Ensysce Biosciences Inc
NASDAQ:ENSC
Earnings Call Analysis
Q4-2023 Analysis
Ensysce Biosciences Inc
As we look back on the previous year, Ensysce has made remarkable strides in the clinical development of novel analgesics, marking 2023 as a pivotal year. The company's unwavering commitment to its mission of providing safer therapeutic options to address severe pain, alongside combating abuse and preventing overdoses, underscores its core operations. Ensysce is pioneering with their TAAP and MPAR technologies, addressing the critical societal issue of opioid related abuses and fatalities. These state-of-the-art platforms are crafted to offer pain management solutions for patients in need, while mitigating risks associated with opioid use.
In its pursuit for innovation, Ensysce strategically advanced PF614 and PF614-MPAR clinical trials, bolstered capital, and scaled manufacturing to lay a strong operational groundwork. These efforts materialized into fruitful discussions with the FDA, putting Ensysce on solid footing to commence pivotal Phase III trials for PF614 in the latter half of 2024.
Ensysce has introduced a significant scientific advancement in medication safety with TAAP, standing for Trypsin Activated Abuse Protection. This technology utilizes a chemical alteration rendering the medication inactive until ingested and reaching the small intestine. It's a strategic formulation meant to significantly limit abuse as it's only activated via oral administration, presenting a safeguard against misuse.
Its auxiliary platform, MPAR (multi-pill abuse resistant), is a cutting-edge combination of TAAP prodrugs with a small dose of Trypsin inhibitor, nafamostat. This dual-action feature ensures pain relief while implementing an innovative smart overdose protection strategy that becomes active only if doses exceed prescribed amounts.
Ensysce's leading product, PF614, is an oxycodone TAAP product positioned to succeed OxyContin in the marketplace. Recognizing its potential, the FDA has accorded PF614 Fast Track status, highlighting its importance for patients enduring chronic pain and affirming confidence in its prospective to meet an unfulfilled medical need.
2023 saw significant progress, including the completion of PF614-104, a trial demonstrating a reduced desire amongst recreational users to abuse PF614 in comparison to immediate-release oxycodone, indicating a lower potential for abuse. In acknowledgment of these promising results, the FDA has awarded breakthrough therapy designation for PF614, a commendable recognition rarely extended to opioid medications.
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Good morning, and welcome to the Ensysce Biosciences, Inc. Corporate Update Call. As a reminder, this conference call is being recorded. Your host today are Dr. Lynn Kirkpatrick, Chief Executive Officer; Dr. Bill Schmidt, Chief Medical Officer; and Dave Humphrey, Chief Financial Officer.
Before we begin the formal presentation, I would like to remind everyone that the statements made on the call and webcast may include predictions, estimates or other information that might be considered forward-looking. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this presentation. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. Throughout today's discussion, we will attempt to present some important factors relating to our business that may affect our predictions. You should also review our most recent forms 10-Q and 10-K for a more complete discussion of these factors and other risks, particularly under the heading Risk Factors. At this time, I'd like to turn the call over to Chief Executive Officer, Dr. Lynn Kirkpatrick. Lynn?
Thank you, operator, and good morning, everyone. Thank you for joining us. I am pleased to welcome you to today's corporate update conference call. 2023 was a year of exceptional clinical progress for our next-generation analgesics as we move our programs to more commercialization. Before I get into the full background of the company, I remind you that Ensysce's mission to provide safer therapeutics to treat severe pain, to reduce abuse and to provide protection from overdose remains the core of our operation. Medical dichotomy exists between the treatment of severe pain with appropriate medication and the abuse an overdose that occurs with this class of drugs. Statistics suggest that the United States loses over 200 Americans every day to prescription opioid overdose, yet there are countless Americans with severe pain who cannot get access to their prescription medication.
