10-Q: Ensysce Biosciences Reports Q3 Losses, Raises Capital Amid Going Concern Doubts

Ensysce Biosciences, a clinical-stage biotech, reported significant operating losses in Q3 2025 and for the nine months ended September 30, 2025, raising substantial doubt about its ability to continue as a going concern, despite recent capital raises.

Summary

• Net loss for the three months ended September 30, 2025, was $(3.73) million, a significant decline from net income of $0.66 million for the same period in 2024.
• Net loss for the nine months ended September 30, 2025, was $(7.41) million, compared to $(4.42) million for the same period in 2024.
• Federal grants revenue decreased to $0.49 million in Q3 2025 from $3.42 million in Q3 2024, and to $3.18 million for the nine months ended September 30, 2025, from $3.91 million in 2024.
• Research and development expenses increased to $2.95 million in Q3 2025 from $1.69 million in Q3 2024, and to $6.76 million for the nine months ended September 30, 2025, from $3.42 million in 2024.
• General and administrative expenses increased to $1.28 million in Q3 2025 from $1.08 million in Q3 2024, and to $3.88 million for the nine months ended September 30, 2025, from $3.64 million in 2024.
• Cash and cash equivalents stood at $1.67 million as of September 30, 2025, down from $3.50 million at December 31, 2024.
• The company completed a convertible preferred stock offering in November 2025, raising $4 million in gross proceeds with potential for an additional $16 million through future tranches.
• Management believes current cash on hand, including the November 2025 raise, is sufficient to fund operations into the late first quarter of 2026.
• The company has not generated any product revenue since inception and expects to continue incurring net losses for the foreseeable future.

Sentiment

Score: 3

Explanation: The company faces severe financial challenges, including significant and increasing net losses, a rapidly declining cash balance, and an explicit 'going concern' warning. While recent capital raises provide a short-term lifeline, they are highly dilutive and do not resolve the fundamental issue of sustained profitability. The dependence on continuous financing for operational viability and clinical trial progression indicates a high-risk investment profile.

Positives

• Secured a new multi-year MPAR Grant from NIH through NIDA in August 2024, providing total funding of $15.1 million through May 2027, with $8.9 million remaining as of September 30, 2025.
• Lead product candidate PF614 is in Phase 3 clinical development, and PF614-MPAR is in Phase 1b clinical development.
• Successfully completed a convertible preferred stock offering in November 2025, raising $4 million in gross proceeds with potential for an additional $16 million through future tranches.
• Increased research and development activities, indicating progress in clinical and pre-clinical programs for PF614 and PF614-MPAR.

Negatives

• Reported a net loss of $(3.73) million for the three months ended September 30, 2025, a significant decline from net income of $0.66 million in the prior year period.
• Accumulated deficit reached $(136.95) million as of September 30, 2025, up from $(129.54) million at December 31, 2024.
• Cash and cash equivalents decreased by over 50% from $3.50 million at December 31, 2024, to $1.67 million at September 30, 2025.
• Federal grants revenue decreased by $2.93 million (85.8%) for the three months ended September 30, 2025, compared to the same period in 2024.
• Net cash used in operating activities was $(6.28) million for the nine months ended September 30, 2025.
• The company has not generated any product revenue since inception and expects to continue incurring net losses for the foreseeable future.
• Substantial doubt exists about the company's ability to continue as a going concern beyond the late first quarter of 2026 without additional financing.
• Significant dilution from multiple equity and warrant offerings, including the 2025 April Warrant Inducement, 2025 Registered Direct Offering, 2024 Registered Direct Offering, and 2024 February Warrant Inducement.

Risks

• **Going Concern**: Substantial doubt about the ability to continue as a going concern for the next twelve months due to significant operating losses and reliance on future financing.
• **Delisting Risk**: Risk that common stock will be delisted from Nasdaq if compliance with listing standards is not maintained.
• **Product Development Failure**: Lead product candidates (PF614, PF614-MPAR) may not successfully limit abuse, overdose, or misuse, or provide additional safety upon commercialization.
• **Regulatory Approval**: Product candidates may not progress through clinical development or receive required regulatory approvals within expected timelines or at all.
• **Clinical Trial Outcomes**: Clinical trials may fail to replicate positive results from earlier preclinical studies or clinical trials.
• **Market Acceptance**: Inability to successfully market or gain market acceptance of product candidates, or overestimation of target market size and willingness of patients/physicians.
• **Funding**: Need for substantial additional funding to complete development and commercialization; no assurance that funds will be available on acceptable terms or at all.
• **Third-Party Reliance**: Reliance on third-party contract research organizations (CROs) and contract manufacturing organizations (CMOs) for R&D, clinical trials, and manufacturing, with risk of unsatisfactory performance.
• **Intellectual Property**: Inability to obtain and maintain sufficient intellectual property protection or risk of infringing others' IP.
• **Key Personnel Loss**: Loss of key members of the management team.
• **Regulatory Environment Changes**: Adverse effects from changes in the regulatory environment.
• **Internal Controls**: Inability to remediate any material weaknesses or maintain effective internal controls over financial reporting.
• **Litigation**: Potential litigation associated with business combination transactions or other disputes in the normal course of business.
• **Health Epidemics**: Business, operations, clinical development plans, timelines, and supply chain could be adversely affected by health epidemics.

