ENSC US Equity☆

Item 1A. Risk Factors 33

Item 1B. Unresolved Staff Comments 66

Item 1C. Cybersecurity 66

Item 2. Properties 66

Item 3. Legal Proceedings 67

Item 4. Mine Safety Disclosures 67

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 84

Item 8. Financial Statements and Supplementary Data 84

Item 9A. Controls and Procedures 84

Item 9B. Other Information 85

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 85

PART III 86

Item 10. Directors, Executive Officers and Corporate Governance 86

Item 11. Executive Compensation 91

Item 14. Principal Accounting Fees and Services 99

Item 15. Exhibits and Financial Statement Schedules 100

Risk

Factor Summary

Below

is a summary of material factors that make an investment in our securities speculative or risky. Importantly, this summary does not address

all of the risks and uncertainties that we face. Additional discussion of the risks and uncertainties in this summary, as well as other

risks and uncertainties that we face, can be found under the section titled “Risk Factors” beginning on page 34 of

this Annual Report on Form 10-K. This summary is qualified in its entirety by that more complete discussion of such risks and uncertainties.

If we are unable to adequately address these and other risks we face, our business, results of operations, financial condition and prospects

may be harmed. You should consider carefully the risks and uncertainties described under the section titled “Risk Factors”

as part of your evaluation of an investment in our securities:

● We require substantial additional funding.

● Government grant awards may not be available to us in the future.

● Interim and preliminary data from our clinical trials may change.

● We may encounter difficulties enrolling patients in our clinical trials.

GLOSSARY

Definitions:

ADFs Abuse deterrent formulations

ADHD Attention deficit hyperactivity disorder

ANDA Abbreviated New Drug Application

API Active pharmaceutical ingredient

AUC Area under the concentration time curve

Board Board of directors of Ensysce, or a committee thereof, as applicable

CARA Comprehensive Addiction and Recovery Act

CDC Center for Disease Control

CDER Center for Drug Evaluation and Research

cGMP Current Good Manufacturing Practice

Cmax Maximum plasma concentration

CMC Chemistry, manufacturing, and controls

CMOs Contract manufacturing organizations

CNS Central nervous system

Company Ensysce Biosciences, Inc. and its consolidated subsidiaries

COVID-19 Novel coronavirus disease

Covistat A subsidiary renamed EBIR, Inc.

CROs Contract research organizations

CSA Controlled Substances Act

CSOS Controlled Substance Ordering System

DEA United States Drug Enforcement Agency

EMA European Medicines Agency

Ensysce Ensysce Biosciences Inc.

EPO European Patent Office

ETASU Elements to assure a products safe use

Exchange Act Securities Exchange Act of 1934, as amended

FDA United States Food and Drug Administration

FDC Act Federal Food, Drug and Cosmetic Act, as amended

GAAP Generally Accepted Accounting Principles in the United States of America

GCP Good Clinical Practices

GEM Global GEM Global Yield LLC SCS

GMP Good Manufacturing Practices

GYBL GEM Yield Bahamas Limited

HHS United States Department of Health and Human Services

IMPDs Investigational Medicinal Product Dossiers

IND Investigational New Drug

Investor Notes The 2021 Notes, 2022 Notes and 2023 Notes, collectively.

IRB Institutional Review Board

JOBS Act Jumpstart Our Business Startups Act of 2012

LACQ Leisure Acquisition Corp., a Delaware Corporation

MAD Multi-Ascending Dose

Nasdaq The Nasdaq Stock Market LLC

NCE New Chemical Entity

NDA New Drug Application

NEO Named Executive Officer

NIDA National Institute of Drug Abuse

NIH National Institutes of Health

NME New molecular entity

PCT Patent Cooperation Treaty

PDMA U.S. Prescription Drug Marketing Act

PK Pharmacokinetics

PTA Patent Term Adjustment

PTE Patent Term Extension

R&D Research and Development

Recro Recro Gainesville LLC

REMS Risk evaluation and mitigation strategy

SARS-CoV-2 Severe acute respiratory syndrome coronavirus 2

SAQ Signature Acquisition Corp., a wholly-owned subsidiary of Signature

SEC U.S. Securities and Exchange Commission

Securities Act Securities Act of 1933, as amended

Signature Signature Therapeutics Inc.

TAAP Trypsin Activated Abuse Protection

TEAEs Treatment-emergent adverse events

USPTO United States Patent and Trademark Office

CAUTIONARY

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This

Annual Report on Form 10-K includes statements that express our opinions, expectations, beliefs, plans, objectives, assumptions, or projections

regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements.”

These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,”

“estimates,” “anticipates,” “expects,” “seeks,” “projects,”

“intends,” “plans,” “may,” “will,” or “should”

or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters

that are not historical facts. They appear in a number of places throughout this Annual Report on Form 10-K and include statements regarding

our intentions, beliefs or current expectations concerning, among other things, results of operations, financial condition, liquidity,

prospects, growth, strategies and the markets in which we operate. Such forward-looking statements are based on available current market

material and management’s expectations, beliefs and forecasts concerning future events impacting our company. Factors that may

impact such forward-looking statements include:

● our ability to continue as a going concern for the next twelve months;

● effects of competition;

● the loss of key members of our management team;

● changes in our regulatory environment;

● changes in our industry;

● the risk that our common stock will be delisted from Nasdaq;

● potential litigation associated with the Business Combination Transactions;

● other factors disclosed in this Annual Report on Form 10-K; and

● other factors beyond our control.