My Ensysce team believes this is unacceptable, and we believe our novel TAAP and MPAR opioid products provide a solution to address this dealing issue with opioids. For those of you new to our story, we are a clinical-stage pharmaceutical companies seeking to develop innovative solutions for severe pain relief while reducing the potential for opioid misuse, abuse and overdose. We've used sophisticated chemistry in the development of our 2 technology platforms, TAAP and MPAR, providing opioid abuse deterrence and overdose protection, respectively. We've strategically positioned our products as next-generation opioids, that improve the delivery and effectiveness of analgesic prescription drugs while reducing abuse potential. In 2023, we focused on the execution and completion of a number of PF614 and PF614-MPAR clinical trials, boosted capital resources and scaled manufacturing procedures, which provided a solid operational foundation and resulted in favorable FDA discussions in early 2024. Following these valuable meetings, Ensysce is well positioned to enter the pivotal Phase III trials for PF614 in the second half of 2024. I will take you through a review of our 2 technology platforms, and then Dr. Bill Schmidt, our Chief Medical Officer, will expand on our clinical trial progress over the last year. TAAP stands for Trypsin Activated Abuse Protection, which is the chemical modification of an active medication designed to make it inactive until it is swallowed and reaches the small intestine, where it's exposed to the natural enzyme Trypsin. Trypsin, only found in the small intestine, initiates the 2-step process to effectively release the active opioid. In other words, our TAAP prodrugs are activated or turned on by normal digestive enzymes that we use to digest our proteins in the small intestine. It's important to point out that Trypsin is not found in other tissues. So our chemistry limits our TAAP opioids to oral administration, which in turn is a mean to reduce abuse.
The second step of the opioid release, which is designed into the chemistry determines whether our TAAP prodrugs provide either an immediate or slow release profile, as is preferred for drugs that are required 24/7 to treat pain. Based on this 2-step release mechanism, we refer to TAAP as clever chemistry. And from our clinical studies, we've shown it to work as designed to improve safety and overall drug efficacy.
Additionally, TAAP can be applied to other types of medicines, to provide a delivery mechanism to the gut to improve safety or to simply make them more effective. Our second technology platform, MPAR, our multi-pill abuse resistant, is our smart overdose protection technology, an industry first. We've designed MPAR as a combination product of our TAAP prodrugs with a small dose of Trypsin inhibitor called nafamostat. This combination allows pain relief, coupled with overdose protection. MPAR is designed to turn off the release of the active ingredient if more than a prescribed dose is consumed orally. This protection is smart since it only kicks in, in an overdose situation. We've applied these highly novel technologies to several opioids and specifically to oxycodone for our lead product, PF614. We believe our entire TAAP drug class is set to become the next generation of opioids to treat severe pain in a safer manner than ever existed for opioid analgesic. We believe that controlling severe pain appropriately may prevent it from spiraling into chronic pain, which frequently leads to the use of opioids long term. The initial role for our lead product, PF614 may be in indications such as traumatic injuries or invasive surgeries. Additionally, we've received PF614 future role in chronic pain conditions, such as treating osteoarthritis pain in patients who cannot use or do not respond well to less effective anti-inflammatory analgesics, and where high levels of pain negatively impact quality of life. PF614-MPAR with overdose protection is their follow-on product, and we believe it will provide an extra layer of safety for treating both acute and chronic pain. In brief, our TAAP and MPAR technologies have been developed to address and reduce both prescription drug abuse and overdose. These are unique to the opioid class and provide a number of advantages over the currently marketed abuse-deterrent formulated products, advantages which we believe will provide both patients and prescribers more confidence in their medicine safety. Although we have focused on applying TAAP and MPART opioid analgesics, we have explored applications with other classes of prescription drugs, which in turn provides substantial opportunities for future growth. Our current pipeline includes a number of TAAP and MPAR opioids, TAAP and MPAR ADHD products and a discovery program of novel TAAP and MPAR agents for the treatment of opioid use disorder. Here is a brief summary of our programs before turning over to Dr. Schmidt to provide more clinical details. PF614, an oxycodone TAAP product, is designed to replace OxyContin in the marketplace. The FDA has granted PF614 Fast Track status for the use in chronic pain, which suggests regulatory confidence that PF614 may fulfill an unmet therapeutic need. We have completed the nonclinical package for PF614. We've completed 5 clinical trials for safety, efficacy and abuse potential, and we've completed key manufacturing activities that position us to initiate our Phase III program. Our accomplishments in 2023 include completion of PF614-104, a study that evaluated the oral abuse potential of PF614. We reported positive results in April of last year. Importantly, the secondary end point take drug again, was significantly lower at both the low and mid doses of PF614 and was even numerically lower than comparator at the high dose, demonstrating that recreational drug users may be less motivated to abuse PF614 compared to immediate-release oxycodone. A second study, PF614-201 was designed to measure the onset of pain relief for PF614 in the cold pressure test. Establishing the time for drug onset was suggested by the FDA prior to initiating larger efficacy studies. Initiated in mid-2023, enrollment was rapid and the study was completed by year's end to support our end of Phase II meeting with the FDA in January. We have used the data from this study to support the design of our Phase III protocols, which were discussed at this end of Phase II meeting. This meeting provided feedback and support for our nonclinical package and enables a constructive discussion regarding Phase III clinical trial design for PF614, as well as suggestions that we believe will support a successful new drug application, or NDA. This end of Phase II meeting signifies a major step in the regulatory approval process of PF614. As previously mentioned, the results and analysis from our completed Phase II studies have informed our strategy and design of Phase III studies, which are expected to begin in the second half of 2024. Last year, we also completed a 3-part Phase I study for our follow-on product, PF614-MPAR that ultimately provided us with the first data demonstrating the potential for preventing prescription drug or overdose, something felt to be a holy grail for opioids. Because of our positive data, the FDA encouraged us to apply for breakthrough therapy designation in late 2023.
