Fennec Pharmaceuticals (FENC) swings to profitability as PEDMARK sales climb in Q2 2026
Fennec Pharmaceuticals reported strong growth and a shift to profitability driven by commercialization of PEDMARK®. For the quarter ended June 30, 2026, total revenue was $17.9 million, up from $9.7 million a year earlier, including PEDMARK net product sales of $17.2 million and $0.7 million of other revenue from its PEDMARQSI® license with Norgine.
Quarterly income from operations was $1.7 million versus a loss of $2.7 million, and net income was $2.0 million versus a net loss of $3.2 million. For the first six months of 2026, revenue reached $33.0 million, with net income of $2.2 million compared to a $4.3 million loss in 2025, and operating cash flow improved to $2.4 million.
Growth was accompanied by a sharp increase in selling and marketing expense to $10.7 million in the quarter, reflecting continued U.S. commercialization and support for international expansion through Norgine. Fennec ended June 30, 2026 with $41.2 million in cash and cash equivalents and $42.4 million of stockholders’ equity, and believes existing cash plus expected revenues will fund operations for at least the next twelve months.
Positive
- Total revenue grew to $17.9 million in Q2 2026 from $9.7 million a year earlier, driven by higher PEDMARK® product sales and new licensing-related revenue, indicating rapid commercial ramp of the company’s lead asset.
- The company delivered a turnaround to profitability, with Q2 2026 net income of $1.97 million versus a $3.15 million loss in Q2 2025 and positive operating cash flow of $2.43 million for the first half of 2026.
- Fennec reported a strong liquidity position with $41.25 million in cash and cash equivalents and $60.1 million of working capital at June 30, 2026, and expects cash plus revenues to fund its operating plan for at least twelve months.
Negative
- Selling and marketing expenses rose substantially to $10.66 million in Q2 2026 from $4.78 million, consuming 66% of revenue for the quarter and 70% for the first half, signaling a high commercial cost structure.
- The business remains highly concentrated in a single product, with PEDMARK® generating $17.16 million of $17.87 million total Q2 2026 revenue and the company operating as one segment focused on PEDMARK®/PEDMARQSI®.
Key Figures
Key Terms
ototoxicity medical
contract liability financial
material right financial
Adolescent and Young Adult (AYA) oncology medical
orphan drug exclusivity regulatory
Earnings Snapshot
FAQ
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AI-generated analysis. How Rhea-AI works. Not financial advice.
Table of Contents
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
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For the transition period from____ to ____
Commission File Number:
(Exact Name of Registrant as Specified in Its Charter)
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Registrant’s Telephone Number, Including Area Code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer | ☐ |
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| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES
As of August 11, 2026, there were
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TABLE OF CONTENTS
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PART I: FINANCIAL INFORMATION | 3 |
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Item 1. Condensed Consolidated Financial Statements | 3 |
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Condensed Consolidated Balance Sheets (Unaudited) as of June 30, 2026, and December 31, 2025 | 3 |
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Condensed Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 30, 2026 and 2025 | 4 |
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Condensed Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited) for the Three and Six Months Ended June 30, 2026 and 2025 | 5 |
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Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2026 and 2025 | 6 |
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Notes to the Condensed Consolidated Financial Statements | 7 |
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | 21 |
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Item 3. Quantitative and Qualitative Disclosures about Market Risk | 32 |
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Item 4. Controls and Procedures | 32 |
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PART II: OTHER INFORMATION | 33 |
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Item 1. Legal Proceedings | 33 |
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Item 1A. Risk Factors | 33 |
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 33 |
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Item 3. Defaults Upon Senior Securities | 33 |
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Item 4. Mine Safety Disclosures | 33 |
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Item 5. Other Information | 34 |
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Item 6. Exhibits | 34 |
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Signatures | 36 |
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PART 1: FINANCIAL INFORMATION
Item 1. Financial Statements
Fennec Pharmaceuticals Inc.
Condensed Consolidated Balance Sheets
(U.S. Dollars and shares in thousands)
(Unaudited)
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Fennec Pharmaceuticals Inc.
Condensed Consolidated Statements of Operations
(U.S. Dollars and shares in thousands, except per share amounts)
(Unaudited)
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PEDMARK product sales, net | | $ | | | $ | | | $ | | | $ | |
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Total other income/(expense) | |
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Income/(loss) before provision for income taxes | | | | | | ( | | | | | | ( |
Provision for income taxes | | | | | | — | | | | | | — |
Net income/(loss) | | $ | | | $ | ( | | $ | | | $ | ( |
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Basic net income/(loss) per common share | | $ | | | $ | ( | | $ | | | $ | ( |
Diluted net income/(loss) per common share | | $ | | | $ | ( | | $ | | | $ | ( |
Weighted-average number of common shares outstanding basic | | | | | | | | | | | | |
Weighted-average number of common shares outstanding diluted | |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Fennec Pharmaceuticals Inc.
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
Three and Six Months Ended June 30, 2026, and 2025
(U.S. dollars and shares in thousands)
(Unaudited)
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Balance at December 31, 2025 |
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Equity-based compensation |
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Net income |
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Balance at March 31, 2026 |
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Restricted and performance stock release | | | | | — | | | ( | | | — | | | — | | | ( |
Net income | | — | | | — | | | — | | | | | | — | | | |
Balance at June 30, 2026 | | | | $ | | | $ | | | $ | ( | | $ | | | $ | |
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Balance at December 31, 2024 | | | | $ | | | $ | | | $ | ( | | $ | | | $ | ( |
Equity-based compensation |
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Net loss | | — | |
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Balance at March 31, 2025 |
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Stock option exercise | | | | | | | | — | | | — | | | — | | | |
Restricted stock release | | | | | — | | | ( | | | — | | | — | | | ( |
Net loss | | — | | | — | | | — | | | ( | | | — | | | ( |
Balance at June 30, 2025 | | | | $ | | | $ | | | $ | ( | | $ | | | $ | ( |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Fennec Pharmaceuticals Inc.
Condensed Consolidated Statements of Cash Flows
(U.S. Dollars in thousands)
(Unaudited)
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Net income/(loss) | | $ | | | $ | ( | |
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities: | |
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Allowance for credit losses | | | ( | | | | |
Amortization of Norgine asset | | | | | | | |
Amortization of debt discount | | | — | | | | |
Unrealized loss on securities | | | — | | | | |
Stock-based compensation | |
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Changes in operating assets and liabilities: | |
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Prepaid expenses | |
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Other non-current assets | | | | | | — | |
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Increase/(decrease) in cash and cash equivalents | | | | | | ( | |
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Cash and cash equivalents - End of period | | $ | | | $ | | |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Fennec Pharmaceuticals Inc.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(U.S. dollars and shares in thousands, except per share information)
1. Nature of Business and Liquidity
Fennec Pharmaceuticals Inc., a corporation existing under the laws of British Columbia (“Fennec,” “the Company,” “we,” “us,” or “our”) was originally formed as a British Columbia corporation under the name Adherex Technologies Inc. and subsequently changed its name on September 3, 2014. Fennec, together with its wholly owned subsidiaries Oxiquant, Inc. and Fennec Pharmaceuticals, Inc., both Delaware corporations, Cadherin Biomedical Inc., a Canadian corporation, and Fennec Pharmaceuticals (EU) Limited, an Ireland company (“Fennec Limited”), collectively referred to herein as the “Company,” is a biopharmaceutical company focused on the commercialization of PEDMARK®, which is approved by the U.S. Food and Drug Administration, the European Medicines Agency (“EMA”), and the Medicines and Healthcare products Regulatory Agency (“MHRA”) to reduce the risk of ototoxicity associated with cisplatin in pediatric patients one month of age and older with localized, non-metastatic solid tumors. With the exception of Fennec Pharmaceuticals, Inc., all subsidiaries are inactive.
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete annual financial statements, and these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
The Company’s accounting policies are consistent with those presented in the audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2025.
As of June 30, 2026, the Company had cash and cash equivalents of $
2. Significant Accounting Policies
Basis of Presentation
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and are the responsibility of the Company’s management. These unaudited interim condensed consolidated financial statements do not include all of the information and notes required by U.S. GAAP for annual financial statements. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that impact the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenue and expense during the reporting period. Significant estimates include revenue recognition, allowance against trade receivables, measurement of stock-
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based compensation and estimates of the Company’s capital requirements over the next twelve months from the date of issuance of the consolidated financial statements. Actual results could differ from those estimates.
Credit Losses
The Company estimates and records a provision for expected credit losses related to its trade receivables. The Company considers historical collection rates, the current financial status of its customers, macroeconomic factors and other industry-specific factors when evaluating expected credit losses. To determine the provision for credit losses for accounts receivable, the Company disaggregates its receivables by class of customer because the risk profile of its customers may vary based on characteristics such as credit history, past payment history and geography. Each class of customer is analyzed individually for estimated credit losses, and specific allowance amounts are established, when appropriate, based on a review of outstanding invoices for customers with a higher probability of default.
Segment and Geographic Information
Operating segments are defined as components of an enterprise engaging in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and assess performance. The Company views its operations and manages its business in
Stock-Based Compensation
Under the Company’s stock-based compensation programs, the Company periodically grants stock options and restricted stock to employees, directors and consultants. The Company also issues shares under an employee stock purchase plan. The fair value of each award is recognized in the Company’s statements of operations over the requisite service period for such award.
Under the employee stock purchase plan, substantially all employees of the Company and its U.S. subsidiaries are eligible to participate, subject to statutory limitations, including the exclusion of employees who own 5% or more of the Company’s voting stock.
