Core Viewpoint - Fennec Pharmaceuticals Inc. is initiating a non-brokered offering of common shares in Canada at a price of US$7.50 per share, aiming for gross proceeds of up to US$5,025,000, with the offering expected to close on November 17, 2025, subject to customary closing conditions [1][2]. Offering Details - The offering targets prospective purchasers in Canada (excluding Quebec) under the listed issuer financing exemption, and the shares will not be subject to a hold period under Canadian securities laws [2][4]. - There are no guarantees regarding the completion of the offering or the total gross proceeds raised [2]. Company Background - Fennec Pharmaceuticals is focused on combating ototoxicity in cancer patients undergoing cisplatin-based chemotherapy, with its product PEDMARK approved by the FDA in September 2022 and by the European Commission in June 2023 [6][8]. - The company has an exclusive licensing agreement with Norgine Pharmaceuticals Ltd. for the commercialization of PEDMARQSI in Europe, the U.K., Australia, and New Zealand, with the product already available in the U.K. and Germany [7]. Regulatory and Market Position - PEDMARK has received Orphan Drug Exclusivity in the U.S., and PEDMARQSI has Pediatric Use Marketing Authorization in Europe, providing significant market protection [8]. - Fennec holds patents for PEDMARK that extend until 2039 in both the U.S. and internationally, enhancing its competitive position in the market [8].

Core Viewpoint - Fennec Pharmaceuticals Inc. has announced a public offering of 4,666,667 common shares priced at $7.50 per share, aiming to raise approximately $35 million in gross proceeds before expenses [1][2] Group 1: Offering Details - The offering includes a 30-day option for underwriters to purchase an additional 700,000 common shares under the same terms [1] - The expected closing date for the offering is November 17, 2025, pending customary closing conditions [1] Group 2: Use of Proceeds - The net proceeds from the offering will be used to repurchase and redeem certain indebtedness, with any remaining funds allocated for working capital and general corporate purposes [2] Group 3: Company Background - Fennec Pharmaceuticals is focused on combating ototoxicity in cancer patients undergoing cisplatin-based chemotherapy, with its product PEDMARK approved by the FDA in September 2022 and by the European Commission in June 2023 [5][6] - The company has entered into an exclusive licensing agreement with Norgine Pharmaceuticals Ltd. for the commercialization of PEDMARQSI in Europe, the U.K., Australia, and New Zealand [6] - PEDMARK has received Orphan Drug Exclusivity in the U.S., and PEDMARQSI has received Pediatric Use Marketing Authorization in Europe, providing significant market protection [7]

Company Performance - Adherex Technologies Inc. reported a quarterly loss of $0.02 per share, better than the Zacks Consensus Estimate of a loss of $0.08, and an improvement from a loss of $0.21 per share a year ago, representing an earnings surprise of +75.00% [1] - The company posted revenues of $12.46 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 11.62%, and showing significant growth from year-ago revenues of $6.97 million [2] - Over the last four quarters, Adherex Technologies has surpassed consensus EPS estimates two times and topped consensus revenue estimates three times [2] Stock Outlook - Adherex Technologies shares have increased approximately 23.1% since the beginning of the year, outperforming the S&P 500's gain of 16.5% [3] - The current consensus EPS estimate for the coming quarter is -$0.02 on revenues of $13.42 million, and for the current fiscal year, it is -$0.25 on revenues of $42.99 million [7] Industry Context - The Medical - Biomedical and Genetics industry, to which Adherex Technologies belongs, is currently ranked in the top 35% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8]

Core Viewpoint - Fennec Pharmaceuticals Inc. is initiating an underwritten public offering of its common shares, with plans to use the proceeds for debt repayment and general corporate purposes [1][2]. Group 1: Offering Details - The company intends to offer common shares and grant underwriters a 30-day option to purchase an additional 15% of the shares sold in the offering [1]. - The offering is being conducted under a registration statement that has been declared effective by the SEC, with a preliminary prospectus supplement to be filed [3]. Group 2: Use of Proceeds - Net proceeds from the offering will be used to repurchase certain indebtedness, with any remaining funds allocated for working capital and general corporate purposes [2]. Group 3: Company Background - Fennec Pharmaceuticals focuses on combating ototoxicity in cancer patients undergoing cisplatin-based chemotherapy, primarily through its product PEDMARK, which has received various regulatory approvals [5][6]. - PEDMARK has Orphan Drug Exclusivity in the U.S. and PEDMARQSI has received Pediatric Use Marketing Authorization in Europe, providing significant market protection [7].

