ENVERIC BIOSCIENCES, INC. The information set forth below should be read in conjunction with the unaudited
condensed consolidated financial statements and notes thereto included elsewhere
in this Quarterly Report on Form 10-Q. Unless stated otherwise, references in
this Quarterly Report on Form 10-Q to "us," "we," "our," or our "Company" and
similar terms refer to
Cautionary Note Regarding Forward-Looking Statements
This quarterly report on Form 10-Q (this "Form 10-Q") contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of forward-looking terms such as "anticipates," "assumes," "believes," "can," "could," "estimates," "expects," "forecasts," "guides," "intends," "is confident that," "may," "plans," "seeks," "projects," "targets," and "would" or the negative of such terms or other variations on such terms or comparable terminology. Such forward-looking statements include, but are not limited to, future financial and operating results, the company's plans, objectives, expectations and intentions and other statements that are not historical facts. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. These forward-looking statements speak only as of the date of this Form 10-Q and are subject to a number of risks, uncertainties, and assumptions that could cause actual results to differ materially from our historical experience and our present expectations, or projections described under the sections in this Form 10-Q entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." These risks and uncertainties include, but are not limited to:
? our dependence on the success of our prospective product candidates, which are
in early stages of development and may not reach a particular stage in
development, receive regulatory approval or be successfully commercialized;
? potential difficulties that may delay, suspend, or scale back our efforts to
advance additional early research programs through preclinical development and
investigational new drug ("IND") application filings and into clinical
development;
? the risk that the cost savings, synergies and growth from our combination with
MagicMed Industries Inc. and the successful use of the rights and technologies
acquired in the combination may not be fully realized or may take longer to
realize than expected;
? the impact of the novel coronavirus (COVID-19) on our business, including our
current plans for product development, as well as any currently ongoing
preclinical studies and clinical trials and any future studies or other
development or commercialization activities;
? the limited study on the effects of medical cannabinoids and psychedelics, and
the chance that future clinical research studies may lead to conclusions that
dispute or conflict with our understanding and belief regarding the medical
benefits, viability, safety, efficacy, dosing, and social acceptance of
cannabinoids or psychedelics;
? the expensive, time-consuming, and uncertain nature of clinical trials, which
are susceptible to change, delays, termination, and differing interpretations;
? the ability to establish that potential products are efficacious or safe in
preclinical or clinical trials;
? the fact that our current and future preclinical and clinical studies may be
conducted outside the United States , and the United States Food and Drug
Administration may not accept data from such studies to support any new drug
applications we may submit after completing the applicable developmental and
regulatory prerequisites;
? our ability to effectively and efficiently build, maintain and legally protect
our molecular derivatives library so that it can be an essential building
block from which those in the biotech industry can develop new patented
products;
? our ability to establish or maintain collaborations on the development of
therapeutic candidates;
? our ability to obtain appropriate or necessary governmental approvals to
market potential products;
? our ability to manufacture product candidates on a commercial scale or in
collaborations with third parties;
? our significant and increasing liquidity needs and potential requirements for
additional funding;
? our ability to obtain future funding for developing products and working
capital and to obtain such funding on commercially reasonable terms;
? legislative changes related to and affecting the healthcare system, including,
without limitation, changes and proposed changes to the Patient Protection and
Affordable Care Act ("PPACA");
? the intense competition we face, often from companies with greater resources
and experience than us;
? our ability to retain key executives and scientists;
? the ability to secure and enforce legal rights related to our products,
including intellectual property rights and patent protection; and
? political, economic, and military instability in Israel which may impede our
development programs.
For a more detailed discussion of these and other factors that may affect our
business and that could cause the actual results to differ materially from those
projected in these forward-looking statements, see the risk factors and
uncertainties set forth in Part II, Item 1A of this Form 10-Q and Part I, Item
1A of the annual report on Form 10-K filed with the
17 Business Overview
We are an early-development-stage biosciences company that is developing
innovative, evidence-based prescription products and combination therapies
containing cannabinoids to address unmet needs in cancer care. We seek to
improve the lives of patients suffering from cancer, initially by developing
palliative and supportive care products for people suffering from certain side
effects of cancer and cancer treatment such as pain or skin irritation. We
currently intend to offer such palliative and supportive care products in
Psychedelics
Following our amalgamation with MagicMed completed in
We screen newly synthesized molecules in the Psybrary™ through PsyAI™, a proprietary artificial intelligence (AI) tool. Leveraging AI systems is expected to reduce the time and cost of pre-clinical, clinical, and commercial development. We believe it streamlines pharmaceutical design by predicting ideal binding structures of molecules, manufacturing capabilities, and pharmacological effects to help determine ideal drug candidates, tailored to each indication. Each of these molecules that we believe are patentable can then be further screened to see how changes to its makeup alter its effects in order to synthesize additional new molecules. New compounds of sufficient purity are undergoing pharmacological screening, including non-clinical (receptors/cell lines), preclinical (animal), and ultimately clinical (human) evaluations. We intend to utilize our Psybrary™ and the AI tool to categorize and characterize the Psybrary™ substituents to focus on bringing more psychedelics-inspired molecules from discovery to the clinical phase.
