Enveric Biosciences Signs Non-Binding Term Sheets to Pursue the Exclusive Out-Licensing of New Chemical Entities for Pharmaceutical and Non-Pharmaceutical Applications in Joint Disease

Rhea-AI Summary

Enveric Biosciences (ENVB) has signed two non-binding term sheets with an undisclosed biotechnology company to potentially out-license cannabinoid-COX-2 conjugate compounds for joint disease treatment. The agreements could lead to milestone payments totaling up to $82 million, with royalty rates ranging from 0.25% to 10% on future sales.

Insights

Pharmaceutical Business Analyst

The recent announcement by Enveric Biosciences regarding the out-licensing of cannabinoid-COX-2 conjugate compounds represents a strategic move in the biotech industry. This decision to out-license, rather than develop in-house, allows Enveric to capitalize on its intellectual property while mitigating the risks and costs associated with drug development. The potential for significant milestone payments, which could total up to $82 million and royalties ranging from 2.5% to 10% for pharmaceutical applications, provides an opportunity for revenue diversification and financial stability.

From a business perspective, the deal structure reflects a common risk-sharing strategy in the pharmaceutical sector, where smaller biotech firms often partner with larger entities to advance drug candidates through the development pipeline. The undisclosed partner's responsibility for future development reduces Enveric's operational burden and allows the company to focus on its core competencies. However, the success of this agreement hinges on the progression of the compounds through clinical trials and regulatory approval, which are inherently uncertain processes.

Investors should note the use of non-binding term sheets, which indicates that the final agreements are subject to change. This could affect the timeline and financial terms, potentially altering the projected revenue streams. Moreover, the specificity of the compounds' application in joint diseases, such as osteoarthritis and rheumatoid arthritis, targets a substantial market but also faces intense competition from existing treatments and other compounds in development.

Biotech Market Research Analyst

The biotechnology sector is driven by innovation and the successful commercialization of new therapies. Enveric's focus on neuroplastogenic small-molecule therapeutics positions it within a niche market with significant growth potential, especially considering the prevalence of depression, anxiety and addiction disorders. The out-licensing of novel compounds for joint disease treatment indicates an expansion of the company's target therapeutic areas, potentially enlarging its market reach.

Market dynamics for joint disease treatments are evolving with an aging population and an increased prevalence of chronic conditions. The development of cannabinoid-COX-2 conjugate compounds aligns with current trends towards exploring cannabinoids' therapeutic effects beyond their traditional use. By leveraging the anti-inflammatory properties of COX-2 inhibitors in conjunction with cannabinoids, Enveric could be addressing an unmet need for safer or more effective treatments for joint pathology. However, the competitive landscape includes many established pharmaceutical companies with greater resources, which could pose challenges to market penetration and the realization of projected sales milestones.

While the financial terms of the out-licensing deal appear lucrative, the actualization of these revenues is conditional upon the achievement of multiple development and sales milestones. The long and uncertain road to regulatory approval and market acceptance underscores the speculative nature of these potential earnings. Investors should also consider the implications of the royalty rates on long-term revenue, as they may be subject to renegotiation or could be impacted by market performance and the entry of generic alternatives post-patent expiration.

Financial Analyst

The financial implications of Enveric Biosciences' out-licensing deal are multifaceted. The disclosed milestone payments of up to $82 million, if realized, represent a significant influx of capital that could be used to fund other research initiatives or reduce the company's burn rate. This strategic move could potentially enhance shareholder value by providing non-dilutive financing and improving the company's balance sheet.

However, investors must also consider the time value of money, as the milestone payments are contingent upon future events that may span several years. The present value of these payments is less than their nominal value and the risk-adjusted return should be evaluated in light of the development risks associated with drug discovery and commercialization. Additionally, the royalty rates, while providing a recurring revenue stream, will only materialize upon successful market entry and sales performance.

Given the early stage of the compounds and the non-binding nature of the term sheets, there is a substantial degree of uncertainty regarding the deal's completion and the realization of the financial benefits. The biotech industry is known for its high attrition rates in drug development and the actual revenue generated may differ significantly from the potential outlined in the announcement. It is also important to note that the out-licensing of these assets may indicate Enveric's strategic prioritization or a redirection of focus towards other projects within its pipeline.

Second biotechnology company to potentially out-license novel compounds from Enveric’s portfolio of assets with possible significant milestone payments and royalties

CAMBRIDGE, Mass.--(BUSINESS WIRE)-- Enveric Biosciences (NASDAQ: ENVB) (“Enveric” or the “Company”), a biotechnology company dedicated to the development of novel neuroplastogenic small-molecule therapeutics for the treatment of depression, anxiety, and addiction disorders, is pleased to announce that it has signed two non-binding term sheets with an undisclosed biotechnology company to pursue the out-licensing of cannabinoid-COX-2 conjugate compounds for both pharmaceutical and non-pharmaceutical applications for treatment of joint diseases.

The term sheets contemplate that, for all human and animal joint pathology, such as osteoarthritis, rheumatoid arthritis, and other joint pathology applications, the undisclosed licensee would assume responsibility for all future product development efforts and in return would receive exclusive, royalty-bearing global licenses to develop, market and sublicense the compounds. The compounds are new chemical entities that include cannabinoids in conjugate form with COX-2 inhibitors and cannabinoids in conjugate form with selected steroids.

