Fennec Pharma(FENC) - 2019 Q1 - Quarterly Report

PART I: FINANCIAL INFORMATION Condensed Consolidated Financial Statements The company presents its unaudited Q1 2019 financial statements, reporting a net loss of $2.6 million Condensed Consolidated Balance Sheets Total assets decreased to $20.7 million as of March 31, 2019, driven by a reduction in cash Condensed Consolidated Balance Sheet Highlights (in thousands) | Financial Item | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $20,231 | $22,781 | | Total current assets | $20,343 | $22,950 | | Total assets | $20,657 | $22,950 | | Liabilities & Equity | | | | Total current liabilities | $1,451 | $1,637 | | Total stockholders' equity | $19,206 | $21,313 | | Total liabilities and stockholders' equity | $20,657 | $22,950 | Condensed Consolidated Statements of Operations The company reported no revenue and a net loss of $2.6 million for Q1 2019, driven by higher R&D expenses Statement of Operations Summary (Unaudited, in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2019 | Three Months Ended Mar 31, 2018 | | :--- | :--- | :--- | | Revenue | $0 | $0 | | Research and development | $1,671 | $689 | | General and administrative | $1,009 | $1,102 | | Loss from operations | $(2,680) | $(1,791) | | Net loss | $(2,626) | $(1,568) | | Basic and Diluted net loss per share | $(0.13) | $(0.09) | Condensed Consolidated Statements of Cash Flows Net cash used in operations was $2.5 million, leading to a period-end cash balance of $20.2 million Cash Flow Summary (Unaudited, in thousands) | Cash Flow Activity | Three Months Ended Mar 31, 2019 | Three Months Ended Mar 31, 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,479) | $(1,727) | | Net cash (used in)/provided by financing activities | $(71) | $186 | | Decrease in cash and cash equivalents | $(2,550) | $(1,541) | | Cash and cash equivalents - End of period | $20,231 | $26,719 | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased by $2.1 million to $19.2 million, primarily due to the quarterly net loss - The total stockholders' equity decreased by approximately $2.1 million during the first quarter of 2019, mainly driven by the net loss of $2.6 million[21] Notes to the Condensed Consolidated Financial Statements The notes detail the company's focus on PEDMARK, its financial condition, and key financing agreements - The company's primary focus is the development of PEDMARK (a unique formulation of Sodium Thiosulfate) to prevent hearing loss in pediatric cancer patients undergoing platinum-based chemotherapy[25] - Fennec entered into a $12.5 million Loan and Security Agreement with Bridge Bank, available upon NDA approval of PEDMARK by September 30, 2020[28][71] - Despite a Q1 2019 operating loss of $2.7 million and an accumulated deficit of $133.9 million, the company believes its cash and new debt facility are sufficient to fund activities for the next 12 to 15 months[27][29] - The company has an exclusive worldwide license agreement with Oregon Health & Science University (OHSU) for intellectual property related to thiol-based compounds, including STS, for use in oncology[63] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses PEDMARK's clinical trial results, NDA submission, and financial performance for Q1 2019 - The company's sole lead product candidate is PEDMARK, a unique formulation of sodium thiosulfate (STS) for the prevention of cisplatin-induced hearing loss in children[76] - A rolling New Drug Application (NDA) for PEDMARK was initiated in December 2018, with a potential commercial launch anticipated in the second half of 2020[84] - The pivotal Phase 3 SIOPEL 6 trial showed that adding STS to cisplatin chemotherapy significantly reduced hearing loss (33.0% with STS vs 63.0% without) with a relative risk of 0.52 (P=0.002)[89][91] Results of Operations (in thousands) | Expense Category | Three Months Ended Mar 31, 2019 | Three Months Ended Mar 31, 2018 | Change | | :--- | :--- | :--- | :--- | | Research and development | $1,671 | $689 | $982 | | General and administration | $1,009 | $1,102 | $(93) | | Net loss | $(2,626) | $(1,568) | $(1,058) | - The increase of $982 thousand in R&D expenses in Q1 2019 was primarily due to drug manufacturing and regulatory registration activities for PEDMARK[105][118] - As of March 31, 2019, the company had $20.2 million in cash and cash equivalents, believed to be sufficient to meet cash requirements for the next 12 to 15 months[101] Quantitative and Qualitative Disclosures about Market Risk The company's market risk is primarily related to its conservative investment portfolio and foreign currency exposure - The company's investment policy is conservative, prioritizing the preservation of principal and limiting investments to high-quality, short-maturity securities[126] - The company is subject to foreign currency risk from purchases denominated in Canadian dollars and does not use derivative instruments for hedging[127] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of the end of the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2019[128] - No material changes in internal control over financial reporting occurred during the quarter[129] PART II: OTHER INFORMATION Legal Proceedings The company reports no current legal proceedings - The company has no legal proceedings to report[131] Risk Factors No material changes are reported from the risk factors disclosed in the company's latest Form 10-K - The company refers to the detailed discussion of risk factors in its Annual Report on Form 10-K and states there are no material changes[133] Recent Sales of Unregistered Securities The company reports no recent sales of unregistered securities - None[135] Default Upon Senior Securities The company reports no defaults upon senior securities - None[136] Mine Safety Disclosure This section is not applicable to the company's operations - Not applicable[138] Other Information The company reports no other information for disclosure - None[140] Exhibits This section lists the exhibits filed with the Form 10-Q, including required certifications and data files - The exhibits filed with this report include: * Certifications of the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act * The press release for the quarter ended March 31, 2019 * The Interactive Data File (XBRL)[142]