Fennec Pharmaceuticals Inc. Price & Performance (FENC)

In addition, any forward looking statements made on this call represent our views only as of today. And should not be relied upon as representing our views as of any subsequent date.

We specifically disclaim any obligation to update or revise any forward looking statements. This conference call is being recorded for audio rebroadcast on Fennec website www.fenikpharma.com, where it will be available for the next thirty days. Now it is my pleasure to turn the call over to Jeff Hackman. Jeff? Thank you, Robert, and good morning, everybody.

Today, I'm going to discuss our continued progress including updates on our market expansion efforts, new academic endorsements, our new demographic interest, our educational investments, our operating efficiency, and our strong overall execution all we believe will translate into significant shareholder value in 2025 and beyond.

In 2024, it marked the beginning of a foundational transformation for Fennec. Setting the stage for our Pedmark strategy. It's a strategy that we'll be utilizing throughout 2025 to realize our next phase of growth. With our recent key management and commercial hires in Q3 and Q4, we strengthened our leadership team. And we enhanced our expertise We are well positioned now to drive execution and excellence in the field and we are already seeing encouraging momentum in early twenty twenty five. As a reminder, our first imperative was to increase our awareness around the unmet need for continuing to and continuing to drive oncologists to recognize the importance of preventing cisplatin induced ototus toxicity or CIO. Second imperative is establishing and cementing PEDmark as the standard of care for all CIO prevention. Next is Pedmark's adoption. Beyond just the oncologist, [indiscernible] gain confidence throughout the office first and continued positive experiences with Pedmark. Fourth is access. Having advocacy, payers and providers be ensured that we have seamless access for our product. And last, an equally important pillar is activation. Patients and caregivers are activated throughout the disease One of the most exciting developments that we continue to see is the interest and adoption and young adult segment.

Or AYA. As mentioned previously, this opportunity for AYA is significant. In The U. S, we estimate it's approximately 20,000 cisplatin chemotherapy patients. That are treated each year with the primary tumor types of thyroid, breast, germ cell and testicular. Additionally, in contrast to the pediatric market, and based upon our market research, The U. S. AYA oncology landscape is shaped by a combination of both academic and community centers across the nation. The key academic institutions play a critical role for establishing the treatment framework. With 72 NCI designated academic centers, that see high volume of patients across the country. In contrast, the remaining patients are treated at nearly 4,000 community practices throughout the country. The market potential for AYA is greater than the size of the pediatric market and has a favorable reimbursement profile. Through outpatient reimbursement efforts. We continue to be very encouraged by the response to Pedmark from the AYA treating physicians. We are finding that most of them are acutely aware of hearing loss caused by cisplatin, but many of them are still not aware of the availability and prevention that and treatment that Pedmark offers. I'm pleased to report that Pedmark is gaining traction in select major academic centers across the country.

Institutions such as UCLA in California, Fred Hutchinson Cancer Center in Seattle, Mount Sinai in New York City, and Henry Ford Cancer Institute in Detroit, just to name a few examples. All have begun integrating Pedmark into their treatment plans. Further validating the clinical utility and expanding patient access in real world settings. These experiences have been very positive and we are pleased with both the new and continued interest in Pedmark as the first and only approved therapy for the prevention of hearing loss related to Cisplatin. These centers are critical in setting clinical standards. So this transition and endorsement by key institutions is a powerful signal for broader market acceptance for our product. This also opens opportunities in research settings positioning us well for potential future expansion. As a reminder, Pedmark is indicated to reduce the risk of ototoxicity associated with cisplatin in pediatric patients one month of age and older. With localized non metastatic solid tumors. Pedmark is recommended for the AYA population by the National Comprehensive Cancer Network or the NCCN. It has a 2a endorsement. In addition, with this recommendation as of the end of twenty twenty four, all medical compendia have received Fennec clinical updates.