The

forward-looking statements contained in this Annual Report on Form 10-K are based on our current expectations and beliefs concerning

future developments and their potential effects on our company. There can be no assurance that future developments affecting us will

be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond

our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied

by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the

heading “Risk Factors”. Should one or more of these risks or uncertainties materialize, or should any of the assumptions

prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We will not undertake

any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise,

except as may be required under applicable securities laws.

References

in this Annual Report on Form 10-K to “we,” “our,” “us,” the “Company” or “Ensysce”

generally refer to Ensysce and its consolidated subsidiaries.

PART

I

Item

1. Business

Corporate

Information

We

were originally incorporated in the State of Delaware in April 2003 as PharmacoFore, Inc. and, in January 2012, we changed our name from

PharmacoFore, Inc. to Signature Therapeutics Inc. (“Signature”). On December 28, 2015, Signature, Signature Acquisition

Corp., a wholly-owned subsidiary of Signature (“SAQ”), and Ensysce Biosciences, Inc. (“EB”) entered

into an Agreement and Plan of Merger (“EB-ST Agreement”). Pursuant to the EB-ST Agreement, SAQ merged with and into

EB with EB surviving the merger as a wholly-owned subsidiary of Signature. As part of the transaction, Signature changed its name to

“Ensysce Biosciences, Inc.” (“Former Ensysce”) and changed EB’s name to EBI Operating Inc. On January

31, 2021, LACQ, Former Ensysce, and Merger Sub entered into the Merger Agreement. On June 30, 2021, pursuant to the Merger Agreement,

Merger Sub merged with and into Former Ensysce, with Former Ensysce surviving the transaction as a wholly-owned subsidiary of LACQ. As

part of the transaction, LACQ changed its name to “Ensysce Biosciences, Inc.” and Former Ensysce changed its name to EBI

OpCo, Inc.

The

mailing address of our principal executive office is 7946 Ivanhoe Avenue, Suite 201, La Jolla, California 92037. Our corporate telephone

number is (858) 263-4196. Our website address is www.ensysce.com. Information contained on our website, or connected thereto, does not

constitute part of, and is not incorporated by reference into, this Annual Report on Form 10-K.

Channels

for Disclosure of Information

Investors,

the media, and others should note that we announce material information to the public through filings with the SEC, the investor relations

page on our website, blog posts on our website, press releases, public conference calls, webcasts, and our twitter feed (@EnsysceBio).

The

information disclosed by the foregoing channels could be deemed to be material information. As such, we encourage investors, the media,

and others to follow the channels listed above and to review the information disclosed through such channels.

Any

updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on

our website.

Business

Overview

We

are a clinical stage pharmaceutical company seeking to develop innovative solutions for severe pain relief while reducing the potential

for opioid misuse, abuse, and overdose.

We

are currently developing product candidates designed to improve the safety of prescription drugs. Our primary focus has been on opioid

pain products and opioid use disorder products. Prescription opioid abuse presents major burdens to society, resulting in significant

costs, illnesses, and deaths, many of which we believe could be prevented through the use of our proprietary technologies. We believe

the intertwined issues of (1) the widespread abuse of prescription opioids and (2) the resultant reluctance of many prescribers to write

prescriptions for opioid analgesics have resulted in the persistent under-treatment of patients with moderate-to-severe pain. Our platforms

utilize a novel molecular delivery technology designed to deter prescription opioid abuse at the molecular level.

Our

current development pipeline includes two new drug platforms - an abuse-resistant opioid prodrug technology – the Trypsin

Activated Abuse Protection, or the TAAP platform, and an over-dose protection opioid prodrug technology - the Multi-Pill Abuse Resistant,

or the MPAR® platform. The TAAP platform is designed to seek to improve the care of patients with chronic pain while reducing the

human and economic costs associated with prescription opioid drug abuse. The MPAR® platform when combined with our TAAP prodrugs

is designed not only to seek to prevent abuse of prescription drugs but also to reduce overdose occurrences. Each prodrug is intended

to be able to be combined with our MPAR® technology for overdose protection. Additionally, nafamostat di-mesylate (“nafamostat”),

which is an ingredient in our overdose protection combination products, is also being developed for the intended purpose of treating

infection and pulmonary lung diseases.

The

technology under the TAAP platform when applied to opioid drugs is designed to release clinically effective opioid drugs only when exposed

to specific physiological conditions (i.e., when the drug is ingested and exposed to the digestive enzyme trypsin). Our lead product

candidate, PF614, is a TAAP oxycodone prodrug that is a biologically inactive compound which can be metabolized in the body to produce

a drug with demonstrable features aimed at resisting both oral and non-oral modes of prescription drug abuse. This approach differs from

current formulation-based strategies such as OxyContin OP which uses Intac® Technology (crush-resistant polymers) and Extampza®ER

which uses DETERxTM (insoluble fatty acid salts in polymers), in a number of ways. First, the TAAP technology seeks to remove the

ability of a user to abuse PF614 intravenously or intranasally based on preclinical studies that show PF614 does not readily convert

into oxycodone in the blood stream and trypsin is not present in the nasal passage, and, accordingly, PF614 would not convert to oxycodone

in the nose. Furthermore, the chemically modified and abuse-resistance TAAP opioid drug is unaffected by simple physical manipulations

designed to extract abusable amounts of opioid, such as through kitchen chemistry. Our portfolio of TAAP product candidates is based

on a differentiated understanding of chemical reactivity and metabolism, as well as the key pillars of our unique approach which focuses

on: (1) enzyme mediated metabolic activation localized in the gastrointestinal track; (2) rearrangement chemistry to achieve pharmacokinetic

release of active drug products; and (3) preclinical and clinical data that set forth the metabolic and chemical activation profile for

each of our clinical candidates.

