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As filed with the Securities and Exchange Commission on May 3, 2021.

 

Registration No. 333-254279

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

AMENDMENT NO. 4

TO

FORM S-4

REGISTRATION STATEMENT UNDER

THE SECURITIES ACT OF 1933

 

LEISURE ACQUISITION CORP.

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware   6770   82-2755287
(State or Other Jurisdiction of
Incorporation or Organization)
  (Primary Standard Industrial
Classification Code Number)
 

(I.R.S. Employer

Identification Number)

 

250 West 57th Street, Suite 415

New York, NY 10107

(646) 565-6940

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

 

A. Lorne Weil

Executive Chairman

250 West 57th Street, Suite 415

New York, NY 10107

(646) 565-6940

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)

 

Copies to:

 

Jeffrey A. Horwitz, Esq.

Daniel I. Ganitsky, Esq.

Daniel L. Forman, Esq.

Proskauer Rose LLP

Eleven Times Square

New York, NY 10036

Tel: (212) 969-3000

 

David I. Meyers, Esq.

Troutman Pepper Hamilton Sanders LLP
1001 Haxall Point, 15th Floor

Richmond, VA 23219
Tel: (804) 697-1200

 

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement becomes effective.

 

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. ☐

 

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the “Securities Act”), check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act of 1934 (the “Exchange Act”).

 

Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
    Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.

 

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction: Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ☐

 

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) ☐

 

CALCULATION OF REGISTRATION FEE

 

Title of each Class of Securities
to be Registered
  Amount to be Registered(1)   Proposed Maximum Offering Price
Per Share
  

Proposed Maximum Aggregate

Offering Price

  

Amount of Registration

Fee(2)

 
Common Stock, par value $0.0001 per share   18,000,000

(3)

 

N/A

  $2,733,485(4)  $0.00

(5)

 

  (1) Pursuant to Rule 416 under the Securities Act, the registrant is also registering an indeterminate number of additional shares of common stock that may become issuable to prevent dilution as a result of any stock dividend, stock split, recapitalization or other similar transaction.
     
  (2) The registration fee is calculated by multiplying the proposed maximum aggregate offering price of securities to be registered by 0.0001091.
     
  (3) Consists of 18,000,000 shares of common stock to be issued in connection with the Merger (as defined herein), including the maximum number of shares which may be issued in respect of the Newly Issued Ensysce Convertible Notes (as defined herein).
     
  (4)

Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(f)(2) of the Securities Act. Ensysce Biosciences, Inc. (“Ensysce”), a Delaware corporation, is a private company, no market exists for its securities, and Ensysce has an accumulated deficit. Therefore, the proposed maximum aggregate offering price is one-third of the aggregate par value of the Ensysce common stock expected to be exchanged in the business combination, including Ensysce common stock issuable in respect of the maximum number of Newly Issued Ensysce Convertible Notes. This calculation results in an offering price per share of less than $.01 per share, therefore, the value of each share of common stock of Ensysce has been rounded up to $.01 for purposes of calculating the filing fee.

     
  (5) A filing fee of $298.22 was paid in connection with the filing of the Registration Statement on Form S-4 on March 15, 2021.

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

 

 

 

The information in this preliminary proxy statement/prospectus is not complete and may be changed. These securities may not be issued until the registration statement filed with the U.S. Securities and Exchange Commission is effective. The preliminary proxy statement/prospectus is not an offer to sell these securities and does not constitute the solicitation of offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

PRELIMINARY — SUBJECT TO COMPLETION, DATED May 3, 2021

 

PROXY STATEMENT OF
LEISURE ACQUISITION CORP.

 

PROSPECTUS FOR UP TO

18,000,000 SHARES OF COMMON STOCK

 

Dear Leisure Acquisition Corp. Stockholders,

 

On behalf of the board of directors (the “Board”) of Leisure Acquisition Corp., a Delaware corporation (“LACQ,” “we” or “our”), we cordially invite you to a special meeting (the “special meeting”) of stockholders to be held at [●] a.m. eastern time, on [●], 2021, at the offices of LACQ at 250 West 57th Street, Suite 415, New York, New York 10107. You will be able vote your shares of LACQ common stock by either signing and returning the enclosed proxy card or attending the special meeting and voting in person.

 

On January 31, 2021, LACQ entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among LACQ, EB Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of LACQ (“Merger Sub”), and Ensysce Biosciences, Inc., a Delaware corporation (“Ensysce”), providing for, among other things, and subject to the terms and conditions therein, the business combination between LACQ and Ensysce pursuant to the merger of Merger Sub with and into Ensysce, with Ensysce continuing as the surviving entity (the “Merger”). The Merger, together with the other transactions contemplated by the Merger Agreement and the related agreements, are referred to herein as the “Transactions.”

 

The proposed Merger is expected to be consummated after the required approval by the stockholders of LACQ, and the satisfaction or waiver of certain other conditions summarized below. At the reference price of $10.00 per share of LACQ common stock, the total Merger Consideration of 17,336,655 shares of LACQ common stock (based on the number of shares of Ensysce common stock outstanding at April 7, 2021 and excluding the shares underlying the Ensysce Options and Ensysce Warrants and shares which may be issuable with respect to the Newly Issued Ensysce Convertible Notes (as those terms are defined herein)) would have a value of $173,336,550.

 

Pursuant to the Merger Agreement, at the effective time of the Merger:

 

(a) each outstanding share of Ensysce common stock, including shares issuable upon conversion of certain convertible notes of Ensysce that will convert into Ensysce common stock immediately prior to the effective time of the Merger, will be cancelled and automatically converted into the right to receive a number of shares of LACQ common stock calculated pursuant to the Merger Agreement (the “Merger Consideration”); and

 

(b) each option to acquire Ensysce common stock that is outstanding immediately prior to the effective time of the Merger, will be assumed and automatically converted into an option to purchase a number of shares of LACQ common stock at the exercise price calculated pursuant to the Merger Agreement and each warrant to acquire Ensysce common stock that is outstanding immediately prior to the effective time of the Merger, will be assumed and automatically converted into a warrant to purchase a number of shares of LACQ common stock at the exercise price calculated pursuant to the Merger Agreement.

  

Upon completion of the Transactions it is expected that: (a) LACQ’s public stockholders (other than the initial stockholders and their respective affiliates) will own approximately 0.9% in the post-combination company; (b) the initial stockholders of LACQ and their respective affiliates, including the Sponsors (which are entities affiliated with A. Lorne Weil, LACQ’s Executive Chairman, and Daniel B. Silvers, LACQ’s Chief Executive Officer), and HG Vora Capital Management LLC on behalf of one or more funds or accounts managed by it (the “Strategic Investor”), will own approximately 24.6% of the post-combination company; (c) Other Stockholders (consisting of the underwriter in LACQ’s initial public offering and an Ensysce vendor which have agreed to receive LACQ common stock instead of cash) and the parties to Ensysce’s GEM Agreement (as defined herein), which has agreed to provide an equity line) will own approximately 3.4% of the post-combination company; and (d) current holders of Ensysce Stock, including holders of shares issued on conversion of Ensysce Convertible Notes, will collectively own approximately 71.1% of the post-combination company. These levels of ownership interests: (i) exclude the impact of the shares of LACQ common stock underlying the warrants and those reserved for issuance under the Incentive Plan (as defined herein), (ii) assume that no LACQ public stockholder exercises redemption rights with respect to its public shares for a pro rata portion of the funds in LACQ’s trust account and that 17,336,655 shares of LACQ common stock are issued as Merger Consideration and are outstanding as of the closing (including shares of LACQ common stock issued on conversion of Ensysce Convertible Notes (other than up to 500,000 shares of LACQ common stock which may be issued in respect of Newly Issued Ensysce Convertible Notes) and exclude shares underlying the Ensysce Options and Ensysce Warrants); and (iii) exclude the impact of warrants to acquire LACQ common stock anticipated to be issued pursuant to the Expense Advancement Agreement and Ensysce’s GEM Agreement (as those terms are defined herein).

 

As described in this proxy statement/prospectus, LACQ’s stockholders are being asked to consider and vote upon the Merger and the other proposals set forth herein. Each of the proposals is more fully described in this proxy statement/prospectus, which we encourage you to read carefully and in its entirety before voting. Only holders of record of LACQ’s common stock at 5:00 p.m. (New York City time) on April 7, 2021 (the “record date”) are entitled to notice of the special meeting and to vote and have their votes counted at the special meeting and any adjournments or postponements thereof.

 

After careful consideration, the Board has determined that the Merger and the other proposals described in this proxy statement/prospectus are fair to and in the best interests of LACQ and its stockholders and unanimously recommends that you vote or give instruction to vote “FOR” the approval of the Merger and the other proposals. When you consider the Board’s recommendation of these proposals, you should keep in mind that our directors and officers have interests in the Transactions that are different from, or in addition to, the interests of LACQ’s stockholders generally. Please see the section entitled “The Merger — Interests of Certain Persons in the Business Combination” for additional information. The Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Transactions and in recommending to LACQ’s stockholders that they vote in favor of the proposals presented at the special meeting.

 

 

 

 

Consummation of the Transactions is conditioned on the approval of LACQ’s stockholders by an affirmative vote of the holders of a majority of the outstanding shares of LACQ common stock of the business combination proposal, and (b) the consent of the requisite Ensysce stockholders (as described herein) to adopt the Merger Agreement and thereby approve the Transactions, including the Merger. The Ensysce stockholders have already provided the requisite consent to adopt the Merger Agreement and approve the Transactions. If such proposal is not approved by the LACQ stockholders, we will not consummate the Transactions. LACQ is sending you this proxy statement/prospectus to ask you to vote in favor of these and the other matters described in this proxy statement/prospectus.

 

All LACQ stockholders are cordially invited to attend the special meeting and we are providing the proxy statement/prospectus and proxy card in connection with the solicitation of proxies to be voted at the special meeting (or any adjournment or postponement thereof). To ensure your representation at the special meeting, however, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the special meeting and vote, obtain a proxy from your broker or bank.

 

This proxy statement/prospectus covers: up to 17,500,000 shares of LACQ common stock (including shares of LACQ common stock issued on conversion of Ensysce Convertible Notes (other than Newly Issued Ensysce Convertible Notes) (of which 17,336,655 shares would be issued based on the outstanding Ensysce common stock on April 7, 2021) and up to 500,000 shares of LACQ common stock which may be issued in respect of Newly Issued Ensysce Convertible Notes as the Merger Consideration pursuant to the Merger Agreement. LACQ’s units, shares of LACQ common stock and LACQ’s public warrants are currently listed on the Nasdaq Stock Market (the “Nasdaq”) under the symbols LACQU, LACQ, and LACQW, respectively.

 

LACQ has filed an application to continue the listing of the combined entity on Nasdaq concurrent with consummation of the Transactions and believes the combined entity will satisfy all criteria for initial listing upon completion of the Transactions. As such, LACQ expects to obtain Nasdaq listing approval prior thereto; notwithstanding, LACQ can provide no assurances that Nasdaq will approve the listing application for the combined entity. Nasdaq’s determination may not be known at the time stockholders are asked to vote on the Transactions and the closing is not conditioned on Nasdaq’s approval of the continued listing.

 

Pursuant to LACQ’s current certificate of incorporation, a holder of public shares may demand that LACQ redeem such shares for cash if the business combination is consummated. To exercise your redemption rights, you must elect to have LACQ redeem your shares for a pro rata portion of the funds held in the trust account and tender your shares to LACQ’s transfer agent at least two (2) business days prior to the vote at the special meeting. You are not required to vote on the Transactions (either for or against) to exercise your redemption rights. You may tender your shares by either delivering your share certificate to the transfer agent or by delivering your shares electronically using the depository trust company DWAC (deposit and withdrawal custodian) system. If the business combination is not completed, then these shares will not be redeemed for cash. If you hold the shares in street name, you will need to instruct the account executive at your bank or broker to withdraw the shares from your account in order to exercise your redemption rights.

 

If a holder of public shares properly demands redemption, LACQ will redeem each public share for a full pro rata portion of the funds held in the trust account holding the proceeds from LACQ’s initial public offering, calculated as of two business days prior to the consummation of the business combination.

 

If the business combination is not completed, these shares will not be redeemed.

 

LACQ is, and, immediately following consummation of the Transactions, will continue to be, an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has elected to comply with certain reduced public company reporting requirements.

 

This proxy statement/prospectus provides you with detailed information about the Transactions and other matters to be considered at the special meeting of LACQ’s stockholders. We encourage you to carefully read this entire document, including the Annexes attached hereto. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 31.

 

Your vote is important regardless of the number of shares you own. Whether you plan to attend the special meeting or not, please sign, date and return the enclosed proxy card as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.

 

The Transactions described in this proxy statement/prospectus have not been approved or disapproved by the Securities and Exchange Commission or any state securities commission nor has the Securities and Exchange Commission or any state securities commission passed upon the merits or fairness of the business combination or related Transactions, or passed upon the accuracy or adequacy of the disclosure in this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

 

Thank you for your participation. We look forward to your continued support.

 

    By Order of the Board of Directors
     
     
    A. Lorne Weil
    Chairman of the Board of Directors

 

This proxy statement/prospectus is dated [●], 2021 and is first being mailed to LACQ stockholders on or about [●], 2021.

 

 

 

 

ADDITIONAL INFORMATION

 

This document is the proxy statement of LACQ for the special meeting and the prospectus for up to 17,500,000 shares of LACQ common stock being issued (of which 17,336,655 shares would be issued based on the outstanding Ensysce common stock on April 7, 2021), and up to 500,000 shares of LACQ common stock which may be issued in respect of Newly Issued Ensysce Convertible Notes, as the Merger Consideration pursuant to the Merger Agreement. This registration statement and this proxy statement/prospectus is available without charge to stockholders of LACQ upon written or oral request. This document and other filings by LACQ with the Securities and Exchange Commission may be obtained by either written or oral request to:

 

George Peng

Chief Financial Officer and Secretary

Leisure Acquisition Corp.

250 West 57th Street, Suite 415

New York, New York 10107

Tel: (646) 565-6940

 

The Securities and Exchange Commission maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Securities and Exchange Commission. You may obtain copies of the materials described above at the commission’s internet site at www.sec.gov.

 

In addition, if you have questions about the proposals to be voted on at the special meeting or this proxy statement/prospectus, would like additional copies of this proxy statement/prospectus, or need to obtain proxy cards or other information related to the proxy solicitation, please contact LACQ at (646) 565-6940. You will not be charged for any of the documents that you request.

 

See the section entitled “Where You Can Find More Information” of this proxy statement/prospectus for further information.

 

Information contained on the LACQ website, or any other website, is expressly not incorporated by reference into this proxy statement/prospectus.

 

To obtain timely delivery of the documents, you must request them no later than five business days before the date of the special meeting, or no later than [●], 2021.

 

 

 

 

LEISURE ACQUISITION CORP.

250 West 57th Street, Suite 415

New York, New York 10107

 

NOTICE OF

SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON
[●], 2021

TO THE STOCKHOLDERS OF LEISURE ACQUISITION CORP.

 

NOTICE IS HEREBY GIVEN that a special meeting of stockholders of Leisure Acquisition Corp, a Delaware corporation (“LACQ,” “we” or “our”), will be held at [●] a.m. eastern time, on [●], 2021, at the offices of LACQ at 250 West 57th Street, Suite 415, New York, New York 10107. If you wish to attend the special meeting in person, you must reserve your attendance at least two (2) business days in advance of the special meeting by contacting George Peng, Chief Financial Officer, Leisure Acquisition Corp., 250 West 57th Street, Suite 415, New York, New York 10107, telephone number (646) 565-6940. See “Questions and Answers about the Proposals — How do I attend the special meeting in person?” for more information.

 

On behalf of LACQ’s board of directors (the “Board”), you are cordially invited to attend the special meeting, to conduct the following business items:

 

(1) Proposal No. 1 — To consider and vote upon a proposal to approve the business combination described in this proxy statement/prospectus, including (a) approving the Agreement and Plan of Merger, dated as of January 31, 2021 (as the same has been or may be amended, modified, supplemented or waived from time to time, the “Merger Agreement”) by and among LACQ, EB Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of LACQ (“Merger Sub”) and Ensysce Biosciences, Inc. a Delaware corporation (“Ensysce”), a copy of which is attached to this proxy statement/prospectus as Annex A, which provides for, among other things, and subject to the terms and conditions therein, a business combination between Ensysce and LACQ pursuant to the merger of Merger Sub with and into Ensysce, with Ensysce continuing as the surviving entity (the “Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Transactions”) and (b) approving the other transactions contemplated by the Merger Agreement and related agreements described in this proxy statement/prospectus — we refer to this proposal as the “business combination proposal”;

 

(2) Proposal No. 2 — To consider and vote upon a proposal to approve and adopt the third amended and restated certificate of incorporation of LACQ in the form attached to this proxy statement/prospectus as Annex B (the “third amended and restated certificate of incorporation”) — we refer to this proposal as the “charter proposal”;

 

(3) Proposal No. 3 — To consider and vote upon, on a non-binding advisory basis, certain governance provisions in the third amended and restated certificate of incorporation, presented separately in accordance with the U.S. Securities and Exchange Commission (“SEC”) requirements — we refer to this proposal as the “governance proposal”;

 

(4) Proposal No. 4 — To consider and vote upon a proposal to approve and adopt the 2021 Omnibus Incentive Plan, in the form attached to this proxy statement/prospectus as Annex C (the “Incentive Plan”), and the material terms thereunder, including the authorization of the initial share reserve thereunder — we refer to this proposal as the “incentive plan proposal.”;

 

(5) Proposal No. 5 — To consider and vote upon a proposal to elect seven (7) directors to the Board following the consummation of the Transactions until their respective successors are duly elected and qualified or until their earlier resignation, removal or death — we refer to this proposal as the “Director Election Proposal”;

 

(6) Proposal No. 6 — To consider and vote upon a proposal to approve, for purposes of complying with the applicable provisions of Nasdaq (as defined below) Rules 5635(a), (b) and (d), the issuance of more than 20% of LACQ’s issued and outstanding shares of common stock in connection with the Transactions, including, without limitation, the issuance of shares of LACQ common stock as Merger Consideration (which may constitute a change of control under the Nasdaq Rules) — we refer to this proposal as the “Nasdaq proposal”; and

 

(7) Proposal No. 7 — To consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the business combination proposal, the charter proposal, the governance proposal, the incentive plan proposal, the director election proposal or the Nasdaq proposal — we refer to this proposal as the “adjournment proposal.”

 

Each of these proposals is more fully described in this proxy statement/prospectus, which we encourage you to read carefully and in its entirety before voting. Only holders of record of LACQ common stock at 5:00 p.m. (New York City time) on [●], 2021 are entitled to notice of the special meeting and to vote and have their votes counted at the special meeting and any adjournments or postponements thereof.

 

 

 

 

After careful consideration, the Board has determined that the business combination proposal, the charter proposal, the governance proposal, the incentive plan proposal, the director election proposal, the Nasdaq proposal and the adjournment proposal are fair to and in the best interests of LACQ and its stockholders and unanimously recommends that you vote or give instruction to vote “FOR” the business combination proposal, “FOR” the charter proposal, “FOR” the governance proposal, “FOR” the incentive plan proposal, “FOR” the director election proposal, “FOR” the Nasdaq proposal and “FOR” the adjournment proposal, if presented.

 

When you consider the Board’s recommendation of these proposals, you should keep in mind that our directors and officers have interests in the business combination that are different from, or in addition to, the interests of LACQ stockholders generally. Please see the section entitled “The Merger — Interests of Certain Persons in the Business Combination” for additional information. The Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Transactions and in recommending to the LACQ stockholders that they vote in favor of the proposals presented at the special meeting.

 

Consummation of the Transactions is conditioned on the approval of LACQ’s stockholders by an affirmative vote of the holders of a majority of the outstanding shares of LACQ common stock of the business combination proposal. LACQ’s directors, officers and other initial stockholders and their respective affiliates (including the Sponsors and Strategic Investor) have agreed to vote in favor of the business combination and own a sufficient number of shares of LACQ common stock to approve the business combination. As of the record date for the special meeting, these holders together beneficially owned and were entitled to vote an aggregate of 6,000,000 shares of common stock, which currently constitutes approximately 96.4% of the outstanding shares of common stock. Accordingly, the business combination proposal can be approved even if every holder of outstanding shares of common stock sold in LACQ’s initial public offering (“public shares”) votes against such proposal.

 

Pursuant to LACQ’s current certificate of incorporation, a holder of public shares may demand that LACQ redeem such shares for cash if the business combination is consummated. To exercise your redemption rights, you must elect to have LACQ redeem your shares for a pro rata portion of the funds held in the trust account and tender your shares to LACQ’s transfer agent at least two (2) business days prior to the vote at the special meeting. You are not required to vote on the Transactions (either for or against) to exercise your redemption rights. You may tender your shares by either delivering your share certificate to the transfer agent or by delivering your shares electronically) using the depositary trust company’s DWAC (deposit and withdrawal at custodian) system. If the business combination is not completed, then these shares will not be redeemed for cash. If you hold the shares in street name, you will need to instruct the account executive at your bank or broker to withdraw the shares from your account in order to exercise your redemption rights.

 

If a holder of public shares properly demands redemption LACQ will redeem each public share for a full pro rata portion of the funds held in the trust account holding the proceeds from LACQ’s initial public offering, calculated as of two business days prior to the consummation of the business combination.

 

If the business combination is not completed, these shares will not be redeemed.

 

All LACQ stockholders are cordially invited to attend the special meeting and we are providing this proxy statement/prospectus and proxy card in connection with the solicitation of proxies to be voted at the special meeting (or any adjournment or postponement thereof). To ensure your representation at the special meeting, however, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the special meeting and vote, obtain a proxy from your broker or bank.

 

Your vote is important regardless of the number of shares you own. Whether you plan to attend the special meeting or not, please sign, date and return the enclosed proxy card as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.

 

Thank you for your participation. We look forward to your continued support.

 

     
    By Order of the Board of Directors
     
    A. Lorne Weil
    Chairman of the Board of Directors

 

[●], 2021

 

IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS.

 

TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST ELECT TO HAVE LACQ REDEEM YOUR SHARES FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO LACQ’s TRANSFER AGENT AT LEAST TWO (2) BUSINESS DAYS PRIOR TO THE VOTE AT THE SPECIAL MEETING. YOU ARE NOT REQUIRED TO VOTE ON THE TRANSACTIONS (EITHER FOR OR AGAINST) TO EXERCISE YOUR REDEMPTION RIGHTS. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT AND WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. PLEASE SEE THE SECTION ENTITLED “SPECIAL MEETING OF LACQ STOCKHOLDERS — REDEMPTION RIGHTS” FOR MORE SPECIFIC INSTRUCTIONS.