The Company uses the Black-Scholes option pricing model to value stock option awards without market conditions, which requires the Company to make certain assumptions regarding the expected volatility of its common stock price, the expected term of the option grants, the risk-free interest rate and the dividend yield with respect to its common stock. The Company calculates volatility using its historical stock price data. Due to the lack of the Company’s own historical data, the Company elected to use the “simplified” method for “plain vanilla” options to estimate the expected term of the Company’s stock option grants. Under this approach, the weighted-average expected life is presumed to be the average of the vesting term and the contractual term of the option. The risk-free interest rate used for each grant is based on the United States Treasury yield curve in effect at the time of grant for instruments with a similar expected life. The Company utilizes a dividend yield of zero based on the fact that the Company has never paid cash dividends and, at present, has no intention to pay cash dividends.
Inventory
Inventories are valued under a standard costing methodology on a first-in, first-out basis and are stated at the lower of cost or net realizable value. The Company capitalizes inventory costs related to products to be sold in the ordinary course of business. The Company makes a determination of capitalizing inventory costs for a product based on, among other factors, status of regulatory approval, information regarding safety, efficacy and expectations relating to commercial sales and recoverability of costs. Capitalized costs of inventories mainly include third party manufacturing, logistics and distribution costs. The Company assesses recoverability of inventory each reporting period to determine any write down to net realizable value resulting from excess or obsolete inventories.
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Revenue Recognition
Under Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, the Company recognizes revenue when its customers obtain control of promised goods or services, in an amount that reflects the consideration which the Company determines it expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies its performance obligation(s). As part of the accounting for these arrangements, the Company must make significant judgments, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each performance obligation.
License Agreements
The Company generates revenue from license or similar agreements with pharmaceutical companies for the commercialization of its product. Such agreements may include the transfer of intellectual property rights in the form of licenses. Payments made by the customers may include non-refundable upfront fees, payments based upon the achievement of defined milestones, and royalties on sales of product.
If a license to the Company's intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes the transaction price allocated to the license as revenue upon transfer of control of the license. All other promised goods or services in the agreement are evaluated to determine if they are distinct. If they are not distinct, they are combined with other promised goods or services to create a bundle of promised goods or services that is distinct. Optional future services where any additional consideration paid to the Company reflects their standalone selling prices do not provide the customer with a material right and, therefore, are not considered performance obligations. If optional future services are priced in a manner which provides the customer with a significant or incremental discount, they are material rights, and are accounted for as separate performance obligations.
Contingent milestones at contract inception are estimated at the amount which is not probable of a material reversal and included in the transaction price using the most likely amount method. Milestone payments that are not within the Company's control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received and therefore the variable consideration is constrained. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. At the end of each reporting period, the Company re-evaluates the probability of achieving development or sales-based milestone payments that may not be subject to a material reversal and, if necessary, adjust the estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license and other revenue, as well as earnings, in the period of adjustment.
For arrangements that include sales-based royalties, including sales-based milestone payments, and a license of intellectual property that is deemed to be the predominant item to which the royalties relate, revenue is recognized at the later of when the related sales occur or when the performance obligation to which some or all of the royalties have been allocated has been satisfied (or partially satisfied).
Net Product Revenue
On September 20, 2022, the FDA approved PEDMARK® in the United States 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® became commercially available on October 17, 2022. PEDMARK® is the Company’s first commercial product. Amongst the Company’s customers are distributors which subsequently resell the Company’s products to health care providers and patients. In addition to distribution agreements, the Company enters into arrangements with health care providers and payors that provide for government-mandated and/or privately- negotiated rebates, chargebacks and discounts with respect to the purchase of the Company’s products. Revenues from product sales are recognized when the customer obtains control of the Company’s product, which occurs at a point in time, typically upon delivery to the customer.
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Other Revenue – Material Right Under PEDMARK® License
Other revenue for the three and six months ended June 30, 2026 of $
Product Sales Discounts and Allowances
The Company records revenues from product sales at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established primarily from discounts, chargebacks, rebates, co-pay assistance, returns and other allowances that are offered within contracts between the Company and its customers, health care providers, payors and other indirect customers relating to the sales of its products. These reserves are based on the amounts to be claimed on the related sales and are classified as a contra-asset or current liability. Where appropriate, these estimates take into consideration a range of possible outcomes that are probability-weighted for relevant factors such as current contractual and statutory requirements, specific known market events and trends, industry data, forecasted customer buying and payment patterns, and the Company’s historical experience that will develop over time as PEDMARK® and PEDMARQSI® (European branded product name) is the Company’s first and only commercial product. Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of its contracts. The amount of variable consideration that is included in the transaction price may be constrained and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results in the future vary from the Company’s estimates, the Company will adjust these estimates, which would affect net product revenues and earnings in the period such variances become known.
Chargebacks: Chargebacks are discounts that occur when contracted customers purchase directly from a specialty distributor. Contracted customers, which currently consist of Public Health Service institutions and Federal government entities purchasing via the Federal Supply Schedule, generally purchase the product at a discounted price. The specialty distributor, in turn, charges back to the Company the difference between the price initially paid by the specialty distributor and the discounted price paid to the specialty distributor by its contracted customer. The allowance for chargebacks is based on actual chargebacks received and an estimate of sales by the specialty distributor to its contracted customers.
Discounts for Prompt Payment: The customers receive a discount for prompt payment which may range from
Rebates: Allowances for rebates include mandated discounts under the Medicaid Drug Rebate Program and other government programs. Rebate amounts owed after the final dispensing of the product to a benefit plan participant are based upon contractual agreements or legal requirements with public sector benefit providers, such as Medicaid. The allowance for rebates is based on statutory or contractual discount rates and expected utilization. The Company’s estimates for the expected utilization of rebates are based on customer and payor data received from the specialty distributors and historical utilization rates that will develop over time, as PEDMARK® is the Company’s first and only commercial product. Rebates are generally invoiced by the payor and paid in arrears, such that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s shipments to the customers, plus an accrual balance for known prior quarters’ unpaid rebates. If actual future rebates vary from estimates, the Company may need to adjust its accruals, which would affect net product revenues in the period of adjustment.
Co-payment Assistance: Patients who have commercial insurance and meet certain eligibility requirements may receive co-payment assistance. The Company accrues a liability for co-payment assistance based on actual program participation and estimates of program redemption using customer data provided by the third party that administers the copay program.
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Other Customer Credits: The Company pays fees to its customers for account management, data management and other administrative services. To the extent the services received are distinct from the sale of products to its customers, the Company classifies these payments in selling and marketing expenses in its condensed consolidated statements of operations.
Distribution and Other Fees: The Company pays distribution and other fees to certain customers in connection with the sales of PEDMARK®. The Company records distribution and other fees paid to its customers as a reduction of revenue, unless the payment is for a distinct good or service from the customer and the Company can reasonably estimate the fair value of the goods or services received. If both conditions are met, the Company records the consideration paid to the customer as an operating expense. These costs are typically known at the time of sale, resulting in minimal adjustments subsequent to the period of sale.
The following table summarizes net product revenues for PEDMARK® earned during the three and six months ended June 30, 2026, and 2025, respectively:
| | | | | | | | | | | | | |
| | | Three Months Ended | | Six Months Ended | ||||||||
| | | | June 30, | | | June 30, | | | June 30, | | | June 30, |
In thousands | | | | 2026 | | | 2025 | | | 2026 | | | 2025 |
Product revenues: | | | | | | | | | | | | | |
Gross product revenues | | | $ | | | $ | | | $ | | | $ | |
Discounts and allowances | | | | ( | | | ( | | | ( | | | ( |
Net product revenues | | | $ | | | $ | | | $ | | | $ | |
Other revenue | | | | | | | - | | | | | | - |
Total revenue | | | $ | | | $ | | | $ | | | $ | |
For the three and six months ended June 30, 2026, the Company had
The activities and ending allowance balances for each significant category of discounts and allowances for PEDMARK® (which constitute variable consideration) for the six months ended June 30, 2026, were as follows:
| | | | | | | | | |
| | | | | | | | | |
| | Chargebacks, | | Rebates, Returns, Customer | | | | ||
| | Discounts for | | Fees/Credits | | | | ||
| | Prompt pay and | | and Co-Pay | | | | ||
In thousands | | Other allowances | | Assistance | | Totals | |||
Balance at December 31, 2025 | | $ | | | $ | | | $ | |
Provision related to sales made in: | | | | | | | | | |
Current period | |
| | | | | | | |
Prior periods | | | — | | | — | | | — |
Payments and customer credits issued | | | ( | | | ( | | | ( |
Balance at March 31, 2026 | | $ | | | $ | | | $ | |
Provision related to sales made in: | | | | | | | | | |
Current period | |
| | | | | | | |
Prior periods | | | — | | | — | | | — |
Payments and customer credits issued | | | ( | | | ( | | | ( |
Balance at June 30, 2026 | | $ | | | $ | | | $ | |
The allowances for chargebacks, fees due to customers, rebates and discounts for prompt payment are recorded as a contra-asset to accounts receivable, while Medicaid rebates and return allowances are in accrued liabilities in the accompanying condensed consolidated balance sheets.