Utilizing

this approach, we filed an Investigational New Drug application, or IND (116794), and commenced a Phase 1 clinical trial for PF614, which

was completed in February 2018. The clinical data from the Phase 1 trial demonstrated that oxycodone released from PF614 as chemically-designed,

and that it was absorbed following oral administration of the TAAP PF614, resulting in blood levels that matched the same release profile

as the extended release oxycodone product, OxyContin OP. A second multi-ascending dose study with a bioequivalent arm was completed in

July 2022 and a nasal human abuse potential (HAP) study was completed in October 2022. A second oral HAP study was completed in March

2023. Most recently, a study to evaluate efficacy was completed in December 2023.

The

MPAR® technology is designed to limit the bioavailability of active opioid following co-ingestion of multiple doses, whether

inadvertent or intentional, through a combination of a TAAP prodrug with nafamostat. Nafamostat is a small molecule that clinical studies

have shown to have a steep dose response curve and to be a highly potent trypsin inhibitor. When combined with our TAAP prodrugs, our

MPAR® technology is designed not to affect metabolism and the release of the active pharmaceutical ingredient. However,

if the MPAR® combination product is taken in larger quantities than intended, the excess nafamostat is designed to inhibit

trypsin, thereby preventing metabolic activation and averting a drug overdose. We believe the potential benefits to society of an opioid

that resists both oral and parenteral abuse are considerable. A Phase 1 study to explore the combination of PF614 and nafamostat, PF614-MPAR-101

was initiated in December of 2021, and early data from the study reported in May 2022 demonstrated the combination product showed overdose

protection, with a reduction in the release of oxycodone over that of PF614 delivered alone. A second part of this trial to confirm overdose

protection from PF614-MPAR 25 mg was completed in 2023 and data reported in May 2023. PF614-MPAR was granted Breakthrough Therapy designation

by the FDA in January 2024.

Our

pipeline has been developed over the course of 15 years of research and investment and includes three clinical-stage product candidates.

While our principal focus and lead product candidates are geared towards combating abuse and overdose of opioid drugs, we have, over

the years of research and development, discovered and recognized qualities and unique features of certain product candidates that may

be useful in addressing other treatments. For example, we discovered the ability of nafamostat in inhibiting the action of enzymes associated

with the COVID-19 infection, and, as such, have devoted efforts to develop an oral and inhalation drug product of nafamostat, for use

against coronaviral infections and other pulmonary diseases such as cystic fibrosis.

PF614

PF614

is our lead TAAP prodrug candidate under development for the treatment of acute or chronic pain. PF614 is a delayed release TAAP prodrug

designed to release oxycodone under certain specific physiological circumstances when taken orally. PF164 was evaluated for safety and

pharmacokinetic release of oxycodone in a Phase 1 single ascending dose clinical trial in 64 healthy subjects. The trial showed that

PF614 was well tolerated with no serious adverse events. The study also showed pharmacokinetics had a maximum blood concentration of

oxycodone at 4 to 6 hours after swallowing PF614, demonstrating its delayed release profile. A second Phase 1b multi-ascending dose study

(MAD) was initiated in 2021 to evaluate PF614 delivered to healthy subjects twice daily for 4.5 days. This study evaluated both safety

and PK, with a second part to evaluate the bioequivalence (BE) of PF614 versus OxyContin. Final data from this trial was reported in

July 2022. The MAD study demonstrated both the safety of PF614 showing it was well tolerated at doses up to 200 mg, which was comparable

to 80 mg of OxyContin both delivered twice daily. The BE study arm followed the successful completion of the multi-ascending twice-daily

dosing study of PF614 and compared the release of oxycodone from PF614 versus OxyContin® administered to subjects in both fasted

and fed states. It was concluded that 100 mg PF614 was bioequivalent to 40 mg OxyContin under both fasted and fed conditions. This data

is critical to understand future prescribing criteria for PF614 as an agent bioequivalent to OxyContin and therefore may be developed

through the 505(b)(2) regulatory path as defined by the FDA. The intranasal (IN) and oral human abuse potential of PF614 was assessed

in two different studies. In study 1, PF614-103, we evaluated the abuse potential of PF614 100 mg relative to crushed oxycodone immediate-release

(IR) tablets 40 mg (equivalent opioid doses) and placebo following intranasal administration. In study 2, PF614-104, we evaluated the

oral abuse potential of intact PF614 at 3 different dose levels 50, 100 and 200 mg to IR oxycodone 40 mg and placebo. The purpose of

this study is to assess the PK and human oral abuse potential of PF614. An efficacy study, PF614-201 was conducted to evaluate 50 and

100 mg PF614 in 16 healthy male subjects for the time of onset of pain relief and the ability of PF614 to relieve pain. The data will

be used to design our Phase 3 clinical trials. We believe PF614 has the potential to provide a safer alternative to the abuse deterrent

formulated opioid products that are currently commercially available.