Cannabinoids
We are also aiming to advance a pipeline of novel cannabinoid combination therapies for the side effects of cancer treatments, such as chemotherapy and radiotherapy.
We intend to bring together leading oncology clinicians, researchers, academic and industry partners to develop both external proprietary products and a robust internal pipeline of product candidates aimed at improving quality of life and outcomes for cancer patients. We intend to evaluate options to out-license our proprietary technology as it moves along the regulatory pathway.
In developing our product candidates, we intend to focus on cannabinoids derived
from non-hemp botanical sources, and synthetic materials containing no
tetrahydrocannabinol (THC) in order to comply with
While we continue to pursue the development of our cannabinoid-based product candidates, our principal focus is on the development of psychedelic-based treatments.
Recent DevelopmentsFebruary 2022 Offering
On
18 Series C Preferred Stock
On
Spin-Off and related Private Placement
On
In connection with the Spin-Off, on
In connection with the securities purchase agreement, on
Key Components of Our Results of Operations
Operating Expenses
Our operating expenses include financial statement preparation services, tax compliance, various consulting and director fees, legal services, auditing fees, stock-based compensation, and research and development expenses.
Results of Operations
The following table sets forth information comparing the components of net loss
for the three months ended
For the Three Months Ended March 31,
2022 2021
Operating expenses
General and administrative $ 2,767,866 $ 6,470,405
Research and development 1,958,714 157,952
Depreciation and amortization 69,265 136,640
Total operating expenses 4,795,845 6,764,997
Loss from operations (4,795,845 ) (6,764,997 )
Other income (expense)
Inducement expense - (298,714 )
Change in fair value of warrant liabilities 275,969 3,813,000
Interest expense (4,138 ) -
Total other income 271,831 3,514,286
Net loss (4,524,014 ) (3,250,711 )
Other comprehensive gain
Foreign currency translation 88,709 35,736
Comprehensive loss $ (4,435,305 ) $ (3,214,975 )
Net loss per share - basic and diluted $ (0.11 ) $ (0.20 )
Weighted average shares outstanding, basic and
diluted 42,356,752 16,220,661
General and Administrative Expenses
Our general and administrative expenses decreased to
19
Research and Development Expenses
Our research and development expense for the three months ended
Depreciation and Amortization Expense
Depreciation and amortization expense for the three months ended
Change in Fair Value of Warrant Liabilities
The Company's change in gain in fair value warrant liabilities was a decrease of
Inducement Expense
Inducement expense was $ for the for the three months ended
Foreign Currency Translation
Our foreign currency translation gain (loss) was
Liquidity and Capital Resources
The Company has incurred continuing losses from its operations. As of
On
We believe that, as a result of February offering, we currently have sufficient cash and financing commitments to meet our funding requirements over the next year. Notwithstanding, we expect that we will need to raise additional financing to accomplish our development plan over the next several years. We may seek to obtain additional funding through debt or equity financing in the future. There are no assurances that we will be able to raise capital on terms acceptable to us or at all, or that cash flows generated from our operations will be sufficient to meet our current operating costs. Our ability to obtain additional capital may depend on prevailing economic conditions and financial, business and other factors beyond our control. The COVID-19 pandemic has caused an unstable economic environment globally. Disruptions in the global financial markets may adversely impact the availability and cost of credit, as well as our ability to raise money in the capital markets. Current economic conditions have been and continue to be volatile. Continued instability in these market conditions may limit our ability to access the capital necessary to fund and grow our business. If we are unable to obtain sufficient amounts of additional capital, we may be required to reduce the scope of our planned development, which could harm our financial condition and operating results.
On
20 Cash Flows
Since inception, we have primarily used our available cash to fund our product development and operations expenditures.
Cash Flows for the Three Months Ended
The following table sets forth a summary of cash flows for the periods
presented:
For the Three Months Ended March 31,
2022 2021
Net cash used in operating activities $ (4,548,941 ) $ (3,162,278 )
Net cash used in investing activities (505,507 ) (675,000 )
Net cash provided by financing activities 9,397,884 24,881,733
Effect of foreign exchange rate on cash (4,900 ) 34,235
Net increase in cash $ 4,338,536 $ 21,078,690
Operating Activities
Net cash used in operating activities was
Net cash used in operating activities was
Investing Activities
Net cash used in investing activities was
Net cash used in investing activities was
Financing Activities
Net cash provided by financing activities was
Net cash provided by financing activities was
Critical Accounting Policies and Significant Judgments and Estimates
The Company's accounting policies are fundamental to understanding its
management's discussion and analysis. The Company's significant accounting
policies are presented in Note 2 to its financial statements for the year ended
Warrant Liability
The Company accounts for warrants for shares of the Company's common stock that are not indexed to its own stock as liabilities at fair value on the balance sheet. Such warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized as a component of other expense on the statement of operations. The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of such common stock warrants. At that time, the portion of the warrant liability related to such common stock warrants will be reclassified to additional paid-in capital.
21 Foreign Currency Risk
The reporting currency of the Company is
The Company has not entered into any financial derivative instruments that expose it to material market risk, including any instruments designed to hedge the impact of foreign currency exposures. The Company may, however, hedge such exposure to foreign currency fluctuations in the future.
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