On March 21, 2024 Fennec Pharmaceuticals Inc. (NASDAQ:FENC; TSX: FRX), a specialty pharmaceutical company, reported its financial results for the fiscal year ended December 31, 2023 and provided a business update (Press release, Fennec Pharmaceuticals, MAR 21, 2024, View Source [SID1234641408]).
Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:
Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing
Schedule Your 30 min Free Demo!
"It was an exciting year for Fennec given the strong performance with PEDMARK in the first full fiscal year following its U.S. commercial launch. We are pleased with our execution against strategic plans and our momentum in 2023, which sets the stage for further success in 2024 and beyond. We also received European Commission and U.K. approvals of PEDMARQSI, which led to the recent announcement of an exclusive licensing agreement with Norgine for Europe, Australia and New Zealand," said Rosty Raykov, Chief Executive Officer of Fennec Pharmaceuticals. "We have significantly strengthened our balance sheet through the agreement with Norgine, and we remain dedicated to further growing our revenues as we expand the availability of PEDMARK to patients and providers globally."
Recent Developments and Highlights:
· Entered into exclusive licensing agreement to commercialize PEDMARQSI in Europe, Australia and New Zealand. Fennec received approximately $43 million upfront and has the potential to receive up to approximately $230 million in additional commercial and regulatory milestones, and double-digit tiered royalties up to the mid-twenties. PEDMARQSI was granted EU marketing authorization by the European Commission in June 2023, and received UK approval from the MHRA in October 2023.
· Achieved PEDMARK net product revenue of approximately $9 million and $21 million for the fourth quarter and full year 2023, respectively. Additionally, anticipate continued increasing utilization of the earlier endorsement from the NCCN for PEDMARK in the adolescent and young adult (AYA) population.
· In January 2024, the FDA issued a public reminder to healthcare providers that PEDMARK (sodium thiosulfate injection) is not substitutable with other sodium thiosulfate products as explicitly directed in its prescribing label.
Financial Results for the Fourth Quarter and Fiscal Year Ended December 31, 2023
· Net Sales – Net product sales of $21.3 million in fiscal 2023 compared to $1.5 million in 2022. The Company had gross profit of $20.0 million for fiscal year ended 2023. The increase in sales reflects strong growth in new patient starts and accounts.
· Cash Position – Cash and cash equivalents were $13.2 million as of December 31, 2023. There was a $10.5 million decrease in cash and cash equivalents between December 31, 2023 and December 31, 2022 as a result of cash outlays for operating expenses related to the promotion and marketing of PEDMARK, general and administrative expenses and the preparation for the commercial launch of PEDMARQSI in Europe. These cash outflows were offset by cash inflows primarily from product sales. In addition, as announced this week, we received approximately $43 million from the licensing of Europe, Australia and New Zealand to Norgine. Inclusive of these events, the pro forma December 31, 2023 cash balance is in excess of $55 million. We anticipate that our cash, cash equivalents and investment securities as of December 31, 2023, when coupled with PEDMARK revenue assumptions and the recently announced license agreement for Europe, will be sufficient to fund our planned operations for at least the next twelve months.
· Research and Development Expenses (R&D) Expenses – R&D expenses decreased by $3.5 million in fiscal 2023 as compared to fiscal 2022. The Company reduced research and development costs when it received FDA approval of PEDMARK in September 2022. The majority of traditional research and development expenses associated with PEDMARK are now recorded as general and administrative expenses or capitalized into inventory and eventually recorded to costs of product sales.
· Selling and Marketing Expenses – Selling and marketing expenses include remuneration of our sales and marketing employees, dollars spent on marketing campaigns (sponsorships, trade shows, presentations, etc.), and any activities to support marketing and sales activities. The Company recorded $12.1 million in selling and marketing expenses in fiscal 2023, compared to $2.8 million in fiscal year 2022.
· General and Administrative (G&A) Expenses – For fiscal 2023, G&A expenses increased by $2.3 million compared to fiscal 2022. Non-cash expenses associated with equity remuneration increased by $1.4 million in fiscal year 2023 over 2022. Payroll and benefits related expenses rose by $1.1 million in fiscal 2023 compared to fiscal 2022. There was an increase in consulting and professional costs of $0.8 million in fiscal 2023 over fiscal 2022.