PF614-MPAR

PF614-MPAR,

a combination product of PF614 and nafamostat has been designed to limit abuse potential by providing resistance to use through injection

or inhalation and to provide overdose protection against excessive oral ingestion. Our IND application (150966) for PF614-MPAR received

FDA allowance on April 27, 2021 following the release of a Full Clinical Hold from January 8, 2021. We addressed deficiencies from the

initial IND submission, amended the protocol and submitted a response to the clinical hold letter on March 29, 2021. We initiated a Phase

1 clinical trial, PF614-MPAR-101, to evaluate safety and PK in healthy subjects in December 2021. Initial data from this trial was reported

in May of 2022. The PF614-MPAR-101 overdose protection study examined PF614 administered orally alone or in combination with the trypsin

inhibitor nafamostat (MPAR®) to healthy volunteers. The initial data demonstrated the overdose protection of our MPAR®

combination product, with reduced release of oxycodone from PF614 in a simulated overdose situation. It also demonstrated the PF614

in the systemic circulation (simulated injection) did not convert to oxycodone. We completed the clinical portion and reported data from

Part A of this study in December 2022. Part B of the study to test the overdose protection of the selected PF614-MPAR 25 mg formulation

by administering an escalating number of dose units to a group of healthy subjects completed enrollment in March 2023. The PK data from

Part B successfully showed that PF614-MPAR® 25 mg administered at a prescribed dose of one or two dose units (capsules)

provided oxycodone in an equivalent manner to PF614 without MPAR®. However, the simultaneous administration of 3 dose

units or greater of PF614-MPAR 25 mg, resulted in reduced oxycodone in the circulation, as compared to the unprotected PF614. There was

a highly significant difference between the oxycodone blood levels following delivery of PF614 200 mg versus 8 dose units of PF614-MPAR

25 mg (200 mg PF614 total) demonstrating the overdose protection produced by the MPAR® technology. This was reported in

May of 2023. PF614-MPAR was granted Breakthrough Therapy designation by the FDA in January 2024.

MPAR

is being tested clinically in partnership with Quotient Sciences, using its integrated Translational Pharmaceutics® platform to search

for a PF614-MPAR formulation that allows conversion into oxycodone within the prescribed dose range but reduces conversion to oxycodone

at higher than prescribed dose levels in an overdose scenario.

Nafamostat

Nafamostat

is an enzyme inhibitor (protease inhibitor) used in our combination overdose protection technology, MPAR®. Due to its ability to

inhibit the action of enzymes associated with the COVID-19 infection, we are also developing an oral drug product of nafamostat, for

use against coronaviral infections and other pulmonary diseases such as cystic fibrosis. An IND was submitted (149877) for the evaluation

of oral nafamostat in coronaviral infections. A Phase 1 trial to evaluate safety and PK was completed in 2021.

Market

Opportunity

Drug

Abuse and Drug Overdose

Opioid

pain medications are essential for improving the care and outcomes of a majority of Americans who live with chronic pain. An NIH study,

updated September 2018, reported that 25.3 million adults suffered from pain every day for the preceding three months and almost 40 million

adults experience severe levels of pain, which is linked to worse health status. High impact chronic pain affects over 10 million Americans

and is characterized by extended periods of suffering which impair life quality to a severe degree. Prescription opioids drugs, such

as morphine, hydromorphone, hydrocodone, and oxycodone, have a long history of use for the management of severe and chronic pain. Prescriptions

for opioid medications in 2021 totaled 153 million, with $4.2 billion in market size in the United States.

The

CDC recently provided recommendations for clinicians who provide pain care, defining acute pain (duration less than 1 month), subacute

pain (duration of 1–3 months), or chronic pain (duration of 3 months or more), not including sickle cell disease related pain management,

cancer pain treatment, palliative care, and end-of life care. These guidelines are based on the indications, acute and chronic

pain, that we intend to explore for our TAAP and MPAR® opioid products including PF614.

Opioids

are offered in a variety of dosages including immediate-release tablets (or capsules), extended-release tablets (or capsules), patches,

and other dose forms. Oxycodone is one of the most effective pain killers available today. This drug helps the patient to overcome pain

and focus on his or her work. Opioids have a risk of dependence and, when used improperly, a common side effect of high doses of opioids

like oxycodone can be euphoria, or a “high.” As a result of these side effects, opioids have become amongst the most misused

or abused prescription drugs in the United States. Opioid abuse was declared a public-health emergency in 2017 when more than 91 people

died each day from opioid-related overdoses. In 2021 the total number of opioid-related deaths rose to 109,600, with 45 people dying

each day from a prescription opioid overdose.

The

large increase in overall overdose deaths is now driven by use of synthetic opioids, in particular fentanyl, as prescription opioids

have become harder to obtain. From 2017 to 2018 the prescription opioid-involved death rates decreased by 13.5% showing that attention

to the problem had beneficial effect. However, 2.1 million people reported having opioid use disorder (“Opioid Use Disorder”)

in 2019. Based on information from the CDC, the most common drugs involved in prescription opioid overdose deaths include Methadone,

Oxycodone (such as OxyContin®), and Hydrocodone (such as Vicodin®). The CDC indicates that improving opioid prescribing, treatment

of opioid use disorder, and prevention of opioid use disorder would help to improve the opioid crisis. Misuse or abuse of opioids is

often done in one of the following manners:

Amphetamines

like Adderall are manufactured in pill form and are intended for oral ingestion. As of Q4 2022, seventy-five percent of Adderall prescriptions

are prescribed to the 10.5 million adults, age 22 or older, that are diagnosed with attention deficit hyperactivity disorder, or ADHD.

ADHD is the most common neurodevelopment disorder in children. Five million adults misuse stimulant medication annually, by using alternative

consumption methods to achieve a more intense high faster; snorting or injecting are most-common methods of abuse. Both of these methods

involve crushing pills.

We

believe that having prescription drug products available that have a reduced potential for abuse by crushing and injecting, snorting,

and chewing could provide an even greater reduction of prescription opioid related deaths in the abuse of opioids or amphetamines.

Nafamostat

Nafamostat’s

market opportunity is multifaceted. The oral form could be used alone or in combination with other antiviral drugs that target separate

processes needed for virus product, such as RNA replication or viral protein processing. Nafamostat delivered orally was evaluated in

a Phase 1 study for safety and tolerability with the anticipation of further evaluating an oral nafamostat drug product against COVID-19

in Phase 2 trials, however at this time the oral nafamostat program is not the company’s primary focus.