Financial Performance - PEDMARK® recorded net product sales of $12,462,000 in Q3 2025, a 78% increase from $6,974,000 in Q3 2024, driven by increased market penetration and focus on the adolescent and young adult population [163]. - Net product sales for the first three quarters of 2025 reached $30,865, a 42.5% increase from $21,655 in 2024, driven by increased market penetration and focus on the adolescent and young adult population [167]. - Total revenue for the nine months ended September 30, 2025, was $30,865, down from $39,613 in 2024, reflecting a decrease of $8,748 [165]. - The net loss for the nine months ended September 30, 2025, was $4,954, compared to a net income of $1,549 in 2024, representing a decline of $6,503 [165]. Expenses - Selling and marketing expenses rose to $5,210,000 in Q3 2025 from $4,601,000 in Q3 2024, reflecting enhanced commercial and marketing efforts in the U.S. [163]. - General and administrative expenses increased by $631,000 in Q3 2025 compared to the same period in 2024 [164]. - Operating expenses totaled $34,593 for the nine months ended September 30, 2025, a decrease of $1,518 compared to $36,111 in 2024 [165]. - Selling and marketing expenses decreased to $12,510 in 2025 from $14,482 in 2024, primarily due to the completion of European pre-commercial activities [167]. Cash Flow and Liabilities - Cash and equivalents decreased to $21,947 as of September 30, 2025, from $26,634 as of December 31, 2024, a net decrease of $4,687 [169]. - Net cash used in operating activities for the nine months ended September 30, 2025, was $(6,511), compared to $28,454 provided in 2024 [170]. - Current liabilities increased to $9,815 as of September 30, 2025, from $6,919 as of December 31, 2024, an increase of $2,896 [169]. Product Development and Approvals - The company received European Commission Marketing Authorization for PEDMARQSI® in June 2023, with U.K. approval following in October 2023 [156]. - An exclusive licensing agreement with Norgine was established in March 2024, providing approximately $43,200,000 upfront and potential future milestone and royalty payments of up to $230,000,000 [141]. - PEDMARK® is the first and only FDA- and EMA-approved therapy to reduce the risk of cisplatin-induced hearing loss in pediatric patients aged one month and older [146]. - The company received Orphan Drug Exclusivity for PEDMARK® in January 2023, granting seven years of market exclusivity until September 20, 2029 [143]. - Norgine plans to launch PEDMARQSI® in Germany and the U.K. in early 2025 [159]. Market Potential - It is estimated that over 10,000 pediatric patients receive platinum-based chemotherapy annually in the U.S. and Europe, with more than 50% potentially suffering permanent hearing loss due to cisplatin [149][155]. - The company has six patents listed for PEDMARK® in the FDA Orange Book, with expiration dates extending to 2039 [143]. Shareholder Information - Outstanding common shares increased to 28,062 as of September 30, 2025, from 27,527 as of December 31, 2024, an increase of 535 shares [174]. - Common shares are recorded as net proceeds after deducting share issuance costs and the fair value of investor warrants, which are recorded as additional paid-in capital [193]. Stock Options and Performance Units - The fair value of stock options is estimated using the Black-Scholes model with a risk-free rate of 3.93-4.19% and expected volatility ranging from 71.04% to 161.67% [191]. - Performance-based units (PSUs) were granted in May and August 2025, with vesting dependent on revenue performance milestones, which are deemed probable as of September 30, 2025 [192].

Core Insights - Fennec Pharmaceuticals reported a record net product sales of $12.5 million for Q3 2025, representing a 79% year-over-year growth, marking the strongest quarter in the company's history [1][8] - The company achieved positive cash flow from operations, with cash and cash equivalents increasing to $22 million as of September 30, 2025 [1][8] - The preliminary results of the clinical trial STS-J01 in Japan are expected in Q4 2025, which could lead to potential registration and partnership opportunities for PEDMARK if results are favorable [1][7] Financial Performance - Net product sales for Q3 2025 were approximately $12.5 million, up from $7.0 million in Q3 2024, indicating significant growth [8][10] - Selling and marketing expenses increased to $5.2 million in Q3 2025 from $4.4 million in Q2 2025 and $4.6 million in Q3 2024 [8] - General and administrative expenses decreased slightly to $6.8 million in Q3 2025 from $7.0 million in Q2 2025 [8] Business Developments - The adoption of PEDMARK has accelerated within key oncology provider networks, reflecting growing confidence in its clinical value [7] - The company is engaged with key opinion leaders and has multiple investigator-initiated studies under review, which are expected to strengthen its clinical and commercial foundation [7] - Fennec's strategy to enhance its commercial organization and drive broader adoption of PEDMARK is showing tangible results [2][7] Upcoming Events - Fennec Pharmaceuticals will host one-on-one investor meetings at the 16th Annual Craig-Hallum Alpha Select Conference on November 18, 2025 [4]

Group 1 - The stock of Adherex Technologies Inc. (FENC) is experiencing significant attention due to high implied volatility in the options market, particularly for the Oct 17, 2025 $12.50 Call option [1] - Implied volatility indicates the market's expectation of future price movement, suggesting that investors anticipate a significant price change or an upcoming event that could lead to a major rally or sell-off [2] - Adherex Technologies currently holds a Zacks Rank of 4 (Sell) in the Medical - Biomedical and Genetics Industry, with no analysts increasing their earnings estimates for the current quarter, resulting in a downward revision of the Zacks Consensus Estimate from 18 cents per share to 16 cents per share [3] Group 2 - The high implied volatility surrounding Adherex Technologies may indicate a developing trading opportunity, as options traders often seek to sell premium on options with high implied volatility to capture decay [4]