 

 

 

 

Table of Contents

 

    Page
     
FREQUENTLY USED TERMS   1
SUMMARY OF THE MATERIAL TERMS OF THE TRANSACTIONS   3
QUESTIONS AND ANSWERS   5
SUMMARY   14
LACQ’S SUMMARY HISTORICAL FINANCIAL INFORMATION   24
ENSYSCE’S SUMMARY HISTORICAL FINANCIAL INFORMATION   25
SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION   26
SUMMARY COMPARATIVE SHARE INFORMATION   28
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS   29
RISK FACTORS   31
SPECIAL MEETING OF LACQ STOCKHOLDERS   75
THE MERGER   79
THE MERGER AGREEMENT   97
CERTAIN OTHER AGREEMENTS RELATING TO THE TRANSACTIONS   105
PROPOSAL NO. 1 — THE BUSINESS COMBINATION PROPOSAL   106
PROPOSAL NO. 2 — THE CHARTER PROPOSAL   107
PROPOSAL NO. 3 — THE GOVERNANCE PROPOSAL   109
PROPOSAL NO. 4 — THE INCENTIVE PLAN PROPOSAL   111
PROPOSAL NO. 5 — THE DIRECTOR ELECTION PROPOSAL   118
PROPOSAL NO. 6 — THE NASDAQ PROPOSAL   119
PROPOSAL NO. 7 — THE ADJOURNMENT PROPOSAL   121
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION   122
INFORMATION ABOUT LACQ   128
LACQ’s MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   131
MANAGEMENT OF LACQ   136
MANAGEMENT AFTER THE BUSINESS COMBINATION   142
EXECUTIVE COMPENSATION OF ENSYSCE PRIOR TO THE BUSINESS COMBINATION AND THE COMBINED COMPANY AFTER THE BUSINESS COMBINATION   147
INFORMATION ABOUT ENSYSCE   152
ENSYSCE’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF ENSYSCE   170
DESCRIPTION OF LACQ’S SECURITIES   181
DIVIDENDS   187
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT   188
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS   191
SECURITIES ACT RESTRICTIONS ON RESALE OF LACQ’S SECURITIES   194
APPRAISAL RIGHTS   195
SUBMISSION OF STOCKHOLDER PROPOSALS   195
FUTURE STOCKHOLDER PROPOSALS   196
OTHER STOCKHOLDER COMMUNICATIONS   196
DELIVERY OF DOCUMENTS TO STOCKHOLDERS   196
EXPERTS   196
LEGAL MATTERS   197

WHERE YOU CAN FIND MORE INFORMATION

  197

 

    Page
     
Index to Financial Statements   F-1
     
Annexes    
     
Annex AMerger Agreement   A-1
     
Annex BForm of Third Amended and Restated Certificate of Incorporation   B-1
     
Annex CForm of 2021 Omnibus Incentive Plan.   C-1
     
Annex DForm of Amended and Restated Bylaws   D-1

 

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FREQUENTLY USED TERMS

 

Unless otherwise stated in this proxy statement/prospectus or the context otherwise requires, references to:

 

Additional LACQ Stock Consideration” are to the Merger Consideration per share of Ensysce common stock resulting from the conversion of Newly Issued Ensysce Convertible Notes in accordance with the Merger Agreement;

 

Board” or “LACQ Board” are to the board of directors of LACQ, or a committee thereof, as applicable;

 

business combination” are to the combination of Ensysce and LACQ into a single business;

 

closing” are to the consummation of the Merger;

 

closing date” are to the date on which the Transactions are consummated;

 

completion window” are to the period following the completion of LACQ IPO at the end of which, if LACQ has not completed an initial business combination, it will redeem 100% of the public shares at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (less up to $75,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, subject to applicable law and certain conditions. The completion window, as extended pursuant to amendments to LACQ’s second amended and restated articles of incorporation, as amended, ends on June 30, 2021;

 

current certificate of incorporation” are to LACQ’s second amended and restated certificate of incorporation, as amended, in effect as of the date of this proxy statement/prospectus;

 

DGCL” are to the Delaware General Corporation Law, as amended;

 

Ensysce” are to Ensysce Biosciences, Inc., a Delaware corporation;

 

Ensysce common stock” are to the shares of Ensysce’s common stock, par value $0.000025 per share, other than Ensysce common stock as to which dissenter’s rights are exercised, and including outstanding principal and accrued but unpaid interest due on Ensysce’s Convertible Notes to be converted into the applicable number of shares of Ensysce common stock provided for under the terms of such Ensysce Convertible Notes;

 

Exchange Act” are to the Securities Exchange Act of 1934, as amended;

 

Ensysce Convertible Notes” are to convertible promissory notes issued by Ensysce, including Newly Issued Ensysce Convertible Notes;

 

Ensysce Option” is to an option to acquire Ensysce common stock that will be converted into an option to acquire a number of shares of LACQ common stock in accordance with the Merger Agreement, equal to (i) the number of shares of Ensysce common stock subject to such Ensysce Option immediately prior to the Merger Effective Time, multiplied by (ii) the exchange ratio of 0.06585, at an exercise price per share equal to (A) the exercise price per share of Ensysce common stock subject to such Ensysce Option immediately prior to the Merger Effective Time, divided by (B) 0.06585;

 

Ensysce Warrant” are to a warrant to acquire a number of shares of Ensysce common stock that will automatically convert into a warrant to acquire LACQ common stock in accordance with the Merger Agreement, equal to (i) the number of shares of Ensysce common stock subject to such Ensysce Warrant immediately prior to the Merger Effective Time, multiplied by (ii) the exchange ratio of 0.06585, at an exercise price per share equal to (A) the exercise price per share of Ensysce common stock subject to such Ensysce Warrant immediately prior to the Merger Effective Time, divided by (B) 0.06585;

 

“Expense Advancement Agreement” are to the Expense Advancement Agreement dated December 1, 2017 among LACQ, the Sponsors and the Strategic Investor, as amended;

 

founder shares” are to the 7,187,500 shares of LACQ common stock initially purchased by LACQ’s initial stockholders in a private placement prior to the LACQ IPO (of which a total of 2,187,500 were previously forfeited);

 

GTWY Expense Advancement Agreement” are to the Expense Advancement Agreement dated December 5, 2019 between LACQ and Gateway Holdings Limited, as amended;

 

HSR Act” are to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended;

 

LACQ” are to Leisure Acquisition Corp, a Delaware corporation, which will be renamed Ensysce Biosciences, Inc. in connection with the consummation of the Transactions;

 

LACQ common stock” are to LACQ’s Common Stock, par value $0.0001 per share;

 

LACQ IPO” are to the initial public offering by LACQ which closed on December 5, 2017;

 

Merger” are to the merger of Merger Sub with and into Ensysce, with Ensysce continuing as the surviving entity and a wholly-owned subsidiary of LACQ;

 

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Merger Agreement” are to that certain Agreement and Plan of Merger, dated as of January 31, 2021, by and among LACQ, Merger Sub and Ensysce, providing for, among other things, and subject to the terms and conditions therein, a business combination between Ensysce and LACQ pursuant to the proposed merger of Merger Sub with and into Ensysce, as the same has been or may be amended, modified, supplemented or waived from time to time;

 

Merger Consideration” are to (i) the shares of LACQ common stock to be issued as consideration for the outstanding shares of Ensysce common stock (other than Ensysce common stock issuable on conversion of Newly Issued Ensysce Convertible Notes) pursuant to the Merger Agreement plus (ii) the Additional LACQ Stock Consideration, excluding options and warrants to acquire LACQ common stock issued in exchange for Ensysce Options and Ensysce Warrants;

 

Merger Effective Time” are to the effective time of the Merger;

 

“Merger Sub” are to EB Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of LACQ;

 

Net Tangible Assets” are to the net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) of LACQ immediately following the closing (after giving effect to the exercise by LACQ’s public stockholders of their right to redeem their shares of LACQ common stock into their pro rata share of the funds held in LACQ’s trust account in accordance with LACQ’s current certificate of incorporation);

 

Newly Issued Ensysce Convertible Notes” are to Ensysce Convertible Notes that may be issued by Ensysce after January 31, 2021 and prior to the closing, in an aggregate principal amount of up to $5,000,000, which may be issued only in accordance with the conditions set forth in the Merger Agreement;

 

Other Stockholders” are to (i) the underwriter of the LACQ IPO, to which, pursuant to an agreement entered into on January 31, 2021, LACQ is entitled, in certain circumstances, to pay a portion of the deferred underwriting commission in shares of LACQ common stock (at $10.00 per LACQ share) instead of cash and which is assumed to be settled in LACQ common stock for purposes of this Proxy Statement/Prospectus, (ii) an Ensysce vendor that previously had entered into an engagement letter with Ensysce that will receive 500,000 shares of LACQ common stock and warrants to purchase 500,000 shares of LACQ common stock on closing in connection with the modification of a brokerage fee and release of certain claims by the party and (iii) the parties under the GEM Agreement (as hereinafter defined) which will be issued an estimated 120,000 shares of LACQ common stock after the closing on account of a commitment fee of $1.2 million payable under Ensysce’s GEM Agreement.

 

Private Placement Warrants” are to the warrants issued by LACQ to the Sponsors in a private placement simultaneously with the closing of the LACQ IPO;

 

private warrants” are to the (i) Private Placement Warrants, (ii) warrants issued to the Sponsors and the Strategic Investor to purchase 1,000,001 shares of LACQ common stock in exchange for previously outstanding loans under the Expense Advancement Agreement, and (iii) warrants issued to GTWY Holdings Limited to purchase 566,288 shares of LACQ common stock issued in exchange for previously outstanding loans under the GTWY Expense Advancement Agreement.

 

public shares” are to the 20,000,000 shares of LACQ common stock sold as part of the units in the LACQ IPO (whether they were purchased in the LACQ IPO or thereafter in the open market), of which 18,775,732 shares had been previously redeemed as of the record date;

 

public stockholders” are to the holders of LACQ’s public shares, including LACQ’s directors, officers and other initial stockholders and their respective affiliates (including Sponsors and Strategic Investor) to the extent they purchase public shares, provided that each of their status as a “public stockholder” shall only exist with respect to such public shares;

 

Public Warrants” are to the redeemable warrants issued by LACQ and sold as part of the units in the LACQ IPO (whether they were purchased in the LACQ IPO or thereafter in the open market). The Public Warrants are exercisable for an aggregate of 10,000,000 shares of LACQ common stock at a purchase price of $11.50 per share;

 

SEC” are to the U.S. Securities and Exchange Commission;

 

Sponsors” are to (i) Hydra Management, LLC, a Delaware limited liability company and an affiliate of A. Lorne Weil, the Executive Chairman of LACQ and (ii) Matthews Lane Capital Partners LLC, a Delaware limited liability company and an affiliate of Daniel B. Silvers, the Chief Executive Officer of LACQ;

 

Strategic Investor” is to HG Vora Capital Management LLC on behalf of one or more funds or accounts managed by it;

 

Transactions” are to the Merger, together with the other transactions contemplated by the Merger Agreement and the related agreements;

 

trust account” are to the trust account of LACQ that holds the proceeds from the LACQ IPO, less amounts previously redeemed subsequent to the LACQ IPO;

 

units” are to the 20,000,000 units sold in the LACQ IPO on December 5, 2017, with each unit consisting of one public share and one-half (1/2) of one Public Warrant, each whole Public Warrant entitling the holder thereof to purchase one share of LACQ common stock for $11.50 per share; and

 

warrants” are to the Public Warrants and the private warrants.

 

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SUMMARY OF THE MATERIAL TERMS OF THE TRANSACTIONS

 

This summary term sheet, together with the sections entitled “Questions and Answers” and “Summary,” summarizes certain information contained in this proxy statement/prospectus, but does not contain all of the information that is important to you. You should carefully read this entire proxy statement/prospectus, including the attached Annexes, for a more complete understanding of the matters to be considered at the special meeting. In addition, for definitions used commonly throughout this proxy statement/prospectus, including this summary term sheet, please see the section entitled “Frequently Used Terms.”

 

  Leisure Acquisition Corp, a Delaware corporation, which we refer to as “LACQ,” “we,” “us,” or “our,” is a blank check company incorporated as a Delaware corporation on September 11, 2017 and formed solely for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.
     
  On December 5, 2017, LACQ closed its initial public offering of 20,000,000 units, with each unit consisting of one share of LACQ common stock and one-half (1/2) of one warrant, each whole warrant to purchase one share of its common stock at a purchase price of $11.50 commencing upon the later of (i) 30 days after LACQ’s completion of a business combination and (ii) December 5, 2018 (collectively, the “LACQ Public Warrants”). The units from the LACQ IPO were sold at an offering price of $10.00 per unit, generating total gross proceeds of $200,000,000. Simultaneously with the consummation of the LACQ IPO, LACQ consummated the private sale of 6,825,000 warrants at $1.00 per warrant for an aggregate purchase price of $6,825,000 (the “LACQ Private Placement Warrants”). A total of $200,000,000, was deposited into the trust account and the remaining net proceeds became available to be used as working capital to provide for business, legal and accounting due diligence on prospective business combinations and continuing general and administrative expenses. The LACQ IPO was conducted pursuant to a registration statement on Form S-1 (Reg. No. 333-221330) that became effective on December 1, 2017. In connection with special stockholders meetings at which the completion window was extended, an aggregate of 18,775,732 public shares were redeemed for cash from the trust account, for an aggregate redemption amount of approximately $196.360 million. As of the record date, additional contributions totaling approximately $2.265 million have been deposited into the trust account. As of February 28, 2021, there was approximately $12.7 million held in the trust account.
     
  Ensysce is a clinical stage pharmaceutical company seeking to develop innovative solutions for severe pain relief while reducing the fear of and the potential for addiction, opioid misuse, abuse and overdose. Ensysce has also incorporated a 79.2%-owned subsidiary, Covistat Inc. (“Covistat”), a clinical stage pharmaceutical company that is developing a compound utilized in Ensysce’s overdose protection program for the treatment of COVID-19. See the sections entitled “Information About Ensysce,”, “Ensysce’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Management after the Business Combination.
     
  On January 31, 2021, LACQ entered into the Merger Agreement with Merger Sub, a wholly-owned subsidiary of LACQ, and Ensysce, providing for, among other things, and subject to the terms and conditions therein, a business combination between Ensysce and LACQ pursuant to the proposed merger of Merger Sub with and into Ensysce, with Ensysce continuing as the surviving entity.
     
  Subject to the terms of the Merger Agreement, at the reference price of $10.00 per share of LACQ common stock, the total Merger Consideration of 17,336,655 shares of LACQ common stock (based on the number of shares of Ensysce common stock outstanding at April 7, 2021) and excluding the shares underlying the Ensysce Options and Ensysce Warrants and shares of LACQ common stock which may be issuable with respect to the Newly Issued Ensysce Convertible Notes would have a value of $173,336,550.
     
  In connection with the Merger Agreement, (i) officers and directors of Ensysce entered into Lock-up Agreements pursuant to which they have agreed not to sell, transfer, pledge or otherwise dispose of shares of LACQ common stock they receive for certain time periods specified therein. Further, LACQ and Sponsors entered into a Warrant Surrender Agreement. For more information about the Lock-up and Warrant Surrender Agreements, please see the section entitled “Certain Other Agreements Relating to the Transactions.”
     
  It is anticipated that, upon completion of the business combination: (a) LACQ’s public stockholders (other than initial stockholders, and their respective affiliates) will own approximately 0.9% in the post-combination company; (b) the initial stockholders and their respective affiliates, including the Sponsors and the Strategic Investor will own approximately 24.6% of the post-combination company; (c) Other Stockholders will own approximately 3.4% of the post-combination company; and (d) current holders of Ensysce Stock, including holders of shares issued on conversion of Ensysce Convertible Notes will collectively own approximately 71.1% of the post-combination company. These levels of ownership interest: (i) exclude the impact of the shares of LACQ common stock underlying the warrants and those reserved for issuance under the Incentive Plan, (ii) assume that no LACQ public stockholder exercises redemption rights with respect to public shares for a pro rata portion of the funds in LACQ’s trust account, (iii) assume that 17,336,655 shares of LACQ common stock are issued as Merger Consideration and are outstanding as of the closing (including shares of LACQ common stock issued on conversion of Ensysce Convertible Notes (other than up to 500,000 shares of LACQ common stock which may be issued in respect of Newly Issued Ensysce Convertible Notes) and excluding shares underlying the Ensysce Options and Ensysce Warrants) and (iv) exclude the impact of the shares of LACQ common stock underlying the warrants anticipated to be issued pursuant to the Expense Advancement Agreement and Ensysce’s GEM Agreement.

 

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  LACQ management and the Board considered various factors in determining whether to approve the Merger Agreement and the Transactions, including the Merger. For more information about the reasons that the Board considered in determining its recommendation, please see the section entitled “The Merger — LACQ’s Board of Directors’ Reasons for the Approval of the Transactions.” When you consider the Board’s recommendation of these proposals, you should keep in mind that LACQ’s directors, officers and other initial stockholders and their respective affiliates (including Sponsors and Strategic Investor) have interests in the business combination that are different from, or in addition to, the interests of LACQ stockholders generally. Please see the section entitled “The Merger — Interests of Certain Persons in the Business Combination” for additional information. The Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Transactions and in recommending to the LACQ stockholders that they vote “FOR” the proposals presented at the special meeting.
     
  At the special meeting, LACQ’s stockholders will be asked to consider and vote on the following proposals:
     
  a proposal to approve the business combination described in this proxy statement/prospectus, including approving the Merger Agreement and the Transactions described in this proxy statement/prospectus. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal”;
     
  a proposal to approve and adopt the third amended and restated certificate of incorporation of LACQ. Please see the section entitled “Proposal No. 2 — The Charter Proposal”;
     
  a proposal to vote upon, on a non-binding advisory basis, certain governance provisions in the third amended and restated certificate of incorporation, presented separately in accordance with requirements of the SEC. Please see the section entitled “Proposal No. 3 — The Governance Proposal”;
     
  a proposal to approve and adopt the 2021 Omnibus Incentive Plan (the “Incentive Plan”) and the material terms thereunder, including the authorization of the initial share reserve thereunder. Please see the section entitled “Proposal No. 4 — The Incentive Plan Proposal”;
     
  a proposal to elect seven (7) directors to serve until their respective successors are duly elected and qualified or until their earlier resignation, removal or death. Please see the section entitled “Proposal No. 5 — The Director Election Proposal”;
     
  a proposal to approve, for purposes of complying with the applicable provisions of Nasdaq Rules 5635(a), (b) and (d), the issuance of more than 20% of LACQ’s issued and outstanding shares of common stock in connection with the Transactions, including, without limitation, the Merger Consideration (which may constitute a change of control under the Nasdaq Rules). Please see the section entitled “Proposal No. 6 — The Nasdaq Proposal”; and
     
  a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the business combination proposal, the charter proposal, the governance proposal, the incentive plan proposal, the director election proposal or the Nasdaq proposal. Please see the section entitled “Proposal No. 7 — The Adjournment Proposal.”

 

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QUESTIONS AND ANSWERS

 

The questions and answers below highlight only selected information from this proxy statement/prospectus and only briefly address some commonly asked questions, which are grouped into the following two categories: (a) Questions and Answers About the Proposed Business Combination and (b) Questions and Answers About the Special Meeting and the Proposals to be Presented at the Special Meeting. The following questions and answers do not include all the information that is important to you. LACQ and Ensysce stockholders are urged to read carefully this entire proxy statement/prospectus, including the Annexes and the other documents referred to herein, to fully understand the proposed business combination and the voting procedures for the special meeting.

 

Questions and Answers About the Proposed Business Combination

 

  Q. Why am I receiving this proxy statement/prospectus?
       
    A. LACQ and Ensysce have agreed to a business combination under the terms of the Merger Agreement that is described in this proxy statement/prospectus. A copy of the Merger Agreement is attached hereto as Annex A, and LACQ and Ensysce encourage their stockholders to read it in its entirety.
       
      This document constitutes a proxy statement of LACQ and a prospectus of LACQ.
       
      This document is a proxy statement because the Board is soliciting from LACQ stockholders proxies for the special meeting using this proxy statement/prospectus. At the special meeting, LACQ’s stockholders are being asked to consider and vote upon, among other proposals set forth herein, a proposal to approve the Merger Agreement and the Transactions, which, among other things, includes provisions for a business combination between Ensysce and LACQ pursuant to the proposed merger of Merger Sub with and into Ensysce, with Ensysce continuing as the surviving entity. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal.
       
      This document is a prospectus because LACQ, in connection with the Merger, is offering up to 17,500,000 shares of LACQ common stock (including shares of LACQ common stock issued on conversion of Ensysce Convertible Notes (other than Newly Issued Ensysce Convertible Notes)) (of which 17,336,655 shares would be issued based on the outstanding Ensysce common stock on April 7, 2021), and up to 500,000 shares of LACQ common stock which may be issued in respect of Newly Issued Ensysce Convertible Notes as part of the Merger Consideration.
       
      This proxy statement/prospectus and its Annexes contain important information about the proposed business combination and the other matters to be acted upon at the special meeting. You should read this proxy statement/prospectus and its Annexes carefully and in their entirety.
       
      Your vote is important. LACQ stockholders are encouraged to submit your proxy, as soon as possible after carefully reviewing this proxy statement/prospectus and its Annexes.
       
  Q. Why is LACQ proposing the business combination?
       
    A. LACQ was formed solely for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.
       
      On December 5, 2017, LACQ consummated its initial public offering of 20,000,000 units, with each unit consisting of one share of LACQ common stock and one-half (1/2) of one Public Warrant, each whole Public Warrant entitling the holder thereof to purchase one share of LACQ common stock for $11.50 per share. The units were sold at an offering price of $10.00 per unit, generating gross proceeds of $200,000,000. Simultaneously with the consummation of the LACQ IPO, LACQ consummated the private placement of 6,825,000 Private Placement Warrants at a price of $1.00 per warrant, generating total proceeds of $6,825,000. Since the LACQ IPO, LACQ’s activity has been limited to the evaluation of business combination candidates and seeking to complete an initial business combination.
       
      Ensysce is a clinical stage pharmaceutical company seeking to develop innovative solutions for severe pain relief while reducing the fear of and the potential for addiction, opioid misuse, abuse and overdose. Ensysce has also incorporated a 79.2%-owned subsidiary, Covistat, a clinical stage pharmaceutical company that is developing a compound utilized in Ensysce’s overdose protection program for the treatment of COVID-19.
       
      Based on its due diligence investigations of Ensysce and the industry in which it operates, including the financial and other information provided by Ensysce in the course of their negotiations in connection with the Merger Agreement, LACQ believes that Ensysce, utilizing its two technology platforms, has the potential to develop opioid products that deter abuse and drug overdoses and may have advantages over abuse-deterrent opioid drugs currently on the market. Therefore, if Ensysce is successful in developing its lead product candidates, it could potentially address a large market. Additionally, as a publicly-traded company, the Board believes that Ensysce would be in a better position than it currently is as a private company to raise capital to fund the development of its product candidates.

 

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      As a result, LACQ believes that a business combination with Ensysce will provide LACQ’s stockholders with an opportunity to participate in the ownership of a company with significant future potential growth if it can successfully complete the development and commercialization of its product candidates. Please see the section entitled “The Merger — LACQ’s Board of Directors’ Reasons for Approval of the Transactions.
       
  Q. What will happen in the business combination?
       
    A. Pursuant to the Merger Agreement, and upon the terms and subject to the conditions set forth therein, LACQ will acquire Ensysce through the merger of Merger Sub with and into Ensysce, with Ensysce continuing as the surviving entity, which merger we refer to as the “Merger.”
       
      As a result of the Merger, LACQ will own 100% of the outstanding common stock of Ensysce and each share of Ensysce common stock, including Ensysce common stock issued on conversion of Ensysce Convertible Notes will be cancelled and automatically converted into the right to receive a number of shares of LACQ common stock calculated pursuant to the Merger Agreement (the “Merger Consideration”).
       
      Each option to acquire Ensysce common stock that is outstanding immediately prior to the effective time of the Merger, will be assumed and automatically converted into an option to purchase a number of shares of LACQ common stock at the exercise price calculated pursuant to the Merger Agreement and each warrant to acquire Ensysce Common Stock that is outstanding immediately prior to the effective time of the Merger, will be assumed and automatically converted into a warrant to purchase a number of shares of LACQ common stock at the exercise price calculated pursuant to the Merger Agreement. For more information, see “The Merger” and “The Merger Agreement — Treatment of Ensysce Securities.”
       
      We also use the term “business combination” in this proxy statement/prospectus statement to refer to the combination of Ensysce and LACQ into a single business.
       
  Q. Following the business combination, will LACQ’s securities continue to trade on a stock exchange?
       
    A. LACQ has filed an application to continue the listing of the combined entity on Nasdaq concurrent with consummation of the Transactions and believes the combined entity will satisfy all criteria for initial listing upon completion of the Transactions. As such, LACQ expects to obtain Nasdaq listing approval prior thereto; notwithstanding, LACQ can provide no assurances that Nasdaq will approve the listing application for the combined entity. In connection with the business combination, LACQ will change its name to Ensysce Biosciences, Inc. and, assuming approval of the application for continued listing, the LACQ common stock and Public Warrants will begin trading on the Nasdaq under the symbols “ENSC” and “ENSCW”, respectively. As a result, our publicly traded units will separate into the component securities upon consummation of the business combination and will no longer trade as a separate security. However, Nasdaq’s determination may not be known at the time stockholders are asked to vote on the Transactions and the closing is not conditioned on Nasdaq’s approval of the continued listing.
       
