 million during the year ended December 31, 2023, due to the timing of research activities eligible for funding under the grants. Research and Development Expenses Research and development expenses were $7.6 million for the year ended December 31, 2023, compared to $19.8 million for the year ended December 31, 2022.
Research and Development Expenses Research and development expenses were $7.2 million for the year ended December 31, 2024, compared to $7.6 million for the year ended December 31, 2023, respectively, representing a decrease of $0.4 million.
However, in order to complete our current and future preclinical studies and clinical trials, and to complete the process of obtaining regulatory approval for our product candidates, as well as to build the sales, marketing and distribution infrastructure that we believe will be necessary to commercialize our product candidates, if approved, we may require substantial additional funding in the future. 2021 Notes On September 24, 2021, we entered into the SPA for an aggregate financing of $15.0 million with institutional investors.
However, in order to complete our current and future preclinical studies and clinical trials, and to complete the process of obtaining regulatory approval for our product candidates, as well as to build the sales, marketing and distribution infrastructure that we believe will be necessary to commercialize our product candidates, if approved, we may require substantial additional funding in the future. 66 2024 Registered Direct Offering and 2024 August Warrant Inducement In August 2024, we entered into a definitive Securities Purchase Agreement with certain institutional investors, pursuant to which we agreed to issue and sell in a registered direct offering, (i) an aggregate of 166,054 shares of our common stock, par value $0.0001 per share at an offering price of $7.05 per share, (ii) pre-funded warrants to purchase up to 70,827 shares of Common Stock, at a price per pre-funded warrant equal to $7.0485, the price per share less $0.0001, for gross proceeds of approximately $1.7 million before the deduction of placement agent fees and offering expenses.
We expect future general and administrative expenses to approximate current levels. 78 Other Income and Expense Other income and expenses, net, were $91,912 for the year ended December 31, 2023, compared to $14,410 for the year ended December 31, 2022.
We expect future general and administrative expenses to approximate current levels. 74 Other Income and Expense Other income and expense for the year ended December 31, 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 year ended December 31, 2023.
Removed
A first closing under the SPA occurred on September 24, 2021 and a second closing under the SPA occurred on November 5, 2021.
Added
The pre-funded warrants were subsequently exercised in full.
Removed
At the first closing, the Company issued to the investors (i) senior secured convertible promissory notes in the aggregate principal amount of $5.3 million for an aggregate purchase price of $5.0 million and (ii) warrants to purchase 1,507 shares of the Company’s common stock in the aggregate at a current exercise price of $3.64 per share.
Added
We also entered into an inducement agreement with certain warrant holders for the exercise of certain outstanding warrants to purchase up to an aggregate of 480,234 shares of our common stock originally issued in February 2024, having an exercise price of $15.90 per share, at a reduced exercise price of $7.05 per share, for gross proceeds of approximately $3.4 million before the deduction of placement agent fees and offering expenses.
Removed
At the second closing, the Company issued to the institutional investors referenced above, (i) senior secured convertible promissory notes in the aggregate principal amount of $10.6 million for an aggregate purchase price of $10.0 million and (ii) warrants to purchase 3,011 shares of the Company’s common stock in the aggregate at a current exercise price of $3.64 per share.
Added
We also agreed to amend certain existing warrants to purchase up to an aggregate of 133,334 shares of common stock that were previously issued in November 2023 and have an exercise price of $23.5125 per share such that the amended warrants will have a reduced exercise price of $7.05 per share effective upon the closing of the offering and will be exercisable from the date on which stockholder approval is received with respect to the issuance of the shares of common stock issuable upon exercise of such warrants.
Removed
The warrants have a current exercise price of $3.64 and are exercisable for five years following issuance of the 2022 Notes. 2022 December Offering On December 7, 2022, we entered into an underwriting agreement with Lake Street Capital Management, LLC (the “ Underwriter ”), pursuant to which we agreed to issue and sell (i) 190,000 shares of the Company’s common stock, par value $0.0001 per share, (ii) pre-funded warrants to purchase 51,666 shares of common stock and (iii) warrants to purchase 483,333 shares of common stock to the Underwriter in a public offering.
Added
In a concurrent private placement, pursuant to the terms of the inducement agreement and Securities Purchase Agreement, we also agreed to issue and sell unregistered warrants to purchase up to 1,863,706 shares of common stock.
Removed
The Underwriter agreed to purchase the shares from the Company pursuant to at a price of $15.62 per share.
Added
The warrants have an exercise price of $7.05 per share and are exercisable from the date on which stockholder approval is received with respect to the issuance of the shares of common stock issuable upon exercise of the warrants.
Removed
Issuance costs for convertible notes The issuance costs for convertible notes represent the original issue discount (expensed immediately due to the initial recognition at fair value of the 2022 Notes noted above), and legal and accounting fees incurred in connection with the issuance of the 2022 Notes.
Added
One half of the warrants will expire eighteen months after they are exercisable and the other half will expire five years after they are exercisable. The warrants contain customary anti-dilution adjustments to the exercise price, including for share splits, share dividends, rights offering and pro rata distributions.
Removed
Loss on conversions and change in fair value of convertible notes When conversions on the 2021 Notes occurred, we calculated the difference between the conversion price and the average of the high and low stock price on the date of conversion.
Added
We agreed to pay the placement agent a cash fee equal to 7% of the aggregate gross proceeds of the offerings or $354,000. We also agreed to pay the placement agent $100,950 for expenses. We also issued to the placement agent warrants to purchase up to 50,200 shares of common stock.
Removed
The resulting difference was either a loss if the conversion price was below the average of the high and low stock price on the date of conversion or a gain if the conversion price was above the average of the high and low stock price on the date of conversion.
Added
These warrants have an exercise price equal to $8.8125 per share and are exercisable for five years from the commencement of sales in the Offerings. 2024 February Warrant Inducement In February 2024, we entered into an Inducement Letter with certain holders of existing warrants to purchase up to an aggregate of 240,120 shares of our common stock issued to the holders in connection with the 2023 May Offering.
Removed
We elected the fair value option to account for the 2021 Notes as we believe the fair value option provided users of the financial statements with greater ability to estimate the outcome of future events as facts and circumstances change, particularly with respect to changes in the fair value of the common stock underlying the conversion option.
Added
Pursuant to the Inducement Letter, the holders agreed to exercise for cash their existing warrants to purchase an aggregate of 240,120 shares of Common Stock at a reduced exercise price of $19.65 per share in consideration of our agreement to issue new unregistered Series A Warrants to purchase up to 240,120 shares of Common Stock and new unregistered Series B Warrants to purchase up to 240,120 shares of Common Stock.
Removed
The 2022 Notes were accounted for under ASC 480 – Distinguishing Liabilities from Equity, due to share settlement features contained within the notes. We used a discounted cash flow model and a Monte Carlo simulation to estimate the fair value of the notes, both of which rely on unobservable Level 3 inputs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and Qualitative Disclosure About Market Risk We are exposed to market risk in the ordinary course of our business. These risks primarily relate to changes in interest rates and inflation. Interest Rate Risk Our cash and cash equivalents as of December 31, 2023, consisted of cash and a money market fund account.
Biggest changeItem 7A. Quantitative and Qualitative Disclosure About Market Risk We are exposed to market risk in the ordinary course of our business. These risks primarily relate to changes in interest rates and inflation. Interest Rate Risk Our cash and cash equivalents as of December 31, 2024, consisted of cash and a money market fund account.

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