Ensysce Biosciences, Inc. current report, 07 July 2021

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Ensysce Biosciences, Inc. Form 8-K Summary

Business Context and Reporting Period

This Current Report on Form 8-K, dated July 7, 2021, reports the completion of a business combination between Leisure Acquisition Corp. ("LACQ") and Former Ensysce Biosciences, Inc. The merger closed on June 30, 2021. Following the transaction, LACQ changed its name to Ensysce Biosciences, Inc. ("Ensysce" or the "Company") and ceased to be a shell company. The Company is a clinical-stage biopharmaceutical company focused on developing treatments for opioid use disorder and other conditions.

Key Financial Metrics and Capital Structure

The filing does not provide specific revenue, profit, or operating cash flow figures for the combined entity within this document, as the Company was a shell company prior to the merger and the operating company's historical financials are incorporated by reference from the Proxy Statement/Prospectus. Key capital structure and liquidity details provided include:

  • Shares Outstanding: 24,275,541 shares of Common Stock issued and outstanding immediately following the closing.
  • Consideration: Former Ensysce securityholders received 17,431,273 shares of Common Stock as closing consideration.
  • Trust Account: Approximately $12,639,222 remained in the trust account immediately prior to closing after $51,832 was paid to redeeming shareholders. A portion of this balance was used to fund transaction expenses.
  • Debt: The filing lists several unsecured 10% Convertible Promissory Notes issued to various parties (including Bob Gower, Paul Vezolles, and others) with aggregate amounts disclosed in the exhibits (e.g., $2.5 million to Bob Gower).
  • Trading Symbols: Common Stock trades on Nasdaq under "ENSC"; Warrants trade on OTC Markets under "ENSCW".

Material Changes Versus Prior Period

The most significant change is the transition from a Special Purpose Acquisition Company (SPAC) with no operations to an operating biopharmaceutical holding company. Specific changes include:

  • Corporate Status: The Company is no longer a shell company.
  • Ownership Structure: Former Ensysce stockholders hold approximately 71.8% of the outstanding voting power, while former LACQ stockholders hold approximately 25.6%.
  • Management and Board: Former LACQ directors (A. Lorne Weil, Daniel B. Silvers, etc.) resigned. New directors and executive officers were appointed, including Dr. Lynn Kirkpatrick as President and CEO, and David Humphrey as CFO.
  • Accounting Firm: The Company replaced Marcum LLP with Mayer Hoffman McCann P.C. as its independent registered public accounting firm.

Guidance, Outlook, Risks, and Unusual Items

Outlook and Strategy: The Company intends to add full-time employees and clinical support staff in 2021 and expand its commercial sales force beginning in 2023. The primary focus is the development of product candidates PF614 and PF614MPAR.

Risks and Contingencies: The filing highlights significant risks, including the need for substantial additional funding to complete development and commercialization, reliance on third-party contract research organizations (CROs), and the risk that clinical trials may fail to replicate preclinical results or receive regulatory approval. There is also a risk regarding the Company's ability to maintain effective internal controls over financial reporting.

Unusual Items:

  • Lock-Up Agreements: Certain stockholders are restricted from transferring shares for one year, unless the stock price exceeds $12.00 per share for 20 trading days within a 30-day period commencing at least 150 days after closing.
  • Indemnification: New indemnification agreements were entered into with all directors and executive officers.

Investor Verification Checklist

  • Verify the exact amount of cash remaining in the trust account after transaction expenses were deducted, as this impacts immediate liquidity.
  • Review the Proxy Statement/Prospectus for the audited historical financial statements of Former Ensysce to assess burn rate and historical losses.
  • Confirm the terms and maturity dates of the convertible promissory notes listed in the exhibits to understand potential dilution and debt obligations.
  • Monitor the status of the Nasdaq listing review to ensure continued compliance with listing criteria.
  • Assess the timeline and funding requirements for the clinical trials of PF614 and PF614MPAR as detailed in the incorporated financial information.