  Q. How will the business combination impact the shares of LACQ outstanding after the business combination?
       
    A. As a result of the business combination and the consummation of the Transactions the amount of LACQ common stock outstanding will increase by approximately 287% to approximately 24,380,923 shares of LACQ common stock (assuming that no shares of LACQ common stock are elected to be redeemed by LACQ stockholders and the other assumptions described under “Unaudited Pro Forma Condensed Combined Financial Information”). Additional shares of LACQ common stock may be issuable in the future as a result of the issuance of additional shares that are not currently outstanding, including issuance of shares of LACQ common stock upon exercise of the warrants and Ensysce Warrants and issuances under the Incentive Plan. The issuance and sale of such shares in the public market could adversely impact the market price of the LACQ common stock, even if our business is doing well. Pursuant to the Incentive Plan, a copy of which is attached hereto as Annex C, following the closing and subject to the approval of the applicable award agreements by the post-combination Board, LACQ may grant an aggregate amount of up to 1,000,000 additional shares of LACQ common stock.
       
  Q. Will the management of Ensysce change in the business combination?
       
    A. We anticipate that all of the executive officers of Ensysce will remain with the post-combination company. In addition, Bob Gower, William Chang, Andrew Benton, Steve R. Martin and Lynn Kirkpatrick will be nominated by Ensysce and Adam Levin and Curtis Rosebraugh will be nominated by LACQ to serve as directors of LACQ following completion of the business combination. Please see the sections entitled “Proposal No. 5 — The Director Election Proposal” and “Management After the Business Combination” for additional information.

 

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  Q. What equity stake will current stockholders of Ensysce, LACQ’s Public Stockholders and the Sponsors hold in the post-combination company after the closing?
       
    A. Upon completion of Transactions it is expected that: (a) LACQ’s public stockholders (other than the initial stockholders and their respective affiliates) will own approximately 0.9% in the post-combination company; (b) the initial stockholders and their respective affiliates, including the Sponsors and the Strategic Investor, will own approximately 24.6% of the post-combination company; (c) Other Stockholders will own approximately 3.4% of the post-combination company; and (d) current holders of Ensysce Stock, including holders of shares issued on conversion of Ensysce Convertible Notes, will collectively own approximately 71.1% of the post-combination company. These levels of ownership interests: (i) exclude the impact of the shares of LACQ common stock underlying the warrants and those reserved for issuance under the Incentive Plan, (ii) assume that no LACQ public stockholder exercises redemption rights with respect to its public shares for a pro rata portion of the funds in LACQ’s trust account and that 17,336,655 shares of LACQ common stock are issued as Merger Consideration and are outstanding as of the closing (including shares of LACQ common stock issued on conversion of Ensysce Convertible Notes (other than up to 500,000 shares of LACQ common stock which may be issued in respect of Newly Issued Ensysce Convertible Notes) and exclude shares underlying the Ensysce Options and Ensysce Warrants); and (iii) exclude the impact of warrants to acquire LACQ common stock anticipated to be issued pursuant to the Expense Advancement Agreement and Ensysce’s GEM Agreement. If LACQ stockholders seek to redeem more than 98,067 shares of LACQ common stock, the conditions to the Merger Agreement and the requirement under LACQ’s current certificate of incorporation that LACQ have at least $5,000,001 of Net Tangible Assets would not be satisfied.
       
      For more information, please see the sections entitled “Summary — Impact of the Business Combination on the Post-Combination Company’s Public Float,” “Unaudited Pro Forma Condensed Combined Financial Information” and “Proposal No. 4 — The Incentive Plan Proposal.”
       
  Q. Can Ensysce issue additional Ensysce common stock or securities convertible into Ensysce common stock after January 31, 2021, the date the Merger Agreement was entered into?
       
    A.

Under the provisions of the Merger Agreement, Ensysce may raise up to $5,000,000 prior to the closing of the Merger through the issuance of Newly Issued Ensysce Convertible Notes. The Newly Issued Ensysce Convertible Notes may not be issued to Ensysce’s affiliates, officers or directors. The Newly Issued Convertible Notes are convertible into Ensysce common stock at the Exchange Ratio multiplied by the greater of (i) $10.00 per share, or (ii) the price of the LACQ common stock on the date of issuance of the Newly Issued Convertible Notes. To date, Ensysce has not issued any of the Newly Issued Convertible Notes.

 

In addition, Ensysce issued 4,325,381 shares of Ensysce common stock (which will be exchangeable for 284,825 shares of LACQ common stock at the closing) after January 31, 2021 on exercise of outstanding Ensysce options, which LACQ provided its consent to under the Merger Agreement.

       
  Q. What conditions must be satisfied to complete the business combination?
       
    A. There are a number of closing conditions in the Merger Agreement, including the approval of LACQ’s stockholders by an affirmative vote of the holders of a majority of the outstanding shares of LACQ common stock of the business combination proposal. In addition, Ensysce’s stockholders must adopt the Merger Agreement and thereby approve the Transactions, including the Merger, which adoption has been completed. LACQ’s directors, officers and other initial stockholders and their respective affiliates (including Sponsors and Strategic Investor) have agreed to vote in favor of the business combination and own a sufficient number of shares of LACQ common stock to approve the business combination. Each of the parties may waive any of the conditions to its obligation to close the Merger Agreement and LACQ, Ensysce and Merger Sub may together waive the conditions to all of the parties’ obligations. However, pursuant to LACQ’s current second amended and restated certificate of incorporation, LACQ cannot consummate the proposed business combination if it would have less than $5,000,001 of Net Tangible Assets remaining after the closing. For a description of the conditions to the completion of the business combination, please see the section entitled “The Merger Agreement — Conditions to the Closing of the Transactions.”
       
  Q. When do you expect the business combination to be completed?
       
    A. It is currently anticipated that the business combination will be consummated promptly following the LACQ special meeting which is set for [●], 2021, subject to the satisfaction of customary closing conditions; however, such meeting could be adjourned, as described herein.
       
  Q. What do I need to do now?
       
    A. LACQ urges you to read carefully and consider the information contained in this proxy statement/ prospectus, including the Annexes, and to consider how the business combination will affect you as a stockholder and/or warrant holder of LACQ. LACQ stockholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/ prospectus and on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or other nominee.
       
Questions and Answers About the Special Meeting and the Proposals to be Presented at the Special Meeting
       
  Q. When and where is the Special Meeting?
       
    A. The special meeting will be held at [●] a.m. eastern time, on [●], 2021, at the offices of LACQ at 250 West 57th Street, Suite 415, New York, New York 10107.
       
  Q.    I am a LACQ stockholder. How do I attend the special meeting in person?
       
    A.  In-person attendance at the special meeting is limited due to the coronavirus pandemic and mandated social distancing protocols in New York City. If you would like to attend the special meeting in person, you must reserve your attendance at least two (2) business days in advance of the special meeting by contacting George Peng, Chief Financial Officer, Leisure Acquisition Corp., 250 West 57th Street, Suite 415, New York, New York 10107, telephone number (646) 565-6940. Reservations will be accepted in the order in which they are received.

 

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      For security reasons, be prepared to show a form of government-issued photo identification upon arrival. If you do not reserve your attendance in advance, you will be admitted only if space is available and you provide photo identification and satisfactory evidence that you were a stockholder as of the record date. Additionally, in accordance with federal and local guidelines, we require all persons attending the special meeting to wear face masks. Social distancing and city and state requirements concerning occupancy will be enforced.

 

  Q. What are the proposals on which I am being asked to vote at the special meeting?
         
    A. The stockholders of LACQ will be asked to consider and vote on the following proposals at the special meeting:
         
      1. a proposal to approve the business combination described in this proxy statement/prospectus, including approving the Merger Agreement and approving the Transactions described in this proxy statement/prospectus. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal”;
         
      2. a proposal to approve and adopt the third amended and restated certificate of incorporation of LACQ. Please see the section entitled “Proposal No. 2 — The Charter Proposal”;
         
      3. a proposal to vote upon, on a non-binding advisory basis, certain governance provisions in the third amended and restated certificate of incorporation, presented separately, in accordance with the requirements of the SEC. Please see the section entitled “Proposal No. 3 — The Governance Proposal”;
         
      4. a proposal to approve and adopt the Incentive Plan and the material terms thereunder, including the authorization of the initial share reserve thereunder. Please see the section entitled “Proposal No. 4 — The Incentive Plan Proposal”;
         
      5. a proposal to elect seven (7) directors to serve until their respective successors are duly elected and qualified or until their earlier resignation, removal or death. Please see the section entitled “Proposal No. 5 — The Director Election Proposal”;
         
      6. a proposal to approve, for purposes of complying with the applicable provisions of Nasdaq Rules 5635(a), (b) and (d), the issuance of more than 20% of LACQ’s issued and outstanding shares of common stock in connection with the Transactions, including, without limitation, the Merger Consideration (which may constitute a change of control under the Nasdaq Rules). Please see the section entitled “Proposal No. 6 — The Nasdaq Proposal”; and
         
      7. a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the business combination proposal, the charter proposal, the governance proposal, the incentive plan proposal, the director election proposal or the Nasdaq proposal. Please see the section entitled “Proposal No. 7 — The Adjournment Proposal.”
         
        LACQ will hold the special meeting of its stockholders to consider and vote upon these proposals. This proxy statement/prospectus contains important information about the proposed business combination and the other matters to be acted upon at the special meeting. Stockholders should read it carefully.
         
        Consummation of the Transactions is conditioned on the approval of the business combination proposal. If this proposal is not approved, we will not consummate the Transactions.
         
        The vote of LACQ’s stockholders is important. LACQ stockholders are encouraged to vote as soon as possible after carefully reviewing this proxy statement/prospectus.
         
  Q. Why is LACQ providing stockholders with the opportunity to vote on the business combination?
         
    A. Under LACQ’s current certificate of incorporation, we must provide all holders of public shares with the opportunity to have their public shares redeemed upon the consummation of our initial business combination either in conjunction with a tender offer or in conjunction with a stockholder vote. For business and other reasons, including those described under “Proposal No. 6 — The Nasdaq Proposal,” we have elected to provide our stockholders with the opportunity to have their public shares redeemed in connection with a stockholder vote rather than a tender offer. Therefore, we are seeking to obtain the approval of our stockholders of the business combination proposal in order to allow our public stockholders to effectuate redemptions of their public shares in connection with the closing.
         
  Q. What constitutes a quorum at the special meeting?
         
    A. A majority of the voting power of all issued and outstanding shares of LACQ’s common stock entitled to vote as of the record date at the special meeting must be present in person, or represented by proxy, at the special meeting to constitute a quorum and in order to conduct business at the special meeting. Abstentions will be counted as present for the purpose of determining a quorum. As of the record date for the special meeting, 3,112,135 shares of our common stock would be required to be present at the special meeting to achieve a quorum.

 

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      LACQ’s directors, officers and other initial stockholders and their respective affiliates (including Sponsors and the Strategic Investor) will count toward this quorum and have agreed to vote the founder shares and any public shares purchased during or after the LACQ IPO in favor of the business combination proposal and own a sufficient number of shares of LACQ common stock to approve the business combination and other proposals.
       
  Q. What vote is required to approve the proposals presented at the special meeting?
       
    A. The approval of the business combination proposal requires the affirmative vote of holders of a majority of LACQ’s outstanding shares of common stock entitled to vote at the special meeting in order to satisfy the condition to closing in the Merger Agreement. Accordingly, if a valid quorum is established, a LACQ stockholder’s failure to vote by proxy or to vote at the special meeting with regard to the business combination proposal will have the same effect as a vote “AGAINST” such proposal.
       
      The approval of the charter proposal requires the affirmative vote of holders of a majority of LACQ’s outstanding shares of common stock entitled to vote at the special meeting. Accordingly, if a valid quorum is established, a LACQ stockholder’s failure to vote by proxy or to vote at the special meeting with regard to the charter proposal will have the same effect as a vote “AGAINST” such proposal.
       
      The approval of each of the governance proposal (which is a non-binding advisory vote), the incentive plan proposal, the Nasdaq proposal and the adjournment proposal require the affirmative vote of a majority of the votes cast by holders of LACQ’s outstanding shares of common stock represented at the special meeting by attendance in person or by proxy and entitled to vote at the special meeting. Accordingly, if a valid quorum is established, a LACQ stockholder’s failure to vote by proxy or to vote at the special meeting with regard to the business combination proposal, the governance proposal, the incentive plan proposal and the Nasdaq proposal will have no effect on such proposals and include a LACQ stockholder’s failure to vote by proxy or to vote at the special meeting with regard to the adjournment proposal will have no effect on such proposals, which may be approved, whether or not a valid quorum is present.
       
      Directors are elected by a plurality of all of the votes cast by holders of shares of LACQ’s common stock represented at the special meeting by attendance in person or by proxy and entitled to vote at the special meeting. This means that the seven (7) director nominees who receive the most affirmative votes will be elected. LACQ stockholders may not cumulate their votes with respect to the election of directors. Accordingly, if a valid quorum is established, a LACQ stockholder’s failure to vote by proxy or to vote at the special meeting with regard to the director election proposal will have no effect on such proposal.
       
      LACQ’s directors, officers and other initial stockholders and their respective affiliates (including Sponsors and Strategic Investor) own of record and are entitled to vote an aggregate of 6,000,000 shares (or 96.4%) of LACQ’s common stock as of the record date. LACQ’s directors, officers and other initial stockholders and their respective affiliates (including Sponsors and Strategic Investor) have agreed to vote in favor of the business combination and own a sufficient number of shares of LACQ common stock to approve the business combination. These parties have interests in the business combination that may conflict with your interests as a stockholder. Please see the sections entitled “Summary — Interests of Certain Persons in the Business Combination” and “The Merger — Interests of Certain Persons in the Business Combination.”
       
  Q. How many votes do I have at the special meeting?
       
    A. LACQ stockholders are entitled to one vote on each proposal presented at the special meeting for each share of common stock held of record as of April 7, 2021, the record date for the special meeting. As of 5:00 p.m. (New York City time) on the record date, there were 6,224,268 outstanding shares of our common stock.
       
  Q. What happens if I sell my shares of LACQ common stock before the special meeting?
       
    A.  The record date for the special meeting is earlier than the date that the business combination is expected to be completed. If you transfer your shares of LACQ common stock after the record date, but before the special meeting, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the special meeting. However, you will not be able to seek redemption of your shares of LACQ common stock because you will no longer be able to deliver them for cancellation upon consummation of the business combination. If you transfer your shares of LACQ common stock prior to the record date, you will have no right to vote those shares at the special meeting or redeem those shares for a pro rata portion of the proceeds held in our trust account.

 

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  Q. Why is LACQ proposing the governance proposal?
     
    A. As required by applicable SEC guidance, LACQ is requesting that its stockholders vote upon, on a non-binding advisory basis, a proposal to approve certain governance provisions contained in the third amended and restated certificate of incorporation that materially affect stockholder rights. This separate vote is not otherwise required by Delaware law separate and apart from the charter proposal, but pursuant to SEC guidance, LACQ is required to submit these provisions to its stockholders separately for approval. However, the stockholder vote regarding this proposal is an advisory vote, and is not binding on LACQ or the Board (separate and apart from the approval of the charter proposal). Furthermore, the business combination is not conditioned on the separate approval of the governance proposal (separate and apart from approval of the charter proposal). Please see the section entitled “Proposal No. 3 — The Governance Proposal.”
     
  Q. Did the Board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the business combination?
     
    A. The Board did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the business combination with Ensysce. While the officers and directors’ primary industry experience relates to the leisure sector and they do not have experience with companies in the biotechnology sector, the officers and directors of LACQ have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries. Additionally, the Board retained a subject matter consultant to assist them in the evaluation of Ensysce’s lead product candidate and technology. The Board also considered the fact that the completion window would expire if a transaction were not completed by June 30, 2021 and that public stockholders could redeem their LACQ common stock if they did not want to be stockholders of the post-combination company. In addition, LACQ’s officers and directors and LACQ’s advisors have substantial experience with mergers and acquisitions. The Board considered these factors, among others, and concluded that their experience and backgrounds, together with the experience and the input of their subject matter consultant, enabled them to perform the necessary analyses and make determinations regarding the Transactions. Accordingly, investors will be relying solely on the judgment of the Board in valuing Ensysce’s business, and assuming the risk that the Board may not have properly valued such business.
     
  Q. What are the material U.S. federal income tax consequences of the Merger to Ensysce stockholders?
     
    A. Ensysce and LACQ intend the Merger to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), for U.S. federal income tax purposes. If the Merger so qualifies, Ensysce stockholders generally should not recognize gain or loss for U.S. federal income tax purposes on the receipt of shares of LACQ common stock issued in connection with the Merger.
     
      The obligations of Ensysce and LACQ to complete the Merger are not conditioned on the receipt of opinions from Proskauer Rose LLP (counsel to LACQ), Troutman Pepper Hamilton Sanders LLP (counsel to Ensysce), or any other U.S. tax counsel to the effect that the Merger will qualify as a reorganization for U.S. federal income tax purposes. If the Merger does not qualify as a reorganization, it will be treated as a taxable stock sale and each Ensysce stockholder will generally recognize capital gain or loss, for U.S. federal income tax purposes, on the receipt of LACQ common stock issued to such Ensysce stockholder and on any cash received in lieu of fractional shares in connection with the Merger.
     
      The consequences of the Merger to any particular stockholder will depend on that stockholder’s particular facts and circumstances. Accordingly, you are urged to consult your tax advisor to determine your tax consequences from the Merger, including the applicability and effect of U.S. federal, state, local and non-U.S. income and other tax laws in light of your particular circumstances.
     
      For a more detailed discussion of the material U.S. federal income tax consequences of the Merger, see “The Merger Material U.S. Federal Income Tax Consequences of the Business Combination.”
     
  Q. Do the Sponsors and/or any of the LACQ directors or officers have interests in the business combination proposal and the other proposals that may differ from or be in addition to the interests of LACQ’s stockholders?
     
    A. The initial stockholders and their respective affiliates, including the Sponsors and the Strategic Investor and the directors and officers, have interests in the business combination proposal and the other proposals that may be different from, or in addition to, the interests of LACQ’s stockholders generally. These interests may cause them to view the business combination proposal and the other proposals differently than LACQ’s stockholders generally may view them. The Board was aware of and considered these interests to the extent such interests existed at the time, among other matters, in approving the Merger Agreement and the Merger, and in recommending that the business combination proposal and other proposals be approved by LACQ’s stockholders. For more information on the interests of the Sponsors and/or LACQ’s directors and executive officers in the Merger, see “The Merger — Interests of Certain Persons in the Business Combination.”

 

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  Q. Do I have redemption rights?
       
    A. If you are a holder of public shares, you have the right to demand that LACQ redeem such shares for a pro rata portion of the cash held in the trust account, whether or not you vote your public shares for or against the business combination proposal or do not vote your public shares. LACQ sometimes refers to these rights to demand redemption of the public shares as “redemption rights.”
       
      Notwithstanding the foregoing, a holder of public shares, together with any affiliate of its or any other person with whom such holder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking redemption with respect to more than 20% of the public shares. Accordingly, all public shares in excess of 20% held by a public stockholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group,” will not be redeemed.
       
      Under the Merger Agreement, the consummation of the Transactions is conditioned upon, among other things, following payment to all stockholders who have exercised their redemption rights (and after giving effect to the payment of expenses related to the Transactions that are to be paid at or after closing (provided that LACQ can pay such expenses in equity securities and not cash)), LACQ having cash of at least $5,000,000. In addition, under LACQ’s current certificate of incorporation, the business combination may be consummated only if LACQ has at least $5,000,001 of Net Tangible Assets. If LACQ stockholders seek to redeem more than 98,067 shares of LACQ common stock, this condition would not be satisfied.
       
  Q. How do I exercise my redemption rights?
       
    A. If you are a holder of public shares and wish to exercise your redemption rights, you must demand that LACQ redeem your shares into cash no later than the second business day preceding the vote on the business combination proposal by delivering your stock to LACQ’s transfer agent physically or electronically using Depository Trust Company’s DWAC (Deposit and Withdrawal at Custodian) system prior to the vote at the special meeting. You are not required to vote on the Transactions (either for or against) to exercise your redemption rights. Any holder of public shares will be entitled to demand that such holder’s shares be redeemed for a full pro rata portion of the amount then in the trust account (which, for illustrative purposes, was approximately $12.7 million, or $10.366 per public share, as of February 28, 2021, the record date). Such amount, less any owed but unpaid taxes on the funds in the trust account, will be paid promptly upon consummation of the business combination. However, under Delaware law, the proceeds held in the trust account could be subject to claims which could take priority over those of LACQ’s public stockholders exercising redemption rights, regardless of whether such holders vote for or against the business combination proposal.
       
      Therefore, the per share distribution from the trust account in such a situation may be less than originally anticipated due to such claims.
       
      Any request for redemption, once made by a holder of public shares, may be withdrawn at any time up to the time the vote is taken with respect to the business combination proposal at the special meeting. If you deliver your shares for redemption to LACQ’s transfer agent and later decide prior to the special meeting not to elect redemption, you may request that LACQ’s transfer agent return the shares (physically or electronically). You may make such request by contacting LACQ’s transfer agent at the address listed at the end of this section.
       
      Any corrected or changed proxy card or written demand of redemption rights must be received by LACQ’s transfer agent prior to the vote taken on the business combination proposal at the special meeting. No demand for redemption will be honored unless the holder’s stock has been delivered (either physically or electronically) to the transfer agent prior to the vote at the special meeting.
       
      If demand is properly made as described above, then, if the business combination is consummated, LACQ will redeem these shares for a pro rata portion of funds deposited in the trust account. If you exercise your redemption rights, then you will be exchanging your shares of LACQ common stock for cash and will not be entitled to continue as a stockholders of LACQ upon consummation of the Transactions.
       
      If you are a holder of public shares and you exercise your redemption rights, it will not result in the loss of any LACQ Public Warrants that you may hold.
       
  Q. Do I have appraisal rights if I object to the proposed business combination?
       
    A. No. Neither LACQ stockholders nor its unit or warrant holders have appraisal rights in connection with the business combination under the DGCL. Please see the section entitled “Special Meeting of LACQ Stockholders — Appraisal Rights.

 

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  Q. What happens to the funds deposited in the trust account after consummation of the business combination?
       
    A. The net proceeds of the LACQ IPO together with the amount raised from the private sale of warrants simultaneously with the consummation of the LACQ IPO, for a total of $200,000,000, was placed in the trust account immediately following the LACQ IPO. At February 28, 2021, there was approximately $12.7 million held in the trust account. In connection with the consummation of the business combination, a portion of the funds in the trust account will be used for transaction expenses and general corporate purposes.
       
  Q. What happens if a substantial number of public stockholders exercise their redemption rights?
       
    A. LACQ’s public stockholders may vote in favor of the business combination and still exercise their redemption rights. Accordingly, the business combination may be consummated even though the funds available from the trust account and the number of public stockholders are substantially reduced as a result of redemptions by public stockholders. In the event a substantial number of public stockholders exercise their redemption rights, fewer funds in the trust account will be available to the post-combination company to fund future growth. In addition, if LACQ would be left with less than $5,000,001 of Net Tangible Assets as a result of the holders of public shares properly demanding redemption of their shares for cash, LACQ will not be able to consummate the business combination. If LACQ stockholders seek to redeem more than 98,067 shares of LACQ common stock, the conditions to the Merger Agreement and the requirement under LACQ’s current certificate of incorporation that LACQ have at least $5,000,001 of Net Tangible Assets would not be satisfied.
       
  Q. What happens if the business combination is not consummated?
       
    A. If LACQ does not complete a business combination with Ensysce by June 30, 2021 (the end of the completion window), LACQ must redeem 100% of the outstanding public shares, at a per share price, payable in cash, equal to the amount then held in the trust account interest (less up to $75,000 of interest to pay dissolution expenses), divided by the number of outstanding public shares. The initial stockholders and their respective affiliates (including Sponsors and Strategic Investor) have no redemption rights with respect to their founders shares in the event a business combination is not effected in the completion window, and, accordingly, the founder shares will be worthless. Additionally, in the event of such liquidation, there will be no distribution with respect to LACQ’s outstanding warrants. Accordingly, the warrants will be worthless.
       
