FENC

Business Context and Reporting Period

Fennec Pharmaceuticals Inc. (FENC) is a commercial-stage specialty pharmaceutical company focused on preventing cisplatin-induced ototoxicity (CIO) in pediatric patients. Its sole commercial product is PEDMARK® (sodium thiosulfate injection), approved by the FDA in September 2022 and the European Commission in June 2023 (branded as PEDMARQSI®). The company operates as a single-product entity with a virtual manufacturing model, relying on third-party contract manufacturers. This filing covers the fiscal year ended December 31, 2025.

Key Financial Metrics

Note: All financial figures are in thousands of U.S. dollars unless otherwise noted.

Material Changes vs. Prior Period

• Revenue Composition: Total revenue decreased by 6.1% to $44.6 million. This decline was driven by the absence of $18.0 million in one-time licensing revenue from the Norgine agreement recorded in 2024. However, net product sales increased by 50.9% to $44.6 million, reflecting expanded market penetration and access programs.
• Profitability: The company reported a net loss of $9.7 million in 2025, compared to a net loss of $0.4 million in 2024. The widening loss was primarily due to the loss of licensing revenue, increased General and Administrative (G&A) expenses ($5.2 million increase), and a $2.0 million loss on debt extinguishment.
• Debt Elimination: In November 2025, the company redeemed all outstanding senior secured convertible notes (approximately $21.7 million) using proceeds from a public equity offering. Consequently, interest expense dropped by $2.0 million, and the company ended the year debt-free.
• Operating Expenses: G&A expenses rose significantly due to higher consulting fees and equity-based compensation. Selling and marketing expenses remained relatively flat ($18.6 million vs. $18.4 million), while R&D expenses decreased slightly to $0.25 million as the focus shifted to commercialization.

Guidance, Outlook, and Risks

• Liquidity and Runway: Management stated that cash and cash equivalents of $36.8 million, combined with accounts receivable, are sufficient to fund operations for at least the next 12 months.
• Commercialization Strategy:
  • U.S. Market: Continued expansion of the sales force and patient support programs (Fennec HEARS®) to drive adoption in pediatric and Adolescent/Young Adult (AYA) oncology centers.
  • Europe: Partner Norgine launched PEDMARQSI® in Germany and the U.K. in 2025, with additional EU launches expected in 2026. Fennec received a $43 million upfront payment in 2024 and is eligible for up to $230 million in milestones and tiered royalties.
  • Japan: Positive topline results from the STS-J01 investigator-initiated trial were announced in December 2025, prompting a regulatory registration strategy and potential partnership discussions.
• Intellectual Property & Litigation:
  • Cipla Settlement: On March 16, 2026 (subsequent to year-end), Fennec settled litigation with Cipla regarding a generic ANDA. Under the terms, Cipla agreed not to enter the market with a generic version until September 1, 2033.
  • Exclusivity: PEDMARK holds Orphan Drug Exclusivity in the U.S. until September 2029 and Pediatric Use Marketing Authorization (PUMA) in the EU until May 2033.
• Risks: Key risks include dependence on a single product, the need for continued payer reimbursement, reliance on third-party manufacturers, and the potential for future capital requirements if commercialization costs exceed projections.

Investor Verification Checklist

• Reimbursement Rates: Verify the actual net price realization after rebates, chargebacks, and co-pay assistance, as these allowances totaled $9.2 million in 2025.
• Debt-Free Status: Confirm the full extinguishment of the Petrichor convertible notes and the absence of remaining covenants or interest obligations.
• Norgine Milestone Progress: Monitor Norgine's commercial performance in Europe to assess the probability of achieving the $230 million in potential milestone payments.
• Japan Partnership: Track the outcome of partnership negotiations in Japan following the positive STS-J01 trial results.
• Generic Defense: Review the specific terms of the Cipla settlement to understand any "earlier entry" clauses that could shorten the 2033 exclusivity date.