Fennec Pharmaceuticals Reports Second Quarter 2024 Financial Results and Provides Business Update

Rhea-AI Summary

Fennec Pharmaceuticals (NASDAQ:FENC; TSX: FRX) reported Q2 2024 financial results and provided a business update. Key highlights include:

- Total net revenues of $7.3 million for Q2 2024
- Appointment of Jeffrey S. Hackman as new CEO and Board member
- Cash position of approximately $43 million
- Net loss of $5.6 million ($0.20 per share)
- Selling and marketing expenses increased to $4.7 million
- General and administrative expenses rose to $6.9 million

The company is focusing on expanding its outreach to community oncology centers and the adolescent and young adult (AYA) population. The NCCN AYA Guidelines were updated, removing 'pediatric' specific wording, potentially broadening PEDMARK's patient population.

Positive

• Total net revenues increased to $7.3 million in Q2 2024, up from $3.3 million in Q2 2023
• Cash position strengthened to $43.1 million as of June 30, 2024
• NCCN AYA Guidelines updated, potentially expanding PEDMARK's patient population
• Appointment of new CEO with track record of success

Negative

• Net loss of $5.6 million in Q2 2024, compared to $5.4 million in Q2 2023
• Selling and marketing expenses increased to $4.7 million from $2.3 million year-over-year
• General and administrative expenses rose to $6.9 million, up $1.4 million from the previous year

Insights

Financial Analyst

Fennec Pharmaceuticals' Q2 2024 results show promising growth, with $7.3 million in total net revenues, a significant increase from $3.3 million in Q2 2023. This 121% year-over-year growth indicates strong market traction for PEDMARK®. The company's cash position of $43.1 million provides a solid financial runway. However, operating expenses have also increased substantially, resulting in a net loss of $5.6 million for the quarter.

The appointment of Jeffrey Hackman as CEO could bring fresh strategies to accelerate growth, particularly in community oncology and AYA markets. The update to NCCN guidelines removing "pediatric" wording is a positive development, potentially expanding PEDMARK's market reach. While the company is showing revenue growth, investors should monitor the increasing expenses and path to profitability.

Oncology Expert

The expansion of PEDMARK® into community oncology and the adolescent and young adult (AYA) population is a significant development. This broadens the potential patient base beyond pediatric oncology, addressing an unmet need in ototoxicity prevention for a wider age range. The update to the NCCN AYA Guidelines removing "pediatric" wording is crucial, as it may facilitate better access and reimbursement for non-pediatric patients.

Fennec's participation in key scientific meetings like ASCO, APPOS and ONS demonstrates commitment to engaging with the oncology community. This could lead to increased awareness and adoption of PEDMARK® among healthcare providers. The focus on community oncology is particularly important, as many cancer patients receive treatment in these settings, potentially driving further growth for Fennec.

Market Research Analyst

Fennec's strategic focus on community oncology and the AYA population is a smart move to expand market share. The 121% year-over-year revenue growth suggests strong product adoption, but it's important to monitor if this growth rate is sustainable. The Norgine transaction, which contributed to the cash position increase, indicates potential for international expansion and additional revenue streams.

However, investors should note the significant increase in selling and marketing expenses, up 104% year-over-year. While necessary for growth, this could impact profitability in the short term. The company's ability to manage these expenses while maintaining revenue growth will be critical. The market should also watch for the impact of reduced European pre-commercialization expenses following the Norgine deal, which could improve the company's cost structure in future quarters.

~ Achieved Second Quarter 2024 Total Net Revenues of $7.3 Million ~

~ Appointed Jeffrey S. Hackman as Chief Executive Officer (CEO) and Member of the Board of Directors ~

~ Company Has Approximately $43 Million in Cash, Cash Equivalents, and Investment Securities ~

~ Management to Host Conference Call Today at 8:30 a.m. ET ~

RESEARCH TRIANGLE PARK, N.C., Aug. 13, 2024 (GLOBE NEWSWIRE) -- Fennec Pharmaceuticals Inc. (NASDAQ:FENC; TSX: FRX), a specialty pharmaceutical company, today reported its financial results for the second quarter ended June 30, 2024, and provided a business update.