  Q. How do the initial stockholders and their respective affiliates (including Sponsors and Strategic Investor) intend to vote on the proposals?
       
    A. LACQ’s directors, officers and other initial stockholders and their respective affiliates (including Sponsors and Strategic Investor) own of record and are entitled to vote an aggregate of 6,000,000 shares (or 96.4%) of LACQ’s common stock as of the record date. LACQ’s directors, officers and other initial stockholders and their respective affiliates (including Sponsors and Strategic Investor) have agreed to vote in favor of the business combination and own a sufficient number of shares of LACQ common stock to approve the business combination. These parties have interests in the business combination that may conflict with your interests as a stockholder. Please see the sections entitled “Summary — Interests of Certain Persons in the Business Combination” and “The Merger — Interests of Certain Persons in the Business Combination.
       
  Q. How do I vote?
       
    A. The special meeting will be held at [●] a.m. eastern time, on [●], 2021, at the offices LACQ, 250 West 57th Street, Suite 415, New York, New York 10107.
       
      If you are a holder of record of LACQ common stock on April 7, 2021, the record date for the special meeting, you may vote at the special meeting by in person attendance or by submitting a proxy for the special meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares or, if you wish to attend the meeting and vote, obtain a proxy from your broker, bank or nominee.
       
  Q. If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?
       
    A. No. Under the rules of various national and regional securities exchanges, your broker, bank or nominee cannot vote your shares with respect to non-routine matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee. We believe the proposals presented to the stockholders at the special meeting will be considered non-routine and therefore, your broker, bank or nominee cannot vote your shares without your instruction on any of the proposals presented at the special meeting. If you do not provide instructions with your proxy, your broker, bank or other nominee may deliver a proxy card expressly indicating that it is NOT voting your shares: this indication that a broker, bank or nominee is not voting your shares is referred to as a “broker non-vote.” Broker non-votes will not be counted for the purposes of determining the existence of a quorum or for purposes of determining the number of votes cast at the special meeting. Your bank, broker or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your shares in accordance with directions you provide.

 

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  Q. How will a broker non-vote impact the results of each proposal?
       
    A. Broker non-votes will count as a vote “AGAINST” the business combination proposal and the charter proposal but will not have any effect on the outcome of any other proposals.
       
  Q. May I change my vote after I have mailed my signed proxy card?
       
    A. Yes. Stockholders of record may send a later-dated, signed proxy card to LACQ’s transfer agent at the address set forth at the end of this section so that it is received prior to the vote at the special meeting or attend the special meeting and vote. Stockholders also may revoke their proxy by sending a notice of revocation to LACQ’s transfer agent, which must be received prior to the vote at the special meeting.
       
  Q. What happens if I fail to take any action with respect to the special meeting?
       
    A. If you fail to take any action with respect to the special meeting and the business combination is approved by stockholders, the business combination will be consummated in accordance with the terms of the Merger Agreement. If you fail to take any action with respect to the special meeting and the business combination is not approved, we will not consummate the business combination.
       
  Q. What will happen if I sign and return my proxy card without indicating how I wish to vote?
       
    A. Signed and dated proxies received by us without an indication of how the stockholder intends to vote on a proposal will be voted “FOR” each proposal presented to the stockholders. The proxyholders may use their discretion to vote on any other matters which properly come before the special meeting.
       
  Q. What should I do if I receive more than one set of voting materials?
       
    A. Stockholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares of LACQ common stock are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your shares of LACQ common stock.
       
  Q. Who can help answer my questions?
       
    A. If you have questions about the proposals to be voted on at the Special Meeting or if you need additional copies of the proxy statement or the enclosed proxy card you should contact:

 

Leisure Acquisition Corp.
250 West 57th Street
Suite 415
New York, New York 10107
Attention: George Peng, Chief Financial Officer
Tel: (646) 565-6940

 

To obtain timely delivery, LACQ stockholders must request any additional materials no later than five business days prior to the special meeting. You may also obtain additional information about LACQ from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.” If you are a holder of public shares and you intend to seek redemption of your public shares, you will need to deliver your stock (either physically or electronically) to LACQ’s transfer agent at the address below at least two (2) business days prior to the vote at the Special Meeting. See the section entitled “The Merger — Redemption Rights for LACQ Stockholders.”

 

If you have questions regarding the certification of your position or delivery of your stock, please contact:

 

Mark Zimkind
Continental Stock Transfer & Trust Company
1 State Street 30th Floor
New York, New York 10004
Tel: (212) 509-4000
Email: mzimkind@continentialstock.com

 

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SUMMARY

 

This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that is important to you. To better understand the proposals to be submitted for a vote at the special meeting, including the business combination proposal, you should read this entire document carefully, including the Merger Agreement attached as Annex A to this proxy statement/prospectus. The Merger Agreement is the legal document that governs the Transactions that will be undertaken in connection with the business combination. It is also described in detail in this proxy statement/prospectus in the section entitled “The Merger Agreement.”

 

The Parties

 

LACQ

 

Leisure Acquisition Corp. is a blank check company incorporated as a Delaware corporation on September 11, 2017 and formed solely for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. LACQ is sponsored by the Sponsors, Hydra Management, LLC, a Delaware limited liability company and an affiliate of A. Lorne Weil, LACQ’s Executive Chairman and Matthews Lane Capital Partners LLC, a Delaware limited liability company and an affiliate of Daniel B. Silvers, LACQ’s Chief Executive Officer.

 

On December 5, 2017, LACQ closed its initial public offering of 20,000,000 units, with each unit consisting of one share of its common stock and one-half (1/2) of one warrant, each whole warrant to purchase one share of its common stock at a purchase price of $11.50 commencing upon the later of (i) 30 days after LACQ’s completion of a business combination and (ii) December 5, 2018 (collectively, the “LACQ Public Warrants”). The units from the LACQ IPO were sold at an offering price of $10.00 per unit, generating total gross proceeds of $200,000,000. Simultaneously with the consummation of the LACQ IPO, LACQ consummated the private sale of 6,825,000 warrants at $1.00 per warrant for an aggregate purchase price of $6,825,000 (the “LACQ Private Placement Warrants”). A total of $200,000,000 was deposited into the trust account and the remaining net proceeds became available to be used as working capital to provide for business, legal and accounting due diligence on prospective business combinations and continuing general and administrative expenses. The LACQ IPO was conducted pursuant to a registration statement on Form S-1 (Reg. No. 333-221330) that became effective on December 1, 2017. In connection with special stockholders meetings at which the completion window was extended, an aggregate of 18,775,732 public shares were redeemed for cash from the trust account, for an aggregate redemption amount of approximately $196.360 million. As of the record date, additional contributions totaling approximately $ 2.265 million have been deposited into the trust account. At February 28, 2021, there was approximately $12.7 million held in the trust account. Except as described in the prospectus for the LACQ IPO, these proceeds will not be released until the earlier of the completion of an initial business combination and LACQ’s redemption of 100% of the outstanding public shares upon its failure to consummate a business combination within the completion window.

 

The units, LACQ’s Common Stock and Public Warrants are listed on the Nasdaq under the symbols LACQU, LACQ, and LACQW, respectively.

 

The mailing address of LACQ’s principal executive office is 250 West 57th Street, Suite 415, New York, New York 10107. Its telephone number is (646) 565-6940. After the consummation of the business combination, its principal executive office will be that of Ensysce.

 

Ensysce

 

Ensysce is a clinical stage pharmaceutical company seeking to develop innovative solutions for severe pain relief while reducing the fear of and the potential for addiction, opioid misuse, abuse and overdose. Ensysce has also incorporated a 79.2%-owned subsidiary, Covistat, a clinical stage pharmaceutical company that is developing a compound utilized in Ensysce’s overdose protection program for the treatment of COVID-19. Ensysce was incorporated in the State of Delaware in April 2003 as PharmacoFore, Inc. and, in January 2012, changed its 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. (“EBI”) entered into an Agreement and Plan of Merger (“EB-ST Agreement”). Pursuant to the EB-ST Agreement, SAQ merged with and into EBI with EBI surviving the merger as a wholly-owned subsidiary of Signature. As part of the transaction, Signature changed its name to Ensysce Biosciences, Inc. and changed EBI’s name to EBI Operating Inc.

 

The mailing address of Ensysce’s principal executive office is 7946 Ivanhoe Avenue, Suite 201, La Jolla, California. Its telephone number is (858) 263-4196.

 

Merger Sub

 

Merger Sub is a wholly-owned subsidiary of LACQ formed solely for the purpose of effectuating the Merger described herein. Merger Sub was incorporated under the laws of Delaware as a corporation on January 27, 2021. Merger Sub owns no material assets and does not operate any business. The mailing address of Merger Sub’s principal executive office is 250 West 57th Street, Suite 415, New York, New York 10107. Its telephone number is (646) 565-6940. After the consummation of the business combination, Merger Sub will cease to exist as a separate legal entity.

 

 

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Emerging Growth Company

 

LACQ is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As such, it is eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in their periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find LACQ’s securities less attractive as a result, there may be a less active trading market for LACQ’s securities and the prices of its securities may be more volatile.

 

LACQ will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following December 5, 2022, the fifth anniversary of the completion of the LACQ IPO, (b) in which LACQ has total annual gross revenue of at least $1.07 billion, or (c) in which LACQ is deemed to be a large accelerated filer, which means the market value of LACQ’s common stock that is held by non-affiliates exceeds $700.0 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which LACQ has issued more than $1.0 billion in non-convertible debt during the prior three-year period. References herein to “emerging growth company” shall have the meaning associated with it in the JOBS Act.

 

LACQ will continue to be an “emerging growth company” immediately following consummation of the Transactions.

 

The Business Combination Proposal

 

Structure of the Transactions

 

Pursuant to the Merger Agreement, and subject to the terms and conditions therein, a business combination between LACQ and Ensysce will be effected through the merger of Merger Sub with and into Ensysce, with Ensysce surviving such merger as a wholly-owned subsidiary of LACQ. In connection with the consummation of the Transactions, LACQ will change its name to “Ensysce Biosciences, Inc.”

 

Merger Consideration

 

Subject to the terms of the Merger Agreement, the total Merger Consideration will consist of no more than (i) 17,500,000 shares of LACQ common stock (including shares issuable on conversion of the Ensysce Convertible Notes (other than the Newly Issued Ensysce Convertible Notes) and excluding the shares underlying the Ensysce Options and Ensysce Warrants) plus (ii) the Additional LACQ Stock, which consists of up to 500,000 shares, of LACQ common stock issuable in respect of the Newly Issued Ensysce Convertible Notes. At the reference price of $10.00 per share and based on the number of shares of Ensysce common stock outstanding at April 7, 2021, the total Merger Consideration of 17,336,655 shares of LACQ common stock would have a value of $173,336,550 (excluding the Additional LACQ Stock, which would have a value of up to $5,000,000 at the reference price of $10.00 per share).

 

For more information, please see the summary of the Merger Agreement in the section entitled “The Merger — Certain Agreements Related to the Business Combination —Merger Agreement” below.

 

Related Agreements

 

Lock-Up Agreements

 

On January 31, 2021, in connection with entering into the Merger Agreement, certain initial stockholders of Ensysce have agreed, subject to certain exceptions, not to transfer, pledge, assign, sell or otherwise dispose of any of their LACQ Shares held immediately after the Merger Effective time until the earlier to occur of (a) one year after the completion of our initial business combination and (b) the date on which we complete a liquidation, merger, share exchange or other similar transaction after closing that results in all of our stockholders having the right to exchange their common shares for cash, securities or other property. Any permitted transferees will be subject to the same restrictions and other agreements as the Ensysce stockholder. Notwithstanding, if the closing price of our common shares equals or exceeds $12.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after closing, the Ensysce stockholder’s shares will be released from the lock-up.

 

Warrant Surrender Agreement

 

On January 31, 2021, in connection with entering into the Merger Agreement, LACQ entered into a Warrant Surrender Agreement, by and among LACQ, Hydra LAC, LLC (“Hydra”) and MLCP GLL Funding LLC (“MLCP”), pursuant to which each of Hydra and MLCP agreed to irrevocably forfeit and surrender 250,000 LACQ warrants immediately prior to, and contingent upon the closing.

 

 

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Incentive Plan

 

On [●], 2021, the Board adopted, subject to stockholder approval, the Incentive Plan for the purpose of providing a means through which to attract, motivate and retain key personnel and to provide a means whereby, after the business combination, LACQ’s directors, officers, employees, consultants and advisors can acquire and maintain an equity interest in LACQ, or be paid incentive compensation, including incentive compensation measured by reference to the value of the LACQ common stock, thereby strengthening their commitment to LACQ’s welfare and aligning their interests with those of LACQ’s stockholders. Stockholders are being asked to consider and approve the Incentive Plan, under which 5,444,068 shares of LACQ common stock will be reserved for issuance, consisting of (i) 4,444,068 shares underlying outstanding awards under the Ensysce Biosciences, Inc. 2016 Stock Incentive Plan and the 2019 Directors Plan (the “Prior Plans”) that will be converted into awards under the Omnibus Incentive Plan subject to the consummation of the business combination and (ii) 1,000,000 additional shares of common stock reserved for issuance under the Omnibus Incentive Plan. Please see the section entitled “Proposal No. 4 — The Incentive Plan Proposal — Material Terms of the Incentive Plan.”

 

Impact of the Business Combination on the Post-Combination Company’s Public Float

 

The following table illustrates varying ownership levels in the post-combination company, assuming no redemptions by LACQ’s public stockholders and the maximum redemptions by LACQ’s public stockholders as described above:

 

   Assuming No Redemptions (1)(4)   Assuming Maximum Redemptions(1)(2)(4) 
LACQ’s public stockholders (other than the initial stockholders and their respective affiliates)    0.9%   0.5%
Initial stockholders and their respective affiliates, including
the Sponsors and the Strategic Investor
   24.6%   24.7%
Other Stockholders    3.4%   3.4%
Current holders of Ensysce common stock(3)    71.1%   71.4%

 

 

(1) Assumes 17,336,655 shares of LACQ common stock are issued as Merger Consideration including LACQ common stock issued in respect of the Ensysce Convertible Notes (other than up to 500,000 shares of LACQ common stock which may be issued in respect of Newly Issued Ensysce Convertible Notes).
   
(2) Assumes that 98,067 shares of LACQ common stock are redeemed, representing the maximum number of public shares of LACQ that can be redeemed without violation the conditions of the Merger Agreement or the requirements of LACQ’s current certificate of incorporation. See “Risk FactorsLACQ will be unable to close the Transactions if the redemptions of public shares result in its Tangible Net Assets being less than $5,000,001 unless it is able to obtain sufficient equity financing.
   
(3) Includes holders of Ensysce Convertible Notes, which will be converted into Ensysce common stock and converted into LACQ common stock in the Merger (other than holders of Newly Issued Ensysce Convertible Notes, which may be converted into Ensysce common stock and converted into LACQ common stock in the Merger as Additional LACQ Stock Consideration).
   
(4) Excludes (i) outstanding warrants issued by LACQ to acquire 18,391,289 shares of LACQ common stock (as adjusted for warrants to be surrendered at the closing), (ii) Ensysce Options which will be automatically converted to options to acquire 4,444,068 shares of LACQ common stock following the closing, (iii) Ensysce Warrants will be automatically converted to warrants to acquire 19,755 shares of LACQ common stock following the closing, (iv) warrants to acquire 460,000 shares which are expected to be issued in exchange for outstanding loan under the Expense Advancement Agreement at the time of the closing and (v) warrants to purchase shares of LACQ common stock in an amount equal to 4% of the total number of common stock outstanding as of the closing calculated on a fully diluted basis which may be issuable under Ensysce’s GEM Agreement at the time of the closing.

 

For more information, please see the sections entitled “Unaudited Pro Forma Condensed Combined Financial Information” and “Proposal No. 4 — The Incentive Plan Proposal.”

 

Matters Being Voted On

 

The stockholders of LACQ will be asked to consider and vote on the following proposals at the special meeting:

 

  1. a proposal to approve the business combination described in this proxy statement/prospectus, including approving the Merger Agreement and approving the Transactions described in this proxy statement/prospectus. Please see the section entitled “Proposal No. 1 — The Business Combination Proposal”;
     
  2. a proposal to approve and adopt the third amended and restated certificate of incorporation of LACQ. Please see the section entitled “Proposal No. 2 — The Charter Proposal”;

 

 

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  3. a proposal to vote upon, on a non-binding advisory basis, certain governance provisions in the third amended and restated certificate of incorporation, presented separately in accordance with requirements of the SEC. Please see the section entitled “Proposal No. 3 — The Governance Proposal”;
     
  4. a proposal to approve and adopt the Incentive Plan and the material terms thereunder, including the authorization of the initial share reserve thereunder. Please see the section entitled “Proposal No. 4 — The Incentive Plan Proposal”;
     
  5. a proposal to elect seven (7) directors to serve until their respective successors are duly elected and qualified or until their earlier resignation, removal or death. Please see the section entitled “Proposal No. 5 — The Director Election Proposal”;
     
  6. a proposal to approve, for purposes of complying with the applicable provisions of Nasdaq Rules 5635(a), (b) and (d), the issuance of more than 20% of LACQ’s issued and outstanding shares of common stock in connection with the Transactions, including, without limitation, the Merger Consideration (which may constitute a change of control under the Nasdaq Rules). Please see the section entitled “Proposal No. 6 — The Nasdaq Proposal”; and
     
  7. a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the business combination proposal, the charter proposal, the governance proposal, the incentive plan proposal, the director election proposal or the Nasdaq proposal. Please see the section entitled “Proposal No. 7 — The Adjournment Proposal.”

 

Date, Time and Place of Special Meeting of LACQ’s Stockholders

 

The special meeting of stockholders of LACQ will be held [●] a.m. eastern time, on [●], 2021, at the offices LACQ, 250 West 57th Street, Suite 415, New York, New York 10107. If you wish to attend the special meeting in person, you must reserve your attendance at least two (2) business days in advance of the special meeting by contacting George Peng, Chief Financial Officer, Leisure Acquisition Corp., 250 West 57th Street, Suite 415, New York, New York 10107, telephone number (646) 565-6940. See “Questions and Answers about the Proposals — How do I attend the special meeting in person?” for more information.

 

At the special meeting, stockholders will be asked to consider and vote upon the business combination proposal, the charter proposal, the governance proposal, the incentive plan proposal, the director election proposal, the Nasdaq proposal and, if necessary, the adjournment proposal to permit further solicitation and vote of proxies if LACQ is not able to consummate the Transactions. The special meeting is in lieu of an annual meeting of stockholders for 2021 and, if the Transactions are consummated, the first annual meeting after the closing will held in 2022.

 

Voting Power; Record Date

 

Stockholders will be entitled to vote or direct votes to be cast at the special meeting if they owned shares of LACQ common stock at 5:00 p.m. (New York City time) on [●], 2021, which is the record date for the special meeting. Stockholders will have one vote for each share of LACQ common stock owned at 5:00 p.m. (New York City time) on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. LACQ warrants do not have voting rights. On the record date, there were 6,224,268 shares of LACQ common stock outstanding.

 

Quorum and Vote of LACQ Stockholders

 

A quorum of LACQ stockholders is necessary to hold a valid meeting. A quorum will be present at the LACQ special meeting if a majority of the outstanding shares entitled to vote at the meeting are represented in person or by proxy. Proxies that are marked “abstain” will be treated as shares present for purposes of determining the presence of a quorum on all matters. Broker non-votes will not be counted for the purposes of determining the existence of a quorum or for purposes of determining the number of votes cast at the special meeting.

 

LACQ’s directors, officers and other initial stockholders and their respective affiliates (including Sponsors and Strategic Investor) own of record and are entitled to vote an aggregate of 6,000,000 shares (or 96.4%) of LACQ’s common stock as of the record date. LACQ’s directors, officers and other initial stockholders and their respective affiliates (including Sponsors and Strategic Investor) have agreed to vote in favor of the business combination and own a sufficient number of shares of LACQ common stock to approve the business combination.

 

The proposals presented at the special meeting will require the following votes:

 

  the approval of the business combination proposal requires the affirmative vote of holders of a majority of LACQ’s outstanding shares of common stock entitled to vote at the special meeting in order to satisfy the condition to closing in the Merger Agreement. Accordingly, if a valid quorum is established, a LACQ stockholder’s failure to vote by proxy or to vote at the special meeting with regard to the business combination proposal will have the same effect as a vote “AGAINST” such proposal;

 

 

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  the approval of the charter proposal requires the affirmative vote of holders of a majority of LACQ’s outstanding shares of common stock entitled to vote at the special meeting. Accordingly, if a valid quorum is established, a LACQ stockholder’s failure to vote by proxy or to vote at the special meeting with regard to the charter proposal will have the same effect as a vote “AGAINST” such proposal;
     
  the approval of each of the governance proposal (which is a non-binding advisory vote), the incentive plan proposal, the Nasdaq proposal and the adjournment proposal require the affirmative vote of a majority of the votes cast by holders of LACQ’s outstanding shares of common stock represented at the special meeting by in person attendance or by proxy and entitled to vote at the special meeting. Accordingly, if a valid quorum is established, a LACQ stockholder’s failure to vote by proxy or to vote at the special meeting with regard to the business combination proposal, the governance proposal, the incentive plan proposal and the Nasdaq proposal will have no effect on such proposals. A LACQ stockholder’s failure to vote by proxy or to vote at the special meeting with regard to the adjournment proposal will have no effect on such proposals, which may be approved, whether or not a valid quorum is present;
     
  directors are elected by a plurality of all of the votes cast by holders of shares of LACQ’s common stock represented at the special meeting by attendance in person or by proxy and entitled to vote at the special meeting. This means that the seven (7) director nominees who receive the most affirmative votes will be elected. LACQ stockholders may not cumulate their votes with respect to the election of directors. Accordingly, if a valid quorum is established, a LACQ stockholder’s failure to vote by proxy or to vote at the special meeting with regard to the director election proposal will have no effect on such proposal.

 

Abstentions will have the same effect as a vote “AGAINST” the business combination proposal and the charter proposal, but will have no effect on the other proposals.

 

Consummation of the Transactions is conditioned on the approval of LACQ’s stockholders by an affirmative vote of the holders of a majority of the outstanding shares of LACQ common stock of the business combination proposal. If this proposal is not approved, we will not consummate the Transactions.

 

Redemption Rights

 

To exercise your redemption rights, you must elect to have LACQ redeem your shares for a pro rata portion of the funds held in the trust account and tender your shares to LACQ’s transfer agent at least two (2) business days prior to the vote at the special meeting. You are not required to vote on the Transactions (either for or against) to exercise your redemption rights.

 

You may tender your shares by either delivering your share certificate to the transfer agent or by delivering your shares electronically using the depository trust company’s DWAC (deposit and withdrawal at custodian) system. If the business combination is not completed, then these shares will not be redeemed for cash. If you hold the shares in street name, you will need to instruct the account executive at your bank or broker to withdraw the shares from your account in order to exercise your redemption rights. If the business combination is not completed, these shares will not be redeemed. If a holder of public shares properly demands redemption, LACQ will redeem each public share for a full pro rata portion of the funds held in the trust account, calculated as of two business days prior to the consummation of the business combination. As of February 28, 2021, this would amount to approximately $10.366 per public share. If a holder of public shares exercises its redemption rights, then it will be exchanging its shares of LACQ common stock for cash and will no longer own the shares. Please see the section entitled “Special Meeting of LACQ Stockholders — Redemption Rights” for a detailed description of the procedures to be followed if you wish to redeem your shares for cash.

 

Notwithstanding the foregoing, a holder of public shares, together with any affiliate of its or any other person with whom it is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from seeking redemption rights with respect to more than 20% of the public shares.

 

Accordingly, all public shares in excess of 20% held by a public stockholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or was a “group,” will not be redeemed for cash.

 

The business combination will not be consummated unless LACQ has Net Tangible Assets of at least $5,000,001. If LACQ stockholders seek to redeem more than 98,067 shares of LACQ common stock, this condition would not be satisfied.