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Trade Receivables
The Company records gross trade receivables at the time of product sale to its customers. Trade accounts receivable are recorded at the invoiced amount and are typically non-interest bearing. Amounts estimated for the associated chargebacks, cash discounts for prompt payment and any allowances for credit losses are booked as a reserve against accounts receivable and reduction of revenue. The Company determines its allowance methodology by pooling receivable balances at the customer level. The Company considers various factors, including loss history, individual credit risk associated with each customer, and the current and future condition of the general economy. These credit risk factors are monitored on a quarterly basis and updated as necessary. To the extent that any individual debtor is identified whose credit quality has deteriorated, the Company establishes allowances based on the individual risk characteristics of such a customer. For customers that are large specialty distributors, the Company considered the risk of potential credit losses to be low. Sales to other select global distributors have an increased potential for losses. The Company evaluates the risk of credit losses on sales on an individual basis using the above-mentioned criteria. Accounts receivable that are expected to be received past 12 months are recorded as non-current accounts receivable. The Company has determined any financing component of non-current receivables to be immaterial. The Company had a balance in allowance for credit losses of $
Cost of Products Sold
Cost of products sold is related to the Company's product revenues for PEDMARK® and consists primarily of product production costs associated with finished goods inventory. Cost of products sold also consists of shipping and other third-party logistics and distribution costs for the Company’s product. As of June 30, 2026, the Company capitalized approximately $
Cash and Cash Equivalents
Cash equivalents consist of highly liquid investments with original maturities at the date of purchase of three months or less.
The Company places its cash and cash equivalents in investments held by highly rated financial institutions in accordance with its investment policy designed to protect the principal investment. At June 30, 2026, the Company had $
Financial Instruments
Financial instruments recognized on the balance sheets at June 30, 2026 and December 31, 2025, consist of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, the carrying values of which approximate fair value due to their relatively short time to maturity or variable interest rates that approximate market interest rates. The Company does not hold or issue financial instruments for trading.
The Company’s investment policy is to manage investments to achieve, in the order of importance, the financial objectives of preservation of principal, liquidity and return on investment. Investments, when made, are made in U.S. or Canadian bank securities, commercial paper of U.S. or Canadian industrial companies, utilities, financial institutions and consumer loan companies, and securities of foreign banks provided the obligations are guaranteed or carry ratings appropriate to the policy. Securities must have a minimum Dun & Bradstreet rating of A for bonds or R1 low for commercial paper.
The policy risks are primarily the opportunity cost of the conservative nature of the allowable investments. The Company has chosen to avoid investments of a trading or speculative nature to preserve cash.
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Research and Development Costs and Investment Tax Credits
Research costs, including employee compensation, laboratory fees, lab supplies, and research and testing performed under contract by third parties, are expensed as incurred. Development costs, including drug substance costs, clinical study expenses and regulatory expenses are expensed as incurred.
The Company conducts certain research and development activities under clinical trial and other research agreements with third parties and records expenses for these activities based on estimates of the work performed during the reporting period. In developing these estimates, the Company considers factors such as the terms of the underlying contracts, progress of patient visits and related clinical procedures, the achievement of contractual milestones, and data received from CROs and other service providers, and adjusts accruals as actual information becomes available.
Investment tax credits, which are earned as a result of qualifying research and development expenditures, are recognized when the expenditures are made and their realization is reasonably assured. They are applied to reduce related capital costs and research and development expenses in the year recognized.
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to credit risk primarily consist of cash and cash equivalents, and accounts receivable. The Company maintains deposits in highly rated, federally-insured financial institutions in excess of federally insured limits. The Company’s investment strategy is focused on capital preservation. The Company invests in instruments that meet the high credit quality standards outlined in the Company’s investment policy. This policy also limits the amount of credit exposure to any one issue or type of instrument.
The Company’s trade receivables includes amounts billed to customers for product sales of PEDMARK®. In the U.S., the customers are a limited group of specialty distributors, and direct customers, and accordingly, the Company considers the risk of potential credit losses to be low. The Company also sells to a select group of global distributors. These global distributors are established companies and although the Company regards credit losses with these distributors to be low, it does recognize the potential for credit losses with this group.
Income Taxes
The Company accounts for income taxes using the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts, using currently enacted tax rates. The Company has deferred tax assets, which are subject to periodic recoverability assessments. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that more likely than not will be realized. As of June 30, 2026, we maintained a full valuation allowance against our deferred tax assets.
The provisions of the Financial Accounting Standards Board (“FASB”) ASC 740-10, Uncertainty in Income Taxes, address the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740-10, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position.
Foreign Currency Transactions
The U.S. dollar is the functional currency for the Company’s consolidated operations. All gains and losses from currency transactions are included in the results of operations.
Income/(Loss) Per Share
Basic net income/(loss) per share is computed by dividing net income/(loss) by the weighted average number of common shares outstanding during the year. Diluted net income/(loss) per share is computed using the same method, except the
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weighted average number of common shares outstanding includes convertible debentures, stock options and warrants, if dilutive, as determined using the if-converted method and treasury methods.
Reclassifications
Certain prior period amounts in the accompanying condensed consolidated financial statements have been reclassified to conform to the current period presentation. Specifically, certain equity-based compensation costs previously classified within general and administrative expenses have been reclassified to selling and marketing expenses. These reclassifications had no effect on previously reported net loss or stockholders' equity.
Recent Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments require public business entities to provide additional disaggregated disclosures in the notes to the financial statements for certain income statement expense captions, including specified natural expense categories and selling expenses. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Accordingly, the amendments will be effective for the Company’s annual report for the year ending December 31, 2027 and its interim period ending March 31, 2028. The Company is currently evaluating the impact of the new disclosure requirements and expects adoption to have a significant impact on the level of expense disaggregation included in its financial statement footnotes; however, the amendments are not expected to affect the Company’s consolidated financial statements, results of operations, or cash flows.
In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This ASU introduces optional practical expedients intended to simplify the estimation of expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, Revenue from Contracts with Customers. The amendments in ASU 2025-05 are intended to reduce complexity in applying the current expected credit loss model to short-term receivables and contract assets while maintaining decision-useful information for financial statement users. The Company adopted this amended standard in the first quarter of 2026 and such adoption did not have a material impact on its consolidated financial statements.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Improvements to Interim Reporting. This ASU clarifies the applicability of interim reporting guidance, improves the navigability of Topic 270, identifies interim disclosure requirements included in other Topics of the Accounting Standards Codification, and establishes a principle requiring disclosure of events since the end of the last annual reporting period that have a material impact on an entity. The amendments in ASU 2025-11 are not intended to fundamentally expand or reduce existing interim disclosure requirements, but rather to improve clarity and consistency in the application of interim reporting guidance. The amendments are effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. Accordingly, the amendments will be effective for the Company beginning with its interim period ending March 31, 2028. The Company is currently assessing the effect of this guidance on its interim disclosures and presentation. The Company does not currently expect the adoption of this standard to have a material impact on its condensed consolidated financial statements other than potential additional or clarified interim disclosure requirements.
In December 2025, the FASB issued ASU 2025-12, Codification Improvements. ASU 2025-12 includes technical corrections, clarifications, and other minor improvements to various Topics within the Accounting Standards Codification. The Company is currently evaluating the effect of this guidance on its consolidated financial statements and related disclosures. The Company does not expect the adoption of this standard to have a material impact on its condensed consolidated financial statements.
Other than the pronouncements discussed above, the Company reviewed other recently issued accounting standards and concluded that they are either not applicable to its business or are not expected to have a material impact on its condensed consolidated financial statements or related disclosures.
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3. Income/(Loss) Per Share
Net income/(loss) per common share is presented under two formats: basic net income/(loss) per common share and diluted income/(loss) per common share. Basic net income/(loss) per common share is computed by dividing net income/(loss) attributable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted income/(loss) per common share is computed by dividing net income/(loss) by the weighted average number of common shares outstanding during the period, plus the potentially dilutive impact of common shares equivalents (e.g. convertible debt, stock options and warrants). Dilutive common share equivalents consist of the incremental common shares issuable upon exercise of convertible debt, restricted share units, stock options and warrants.
| | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Numerator: | | | | | | | | | | | | |
Net income/(loss) | | $ | | | $ | ( | | $ | | | $ | ( |
| | | | | | | | | | | | |
Denominator: | |
| | |
| | |
| | |
| |
Weighted-average common shares, basic | |
| | | | | | | | | | |
Dilutive effect of stock options | |
| | |
| — | |
| | |
| — |
Dilutive effect of restricted share units | | | | | | — | | | | | | — |
Dilutive effect of warrants | |
| | |
| — | |
| — | |
| — |
Incremental dilutive shares | |
| | |
| — | |
| | |
| — |
Weighted-average common shares, diluted | |
| | |
| | |
| | |
| |
Net income/(loss) per share diluted | | $ | | | $ | ( | | $ | | | $ | ( |
| | | | | | | | | | | | |
For the three and six months ended June 30, 2026, the Company reported net income and therefore included the effect of dilutive common share equivalents to the extent they were dilutive. For the three and six months ended June 30, 2025, the Company reported a net loss and, accordingly, all potentially dilutive securities were excluded from diluted net loss per share because their inclusion would have been anti-dilutive.
The following common stock equivalents, outstanding convertible debt, options and warrants were excluded from the computation of diluted net income/(loss) per share for the periods presented because including them would have had an anti-dilutive effect:
| | | | | | | |
| Diluted Earnings Per Share | | Diluted Earnings Per Share | ||||
| Three Months Ended June 30, | | Six Months Ended June 30, | ||||
| 2026 | | 2025 | | 2026 | | 2025 |
Options to purchase common shares | | | | | | | |
Convertible debt to purchase common shares | | | | | | | |
Restricted share units to purchase common shares | | | | | | | |
Performance share units to purchase common shares | | | | | | | |
Warrants to purchase common shares | | | | | | | |
4. Stockholders’ Equity
Authorized Capital Stock
The Company’s authorized capital stock consists of an unlimited number of common shares,
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Warrants to Purchase Common Stock
During the three and six months ended June 30, 2026, and 2025, there were
| | | | | |
| | Common Shares | | | |
| | Issuable Upon Exercise | | | |
| | of Outstanding | | | Weighted-Average |
Investor Warrants | | Warrants | | | Exercise Price |
Outstanding December 31, 2025 |
| | | $ | |
Issued |
| | |
| |
Outstanding March 31, 2026 | | | | $ | |
Issued | | | |
| |
Outstanding June 30, 2026 | | | | $ | |
Equity Incentive Plan
The Company maintains the Fennec Pharmaceuticals Inc. 2020 Equity Incentive Plan, as amended (the “Plan”), which is administered by the Compensation Committee of the Board of Directors. The Plan provides for the issuance of stock options, restricted share units (“RSUs”), stock appreciation rights, restricted stock awards, unrestricted stock awards, cash-based awards, dividend equivalent rights and stock purchase rights to employees, directors, officers and consultants of the Company. The Compensation Committee is responsible for determining eligible participants and approving individual award grants under the Plan.