“We continued to execute well in the second quarter and are encouraged by the early third quarter momentum of PEDMARK^® within the community oncology and the adolescent and young adult (AYA) population,” said Jeff Hackman, chief executive officer of Fennec Pharmaceuticals. “I am excited to join Fennec and take on the challenge of guiding the Company towards greater commercial success. We will focus on expanding our initial outreach to community oncology centers and the adolescent and young adult (AYA) population, who can greatly benefit from our treatments. By reaching more patients in these critical areas, I am confident that we can drive growth and make a significant impact in improving patient outcomes.”

Recent Developments and Highlights:

• Appointed Jeffery Hackman as Fennec’s New CEO and Board Member: Jeff has been appointed as the new Chief Executive Officer and a member of the Board of Directors. With a passion for patients and a track record of success, Jeff is poised to make an immediate impact by driving Fennec’s strategic direction and leading the Company into its next exciting phase of growth. Rosty Raykov will continue to contribute as a member of the Board of Directors. 

• NCCN AYA Guidelines Updated: The NCCN Adolescent and Young Adult (AYA) Guidelines have been modified to remove “pediatric” specific wording. This change is instrumental in solidifying PEDMARK's position for access to a broader patient population to prevent ototoxicity, both with payers and providers. 

• Participation in Key Scientific Meetings: During the second quarter, Fennec actively participated in key regional and national scientific meetings, including the American Society of Clinical Oncology (ASCO), the Advanced Practice Providers Oncology Summit (APPOS), and the Oncology Nursing Society (ONS) annual meetings. These engagements underscore our commitment to advancing oncology care and fostering strong relationships within the healthcare community.

Financial Results for the Second Quarter 2024

• Net Sales – The Company recorded net product sales of $7.3 million for the three-month period ended June 30, 2024, compared to $3.3 million in net sales for the same period in 2023.

• Cash Position – Cash and cash equivalents were $43.1 million on June 30, 2024. The increase in cash and cash equivalents between June 30, 2024, and December 31, 2023, is the result of approximately $43 million from the Norgine transaction and cash inflows from net sales offset by cash outlays for operating expenses related to the promotion of our product, selling and marketing expenses and general and administrative expenses. We anticipate that our cash, cash equivalents and investment securities as of June 30, 2024 will be sufficient to fund our planned operations for at least the next twelve months

• Selling and Marketing Expenses –The Company recorded $4.7 million in selling and marketing expenses for the period ended June 30, 2024, compared to $2.3 million for the same period in 2023. The increase is largely related to additional selling and marketing expenses as the Company expanded its focus in the AYA and community oncology population during 2024.

• General and Administrative (G&A) Expenses – G&A expenses increased by $1.4 million over the same period in 2023 to $6.9 million. There was an increase in consulting, and professional costs related to European pre-commercialization related expenses in the 2024 period over the comparable period. European related expenses are expected to wind down after Q2 2024 with the announcement of the Norgine transaction in March 2024.

• Net Earnings – Net loss for the quarter ended June 30, 2024 was $5.6 million (basic and diluted loss of $0.20 per share) compared to a net loss of $5.4 million (basic and diluted loss of $0.21 per share) for the same period in 2023.

Q2 2024 Conference Call Information

Date:	Tuesday, August 13, 2024
Time:	8:30 a.m. ET
Link:	https://register.vevent.com/register/BI59b5706a6c00453a9eed343d4a210de9

To access the conference call, please register using https://register.vevent.com/register/BI59b5706a6c00453a9eed343d4a210de9. Upon registration, a dial-in number and unique PIN will be provided to join the call. To access the live webcast link, log onto www.fennepharma.com and proceed to the News & Events / Event Calendar page under the Investors & Media heading. Please connect to the company’s website at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to listen to the webcast. A webcast replay of the conference call will also be archived on www.fennecpharma.com for thirty days.

Financial Update

The selected financial data presented below is derived from our unaudited condensed consolidated financial statements, which were prepared in accordance with U.S. generally accepted accounting principles. The complete unaudited condensed consolidated financial statements for the period ended June 30, 2024 and management's discussion and analysis of financial condition and results of operations will be available via www.sec.gov and www.sedar.com. All values are presented in thousands unless otherwise noted.