 

Holders of warrants will not have redemption rights with respect to such securities.

 

Appraisal Rights

 

LACQ stockholders, unitholders and warrantholders do not have appraisal rights in connection with the Transactions under the DGCL.

 

Proxy Solicitation

 

Proxies may be solicited by mail, telephone or in person by certain of LACQ’s directors, officers and employees without additional compensation. If a stockholder grants a proxy, it may still vote its shares during the meeting if it revokes its proxy before the special meeting. A stockholder may also change its vote by submitting a later-dated proxy as described in the section entitled “Special Meeting of LACQ Stockholders — Revoking Your Proxy.”

 

 

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Interests of Certain Persons in the Business Combination

 

In considering the recommendation of the Board to vote in favor of approval of the business combination proposal and the other proposals, stockholders should keep in mind that the initial stockholders and their respective affiliates, including the Sponsors and the Strategic Investor and officers and directors have interests in such proposals that are different from, or in addition to, those of LACQ stockholders generally. In particular:

 

  If the Transactions are not consummated by June 30, 2021 (the end of the completion window), LACQ will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of its remaining stockholders and the Board, dissolving and liquidating. In such event, the founder shares held by the initial stockholders and their respective affiliates, including the Sponsors and the Strategic Investor and officers and directors, would be worthless because the holders thereof are not entitled to participate in any redemption or distribution with respect to such shares. Such shares had an aggregate market value of approximately $77,100,000 based upon the closing price of $12.85 per share on the Nasdaq on April 7, 2021, the record date for the special meeting.
     
  The initial stockholders and their respective affiliates, including the Sponsors and the Strategic Investor and officers and directors, purchased an aggregate of 6,825,000 Private Placement Warrants from LACQ for an aggregate purchase price of $6,825,000 (or $1.00 per warrant). These purchases took place on a private placement basis simultaneously with the consummation of the LACQ IPO. In addition, LACQ issued warrants to the Sponsors and the Strategic Investor to purchase 1,000,0001 shares of LACQ common stock in exchange for previously outstanding loans under the Expense Advancement Agreement and issued warrants to GTWY Holdings Limited to purchase 566,288 shares of LACQ common stock in exchange for outstanding loans under the GTWY Expense Advancement Agreement. The Private Placement Warrants and the other private warrants held by the initial stockholders and their respective affiliates, including the Sponsors and the Strategic Investor and officers and directors, will also become worthless if LACQ does not consummate a business combination by June 30, 2021 (the end of the completion window).
     
  LACQ’s Sponsors and Strategic Investor have an outstanding balance of $460,000 at March 10, 2021 on unsecured promissory notes on loans made to fund LACQ’s expenses prior to the business combination. The notes may be repaid out of the proceeds of the trust account released upon completion of the business combination or converted to warrants to purchase LACQ common stock upon completion of the business combination. If a business combination is not completed, LACQ would, most likely, not be able to repay such loans.
     
  If LACQ is unable to complete a business combination within the completion window, the Sponsors will be liable under certain circumstances to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by LACQ for services rendered or contracted for or products sold to LACQ. If LACQ consummates a business combination, on the other hand, LACQ will be liable for all such claims.
     
  LACQ’s officers and directors and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on LACQ’s behalf, such as identifying and investigating possible business targets and business combinations. However, if LACQ fails to consummate a business combination within the completion window, they will not have any claim against the trust account for reimbursement. Accordingly, LACQ may not be able to reimburse these expenses if the Transactions are not completed within the completion window.
     
  All rights specified in LACQ’s second amended and restated certificate of incorporation, as amended, relating to the right of officers and directors to be indemnified by LACQ, and of LACQ’s officers and directors to be exculpated from monetary liability with respect to prior acts or omissions, will continue after a business combination. If the business combination is not approved and LACQ liquidates, LACQ will not be able to perform its obligations to its officers and directors under those provisions.
     
  The Registration Rights Agreement provides for certain demand and piggyback registration rights for the Sponsors and Strategic Investor (and their respective affiliates and permitted transferees).

 

 

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In addition, Ensysce’s officers and directors have certain interests in the transaction, including the following:

 

  Five of Ensysce’s existing officers and directors are expected to become directors, and Ensysce’s officers will become officers, of the post-combination company upon the closing.
     
  Ensysce’s Chairman, Bob Gower, holds Ensysce Convertible Notes that will accelerate as a result of the Merger and automatically convert into shares of common stock of LACQ in connection with the Merger.
     
  Pursuant to an offer letter with Dave Humphrey, Ensysce’s Chief Financial Officer, following the Merger, Mr. Humphrey will receive, subject to approval by the LACQ stockholders of the Incentive Plan, (i) options to purchase 275,000 shares of LACQ common stock and 50,000 restricted stock units and (ii) his base salary will increase (as set forth under the section entitled “Executive Compensation of Ensysce prior to the Business Combination and the Combined Company after the Business Combination”).
     
  Richard Wright, Ensysce’s Chief Business Officer, holds unvested options to purchase 583,343 shares of Ensysce common stock which will vest on closing.
     
  Existing Ensysce directors and officers will continue to be entitled to indemnification and directors’ and officers’ liability insurance coverage after the Merger closes.

 

Board of Directors following the Business Combination

 

Upon consummation of the Transactions, the Board anticipates each Class I director will have a term that expires immediately following LACQ’s annual meeting of stockholders for the calendar year ending December 31, 2022, each Class II director will have a term that expires immediately following LACQ’s annual meeting of stockholders for the calendar year ending December 31, 2023 and each Class III director will have a term that expires immediately following LACQ’s annual meeting of stockholders for the calendar year ending December 31, 2024, or in each case until their respective successors are duly elected and qualified, or until their earlier resignation, removal or death. Adam Levin and Curtis Rosebraugh were designated as director nominees by LACQ and the remaining director nominees were designated by Ensysce.

 

We are proposing William Chang and Andrew Benton to serve as the Class I directors, Curtis Rosebraugh and Bob Gower to serve as Class II directors and Steve R. Martin, Adam Levin and Lynn Kirkpatrick to serve as Class III directors. Bob Gower is expected to serve as Chairman of the Board.

 

Please see the sections entitled “Proposal No. 5 — The Director Election Proposal” and “Management After the Business Combination” for additional information.

 

Recommendation of the LACQ Board of Directors

 

The Board believes that the business combination proposal and the other proposals to be presented at the special meeting are fair to and in the best interest of LACQ’s stockholders and unanimously recommends that its stockholders vote “FOR” the business combination proposal, “FOR” the charter proposal, “FOR” the governance proposal, “FOR” the incentive plan proposal, “FOR” the director election proposal, “FOR” the Nasdaq proposal and “FOR” the adjournment proposal, if presented.

 

When you consider the Board’s recommendation of these proposals, you should keep in mind that the initial stockholders and their respective affiliates, including the Sponsors and the Strategic Investor and officers and directors, have interests in the business combination that are different from, or in addition to, the interests of LACQ stockholders generally. Please see the section entitled “The Merger — Interests of Certain Persons in the Business Combination” for additional information. The Board was aware of and considered these interests, among other matters, in evaluating and negotiating the Transactions and in recommending to the LACQ stockholders that they vote “FOR” the proposals presented at the special meeting.

 

Conditions to the Closing of the Business Combination

 

General Conditions

 

Consummation of the Transactions is conditioned on the approval of the business combination proposal as described in this proxy statement/prospectus.

 

In addition, consummation of the Transactions is subject to customary conditions of the respective parties, including, among others:

 

  the approval of the Transactions by LACQ stockholders by the vote of a majority of the outstanding shares of the LACQ common stock;
     
  the approval of the Transactions by the Ensysce stockholders having been obtained and in full force and effect, which approval has been given;
     
  the termination or expiration of any waiting period applicable to the Merger, none of which are currently expected to apply;

 

 

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  no governmental order, statute, rule or regulation being in effect which enjoins or prohibits the consummation of the Transactions; and
     
  the delivery by each party to the other party of a certificate with respect to (i) the truth and accuracy of such party’s representations and warranties as of date of the Merger Agreement and as of the closing date (subject to customary bring-down standards), (ii) the performance by such party in all material respects of covenants contained in the Merger Agreement required to be complied with by such party prior to the closing and (iii) no occurrence of any material adverse effect with respect to such party since the date of the Merger Agreement through the closing date.

 

LACQ’s Conditions to Closing

 

The obligations of LACQ to consummate the Transactions contemplated by the Merger Agreement also are conditioned upon, among other things:

 

  the accuracy of the representations and warranties of Ensysce (subject to customary bring-down standards);
     
  the covenants of Ensysce having been performed in all material respects;
     
  the delivery by Ensysce to LACQ of an affidavit certifying that an interest in Ensysce is not a U.S. real property holding corporation interest at any time during the previous five years;
     
  the absence of any material adverse effect with respect to Ensysce since the date of the Merger Agreement through the closing date; and
     
  the delivery by Ensysce to LACQ of lock-up agreements executed by Ensysce directors and officers who are also Ensysce stockholders.
     
Ensysce’s Conditions to Closing
     
The obligations of Ensysce to consummate the Transactions contemplated by the Merger Agreement also are conditioned upon, among other things:
     
  the accuracy of the representations and warranties of LACQ (subject to customary bring-down standards);
     
  the covenants of LACQ having been performed in all material respects;
     
  the absence of any material adverse effect with respect to LACQ since the date of the Merger Agreement through the closing date;
     
  the approval of the Transactions by LACQ, in its capacity as the sole stockholder of Merger Sub, having been obtained;
     
  following payment by LACQ to its stockholders who have validly elected to have their shares of LACQ common stock redeemed for cash pursuant to the LACQ governing documents as part of a LACQ Share Redemption (as defined in the Merger Agreement) and after giving effect to the payment of LACQ’s transaction expenses, LACQ having an aggregate amount of cash of at least $5,000,000 (with LACQ’s management having, in its sole discretion, the right to direct that some or all of such transaction expenses be paid through the issuance of equity securities of LACQ rather than through direct cash payments); and
     
  LACQ having made all necessary arrangements with Continental Stock Transfer & Trust Company to have the funds contained in the trust account disbursed or available to LACQ, in accordance with the Trust Agreement and the Merger Agreement, immediately prior to the closing, and all such funds released from the trust account to LACQ are available to LACQ (and, following the Merger, the combined company).

 

For more information, see “The Merger Agreement — Conditions to the Closing of the Transactions” and “Certain Other Agreements Relating to the Transactions.”

 

Tax Consequences of the Business Combination

 

For a description of certain U.S. federal income tax consequences of the Transactions and the exercise of redemption rights, please see the information set forth in “The Merger — Material U.S. Federal Income Tax Consequences of the Business Combination.”

 

Anticipated Accounting Treatment

 

The business combination will be accounted for as a reverse merger in accordance with U.S. GAAP. Under this method of accounting, LACQ will be treated as the “acquired” company for financial reporting purposes. This determination was primarily based on the holders of Ensysce expecting to have a majority of the voting power of the post-combination company, Ensysce senior management comprising substantially all of the senior management of the post-combination company, the relative size of Ensysce compared to LACQ, and Ensysce operations comprising the ongoing operations of the post-combination company. Accordingly, for accounting purposes, the business combination will be treated as the equivalent of Ensysce issuing stock for the net assets of LACQ, accompanied by a recapitalization. The net assets of LACQ will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the business combination will be those of Ensysce.

 

 

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Regulatory Matters

 

Under the HSR Act and the rules that have been promulgated thereunder by the FTC, certain transactions may not be consummated unless information has been furnished to the Antitrust Division and the FTC and certain waiting period requirements have been satisfied. Based on Ensysce’s balance sheet as of December 31, 2020, Ensysce does not satisfy the “size of person” test to trigger the filing requirement under the HSR Act, thus the transaction is not expected to be subject to the reporting and waiting period requirements of the HSR Act. However, at any time before or after consummation of the Transactions, the applicable competition authorities could take such action under other applicable antitrust laws as each deems necessary or desirable in the public interest, including seeking to enjoin the consummation of the Transactions. Private parties may also seek to take legal action under the antitrust laws under certain circumstances. There is no assurance that the Antitrust Division, the FTC, any state attorney general, or any other government authority will not attempt to challenge the Transactions on antitrust grounds, and, if such a challenge is made, we cannot assure you as to its result.

 

Neither LACQ nor Ensysce is aware of any material regulatory approvals or actions that are required for completion of the Transactions. It is presently contemplated that if any such regulatory approvals or actions are required, those approvals or actions will be sought. There can be no assurance, however, that any additional approvals or actions will be obtained.

 

Risk Factors

 

In addition to the other information contained in this proxy statement/prospectus, including the matters addressed under the heading “Cautionary Note Regarding Forward-Looking Statements,” you should carefully consider all of the risks and uncertainties described in the section of this proxy statement/prospectus captioned “Risk Factors” following this Summary. These risks include, but are not limited to, the following:

 

  Risks Related to Ensysce’s Business, Financial Condition and Capital Requirements
       
    Ensysce is a clinical stage pharmaceutical company with a limited operating history. It has incurred significant financial losses since its inception and anticipates that it will continue to incur significant financial losses for the foreseeable future.
       
    Ensysce’s ability to generate revenue from product is subject to its ability to obtain regulatory approval and fulfill numerous other requirements.
       
    Even if Ensysce consummates the Merger, Ensysce will need substantial additional funding.
       
    The issuances of additional shares of LACQ common stock under the GEM Agreement and the anti-dilution protection granted to GEM Global in connection therewith, may result in dilution of existing LACQ stockholders and have a negative impact on the market price of LACQ common stock.
       
    Ensysce may fail to expend its limited resources on product candidates or indications that may have been more profitable or for which there is a greater likelihood of success.
       
    Ensysce’s business is highly dependent on the success of its product candidates, particularly PF614, and any failure or delay in completing clinical development, obtaining regulatory approval or commercializing one or more of its product candidates could materially harm its business.
       
    Ensysce’s PF614 and PF614-MPAR™ product candidates may not be successful in limiting or impeding abuse, overdose or misuse or providing additional safety upon commercialization.
       
    Business interruptions resulting from the COVID-19 pandemic or similar public health crises could cause a disruption of the development of Ensysce’s product candidates.
       
    Ensysce’s competitors might develop technologies or product candidates more rapidly than Ensysce does.
       
    Ensysce might lose the services of its key personnel.
       
  Risks Related to Product Development, Regulatory Approval, Manufacturing and Commercialization
     
    Ensysce might not be able to obtain regulatory approval for its product candidates.
       
    Ensysce’s clinical trials may fail to replicate positive results from earlier preclinical studies or clinical trials conducted by Ensysce or third parties.
       
    Ensysce could be subject to substantial penalties, including withdrawal of its product from the market, if it fails to comply with all regulatory requirements.
       
    Fast track designation by the FDA for PF614 may not lead to a faster development or regulatory review or approval process and does not assure FDA approval. The Section 505(b)(2) regulatory approval pathway for certain product candidates of Ensysce may not be successful.

 

 

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    Changes in methods of product candidate manufacturing or formulation may result in additional costs or delay.
       
    Ensysce’s product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval.
       
    Ensysce uses contract research organizations for research and development and clinical trials and will be dependent on third parties for development of its product candidates, clinical trials and manufacturing.
       
    Ensysce may fail to comply with the Controlled Substance Act or its state equivalents.
       
  Risks Related to Ensysce’s Intellectual Property
       
    Absent a broad patent protection, Ensysce’s competitors could develop and commercialize product candidates that are similar or identical to Ensysce’s product candidates.
       
    Ensysce may face intellectual property infringement claims from third parties.
       
    Ensysce may not be able to protect its intellectual property rights throughout the world.
       
    The expiration or loss of patent protection may adversely affect future revenues and operating earnings.
       
    If Ensysce does not obtain protection under the Hatch-Waxman Amendments by obtaining data exclusivity, Ensysce’s business may be harmed.
       
    Cyber-attacks or other failures in Ensysce’s telecommunications or information technology systems, or those of its collaborators, could result in information theft, data corruption and significant disruption of its business operations.
       
  Risks Related to the Ownership of Common Stock and Financial Reporting
       
    Ensysce does not anticipate paying any cash dividends on its capital stock in the foreseeable future.
       
    Raising additional capital may cause dilution to the stockholders of the combined entity or require Ensysce to relinquish rights to its technologies or product candidates.
       
    Absent an effective system of internal control over financial reporting, Ensysce may not be able to accurately report its financial results or prevent fraud.
       
  Risks Related to the Business Combination and Ownership of LACQ’s Common Stock and Warrants
       
    LACQ’s directors, officers and other initial stockholders and their respective affiliates (including Sponsors and Strategic Investor) have agreed to vote in favor of the business combination and own a sufficient number of shares of LACQ common stock to approve the business combination, and have interests in the business combination that may be different from or are in addition to the other stockholders.
       
    Prior to or following the consummation of the Transactions, the Nasdaq may not continue to list LACQ’s securities and/or an active market for LACQ’s securities may not continue or develop.
       
    The Board did not obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the business combination.
       
    LACQ’s officers’ and directors’ primary industry experience relates to the leisure sector and they do not have experience with companies in the biotechnology sector.
       
    LACQ’s public stockholders will experience dilution and have reduced influence on LACQ as a consequence of, among other transactions, the issuance of LACQ common stock as consideration in the business combination.
       
    A significant portion of the outstanding LACQ common stock following the business combination will be restricted, but may be sold into the market in the future which could cause the market price of LACQ common stock to drop significantly.
       
    If the business combination’s benefits do not meet the expectations of investors, stockholders or financial analysts, if any, the market price of LACQ’s securities may decline.
       
  Risks Related to the Redemption
       
    A failure to timely tender your shares of LACQ common stock will make your shares of LACQ common stock ineligible for redemption.

 

In evaluating the proposals to be presented at the special meeting, you should carefully read this proxy statement/prospectus and especially consider the factors discussed in the section entitled “Risk Factors.”

 

 

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LACQ’S SUMMARY HISTORICAL FINANCIAL INFORMATION

 

LACQ is providing the following summary historical financial information to assist you in your analysis of the financial aspects of the Transactions.

 

LACQ’s balance sheet data as of December 31, 2019 and December 31, 2020 and statement of operations data for the years ended December 31, 2019 and December 31, 2020 are derived from LACQ’s audited financial statements, included elsewhere in this proxy statement/prospectus.

 

This information is only a summary and should be read in conjunction with LACQ’s financial statements and related notes and “Information About LACQ” and “LACQ’s Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The historical results included below and elsewhere in this proxy statement/prospectus are not indicative of the future performance of LACQ. 

 

    Year Ended December 31,  
    2020     2019  
Statement of Operations Data:                
Revenues   $ -     $ -  
Loss from operations     (1,368,841 )     (3,328,674 )
Interest income     719,646       4,249,828  
Net income   $ 2,404,519     $ 365,954  
Basic and diluted weighted average shares outstanding, Common stock subject to possible redemption     4,457,537       19,940,154  
Basic and diluted net income (loss) per share, Common stock subject to possible redemption   $ 0.00     $ 0.16  
Basic and diluted weighted average shares outstanding, Common stock (1)     6,367,631       6,081,996  
Basic and diluted net income (loss) per share, Common stock   $ 0.38     $ (0.47 )

 

   As of December 31, 
   2020   2019 
Balance Sheet Data:          
Total current assets  $226,464   $1,199,722 
Cash and marketable securities held in trust account   12,628,170    195,312,177 
Total assets   12,854,634    196,511,899 
Total liabilities   7,801,692    10,337,313 
Common stock subject to possible redemption, 5,094 and 17,501,073 shares at redemption value at value at December 31, 2020 and 2019, respectively   52,935    181,174,585 
Total stockholders’ equity   5,000,007    5,000,001 

 

 

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ENSYSCE’S SUMMARY HISTORICAL FINANCIAL INFORMATION

 

The following tables present summary historical consolidated financial information of Ensysce for the periods presented. The consolidated statement of operations data for the years ended December 31, 2019 and 2020 and the consolidated balance sheet data as of December 31, 2019 and 2020 have been derived from Ensysce’s audited consolidated financial statements included elsewhere in this proxy statement/prospectus.

 

You should read the summary financial data presented below in conjunction with “Ensysce’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Ensysce’s consolidated financial statements and the related notes included elsewhere in this proxy statement/prospectus. Historical operating results are not necessarily indicative of future operating results.

 

    Year Ended December 31,  
Consolidated Statement of Operations Data:   2020     2019  
             
Federal grants   $ 3,931,209     $ 1,763,961  
Operating expenses:                
Research and development     4,389,579       3,402,301  
General and administrative     1,154,917       6,929,904  
Total operating expenses     5,544,496       10,332,205  
Loss from operations     (1,613,287 )     (8,568,244 )
Other income (expense):                
Change in fair value of derivative liability     2,447,908       (575,087 )
Interest expense     (995,496 )     (958,949 )
Total other income (expense), net     1,452,412       (1,534,036 )
Net loss   $ (160,875 )   $ (10,102,280 )
                 
Net loss attributable to noncontrolling interests   $ (217,645 )   $ -  
Net income (loss) attributable to common stockholders   $ 56,770     $ (10,102,280 )
                 
Net income (loss) per share attributable to common stockholders, basic   $ 0.00     $ (0.04 )
Weighted average common shares outstanding, basic     239,465,160       239,465,160  
                 
Net income (loss) per share attributable to common stockholders, diluted   $ 0.00     $ (0.04 )
Weighted average common shares outstanding, diluted     250,682,575       239,465,160  

 

    As of December 31,  
Consolidated Balance Sheet Data:   2020     2019  
             
Total assets   $ 351,807     $ 623,941  
Total liabilities   $ 7,010,234     $ 7,300,192  
Total stockholders’ deficit   $ (6,658,427 )   $ (6,676,251 )

 

 

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SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

LACQ is providing the following summary unaudited pro forma condensed combined financial information to aid you in your analysis of the financial aspects of the Transactions.

 

The following selected unaudited pro forma condensed combined statement of position combines the audited historical consolidated balance sheet of Ensysce as of December 31, 2020 with the audited historical balance sheet of LACQ as of December 31, 2020, giving effect to the Transactions as if they had been consummated as of that date.

 

The following selected unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020 combines the audited historical consolidated statement of operations of Ensysce for the year ended December 31, 2020 with the audited statement of operations of LACQ for the year ended December 31, 2020, giving effect to the Transactions as if they had occurred as of January 1, 2020.

 

The selected unaudited pro forma condensed combined financial information has been prepared assuming two alternative levels of redemption of LACQ common stock into cash:

 

  Assuming No Redemptions: This presentation assumes that no LACQ public stockholders exercise redemption rights with respect to their shares of LACQ common stock upon consummation of the business combination; and
     
  Assuming Maximum Redemptions: This presentation assumes that LACQ public stockholders exercise their redemption rights with respect to 98,067 shares of common stock upon consummation of the business combination at a redemption price of approximately $10.31 per share. The maximum redemption amount reflects the maximum number of LACQ’s public shares that can be redeemed without violating the conditions of the Merger Agreement or the requirement of LACQ’s current certificate of incorporation that LACQ cannot redeem public shares if it would result in LACQ having a minimum net tangible asset value of less than $5,000,001, after giving effect to the payments to redeeming stockholders and payment of transaction expenses.

 

The adjustments presented in the selected unaudited pro forma condensed combined financial statements have been identified and presented to provide relevant information necessary for an accurate understanding of the combined company upon consummation of the Transactions.

 

The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.” Release No. 33-10786 replaces the existing pro forma adjustment criteria with simplified requirements to depict the accounting for the transaction (“Transaction Accounting Adjustments”) and present the reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management’s Adjustments”). The Company has elected not to present Management’s Adjustments and will only be presenting Transaction Accounting Adjustments in the following unaudited pro forma condensed combined financial information.

 

The historical financial information of LACQ was derived from the historical audited financial statements of LACQ for the year ended December 31, 2020, which are included elsewhere in this proxy statement/prospectus. The historical financial information of Ensysce was derived from the historical audited consolidated financial statements of Ensysce for the year ended December 31, 2020, which are included elsewhere in this proxy statement/prospectus. This information should be read together with LACQ’s and Ensysce’s financial statements and related notes, “Information About LACQLACQ’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Ensysce’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other financial information included elsewhere in this proxy statement/prospectus.