· Net Loss – Net losses for the fourth quarter and year ended December 31, 2023, of $2.7 million ($0.10 per share) and $16.0 million ($0.60 per share), respectively, compared to $6.9 million ($0.26 per share) and $23.7 million ($0.90 per share), respectively, for the same periods in 2022.
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 audited, condensed consolidated financial statements for the period ended December 31, 2023, 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.
Audited Consolidated
Statements of Operations:
(U.S. Dollars in thousands except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31, December 31, December 31,
2023 2022 2023 2022
Revenue
PEDMARK product sales, net $ 9,735 $ 1,535 $ 21,252 $ 1,535
Cost of products sold (685 ) (86 ) (1,259 ) (86 )
Gross profit 9,050 1,449 19,993 1,449
Operating expenses:
Research and development 32 117 56 3,531
Selling and marketing 3,868 2,785 12,123 2,785
General and administrative 6,968 4,682 20,585 17,722
Total operating expenses 10,868 7,584 32,764 24,038
Loss from operations (1,818 ) (6,135 ) (12,771 ) (22,589 )
Other (expense)/income
Unrealized foreign exchange gain (loss) 2 (58 ) 5 (9 )
Amortization expense (70 ) (70 ) (287 ) (149 )
Unrealized gain (loss) on securities 4 (3 ) (39 ) (184 )
Interest income 115 153 441 195
Interest expense (915 ) (744 ) (3,394 ) (978 )
Total other (expense)/income (864 ) (722 ) (3,274 ) (1,125 )
Net loss $ (2,682 ) $ (6,857 ) $ (16,045 ) $ (23,714 )
Basic net loss per common share $ (0.10 ) $ (0.26 ) $ (0.60 ) $ (0.90 )
Diluted net loss per common share $ (0.10 ) $ (0.26 ) $ (0.60 ) $ (0.90 )
Weighted-average number of common shares outstanding, basic 26,833 26,275 26,574 26,275
Weighted-average number of common shares outstanding, diluted 26,833 26,275 26,574 26,275
Audited Consolidated Balance Sheets:
(U.S. Dollars in thousands)
December 31, December 31,
2023 2022
Assets
Current assets
Cash and cash equivalents $ 13,269 $ 23,774
Accounts receivable, net 8,814 1,545
Prepaid expenses 583 770
Inventory 2,156 576
Other current assets 21 63
Total current assets 24,843 26,728
Non-current assets
Deferred issuance cost, net amortization 2,021 211
Total non-current assets 2,021 211
Total assets $ 26,864 $ 26,939
Liabilities and shareholders’ (deficit) equity
Current liabilities:
Accounts payable $ 3,799 $ 2,390
Accrued liabilities 3,754 2,219
Total current liabilities 7,553 4,609
Long term liabilities
Term loan 30,000 25,000
PIK interest 1,219 260
Debt discount (286 ) (361 )
Total long term liabilities 30,933 24,899
Total liabilities 38,486 29,508
Commitments and Contingencies
Shareholders’(deficit) equity:
Common stock, no par value; unlimited shares authorized; 26,361 shares issued and outstanding (2022 -26,014) 144,307 142,591
Additional paid-in capital 60,073 56,797
Accumulated deficit (219,245 ) (203,200 )
Accumulated other comprehensive income 1,243 1,243
Total shareholders’ (deficit) equity (11,622 ) (2,569 )
Total liabilities and shareholders’ (deficit) equity $ 26,864 $ 26,939
Fiscal Year Ended
Working capital
Selected Asset and Liability Data: December 31,
2023 December 31,
2022
(U.S. Dollars in thousands)
Cash and equivalents $ 13,269 $ 23,774
Other current assets 11,574 2,954
Current liabilities (7,553 ) (4,608 )
Working capital $ 17,290 $ 22,120
Selected Equity:
Common stock and additional paid in capital 206,380 199,388
Accumulated deficit (219,245 ) (203,200 )
Shareholders’ equity (11,622 ) (2,569 )
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.i
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.ii 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.iii
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.