Q4 2023 Ensysce Biosciences Inc Earnings Call

Participants

Lynn Kirkpatrick; Chief Executive Officer; Ensysce Biosciences Inc

Bill Schmidt; Chief Medical Officer; Ensysce Biosciences Inc

David Humphrey; Chief Financial Officer, Treasurer, Secretary; Ensysce Biosciences Inc

Ram Selvaraju; Analyst; H.C. Wainwright & Company Inc

Hunter Diamond; Analyst; Diamond Equity Research

Brad Sorensen; Analyst; Zacks Small-Cap Research

Presentation

Operator

Good morning, And welcome to the Ensysce Biosciences, Inc corporate update call. As a reminder, this conference call is being recorded. Your hosts today are Dr. Lynn Kirkpatrick, Chief Executive Officer; Dr. Bill Schmidt, Chief Medical Officer; and Dave Humphrey, Chief Financial Officer.
And 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?

Lynn Kirkpatrick

Thank you, operator, and good morning, everyone, and 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 toward commercialization.
Before I get into the full background of the Company, I remind you that Encysive mission to provide safer therapeutics to treat severe pain to reduce abuse and to provide protection from overdose remains the core of our operations. Medicoe dichotomy exist between the treatment of severe pain with appropriate medication and the abuse and overdose that occurs with this class of drugs. Statistics suggest that the United States loses over 200 Americans every day to prescription of opioid overdose. Yet there are countless Americans with severe pain who cannot get access to the prescription medication. My insights team believes this is unacceptable, and we believe our novel TAP and impart opioid products provide a solution to address this dueling issue with opioids. For those of you new to our story, we are clinical-stage pharmaceutical companies seeking to develop innovative solutions. First the beer pain relief while reducing the potential for opioid misuse, abuse and overdose. We've used sophisticated chemistry in the development of our two technology platforms, TAPs and impart, providing opioid abuse deterrence and overdose protection, respectively. We've strategically positioned our products as next-generation opioids. It improves 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 PF. six one four and PF. six one for NPR clinical trials, boosted capital resources and scale manufacturing procedures, which provided a solid operational foundation and resulted in favorable FDA discussions in early 2024. Following these valuable meeting, Insights is well positioned to enter the pivotal Phase three trials for PF 6.4 in the second half of 2024. I will take you through a review of our two technology platforms, and then Dr. Bill Schmidt, our Chief Medical Officer will expand on our clinical trial progress over the last year. Tap stands for triptan 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. Tryptophan person only found in the small intestine and initiate the two-step process to effectively release the active opioid. In other words, our top prodrugs are activated or turned on a normal digestive enzymes that we use to digest our proteins in the small intestine. It's important to point out, the triptan is not found in other tissues through our chemistry limits our top opioids to oral administration, which in turns is a means to reduce abuse. The second step of the opioid release, which is designed into the chemistry determines whether our cap pro drugs provide either an immediate, our slow release profile as is preferred for drugs that are required 24 seven to treat pain. Based on this two-step release mechanism, we refer to tap as clever chemistry and from our clinical studies, we've shown it to work as designed to improve safety and overall drug efficacy. Additionally, TAP 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, empower our multi pill abuse resistant is their smart overdose protection technology and industry. First, we've designed and par as a combination product of our TAP prodrugs with a small dose of triptan inhibitor called defense debt. This combination alone pain relief, coupled with overdose protection Empire, is designed to turn off the release of the active ingredient if more than the prescribed dose is consumed orally. This protection is smart since it only kicks in in an overdose situation. We have applied these highly novel technologies to sever opioids and specifically to oxycodone for our lead product, PF 6.4, we believe our entire TAP drug class is set to become the next generation of opioids to treat severe pain in a safer manner than ever existed for opioid analgesics. 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, PF 6.4 may maybe an indication such as traumatic injuries or invasive surgeries. Additionally, we for CPS. 600 for future role in chronic pain because it additions such as treating osteo arthritis, pain in patients who cannot use or do not respond well to less effective anti-inflammatory analgesics and were high levels of pain negatively impact quality of life Series $0.06 or NPR with overdose protection is a follow-on product and we believe it will provide an extra layer of safety for treating both acute and chronic pain. In brief, our top and impart technologies have been developed to address and reduce both prescriptions, drug abuse and overdose. These are unique to the opioid class and provide a number of advantages over the currently marketed abuse deterrent formulated product advantages, which we believe will provide both patients and prescribers more confidence in the medicines safety. Although we've had focused on applying TAP and imparts 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 TAP and NPR opioid tap and impart ADHD products and a discovery program of novel cap and in-park agents for the treatment of opioid use disorder. There is a brief summary of our programs before turning it over to Dr. Schmidt to provide more clinical details. PS. 600 for an oxygen code on TAP product is designed to replace OxyContin in the marketplace. The FDA has granted PF 600 for fast track status for the use in chronic pain, which suggests regulatory confidence that PF 600 for May fulfill an unmet therapeutic need. We have completed the nonclinical package for PO six and four. We've completed five clinical trials for safety, efficacy and abuse potential, and we've completed key manufacturing activities that position us two to initiate our Phase three program. Our accomplishments in 2023 include completion of PF 6.4104, a study that evaluated the oral abuse potential of PS. six and four, we reported positive results in April of last year. Importantly, the secondary endpoint take drug again was significantly lower at both low and mid doses of PS. six and four and was even numerically lower than comparator at the high dose, demonstrating that recreational drug users may be less motivated to abuse PF six one four compared to immediate release oxycodone, a second study, PF. six one four to a one was designed to measure the onset of pain relief for PF 6.4 in the cold presser 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 two meeting with the FDA in January, we have used the data from this study to support the design of our Phase three protocols, which were discussed at this end of Phase two meeting. This meeting provided feedback and support for our nonclinical package and enables a constructive discussion regarding Phase three clinical trial design for PF. six and four, as well as suggestions that we believe will support a successful new drug application or NDA. This end of Phase two meeting signifies a major step in the regulatory approval process of PF. six one four. As previously mentioned, the results and analyses from our completed Phase two studies have informed our strategy and design of Phase three studies, which are expected to begin in the second half of 2024 last year. We also completed a three-part Phase one study for our follow-on product PS. six for NPR that ultimately provided us with the first data, demonstrating the potential for preventing prescription drug oral 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 19th, 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 impart 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 Weeden based on present to explore a collaboration for the US development of view present, which is in Phase three clinical trials in the European Union you present is a non opioid lozenge to treat pain caused by oral mucositis. I can addition, resulting as a side effect of cancer therapies. We believe this collaboration could allow insights to diversify its pain like pipeline and discussions are continuing.
Finally, I want to stress our programs are protected by our global intellectual property portfolio have 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 Smith, our Chief Medical Officer to further elaborate on our recent clinical study results. Phil?