 

The unaudited pro forma combined financial information is for illustrative purposes only. The financial results may have been different had the companies always been combined. You should not rely on the unaudited pro forma combined financial information as being indicative of the historical financial position and results that would have been achieved had the companies always been combined or the future financial position and results that the post-combination company will experience. Ensysce and LACQ have not had any historical relationship prior to the business combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

 

 

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SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

   Assuming No Redemptions   Assuming Maximum Redemptions 
Summary Unaudited Pro Forma Condensed Combined Statement of Operations - Year Ended December 31, 2020          
Total revenues  $3,931,209   $3,931,209 
Total expenses  $15,215,377   $15,215,377 
Operating loss  $(11,284,168)  $(11,284,168)
Net loss  $(7,985,961)  $(7,985,961)
Loss per share – basic and dilutive  $(0.33)  $(0.33)
Weighted average shares outstanding – basic and diluted   24,380,923    24,282,856 
           
Summary Unaudited Pro Forma Condensed Combined Balance Sheet as of December 31, 2020          
Total current assets  $8,102,510   $7,090,960 
Total assets  $8,106,441   $7,094,891 
Total current liabilities  $2,094,890   $2,094,890 
Total liabilities  $2,094,890   $2,094,890 
Total stockholders’ equity  $6,011,551   $5,000,001 

 

 

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SUMMARY COMPARATIVE SHARE INFORMATION

 

The following table sets forth the historical comparative share information for Ensysce and LACQ on a stand-alone basis and the unaudited pro forma combined per share information after giving effect to the business combination, (1) assuming no LACQ stockholders exercise redemption rights with respect to their shares of common stock upon the consummation of the business combination; and (2) assuming that LACQ stockholders exercise their redemption rights with respect to a maximum of 98,067 shares of common stock upon consummation of the business combination.

 

The historical information should be read in conjunction with the information in the sections entitled “Selected Historical Financial Information of LACQ” and “Selected Historical Consolidated Financial and Other Data of Ensysce” and the historical financial statements of LACQ and Ensysce incorporated by reference in or included elsewhere in this proxy statement. The unaudited pro forma condensed combined per share information is derived from, and should be read in conjunction with, the information contained in the section of this proxy statement/prospectus entitled “Unaudited Pro Forma Condensed Combined Financial Information.”

 

The unaudited pro forma combined share information below does not purport to represent what the actual results of operations or the earnings per share would been had the companies been combined during the period presented, nor to project the Company’s results of operations or earnings per share for any future date or period. The unaudited pro forma combined stockholders’ equity per share information below does not purport to represent what the value of LACQ and Ensysce would have been had the companies been combined during the periods presented.

 

   Ensysce   LACQ   Pro Forma Combined Assuming No Redemptions into Cash   Pro Forma Combined Assuming Maximum Redemptions into Cash 
Year Ended December 31, 2020                    
Net (loss) income  $(160,875)  $2,404,519   $(7,985,961)  $(7,985,961
Stockholders’ (deficit) equity   (6,658,427)   5,000,007    6,011,551    5,000,001 
Weighted average shares outstanding — basic and diluted        6,367,631    24,380,923    24,282,856 
Basic net income per share        0.38    (0.33   (0.33
Stockholders’ equity per share — basic and diluted        0.79    0.25    0.21 

 

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This proxy statement/prospectus includes statements that express LACQ’s and Ensysce’s 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 proxy statement/prospectus and include statements regarding our intentions, beliefs or current expectations concerning, among other things, the Transactions, the benefits of the Transactions, results of operations, financial condition, liquidity, prospects, growth, strategies and the markets in which Ensysce operates. Such forward-looking statements are based on available current market material and management’s expectations, beliefs and forecasts concerning future events impacting LACQ and Ensysce. Factors that may impact such forward-looking statements include:

 

  the risk that Ensysce’s lead product candidate PF614 and PF614-MPAR™ may not be successful in limiting or impeding abuse, overdose or misuse or providing additional safety upon commercialization;
     
  reliance by Ensysce on third party contract research organizations, or CROs, for its research and development activities and clinical trials;
     
  the need for substantial additional funding after consummation of Merger to complete the development and commercialization of Ensysce’s product candidates;
     
  the risk that Ensysce’s clinical trials may fail to replicate positive results from earlier preclinical studies or clinical trials conducted by Ensysce or third parties;
     
  the risk that the potential product candidates that Ensysce develops may not progress through clinical development or receive required regulatory approvals within expected timelines or at all;
     
  the risk that clinical trials may not confirm any safety, potency or other product characteristics described or assumed in this proxy statement/prospectus;
     
  the risk that Ensysce will be unable to successfully market or gain market acceptance of its product candidates;
     
  the risk that Ensysce’s product candidates may not be beneficial to patients or successfully commercialized;
     
  the risk that Ensysce has overestimated the size of the target market, patients’ willingness to try new therapies and the willingness of physicians to prescribe these therapies;
     
  effects of competition;
     
  the risk that third parties on which Ensysce depends for laboratory, clinical development, manufacturing and other critical services will fail to perform satisfactorily;
     
  the risk that Ensysce’s business, operations, clinical development plans and timelines, and supply chain could be adversely affected by the effects of health epidemics, including the ongoing COVID-19 pandemic;
     
  the risk that Ensysce will be unable to obtain and maintain sufficient intellectual property protection for its investigational products or will infringe the intellectual property protection of others;
     
  the loss of key members of Ensysce’s management team;
     
  changes in Ensysce’s regulatory environment;
     
  Ensysce’s need for additional financing to fund its operations and research and development;
     
  the ability to attract and retain key scientific, medical, commercial or management personnel;
     
  changes in Ensysce’s industry;
     
  Ensysce’s ability to remediate any material weaknesses or maintain effective internal controls over financial reporting;
     
  the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement;
     
  the inability to complete the Transactions due to the conditions to closing in the Merger Agreement;
     
  the ability to meet applicable listing standards prior to or following the consummation of the Transactions;

 

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  the risk that the proposed Transactions disrupt current plans and operations of Ensysce as a result of the announcement and consummation of the Transactions;
     
  the ability to recognize the anticipated benefits of the proposed business combination, which may be affected by, among other things, the factors described above;
     
  pending or potential litigation associated with the proposed business combination;
     
  other factors disclosed in this proxy statement/prospectus; and
     
  other factors beyond LACQ’s or Ensysce’s control.

 

The forward-looking statements contained in this proxy statement/prospectus are based on LACQ’s and Ensysce’s current expectations and beliefs concerning future developments and their potential effects on the Transactions and Ensysce. There can be no assurance that future developments affecting LACQ and/or Ensysce will be those that LACQ or Ensysce has anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond either LACQ’s or Ensysce’s 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. LACQ and Ensysce 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.

 

Before a LACQ stockholder grants its proxy or instructs how its vote should be cast at the special meeting, it should be aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this proxy statement/prospectus may adversely affect LACQ and Ensysce.

 

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RISK FACTORS

 

Stockholders should carefully consider the following risk factors, together with all of the other information included in this proxy statement/prospectus, before they decide whether to vote or instruct their vote to be cast to approve the proposals described in this proxy statement/prospectus. The following risk factors apply to the business and operations of Ensysce and will also apply to the business and operations of the post-combination company following the completion of the business combination. The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may adversely affect the ability to complete or realize the anticipated benefits of the business combination, and may have an adverse effect on the business, cash flows, financial condition and results of operations of the post-combination company. You should also carefully consider the following risk factors in addition to the other information included in this proxy statement/prospectus, including matters addressed in the section entitled “Cautionary Note Regarding Forward-Looking Statements.” LACQ or Ensysce may face additional risks and uncertainties that are not presently known to us or Ensysce, or that we or Ensysce currently deem immaterial, which may also impair our or Ensysce’s business or financial condition. The following discussion should be read in conjunction with the financial statements and notes to the financial statements of both LACQ and Ensysce included herein.

 

Risks Related to Ensysce’s Business, Financial Condition and Capital Requirements

 

Ensysce is a clinical-stage pharmaceutical company with a limited operating history. It has incurred significant financial losses since its inception and anticipates that it will continue to incur significant financial losses for the foreseeable future.

 

Ensysce is a clinical-stage pharmaceutical company with a limited operating history. Ensysce has not yet demonstrated an ability to generate revenues, obtain regulatory approvals, engage in clinical development beyond Phase 1 trials, manufacture any product on a commercial scale or arrange for a third party to do so on Ensysce’s behalf or enter into licensing arrangements to commercialize a product, or conduct sales and marketing activities necessary for successful product commercialization.

 

Ensysce has no products approved for commercial sale and has not generated any revenue from product sales to date, nor does it expect to generate any significant revenue from product sales for the next few years. Ensysce will continue to incur significant research and development and other expenses related to its product development, preclinical and clinical activities and ongoing operations. As a result, Ensysce is not profitable and has incurred losses in each period since its inception. Net losses and negative cash flows have had, and will continue to have, an adverse effect on Ensysce’s stockholders’ equity and working capital. Ensysce’s net loss was $10,102,280 for the year ended December 31, 2019, and $160,875 for the year ended December 31, 2020. As of December 31, 2020, Ensysce had an accumulated deficit of $56.0 million. Ensysce expects to continue to incur significant losses for the foreseeable future, and it expects these losses to increase as it continues its research and development of, and seeks regulatory approvals for, its product candidates.

 

If Ensysce continues to suffer losses as it has since inception, investors may not receive any return on their investment and may lose their entire investment.

 

In addition, as part of a public company, Ensysce will incur significant additional legal, accounting and other expenses that it did not incur as a private company and anticipates that its expenses will increase substantially if, and as, it:

 

  meets the requirements and demands of being a public company;
     
  expands its operational, financial and management systems and increases personnel to support its operations;
     
  hires additional clinical, quality control, medical, scientific and other technical personnel to support its clinical operations;
     
  advances its clinical-stage product candidate PF614 through clinical development;
     
  advance its preclinical stage product candidates into clinical development;
     
  seeks regulatory approvals for any product candidates that successfully complete clinical trials;
     
  undertakes any pre-commercialization activities to establish sales, marketing and distribution capabilities for any product candidates for which it may receive regulatory approval in regions where it choose to commercialize its products on its own or jointly with third parties;
     
  maintains, expands and protects its intellectual property portfolio; and
     
  makes milestone, royalty or other payments due under any future in-license or collaboration agreements.

 

Pharmaceutical product development entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate efficacy or an acceptable safety profile, gain regulatory approval, secure market access and reimbursement and become commercially viable. Therefore any investment in the combined company would be highly speculative. Ensysce’s prospects are subject to the costs, uncertainties, delays and difficulties frequently encountered by companies in clinical development, especially clinical-stage pharmaceutical companies such as Ensysce’s. Any predictions you make about Ensysce’s future success or viability may not be as accurate as they would otherwise be if Ensysce had a longer operating history or a history of successfully developing and commercializing pharmaceutical products. Ensysce will likely encounter unforeseen expenses, difficulties, complications, delays and other known or unknown factors in achieving its business objectives.

 

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Additionally, Ensysce’s expenses could increase beyond its expectations if it is required by the U.S. Food and Drug Administration, or FDA, or other regulatory authorities to perform clinical trials in addition to those that it currently expects to conduct, or if there are any delays in establishing appropriate manufacturing arrangements for or in completing its clinical trials or the development of any of its product candidates.

 

Ensysce’s ability to generate revenue from any of its potential products is subject to its ability to obtain regulatory approval and fulfill numerous other requirements and it may never be successful in generating revenues or becoming profitable.

 

Ensysce’s ability to become and remain profitable depends on its ability to generate revenue or execute other business development arrangements. Ensysce does not expect to generate significant revenue, if any, unless and until it is able to obtain regulatory approval for, and successfully commercialize the product candidates it is developing or may develop. Successful commercialization, to the extent it occurs, will require achievement of many key milestones, including demonstrating safety and efficacy in clinical trials, obtaining regulatory approval for these product candidates, manufacturing, marketing and selling, or entering into other agreements to commercialize, those products for which Ensysce may obtain regulatory approval, satisfying any post-marketing requirements and obtaining reimbursement for its products from private insurance or government payors. Because of the uncertainties and risks associated with these activities, Ensysce cannot accurately and precisely predict the timing and amount, if any, of revenues, the extent of any further losses or when it might achieve profitability. Ensysce may never succeed in these activities and, even if it does, Ensysce may never generate revenues that are sufficient enough for Ensysce to achieve profitability. Even if Ensysce does achieve profitability, it may not be able to sustain or increase profitability on a quarterly or annual basis.

 

Ensysce’s failure to become and remain profitable may depress the market price of its common stock and could impair its ability to raise capital, expand its business, diversify its product offerings or continue its operations.

 

Even if Ensysce consummates the Merger, it will need substantial additional funding. If Ensysce is unable raise capital when needed, it could be forced to delay, reduce or terminate its product discovery and development programs or commercialization efforts.

 

Ensysce’s operations have consumed substantial amounts of cash since inception. Ensysce expects to continue to spend substantial amounts to continue the clinical and preclinical development of Ensysce’s product candidates, including its planned Phase 2 program for nafamostat and planned clinical trials for PF614 and PF614-MPAR™. The proceeds from this transaction are expected to be approximately $5,000,000 and will not be sufficient to meet Ensysce’s total expected capital requirements. Accordingly, Ensysce will need to raise additional capital to complete its currently planned clinical trials and any future clinical trials. Other unanticipated costs may arise in the course of its development efforts. If Ensysce is able to obtain marketing approval for product candidates that it develops, it would require significant additional amounts of funding in order to launch and commercialize such product candidates. Ensysce cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of any product candidate it develops and it may require substantial additional funding after consummation of the Merger to complete the development and commercialization of its product candidates.

 

Ensysce’s future need for additional funding depends on many factors, including:

 

  the scope, progress, results and costs of researching and developing its current product candidates, as well as other additional product candidates it may develop and pursue in the future, including the costs related to preclinical and clinical development of the product;
     
  the timing of, and the costs involved in, obtaining marketing approvals for its product candidates and any other additional product candidates Ensysce may develop and pursue in the future;
     
  the number of future product candidates that it may pursue and their development requirements;
     
  subject to receipt of regulatory approval, the costs of commercialization activities for Ensysce’s product candidates, to the extent such costs are not the responsibility of any future collaborators, including the costs and timing of establishing product sales, marketing, distribution and manufacturing capabilities;
     
  subject to receipt of regulatory approval, the amount of revenue, if any, received from commercial sales of its product candidates or any other additional product candidates it may develop and pursue in the future;
     
  the extent to which it in-licenses or acquires rights to other products, product candidates or technologies;
     
  its ability to establish collaboration arrangements for the development of its product candidates on favorable terms, if at all;

 

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  its headcount growth and associated costs as it expands its research and development and establishes a commercial infrastructure;
     
  the costs of preparing, filing and prosecuting patent applications, maintaining and protecting its intellectual property rights, including enforcing and defending intellectual property related claims; and
     
  the costs of operating as a public company.

 

Ensysce cannot be certain that additional funding will be available on acceptable terms, or at all. Please see the risk factors under “Risks Related to the Ownership of Common Stock and Financial Reporting.”

 

Ensysce believes that the net proceeds from this transaction, together with its existing cash and cash equivalents including subsequent draw downs, if, to the extent, available, under the Share Purchase Agreement between the Company, GEM Global Yield LLC SCS (“GEM Global”) and GEM Yield Bahamas Limited (“GYBL”), dated as of December 29, 2020, including a Registration Rights Agreement between the same parties and dated as of the same date (the “GEM Agreement”) (as described in the following risk factor), will enable Ensysce to fund its operating expenses and capital expenditure requirements through the end of 2021 while advancing its main product candidates such as, PF614 and PF614 MPAR™ and nafamostat through their respective next phases of clinical development. Ensysce’s estimate may prove to be wrong, and Ensysce could use its available capital resources, if any, sooner than it currently expects. Further, changing circumstances, some of which may be beyond its control, could cause Ensysce to consume capital significantly faster than Ensysce currently anticipates, and Ensysce may need to seek additional funds sooner than planned. To the extent this occurred, it could impose significant dilution on the shareholders of the combined entity.

 

The proceeds under the GEM Agreement may be less than anticipated. The issuances of common stock pursuant to the GEM Agreement would result in dilution of existing LACQ stockholders and could have a negative impact on the market price of LACQ common stock. Additionally, the negative covenants under the GEM Agreement are onerous and any breach by Ensysce thereunder may entitle GEM Global and GYBL to indemnification payments, reimbursements of legal and other expenses and other compensation thereby diverting Ensysce’s time and resources.

 

Ensysce is entitled to draw down up to $60 million of gross proceeds from GEM Global in exchange for shares of LACQ common stock at a price equal to 90% of the average closing bid price of the shares of LACQ common stock on Nasdaq for a 30 day period, subject to meeting the terms and conditions of the GEM Agreement. This equity line facility is available for a period of 36 months from the closing date of the Merger. Please see the section entitled “Information About Ensysce” for additional information. The limitations on the amount and frequency of the draws that Ensysce can make under the GEM facility, which include the requirement that (i) there be an effective registration statement and (ii) size restrictions relating to LACQ’s trading volume, may affect the ability to draw under the GEM Agreement and result in proceeds that are less than anticipated.

 

In addition, the occurrence of the Merger would trigger (i) payment of a commitment fee of $1.2 million to GEM Global payable in either LACQ common stock or cash and (ii) issuance of a warrant granting the right to purchase shares of LACQ common stock in an amount equal to 4% of the total number of common shares outstanding as of the closing date, calculated on a fully diluted basis, at a strike price per share equal to the closing bid price for such common shares on the closing date of the Merger. The number of shares underlying the warrant as well as the strike price is subject to adjustments for recapitalizations, reorganizations, change of control, stock split, stock dividend, reverse stock splits and certain issuances of additional shares of LACQ common stock.

 

The issuances of shares at discount under the GEM Agreement and the anti-dilution protection granted to GEM Global in connection with issuances of additional shares of LACQ common stock, would result in dilution of existing LACQ stockholders and have a negative impact on the market price of LACQ common stock and LACQ’s ability to obtain equity financing.

 

In addition, the negative covenants under the GEM Agreement are onerous and any breach thereof may trigger indemnification, reimbursement of losses and other liability for Ensysce thereby diverting Ensysce’s time and resources.

 

Ensysce’s business is highly dependent on the success of its product candidates. If Ensysce is unable to successfully complete clinical development, obtain regulatory approval for or commercialize one or more of Ensysce’s product candidates, or if Ensysce experiences delays in doing so, its business will be materially harmed.

 

Ensysce’s future success and ability to generate significant revenue from its product candidates, which it does not expect will occur for several years, is dependent on its ability to successfully develop, obtain regulatory approval for and commercialize one or more of its product candidates. Ensysce completed its Phase 1 clinical study for its most advanced product candidate, PF614, in February 2018. A Phase 1 study for nafamostat was completed in December 2020. A Phase 1 study for PF614-MPAR™ is expected to be initiated during 2021, to the extent of sufficient available funding. All of Ensysce’s other product candidates are in earlier stages of development and will require substantial additional investment for manufacturing, preclinical testing, clinical development, regulatory review and approval in one or more jurisdictions. If any of Ensysce’s product candidates encounters safety or efficacy problems, development delays or regulatory issues or other problems, its development plans and business would be materially harmed.

 

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Ensysce may not have the financial resources to continue development of its product candidates. Even if clinical trials are completed, Ensysce may experience other issues that may delay or prevent regulatory approval of, or its ability to commercialize, Ensysce’s product candidates, including:

 

  inability to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that its product candidates are safe and effective;
     
  insufficiency of its financial and other resources to complete the necessary clinical trials and preclinical studies;
     
  negative or inconclusive results from its clinical trials, preclinical studies or the clinical trials of others for product candidates that are similar to Ensysce’s, leading to a decision or requirement to conduct additional clinical trials or preclinical studies or abandon a program;
     
  product-related adverse events experienced by subjects in its clinical trials, including unexpected toxicity results, or by individuals using drugs or therapeutic biologics similar to Ensysce’s product candidates;
     
  delays in submitting an Investigational New Drug application, or IND, or comparable foreign applications or delays or failure in obtaining the necessary approvals from regulators to commence a clinical trial or a suspension or termination, or hold, of a clinical trial once commenced;
     
  conditions imposed by the FDA, the European Medicines Agency, or EMA, or comparable foreign regulatory authorities regarding the scope or design of its clinical trials;
     
  poor effectiveness of its product candidates during clinical trials;
     
  better than expected performance of control arms, such as placebo groups, which could lead to negative or inconclusive results from its clinical trials;
     
  delays in enrolling subjects in clinical trials;
     
  high drop-out rates of subjects from clinical trials;
     
  inadequate supply or quality of product candidates or other materials necessary for the conduct of its clinical trials;
     
  greater than anticipated clinical trial or manufacturing costs;
     
  unfavorable FDA, EMA or comparable regulatory authority inspection and review of a clinical trial site;
     
  failure of its third-party contractors or investigators to comply with regulatory requirements or the clinical trial protocol or otherwise meet their contractual obligations in a timely manner, or at all;
     
  unfavorable FDA, EMA or comparable regulatory authority inspection and review of manufacturing facilities or inability of those facilities to maintain a compliance status acceptable to the FDA, EMA or comparable regulatory authorities;
     
  delays and changes in regulatory requirements, policy and guidelines, including the imposition of additional regulatory oversight around clinical testing generally or with respect to its therapies in particular; or
     
  varying interpretations of data by the FDA, EMA and comparable foreign regulatory authorities.

 

Ensysce’s product candidates will require additional, time-consuming development efforts prior to commercial sale, including preclinical studies, clinical trials and approval by the FDA and applicable foreign regulatory authorities. All product candidates are prone to the risks of failure that are inherent in pharmaceutical product development, including the possibility that such product candidate will not be shown to be sufficiently safe and effective for approval by regulatory authorities. In addition, Ensysce cannot assure stockholders that any such products that are approved will be manufactured or produced economically, successfully commercialized or widely accepted in the marketplace or be more effective than other commercially available alternatives.

 

Ensysce depends heavily on the success of its lead product candidate PF614, which is currently in clinical trials. Ensysce’s clinical trials of PF614 may not be successful. If Ensysce is unable to commercialize PF614 or experience significant delays in doing so, its business will be materially harmed.

 

Ensysce has invested a significant portion of its efforts and financial resources in the research and development of its lead product candidate, PF614 and expects to continue to do so. Ensysce’s ability to generate revenues from the sale of abuse-deterrent opioid products, which may not occur at a significant level for several years, will depend heavily on the successful development, regulatory approval and eventual commercialization of PF614.

 

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Ensysce cannot commercialize product candidates in the United States without first obtaining regulatory approval for the product from the U.S. Food and Drug Administration, or FDA; similarly, Ensysce cannot commercialize product candidates outside of the United States without obtaining regulatory approval from similar regulatory authorities outside of the United States. Even if PF614 or another product candidate were to successfully obtain approval from the FDA and non-U.S. regulatory authorities, any approval might contain significant limitations related to use restrictions for specified age groups, warnings, precautions or contraindications, or may be subject to burdensome post-approval study or risk management requirements. If Ensysce is unable to obtain regulatory approval for PF614 in one or more jurisdictions, or any approval contains significant limitations, it may not be able to obtain sufficient funding or generate sufficient revenue to continue the development, marketing and/or commercialization of PF614 or any other product candidate that Ensysce may discover, in-license, develop or acquire in the future. Furthermore, even if Ensysce obtains regulatory approval for P614, it will still need to develop a commercial organization, or collaborate with third parties for the commercialization of PF614, establish commercially viable pricing and obtain approval for adequate reimbursement from third-party and government payors. If Ensysce or its commercialization collaborators are unable to successfully commercialize PF614, Ensysce may not be able to generate sufficient revenues to continue its business.

 

Due to the significant resources required for the development of Ensysce’s product pipeline, and depending on its ability to access capital, Ensysce must prioritize the development of certain product candidates over others. Moreover, Ensysce may fail to expend its limited resources on product candidates or indications that may have been more profitable or for which there is a greater likelihood of success.