Our

Technology Platform Solution

TAAP

Prescription Drugs

The

technology under the TAAP platform utilizes a novel technology designed to deter prescription drug abuse at the molecular level. The

molecular delivery system is designed to release clinically effective drugs only when exposed to specific physiological conditions (i.e.,

when the drug is ingested and exposed to the digestive enzyme trypsin). Our TAAP prodrugs delivery system demonstrates a number

of features aimed at resisting both oral and non-oral modes of abuse. This platform’s approach differs from current formulation-based

strategies (abuse deterrent formulations, or ADFs) in a number of ways. First, the abuse-resistance provided by TAAP is designed to be

unaffected by simple physical manipulations (e.g., crushing and extraction and/or chewing of the dose form provided to patients). We

believe the potential benefits to society of applying TAAP to opioids and amphetamines providing medication that resists both oral and

parenteral abuse are considerable.

MPAR®

Prescription Drugs

MPAR®

combination therapy, involves co-formulating TAAP prodrugs with a trypsin inhibitor, nafamostat, which, when administered at prescribed

dose levels, are intended to have no effect on the conversion of the prodrug to the active ingredient thus allowing normal drug plasma

exposure levels. However, if the drug were taken in greater than prescribed quantities, the trypsin inhibitor would also be present at

higher levels, inhibiting the first step in the activation process, preventing the conversion of the prodrug to the active ingredient

thus limiting the potential to an overdose from the medication.

Our

Development Programs

We

are currently developing product candidates designed to improve the safety and performance of prescription drugs. Our primary focus has

been on opioid pain products and opioid use disorder products. Each prodrug is intended to be able to be combined with our MPAR®

technology for overdose protection. Additionally, nafamostat, which is an ingredient in our overdose protection combination products,

may be developed for infection and pulmonary lung diseases. Besides our clinical candidates, we have a product portfolio of other TAAP

and MPAR® opioids and amphetamines that could potentially be developed to build on this pipeline.

Clinical

agents

PF614

PF614

is a chemically modified, extended-release oxycodone-derivative which releases clinically effective oxycodone only when exposed trypsin

in the gut (i.e., when the drug is ingested). This approach differs from formulation-based strategies which are currently commercially

available, in a number of ways. First, the abuse-resistance provided by PF614 is retained even when dissolved in water and is designed

to be unaffected by simple physical manipulations (e.g., extraction, chewing, and/or crushing). It also limits the bioavailability of

active medication following co-ingestion of multiple doses.

Following

ingestion, the release of oxycodone from PF614 proceeds via a two-step process comprised of (1) trypsin activation in the small intestine

and (2) a subsequent intramolecular cyclization release reaction. This reaction releases oxycodone with concomitant formation of a cyclic

urea metabolite. The time-course of oxycodone release from PF614 is a function of the kinetics of (i) the trypsin hydrolysis and (ii)

the cyclization-release reaction. In the Phase 1 study of PF614, the time to maximal blood concentration of oxycodone (Tmax)

was five to six hours for the release of oxycodone and this time cannot be modified by crushing, chewing, or physically manipulating

the drug product. Oxycodone safety, metabolism, and pharmacokinetics have been well studied.

PF614-101

Phase 1 Clinical Trial

PF614

(IND 116796) has been evaluated in a Phase 1 clinical study for safety and pharmacokinetics of oxycodone release in 64 healthy subjects

in seven different closing cohorts from November 2016 to January 2018. This study was conducted for us by PRA Health Sciences –

Early Development Services Lenexa, Kansas, principal investigator, Daniel Dickerson, M.D., Ph.D. to evaluate the safety and pharmacokinetics

of PF614, as well as the pharmacokinetics of oxycodone at doses sufficient to characterize the extent to which plasma oxycodone is produced

and maintained following oral ingestion of PF614 and was compared to the oxycodone released from extended release oxycodone from OxyContin

OP. Subjects were randomized to receive a single dose of PF614 (dose of 15, 25, 50, 100, and 200 mg with 6 subjects per dosing group)

or OxyContin OP (dose of 10, 20, 50, and 80 mg with 2 subjects per dosing group). New subjects were recruited for each cohort. Cohort

1 compared subjects receiving PF614 and OxyContin OP with and without naltrexone blockade. Naltrexone is an opioid blocker to prevent

opioids from attaching to the opioid receptors, preventing the effect of the opioid medication such as pain relief, feeling of euphoria

or respiratory depression. The single ascending dose study also compared the release of oxycodone from PF614 under both fasted and fed

conditions at the highest dose of PF614 evaluated, 200 mg. The pharmacokinetics of the prodrug fragments was also evaluated. In addition,

this study instructed as to the “conversion efficiency” of the PF614 prodrug to oxycodone, with respect to OxyContin.

Pharmacokinetic

Analyses

The

shape of the plasma concentration versus time curve of oxycodone was similar following administration of OxyContin OP (oxycodone extended

release) and PF614. The efficiency of conversion for PF614 to oxycodone was determined to be approximately 86%. A PF614 dose of 50 mg

yields oxycodone exposure comparable to a 20.01 mg dose of OxyContin, indicating a potency ratio of 0.40. This data has allowed us to

match doses of PF614 to those of commercially available OxyContin OP.