Bill Schmidt

Thank you, Len.
I'm pleased to provide an update on Encysive significant progress with our clinical program and further development of PF. six one four during 2023. We believe the results from our trials throughout the year have provided a formative structure as we advance to Phase three studies appear at six one four in 2024. As Lynne mentioned, we are developing a next-generation opioid analgesic, which provided 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 five clinical trials with PF six one for a single ascending dose study, also known as the SAD study, a multiple ascending dose study, also known as the MAD study that was combined with a bio equivalents arm, demonstrating that PF. six one four delivers oxycodone in a dose equivalent fashion, similar to actually cotton to support our use of the five or five b. to shorten regulatory pathway, two 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 PF six one four. The efficacy study at six one four dash two oh one was designed after receiving feedback from the FDA on our plan to explore F. six month for efficacy for the acute pain indication. Pf six one for dash two oh one was a Phase two study entitled A randomized, double-blind, placebo-controlled crossover study of PF. six one four on analgesic response in the cold presser test in healthy male subjects. It evaluated the time to efficacy onset for analgesia and measured pain intensity following two different oral doses of PF. six, one four versus placebo. The study was initiated and enrolled quickly to provide data for discussion with the FDA during our end-of-Phase two meeting early in 2024 study measured the onset of pain relief versus time in male subjects who submerged their non dominant hand in a two 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 PSX. one for demonstrating the time of analgesia onset and its ability to provide significant pain intensity reduction. The first ever measured for any type of opioid analgesics study. Pain endpoints matched all previous pharmacokinetic endpoints from prior clinical studies and supported the concept that Encysive TAP 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 three 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, PF. six one for Dash and power dash one oh one study was undertaken in partnership with quotient sciences using their integrated translational pharmaceutics platform for the clinical testing of PF 600 for DASH and Par allowed us to complete this highly complicated study in record time. Final data from Part three of this trial confirm that consumption of increasing amounts of PF. 600 for dash Empire at the 25 milligram dose level resulted in protection from overdose if three or more capsules were taken simultaneously. This part of the trial was designed to deliver increasing amounts of PF. six one for dash Empire at the 25 milligram dosage. Specifically, we administered one two, three five or eight dose units at one time and measured resulting plasma levels of oxycodone. All of the subjects were now trucks en bloc for safety and the resulting Oxy codon released into their plasma was measured and compared to previous data generated with the delivery of increasing doses of PIP six one four without in-park protection data showed that delivery of one or two dose units of PF. six one four dash NPR provided analgesic level doses of oxycodone as designed once the dose units were increased to three or more, the amount of oxycodone release was reduced as compared to levels of unprotected PF. six one four at eight dose units that was significantly less plasma oxycodone. This is significant at P is less than 0.0033. And at the same dose of PF. six one four 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. Pf 600 for Empire is the first ever opioid analgesic with oral overdose protection. Finally, results from our intranasal human abuse potential study provided the fused first human data. It shows the intact prodrug PF. six one four when absorbed into the bloodstream does not convert to oxycodone. This confirms a key design feature of PF six one four. In that it requires exposure to the digestive enzyme trips and 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 PF. six one four 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.