 

Ensysce currently has three clinical-stage product candidates as well as certain other product candidates that are at various stages of preclinical development. Ensysce seek to maintain a process of prioritization and resource allocation to maintain an optimal balance between aggressively pursuing its more advanced clinical-stage product candidates, such as nafamostat, PF614 and PF614-MPAR™, and ensuring the development of additional potential product candidates.

 

Due to the significant resources required for the development of Ensysce’s product candidates, Ensysce must focus on specific diseases and disease pathways and decide which product candidates to pursue and advance and the amount of resources to allocate to each. Ensysce’s decisions concerning the allocation of research, development, collaboration, management and financial resources toward particular product candidates or therapeutic areas may not lead to the development of any viable commercial products and may divert resources away from better opportunities. If Ensysce makes incorrect determinations regarding the viability or market potential of any of its product candidates or misinterprets trends in the pharmaceutical industry, in particular for opioid abuse and drug overdose, its business, financial condition, and results of operations could be materially adversely affected. As a result, Ensysce may (i) fail to capitalize on viable commercial products or profitable market opportunities, (ii) be required to forego or delay pursuit of opportunities with other product candidates or other diseases and disease pathways that may later prove to have greater commercial potential than those it chooses to pursue, or (iii) relinquish valuable rights to such product candidates through collaboration, licensing, or other royalty arrangements in cases in which it would have been advantageous for it to invest additional resources to retain sole development and commercialization rights.

 

Ensysce’s PF614 and PF614-MPAR™ product candidates may not be successful in limiting or impeding abuse, overdose or misuse or providing additional safety upon commercialization.

 

Ensysce is committing a substantial majority of its resources to the development of products utilizing its TAAPTM and MPARTM. There can be no assurance that Ensysce’s products will perform as tested and limit or impede the actual abuse, overdose or misuse of such products or provide other benefits in commercial settings. Moreover, there can be no assurance that if Ensysce’s products are approved by the FDA, the post-approval epidemiological studies required by the FDA as a condition of any such approvals of the products will show a reduction in the consequences of abuse and misuse by patients for whom the applicable product is prescribed. The failure of Ensysce’s products to limit or impede actual abuse, overdose or misuse or provide other safety benefits in practice will have a material adverse impact on market acceptance for such products and on Ensysce’s financial condition and results of operations.

 

If Ensysce fails to discover, develop and commercialize other product candidates, it may be unable to grow its business and Ensysce’s ability to achieve its strategic objectives would be impaired. In addition, Ensysce may also seek to commercialize certain treatments that may not be proprietary to Ensysce.

 

Although the development and commercialization of its current product candidates are Ensysce’s initial focus, as part of its longer-term growth strategy, Ensysce plans to develop other product candidates. Ensysce may also seek to commercialize treatments that may not be proprietary to Ensysce. Ensysce intends to evaluate internal opportunities from its existing product candidates or other potential product candidates. While Ensysce’s’ technology platforms have potential applicability to other uses, Ensysce has not conducted any clinical trials on these other uses and Ensysce may not be successful in developing product candidates for other uses.

 

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In addition, Ensysce intends to devote capital and resources for basic research to discover and identify additional product candidates. These research programs require technical, financial and human resources, whether or not any product candidates are ultimately identified. Ensysce’s research programs may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development for many reasons, including the following:

 

  the research methodology used may not be successful in identifying potential product candidates;
     
  competitors may develop alternatives that render Ensysce’s product candidates obsolete;
     
  product candidates that Ensysce develops may nevertheless be covered by third parties’ patents or other exclusive rights;
     
  a product candidate may, on further study, be shown to have harmful side effects or other characteristics that indicate it is unlikely to be effective or otherwise does not meet applicable regulatory criteria;
     
  a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; and
     
  a product candidate may not be accepted as safe and effective by patients, the medical community or third-party payors.

 

In the future, Ensysce may also seek to in-license or acquire product candidates or the underlying technology. The process of proposing, negotiating and implementing a license or acquisition is lengthy and complex. Other companies, including many with substantially greater financial, marketing and sales resources, may compete with Ensysce for the license or acquisition of product candidates. Ensysce has limited resources to identify and execute the acquisition or in-licensing of third-party products, businesses and technologies and integrate them into its current infrastructure. Moreover, Ensysce may devote resources to potential acquisitions or in-licensing opportunities that are never completed, or it may fail to realize the anticipated benefits of such efforts. Ensysce may not be able to acquire the rights to additional product candidates on terms that it finds acceptable, or at all.

 

In addition, future acquisitions may entail numerous operational and financial risks, including:

 

  exposure to unknown liabilities;
     
  disruption of Ensysce’s business and diversion of its management’s time and attention to develop acquired products or technologies;
     
  incurrence of substantial debt, dilutive issuances of securities or depletion of cash to pay for acquisitions;
     
  higher than expected acquisition and integration costs;
     
  difficulty in combining the operations and personnel of any acquired businesses with Ensysce’s operations and personnel;
     
  increased amortization expenses;
     
  impairment of relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership; and
     
  inability to motivate key employees of any acquired businesses.

 

If Ensysce is unsuccessful in identifying and developing additional product candidates, either through internal development or licensing or acquisition from third parties, its potential for growth and achieving its strategic objectives may be impaired.

 

If Ensysce does not achieve its projected development and commercialization goals within the timeframes it expects, the development and commercialization of its product candidates may be delayed, and its business and results of operations may be harmed.

 

For planning purposes, Ensysce seeks to estimate the timing of the accomplishment of various scientific, clinical, regulatory and other product development objectives. These milestones may include its expectations regarding the commencement or completion of scientific studies and clinical trials, the submission of regulatory filings, or commercialization objectives. From time to time, Ensysce may publicly announce the expected timing of some of these milestones, such as the completion of an ongoing clinical trial, the initiation of other clinical programs, receipt of marketing approval or a commercial launch of a product. The potential achievement of many of these milestones may be outside of Ensysce’s control. Each of these milestones is based on a variety of assumptions which, if not realized as expected, may cause the timing of such potential achievement of the respective milestones to vary considerably from Ensysce’s estimates, including:

 

  its available capital resources or capital constraints Ensysce experiences;
     
  the rate of progress, costs and results of its clinical trials and research and development activities, including the extent of scheduling conflicts with participating clinicians and collaborators;
     
  its ability to identify and enroll patients who meet clinical trial eligibility criteria;
     
  its receipt of approvals by the FDA and other regulatory authorities and the timing thereof;

 

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  clinical outcomes;
     
  other actions, decisions or rules issued by regulators;
     
  its ability to access sufficient, reliable and affordable supplies of materials used in the manufacture of Ensysce’s product candidates;
     
  the efforts of its collaborators with respect to the commercialization of Ensysce’s product candidates; and
     
  the securing of, costs related to, and timing issues associated with, product manufacturing as well as sales and marketing activities.

 

If Ensysce fails to achieve any announced milestones in the timeframes it expects, the development and commercialization of its product candidates may be delayed, and its business and results of operations may be harmed and it could negatively impact our share price performance. Please see “Information about Ensysce” for more information.

 

Competitive products may reduce or eliminate commercial opportunity for Ensysce’s product candidates, if approved. If its competitors develop technologies or product candidates more rapidly than Ensysce does, or their technologies or product candidates are more effective or safer than any such technologies or product candidate of Ensysce, Ensysce’s ability to develop and successfully commercialize its own technologies or product candidates may be adversely affected.

 

The clinical and commercial landscapes for the solution of opioid abuse and drug overdose are highly competitive and subject to rapid and significant technological change. Ensysce faces competition with respect to its indications for Ensysce’s product candidates and will face competition with respect to any other product candidates that it may seek to develop or commercialize in the future, from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide. There are a number of large pharmaceutical and biotechnology companies that currently market and sell drugs or are pursuing the development of product candidates for the treatment of the indications that Ensysce is pursuing. These companies include, but are not limited to, Purdue Pharma, LP, and Collegium Pharmaceutical, Inc. Potential competitors include not only pharmaceutical companies but also academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization.

 

Ensysce believes that a significant number of product candidates are currently under development for the same indications that it is currently pursuing, and some or all may become commercially available in the future for the treatment of conditions for which it is trying or may try to develop product candidates. Ensysce’s potential competitors include large pharmaceutical and biotechnology companies, specialty pharmaceutical and generic drug companies, academic institutions, government agencies and research institutions. See the section entitled “Information About Ensysce — Competition” for examples of the competition that Ensysce’s product candidates face.

 

Ensysce’s competitors may have significantly greater financial resources, established presence in the market, expertise in research and development, manufacturing, preclinical and clinical testing, obtaining regulatory approvals and reimbursement and marketing approved products than Ensysce does. Accordingly, its competitors may be more successful than Ensysce may be in obtaining regulatory approval for therapies and achieving widespread market acceptance. Ensysce’s competitors’ products may be more effective, or more effectively marketed and sold, than any product candidate Ensysce may commercialize and may render its therapies obsolete or non-competitive before Ensysce can recover development and commercialization expenses. If any of Ensysce’s product candidates, including PF614, is approved, these product candidates could compete with a range of therapeutic treatments that are in development. In addition, Ensysce’s competitors may succeed in developing, acquiring or licensing technologies and products that are more effective or less costly than PF614, its other product candidates or any other product candidates that Ensysce may develop, which could render its product candidates obsolete and noncompetitive.

 

If Ensysce obtains approval for any of its product candidates, it may face competition based on many different factors, including the efficacy, safety and tolerability of its products, the ease with which its products can be administered, the timing and scope of regulatory approvals for these products, the availability and cost of manufacturing, marketing and sales capabilities, price, reimbursement coverage and patent position. Existing and future competing products could present superior treatment alternatives, including being more effective, safer, less expensive or marketed and sold more effectively than any products Ensysce may develop.

 

Competitive products may make any products Ensysce develops obsolete or noncompetitive before it is able to recover the expense of developing and commercializing Ensysce’s product candidates. Such competitors could also recruit its employees, which could negatively impact Ensysce’s level of expertise and its ability to execute its business plan.

 

In addition, Ensysce’s competitors may obtain patent protection, regulatory exclusivities or FDA approval and commercialize products more rapidly than Ensysce does, if it is successful at all, which may impact future approvals or sales of any of Ensysce’s product candidates that receive regulatory approval. If the FDA approves the commercial sale of PF614 or any other product candidate, Ensysce will also be competing with respect to marketing capabilities and manufacturing efficiency. Ensysce expects any such competition among products will be based on product efficacy and safety, the timing and scope of regulatory approvals, availability of supply, marketing and sales capabilities, product price, reimbursement coverage by government and private third-party payors, regulatory exclusivities and patent position. Ensysce’s profitability and financial position will suffer if its product candidates receive regulatory approval but cannot compete effectively in the marketplace.

 

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Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of its competitors. Smaller and other early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with Ensysce in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites, as well as in acquiring technologies complementary to, or necessary for, its programs.

 

Ensysce’s business could be harmed if it loses the services of its key personnel or is unable to hire additional employees.

 

Ensysce’s business depends upon its ability to attract and retain highly qualified personnel, including managerial, sales and technical personnel. Ensysce competes for key personnel with other companies, healthcare institutions, academic institutions, government entities and other organizations. Ensysce does not have written employment agreements with its chief executive officer. Ensysce’s ability to maintain and expand its business may be impaired if it is unable to retain its current key personnel or hire or retain other qualified personnel in the future.

 

Ensysce currently only has four full-time employees and three consultants and expects to add additional employees. Ensysce’s future success also depends on its ability to identify, attract, hire or engage, retain and motivate other well-qualified managerial, technical, clinical and regulatory personnel.

 

Competition for such individuals, particularly in the United States, is intense, and Ensysce may not be able to hire sufficient personnel to support its efforts. There can be no assurance that such professionals will be available in the market, or that Ensysce will be able to retain existing professionals or to meet or to continue to meet their compensation requirements. Furthermore, the combined entity’s cost base with respect to such compensation, which may include equity compensation, may increase significantly, which could have a material adverse effect on Ensysce’s financial results, including the potential for additional dilution to the combined entity’s shareholders. Failure to establish and maintain an effective management team and work force could adversely affect Ensysce’s ability to operate, grow and manage its business.

 

Ensysce’s employees, independent contractors, principal investigators, consultants, commercial collaborators, service providers and other vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could have an adverse effect on Ensysce’s results of operations.

 

Ensysce is exposed to the risk that its and its CROs’ employees and contractors, including principal investigators, consultants, commercial collaborators, service providers and other vendors may engage in fraudulent or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or other unauthorized activities that violate the laws and regulations of the FDA and other similar regulatory bodies, including those laws that require the reporting of true, complete and accurate information to such regulatory bodies; manufacturing standards; federal and state healthcare fraud and abuse and health regulatory laws and other similar foreign fraudulent misconduct laws; or laws that require the true, complete and accurate reporting of financial information or data. Activities subject to these laws also involve the improper use or misrepresentation of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to Ensysce’s reputation. It is not always possible to identify and deter third-party misconduct, and the precautions Ensysce takes to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting Ensysce from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against Ensysce, and it is not successful in defending itself or asserting its rights, those actions could have a significant impact on Ensysce’s business and financial results, including the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, reputational harm, diminished profits and future earnings, and curtailment of Ensysce’s operations, any of which could adversely affect Ensysce’s ability to operate its business and its results of operations

 

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Business interruptions resulting from the COVID-19 pandemic or similar public health crises could cause a disruption of the development of Ensysce’s product candidates and adversely impact Ensysce’s business.

 

Public health crises such as pandemics or similar outbreaks could adversely impact Ensysce’s business. In December 2019, a novel strain of a virus named SARS-CoV-2 (severe acute respiratory syndrome coronavirus 2), or coronavirus, which causes coronavirus disease (COVID-19), was reported to have surfaced in Wuhan, China and has since reached multiple other regions and countries worldwide. The COVID-19 pandemic is evolving, and to date has led to the implementation of various responses, including government-imposed quarantines, travel restrictions and other public health safety measures.

 

The continued spread of COVID-19 or other global health matters, such as pandemics, could adversely impact Ensysce’s clinical trials or preclinical studies. For instance, the COVID-19 pandemic could impair Ensysce’s ability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19 if a pandemic occurs in their geography or due to prioritization of hospital resources toward the pandemic and restrictions on travel. Furthermore, some patients may be unwilling to enroll in Ensysce’s trials or be unable to comply with clinical trial protocols if quarantines or travel restrictions impede patient movement or interrupt healthcare services. COVID-19 may also negatively affect the operations of third-party contract research organizations that Ensysce relies upon to carry out its clinical trials or the operations of its third-party manufacturers, which could result in delays or disruptions in the supply of its product candidates. For instance, while Ensysce has taken measures to revise clinical trial protocols in its Phase 2 program of nafamostat, including home delivery of study medication, home health care visits to collect safety data and telemedicine visits to collect clinician-based trial assessments, such measures may not be sufficient to prevent missing data from impacting trial outcomes or delays in enrollment and trial completion caused by COVID-19. If patients are reluctant to participate in these trials due to fears of COVID-19 infection resulting from regular visits to a healthcare facility, Ensysce may not be able to meet its current trial completion timelines. Any negative impact COVID-19 has to patient enrollment or treatment or the timing and execution of its clinical trials could cause costly delays to its clinical trial activities, which could adversely affect its ability to obtain regulatory approval for the commercialization of Ensysce’s product candidates, increase its operating expenses, and have a material adverse effect on its business and financial results. Ensysce may also take temporary precautionary measures intended to help minimize the risk of COVID-19 to its employees, including temporarily requiring all employees to work remotely, suspending all non-essential travel worldwide for its employees and discouraging employee attendance at industry events and in-person work-related meetings. These measures could negatively affect its business. COVID-19 has also caused volatility in the global financial markets and threatened a slowdown in the global economy, which may negatively affect its ability to raise additional capital on attractive terms or at all.

 

The extent to which the ongoing COVID-19 pandemic impacts Ensysce’s business, results of operation and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration of the pandemic, new information that may emerge concerning the severity of COVID-19, or the effectiveness of actions to contain COVID-19 or treat its impact, among others. Ensysce cannot presently predict the scope and severity of any potential business shutdowns or disruptions. If Ensysce or any of the third parties with whom it engages, however, were to experience shutdowns or other business disruptions, Ensysce’s ability to conduct its business in the manner and on the timelines presently planned could be materially and negatively affected, which could have a material adverse impact on its business, results of operation and financial condition.

 

Some of Ensysce’s programs are partially supported by government grant awards, which may not be available to Ensysce in the future.

 

Ensysce has received funding under grant award programs funded by governmental agencies, such as the NIH and NIDA. To fund a portion of Ensysce’s future research and development programs, it may apply for additional grant funding from these or similar governmental agencies in the future. However, funding by these, and other, governmental agencies may be significantly reduced or eliminated in the future for a number of reasons. For example, some programs are subject to a yearly appropriations process in Congress. In addition, Ensysce may not receive full funding under current or future grants because of budgeting constraints of the agency administering the program or unsatisfactory progress on the study being funded. Also, the continued spread of COVID-19 could affect governmental priorities in the future or prospective funding for Ensysce’s product candidates. Therefore, Ensysce cannot provide any assurance that it will receive any future grant funding from any government agencies, or, that if received, it will receive the full amount of the particular grant award. Any such reductions could delay the development of Ensysce’s product candidates and the introduction of new products.

 

Social issues around the abuse of opioids, including law enforcement concerns over diversion of opioid and regulatory efforts to combat abuse, could decrease the potential market for Ensysce’s product candidates.

 

Media stories regarding prescription drug abuse and the diversion of opioids and other controlled substances have become commonplace. Law enforcement and regulatory agencies may apply additional policies that further seek to limit the availability of opioids. Such efforts may inhibit Ensysce’s ability to commercialize its product candidates. Aggressive enforcement and unfavorable publicity regarding, for example, the use or misuse of oxycodone or other opioid drugs, the limitations of abuse resistant formulations, public inquiries and investigations into prescription drug abuse, litigation or regulatory activity, sales, marketing, distribution or storage of Ensysce’s drug products could harm its reputation. Such negative publicity could reduce the potential size of the market for Ensysce’s product candidates and decrease the revenues and royalties, if any, it is able to generate from their sale. Similarly, to the extent opioid abuse becomes less prevalent or a less urgent public health issue, regulators and third-party payers may not be willing to pay a premium for abuse deterrent formulations of opioids.

 

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In addition, efforts by the FDA and other regulatory bodies to combat abuse of opioids may negatively impact the market for Ensysce’s product candidates. For example, in February 2016, as part of a broader initiative led by U.S. Department of Health and Human Services to address opioid-related overdose, death and dependence, the FDA released an action plan to address the opioid abuse epidemic and reassess the FDA’s approach to opioid medications. The plan identifies the FDA’s focus on implementing policies to reverse the opioid abuse epidemic, while maintaining access to effective treatments. The actions set forth in the FDA’s plan include strengthening post marketing study requirements to evaluate the benefit of long-term opioid use, changing the Risk Evaluation and Mitigation Strategy (REMS) requirements to provide additional funding for physician education courses, releasing a draft guidance setting forth approval standards for generic abuse-deterrent opioid formulations, and seeking input from the FDA’s Scientific Board to broaden the understanding of the public risks of opioid abuse. Many of these changes could require Ensysce to expend additional resources in developing and commercializing its product candidates to meet additional requirements. In October 2017, the acting director of HHS under the directive of former President Trump, declared the opioid crisis a national health emergency and initiated a five point plan including (i) improving access to prevention, treatment, and recovery support services; (ii) targeting the availability and distribution of overdose-reversing drugs; (iii) strengthening public health data reporting and collection; (iv) supporting cutting-edge research on addiction and pain; and (v) advancing the practice of pain management. The impact that this five-point plan will have on Ensysce is unclear at this time, especially after the change in administrations following the 2020 elections.

 

Risks Related to Ensysce’s Dependence on Third-Party Providers

 

Ensysce currently relies on and expects to rely in the future on third parties to conduct its clinical trials, and those third parties may not perform satisfactorily, including failing to meet deadlines for completing such trials, failing to satisfy legal or regulatory requirements or terminating the relationship.

 

Ensysce currently relies on and expects to rely in the future on third-party contract research organizations, or CROs, to conduct research and development activities and its clinical trials for its product candidates. Agreements with these CROs might terminate for a variety of reasons, including for their failure to perform. Entry into alternative arrangements, if necessary, could significantly delay Ensysce’s product development activities.

 

Ensysce’s reliance on these CROs for research and development activities and clinical trials will reduce its control over these activities but will not relieve Ensysce of any of its responsibilities. For example, Ensysce will remain responsible for ensuring that each of its clinical trials is conducted in accordance with the general investigational plan and protocols in the applicable IND. Moreover, the FDA requires compliance with standards, commonly referred to as good clinical practices, or GCPs, for conducting, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected.

 

If these CROs do not successfully carry out their contractual duties, meet expected deadlines or conduct the clinical trials in accordance with regulatory requirements or its stated protocols, it could adversely affect the development of Ensysce’s product candidates and it could result in Ensysce not being able to obtain, or being delayed in obtaining, marketing approvals for its product candidates and it could adversely affect Ensysce’s efforts to successfully commercialize its product candidates.

 

Ensysce expects to be completely dependent on third parties to manufacture its product candidates, and its commercialization of its product candidates could be halted, delayed or made less profitable if those third parties fail to maintain a compliance status acceptable to the FDA or comparable foreign regulatory authorities, fail to provide to Ensysce with sufficient quantities of its product candidates or fail to do so at acceptable quality levels or prices.

 

Ensysce does not currently have, nor does it plan to acquire, the capability or infrastructure to manufacture the ingredients in its product candidates for use in its clinical trials or for commercial product, if any. Ensysce has entered into a Manufacturing Agreement (the “Recro Agreement”) with Recro Gainesville LLC (“Recro”) for the production of PF614 capsules and other materials and services with respect to Ensysce’s clinical studies. In addition, Ensysce does not have the capability to encapsulate any of its product candidates as a finished product for commercial distribution. As a result, Ensysce expects to be obligated to rely on contract manufacturers, like Recro, if and when any of its product candidates are approved for commercialization. In the event that Recro is unable to perform its obligations under the Recro Agreement, Ensysce may be unable to replace the Recro Agreement on terms as favorable to it. Ensysce has not entered into an agreement with any contract manufacturers for commercial supply and may not be able to engage a contract manufacturer for commercial supply of any of its product candidates on favorable terms to Ensysce, or at all.

 

The processes used by Ensysce’s contract manufacturers to manufacture its product candidates must be approved by the FDA or comparable foreign regulatory authorities and the facilities at which the product candidates are manufactured must maintain a compliance status acceptable to the FDA and foreign regulatory authorities. FDA and foreign regulatory authorities will conduct inspections after Ensysce submits an NDA to the FDA or its equivalent to other relevant regulatory authorities. Ensysce will not control the manufacturing process of, and will be completely dependent on, its contract manufacturing partners for compliance with cGMPs for manufacture of both active drug substances and finished products. These cGMP regulations cover all aspects of the manufacturing, testing, quality control and record keeping relating to Ensysce’s product candidates. If Ensysce’s contract manufacturers, including Recro, do not successfully manufacture material that conforms to its specifications and the strict regulatory requirements of the FDA or others, Ensysce’s product candidates may not be approved. If these facilities do not maintain a compliance status acceptable to the FDA, DEA or comparable regulatory authorities, Ensysce may need to find alternative manufacturing facilities, which would significantly impact its ability to develop, obtain regulatory approval for or market its product candidates, if approved.

 

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Ensysce’s contract manufacturers, including Recro, will be subject to ongoing periodic unannounced inspections by the FDA, DEA and corresponding state and foreign agencies for compliance with cGMPs, security, recordkeeping and similar regulatory requirements. Although Ensysce will not have control over its contract manufacturers’ compliance with these regulations and standards, it is nonetheless responsible for assuring such compliance. Failure by any of Ensysce’s contract manufacturers to comply with applicable regulations could result in sanctions being imposed on Ensysce, including fines, injunctions, civil penalties, failure to grant approval to market any of its product candidates, delays, suspensions or withdrawals of approvals, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect Ensysce’s business. Failure by Ensysce’s contract manufacturers to comply with or maintain any of these standards could adversely affect Ensysce’s ability to develop, obtain regulatory approval for or market any of Ensysce’s product candidates.