On April 24, 2025, the Company’s Board of Directors approved an amendment to the Plan to: (i) increase the number of common shares available for issuance under the Plan (excluding common shares issued prior to the date of the meeting pursuant to the exercise of options and vesting of RSUs) to
On April 27, 2026, the Company’s Board of Directors approved a further amendment to the Plan to increase the maximum number of common shares reserved and available for issuance under the Plan, together with the Prior Plan, to
Prior to the June 2026 amendment, the maximum number of equity instruments issuable under the Plan, together with the Company’s prior stock option plan, was limited to
All stock options granted under the Plan have an exercise price equal to the fair value of the Company’s common shares on the date of grant. Options generally vest over a period of up to three years and are exercisable for a period of up to ten years from the grant date. Awards under the Plan may be denominated in either U.S. or Canadian dollars.
The Company recognizes stock-based compensation expense for all share-based awards granted to employees and non-employees based on the fair value of the awards on the grant date. The following table summarizes stock-based compensation expense related to equity awards:
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| | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended | ||||||||
| | June 30, | | June 30, | | June 30, | | June 30, | ||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Stock-based compensation expense recognized | | $ | | | $ | | | $ | | | $ | |
Total stock-based expense recognized | | $ | | | $ | | | $ | | | $ | |
Stock Option Activity
The following is a summary of option activity for the three and six months ended June 30, 2026.
| | | | | |
| | Number of | | Weighted-Average | |
Options | | Options | | Exercise Price | |
Outstanding at December 31, 2025 | | | | $ | |
Granted | | | |
| |
Exercised | | ( | |
| |
Outstanding at March 31, 2026 | | | | | |
Granted | | | | | |
Exercised | | ( | | | |
Forfeited | | ( | | | |
Outstanding at June 30, 2026 | | | | $ | |
Of the
The fair value of equity awards valued using the Black-Scholes option pricing model, including stock options awards, was estimated using the assumptions in the table below. Expected volatility was determined based on the historical volatility of the Company’s common stock over a period consistent with the expected term of the applicable award.
| | | |
| | Valuation | |
| | Assumptions | |
| | Six Months Ended | |
Black-Scholes Model Assumptions | | June 30, 2026 | |
Expected dividend |
| - | % |
Risk free rate |
| % | |
Expected volatility | | % | |
Expected life | | years |
Performance-Based Units
In May and August 2025, the Board of Directors approved grants of performance-based restricted share units (“PSUs”) that vest based on the achievement of specified revenue performance milestones for 2025, and the related compensation cost was fully recognized in 2025. During the six months ended June 30, 2026, no additional PSUs were granted, and certain PSUs vested and were released in accordance with the original terms of the awards.
Restricted Share Units Activity
The Plan allows for the issuance of restricted share units (“RSUs”). The following is a summary of RSU activity for the three and six months ended June 30, 2026. During the three and six months ended June 30, 2026, there were
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anniversary date of the grant and then 1/24 on the last day of each subsequent month. The Compensation Committee may also award RSUs with alternative vesting.
| | |
| | Number of |
| | Restricted Share |
RSUs Current Periods | | Units |
Outstanding at December 31, 2025 |
| |
Awarded |
| |
Released | | ( |
Forfeited | | — |
Outstanding at March 31, 2026 | | |
Awarded | | — |
Released | | ( |
Forfeited | | ( |
Outstanding at June 30, 2026 | | |
The value of RSUs issued was estimated using the share price on the date of the award multiplied by the number of common shares granted.
Employee Stock Purchase Plan
The Company maintains an employee stock purchase plan under the Fennec Pharmaceuticals Inc. 2020 Equity Incentive Plan that allows eligible employees to purchase common shares at a discount through after-tax payroll deductions during recurring six-month offering periods. The purchase price is generally 85% of the lower of the fair market value of the Company’s common shares on the first or last trading day of the applicable offering period, subject to statutory limits. The ESPP is accounted for as a compensatory plan under ASC 718, and the grant-date fair value of purchase rights is estimated using the Black-Scholes option pricing model. ESPP-related stock-based compensation expense for the three and six months ended June 30, 2026 was $
Under the ESPP, eligible employees of the Company and its participating subsidiaries may purchase common shares through after-tax payroll deductions at a discounted price. Substantially all employees of the Company and its U.S. subsidiaries are eligible to participate, except employees who own 5% or more of the Company’s voting stock and employees who may be excluded under the plan’s terms in accordance with Section 423 of the Internal Revenue Code (e.g., based on service requirements, customary hours worked, or highly-compensated status).
5. Fair Value Measurements
The Company has adopted ASC 820, the Fair Value Measurements and Disclosure Topic of the FASB. This Topic applies to certain assets and liabilities that are being measured and reported on a fair value basis. The Fair Value Measurements Topic defines fair value, establishes a framework for measuring fair value in accordance with US GAAP, and expands disclosure about fair value measurements. This Topic enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The Topic requires that financial assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.
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| | | | | | | | | | | | | | | | | | | |
| | Fair Value Measurement at June 30, 2026 and December 31, 2025 | |||||||||||||||||
| | Quoted Price in Active | | | | | | | | | | | | | | ||||
| | Market for Identical | | Significant Other | Significant | | | | | ||||||||||
| | Instruments | | Observable Inputs | Unobservable Inputs | | | | | ||||||||||
| | Level 1 | | Level 2 | Level 3 | | Total | ||||||||||||
| | 2026 | | | 2025 | | | 2026 | | 2025 | | 2026 | | 2025 | | 2026 | | 2025 | |
Assets | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | | (1) | $ | | (1) | $ | | $ | | $ | — | $ | — | $ | | $ | |
Processa common shares | | $ | | (2) | $ | | (2) | $ | — | $ | — | $ | — | $ | — | $ | | $ | |
(1) | The Company held approximately $ |
(2) | The Company holds |
6. Commitments and Contingencies
Executive Severance
In the event of termination of Mr. Hackman's (Chief Executive Officer) employment with the Company other than for cause, the Company will be obligated to pay him a
Leases
The Company has an operating lease in Research Triangle Park, North Carolina utilizing a small space within a commercial building. The operating lease has payments of $
On January 23, 2020, the Company entered into an Office Service Agreement (the “Office Service Agreement”) with Regus to lease office space in Hoboken, New Jersey. Per the terms of the Office Service Agreement, the monthly rent payments are $
Because the Company’s lease arrangements are short-term or month-to-month in nature, no operating lease liability was recorded on the condensed consolidated balance sheets as of June 30, 2026 or December 31, 2025.
Employee Benefit Plan
In May 2021, the Company established the Fennec Pharmaceuticals, Inc. 401(k) Plan (the “401(k) Plan”) for its employees, which is designed to be qualified under Section 401(k) of the Internal Revenue Code of 1986. Eligible employees are permitted to contribute to the 401(k) Plan within statutory and 401(k) Plan limits. Effective June 1, 2026, the Company began matching employee contributions to the 401(k) Plan at
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7. License Agreement
License Agreement with Norgine Pharma UK Limited
On March 17, 2024, the Company announced that, through its wholly-owned subsidiary, Fennec Pharmaceuticals, Inc. entered into a License and Supply Agreement (the “Agreement”) with Norgine, pursuant to which Norgine is granted an exclusive license to commercialize the Company’s product PEDMARQSI® (known as PEDMARK® in the United States) for all human indications in the European Economic Area, Switzerland, the United Kingdom, Australia and New Zealand (collectively, the “Territory”). On July 26, 2024, Norgine and Fennec amended the Agreement. The amended Agreement maintains all principal payment terms with the primary addition of Norgine assuming responsibility for packaging and labeling of PEDMARQSI®.
Pursuant to the terms of the Agreement, Fennec shall receive the following payments from Norgine: (i) an upfront payment in the amount of €
Subject to customary rights of each party to earlier terminate the Agreement, the term of the Agreement continues for the longer of: (i) March 15, 2034, or (ii) with respect to any particular country in the Territory, (a) the expiration of regulatory market exclusivity for PEDMARQSI® in such country, or (b) the last-to-expire of all patents for PEDMARQSI® in such country. The term of the Agreement shall be automatically renewed for additional three-year periods unless either party provides the other party written notice of its intent not to renew the Agreement at least one year prior to the applicable termination date of the Agreement.
The Company evaluated the Agreement under ASC 606 and concluded that Norgine is a customer in the arrangement. The Company identified two performance obligations under the Agreement: a license of functional intellectual property and a material right for future supply. A portion of the non-refundable upfront payment was allocated to the license and recognized as license revenue in 2024, and the portion associated with the material right was deferred and is reflected as contract liabilities in the condensed consolidated balance sheets.
As of June 30, 2026 and December 31, 2025, contract liabilities related to the Agreement were $
In conjunction with entering into the Agreement, the Company paid approximately $
8. Income Taxes
The Company accounts for income taxes under ASC 740, Income Taxes. The income tax provision for interim periods is determined using an estimate of the Company’s annual effective tax rate, adjusted for discrete items, if any, recognized in the period in which they occur.