Summary of Fennec Pharmaceuticals FY Conference Call Company Overview - Fennec Pharmaceuticals is a commercial-stage biotechnology company focused on improving the lives of cancer patients, specifically through its FDA-approved product, PEDMARK, which reduces the risk of ototoxicity (hearing loss) from cisplatin chemotherapy [2][3] Financial Performance - The company reported a 33% year-over-year increase in revenue for Q2 ending June 30, achieving nearly $10 million in quarterly sales, marking the highest in its history [3][16] - Fennec is approaching cash flow break-even, needing to exceed $9 million in net product sales to achieve this milestone [16][17] - Total cash operating expenses for the year are approximately $35 million, with $20 million spent in the first half and $15 million expected in the second half [17] Product and Market Opportunity - PEDMARK is the first and only approved agent for the prevention of hearing loss associated with cisplatin administration, showing a 50% reduction in hearing loss in clinical trials [10][11] - The addressable market in the U.S. includes over 2,000 pediatric patients treated with cisplatin, while the adolescent and young adult (AYA) market is significantly larger, with approximately 20,000 patients annually [12] - The company has a strong intellectual property portfolio, including six U.S. Orange Book patents and seven years of U.S. market exclusivity under orphan drug designation, extending to 2039 [5] Partnerships and Collaborations - Fennec partnered with Norgine for the commercialization of PEDMARQSI (the European brand name for PEDMARK) in Europe, Australia, and New Zealand, receiving $43 million in upfront payments and potential over $200 million in sales and regulatory milestones [4][5] - Norgine has successfully launched PEDMARQSI in the UK and Germany, with further EU rollouts planned [4][11] Clinical and Regulatory Developments - The company received NCCN Clinical Practice Guidelines with a 2A endorsement for AYA patients, enhancing the market opportunity for PEDMARK [11] - A trial conducted in Japan with 25 patients is expected to yield results by the end of the year [4] Marketing and Awareness Initiatives - Fennec has focused on creating awareness and education around PEDMARK, achieving over 80% reimbursement success with major insurance plans [13][14] - The company has established relationships with key opinion leaders (KOLs) and audiologists to promote the use of PEDMARK [14][15] Conclusion - Fennec Pharmaceuticals is positioned for growth with a unique product addressing a significant unmet need in cancer treatment, supported by strong financial performance and strategic partnerships [10][16]

PART I: FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) The company's unaudited financial statements show key changes in assets, liabilities, operations, equity, and cash flows [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)%20as%20of%20June%2030%2C%202025%20and%20December%2031%2C%202024) The balance sheet reflects a decrease in cash and total assets, alongside an increase in liabilities and stockholders' deficit | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Cash and cash equivalents | $18,705 | $26,634 | $(7,929) | | Accounts receivable, net | $17,502 | $12,884 | $4,618 | | Inventory | $2,201 | $1,060 | $1,141 | | Total current assets | $40,794 | $44,124 | $(3,330) | | Total assets | $44,876 | $44,946 | $(70) | | Accounts payable | $5,941 | $3,241 | $2,700 | | Total current liabilities | $8,414 | $6,919 | $1,495 | | Total liabilities | $52,339 | $50,818 | $1,521 | | Total stockholders' deficit | $(7,463) | $(5,872) | $(1,591) | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(Unaudited)%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) The company reported a net loss for the first half of 2025, a reversal from 2024's net income due to absent licensing revenue Three Months Ended June 30 (in thousands, except per share) | Metric | June 30, 2025 | June 30, 2024 | Change | | :-------------------------- | :------------ | :------------ | :----- | | PEDMARK product sales, net | $9,652 | $7,262 | $2,390 | | Total revenue | $9,652 | $7,262 | $2,390 | | Total operating expenses | $12,384 | $12,301 | $83 | | Net (loss)/income | $(3,152) | $(5,553) | $2,401 | | Basic net (loss)/income per common share | $(0.11) | $(0.20) | $0.09 | Six Months Ended June 30 (in thousands, except per share) | Metric | June 30, 2025 | June 30, 2024 | Change | | :-------------------------- | :------------ | :------------ | :------- | | PEDMARK product sales, net | $18,403 | $14,681 | $3,722 | | Licensing revenue | $0 | $17,958 | $(17,958) | | Total revenue | $18,403 | $32,639 | $(14,236) | | Total operating expenses | $21,943 | $23,935 | $(1,992) | | Net (loss)/income | $(4,317) | $7,284 | $(11,601) | | Basic net (loss)/income per common share | $(0.16) | $0.27 | $(0.43) | [Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Deficit)%20(Unaudited)%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) The stockholders' deficit widened in the first half of 2025, driven by net losses that outweighed equity-related inflows Stockholders' Equity (Deficit) Changes (in thousands) | Item | Balance at Dec 31, 2024 | Stock-based compensation | Stock option exercise | Restricted stock release | Net loss | Balance at Jun 30, 2025 | | :---------------------- | :---------------------- | :----------------------- | :-------------------- | :----------------------- | :------- | :---------------------- | | Common Stock Amount | $145,608 | — | $557 | — | — | $146,165 | | Additional Paid-in Capital | $66,958 | $2,292 | — | $(123) | — | $69,127 | | Accumulated Deficit | $(219,681) | — | — | — | $(4,317) | $(223,998) | | Total Stockholders' Equity (deficit) | $(5,872) | $2,292 | $557 | $(123) | $(4,317) | $(7,463) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) The company experienced a significant net cash outflow from operations in H1 2025, contrasting sharply with a large inflow in H1 2024 Six Months Ended June 30 (in thousands) | Cash Flow Activity | June 30, 2025 | June 30, 2024 | Change | | :------------------------------------------ | :------------ | :------------ | :------- | | Net cash (used in) / provided by operating activities | $(8,004) | $30,660 | $(38,664) | | Net cash provided by / (used in) financing activities | $75 | $(875) | $950 | | (Decrease) / increase in cash and cash equivalents | $(7,929) | $29,785 | $(37,714) | | Cash and cash equivalents - End of period | $18,705 | $43,054 | $(24,349) | [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) These notes detail the company's financial position, operations, liquidity, accounting policies, and key agreements [1. Nature of Business and Liquidity](index=9&type=section&id=1.%20Nature%20of%20Business%20and%20Liquidity) The company focuses on its approved product PEDMARK® and believes current funds are sufficient for the next twelve months - Fennec Pharmaceuticals Inc is a biopharmaceutical company with one FDA, EMA, and U.K approved product, **PEDMARK®**, designed to reduce the risk of ototoxicity associated with cisplatin in pediatric patients[14](index=14&type=chunk) - The company experienced a **net loss from operations of $(3,540) thousand** and **negative cash flows from operating activities of $(8,004) thousand** for the six-month period ended June 30, 2025, with an accumulated deficit of $223,998 thousand[16](index=16&type=chunk) - In March 2024, the company secured an exclusive licensing agreement with Norgine Pharma UK Limited for PEDMARQSI® (PEDMARK® outside the U.S) in Europe, Australia, and New Zealand, providing approximately **$43,000 thousand upfront** and potential future royalties and milestone payments of approximately **$230,000 thousand**[25](index=25&type=chunk) - Management believes current funds, including the Norgine upfront payment, provide **sufficient funding for planned activities**, including PEDMARK® commercialization, for at least the next twelve months[26](index=26&type=chunk) [2. Significant Accounting Policies](index=11&type=section&id=2.%20Significant%20Accounting%20Policies) This section outlines key accounting policies for revenue recognition, inventory, stock compensation, and segment reporting - The company operates and manages its business as a **single operating segment** focused on the production and commercialization of PEDMARK®[32](index=32&type=chunk) - Revenue from product sales (PEDMARK®) is recognized when the customer obtains control, typically upon delivery, with estimates for variable consideration (discounts, rebates, chargebacks) recorded as reserves[43](index=43&type=chunk)[44](index=44&type=chunk) - Licensing revenue from intellectual property is recognized upon transfer of control of the license, with contingent milestones constrained until probable of not resulting in a material reversal[39](index=39&type=chunk)[40](index=40&type=chunk) - Recent accounting pronouncements include ASU 2023-09 (Income Taxes) effective for annual periods beginning December 31, 2025, and ASU 2024-03 (Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures) effective for annual periods beginning after December 15, 2026[70](index=70&type=chunk)[71](index=71&type=chunk) Net Product Revenues (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gross product revenues | $10,941 | $9,466 | $21,753 | $19,022 | | Discounts and allowances | $(1,289) | $(2,204) | $(3,350) | $(4,341) | | Net product revenues | $9,652 | $7,262 | $18,403 | $14,681 | [3. Loss Per Share](index=24&type=section&id=3.%20Loss%20Per%20Share) Due to a net loss in 2025, all common stock equivalents were anti-dilutive, making basic and diluted EPS identical - For the three and six months ended June 30, 2025, options, convertible debt, restricted share units, performance share units, and warrants were **excluded from diluted EPS calculation** as they were anti-dilutive due to the net loss[73](index=73&type=chunk) Net (Loss)/Income Per Share (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net (loss) / income | $(3,152) | $(5,553) | $(4,317) | $7,284 | | Weighted-average common shares, basic | 27,664 | 27,297 | 27,621 | 27,250 | | Weighted-average common shares, diluted | 27,664 | 27,297 | 27,621 | 30,354 | | Net (loss) / income per share diluted | $(0.11) | $(0.20) | $(0.16) | $0.24 | [4. Stockholders' Equity](index=25&type=section&id=4.%20Stockholders'%20Equity) The company amended its equity incentive plan to increase available shares and add an employee stock purchase program - The Company's authorized capital stock consists of an **unlimited number of common shares**, no par value per share[74](index=74&type=chunk) - On April 24, 2025, the Board approved an amendment to the Equity Incentive Plan to **increase common shares available for issuance to 8,500 thousand** and include an employee stock purchase program, which was approved by shareholders on June 3, 2025[77](index=77&type=chunk) - In May 2025, the Board approved a performance-based unit (PSU) grant, with vesting dependent on revenue performance milestones over the next year, with partial achievement deemed probable as of June 30, 2025[85](index=85&type=chunk)[86](index=86&type=chunk) Stock-Based Compensation Expense (in thousands) | Period | June 30, 2025 | June 30, 2024 | | :----------------------- | :------------ | :------------ | | Three Months Ended | $1,494 | $925 | | Six Months Ended | $2,292 | $2,116 | Stock Option Activity (in thousands) | Metric | Outstanding at Dec 31, 2024 | Granted | Exercised | Forfeited | Outstanding at Jun 30, 2025 | | :-------------------------- | :-------------------------- | :------ | :-------- | :-------- | :-------------------------- | | Number of Options | 5,855 | 498 | (107) | (168) | 6,078 | | Weighted-Average Exercise Price | $6.22 | $7.05 | $5.04 | $6.09 | $6.31 | [5. Fair Value Measurements](index=29&type=section&id=5.