I'm pleased to announce that the AhFS, the largest online platform for pharmacists has updated its content to reflect and differentiate Pedmark in accordance with our labeling. We anticipate additional Compendia listings in the early twenty twenty five and look forward to providing you all updates. Further, we continue to advance our efforts to have Pedmark added to the NCCN drug and Biologics Compendium, a key step in further expanding access and reimbursement pathways. [indiscernible] the process involves multiple steps. Beginning with our request to modify the NCCN adolescent and young adult guidelines. To expand consideration for Pedmark in platinum based regimens beyond cisplatin. In parallel, we've also submitted a formal inclusion request to the NCCN for the neuroblastoma guidelines. Since inclusion in the compendium requires product recognition in a cancer specific NCCN guideline, the submission is a key milestone. A decision is anticipated by mid-twenty five and we are actively engaging with key stakeholders to support a positive outcome here. In terms of the commercial launch and the progress, we are making significant steps outside The U. S. As previously announced, we have an exclusive licensing agreement that we've executed in March of last year twenty twenty four with Norgene.

To commercialize Pedmarcci. The product is now commercially launched in both Germany and The UK in early twenty twenty five. In The UK, NICE published the list price of Pedmarcie is £8,277 In Germany, the current public price is more than €10,500 per vial. And that final price in Germany is anticipated to happen at the end of twenty twenty five. Both markets are generating additional revenue source for Fennec in 2025, with potential for the achievement of the first two sales royalty and related milestones by the end of twenty twenty five. We look forward to providing you all updates to these recent launches as we move forward in Europe. Also on the ex U. S. Front, is the investigator initiated trial in Japan, We call it STSJ-one. It's evaluating PEDmark and was all currently enrolled and completed with enrollment in October 2024. The clinical trial STSJ-one evaluates the efficacy and safety of Pedmark in reducing ototoxicity induced by cisplatin in children and AYA's with localized solid tumors. The primary endpoint of this trial is to assess the frequency of hearing impairment at the end of the treatment. Results of the trial are expected by the fall of twenty twenty five with the potential evaluation of both registration and partnering or licensing of Pedmark in Japan thereafter.

Further, we partnered with infamous InPharmus for the distribution of Pedmark in Turkey and in the Gulf cooperative Council countries. These milestones collectively mark an important step in achieving Fennec's mission of expanding our access to Pedmark to cancer patients across the globe. Who all have risk of hearing loss due to cisplatin. Our CIO. I want to take a moment now to just reflect on why this work and what we're doing here at Pedmark truly matters. Or what we're doing here at Fennec truly matters. I recently shared at an all company Fennec national meeting that we're not just working to preserve hearing, we're preserving connections, memories and life itself. At Fennec, we are constantly reminded through our daily interactions with both physicians and patients of the significant importance of protecting hearing for people who are going through cancer treatment. Every cancer patient who makes it through treatment and could still hear the laughter of a loved one or just everyday sounds, because of the work that we are doing to raise awareness and the importance of CIO and Pedmark. The progress we are sharing with you today is more important than just the milestones and numbers. It's making real impact on patients lives and their families.

I'm incredibly proud of our team here at Fennec and excited about our road ahead. With that, I'm going to turn it back over to Robert.

Thank you, Jeff. Our press release contains details of our financial results for the fourth quarter and full year of 2024. Which can be viewed on the Investors and Media section of our website. Rather than read through all of those details, my comments today will focus on some key financial results. At Fennec, we have been consistent with a strategic and disciplined approach to spending. We are pleased to report that over the past twelve months, during a time of change and evolution at the company, we grew revenues by approximately 40% and importantly, managed to burn only approximately $600,000 in cash for the fourth quarter of twenty twenty four. In the fourth quarter of twenty twenty four, the company reported $7,900,000 in net product sales. Or a quarterly growth rate of approximately 13%. For the full fiscal year 2024, the company recorded $29,600,000 in net product sales, compared to $21,300,000 dollars in 2023. [indiscernible] As we approach fiscal year 2025, we are focused on growing net product sales. And anticipate the most significantly quarter growth in the second half of twenty twenty five, when all the foundational pillars and initiatives we are putting in place are expected to materially impact the growth of Penmark.

