On October 24, 2023 Ensysce Biosciences, Inc. ("Ensysce" or the "Company") (NASDAQ:ENSC)(OTC PINK:ENSCW), a clinical-stage company applying transformative chemistry to improve prescription drug safety, reported that it has entered into a securities purchase agreement (the "SPA") with investors ("Investors") in the form of senior secured convertible notes (the "Notes") and warrants exercisable for Ensysce common stock (the "Warrants") in a private placement for an aggregate investment of $1.7 million (Press release, Ensysce Biosciences, OCT 24, 2023, View Source [SID1234636298]). The initial closing is expected to occur on or before October 26th and will raise $566,667, prior to fees and offering expenses.
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Dr. Lynn Kirkpatrick, CEO of Ensysce commented, "The financing is an excellent step allowing us to advance the clinical development of our highly unique TAAP and MPAR technologies. The funding will support the completion of a time of onset study and regulatory milestones for PF614, our lead product. We are very pleased that we were able to secure this additional funding to continue our progress and support our mission to deliver superior pain relief options while also providing abuse and overdose protection for opioid products."
The Notes, with total gross proceeds expected to be $1.7 million before fees and expenses, are convertible into shares of Ensysce common stock ("Common Stock") at a conversion price of $1.5675, the base price set at the time of execution of the SPA. The Notes have a maturity date of 6 months from the applicable closing date, will be issued with an original discount of 8% and will bear interest from date of issuance at 6% per annum. Monthly principal payments and interest in cash, or at the election of the purchaser in whole or in part which may occur at any time, in common stock will begin approximately 90 days after each respective closing. The Warrants to be issued at the initial closing will have the right to purchase up to 1,255,697 shares of common stock at an exercise price of $1.5675, the same as the conversion price, and are exercisable for five years following the date of issuance. An initial $566,667 of funding will be secured upon the initial closing upon satisfaction of certain conditions with a second closing of $1,133,333 under similar terms expected to occur upon satisfaction of certain conditions.
The conversion price for the Notes of $1.5675 and the exercise price for the Warrants of $1.5675 meet a minimum price requirement established by The Nasdaq Stock Market in connection with a potential issuance of 20% or more of the common stock of a public company or 20% or more of the voting power outstanding before the potential issuance. If the Company is not able to pay the principal and interest on the Notes when due and the Company needs to issue more shares of Common Stock or on terms different than those provided by the transaction documents, the Company might, in certain circumstances, be required to obtain stockholder approval before doing so.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful. This news release is being issued pursuant to and in accordance with Rule 135c under the Securities Act of 1933, as amended.