On January 19, 2024, we were informed that the FDA had granted us breakthrough therapy designation, which to date has only been provided to less than 300 drugs. Importantly, opioid analgesics have not previously been included in this exclusive drug classification. Breakthrough therapy is a process designed to expedite the development and review of drugs that are intended to treat a serious condition and that show preliminary clinical evidence of having a clear advantage over available therapies. We are highly encouraged by our innovative MPAR technology, which is truly groundbreaking and could save many lives. Strategically, to broaden our portfolio in November 2023, we executed a letter of intent with Sweden based OncoZenge to explore a collaboration for the U.S. development of [indiscernible], which is in Phase III clinical trials in the European Union. [indiscernible] is a non-opioid lozenge to treat pain caused by oral mucositis, a condition resulting as a side effect of cancer therapies. We believe this collaboration could allow insights to diversify its pain line and discussions are continuing. Finally, I want to stress our programs are protected by a global intellectual property portfolio of over 100 patents issued in 25 countries, ensuring an opportunity to address the need for safer pain medication globally. We have built a strong, motivated and experienced team to assure our programs through each stage of development in an attempt to launch our next-generation products as quickly as possible. Now I'm pleased to turn over the call to Dr. Bill Schmidt, our Chief Medical Officer, to further elaborate on our recent clinical study results. Bill?
Thank you, Lynn. I'm pleased to provide an update on Ensysce's significant progress with our clinical program and further development of PF614 during 2023. We believe the results from our trials throughout the year have provided a formative structure as we advance the Phase III studies of PF614 in 2024. As Lynn mentioned, we are developing a next-generation opioid analgesic, which promises strong efficacy with less potential for abuse and overdose, something the industry and society really need.
Over the past year, we've been perfecting our clinical package to ensure it will support a successful NDA. In all, we have completed 5 clinical trials with PF614, a single ascending dose study, also known as a SAD study, a multiple ascending dose study, also known as a MAD study that was combined with the bioequivalence arm demonstrating that PF614 delivers oxycodone in a dose equivalent fashion similar to OxyContin to support our use of the 505(b)2 shortened regulatory pathway; 2 human abuse potential studies to support abuse-deterrent labeling; and most recently, an analgesic efficacy study that evaluated the time to onset of analgesia following oral dosing of PF614. The efficacy study, PF614-201 was designed after receiving feedback from the FDA on our plan to explore PF614 efficacy for the acute pain indication. PF614-201 was a Phase II study entitled a randomized, double-blind, placebo-controlled crossover study of PF614 on analgesic response in the cold pressor test in healthy male subjects. It evaluated the time to efficacy onset for analgesia and measured pain intensity following 2 different oral doses of PF614 versus placebo. The study was initiated and enrolled quickly to provide data for discussion with the FDA during our end of Phase II meeting early in 2024. The study measured the onset of pain relief versus time in male subjects who submerse their nondominant hand in a 2-degree centigrade freezing ice water bath. This is a well-established method to measure pain and efficacy of novel pain products and provides a method to establish the time that the pain relief begins to occur. Following completion of enrollment in November 2023, we reported results in December that reinforce the efficacy of PF614 demonstrating the time of analgesia onset and its ability to provide significant pain intensity reduction, the first ever measured for any TAAP opioid analgesic. The study pain endpoints matched all previous pharmacokinetic endpoints from prior clinical studies and supported the concept that Ensysce's TAAP opioids deliver strong analgesia safely and effectively. Importantly, this time of onset study provided data that aided the design of key elements of our Phase III studies that we are aiming to initiate in the second half of 2024. Early last year, we also completed enrollment of the final part of our first clinical trial to evaluate overdose protection, PF614-MPAR-101. This study was undertaken in partnership with Quotient Sciences. Using their integrated translational pharmaceutics platform for the clinical testing of PF614-MPAR allowed us to complete this highly complicated study in record time. The final data from Part III of this trial confirmed that consumption of increasing amounts of PF614-MPAR at the 25-milligram dose level resulted in protection from oral overdose if 3 or more capsules were taken simultaneously. This part of the trial was designed to deliver increasing