Future Outlook

The company expects to continue incurring significant operating losses for the foreseeable future as it advances its product candidates through preclinical and clinical development. Substantial additional funding will be required to complete development, seek regulatory approvals, and establish commercialization capabilities. Management estimates that current cash on hand, including the recent $4 million convertible preferred stock offering, will fund operations into the late first quarter of 2026, but future viability beyond this period is dependent on raising further capital.

Management Comments

• "We expect that our expenses and capital requirements will increase substantially in connection with our ongoing development activities."
• "We may never become profitable."
• "We require substantial additional funding to support our continuing operations and pursue our growth strategy."
• "Without raising additional capital through a future offering, we believe that current cash on hand is sufficient to fund operations into the late first quarter of 2026."
• "Our future viability is dependent on our ability to raise additional capital to finance our operations."

Industry Context

Ensysce operates in the highly capital-intensive and regulated clinical-stage biotech sector, focusing on pain management and opioid use disorder with abuse-deterrent and overdose-protection technologies. This industry is characterized by long development cycles, high R&D costs, significant regulatory hurdles, and a heavy reliance on external financing and grants. The market for abuse-deterrent opioids and OUD treatments is driven by public health crises, but also faces intense scrutiny and competition.

Legal Proceedings

• No pending legal proceedings against the company are expected to have a material adverse effect on cash flows, financial condition, or results of operations as of September 30, 2025, and December 31, 2024.
• A dispute with a former independent contractor was settled in April 2025, resulting in the issuance of 20,000 shares of common stock and an accrued settlement value of $0.2 million.

Related Party Transactions

• A board member holds $0.2 million in senior secured convertible promissory notes (2023 Notes) plus accrued interest and 29,547 warrants exercisable at $23.51 per share.
• A forbearance agreement with this board member regarding the 2023 Notes expires on April 25, 2026.
• Certain key personnel of the company hold 19.8% of EBIR, Inc. shares, which are reflected as noncontrolling interests.

Stakeholder Impact

• **Shareholders**: Face significant dilution from ongoing equity and warrant offerings, substantial risk of further share price decline due to "going concern" doubts and persistent losses, and potential delisting from Nasdaq.
• **Employees**: Continued employment and compensation are dependent on the company's ability to secure ongoing financing and achieve operational viability.
• **Customers (Patients)**: Potential for new abuse-deterrent pain medications and OUD treatments if product candidates successfully complete development and gain regulatory approval, but this is highly uncertain.
• **Suppliers/CROs/CMOs**: Continued engagement and payment are dependent on the company's financial health and ability to fund R&D activities.
• **Creditors**: Holders of the 2023 Notes (including a board member) have secured notes, but the company's going concern status introduces repayment risk.

Next Steps

• Advance preclinical development of early-stage programs and clinical trials for product candidates (PF614, PF614-MPAR, nafamostat).
• Manufacture preclinical and clinical drug material and develop processes for late-stage and commercial manufacturing.
• Seek regulatory approvals for product candidates that successfully complete clinical trials.
• Establish sales, marketing, medical affairs, and distribution infrastructure for approved product candidates.
• Hire additional clinical, quality control, and scientific personnel.
• Expand operational, financial, and management systems and personnel.
• Obtain, maintain, expand, and protect the intellectual property portfolio.
• Manage costs associated with operating as a public company.
• Raise additional capital to fund future operations beyond Q1 2026.

Key Dates

Recommendation

The company's financial position is highly precarious, marked by substantial and increasing net losses, a rapidly depleting cash balance, and an explicit 'going concern' warning from management. While recent capital raises provide temporary liquidity, they are highly dilutive and merely defer the fundamental issue of achieving profitability. The business model relies heavily on continuous, dilutive financing to fund R&D for product candidates that are still in early to mid-stage clinical development, with no clear path to product revenue in the foreseeable future. The high burn rate, coupled with the inherent risks of clinical-stage biotech (regulatory hurdles, trial failures, market acceptance), makes this a speculative investment with significant downside risk and a strong likelihood of further shareholder value erosion through dilution or potential insolvency.

Keywords

Ensysce Biosciences, ENSC, biotech, pharmaceutical, opioid, pain management, abuse deterrent, overdose protection, TAAP, MPAR, PF614, clinical stage, SEC filing, 10-Q, financial report, drug development, clinical trials, financing, going concern