%20Fair%20Value%20Measurements) The company's financial assets are classified within a three-level fair value hierarchy, with most cash equivalents in Level 2 - The company held approximately **$1,984 thousand in cash accounts** and **$16,721 thousand in savings and money market accounts** as of June 30, 2025[91](index=91&type=chunk) Fair Value Measurement at June 30, 2025 (in thousands) | Asset | Level 1 | Level 2 | Level 3 | Total | | :---------------------- | :------ | :------ | :------ | :------ | | Cash and cash equivalents | $1,984 | $16,721 | $— | $18,705 | | Processa common shares | $1 | $— | $— | $1 | [6. Commitments and Contingencies](index=30&type=section&id=6.%20Commitments%20and%20Contingencies) The company is engaged in ongoing patent infringement litigation against CIPLA and has defined executive severance agreements - The company is engaged in ongoing patent infringement litigation against CIPLA Ltd and CIPLA USA concerning generic versions of PEDMARK®, asserting infringement of multiple patents (US '190, '728, '984, '793, '018, '530, '604, '026)[92](index=92&type=chunk)[94](index=94&type=chunk)[97](index=97&type=chunk)[100](index=100&type=chunk) - On July 14, 2025, the court **granted the motion to consolidate two related cases** (2:25-cv-05709 and 2:23-cv-00123) and issued an order on claim construction, adopting the company's proposed constructions for two disputed claim terms[101](index=101&type=chunk)[102](index=102&type=chunk) - Executive severance agreements include a one-time payment of **$559 thousand for the CEO** and **$344 thousand for the CFO** upon termination without cause[104](index=104&type=chunk) - The company has operating lease commitments for office spaces in Research Triangle Park, North Carolina, and previously in Dublin, Ireland (terminated)[105](index=105&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk) [7. Term Loans](index=34&type=section&id=7.%20Term%20Loans) The company significantly reduced its convertible note obligations with Petrichor through a redemption in December 2024 - The company entered into a Securities Purchase Agreement (SPA) with Petrichor Opportunities Fund I LP for up to **$45,000 thousand in senior secured floating rate convertible notes**, with tranches closed in August 2022 ($5,000 thousand), September 2022 ($20,000 thousand), and December 2023 ($5,000 thousand)[110](index=110&type=chunk)[111](index=111&type=chunk)[113](index=113&type=chunk) - On December 18, 2024, the company **repurchased and redeemed $13,000 thousand in Notes** (including $1,271 thousand in PIK interest), fully redeeming the First and Third Closing Notes[115](index=115&type=chunk) - As of June 30, 2025, approximately **$19,477 thousand of Second Closing Notes** (inclusive of PIK interest) remains outstanding, due in August 2027[117](index=117&type=chunk) - Cash interest accrues at prime plus 4.5% per annum (**12% at June 30, 2025**), and PIK interest accrued at 3.5% per annum until August 24, 2024, with $1,271 thousand accrued and classified as long-term liabilities[118](index=118&type=chunk) Aggregate Annual Payments Due on SPA (in thousands) | Years Ending December 31, | Amount | | :------------------------ | :----- | | 2025 | $— | | 2026 | $— | | 2027 | $18,206 | | Payment in kind interest | $1,271 | | Total future payments | $19,477 | | Less: unamortized debt discount | $(113) | | Total term loan, net of debt discount | $19,364 | [8. License Agreement with Norgine Pharma UK Limited](index=36&type=section&id=8.%20License%20Agreement) The company secured a significant licensing deal with Norgine for European commercialization of PEDMARQSI® - On March 17, 2024, the company entered into an exclusive License and Supply Agreement with Norgine Pharma UK Limited to commercialize PEDMARQSI® (PEDMARK® in the U.S) in Europe, Australia, and New Zealand[122](index=122&type=chunk) - The agreement provided an **upfront payment of approximately $43.2 million** (€40 million) and potential future payments of up to approximately **$230 million** (€210 million) upon achievement of regulatory and commercial milestones, plus tiered royalties from mid-teen to mid-twenty percent on net sales[123](index=123&type=chunk)[125](index=125&type=chunk) - The company identified two performance obligations under ASC 606: a license of functional IP and a material right for future supply, allocating the upfront payment between recognized revenue and deferred liability[127](index=127&type=chunk) - Milestone payments are constrained and not included in the transaction price at inception due to dependence on regulatory approvals and third-party actions, and will be recognized when achieved[127](index=127&type=chunk) [9. Segment Reporting](index=38&type=section&id=9.%20Segment%20Reporting) The company operates as a single segment focused on the commercialization of its sole product, PEDMARK® - The company views its operations and manages its business in **one operating segment**, principally in the United States, focused on the production and commercialization of PEDMARK®[129](index=129&type=chunk) - The chief operating decision maker (senior executive team) uses **net loss** to evaluate segment performance and allocate resources[130](index=130&type=chunk)[133](index=133&type=chunk) [10. Subsequent Events](index=40&type=section&id=10.