amounts of PF614-MPAR at the 25-milligram dosage. Specifically, we administered 1, 2, 3, 5 or 8 dose units at one time and measured resulting plasma levels of oxycodone. All of the subjects were naltrexone blocked for safety and the resulting oxycodone released into their plasma was measured and compared to previous data generated with the delivery of increasing doses of PF614 without MPAR protection. The data showed that delivery of 1 or 2 dose units of PF614-MPAR provided analgesic level doses of oxycodone as designed. Once the dose units were increased to 3 or more, the amount of oxycodone released was reduced as compared to levels of unprotected PF614. At 8 dose units, there was significantly less plasma oxycodone. This is significant at P is less than 0.0033 and if the same dose of PF614 was delivered unprotected. These data were presented to the FDA and was the basis for the grant of our breakthrough therapy designation, something highly unique for an opioid product and something we are exceptionally proud of. PF614-MPAR is the first ever opioid analgesic with oral overdose protection. Finally, results from our intranasal human abuse potential study provided the first human data to show that the intact prodrug PF614, when absorbed into the blood stream does not convert to oxycodone. This confirms a key design feature of PF614 in that it requires exposure to the digestive enzyme Trypsin to convert to oxycodone. As Dr. Kirkpatrick mentioned, this can only occur in the human gastrointestinal tract. This information is important as it supports our contention that attempts to abuse PF614 by direct intravenous injection will be unsuccessful for supporting the habits of IV drug abusers. I will now turn the call back over to Lynn.
Thank you, Bill. In February, with breakthrough therapy designation granted for PF614-MPAR, we held the constructive meeting with the FDA. The meeting focused on the nonclinical data from our combination product that is designed for the treatment of severe pain integrated with multiple layers of safety. The FDA provided helpful feedback and advice on additional nonclinical studies that will be required for an inventional NDA submission and approval. The guidance will aid in streamlining the development plans for this innovative drug candidate. Looking ahead, the next stages for our PF614 and our PF614-MPAR clinical programs include more ambitious goals designed to enter the market as soon as possible and are outlined as follows: Firstly, following FDA final review of our Phase III protocols and statistical analysis plans, we intend to initiate the first of the Phase III acute postsurgical pain studies PF614-301 abdominoplasty, or PF614-302 bunionectomy in the second half of 2024. Secondly, we aim to initiate our second study of PF614-MPAR in the second half of 2024 as well. PF614-MPAR-102 will be a Phase Ib study intended to confirm that the higher 50- and 100-milligram dose units of PF614-MPAR also provide overdose protection. Thirdly, we are continuing to move our chemistry manufacturing and controls activity towards commercial scale with additional drug substance and drug product development activities that have already been initiated in the first quarter of 2024. Fourthly, given the expedited designations of both PF614 and PF614-MPAR, we are continuing our regulatory package development and plan additional meetings with the FDA for both products in the second half of 2024. I now welcome our CFO, Dave Humphrey, for a short financial summary. Dave?
Thanks, Lynn. Into 2023, with cash and cash equivalents of $1.1 million as of December 31st compared to $1.5 million as of September 30. We have boosted our cash balance in early 2024, with cash proceeds of $2.1 million from the exercise of warrants to purchase 1.3 million shares of common stock that were issued in the fourth quarter of 2023. Additionally, in February, we received gross proceeds of $4.7 million from the exercise of warrants to purchase 3.6 million shares of common stock that were originally issued in May 2023. Funding under federal brands was $0.5 million for the fourth quarter of '23 compared to $1.4 million in the comparable '22 quarter. For the full year of 2023, pending federal grants was $2.2 million compared to $2.5 million for the full year of 2022. These decreases were a result of the timing of research activities eligible for funding, particularly for the MPAR program. We are continuing to explore a modulated government funding to support this program through the NIH HEAL initiative, which stands for helping to end addiction long term. Our research and development expenses declined in 2023, totaling $2.2 million for the fourth quarter compared to $6.4 million for the same period in 2022. For the full year of 2023, R&D expenses were $7.6 million compared to $19.8 million for the full year 2022. The decreases were primarily the result of reduced external costs related to the clinical programs for PF614 and PF614-MPAR, particularly regarding bioequivalence and [indiscernible] potential studies for PF614 conducted in 2022.