Unaudited Condensed Consolidated Statements of Operations: (U.S. Dollars in thousands except share and per share amounts)
	Three Months Ended
	June 30,				June 30,
	2024				2023
Revenue
PEDMARK product sales, net	$	7,262			$	3,325
Licensing revenue		—				—
Total revenue		7,262				3,325
Operating expenses:
Cost of products sold		608				148
Research and development		157				8
Selling and marketing		4,672				2,340
General and administrative		6,864				5,495
Total operating expenses		12,301				7,991
Loss from operations		(5,039	)			(4,666	)
Other (expense)/income
Unrealized foreign exchange (loss) /gain		(17	)			5
Amortization expense		(23	)			(73	)
Unrealized loss on securities		—				—
Interest income		570				115
Interest expense		(1,044	)			(825	)
Total other expense		(514	)			(778	)
Net loss	$	(5,553	)		$	(5,444	)
Basic net loss per common share	$	(0.20	)		$	(0.21	)
Diluted net loss per common share	$	(0.20	)		$	(0.21	)
Weighted-average number of common shares outstanding basic		27,297				26,458
Weighted-average number of common shares outstanding diluted		27,297				26,458

Fennec Pharmaceuticals Inc. Balance Sheets (U.S. Dollars and shares in thousands)
	Unaudited				Audited
	June 30,				December 31,
	2024				2023
Assets
Current assets
Cash and cash equivalents	$	43,054			$	13,269
Accounts receivable, net		12,312				8,814
Prepaid expenses		4,379				2,575
Inventory		2,144				2,156
Other current assets		283				44
Total current assets		62,172				26,858
Non-current assets
Other non-current assets, net amortization		989				6
Total non-current assets		989				6
Total assets	$	63,161			$	26,864
Liabilities and shareholders’ deficit
Current liabilities:
Accounts payable	$	4,447			$	3,778
Accrued liabilities		3,038				3,754
Operating lease liability - current		12				21
Contract liability - Norgine		252				—
Total current liabilities		7,749				7,553
Long-term liabilities
Term loan		30,000				30,000
PIK interest		2,022				1,219
Debt discount		(247	)			(288	)
Operating lease liability - net of current portion		—				2
Contract liability - Norgine		24,994				—
Total long-term liabilities		56,769				30,933
Total liabilities		64,518				38,486
Shareholders’ deficit:
Common stock, no par value; unlimited shares authorized; 27,328 shares issued and outstanding (2023 ‑27,027)		145,281				144,307
Additional paid-in capital		64,080				62,073
Accumulated deficit		(211,961	)			(219,245	)
Accumulated other comprehensive income		1,243				1,243
Total shareholders’ deficit		(1,357	)			(11,622	)
Total liabilities and shareholders’ deficit	$	63,161			$	26,864

Working capital		Fiscal Period Ended
Selected Asset and Liability Data:		June 30, 2024				December 31, 2023
(U.S. Dollars in thousands)
Cash and equivalents		$	43,054			$	13,269
Other current assets			19,118				13,589
Current liabilities			7,749				7,553
Working capital		$	54,423			$	19,305
Selected Equity:
Common stock and additional paid in capital			209,361				206,380
Accumulated deficit			(211,961	)			(219,245	)
Shareholders’ (deficit) equity			(1,357	)			(11,622	)

About Cisplatin-Induced Ototoxicity
Cisplatin and other platinum compounds are essential chemotherapeutic agents for the treatment of many pediatric malignancies. Unfortunately, platinum-based therapies can cause ototoxicity, or hearing loss, which is permanent, irreversible, and particularly harmful to the survivors of pediatric cancer.¹

The incidence of ototoxicity depends upon the dose and duration of chemotherapy, and many of these children require lifelong hearing aids or cochlear implants, which can be helpful for some, but do not reverse the hearing loss and can be costly over time.² Infants and young children that are affected by ototoxicity at critical stages of development lack speech and language development and literacy, and older children and adolescents often lack social-emotional development and educational achievement.³

PEDMARK^® (sodium thiosulfate injection)
PEDMARK^® is the first and only U.S. Food and Drug Administration (FDA) approved therapy indicated to reduce the risk of ototoxicity associated with cisplatin treatment in pediatric patients with localized, non-metastatic, solid tumors. It is a unique formulation of sodium thiosulfate in single-dose, ready-to-use vials for intravenous use in pediatric patients.⁷ PEDMARK is also the only therapeutic agent with proven efficacy and safety data with an established dosing paradigm, across two open-label, randomized Phase 3 clinical studies, the Clinical Oncology Group (COG) Protocol ACCL0431 and SIOPEL 6.