%20Subsequent%20Events) Management evaluated subsequent events and concluded there were no events requiring disclosure after the reporting period - No events of significance requiring disclosure were identified by management through the date of this filing[134](index=134&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial results, highlighting PEDMARK® commercialization, the Norgine agreement, and operational trends [Overview](index=40&type=section&id=Overview) Fennec is a commercial-stage biopharmaceutical company focused on its approved product PEDMARK® for pediatric cancer patients - Fennec Pharmaceuticals is a commercial-stage biopharmaceutical company focused on PEDMARK®, approved by the FDA (September 20, 2022) to reduce ototoxicity associated with cisplatin in pediatric patients[137](index=137&type=chunk) - PEDMARK® received European Commission Marketing Authorization in June 2023 and U.K approval in October 2023 (branded as PEDMARQSI®)[138](index=138&type=chunk) - An exclusive licensing agreement with Norgine in March 2024 provided approximately **$43,200 thousand upfront** and potential future milestone and royalty payments of up to **$230,000 thousand** for commercialization in Europe, Australia, and New Zealand[138](index=138&type=chunk) - The company holds **Orphan Drug Exclusivity for PEDMARK® until September 20, 2029**, and has six patents listed in the FDA Orange Book, with expiration dates in 2039[141](index=141&type=chunk) [PEDMARK® Product Overview](index=42&type=section&id=PEDMARK%C2%AE%20Product%20Overview) PEDMARK® is the only approved therapy to mitigate cisplatin-induced hearing loss in pediatric patients - PEDMARK® is the **first and only FDA- and EMA-approved agent** designed to reduce the risk of cisplatin-induced hearing loss (CIO) in children with localized solid tumors[144](index=144&type=chunk) - Strategic imperatives include increasing awareness of unmet patient needs, emphasizing CIO prevention, establishing PEDMARK® as the standard of care, expanding adoption beyond oncologists, ensuring seamless access, and activating patients/caregivers through disease education[144](index=144&type=chunk) - The U.S pediatric oncology landscape includes approximately **200 targeted hospital centers**, treating around 80% of pediatric cancer patients[147](index=147&type=chunk) - An estimated **10,000+ pediatric patients annually** in the U.S and Europe may receive platinum-based chemotherapy, with many requiring lifelong hearing aids due to ototoxicity[145](index=145&type=chunk) [Cisplatin Induced Ototoxicity ("CIO")](index=44&type=section&id=Cisplatin%20Induced%20Ototoxicity%20(%22CIO%22)) Cisplatin-induced ototoxicity is a permanent and irreversible hearing loss affecting a high percentage of cancer patients - Cisplatin and other platinum compounds can cause **permanent, irreversible ototoxicity** (hearing loss), which is particularly harmful to pediatric cancer survivors[150](index=150&type=chunk)[151](index=151&type=chunk) - It is estimated that **over 50% of pediatric patients** and approximately **40-80% of adult patients** may suffer permanent hearing loss as a result of CIO[152](index=152&type=chunk) [European Commission Marketing Authorization](index=44&type=section&id=European%20Commission%20Marketing%20Authorization) PEDMARQSI® received European and U.K marketing authorization, with commercial launch initiated by Norgine in early 2025 - PEDMARQSI® (PEDMARK® brand name in Europe) received European Commission Marketing Authorization in June 2023 and U.K approval in October 2023[153](index=153&type=chunk) - Norgine, the exclusive licensing partner, **launched PEDMARQSI® in Germany and the U.K in early 2025**[155](index=155&type=chunk) [Results of Operations](index=45&type=section&id=Results%20of%20Operations) Net product sales increased, but the absence of 2024's licensing revenue led to a significant year-over-year total revenue decline - The decrease in selling and marketing expenses for both periods is largely related to the **elimination of European pre-commercial activities** in 2024 after the Norgine transaction[157](index=157&type=chunk)[159](index=159&type=chunk) - Interest expense decreased due to a lower long-term debt balance following a **$13,000 thousand debt paydown** in December 2024[157](index=157&type=chunk)[159](index=159&type=chunk) Three Months Ended June 30, 2025 vs 2024 (in thousands) | Metric | June 30, 2025 | June 30, 2024 | Change | | :-------------------------- | :------------ | :------------ | :----- | | PEDMARK product sales, net | $9,652 | $7,262 | $2,390 | | Selling and marketing expenses | $4,354 | $4,672 | $(318) | | General and administrative | $6,956 | $6,864 | $92 | | Loss from operations | $(2,732) | $(5,039) | $2,307 | | Interest expense | $(594) | $(1,044) | $450 | | Net loss | $(3,152) | $(5,553) | $2,401 | Six Months Ended June 30, 2025 vs 2024 (in thousands) | Metric | June 30, 2025 | June 30, 2024 | Change | | :-------------------------- | :------------ | :------------ | :------- | | PEDMARK product sales, net | $18,403 | $14,681 | $3,722 | | Licensing revenue | $0 | $17,958 | $(17,958) | | Total revenue | $18,403 | $32,639 | $(14,236) | | Selling and marketing expenses | $7,301 | $9,881 | $(2,580) | | General and administrative | $13,101 | $12,736 | $365 | | (Loss) / income from operations | $(3,540) | $8,704 | $(12,244) | | Interest expense | $(1,186) | $(2,078) | $892 | | Net (loss) / income | $(4,317) | $7,284 | $(11,601) | [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and working capital decreased in H1 2025 due to higher operating expenses and timing of working capital collections - The net decrease in cash and cash equivalents of **$7,929 thousand** was primarily due to seasonally higher cash operating expenses and the timing of working capital collections[163](index=163&type=chunk) - The company's investment policy prioritizes **preservation of principal, liquidity, and return on investment**, avoiding speculative investments[166](index=166&type=chunk) Selected Asset and Liability Data (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Cash and equivalents | $18,705 | $26,634 | | Other current assets | $22,089 | $17,490 | | Current liabilities | $8,414 | $6,919 | | Working capital | $32,380 | $37,205 | | Stockholders' deficit | $(7,463) | $(5,872) | Selected Cash Flow Data (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash (used in) / provided by operating activities | $(8,004) | $30,660 | | Net cash provided by / (used in) financing activities | $75 | $(875) | | Net cash flow | $(7,929) | $29,785 | Outstanding Share Information (in thousands) | Outstanding Share Type | June 30, 2025 | December 