For the three and six months ended June 30, 2026, the Company recorded an income tax provision of $
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provision was recorded in the 2025 periods, in which the Company incurred net losses. The Company continues to maintain a full valuation allowance against its deferred tax assets.
The Company continues to maintain a valuation allowance against deferred tax assets for jurisdictions where, based on all available evidence, it is more likely than not that such deferred tax assets will not be realized. The Company will continue to evaluate the realizability of deferred tax assets in future periods, including the impact of sustained profitability, future taxable income and the reversal of temporary differences.
9. Segment Reporting
Operating segments are defined as components of an enterprise engaging in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker (“CODM”) in deciding how to allocate resources and assess performance. The Company operates as a single operating and reportable segment focused on the commercialization of PEDMARK®/PEDMARQSI®.
The Company’s CODM is its Chief Executive Officer. The CODM reviews consolidated net income (loss) to assess performance, make operating decisions and allocate resources. This measure is reported on the condensed consolidated statements of operations.
The accounting policies of the operating segment are the same as those described in Note 2, Significant Accounting Policies. Segment assets are reported on the condensed consolidated balance sheets as total assets. The CODM also reviews significant expense categories, which are presented on the condensed consolidated statements of operations, including cost of product sales, research and development, selling and marketing, and general and administrative expenses.
10. Subsequent Events
Management has evaluated subsequent events through the date of this filing and concluded there are no events of significance which require disclosure.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Caution Concerning Forward-Looking Statements
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 27, 2026 (the “Annual Report”) and our unaudited interim condensed consolidated financial statements and related notes appearing in this Quarterly Report on Form 10-Q (the “Quarterly Report”). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. As a result of many factors, including those factors set forth in Part I, Item 1A of the Annual Report under the heading “Risk Factors”, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis.
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The following discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2025, and the condensed consolidated financial statements and accompanying notes included elsewhere in this report.
Overview
Fennec Pharmaceuticals Inc., a corporation existing under the laws of British Columbia, was originally formed under the name Adherex Technologies Inc. and subsequently changed its name on September 3, 2014. Fennec is a commercial stage specialty pharmaceutical company dedicated to preventing cisplatin-induced ototoxicity (“CIO”), a serious and often irreversible side effect of cancer treatment, with one FDA approved and European Commission approved product, PEDMARK® in the U.S. and PEDMARQSI®, which is the branded name for PEDMARK® outside of the U.S. (collectively, “PEDMARK”), developed to reduce the risk of ototoxicity associated with cisplatin in pediatric patients one month of age and older with localized, non-metastatic solid tumors. The Company has four wholly owned subsidiaries: Oxiquant, Inc. and Fennec Pharmaceuticals, Inc., both Delaware corporations, Cadherin Biomedical Inc., a Canadian corporation, and Fennec Pharmaceuticals (EU) Limited, an Ireland company (“Fennec Limited”). With the exception of Fennec Pharmaceuticals, Inc., all subsidiaries are inactive. On September 20, 2022, we received approval from the FDA for PEDMARK® (sodium thiosulfate injection). This approval makes PEDMARK® the first and only treatment approved by the FDA in this area of significant unmet medical need. On October 17, 2022, we announced commercial availability of PEDMARK® in the United States. Further, PEDMARQSI® received European Commission Marketing Authorization in June 2023 and received U.K. approval in October 2023.
PEDMARK® is currently the only FDA-approved therapy 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. In clinical studies in this population, treatment with PEDMARK® resulted in an approximate 50% relative reduction in the incidence of cisplatin-induced hearing loss compared to cisplatin alone, without evidence of materially compromised antitumor efficacy. PEDMARK® is administered as a short intravenous infusion and has generally been associated with a mild-to-moderate and manageable safety profile consistent with its known pharmacology.
In March 2024, we announced that we entered into an agreement with Norgine, a leading European specialist pharmaceutical company. This is an exclusive licensing agreement under which Norgine will commercialize PEDMARQSI® in Europe, Australia and New Zealand. PEDMARQSI® is the first and only approved therapy in the EU and U.K. for the prevention of ototoxicity (hearing loss) induced by cisplatin chemotherapy in patients one month to eighteen years of age with localized, non-metastatic solid tumors. During 2025, Norgine made PEDMARQSI® commercially available in the U.K. and Germany and expects additional launches to occur in 2026 and beyond.
Under the terms of the Norgine licensing agreement, Fennec received approximately $43 million in upfront consideration and may receive up to approximately $230 million in additional commercial and regulatory milestone payments and double-digit tiered royalties (up to the mid-twenties) on net sales of PEDMARQSI® in the licensed territories. To date, Fennec has not received any milestone payments. Norgine will be responsible for all commercialization activities in the licensed territories and will hold all marketing authorizations in the licensed territories.
In the United States, we sell our product through an experienced field force including Territory Managers and we utilize medical science liaisons within our medical team who help educate the medical communities and patients about CIO and our programs supporting patient access to PEDMARK®.
Further, we have established Fennec HEARS®, a comprehensive single source program designed to connect PEDMARK® patients to both patient financial and product access support. The program offers assistance and resources, regardless of insurance type, that can address co-pays or lack of coverage when certain eligibility requirements are met. Fennec HEARS® also provides access to care coordinators that can answer insurance questions about coverage for PEDMARK® and provide tips and resources for managing treatment.
We received Orphan Drug Exclusivity for PEDMARK® in January 2023, which provides seven years of market exclusivity from its FDA approval on September 20, 2022, until September 20, 2029. We currently have six patents listed for PEDMARK® in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (“FDA Orange Book”).
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In September 2022, the United States Patent and Trademark Office (“USPTO”) issued Patent No. 11,291,728 (the “US ‘728 Patent”), in December 2022, the USPTO issued Patent No. 11,510,984 (“US ‘984 Patent”) and in April 2023, the USPTO issued Patent No. 11,671,793 (“US ‘793 Patent”) that covers PEDMARK® pharmaceutical formulation. Further, additional issued patents included US 11,964,018 Patent (the “US ‘018 Patent) and US 11,992,530 Patent (the “US ‘530 Patent”) and US 11,998,604 Patent (the “US ‘604 Patent”) covering methods of using our PEDMARK® product to reduce ototoxicity in a patient receiving a platinum based chemotherapeutic for the treatment of a cancer. The US ‘728, US ‘984, US ‘793, US ‘018, US ‘530, and US ‘604 Patents will expire in 2039. Additional patents covering PEDMARK® formulation have been granted in Australia, Canada, the European Patent Office (EPO) (described further below), Hong Kong, Indonesia, Japan, Korea, Malaysia, Mexico, and Russia, and patent applications covering PEDMARK® are pending in Brazil, China, the European Patent Office (EPO), Hong Kong, Israel, Korea, Mexico, New Zealand, Singapore, and Thailand. Patents covering alternative sodium thiosulfate formulations have been granted in the United States (US 12,311,026 (the “US ‘026 Patent”), Canada, Korea, Mexico, and Russia, and patent applications covering alternative sodium thiosulfate formulations are pending in the United States, Australia, the EPO, Hong Kong, Indonesia, Japan, Malaysia, Mexico, and New Zealand. Applications from these patent families, where granted, valid, and enforceable, will expire in July 2039, exclusive of any patent term adjustment or extension.
On March 16, 2026, we announced that we had entered into a settlement and license agreement with Cipla Limited and Cipla USA, Inc. resolving the PEDMARK® patent litigation pending in the United States District Court for the District of New Jersey. Under the terms of the agreement, the lawsuit will be dismissed with each party bearing its own costs, and Cipla will not enter the U.S. market with its generic sodium thiosulfate product until September 1, 2033, or earlier under certain specified circumstances. We believe this settlement, together with our existing patent and regulatory protections, provides additional visibility into the long-term exclusivity profile of PEDMARK® in the United States.
There can be no assurance that we do not or will not infringe on patents held by third parties or that third parties in the future will not claim that we have infringed on their patents. In the event that our product or technologies infringe or violate the patent or other proprietary rights of third parties, there is a possibility we may be prevented from pursuing product development, manufacturing or commercialization of our product until the underlying patent dispute is resolved. For example, there may be patents or patent applications held by others that contain claims that our product or operations might be determined to infringe or that may be broader than we believe them to be. Given the complexities and uncertainties of patent laws, there can be no assurance as to the impact that future patent claims against us may have on our business, financial condition, results of operations, or prospects.
PEDMARK® Product Overview
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 cancer patients 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.
In the United States, PEDMARK® is the first and only therapy approved to mitigate the risk of ototoxicity associated with cisplatin in pediatric patients aged one month and older with localized, non-metastatic solid tumors. Further, the National Comprehensive Cancer Network (NCCN) recommended the use of PEDMARK® to reduce the risk of cisplatin-induced ototoxicity in patients with localized, non-metastatic solid tumors (category 2A) for Adolescent and Young Adult (AYA) Oncology. As of January 2025, all medical compendia have incorporated Fennec’s clinical updates, and AHFS, the largest online platform for pharmacists, has updated its content to reflect and differentiate PEDMARK® in accordance with its labeling.
PEDMARK® is the first and only FDA- and EMA-approved agent designed to reduce the risk of CIO in pediatric patients with localized solid tumors. The strategic imperatives driving the execution of PEDMARK®’s strategy include increasing awareness of unmet patient needs and emphasizing the importance of preventing CIO among oncologists. A key goal is to establish PEDMARK® as the standard of care (SOC) for all CIO prevention. Additionally, efforts focus on expanding adoption beyond oncologists by ensuring healthcare providers (HCPs) gain confidence in and have positive experiences with PEDMARK®. Ensuring seamless access for advocacy groups, payers, and providers is also a priority, along with
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activating patients and caregivers through disease education to drive demand for PEDMARK®. Key activities supporting these objectives include an expanded sales team with a strong track record in both academic and community settings, partnerships with group purchasing organizations, and specialty pharmacy offerings such as home infusions, white bag delivery, and direct billing. Furthermore, digital materials, a digital speaker bureau to engage pediatric oncologists, audiologists, nurses, and pharmacists, along with a patient access services hub and ongoing support from advocacy groups, are all integral components of the strategy.