The company recorded $3,900,000 in selling and marketing expenses in the fourth quarter of twenty twenty four, compared to $4,600,000 in the third quarter of twenty twenty four. [indiscernible] For the fiscal year 2024, the company recorded $18,400,000 in selling and marketing expenses compared to 12,100,000.0 in fiscal year 'twenty three. With the increases largely related to increased payroll and additional marketing expenses as we focused on expanding our outreach. And awareness to the AYA population. For the fourth quarter of twenty twenty four, G and A expenses decreased 2,900,000.0 compared to the third quarter of twenty twenty four. [indiscernible] largely due to non cash equity compensation and the one time severance paid to the previous CEO in the third quarter. For the fiscal year twenty twenty four, G and A expenses increased by $2,400,000 compared to fiscal twenty twenty three. [indiscernible] as a result of the increased European pre commercialization expenses and expenses associated with the Norgene transaction. For the full year of 2024, the company spent approximately $33,000,000 in cash operating expenses, [indiscernible] dollars in cash expenses related to the pre commercialization of Europe We and related Norgene transaction expenses. We would anticipate the full year cash operating expenses to be similar in 2025.

This includes a step up in marketing expenses and increased headcount while there will be an elimination of any pre commercialization expenses. Related to Europe We or Norgen expenses that we incurred in 2024. [indiscernible] As is customary with our business, cash operating expenses are higher in the first half of the fiscal year largely as a result of commercial and marketing spending fiscal year spending patterns. And finally, our cash position. Cash and cash equivalents were $26,600,000 as of 12/31/2024. I would like to remind those that in December 24, Fennec announced the early partial repayment of a significant portion of its debt to Petrocor. The early repayment of $13,000,000 of the company's approximately $32,000,000 outstanding convertible debt facility is a financial and strategic action that optimizes the company's balance sheet. And overall capital structure. While effectively saving approximately $1,500,000 in future annual interest payments and eliminating potential dilutive shares. As mentioned, we were very pleased with our operational efficiency in the fourth quarter. While reporting a cash burn of only $600,000 For the full fiscal year 2024, was approximately a $13,000,000 increase in cash and cash equivalents. [indiscernible] Due primarily to the $43,000,000 in upfront proceeds from the Nordyne transaction [indiscernible] Net product revenues collected offset by operating expenses and the $13,000,000 debt pay down in December 24.

Additionally, as a reminder, the next milestone related to our Nordyen agreement will be obtaining final pricing approval in Germany. [indiscernible] in which Fennec will have the opportunity to receive a €10,000,000 milestone. And thereafter a sales milestone for the full fiscal year in which Fennec will have the opportunity to receive a €5,000,000 milestone. With the Pedmark KZ launch underway in two important markets in The UK and Germany, We look forward to providing further updates as the year progresses. And operator, with that, we will now open up the call for questions.

And our first question will come from Chase Nikkerbacher with Craig Hallum. Your line is open.

Good morning. Thanks for taking the questions. Just first, as it relates to Q4, can you just give us a sense of a little bit more specifics? Did the pediatric business return to sequential growth in the quarter and then kind of backing into it, can you give us a sense for what the AOA contribution was in Q4?

Yes. Hi, Jace. How are you? Thanks for the question. Yes, we continue to see growth in the pediatric segment. We're pleased with the momentum that was created earlier in that segment and we continue to be that's an important part of our business. AYA has jumped out to be an incredible opportunity for us. And so as we provide it, we won't give a breakdown of that of the details of between how each has contributed to that. But our growth really is coming from both.

Got it. And so you mentioned kind of a second half and there. Is that just NCC and compendia related And then I guess just an overarching question, Jeff. I mean, mean, it's good to hear you talk about kind of the next phase of growth on the call here. With AYA. But AYA is not a a business that we have a great visibility into. Can you maybe just give us a sense to what degree that you kind of expect inflection or seeing inflection in 1Q? And then what investors' expectation should be kind of in 2025 for what potential growth we could see in that segment?

Sure. In the obviously, the absence of given any guidance we really we believe the opportunity is significant. This is not a purely pediatric opportunity anymore for the for the product. And those those institutions that I mentioned which there are more that are adopting Pedmark in the AYA population will continue. So the reason why going to your question, the reason why we are looking as second half of the year continuing to see accelerated growth is just because we're building the business here. And the business builds on itself and we'll continue to see that. We'll invest here in the in 2025 to do that. As Robert said, But the expansion really focuses on this And I guess just to close-up there, I mean, are you seeing enough so far in Q1 to to kind of give you confidence that that growth is going to show its rear its head in 2025 or just maybe speak specifically what you've seen in the first couple of months of Q1?