The pharmaceutical application term sheet provides that Enveric could be eligible to receive future development and sales milestone payments that in total could add up to approximately $61 million, assuming certain conditions are met, including receiving approval for the investigational new drug (IND) application and completing Phases I through III testing of the licensed product. Royalty rates could range from 2.5% up to 10% on future sales, depending on meeting certain sales criteria.

The non-pharmaceutical application term sheet provides that Enveric could be eligible to receive future development and sales milestone payments, which in total could add up to approximately $21 million and with royalty rates ranging from 0.25% up to 7%, assuming certain conditions are met, including successful product development and commercial launch and on meeting certain sales criteria.

Together, through the out-licensing of the two assets and meeting various development and sales milestones, Enveric could potentially receive milestone payments that total up to approximately $82 million.

“We are pleased to announce that a second biotechnology company has stepped forward looking to join Enveric in moving some of the Company’s promising assets forward,” said Joseph Tucker, Ph.D., Director and CEO of Enveric. “We look forward to working with our partner, and we are confident in their leadership and capabilities to continue the development of these compounds for both pharmaceutical and non-pharmaceutical applications to advance joint disease treatment options for patients. Ultimately, we believe the definitive licensing agreements, once negotiated and finalized, could represent an excellent potential source of revenue for Enveric, and continue to demonstrate the value of Enveric’s extensive portfolio of assets.”

About Enveric Biosciences

Enveric Biosciences (NASDAQ: ENVB) is a biotechnology company dedicated to the development of novel neuroplastogenic small-molecule therapeutics for the treatment of depression, anxiety, and addiction disorders. Leveraging its unique discovery and development platform, Psybrary™, Enveric has created a robust intellectual property portfolio of new chemical entities for specific mental health indications. Enveric’s lead program, EB-003, is a first-in-class approach to the treatment of difficult-to-address mental health disorders designed to promote neuroplasticity without inducing hallucinations in the patient. Enveric is also developing EB-002, formerly EB-373, a next generation synthetic prodrug of the active metabolite, psilocin, being studied as a treatment of psychiatric disorders. Enveric is headquartered in Naples, FL with offices in Cambridge, MA and Calgary, AB Canada. For more information, please visit www.enveric.com.

Forward-Looking Statements

This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. These statements relate to future events or future performance. All statements other than statements of historical fact may be forward-looking statements or information. Generally, forward-looking statements and information may be identified by the use of forward-looking terminology such as “plans,” “expects” or “does not expect,” “proposed,” “is expected,” “budgets,” “scheduled,” “estimates,” “forecasts,” “intends,” “anticipates” or “does not anticipate,” or “believes,” or variations of such words and phrases, or by the use of words or phrases which state that certain actions, events or results may, could, should, would, or might occur or be achieved. Forward-looking statements may include historical statements and statements regarding beliefs, plans, expectations, or intentions regarding the future and are based on the beliefs of management as well as assumptions made by and information currently available to management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including, but not limited to, the ability of Enveric to: negotiate and finalize definitive agreements based on the any of its out-licensing term sheets, including the two identified herein, and perform pursuant to the terms thereof; carry out successful clinical programs in Australia; achieve the value creation contemplated by technical developments; avoid delays in planned clinical trials; establish that potential products are efficacious or safe in preclinical or clinical trials; establish or maintain collaborations for the development of therapeutic candidates; obtain appropriate or necessary governmental approvals to market potential products; obtain future funding for product development and working capital on commercially reasonable terms; scale-up manufacture of product candidates; respond to changes in the size and nature of competitors; hire and retain key executives and scientists; secure and enforce legal rights related to Enveric’s products, including patent protection; identify and pursue alternative routes to capture value from its research and development pipeline assets; continue as a going concern; and manage its future growth effectively. The two out-licensing term sheets identified herein are non-binding and may not result in definitive agreements or attainment of the licensing fees referenced therein.

A discussion of these and other factors, including risks and uncertainties with respect to Enveric, is set forth in Enveric’s filings with the Securities and Exchange Commission, including Enveric’s Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. Enveric disclaims any intention or obligation to revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240318068312/en/

Investor Relations

Tiberend Strategic Advisors, Inc.

Daniel Kontoh-Boateng

(862) 213-1398

dboateng@tiberend.com

Media Relations

Tiberend Strategic Advisors, Inc.

Casey McDonald

(646) 577-8520

cmcdonald@tiberend.com

Source: Enveric Biosciences

FAQ

What type of compounds is Enveric looking to out-license?

Enveric is looking to out-license cannabinoid-COX-2 conjugate compounds for joint disease treatment.

What are the potential milestone payments Enveric could receive?

Enveric could potentially receive milestone payments totaling up to approximately $82 million through the out-licensing agreements.

What are the royalty rates Enveric could receive on future sales?

Royalty rates for Enveric could range from 0.25% up to 10% on future sales, depending on meeting certain criteria.

What are the conditions Enveric needs to meet to receive milestone payments?

Enveric needs to meet conditions such as successful product development, commercial launch, and certain sales criteria to receive milestone payments.

How many non-binding term sheets has Enveric signed?

Enveric has signed two non-binding term sheets with an undisclosed biotechnology company.