In the U.S. and Europe, it is estimated that, annually, more than 10,000 children may receive platinum-based chemotherapy. The incidence of ototoxicity depends upon the dose and duration of chemotherapy, and many of these children require lifelong hearing aids. There is currently no established preventive agent for this hearing loss and only expensive, technically difficult, and sub-optimal cochlear (inner ear) implants have been shown to provide some benefit. Infants and young children that suffer ototoxicity at critical stages of development lack speech language development and literacy, and older children and adolescents lack social-emotional development and educational achievement.

PEDMARK has been studied by co-operative groups in two Phase 3 clinical studies of survival and reduction of ototoxicity, COG ACCL0431 and SIOPEL 6. Both studies have been completed. The COG ACCL0431 protocol enrolled childhood cancers typically treated with intensive cisplatin therapy for localized and disseminated disease, including newly diagnosed hepatoblastoma, germ cell tumor, osteosarcoma, neuroblastoma, medulloblastoma, and other solid tumors. SIOPEL 6 enrolled only hepatoblastoma patients with localized tumors.

Indications and Usage
PEDMARK^® (sodium thiosulfate injection) is indicated to reduce the risk of ototoxicity associated with cisplatin in pediatric patients 1 month of age and older with localized, non-metastatic solid tumors.

Limitations of Use
The safety and efficacy of PEDMARK have not been established when administered following cisplatin infusions longer than 6 hours. PEDMARK may not reduce the risk of ototoxicity when administered following longer cisplatin infusions, because irreversible ototoxicity may have already occurred.

Important Safety Information
PEDMARK is contraindicated in patients with history of a severe hypersensitivity to sodium thiosulfate or any of its components.

Hypersensitivity reactions occurred in 8% to 13% of patients in clinical trials. Monitor patients for hypersensitivity reactions. Immediately discontinue PEDMARK and institute appropriate care if a hypersensitivity reaction occurs. Administer antihistamines or glucocorticoids (if appropriate) before each subsequent administration of PEDMARK. PEDMARK may contain sodium sulfite; patients with sulfite sensitivity may have hypersensitivity reactions, including anaphylactic symptoms and life-threatening or severe asthma episodes. Sulfite sensitivity is seen more frequently in people with asthma.

PEDMARK is not indicated for use in pediatric patients less than 1 month of age due to the increased risk of hypernatremia or in pediatric patients with metastatic cancers.

Hypernatremia occurred in 12% to 26% of patients in clinical trials, including a single Grade 3 case. Hypokalemia occurred in 15% to 27% of patients in clinical trials, with Grade 3 or 4 occurring in 9% to 27% of patients. Monitor serum sodium and potassium levels at baseline and as clinically indicated. Withhold PEDMARK in patients with baseline serum sodium greater than 145 mmol/L.

Monitor for signs and symptoms of hypernatremia and hypokalemia more closely if the glomerular filtration rate (GFR) falls below 60 mL/min/1.73m².

Administer antiemetics prior to each PEDMARK administration. Provide additional antiemetics and supportive care as appropriate.

The most common adverse reactions (≥25% with difference between arms of >5% compared to cisplatin alone) in SIOPEL 6 were vomiting, nausea, decreased hemoglobin, and hypernatremia. The most common adverse reaction (≥25% with difference between arms of >5% compared to cisplatin alone) in COG ACCL0431 was hypokalemia.

Please see full Prescribing Information for PEDMARK^® at: www.PEDMARK.com.