We've seen it and we're expecting it to continue, Chase. Thank you.

And our next question will come from Raghuram Selvaraju with H. C. Wainwright. Your line is open.

Thanks very much for taking my questions and congratulations on all the recent progress.

Just wanted to ask in particular about the progress so far that Norgeen has been making in Europe particular, if you could provide us with any kind of granularity regarding relationships that have been built with key centers of excellence in European countries how you are expecting the broader rollout to occur with what cadence and which countries you anticipate being the most likely contributors to European revenue and therefore the European royalty stream? And if you could also maybe talk about whether the AYA Population Is Likely To Be In Any Way A Comparable Driver To Revenue Uptake In Europe? Relative to The United States? Thanks.

Sure. We've following the licensing agreement, and the announcement with Norgene, as you guys know, we've now the product is commercially available. So, and it just really they're just really getting it off the ground both in The U. K. And Germany. Which will be two probably of the largest markets in Europe, as you guys know, as you kind of look at the kind of the big five countries there. We issued a press release when we got the guidance from NICE as well as the German the German launch. Both of these markets now are progressing well. We continue to be really close. Norgene to follow these updates and the launch progress. And we'll continue to update you more as more countries get approved and come on board with the Norgene Norgene opportunity. In In relation to AYA, that's something obvious Neurgein will start to kind of think through. It's a little bit different in Europe obviously, as you can imagine, and they've got a they have a different structure of how they would get to that population. But right now, this product is approved through patients aged one month through 17 years of age with localized non metastatic solid tumors in Europe.

And then just very briefly, when you think about going forward in The United States with Tedmark sort of leading the line Has there been any kind of update in your thinking regarding business development initiatives potential partnership opportunities, ways to potentially expand your presence in areas where you already are effectively in front of key prescribers Are you seeing outside or within No, no, within The U. S. [indiscernible] Yes, we've again, we you know our indication and where we are and the NCCN guidelines allow us obviously in the AYA population to be able to expand our business there. We've had discussions with key academic institutions in The U. S. Talking about expanding that that opportunity. And we're going to continue to listen and potentially look at what that is. We and we'll get to you with updates on if we as we kind of enter into some of these discussions with some of these academic institutions.

Thank you.

And our next question will come from Sudan Loganson with Stephens. Your line is open.

Hi, everyone. This is Felix Ampuma in for Sudan Luganathan. Congrats on the earnings call.

And for the progress that you're making.

I have two or three questions First and foremost, can you please comment on the competitive landscape for Pedmark right now, especially in The U. S. Market? And if you can comment a bit more on pricing. I know you did make mention of the pricing in for U. S. And how you [indiscernible] how is the prescription of the drug going? Right now In terms of SG and A, how should we think about it going forward? It looks as if it came down a bit And also the payment that was made to the ex CEO would that lead to operational expenses coming down a bit more?

Maybe Robert, do you want to take this? Second part and I can jump back into the first?

Sure. Hey, Fennec. How are you?

Good. On the SG and A, as mentioned in my prepared remarks, 2024 saw additional expenses of approximately $8,000,000 including the Norgen transaction including European pre commercialization expenses and as you mentioned, CEO severance. So on a year over year basis, we anticipate that aggregate expenses are those about $33,000,000 to be the same. And that's largely as a result of additional marketing and awareness expenditures that we're making and focus both for the AYA market and just for Penmark in general. As well as the increased headcount that we have from some of the commercial expertise that we brought on board. So in aggregate, the same, but I think I gave you some of the ebbs and flows in terms of why there's pluses and minuses.

Okay. Thanks.

Yes.

And related to the cost of Pedmark your question is obviously PEDmark, it varies from patient to patient depending on a bunch of factors, right? Weight based dosing, vial utilization, duration of treatment, obviously cost of treatment, We've said this in the past that the WACC of Pedmark the wholesale acquisition cost of Pedmark is $11,000 per vial. And the number of vials Pedmark, that's administered per patient, it varies. Based on how many doses of cisplatin, for example, it's given or and that can range we've seen from six vials of Pedmark up to potentially 40 vials with larger and some of the older patients. In the AYA market. So it's very it just varies.