Lynn Kirkpatrick

Thank you, Bill. In February with breakthrough therapy designation granted for PS. 600 for NPR, we held a 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 firm provided helpful feedback and advice on additional nonclinical studies that will be required for an eventual NDA submission and approval guidance will aid in streamlining the development plans for this innovative drug candidate.
Looking ahead, the next stages for our key U.S. six one four and our PF. 600 for in-park 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 three protocols and statistical analysis plans, we intend to initiate the first of the Phase three acute post-surgical pain studies, we have six one four Dash three oh one abdominoplasty or PF. 6,004 dash through two bunionectomy in the second half of 2024.
Secondly, we aim to initiate our second study of PF. six and for NPR in the second half of 2024 as well as 6.4 m. or one or two will be a Phase Ib study intended to confirm that the higher 50 and 100 milligram dose units up to 6.4 m. are 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 2020.
For fourthly, given the expedited designations of both PF. 6.4 and PF. six one for Empire, we are continuing our regulatory package development and plan additional meetings with the FDA for both products in the second half of 2024.

David Humphrey

I now welcome our CFO, Dave Humphrey, for a short financial summary Dave potentially into 2023 with cash and cash equivalents of $1.1 million as of December 31st compared to 1.5 million as of September 30th, 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 grants 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, funding of 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 Empower program we're continuing to explore and non-dilutive government funding to support this program through the NIHCL. 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 and 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 PSX. one for MPS six, one for Empire, particularly regarding bioequivalents. And due to these potential studies for PS. 600 for 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 P. and A. expenses decreased 22% to 5.4 million compared to $6.9 million for the full year 2020. A 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 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 non-cash better value adjustments for convertible notes and warrant 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 biotech company. Our continued research and development efforts toward regulatory approvals for our product candidates are expected to result in losses for the foreseeable future. Operator, we will now take questions.

Question and Answer Session

Operator

(Operator Instructions) Ram Selvaraju, H.C. Wainwright.

Ram Selvaraju

Please proceed with your question.
Hello. What is the current pro forma cash?

Lynn Kirkpatrick

Dave, would you like to take that?

David Humphrey

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.

Ram Selvaraju

Do you currently have sufficient resources with which to start the Phase three trial of PF. six one four.

David Humphrey

And right now we're working on preparatory preparation for Phase three 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 three study.

Ram Selvaraju

Great.
Thank you.
First answering my questions.

Operator

Hunter Diamond, Diamond Equity.

Hunter Diamond

Thank you. It was a fairly comprehensive call, so not many questions from me, but just a follow-up to the cash question on considering the advancements of PS. 600 for the exercise of the warrants and the issuances, maybe just to be approved, provide kind of an update on the burn rate and what you think milestones you can reach with the current capital?

David Humphrey

Sure. In terms of burn rate, we're in 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 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 three clinical trials and depending on funding and as that ramps up, might reach levels more closely aligned with what we're doing in 2022 with some of our higher clinical activity in that year. So potentially 5 million or more a quarter and when fully ramped up for Phase three.

Hunter Diamond

Great. Thank you.
And that makes perfect sense and congratulations on all the progress.

David Humphrey

Okay.

Operator

Brad Sorensen, Zacks Small-Cap Research

Brad Sorensen

Yes, thank you.
Hi, Alan and the team a great update and we are very excited to hear about it and obviously a huge need for the country and read more about that this morning. And you mentioned some partnership opportunities in your partnership opportunity in Europe, I believe. And I was just wondering if you had pursued in the other side on the health of the pipeline with other partnership opportunities or additional government funding because this is a huge national problem, just those kinds of issues, either partner or government funding if there's any developments in that area.
Thank you.

Lynn Kirkpatrick

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 too expand our pipeline, and that is the partnership we spoke about with our strong presence. We are continuing to see that examine opportunities for all of our pLADD 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 TAP and impart platforms can be applied to other indications. So we've explored and have initiated discussions with that. It still have fairly long process, but we are in discussions for that and we are exploring other opportunities with the NIH. the Heald program, as Dave mentioned, as there is funding opportunities there for various programs and we will continue to tap into that as necessary.

Brad Sorensen

Great. Thanks.

Operator

Thank you. 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. Corey Passeri for her closing remarks.

Lynn Kirkpatrick

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 tried to replace opioids with products that do not have their deleterious effect yet today this has not been a reality. There has been significant press recently about a new pain product, a NaV 1.8 inhibitor that purportedly it 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 three clinical study. This new pain product may have great potential for some types of pain. But the study showed 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. And I believe that tap and in-park opioid products will provide prescribers and patients with the next generation of safer opioid 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. We look forward to continuing to provide progress updates as we initiate our Phase three studies in the year ahead. Thank you.

Operator

Thank you. This concludes today's conference, and you may disconnect your lines. Thank you for your participation.