In the U.S. and Europe, Fennec estimates that there are approximately 11,400 pediatric patients with localized, non-metastatic solid tumors each year, of which include approximately 2,157 cisplatin-treated pediatric patients in the U.S. and 1,250 in Europe who fall within the current PEDMARK® market. The incidence and severity of CIO depends on the cumulative dose and duration of chemotherapy. Many affected children ultimately require hearing aids or, in more severe cases, cochlear implants, which are costly, technically complex and do not fully restore normal hearing. PEDMARK® is the first and only therapy approved in the U.S. to reduce the risk of ototoxicity associated with cisplatin in pediatric patients one month of age and older with localized, non-metastatic solid tumors. Infants and young children who experience ototoxicity during critical developmental windows are at risk for impaired speech and language development and literacy, while older children and adolescents may face long-term challenges in academic performance, social-emotional development, career potential and independent living.
In the U.S., approximately 90% of pediatric cancer patients receive care at approximately 200 key pediatric hospital centers, including institutions within the Children’s Oncology Group (COG), National Cancer Institute (NCI) and National Comprehensive Cancer Network (NCCN).
The Adolescent and Young Adult (“AYA”) oncology patient is defined as an individual between 15 and 39 years of age at the time of initial cancer diagnosis. In the U.S., Fennec estimates that there are approximately 51,282 new AYA solid tumor cases annually, of which approximately 25,536 involve cisplatin-treated patients with localized, non-metastatic solid tumors. The most common relevant tumor types include germ cell tumors, testicular cancer, thyroid cancer and breast cancer. The U.S. AYA oncology treatment landscape spans both academic and community settings, with 72 NCI-designated academic centers treating roughly 20% of AYA oncology patients, while approximately 80% are managed across approximately 3,750 community oncology centers nationwide.
CIO and Unmet Medical Need
Cisplatin is a cornerstone of modern cancer therapy for many pediatric and AYA solid tumors, with reported overall survival rates in some cisplatin-treated cancers exceeding 80%. However, cisplatin is associated with a high incidence of ototoxicity. Published data indicates that approximately 60% to 90% of cisplatin-treated patients may develop some degree of permanent, sensorineural hearing loss, with reported rates of 40% to 80% occurring in adults and 50% to 90% in children. CIO typically begins as bilateral, high-frequency hearing loss that is progressive and irreversible, occasionally accompanied by tinnitus. In some cases, it may ultimately require the use of hearing aids or cochlear implants.
Published literature has linked treatment-related hearing loss to impairments in speech and language development, reduced academic performance, challenges in social-emotional development, and enduring impacts on educational attainment, vocational opportunities, and independent living. Additionally, published research indicates that severe to profound early-onset hearing loss can impose a substantial lifetime economic burden, with per-individual costs estimated at approximately $0.5 million and potentially exceeding $1.0 million on an undiscounted basis, primarily due to lost productivity, educational expenses, and medical costs. These figures are derived from published literature regarding the disease burden of hearing loss and do not represent demonstrated health-economic outcomes specifically attributable to PEDMARK®.
European Commission Marketing Authorization
PEDMARQSI® (PEDMARK® brand name in Europe) received European Commission Marketing Authorization in June 2023 and received U.K. approval in October 2023.
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As previously noted, in March 2024, we entered into an agreement with Norgine, a leading European specialist pharmaceutical company. This is an exclusive licensing agreement under which Norgine will commercialize PEDMARQSI® in Europe, Australia and New Zealand. PEDMARQSI® is the first and only approved therapy in the EU and U.K. for the prevention of ototoxicity (hearing loss) induced by cisplatin chemotherapy in patients 1 month to < 18 years of age with localized, non-metastatic solid tumors.
Under the terms of the licensing agreement, Fennec received approximately $43 million in upfront consideration and may receive up to approximately $230 million in additional commercial and regulatory milestone payments and double-digit tiered royalties on net sales of PEDMARQSI® in the licensed territories up to the mid-twenties. To date, Fennec has not received any milestone payments. Norgine will be responsible for all commercialization activities in the licensed territories and will hold all marketing authorizations in the licensed territories.
Most recently, in 2025, Norgine launched PEDMARQSI® in Germany and the U.K with plans to launch in several additional markets in 2026.
Japan: STS-J01 Investigator-Initiated Trial and Registration Plans
In Japan, an independent investigator-initiated clinical trial, known as STS-J01, has been evaluating PEDMARK® for the prevention of CIO. In December 2025, we announced positive topline results from this trial that demonstrated use of PEDMARK® was associated with a significant reduction in the incidence of hearing loss compared to historically reported rates in patients receiving cisplatin alone, with no evidence of reduced antitumor activity and an approximate 95% clinical response rate. Based on these results, we are pursuing a regulatory registration strategy for PEDMARK® in Japan and are evaluating partnering or licensing opportunities in that market, similar to our partnership with Norgine in Europe. Discussions with potential partners and regulators are ongoing.
Investigator-Initiated Studies and Lifecycle Management
In addition to our pivotal pediatric studies (SIOPEL6 and COG ACCL0431), we support a number of investigator-initiated and other clinical studies designed to further characterize the use of PEDMARK® in additional tumor types and patient populations. For example, City of Hope, a U.S. cancer research and treatment organization, is conducting an investigator-initiated clinical trial evaluating PEDMARK® in adult men with stage II–III metastatic testicular germ cell tumors receiving cisplatin-based chemotherapy. We also engage in medical affairs activities and data-generation initiatives to expand the clinical evidence base for PEDMARK®, including in AYA and adult populations. In 2026, additional investigator-sponsored studies were initiated, including a real-world study at Tampa General Hospital Cancer Institute and a Phase I/II trial at the University of Arizona Cancer Center to evaluate PEDMARK® in AYA and adult patients receiving cisplatin-based chemotherapy. These studies are exploratory in nature, and PEDMARK® is not currently approved for use in metastatic cancers or adult populations outside of its labeled indication. Any potential label expansion will require additional clinical data and regulatory approvals.
Further, in April 2026, we announced that four abstracts evaluating PEDMARK® (sodium thiosulfate injection) were accepted as part of the 2026 American Society of Clinical Oncology (ASCO) Annual Meeting program, which took place from May 29-June 2, 2026 in Chicago, IL. These four independently led studies build upon the established safety and efficacy of PEDMARK® – currently approved for pediatric patients one month of age and older with localized, non-metastatic solid tumors, and recognized by the National Comprehensive Cancer Network with a 2A recommendation for use in adolescent and young adult patients – and help to expand understanding of the clinical utility of PEDMARK® in Adolescent and Young Adult (AYA) and adult populations, where significant unmet need remains.
