SAN DIEGO, CA - Ensysce Biosciences, Inc. (NASDAQ:ENSC), a biotech firm focused on enhancing prescription drug safety, has announced agreements for the immediate exercise of certain outstanding warrants to purchase shares at a reduced price. The transaction involves warrants originally issued in May 2023, which are now exercisable at $1.31 per share, down from $3.637. This move is expected to generate approximately $4.7 million in gross proceeds for the company, before accounting for fees and expenses.
The exercised warrants will allow the purchase of up to 3,601,752 shares of common stock, with the shares being registered under a Form S-1 registration statement. In return for the immediate cash exercise of the warrants, Ensysce will issue new unregistered warrants for up to 7,203,504 shares of common stock at an exercise price of $1.06 per share. These new warrants will be immediately exercisable, with half expiring on May 12, 2028, and the remainder having an eighteen-month term from the issuance date.
H.C. Wainwright & Co. is serving as the exclusive placement agent for the offering, which is slated to close around February 14, 2024, subject to standard closing conditions. Ensysce plans to allocate the net proceeds to prepare for Phase 3 clinical trials of its lead agent PF614, repay debt incurred in late 2023, and for general corporate objectives.
The new warrants were offered privately in compliance with exemptions from the Securities Act of 1933 registration requirements. These securities, along with the shares of common stock upon their exercise, are not registered under the 1933 Act and cannot be offered or sold in the U.S. without SEC registration or an exemption. The company has committed to filing a registration statement with the SEC for the resale of the shares from the new warrants.
The information in this article is based on a press release.
InvestingPro Insights
As Ensysce Biosciences Inc. (NASDAQ:ENSC) forges ahead with its strategic financial maneuvers to strengthen its capital, the real-time data and insights from InvestingPro paint a detailed picture of the company's financial health and market performance. With a modest market capitalization of $3.59 million, Ensysce appears to be a small player in the biotech industry. The company's efforts to generate capital through warrant exercises come at a time when its stock has experienced significant volatility. The InvestingPro data shows a stark 19.15% decline in the stock's total return over the past week, coupled with a 16.79% drop over the last month, highlighting the challenges the company faces in the market.
Despite these setbacks, Ensysce has managed a strong return over the last three months, with a 36.77% increase. This could indicate a potential rebound or a response to specific market or company events. However, it is essential to note that the company has not been profitable over the last twelve months, as reflected in its negative earnings per share of $7.5. Additionally, the company's gross profit margin stands at a concerning -274.62%, suggesting significant inefficiencies or costs that could impact its financial sustainability.
InvestingPro Tips further reveal that Ensysce holds more cash than debt, which could provide some financial flexibility. Yet, analysts anticipate a sales decline in the current year, and they do not expect the company to turn a profit this year. These insights may be particularly relevant for investors considering the recent warrant exercise and the company's plans for its lead agent PF614. For those seeking a deeper analysis, there are additional InvestingPro Tips available, offering a comprehensive view of Ensysce's financial and market position.
Investors interested in a more thorough examination of Ensysce Biosciences can access further InvestingPro Tips by visiting the dedicated page at https://www.investing.com/pro/ENSC. To enhance their investing toolkit, users can take advantage of the special offer using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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