On May 15, 2023 Enveric Biosciences, Inc. (NASDAQ: ENVB) ("Enveric" or the "Company"), a biotechnology company dedicated to the development of novel small-molecule therapeutics for the treatment of anxiety, depression, and addiction disorders, reported a corporate update and reported financial results for the first quarter of 2023 ended March 31, 2023 (Press release, Enveric Biosciences, MAY 15, 2023, View Source [SID1234631717]).
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Enveric announced a cost reduction plan to extend its financial runway into the first quarter of 2024. The operational streamlining entailed an approximately 35 percent reduction in full-time personnel, the cancelation of 7 consulting contracts focused on the cannabinoid programs and a transition from third-party service providers supporting R&D efforts to internal science teams performing this work. Separately, Enveric announced that the proposed spin-off of cannabinoid clinical development pipeline assets to Akos Biosciences, Inc. ("Akos") is not proceeding due to the holders of the Akos Series A Preferred Stock electing to exercise their right to require Enveric to redeem all of the Akos Series A Preferred Stock due to an inability to meet listing requirements on a national exchange. Enveric now plans to engage with strategic advisors to identify and pursue alternative routes to capture value from these assets.
"Underpinning Enveric’s business and development strategy is a continued focus on maximizing the value of our novel drug development programs to produce positive returns for our shareholders. In this pursuit, the Company has been diligently working to develop a robust and differentiated pipeline of small-molecule therapeutics for the treatment of mental health disorders," said Joseph Tucker, Ph.D., Director and CEO of Enveric Biosciences. "Today’s announcement, including the cost reduction plan and reduction in force, reflects the necessary evolution of this strategy, enabling a greater focus of resources towards Enveric’s most valuable assets, EB-373 and our EVM301 Series."
FIRST QUARTER AND RECENT UPDATES
During the quarter, the company has made progress in delivering on the top near-term priorities:
Priority #1 – Progressing Small Molecule Therapeutics Pipeline Targeting Unmet Needs in Mental Health
Advanced product manufacturing and preclinical activities that support initiation of Phase 1 clinical trial for lead asset, EB-373, for the treatment of anxiety disorder
Continued in vitro and in vivo testing of novel chemical entities developed from the EVM301 Series with the goal of identifying lead molecules by year-end 2023
EVM301 Series of novel molecules are specifically designed to promote neuroplasticity and show efficacy in animal models of depression and anxiety without inducing the hallmark hallucinations of other psychedelic or psychedelic-inspired agents
Established Enveric Therapeutics, an Australia-based subsidiary to manage clinical operations for EB-373 and additional clinical-stage candidates from the EVM201 and EVM301 Series of compounds
Priority #2 – Maximizing Operational Efficiency
Announced cost reduction plan designed to extend financial runway into the first quarter of 2024
Operational streamlining includes an approximately 35% reduction in full-time workforce personnel, the cancelation of 7 contracts for consultants focused on the cannabinoid programs, and a transition from third-party service providers supporting R&D efforts to internal science teams performing this work
Update on Proposed Spin-off of Cannabinoid Clinical Pipeline Assets
On May 11, 2022, the Company announced plans to transfer and spin-off its cannabinoid clinical development pipeline assets (the "Spin-Off") to Akos Biosciences, Inc. (formerly known as Acanna Therapeutics, Inc.), a majority-owned subsidiary of the Company. In connection with the Spin-Off, the Company transferred its cannabinoid clinical development pipeline assets to Akos, while retaining its psychedelics and non-hallucinogenic clinical development pipeline assets. The Spin-Off was subject to various conditions, including Akos meeting the qualifications for listing on the Nasdaq Stock Market, and if successful, would result in two standalone public companies. The new company resulting from the Spin-Off was to be referred to as Akos. As of May 5, 2023, since the Spin-Off had not occurred, the holders of the Akos Series A Preferred Stock had the right, but not the obligation, to cause Enveric to redeem all or a portion of the Akos Series A Preferred Stock. As of May 12, 2023, the holders of the Akos Series A Preferred Stock have exercised this right to require Enveric to redeem all of the Akos Series A Preferred Stock for $1,000 per share, plus accrued but unpaid dividends per share of approximately $50,000 for a total of approximately $1,050,000.
Enveric now plans to seek strategic advisors and alternative routes to capture value from these assets.
FIRST QUARTER 2023 FINANCIAL RESULTS
Net loss attributable to shareholders was $4.80 million for the quarter ended March 31, 2023, including $0.56 million in net non-cash expenses, with a basic and diluted loss per share of $2.31, as compared to a net loss of $4.44 with basic and diluted loss per share of $5.34 per share for the quarter ended March 31, 2022.
Net cash used in operations for the quarter ended March 31, 2023, was $5.14 million consisting of a $4.68 million net loss, adjusted by a net of $0.46 million in non-cash expenses and changes in asset and liability balances of $0.92 million.
As of March 31, 2023, the Company had cash and cash equivalents of $12.56 million and working capital of $10.40 million.