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Results of Operations
Three months ended June 30, 2026 versus three months ended June 30, 2025:
| | | | | | | | | | | | | | |
| | Three Months Ended | | | | Three Months Ended | | | | | | |||
In thousands of U.S. Dollars | | June 30, 2026 | | % | | June 30, 2025 | | % | | Change | | |||
PEDMARK product sales, net | | $ | 17,164 | | | | $ | 9,652 | | | | $ | 7,512 | |
Other revenue | | | 710 | | | | | — | | | | | 710 | |
Total revenue | | | 17,874 | | | | | 9,652 | | | | | 8,222 | |
| | | | | | | | | | | | | | |
Operating expenses: | |
| |
| | |
| |
| | |
| | |
Cost of product sales | | | 721 | | 4 | % | | 967 | | 8 | % | | (246) | |
Research and development | |
| 118 |
| 1 | % |
| 107 |
| 1 | % |
| 11 | |
Selling and marketing | | | 10,659 | | 66 | % | | 4,784 | | 39 | % | | 5,875 | |
General and administration | |
| 4,639 |
| 29 | % |
| 6,526 |
| 53 | % |
| (1,887) | |
Total operating expense | |
| 16,137 |
| 100 | % |
| 12,384 |
| 100 | % |
| 3,753 | |
Income/(loss) from operations | |
| 1,737 |
| | |
| (2,732) |
| | |
| 4,469 | |
| | | | | | | | | | | | | | |
Unrealized foreign exchange (loss)/gain | |
| (6) |
| | |
| 17 |
| | |
| (23) | |
Amortization expense | |
| — |
| | |
| (13) |
| | |
| 13 | |
Unrealized loss on securities | | | — | | | | | (1) | | | | | 1 | |
Interest income | |
| 287 |
| | |
| 171 |
| | |
| 116 | |
Interest expense | | | (3) |
| | | | (594) | | | | | 591 | |
Income/(loss) before provision for income taxes | | | 2,015 |
| | | | (3,152) | | | | | 5,167 | |
Provision for income taxes | | | 42 | | | | | — | | | | | 42 | |
Net income/(loss) | | $ | 1,973 |
| | | $ | (3,152) |
| | | $ | 5,125 | |
| | | | | | | | | | | | | | |
| ● | The Company recorded net product sales of $17,164 in the second quarter of 2026 compared to $9,652 in the comparable period in 2025 as the Company increased market penetration and access for PEDMARK® and as the Company expanded its focus to the adolescent and young adult (AYA) population. Further, the Company recorded $710 in other revenue related to the Norgine transaction in the three months ended June 30, 2026 compared to $0 in the comparable period in 2025. |
| ● | Cost of product sales decreased by $246 for the second quarter of 2026 compared to the comparable period in 2025. The improvement was primarily driven by greater efficiencies in manufacturing and inventory management. |
| ● | Research and development expense increased by $11 for the three-month period ended June 30, 2026, as compared to the same period in 2025. Our research and development activities for this period consisted of costs associated with investigator-initiated trials. |
| ● | Selling and marketing expenses include distribution costs, logistics, shipping and insurance, advertising, wages commissions and out-of-pocket expenses. We recorded $10,659 in selling and marketing expenses for the three-month period ended June 30, 2026, as compared to $4,784 for the same period in 2025. The increase is largely related to the higher commercial headcount expenses to support the expansion of our sales organization to enhance coverage of the U.S. market and additional marketing and awareness initiatives in 2026. |
| ● | There was a $1,887 decrease in general and administrative expenses for the three-month period ended June 30, 2026 compared to the same period in 2025. The decrease was primarily due to lower legal and professional fees as patent litigation activities related to CIPLA concluded and the reallocation of certain employee-related and |
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| equity-based compensation costs to selling and marketing expenses beginning in the first quarter of 2026 from general and administrative expenses. |
| ● | Interest expense decreased by $591 for the three-month period ended June 30, 2026 compared to the same period in 2025. The decrease was primarily due to full repayment of the Petrichor convertible notes in the fourth quarter of 2025, which eliminated related interest in 2026. |
| ● | Interest income increased in the three-month period ended June 30, 2026 as compared to the same period in 2025 by $116, driven by higher average cash balances on money market investments. |
Six months ended June 30, 2026, versus six months ended June 30, 2025:
| | | | | | | | | | | | | |
| | Six Months Ended | | | | Six Months Ended | | | | | |||
In thousands of U.S. Dollars | | June 30, 2026 | | % | | June 30, 2025 | | % | | Change | |||
PEDMARK product sales, net | | $ | 32,272 |
| | | $ | 18,403 |
| | | $ | 13,869 |
Other revenue | | | 710 | | | | | — | | | | | 710 |
Total revenue | | | 32,982 | | | | | 18,403 | | | | | 14,579 |
| | | | | | | | | | | | | |
Operating expenses: | |
| |
| | |
| |
| | |
| |
Cost of product sales | | | 1,291 | | 4 | % | | 1,340 | | 6 | % | | (49) |
Research and development | |
| 167 |
| 1 | % |
| 201 |
| 1 | % |
| (34) |
Selling and marketing | | | 22,081 | | 70 | % | | 8,011 | | 37 | % | | 14,070 |
General and administration | |
| 7,825 |
| 25 | % |
| 12,391 |
| 56 | % |
| (4,566) |
Total operating expenses | |
| 31,364 |
| 100 | % |
| 21,943 |
| 100 | % |
| 9,421 |
Income/(loss) from operations | |
| 1,618 |
| | |
| (3,540) |
| | |
| 5,158 |
| | | | | | | | | | | | | |
Unrealized foreign exchange gain/(loss) | |
| (18) |
| | |
| 30 |
| | |
| (48) |
Amortization expense | | | — | | | | | (26) | | | | | 26 |
Unrealized loss on securities | | | — | | | | | (2) | | | | | 2 |
Interest income | |
| 626 |
| | |
| 407 |
| | |
| 219 |
Interest expense | | | (10) | | | | | (1,186) | | | | | 1,176 |
Income/(loss) before provision for income taxes | | | 2,216 | | | | | (4,317) | | | | | 6,533 |
Provision for income taxes | | | 42 | | | | | - | | | | | 42 |
Net income/(loss) | | $ | 2,174 |
| | | $ | (4,317) |
| | | $ | 6,491 |
| ● | The Company recorded net product sales of $32,272 in the first two quarters of 2026 compared to $18,403 in the comparable period in 2025 as the Company increased market penetration and access for PEDMARK® and as the Company expanded its focus to the adolescent and young adult (AYA) population. For the six months ended June 30, 2026 the Company recorded $710 in other revenue related to the Norgine transaction compared to $0 in the comparable period. |
| ● | Cost of product sales decreased by $49 for the first two quarters of 2026 compared to the comparable period in 2025. The improvement was primarily driven by greater efficiencies in manufacturing and inventory management. |
| ● | Research and development expense decreased by $34 for the six-month period ended June 30, 2026, as compared to the same period in 2025. Our research and development activities for this period consisted of costs associated with investigator initiated clinical trials. |
| ● | We recorded $22,081 in selling and marketing expenses for the six-month period ended June 30, 2026, as compared to $8,011 for the same product in 2025. The increase is largely related to the higher commercial |
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| headcount to support the expansion of our sales organization to enhance coverage of the U.S. market as well as increased marketing and awareness activities in 2026. |
| ● | There was a $4,566 decrease in general and administrative expenses for the six-month period ended June 30, 2026 compared to the same period in 2025. The decrease was primarily due to lower legal and professional fees as patent litigation activities with CIPLA concluded and the reallocation of certain employee-related and equity-based compensation costs to selling and marketing expenses beginning in the first quarter of 2026 from general and administrative expenses. |
| ● | Interest expense decreased by $1,176 for the six-month period ended June 30, 2026 compared to the same period in 2025. The decrease was primarily due to full repayment of the Petrichor convertible notes in the fourth quarter of 2025, which eliminated related interest and accretion in 2026. |
| ● | Interest income increased in the six-month period ended June 30, 2026, as compared to the same period in 2025 by $219, driven by higher average cash balances on money market investments. |
Liquidity and Capital Resources
| | | | | | |
| | As of | | As of | ||
Selected Asset and Liability Data (thousands): | | June 30, 2026 | | December 31, 2025 | ||
Cash and equivalents | | $ | 41,249 | | $ | 36,788 |
Other current assets | |
| 31,251 | |
| 30,255 |
Current liabilities | |
| 12,394 | |
| 10,518 |
Working capital (1) | |
| 60,106 | |
| 56,525 |
(1) [Current assets – current liabilities] | | | | | | |
| | | | | | |
Selected Equity: | |
| | |
| |
Common stock and additional paid in capital | | | 268,447 | | | 263,651 |
Accumulated deficit | |
| (227,248) | |
| (229,422) |
Stockholders’ equity | |
| 42,442 | |
| 35,472 |
| ● | There was a $4,461 net increase in cash and cash equivalents between June 30, 2026, and December 31, 2025. The increase was primarily driven by net cash provided by operating activities reflecting profitable operations and favorable working capital movements, option exercises, and including the timing of accounts receivable collections. |
| ● | The increase in other current assets of $996 between June 30, 2026, and December 31, 2025, primarily relates to an increase in inventory. |
| ● | Current liabilities at June 30, 2026, increased $1,876 compared to December 31, 2025 reflecting an increase in current portion of contract liability offset by a decrease in accrued expenses. |
| ● | Working capital increased by $3,581 between June 30, 2026, and December 31, 2025 driven by higher cash balance. |
The following table illustrates a summary of cash flows data for the six-month periods of June 30, 2026 and 2025:
| | | | | | |
Selected Cash Flow Data | | Six Months Ended June 30, | ||||
(dollars and shares in thousands) | | 2026 | | 2025 | ||
Net cash provided by/(used in) operating activities | | $ | 2,429 | | $ | (8,004) |
Net cash provided by financing activities | |
| 2,032 | |
| 75 |
Net cash flow | | $ | 4,461 | | $ | (7,929) |
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The net cash provided operating activities for the six-month period ended June 30, 2026 was approximately $2,429 as compared to $8,004 net cash used in operating activities during the same period in 2025. The year-over-year improvement was primarily driven by the shift from a net loss of $4,317 to net income of $2,174 and a favorable swing in working capital, including a significant decrease in accounts receivable in 2026. Net cash provided by financing activities was $2,032 in 2026 versus $75 in 2025, driven by increased cashflow from operations and proceeds from stock option exercises.
We continue to pursue various strategic alternatives including collaborations with other pharmaceutical and biotechnology companies. Our projections of further capital requirements are subject to substantial uncertainty. Our working capital requirements may fluctuate in future periods depending upon numerous factors, including: our ability to obtain additional financial resources; our ability to enter into collaborations that provide us with up-front payments, milestones or other payments; progress or lack of progress in our preclinical studies or clinical trials; unfavorable toxicology in our clinical programs; our drug substance requirements to support clinical programs; change in the focus, direction, or costs of our research and development programs; headcount expense; the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing our patent claims; competitive and technological advances; the potential need to develop, acquire or license new technologies and products; our business development activities; new regulatory requirements implemented by regulatory authorities; the timing and outcome of any regulatory review process; and commercialization activities, if any.
Outstanding Share Information
Our outstanding share data as of June 30, 2026 and December 31, 2025 was as follows (in thousands):
| | | | | | |
| | June 30, | | December 31, |
| |
Outstanding Share Type | | 2026 | | 2025 | | Change |
Common shares | | 35,034 | | 34,163 |
| 871 |
Warrants |
| 111 |
| 111 | | — |
RSU and PSU Awards | | 217 | | 701 | | (484) |
Stock options | | 7,039 | | 5,853 | | 1,186 |
Total |
| 42,401 |
| 40,828 | | 1,573 |
| | | | | | |
Financial Instruments
We invest excess cash and cash equivalents in high credit quality investments held by financial institutions in accordance with our investment policy designed to protect the principal investment. At June 30, 2026, we had approximately $2,544 in our cash accounts and $38,705 in savings and money market accounts. While we have never experienced any loss or write down of our money market investments since our inception, the amounts we hold in money market accounts are substantially above the $250 amount insured by the FDIC and may lose value.