31, 2024 | Change | | :----------------------- | :------------ | :---------------- | :----- | | Common shares | 27,733 | 27,527 | 206 | | Warrants | 150 | 150 | — | | RSUs | 485 | 324 | 161 | | PSUs | 100 | — | 100 | | Stock options | 6,078 | 5,855 | 223 | | Total | 34,546 | 33,856 | 690 | [Credit Losses](index=52&type=section&id=Credit%20Losses) The company provides for expected credit losses on trade receivables by analyzing customer classes and financial status - The company estimates and records a provision for expected credit losses related to trade receivables, considering historical collection rates, customer financial status, macroeconomic factors, and industry-specific factors[171](index=171&type=chunk) - Receivables are disaggregated by customer class, and each component is analyzed individually, establishing customer profiles based on past collections and evaluating current/forecasted financial positions[172](index=172&type=chunk) [Revenue Recognition](index=52&type=section&id=Revenue%20Recognition) Revenue is recognized under ASC 606, requiring significant judgment in estimating variable consideration and allocating price - Revenue is recognized when customers obtain control of promised goods or services, reflecting the consideration expected in exchange[173](index=173&type=chunk) - For license agreements, if intellectual property is distinct, revenue is recognized upon transfer of control, with contingent milestones constrained until probable of not resulting in a material reversal[175](index=175&type=chunk)[176](index=176&type=chunk) - Sales-based royalties are recognized as revenue when the related sales occur or when the performance obligation to which royalties relate has been satisfied[179](index=179&type=chunk) [Stock-based Compensation](index=54&type=section&id=Stock-based%20Compensation) The fair value of stock options is estimated using the Black-Scholes model, which requires significant management assumptions - The fair value of stock options is estimated using the **Black-Scholes option-pricing model**, requiring assumptions for expected volatility, expected life, expected dividends, and expected risk-free interest rates[180](index=180&type=chunk) - Performance-based units (PSUs) are expensed over the performance period to the extent that the achievement of revenue performance milestones is considered **probable**[181](index=181&type=chunk) Black-Scholes Model Assumptions (June 30, 2025) | Assumption | Value | | :-------------------- | :------------------ | | Expected dividend | -% | | Risk free rate | 3.93 - 4.19 % | | Expected volatility | 71.04 - 161.67 % | | Expected life | 1.5 - 6.0 years | [Common shares and warrants](index=54&type=section&id=Common%20shares%20and%20warrants) Common shares are recorded at net proceeds, while warrants are recorded at relative fair value as additional paid-in capital - Common shares are recorded as net proceeds received on issuance, after deducting share issuance costs and the relative fair value of investor warrants[182](index=182&type=chunk) - Warrants are recorded at relative fair value and deducted from common share proceeds, then recorded as additional paid-in capital[182](index=182&type=chunk) [Newly Adopted and Recent Accounting Pronouncements](index=54&type=section&id=Newly%20Adopted%20and%20Recent%20Accounting%20Pronouncements) This section refers to Note 2 for details on new and recently adopted accounting pronouncements - Refer to Note 2, 'Significant Accounting Policies - Recent Accounting Pronouncements' for information on newly adopted and recent accounting pronouncements[183](index=183&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=55&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This item states that there are no applicable quantitative and qualitative disclosures about market risk for the company - This section is not applicable[184](index=184&type=chunk) [Item 4. Controls and Procedures](index=55&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of the end of the reporting period - As of June 30, 2025, the company's Chief Executive Officer and Chief Financial Officer concluded that the **disclosure controls and procedures were effective**[186](index=186&type=chunk) - There were **no material changes** to the company's internal control over financial reporting during the quarter ended June 30, 2025[187](index=187&type=chunk) - The effectiveness of any internal control system is subject to inherent limitations, providing **reasonable, not absolute, assurances**[188](index=188&type=chunk) PART II: OTHER INFORMATION [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) The company is actively engaged in patent infringement litigation against CIPLA concerning its generic version of PEDMARK® - The company is actively engaged in patent infringement litigation against CIPLA Ltd and CIPLA USA, who submitted an ANDA for a generic version of PEDMARK®[189](index=189&type=chunk)[191](index=191&type=chunk) - The litigation involves multiple patents covering PEDMARK®, including newly granted patents like US 12,311,026 ('026 Patent) in May 2025, all with **expiration dates in July 2039**[191](index=191&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk)[197](index=197&type=chunk) - On July 14, 2025, the court **granted a motion to consolidate two related cases** (2:25-cv-05709 and 2:23-cv-00123) and issued an order on claim construction, adopting the company's proposed constructions for two disputed claim terms[198](index=198&type=chunk)[199](index=199&type=chunk) - The company has received **Orphan Drug Exclusivity**, preventing FDA approval of CIPLA's ANDA until at least September 20, 2029[192](index=192&type=chunk) [Item 1A. Risk Factors](index=59&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the company's Annual Report for a detailed discussion of risk factors, with no material changes noted - Readers should carefully consider the risk factors discussed in the **Annual Report on Form 10-K** for the fiscal year ended December 31, 