 

If, for any reason, these third parties, including Recro, are unable or unwilling to perform, Ensysce may not be able to terminate its agreements with them, and it may not be able to locate alternative manufacturers or formulators or enter into favorable agreements with them and it cannot be certain that any such third parties will have the manufacturing capacity to meet future requirements. If these manufacturers or any alternate manufacturer of finished drug product experiences any significant difficulties in its respective manufacturing processes for Ensysce’s ingredients or finished products or should cease doing business with Ensysce, Ensysce could experience significant interruptions in the supply of any of its product candidates or may not be able to create a supply of its product candidates at all. Ensysce’s inability to coordinate the efforts of its third-party manufacturing partners, or the lack of capacity available at its third-party manufacturing partners, could impair Ensysce’s ability to supply any of its product candidates at required levels. Because of the significant regulatory requirements that Ensysce would need to satisfy in order to qualify a new bulk or finished product manufacturer, if it faces these or other difficulties with its current manufacturing partners, Ensysce could experience significant interruptions in the supply of any of its product candidates if it decided to transfer the manufacture of any of its product candidates to one or more alternative manufacturers in an effort to deal with the difficulties.

 

Any manufacturing problem or the loss of a contract manufacturer, including Recro, could be disruptive to Ensysce’s operations and delay development of its investigational products. Additionally, Ensysce relies on third parties to supply the raw materials needed to manufacture its potential products. Any reliance on suppliers may involve several risks, including a potential inability to obtain critical materials and reduced control over production costs, delivery schedules, reliability and quality. Any unanticipated disruption to a future contract manufacturer caused by problems at suppliers could delay shipment of any of Ensysce’s investigational products and, if approved, product candidates.

 

Ensysce cannot guarantee that its future manufacturing and supply partners will be able to reduce the costs of commercial scale manufacturing of any of Ensysce’s product candidates over time. If the commercial-scale manufacturing costs of any of Ensysce’s product candidates are higher than expected, these costs may significantly impact its operating results. In order to reduce costs, Ensysce may need to develop and implement process improvements. However, in order to do so, Ensysce will need, from time to time, to notify or make submissions with regulatory authorities, and the improvements may be subject to approval by such regulatory authorities.

 

Ensysce cannot be sure that it will receive these necessary approvals or that these approvals will be granted in a timely fashion. Ensysce also cannot guarantee that it will be able to enhance and optimize output in its commercial manufacturing process. If Ensysce cannot enhance and optimize output, it may not be able to reduce its costs over time.

 

If Ensysce is unable to develop its sales, marketing and distribution capability on its own or through collaborations with marketing partners, it will not be successful in commercializing its product candidates.

 

Ensysce currently has no marketing, sales or distribution capabilities. Ensysce intends to establish a sales and marketing organization, either on its own or in collaboration with third parties, with technical expertise and supporting distribution capabilities to commercialize PF614 or one or more of its other product candidates that may receive regulatory approval in key territories. These efforts will require substantial additional resources, some or all of which may be incurred in advance of any approval of the product candidate. Any failure or delay in the development of Ensysce’s or third parties’ internal sales, marketing and distribution capabilities would adversely impact the commercialization of PF614, its other product candidates and other future product candidates.

 

Factors that may inhibit Ensysce’s efforts to commercialize its product candidates on its own include:

 

  its inability to recruit and retain effective sales and marketing personnel;
     
  the inability of sales personnel to obtain access to or persuade physicians to prescribe any future products;
     
  the lack of complementary products to be offered by sales personnel, which may put Ensysce at a competitive disadvantage relative to companies with more extensive product lines; and
     
  unforeseen costs and expenses associated with creating an independent sales and marketing organization.

 

With respect to its existing and future product candidates, Ensysce may choose to collaborate with third parties that have direct sales forces and established distribution systems to serve as an alternative to its own sales force and distribution systems. Ensysce’s future product revenue may be lower than if it directly marketed or sold its product candidates, if approved. In addition, any revenue Ensysce receives will depend in whole or in part upon the efforts of these third parties, which may not be successful and are generally not within its control. If Ensysce is not successful in commercializing any approved products, its future product revenue will suffer and it may incur significant additional losses.

 

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If Ensysce does not establish sales and marketing capabilities successfully, either on its own or in collaboration with third parties, Ensysce will not be successful in commercializing its product candidates.

 

Risks Related to Product Development, Regulatory Approval, Manufacturing and Commercialization

 

The regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time- consuming and inherently unpredictable, and if Ensysce is ultimately unable to obtain regulatory approval for its product candidates, its business will be substantially harmed.

 

Ensysce is not permitted to commercialize, market, promote or sell any product candidate in the United States without obtaining regulatory approval from the FDA. Foreign regulatory authorities, such as the EMA, impose similar requirements. The time required to obtain approval by the FDA and comparable foreign authorities is inherently unpredictable, but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including substantial discretion of the regulatory authorities. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions. To date, Ensysce has not submitted an NDA to the FDA or similar drug approval submissions to comparable foreign regulatory authorities for its most advanced product candidate, PF614, or any other product candidate. Ensysce must complete additional preclinical studies and clinical trials to demonstrate the safety and efficacy of its product candidates in humans before it will be able to obtain these approvals.

 

Clinical testing is expensive, difficult to design and implement, can take many years to complete and is inherently uncertain as to outcome. Ensysce cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all. The clinical development of its initial and potential additional product candidates is susceptible to the risk of failure inherent at any stage of development, including failure to demonstrate efficacy in a clinical trial or across a broad population of patients, the occurrence of adverse events that are severe or medically or commercially unacceptable, failure to comply with protocols or applicable regulatory requirements, and determination by the FDA or any comparable foreign regulatory authority that a product candidate may not continue development or is not approvable. It is possible that even if any of Ensysce’s product candidates has a beneficial effect, that effect will not be detected during clinical evaluation as a result of one or more of a variety of factors, including the size, duration, design, measurements, conduct or analysis of its clinical trials. Conversely, as a result of the same factors, its clinical trials may indicate an apparent positive effect of such product candidate that is greater than the actual positive effect, if any. Similarly, in its clinical trials Ensysce may fail to detect toxicity of, or intolerability caused by, such product candidate, or mistakenly believe that its product candidates are toxic or not well tolerated when that is not in fact the case. Serious adverse events, or SAEs, or other AEs, as well as tolerability issues, could hinder or prevent market acceptance of the product candidate at issue.

 

Ensysce’s current and future product candidates could fail to receive regulatory approval for many reasons, including the following:

 

  the FDA or comparable foreign regulatory authorities may disagree as to the design or implementation of its clinical trials;
     
  Ensysce may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a product candidate is safe and effective for its proposed indication;
     
  the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval;
     
  Ensysce may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks;
     
  the FDA or comparable foreign regulatory authorities may disagree with its interpretation of data from clinical trials or preclinical studies;
     
  the data collected from clinical trials of Ensysce’s product candidates may not be sufficient to support the submission of an NDA to the FDA or other submission or to obtain regulatory approval in the United States, the European Union or elsewhere;
     
  the FDA or comparable foreign regulatory authorities may find deficiencies with the manufacturing processes of third-party manufacturers with which Ensysce contracts for clinical and commercial supplies; and
     
  the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering its clinical data insufficient for approval.

 

This lengthy approval process as well as the unpredictability of clinical trial results may result in its failing to obtain regulatory approval to market any product candidate Ensysce develops, which would substantially harm its business, results of operations and prospects. The FDA and other comparable foreign authorities have substantial discretion in the approval process and determining when or whether regulatory approval will be granted for any product candidate that Ensysce develops. Even if Ensysce believes the data collected from future clinical trials of its product candidates are promising, such data may not be sufficient to support approval by the FDA or any other regulatory authority.

 

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In addition, even if Ensysce were to obtain approval, regulatory authorities may approve any of its product candidates for fewer or more limited indications than it requests, may not approve the price it intends to charge for its products, may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve a product candidate with labeling that does not include the claims necessary or desirable for the successful commercialization of that product candidate. Any of the foregoing scenarios could materially harm the commercial prospects for Ensysce’s product candidates.

 

The FDA may recommend scheduling with respect to any of Ensysce’s current or future product candidates. In such event, prior to a product launch, the U.S. Drug Enforcement Administration, or DEA, will need to determine the controlled substance schedule of the product, taking into account the recommendation of the FDA. The timing of the scheduling process is uncertain and may delay Ensysce’s ability to market any product candidate that is successfully developed and approved.

 

The FDA has the authority to grant an Emergency Use Authorization (“EUA”) to allow unapproved medical products to be used in an emergency to diagnose, treat, or prevent serious or life-threatening diseases or conditions when, based on the totality of scientific evidence, there is evidence of effectiveness of the medical product, and there are no adequate, approved, and available alternatives. Based on the outcomes of Ensysce’s clinical testing for nafamostat, Ensysce expects to apply for an EUA for use against coronaviral infections, which would permit Ensysce to commercialize nafamostat prior to FDA approval of an NDA. However, commercialization under an EUA is permitted only during the period of time that FDA determines that the statutory criteria for EUA are met, meaning that Ensysce would be required to obtain NDA approval to continue marketing the product. Furthermore, the FDA may revoke an EUA based on a determination that the product no longer satisfies the criteria for issuance of an EUA—for example, if there is no longer evidence of effectiveness of the product or there are other adequate, approved alternatives. Accordingly, Ensysce cannot predict how long, if at all, an EUA for nafamostat or any other product candidates may remain in place. Any termination or revocation of an EUA (if any) for nafamostat or any other product candidates could adversely impact Ensysce’s business in a variety of ways, including if nafamostat is not yet approved by the FDA and if Ensysce and its manufacturing partners have invested in the supply chain to provide nafamostat under an EUA.

 

If Ensysce’s clinical trials fail to replicate positive results from earlier preclinical studies or clinical trials conducted by Ensysce or third parties, Ensysce may be unable to successfully develop, obtain regulatory approval for, or commercialize its product candidates.

 

The results observed from preclinical studies or early-stage clinical trials of Ensysce’s product candidates may not necessarily be predictive of the results of later-stage clinical trials that Ensysce conducts. Similarly, positive results from such preclinical studies or early-stage clinical trials may not be replicated in its subsequent preclinical studies or clinical trials. For example, preclinical studies showed that PF614 does not readily convert into oxycodone in the blood stream and the Phase 1 trial Ensysce has conducted with TAAP prodrug (a medication or compound that, after administration, is metabolized (i.e., converted within the body) into a pharmacologically active drug, or “prodrug”) PF614, demonstrated that, after oral administration of the TAAP prodrug, the corresponding opioid was measured in the subjects’ blood. Furthermore, Ensysce’s product candidates may not be able to demonstrate similar activity or adverse event profiles as other product candidates that it believes may have similar profiles.

 

There can be no assurance that any of Ensysce’s clinical trials will ultimately be successful or support further clinical development of any of its product candidates. There is a high failure rate for drugs proceeding through clinical trials. Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials after achieving positive results in early-stage development, and Ensysce cannot be certain that it will not face similar setbacks. These setbacks have been caused by, among other things, preclinical findings made while clinical trials were underway or safety or efficacy observations made in preclinical studies and clinical trials, including previously unreported adverse events.

 

Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses and many companies that believed their product candidates performed satisfactorily in preclinical studies and clinical trials nonetheless failed to obtain FDA, EMA or comparable foreign regulatory authority approval.

 

The FDA, EMA or comparable foreign regulatory authorities may disagree with Ensysce’s regulatory plan for its product candidates.

 

Ensysce has submitted IND applications for PF614 and nafamostat and completed a Phase 1 trial for each product candidate. Ensysce has applied for and received fast track designation for PF614. However, fast track designation does not guaranty a faster development or regulatory review or approval process and does not assure FDA approval. Ensysce has received feedback from the FDA on requirements to achieve abuse deterrent labeling claims for PF614. Ensysce has submitted an IND for PF614-MPAR™ and has received feedback on required pre-clinical, manufacturing and clinical studies that will be required for an NDA.

 

Ensysce’s clinical trial results may not support approval of Ensysce’s product candidates. The general approach for FDA approval of a new drug is dispositive data from two or more well-controlled Phase 3 clinical trials of the product candidate in the relevant patient population. Phase 3 clinical trials typically involve a large number of patients, have significant costs, and take years to complete. In addition, there is no assurance that the endpoints and trial designs that Ensysce intends to use for its planned clinical trials, including those that Ensysce has developed based on feedback from regulatory agencies or those that have been used for the approval of similar drugs, will be acceptable for future approvals. For example, while Ensysce has designed its Phase 2 clinical trials of nafamostat for coronaviral infections after receiving input and feedback from the FDA, there can be no assurance that the design of its planned clinical trials will be satisfactory to the FDA, the FDA will not require Ensysce to modify its trials, these trials will enable Ensysce to conduct the required Phase 3 studies or other testing or that completing these trials will result in regulatory approval.

 

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Interim topline and preliminary data from Ensysce’s clinical trials that it announces or publishes from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

 

From time to time, Ensysce may publish interim topline or preliminary data from its clinical trials. Interim data from clinical trials that it may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Preliminary or topline data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data Ensysce previously published. As a result, interim and preliminary data should be viewed with caution until the final data are available. Adverse differences between preliminary or interim data and final data could significantly harm its reputation and business prospects.

 

Even if Ensysce completes the necessary preclinical studies and clinical trials, the marketing approval process is expensive, time-consuming and uncertain and may prevent it from obtaining approvals for the commercialization of its product candidates.

 

Any product candidate Ensysce develops and the activities associated with such development and commercialization, including its design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale, and distribution, are subject to comprehensive regulation by the FDA and other regulatory authorities in the United States and by comparable authorities in other countries. Failure to obtain marketing approval for a product candidate will prevent Ensysce from commercializing the product candidate in a given jurisdiction. Ensysce has not received approval to market any product candidates from regulatory authorities in any jurisdiction and it is possible that none of the product candidates Ensysce is developing or may seek to develop in the future will ever obtain regulatory approval. Ensysce has no experience in submitting and supporting the applications necessary to gain marketing approvals and expects to rely on third-party CROs or regulatory consultants to assist Ensysce in this process. Securing regulatory approval requires the submission of extensive preclinical and clinical data and supporting information to the various regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing regulatory approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the relevant regulatory authority. Any product candidates Ensysce develops may not be effective, may be only moderately effective, or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude its obtaining marketing approval or prevent or limit commercial use.

 

The process of obtaining marketing approvals, both in the United States and abroad, is expensive, may take many years if additional clinical trials are required, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity, and novelty of the product candidates involved. Changes in marketing approval policies during the development period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted product application, may cause delays in the approval or rejection of an application. The FDA and comparable authorities in other countries have substantial discretion in the approval process and may refuse to accept any application or may decide that Ensysce’s data are insufficient for approval and requires additional preclinical, clinical or other studies. In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay, limit, or prevent marketing approval of a product candidate. Any marketing approval that Ensysce may ultimately obtain could be limited or subject to restrictions or post-approval commitments that render the approved product not commercially viable. For example, during the product approval process, the FDA will determine whether a REMS plan is necessary to assure the safe use of the product. All opioid analgesic products currently on the market in the U.S. are subject to a REMS. A REMS may be required to include various elements, such as a medication guide or patient package insert, a communication plan to educate health care providers of the risks, limitations on who may prescribe or dispense the drug or other measures that the FDA deems necessary to assure the safe use of the drug. In addition, the REMS plan must include a timetable to assess the strategy at eighteen months, three years and seven years after approval. We may be required to develop a REMS for the product, or participate in a REMS with other manufacturers, or to develop a similar strategy as required by a regulatory authority.

 

Even if approved, Ensysce’s contract manufacturers will need to obtain quota from DEA to manufacture sufficient quantities and maintain inventories of product to be commercially distributed.

 

If Ensysce experiences delays in obtaining manufacturing approval or if it fails to obtain manufacturing approval of any product candidates it may develop, the commercial prospects for those product candidates may be harmed, and its ability to generate revenues will be materially impaired.

 

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Any product candidate for which Ensysce obtains marketing approval will be subject to ongoing enforcement of post-marketing requirements by regulatory agencies, and Ensysce could be subject to substantial penalties, including withdrawal of its product from the market, if it fails to comply with all regulatory requirements or if it experiences unanticipated problems with its products, when and if any of them are approved.

 

Any product candidate for which Ensysce obtains marketing approval, as well as the manufacturing processes, post-approval clinical data, labeling, advertising and promotional activities for such product, will be subject to continual requirements of and review by the FDA and other regulatory authorities. These requirements include, but are not limited to, restrictions governing promotion of an approved product, submissions of safety and other post-marketing information and reports, registration and listing requirements, cGMP requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, and requirements regarding drug distribution and the distribution of samples to physicians and recordkeeping.

 

The FDA also may impose requirements for costly post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy of a product, including the adoption and implementation of risk evaluation and mitigation strategies. The FDA and other federal and state agencies, including the Department of Justice, closely regulate compliance with all requirements governing drug products, including requirements pertaining to marketing and promotion of drugs in accordance with the provisions of the approved labeling and manufacturing of products in accordance with cGMP requirements. For example, the FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability. Violations of such requirements may lead to investigations alleging violations of the Federal Food, Drug, and Cosmetic Act and other statutes, including the False Claims Act and other federal and state healthcare fraud and abuse laws as well as state consumer protection laws. Ensysce’s failure to comply with all regulatory requirements, and later discovery of previously unknown adverse events or other problems with its products, manufacturers or manufacturing processes, may yield various results, including:

 

  litigation involving patients using its products;
     
  restrictions on such products, manufacturers or manufacturing processes;
     
  restrictions on the labeling or marketing of a product;
     
  restrictions on distribution or use;
     
  requirements to conduct post-marketing studies or clinical trials;
     
  warning or untitled letters;
     
  withdrawal or recall of the product from the market;
     
  refusal to approve pending applications or supplements to approved applications that Ensysce submits;
     
  fines, restitution or disgorgement of profits or revenues;
     
  suspension or withdrawal of marketing approvals;
     
  damage to relationships with any potential collaborators;
     
  unfavorable press coverage and damage to Ensysce’s reputation;
     
  refusal to permit the import or export of Ensysce’s products;
     
  product seizure; or
     
  injunctions or the imposition of civil or criminal penalties.

 

Non-compliance by Ensysce or any future collaborator with regulatory requirements, including safety monitoring or pharmacovigilance, and with requirements related to the development of its products can also result in significant financial penalties.

 

Ensysce’s employees, independent contractors, principal investigators, consultants, commercial collaborators, service providers and other vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could have an adverse effect on Ensysce’s results of operations.

 

Ensysce is exposed to the risk that its employees and contractors, including principal investigators, consultants, commercial collaborators, service providers and other vendors may engage in fraudulent or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or other unauthorized activities that violate the laws and regulations of the FDA and other similar regulatory bodies, including those laws that require the reporting of true, complete and accurate information to such regulatory bodies; manufacturing standards; federal and state healthcare fraud and abuse and health regulatory laws and other similar foreign fraudulent misconduct laws; or laws that require the true, complete and accurate reporting of financial information or data. Activities subject to these laws also involve the improper use or misrepresentation of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to Ensysce’s reputation. It is not always possible to identify and deter third-party misconduct, and the precautions Ensysce takes to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting Ensysce from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against Ensysce, and it is not successful in defending itself or asserting its rights, those actions could have a significant impact on Ensysce’s business and financial results, including the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, reputational harm, diminished profits and future earnings, and curtailment of Ensysce’s operations, any of which could adversely affect Ensysce’s ability to operate its business and its results of operations.

 

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Ensysce may incur unexpected costs or experience delays in completing, or ultimately be unable to complete, the preclinical and clinical studies necessary for development and commercialization of Ensysce’s product candidates.

 

To obtain the requisite regulatory approvals to commercialize any of Ensysce’s product candidates, Ensysce must demonstrate through extensive preclinical studies and clinical trials that Ensysce’s product candidates are safe and effective in humans. Ensysce may experience delays in completing its clinical trials or preclinical studies and initiating or completing additional clinical trials or preclinical studies, including as a result of regulators not allowing or delay in allowing clinical trials to proceed under an IND, or not approving or delaying approval for any clinical trial grant or similar approval that Ensysce needs to initiate a clinical trial. Ensysce may also experience numerous unforeseen events during its clinical trials that could delay or prevent its ability to receive marketing approval or commercialize the product candidates it develops, including:

 

  regulators, or institutional review boards, or IRBs, or other reviewing bodies may not authorize Ensysce or its investigators to commence a clinical trial, or to conduct or continue a clinical trial at a prospective or specific trial site;
     
  it may not reach agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;
     
  Ensysce may experience challenges or delays in recruiting principal investigators or study sites to lead its clinical trials;
     
  the number of subjects or patients required for clinical trials of Ensysce’s product candidates may be larger than Ensysce anticipates, enrollment in these clinical trials may be insufficient or slower than Ensysce anticipates, and the number of clinical trials being conducted at any given time may be high and result in fewer available patients for any given clinical trial, or patients may drop out of these clinical trials at a higher rate than it anticipates;
     
  its third-party contractors, including those manufacturing its product candidates or conducting clinical trials on its behalf, may fail to comply with regulatory requirements or meet their contractual obligations to Ensysce in a timely manner, or at all;
     
  Ensysce may have to amend clinical trial protocols submitted to regulatory authorities or conduct additional studies to reflect changes in regulatory requirements or guidance, which it may be required to resubmit to an IRB and regulatory authorities for re-examination;
     
  regulators or other reviewing bodies may find deficiencies with or subsequently find fault with the manufacturing processes or facilities of third-party manufacturers with which Ensysce enter into agreement for clinical and commercial supplies, or the supply or quality of any product candidate or other materials necessary to conduct clinical trials of Ensysce’s product candidates may be insufficient, inadequate or not available at an acceptable cost, or it may experience interruptions in supply; and
     
  the potential for approval policies or regulations of the FDA or the applicable foreign regulatory agencies to significantly change in a manner rendering Ensysce’s clinical data insufficient for approval.

 

Regulators or IRBs of the institutions in which clinical trials are being conducted may suspend, limit or terminate a clinical trial, or data monitoring committees may recommend that Ensysce suspend or terminate a clinical trial, due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or its clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, safety issues or adverse side effects, failure to demonstrate a benefit from using a drug, changes in governmental regulations or administrative actions, or lack of adequate funding to continue the clinical trial. Negative or inconclusive results from Ensysce’s clinical trials or preclinical studies could mandate repeated or additional clinical trials and, to the extent it chooses to conduct clinical trials in other indications, could result in changes to or delays in clinical trials of Ensysce’s product candidates in such other indications. Ensysce does not know whether any clinical trials that it conducts will demonstrate adequate efficacy and safety to result in regulatory approval to market Ensysce’s product candidates for the indications that Ensysce is pursuing. If later-stage clinical trials do not produce favorable results, Ensysce’s ability to obtain regulatory approval for Ensysce’s product candidates will be adversely impacted.

 

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Ensysce’s failure to successfully initiate and complete clinical trials and to demonstrate the efficacy and safety necessary to obtain regulatory approval to market Ensysce’s product candidates would significantly harm its business. The development costs of Ensysce’s product candidates will also increase if Ensysce experiences delays in testing or regulatory approvals and it may be required to obtain additional funds to complete clinical trials. Ensysce cannot assure to the stockholders that its clinical trials will begin as planned or be completed on schedule, if at all, or that it will not need to restructure or otherwise modify its trials after they have begun. Significant clinical trial delays also could shorten any periods during which Ensysce may have the exclusive right to commercialize Ensysce’s product candidates or allow its competitors to bring products to market before Ensysce does and impair its ability to successfully commercialize Ensysce’s product candidates, which may harm its business and results of operations. In addition, many of the factors that cause, or lead to, delays of clinical trials may ultimately lead to the denial of regulatory approval of Ensysce’s product candidates.