Safety

A

total of 64 subjects were included in this study, of which 23 (35.9%) experienced 47 treatment-emergent adverse events, or TEAEs. The

majority of TEAEs were either gastrointestinal disorders or nervous system disorders with no deaths, serious adverse events, or severe

TEAEs. Additionally, there were no discontinuations due to study drug-related adverse events. Over half of TEAEs were study drug related,

but they were mostly mild in severity. The three TEAEs that were moderate in severity were nephrolithiasis, or kidney stones, nausea,

and vomiting, with the nausea and vomiting being study drug related. Comparing safety data across cohorts, the data indicated that dose,

naltrexone, and fed/fasted state had no clinically relevant effect on the safety profile of PF614. PF614 was generally well tolerated

at doses up to 200 mg in healthy subjects.

PF614-102

Phase 1b Clinical Trial

A

Phase 1b study was conducted by ICON (formerly PRA Health Sciences) with Dr. M Johnston as Principal investigator. This was a 2-part

study comprised of a MAD study (Part A) and a comparative bioavailability/bioequivalence and food effect study (Part B) in healthy subjects.

Part A treated a total of 24 subjects and utilized a randomized, open-label, MAD design with up to 3 separate dose groups of 8 subjects

per group. Within each dose group, subjects were randomized to receive either PF614 (n=6) or OxyContin (n=2). Subjects received repeated

BID doses, planned to be administered every 12 hours (q12h) over a 5-day period, for a total of 9 doses. PF614 doses were 50 mg, 100

mg, and 200 mg, which were expected to be approximately equivalent to the 20 mg, 40 mg, and 80 mg OxyContin doses, for Dose Groups 1,

2, and 3, respectively. Serial PK sampling was performed for the first day/first dose (Day 1) and for the last day/last dose (Day 5).

Only trough PK samples were taken within 30 minutes prior to the morning dose on Days 2, 3, and 4. Safety assessments, including regular

assessments of adverse events (AEs), vital signs (pulse rate, blood pressure, respiratory rate, and oxygen saturation [SpO2]),

clinical laboratory tests, 12-lead electrocardiograms (ECGs), and cardiac telemetry were monitored throughout the study. Subjects were

monitored for hypotension, hypopnea, apnea, and oxygen desaturation.

Part

B treated a total of 60 subjects and utilized an open-label, single-dose, randomized, 4-way crossover design. Subjects were randomized

to receive each of the following single oral doses of study drugs in a Williams design crossover manner (1 at each treatment period):

●

Treatment A: 100 mg PF614, administered under fasted conditions (hereafter referred to as 100 mg PF614, fasted)

●

Treatment B: 100 mg PF614, administered under fed conditions (high-fat breakfast) (hereafter referred to as 100 mg PF614, fed)

●

Treatment C: 40 mg OxyContin, administered under fasted conditions (hereafter referred to as 40 mg OxyContin, fasted)

●

Treatment D: 40 mg OxyContin, administered under fed conditions (high-fat breakfast) (hereafter referred to as 40 mg OxyContin, fed)

Each

treatment was separated by a washout interval of 5 days. Serial PK sampling was performed after each study drug administration up to

120 hours postdose. Safety including regular assessments of AEs, vital signs (pulse rate, blood pressure, respiratory rate, and SpO2

), clinical laboratory tests, and 12-lead ECGs were monitored. Subjects were monitored for hypotension, hypopnea, apnea, and oxygen

desaturation.

Pharmacokinetics

Part

A: The shape of the plasma concentration versus time curve of oxycodone was similar following administration of PF614 and OxyContin (oxycodone

extended release). Oxycodone plasma exposure (Tmax, Cmax,ss and AUCtau) were assessed and PF614 showed

similar trends as OxyContin following administration of multiple oral BID doses. Due to the small sample number for OxyContin some PK

parameters could not be calculated. Trough concentrations of oxycodone were generally similar from Day 2 through Day 4, suggesting that

subjects achieved steady state after repeated oral BID dosing of PF614 and OxyContin at all dose levels.

Part

B: A total of 57 subjects were included in the PK analyses. The data for Cmax, AUC0-t, and AUC0-inf

of oxycodone post 100 mg PF614 versus 40 mg OxyContin dosing under fasted and fed conditions were completely contained within the standard

bioequivalence limits of 80% to 125%. Therefore, it was concluded that 100 mg PF614 was bioequivalent to 40 mg OxyContin under both fasted

and fed conditions.

Safety

PF614

was generally safe and well-tolerated following oral administration of 50 mg, 100 mg, or 200 mg PF614 BID for 5 days. There was no apparent

difference in the safety profile of single oral doses of 100 mg PF614 when administered in the fasted or fed state or between PF614 and

OxyContin when administered in the fasted and fed state. PF614 was generally safe and well-tolerated following single and multiple oral

doses under naltrexone blockade.

PF614-103

Intranasal Human Abuse Potential Clinical Trial

PF614-103

was a randomized, double-blind, placebo- and active-controlled, 3-way crossover study to evaluate the abuse potential and pharmacokinetics

of intranasally administered PF614, relative to crushed oxycodone IR tablets and placebo, in non-dependent recreational opioid users

conducted by Lotus Clinical Trials LLC through Ohio Clinical Trials, Inc with Principal investigator, Dr. G. Apseloff.

The

study consisted of 4 phases: Screening, Qualification, Treatment, and Follow-up. Subjects were randomized to receive PF614 100mg or crushed

oxycodone 40 mg intranasally. The primary objective of the study was to evaluate the abuse potential of PF614 relative to crushed oxycodone

immediate-release (IR) tablets and placebo following intranasal administration in non-dependent recreational opioid users (n=26), with

the primary pharmacodynamic endpoint being the maximum effect (Emax) for Drug Liking (“at this moment”)

measured up to 24 hours after dosing using a visual analogue scale (VAS). The secondary objectives of the study were to evaluate the

pharmacokinetic profile of PF614 relative to crushed oxycodone IR tablets following intranasal administration, to evaluate the safety

of PF614 following intranasal administration.