And we are seeing favorable reimbursement from coverages right now across both commercial and government, both Medicaid payers and across inpatient and outpatient settings. Which is really, really good news, especially as we enter into the AYA market.

Hope that answers your question.

Yes, it does. If you can elaborate a bit more on the competitive landscape, and other competing formulations that you are aware of and how I mean, any idea in terms of the Yes, we don't give a breakdown of the splits of the competitive market. Right now, as you guys know, the compound at STS product still continues to be available, mostly I would say the majority of it is used in the pediatric settings. We really don't see any of that really any of that product or the compounding of that product in the community settings. And as you can see, I announced some of the institutions, the UCLA's, the Mount Sinai's, the Fred Hutch's, as you can see, those are margins institutions that have adopted Pedmark. And that's great news, especially when there is a compounding competitor that's available. So So I would say that we're making progress there. And this will continue to be progress that will we'll talk about as 2025 continues.

One last question, if you may. I think you made mention of label expansion. Will you be running clinical trials in all those labels that you potentially hope to expand into? Those indications?

Well, no, we'll update you more on that. That's a great question. Those are developments that are happening as we speak. Here in 2025. I can tell you that I'm open to having those discussions with institutions. I think it's an area where we have to play and continue to to grow PEDmark. So stay tuned for that. That's a great question.

Okay.

Thank you more as it comes.

Congrats again.

Thanks. You're welcome.

And the next question will come from Michael Okunwitsch with Maxim Group. Your line is open.

Hey, guys. Thank you so much for taking my questions today. Congrats on the progress.

Thank you.

Thanks, Michael.

Just a couple of quick ones from me. So thinking about Japan, right, do you expect that you'll need to have that data in hand to gain a partner or is there a potential you could see progress on the partnering front as we head into that data?

Yes. You'd always like to have the data first. Right? But we have been approached and have had some discussions. And so those will I think about the business development of other countries like this, like Japan is a it's a long process. But it's a process that we've begun to have conversations with. And as the data as we get information and you get hints of of the data and it's and the positive outcome of that data, that all is information that will lend to a much better value for us. And so that process is going to continue all throughout 2025 until we get the final data.

All right. Thank you. And then thinking about that kind of bifurcation you mentioned in the AY Ag segment between [indiscernible] and the more concentrated 72, I think you said major centers. How do you prioritize your commercial efforts between those two settings?

Yes. It's interesting because what we're finding is is the those 72 centers that we talked about as well as these 20,000 patients are in those 4,000 oncology offices around the country. It kind of break it's breaking out very almost as we start to see this as a very balanced where these patients are both in the community and in the academic centers. So these academic centers play an important role. And those institutions are really key for us, but it's not we have to make sure that we're out in these in these 4,000 oncology community centers. It's It's critically important for us to be there as well. When I mentioned earlier in the call about the lower awareness levels, in the AYA space, that's a great opportunity for us. Many of these physicians that we're talking to understand the issue with Cisplatin, but in a lot of cases, they don't they didn't have an alternative to be able to help with CIO. With these patients and now they do. And so this is a an exciting opportunity for us. In both the academic institutions and the community setting.

Thank you very much. I appreciate the additional color. You got it.

Thanks, Michael.

I show no further questions in the queue at this time. I would now like to turn the call back over to Jeff Heckman for closing remarks. Yes, perfect. Thank you and thanks for your questions everybody. It was truly an exciting year for us and for Fennec given the strong performance of Pedmark. Especially this is the second full fiscal year following The U. S. Commercial launch. We're pleased with our execution. Especially against the foundational pillars that I mentioned earlier. And this sets us up for an incredible 2025 and beyond. We're also significantly strengthened and we remain dedicated to further growing our revenues and expanding our availability of Pedmark. To patients and providers globally. So I want to thank you all today for joining the call and the support of Fennec. We look forward to updating you all on our commercial progress and an important corporate milestones on future quarterly calls. Thanks everybody. [indiscernible]