General and administrative expenses were $1.4 million in the fourth quarter of 2023, a slight increase compared to $1.2 million for the same period of 2022. For the full year 2023, G&A expenses decreased 22% to $5.4 million compared to $6.9 million for the full year 2022. The slight increase in the quarter-over-quarter period was due to higher noncash stock-based compensation while the full year decrease was a result of reduced consulting, legal, liability insurance and employee bonus expenses. Total other income or expense net was an expense of approximately $0.3 million for the fourth quarter of '23 compared to income of $0.7 million from the same period in '22. For the full year, total other income net was $92,000 in 2023 compared to $14,000 in 2022. These changes in other income expense are primarily due to noncash fair value adjustments for convertible notes and warrants. Net loss attributable to common stockholders for the fourth quarter of 2023 was $3.5 million compared to $5.5 million for the fourth quarter of '22. For the full year of 2023, our net loss was $10.6 million compared to $25.1 million for the full year of 2022. As a clinical stage to accompany our continued research and development efforts toward regulatory approvals, our product candidates are expected to result in losses for the foreseeable future. Operator, we will now take questions.
[Operator Instructions] And our first question comes from the line of Ram Selvaraju with H.C. Wainwright.
What is the current pro forma cash position?
Dave, would you like to take that?
Sure. Our cash was about $1.1 million at the end of the year, and then we had some warrant exercises and -- in the first quarter. So our current funding allows us to fund operations into the third quarter of this year.
And do you currently have sufficient resources with which to start the Phase III trial of PF614?
Right now, we're working on preparation for Phase III trials and some additional work on our manufacturing of drug products, but we'd be looking to raise additional funding before we initiate the actual Phase III study.
Our next question comes from the line of Hunter Diamond with Diamond Equity.
It was a fairly comprehensive call, so not many questions from me, but just a follow-up to the cash question. Considering the advancements of PF614, the exercise of the warrants and the issuance, maybe just if you could provide kind of an update on the burn rate and what you think milestones you can reach with the current capital.
Sure. In terms of burn rate, we're at a phase right now where we're spending a little bit less, I think, in the first half of this year, we'll probably continue R&D spending at about the rate we were in 2023, so maybe $1.5 million to $2 million a quarter. I would expect that to begin to ramp up in the second half of the year once we initiate the Phase III clinical trials depending on funding. And as that ramps up, might reach levels more closely aligned with what we were doing in 2022 with higher clinical activity in that year. So potentially $5 million or more a quarter when fully ramped up for Phase III.
And our next question comes from the line of Brad Sorensen with Zacks Small-Cap Research.
Great update, and yes, I'm very excited always to hear about it. Obviously, a huge need for the country and read more about that this morning. You mentioned some partnership opportunities -- partnership opportunity in Europe, I believe. And I was just wondering if you had pursued any other siting anything else in the pipeline with other partnership opportunities or additional government funding because this is a huge national problem, just those kind of issues, either a partner or government funding if there's any developments in that area?
Thanks, Brad. And certainly, we appreciate the fact that you recognize the need that we're trying to fill. As we mentioned, we have explored a partnership really to expand our pipeline, and that is the partnership we spoke about with OncoZenge. We are continuing to examine opportunities for all of our programs. Certainly, the opioid products, which are more fully developed, we have had discussions with some groups. And we do have intellectual property in other areas and the use of our top end platforms can be applied to other indications.
So we've explored and have initiated discussions with that. It's a fairly long process, but we are in discussions for that. And we are exploring other opportunities with the NIH, the HEAL program, as Dave mentioned, as there is funding opportunities there for various programs, and we will continue to tap into that as necessary.
And we have reached the end of the question-and-answer session. And therefore, I would like to turn the call back over to Dr. Kirkpatrick for her closing remarks.
Thank you, operator. As we think about pain, we know there are many different products on the market that deal with different types of pain. Many patients don't need an opioid to relieve their discomfort. Additionally, we know there is a significant push to try to replace opioids with products that do not have their deleterious effect. Yet to date, this has not been a reality. There has been significant press recently about a new pain product, a NAV 1.8 inhibitor that reportedly does not have the same potential for addiction as an opioid. However, we believe the data recently presented indicated that this new product was inferior to the opioid control arm for reducing pain in its recent Phase III clinical study. This new pain product may have great potential for some types of pain, but the study shows that severe postsurgical pain may still be better off treated with an opioid. Opioids have been used for thousands of years and still play a major role in health care. Ensysce believes its TAAP and MPAR opioid products will provide prescribers and patients with the next generation of safer opioids, and the only opioid to date with oral overdose protection. We are working to bring these products to the market in a timely manner. I would like to thank each of you for joining our corporate update conference call today. We are encouraged by the positive developments that have transpired in early 2024 for both our unique products. I look forward to continuing to provide progress updates as we initiate our Phase III studies in the year ahead. Thank you.
Thank you. And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.