About Fennec Pharmaceuticals
Fennec Pharmaceuticals Inc. is a specialty pharmaceutical company focused on the development and commercialization of PEDMARK^® to reduce the risk of platinum-induced ototoxicity in pediatric patients. Further, PEDMARK received FDA approval in September 2022 and European Commission approval in June 2023 and U.K. approval in October 2023 under the brand name PEDMARQSI. PEDMARK has received Orphan Drug Exclusivity in the U.S. and PEDMARQSI has received Pediatric Use Marketing Authorization in Europe which includes eight years plus two years of data and market protection. For more information, please visit www.fennecpharma.com.

Forward Looking Statements
Except for historical information described in this press release, all other statements are forward-looking. Words such as “believe,” “anticipate,” “plan,” “expect,” “estimate,” “intend,” “may,” “will,” or the negative of those terms, and similar expressions, are intended to identify forward-looking statements. These forward-looking statements include statements about our business strategy, timeline and other goals, plans and prospects, including our commercialization plans respecting PEDMARK^®, the market opportunity for and market impact of PEDMARK^®, its potential impact on patients and anticipated benefits associated with its use, and potential access to further funding after the date of this release. Forward-looking statements are subject to certain risks and uncertainties inherent in the Company’s business that could cause actual results to vary, including the risks and uncertainties that regulatory and guideline developments may change, scientific data and/or manufacturing capabilities may not be sufficient to meet regulatory standards or receipt of required regulatory clearances or approvals, clinical results may not be replicated in actual patient settings, unforeseen global instability, including political instability, or instability from an outbreak of pandemic or contagious disease, such as the novel coronavirus (COVID-19), or surrounding the duration and severity of an outbreak, protection offered by the Company’s patents and patent applications may be challenged, invalidated or circumvented by its competitors, the available market for the Company’s products will not be as large as expected, the Company’s products will not be able to penetrate one or more targeted markets, revenues will not be sufficient to fund further development and clinical studies, our ability to obtain necessary capital when needed on acceptable terms or at all, the Company may not meet its future capital requirements in different countries and municipalities, and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission including its Annual Report on Form 10-K for the year ended December 31, 2023. Fennec disclaims any obligation to update these forward-looking statements except as required by law.

For a more detailed discussion of related risk factors, please refer to our public filings available at www.sec.gov and www.sedar.com.

PEDMARK^® and Fennec^® are registered trademarks of Fennec Pharmaceuticals Inc.

©2024 Fennec Pharmaceuticals Inc. All rights reserved. FEN-1604-v1

For further information, please contact:

Investors:
Robert Andrade
Chief Financial Officer
Fennec Pharmaceuticals Inc.
+1 919-246-5299

Corporate and Media:
Lindsay Rocco
Elixir Health Public Relations
+1 862-596-1304
lrocco@elixirhealthpr.com

________________________
¹ Rybak L. Mechanisms of Cisplatin Ototoxicity and Progress in Otoprotection. Current Opinion in Otolaryngology & Head and Neck Surgery. 2007, Vol. 15: 364-369.
² Landier W. Ototoxicity and Cancer Therapy. Cancer. June 2016 Vol. 122, No.11: 1647-1658.
³ Bass JK, Knight KR, Yock TI, et al. Evaluation and Management of Hearing Loss in Survivors of Childhood and Adolescent Cancers: A Report from the Children's Oncology Group. Pediatric Blood & Cancer. 2016 Jul;63(7):1152-1162.

FAQ

What were Fennec Pharmaceuticals' (FENC) Q2 2024 total net revenues?

Fennec Pharmaceuticals reported total net revenues of $7.3 million for Q2 2024.

Who was appointed as the new CEO of Fennec Pharmaceuticals (FENC) in Q2 2024?

Jeffrey S. Hackman was appointed as the new Chief Executive Officer and a member of the Board of Directors of Fennec Pharmaceuticals.

What was Fennec Pharmaceuticals' (FENC) cash position as of June 30, 2024?

Fennec Pharmaceuticals had approximately $43 million in cash, cash equivalents, and investment securities as of June 30, 2024.

How did the NCCN AYA Guidelines change affect PEDMARK's potential patient population for Fennec Pharmaceuticals (FENC)?

The NCCN Adolescent and Young Adult (AYA) Guidelines were modified to remove 'pediatric' specific wording, potentially broadening PEDMARK's access to a larger patient population for ototoxicity prevention.