In

the study, PF614 powder produced a statistically significant lower peak “drug liking” (Emax) when compared with intranasal

crushed IR oxycodone (p = 0.0133) using the full modified completer population in a 3-period crossover of PF614 vs. crushed oxycodone

and placebo. Furthermore, in a first period analysis of initial impressions of each drug, a statistically significant difference was

noted between PF614 (n=8) and crushed IR oxycodone (n=10) (p = 0.0175), even with this smaller cohort of subjects.

Statistically

significant differences in peak effects (Emax) between PF614 and crushed IR oxycodone intranasal were also demonstrated for the secondary

endpoint of “take drug again,” also using a first period analysis (p < 0.0001).

The

intranasal HAP study was designed to test if known recreational drug users “liked” the product and is critical for

labeling claims for new drugs in this class. The primary measure in this study, “drug liking,” is recommended by the

FDA in their Guidance on “Assessment of Abuse Potential of Drugs.” This measure is known to correlate with a drug’s

potential for abuse. The results demonstrated that inhaled powdered PF614 had significantly lower drug liking than inhaled crushed IR

oxycodone.

PF614-104

Oral Human Abuse Potential Clinical Trial

PF614-104

was a randomized, double-blind, placebo- and active-controlled, 5-way crossover study to evaluate the abuse potential and pharmacokinetics

of orally administered PF614, relative to oxycodone IR tablets and placebo, in non-dependent recreational opioid users conducted by DVCR,

Kansas.

The

study consisted of 4 phases: Screening, Qualification, Treatment, and Follow-up. Subjects were randomized to receive PF614 50, 100 and

200 mg, oxycodone 40 mg or placebo orally. The primary objective of the study was to evaluate the abuse potential of PF614 relative to

oxycodone immediate-release (IR) tablets and placebo following oral administration in non-dependent recreational opioid users (n=28),

with the primary pharmacodynamic endpoint being the maximum effect (Emax) for Drug Liking (“at this moment”)

and “Take Drug Again” Emax (Secondary endpoint) measured up to 24 hours after dosing using a visual analogue scale (VAS).

The secondary objectives of the study were to evaluate the pharmacokinetic profile of PF614 relative to oxycodone IR tablets and to evaluate

the safety of PF614.

PF614

produced statistically lower effects than oxycodone, the lowest dose p<0.0001, and statistically significant overall “Drug Liking”

at both the low and the mid doses p<0.0001 and p=0.0025, respectively. PF614 took a significantly lower median time to reach Emax

for “Drug Liking” than oxycodone at all three dose levels, which is highly important for reducing drug abuse. Similar findings

were noted with a second endpoint “Take Drug Again”. The secondary endpoint was met at both the low and mid dose of PF614

with highly significant values of p<0.001 and p=0.0038, respectively, and was numerically lower than comparator even at double the

dose, demonstrating that recreational users would be less motivated to abuse PF614 compared to immediate release oxycodone.

In

November 2022, we received written guidance from the FDA that an acute pain indication may be appropriate for PF614. The FDA guidance,

while not binding, states that our proposed clinical development approach of conducting at least two adequate and well-controlled clinical

trials in two different pain models comparing PF614 to a placebo and to another immediate release (IR) opioid, such as IR oxycodone,

appears reasonable to support a new drug application for PF614 for an acute pain indication. The FDA guidance also provides additional

guidance with respect to the non-clinical studies and clinical trials planned by us. The clinical development pathway of PF614 for an

acute pain indication may reduce the development timeline and be more cost-effective than initially pursuing a chronic pain indication

for PF614.

PF614-201

Time of Onset clinical study

PF614-201

was a randomized, double-blind, placebo-controlled study of PF614 50 and 100 mg to evaluate the onset of analgesia following administration

of a single oral dose of PF614 in healthy male subjects in an experimental pain model (cold pressor test [CPT]). This study was initiated

in September of 2023 and enrolled 16 subjects. The Treatment Phase consisted of 2 treatment periods; PF614 50 mg or 100 mg versus placebo.

The CPT, pharmacodynamic (PD), and safety assessments were conducted prior to dosing and for six hours after each study drug administration.

This study was the first to successfully demonstrate the efficacy of PF614. Data was reported December 2023, stating the time-of-onset

of pain relief from both doses of PF614 was identified, and PF614 did decrease the intensity of pain.

Next

Steps

An

End of Phase 2 regulatory meeting request for PF614 IND 116794 was submitted on October 13, 2023, with a meeting was held on January

30, 2024. The meeting clarified the non-clinical and clinical Phase 3 study plans for the further development of PF614 which are expected

to initiate in mid-2024.

PF614-MPAR

We

initiated a Phase 1 study that is evaluating PF614-MPAR in study entitled “A Single Dose, 2 Part Study to Evaluate the Pharmacokinetics

of Oxycodone and PF614, when PF614 Solution is Co-Administered with nafamostat, as an Immediate Release Solution and/or Extended Release

(ER) Capsule Formulations in Healthy Subjects:” We are clinically testing MPAR® in partnership with Quotient Sciences,

using its integrated Translational Pharmaceutics® platform to search for a PF614-MPAR formulation that allows conversion

into oxycodone within the prescribed dose range but reduces conversion to oxycodone at higher than prescribed dose levels in an overdose

scenario.