2024[201](index=201&type=chunk) - The company is not aware of any **material changes** from the risk factors previously disclosed[201](index=201&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=59&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item confirms there were no unregistered sales of equity securities or use of proceeds to report during the period - No unregistered sales of equity securities or use of proceeds to report[202](index=202&type=chunk) [Item 3. Defaults Upon Senior Securities](index=59&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item confirms there were no defaults upon senior securities to report during the period - No defaults upon senior securities to report[203](index=203&type=chunk) [Item 4. Mine Safety Disclosures](index=59&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item states that mine safety disclosures are not applicable to the company's operations - Mine safety disclosures are not applicable[204](index=204&type=chunk) [Item 5. Other Information](index=59&type=section&id=Item%205.%20Other%20Information) This section discloses a director's adoption of a Rule 10b5-1 trading plan and the furnishing of a press release - Chris Rallis, a Board member, adopted a **Rule 10b5-1 trading arrangement** on May 19, 2025, covering the disposition of up to 18,406 common shares, set to terminate on June 9, 2026[205](index=205&type=chunk) - A press release announcing financial results for the quarter ended June 30, 2025, was issued on August 14, 2025, and furnished as Exhibit 99.1[206](index=206&type=chunk) [Item 6. Exhibits](index=59&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including certifications and Inline XBRL documents - Exhibits include certifications from the CEO and CFO (31.1, 31.2, 32.1), the press release for Q2 2025 results (99.1), and various Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[207](index=207&type=chunk)[209](index=209&type=chunk) [Signatures](index=62&type=section&id=Signatures) This section contains the certifying signatures of the company's Chief Executive Officer and Chief Financial Officer - The report is signed by Jeff Hackman, Chief Executive Officer, and Robert Andrade, Chief Financial Officer, on August 14, 2025[213](index=213&type=chunk)

Financial Data and Key Metrics Changes - The company reported net product sales of $9.7 million for Q2 2025, representing a 33% increase year-over-year and a 10% increase sequentially, marking the highest quarterly net product sales in the company's history [14][20][24] - Total cash operating expenses for the quarter were approximately $11 million, an increase of roughly $2 million compared to Q1 2025, driven by ongoing investments in marketing and additional headcount [22][24] Business Line Data and Key Metrics Changes - The company achieved three consecutive quarters of growth in Pedmark sales, with the addition of 14 new accounts in Q2, including large community oncology groups [15][20] - The company is focused on establishing Pedmark as the standard of care for cisplatin-induced ototoxicity (CIO) prevention, with positive feedback from existing accounts strengthening confidence in clinical value [10][11] Market Data and Key Metrics Changes - The AYA (adolescent and young adult) market is identified as significantly larger than the pediatric market, with approximately 20,000 patients treated with cisplatin in that demographic [31] - The company is seeing strong momentum in both large community practices and academic centers, indicating a growing recognition of the need for Pedmark [9][10] Company Strategy and Development Direction - The company aims to stabilize the business and build a foundation for sustainable growth, focusing on increasing awareness and adoption of Pedmark [6][8] - The strategic imperatives include enhancing patient support services, cementing Pedmark as the standard of care, and expanding educational efforts beyond oncologists to other healthcare professionals [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the scalability of the business model and the growing demand for Pedmark, anticipating significant quarterly growth in 2025 [20][21] - The company is optimistic about the partnership with Norgene in the EU, expecting to provide updates on milestones and royalties in future quarters [21][40] Other Important Information - The company has made significant progress with payers and providers to ensure smoother coverage and fewer barriers for treatment sites [12] - The company plans to ring the closing bell at NASDAQ on September 5, 2025, symbolizing its mission to help patients [14] Q&A Session Summary Question: Can you share the active prescribers number, particularly within AYA? - The company does not disclose cumulative active prescriber numbers but acknowledges the importance of protecting relationships with accounts [28][30] Question: What is the mix of new and repeat customers? - Initially, the company focused on new customers, but there is now a shift towards a higher percentage of repeat customers as the business grows [44][46] Question: Can you elaborate on the Japanese market opportunity? - Japan represents about a third of the size of the U.S. and Europe in terms of CIO usage, with ongoing discussions about regulatory approaches and potential partnerships [49][50] Question: What are the expectations for operating expenses in the second half of the year? - The company expects cash operating expenses to decrease in the second half of the year, consistent with previous years [55][56] Question: How proactive has the FDA been regarding compliance with guidance on Pedmark? - The FDA has been supportive of the use of Pedmark and continues to emphasize its status as the only FDA-approved product for preventing cisplatin-induced hearing loss [70][71] Question: What is the timeline for the Norgene partnership in the EU? - The Norgene partnership has launched in the UK and is expected to expand to other EU markets early next year, with significant enthusiasm for the product [74][75]