PF614-MPAR-101

Phase 1 Clinical Trial

The

primary objectives of the Phase 1 study are to assess the pharmacokinetics of oxycodone, when PF614 solution is administered alone and

with nafamostat as an immediate release solution and/or extended-release capsule prototypes. The study is designed to aid in the selection

of the optimal nafamostat formulation and dose to combine with PF614 in order to provide oxycodone when a prescribed dose is taken yet

attenuate the maximum plasma concentration (Cmax) and the area under the concentration time curve (AUC) of oxycodone when

more than the prescribed PF614-MPAR dose is taken. Initial data was reported in May 2022 that demonstrated nafamostat administer in combination

with PF614 in a simulated overdose situation reduced the release of oxycodone from PF614 as designed. We completed the clinical portion

of Part A of this study in December 2022, with the identification of an optimal drug product formulation. A second, Part B was initiated

in January 2023 to test the overdose protection of the selected formulation by administering an escalating number of dose units to a

group of healthy subjects. Enrollment was completed in March 2023.

Part

B was a dose escalation study of PF614 25 mg alone, or increasing dose units of PF614-MPAR 25 mg (PF614 25 mg with 1 mg formulated nafamostat),

and enrolled 6 to 8 healthy subjects in each cohort. PF614-MPAR 25 mg was delivered at 1, 2, 3, 5, and 8 doses simultaneously, with safety

and PK endpoints. The plasma PK of oxycodone released from PF614 or PF614-MPAR was measured and compared to prior data where PF614 was

delivered up to 200 mg alone. Additionally, the PK of parent PF614 and metabolic fragments were measured.

The

results of the study successfully demonstrated that up to 2 dose units of PF614-MPAR delivered oxycodone at the same level as was derived

from PF614 without MPAR®. At 3 units of PF614-MPAR the amount of oxycodone delivered was reduced compared to a 75 mg dose

of PF614. At 8 dose units there was a significant decrease (p<0.00333) in the maximal oxycodone plasma concentration (Cmax) as compared

to that delivered from unprotected PF614 200 mg. In addition, delivering 2 doses of PF614-MPAR sequentially, 12 hours apart did not affect

the release of oxycodone from the 2nd dose. Data from this study was reported in May 2023.

PF614-MPAR

was granted Breakthrough Therapy designation by the FDA in January 2024. A Type D meeting request to discuss the non-clinical program

for PF614-MPAR was submitted in 2023 and responses to questions were received in February 2024.

Competition

The

life sciences industry is characterized by rapidly advancing technologies, intense competition, and a strong emphasis on proprietary

products. We expect to face competition from a number of sources, including pharmaceutical and biotechnology companies, generic drug

companies, drug delivery companies, and academic and research institutions. Most of these existing and potential competitors have significantly

greater financial and other resources than we do.

The

key competitive factors that are expected to affect the development and commercial success of our product candidates include safety and

tolerability, the ability of our product candidates to limit human abuse potential, bioavailability and therapeutic efficacy of our product

candidates, market indications and convenience of dosing and distribution. PF614 will also face competition from commercially available

generic and branded extended-release and long-acting opioid drugs other than oxycodone, including, but not limited to, fentanyl, hydromorphone,

oxymorphone, and methadone, as well as opioids that are currently in clinical development.

We

believe that obtaining an abuse-deterrent label through the FDA for our prodrugs would provide us with a significant competitive advantage.

There are only four commercially available (in the United States) opioid drugs for chronic pain relief that have an abuse-deterrent label.

These drugs are MorphaBondTM ER, marketed by Daiichi Sankyo, OxyContin® ER and Hysingla® ER, both

of which are marketed by Purdue Pharma, LP, and Collegium Pharmaceutical, Inc.’s XTampza®ER. However, obtaining

an abuse-deterrent label involves a lengthy and complicated process with no certainty of success. We believe abuse-deterrent opioids

represent a therapeutic option to maximize pain relief in patients for whom opioid analgesia is indicated, while reducing the risks of

abuse and diversion.

A

number of other companies including, but not limited to, Pfizer Inc., Daiichi Sankyo, Endo Health Solutions, Nektar Therapeutics, Teva

Pharmaceutical, Inc., Egalet Ltd., KemPharm Inc., Elysium Therapeutics Inc., and Acura Pharmaceutical, have either extended-release or

abuse-deterrent products in various stages of development. Other companies offer products indicated for chronic, severe, long-term pain

with various delivery technologies, but these products do not have abuse-deterrent claims on their labels. Vertex has recently announced

a non-opioid pain product that inhibits NaV1.8 and has entered Phase 3 development.

We

do not believe there are other companies developing products that have an overdose mechanism similar to our MPAR® technology.

Intellectual

Property

Our

commercial success depends in part on our ability to obtain and maintain proprietary protection for product candidates and any of our

future product candidates, novel discoveries, product development technologies, and know-how; to operate without infringing on the proprietary

rights of others; and to prevent others from infringing our proprietary rights. Our policy is to seek to protect our proprietary position

by, among other methods, filing or in-licensing United States and foreign patents and patent applications related to our proprietary

technology, inventions, and improvements that are important to the development and implementation of our business. We also rely on trademarks,

trade secrets, know-how, continuing technological innovation, and potential in-licensing opportunities to develop and maintain our proprietary

position.

In

August 2020, EBIR entered into a Technology Transfer Agreement with Mucokinetica to acquire its intellectual property and all assets

associated with the inhaled nafamostat program. Specifically, EBIR acquired Patent EP2124926B1 and all data and assets associated with

the development and expansion of the inhaled nafamostat program. These assets included COVID-19 and cystic fibrosis drug targets in development.

In

consideration for this intellectual property, Mucokinetica received a 1% equity ownership in EBIR, and its founders, Roderick Hall and

Peter Cole, entered into Consulting Agreements with EBIR. The Consulting Agreements were subsequently terminated by Messrs. Hall and

Cole.