Our investment policy is to manage investments to achieve, in the order of importance, the financial objectives of preservation of principal, liquidity and return on investment. Investments may be made in U.S. or Canadian obligations and bank securities, commercial paper of U.S. or Canadian industrial companies, utilities, financial institutions and consumer loan companies, and securities of foreign banks provided the obligations are guaranteed or carry ratings appropriate to the policy. Securities must have a minimum Dun & Bradstreet rating of A for bonds or R1 low for commercial paper. The policy also provides for investment limits on concentrations of securities by issuer and maximum-weighted average time to maturity of twelve months. This policy applies to all of our financial resources. The policy risks are primarily the opportunity cost of the conservative nature of the allowable investments. Until we are cash flow positive from operations, we have chosen to avoid investments of a trading or speculative nature.
We classify fixed income investments with original maturities at the date of purchase greater than three months which mature at or less than twelve months as current. We carry investments at their fair value with unrealized gains and losses included in other comprehensive income (loss); however, we have not held any instruments that were classified as short-term investments during the periods presented in this Quarterly Report.
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Off-Balance Sheet Arrangements
Since our inception, we have not had any material off-balance sheet arrangements.
Contractual Obligations and Commitments
None, other than the lease agreements, and severance amounts described in notes to our condensed consolidated financial statements contained elsewhere in this Quarterly Report.
Critical Accounting Policies and Estimates
The preparation of our condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as related disclosures of contingent assets and liabilities. Actual results could differ from those estimates, and such differences may be material to the financial statements in future periods.
There have been no material changes to our critical accounting policies and estimates from those described in our Annual Report on Form 10-K for the year ended December 31, 2025, which include, among others, revenue recognition (including variable consideration and contract liabilities), valuation of accounts receivable and related allowances, inventory valuation, stock-based compensation, and income taxes. A detailed description of these policies is included in Note 2, “Significant Accounting Policies,” to our audited consolidated financial statements in that Form 10-K and in Note 2 to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.
Non-GAAP Measures
Adjusted EBITDA
To supplement our condensed consolidated financial statements presented in accordance with U.S. GAAP, the Company provides the computation of Adjusted EBITDA attributable to the Company, which is defined as net income adjusted for the following items: interest expense, depreciation expense, amortization of intangible assets, income tax expense, share-based compensation expense, other revenue, certain other specific provisions, and unrealized foreign exchange gains and/or losses. The adjustments to net income in computing Adjusted EBITDA are set forth in the reconciliation table below.
We view Adjusted EBITDA as a key measure of our performance. We present Adjusted EBITDA because it assists us in comparing our performance across reporting periods on a consistent basis as it excludes certain items that we do not believe are indicative of our core operating performance. Our management uses Adjusted EBITDA:
| ● | for planning purposes, including the preparation of our annual operating budget and developing and refining our internal projections for future periods; |
| ● | to allocate resources to enhance the financial performance of our business; |
| ● | as a target for the determination of the bonus component of compensation for our senior executives; |
| ● | to evaluate the effectiveness of our business strategies and as a tool in evaluating our performance against our budget for each period; and |
| ● | in communications with our Board of Directors and investors concerning our financial performance. |
We believe Adjusted EBITDA is used by securities analysts, investors and other parties interested in the evaluation of the Company. Management believes the disclosure of Adjusted EBITDA offers an additional financial metric that, when coupled with results prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and the reconciliation to U.S. GAAP results, provides a more complete understanding of our results of operations and the factors and trends affecting our business. We believe Adjusted EBITDA is useful to investors for the following reasons:
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| ● | Adjusted EBITDA and similar non-GAAP measures are widely used by investors to measure a company's operating performance without regard to items that can vary substantially from company to company depending upon financing and accounting methods, book values of assets, tax jurisdictions, capital structures and the methods by which assets were acquired; |
| ● | investors can use Adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of our Company, including our ability to service our debt and other cash needs; and |
| ● | by comparing our Adjusted EBITDA in different historical periods, our investors can evaluate our operating performance excluding the impact of items described below. |
The adjustments included in the reconciliation table listed below are presented to illustrate the operating performance of our business in a manner consistent with the presentation used by our management. These adjustments eliminate the impact of a number of items that:
| ● | we do not consider indicative of our ongoing operating performance, such as interest income, unrealized loss on securities; |
| ● | we believe to be akin to, or associated with, interest expense, such as revolving credit facility commitment fees and letter of credit fees; |
| ● | are non-cash in nature, such as share-based compensation; or |
Adjusted EBITDA does not represent, and should not be a substitute for, net income or cash flows from operations as determined in accordance with U.S. GAAP. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. Some of the limitations are:
| ● | Adjusted EBITDA does not reflect our capital expenditures, or future requirements for capital expenditures or contractual commitments; |
| ● | Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; |
| ● | Adjusted EBITDA does not reflect interest expense, or the cash requirements necessary to service interest or principal payments on our debt; |
| ● | although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; |
| ● | several of the adjustments that we use in calculating Adjusted EBITDA, such as non-cash write-downs and other charges, while not involving cash expense, do have a negative impact on the value of our assets as reflected in our consolidated balance sheet prepared in accordance with U.S. GAAP; and |
| ● | other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. |
Furthermore, as noted above, one of our uses of Adjusted EBITDA is as a target for determining elements of compensation for our senior executives. At the same time, some or all of these senior executives have responsibility for monitoring our financial results, generally including the adjustments in calculating Adjusted EBITDA (subject ultimately to review by our Board in the context of the Board's review of our financial statements). While many of the adjustments, involve mathematical application of items reflected in our financial statements, others involve a degree of judgment and discretion. While we believe all of these adjustments are appropriate, and while the calculations are subject to review by our Board in the context of the Board's review of our financial statements, this discretion may be viewed as an additional limitation on the use of Adjusted EBITDA as an analytical tool.
Because of these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our U.S. GAAP results and using Adjusted EBITDA only supplementally.
The following table presents a reconciliation of net income to Adjusted EBITDA:
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| | | | | | | | |
| Three Months Ended | | Six Months Ended | |||||
| June 30, | | June 30, | | June 30, | | June 30, | |
| 2026 | | 2025 | | 2026 | | 2025 | |
Net income | $ | 1,973 | $ | (3,152) | $ | 2,174 | $ | (4,317) |
Interest income | | (287) | | (171) | | (626) | | (407) |
Interest expense | | 3 | | 594 | | 10 | | 1,186 |
Provision for income taxes | | 42 | | - | | 42 | | - |
Depreciation and amortization | | - | | 13 | | - | | 26 |
Other revenue (a) | | (710) | | - | | (710) | | - |
Share based compensation expense (b) | | 1,774 | | 1,494 | | 2,764 | | 2,292 |
Unrealized loss on securities | | - | | 1 | | - | | 2 |
Unrealized foreign exchange gain/(loss) | | 6 | | (17) | | 18 | | (30) |
Adjusted EBITDA | $ | 2,801 | $ | (1,238) | $ | 3,672 | $ | (1,248) |
| (a) | Represents the portion of GAAP revenue related to “material rights” under the Company’s PEDMARK® license with Norgine that is non-cash in the current period and was previously recorded as deferred licensing revenue. Under ASC 606, a portion of the upfront consideration received under this agreement was allocated to a material right and recorded as deferred revenue (contract liability), which is subsequently recognized as revenue as PEDMARK® units are shipped to Norgine and the related material right is satisfied. These amounts are included in GAAP revenue in the periods presented, and the Company continues to apply GAAP recognition and measurement for all revenue, including this component. The adjustment is intended solely to remove this non-cash amortization of previously deferred licensing revenue from Adjusted EBITDA, as management believes excluding this item provides a more comparable view of period-over-period cash operating performance from the Company’s commercial activities. |
| (b) | Represents share-based compensation expense to account for stock options, restricted stock, and other stock awards over their respective vesting periods. |
| | | | | | | ||
| | | | | | | | |
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
Item 4. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures.
The Company’s management, with the participation of our Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of June 30, 2026. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports the Company files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, to allow for timely decisions regarding required disclosures. In designing and evaluating our disclosure controls and procedures, the Company’s management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Our disclosure controls and procedures have been designed to meet reasonable assurance standards. In addition, the design of
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disclosure controls and procedures must reflect the fact that there are resource constraints that require the Company’s management to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Based on this evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2026, the Company's disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
There were no changes to the Company’s internal control over financial reporting during the quarter ended June 30, 2026, that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Inherent Limitation on the Effectiveness of Internal Controls
The effectiveness of any system of internal control over financial reporting is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting can only provide reasonable, not absolute, assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business but cannot assure that such improvements will be sufficient to provide us with effective internal control over financial reporting.
PART II: OTHER INFORMATION
Item 1. Legal Proceedings.
We are not currently a party to any legal proceedings that, in the opinion of management, would have a material adverse effect on our business, financial condition or results of operations.
Item 1A. Risk Factors.
Our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 27, 2026 (the “Annual Report”), includes a detailed discussion of our risk factors under the heading “PART I, Item 1A – Risk Factors.” You should carefully consider the risk factors discussed in our Annual Report, as well as other information in this Quarterly Report. Any of these risks could cause our business, financial condition, results of operations and future growth prospects to suffer. We are not aware of any material changes from the risk factors previously disclosed.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
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Item 5. Other Information.
Insider Trading Arrangements and Policies
During the quarter ended June 30, 2026, no other director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulations S-K.
Press Release
On August 11, 2026, we issued a press release announcing our financial results for the quarter ended June 30, 2026. A copy of the news release is attached to this Quarterly Report as Exhibit 99.1. The press release is being furnished and shall not be deemed to be filed for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, unless such subsequent filing specifically references the press release.
Item 6. Exhibits
Exhibit | | Description | |||
| | | |||
10.1* | | Fennec Pharmaceuticals Inc. 2020 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 99.1 to the Registrant's Registration Statement on Form S-8 filed June 11, 2026). | |||
| | | |||
31.1 | | Certification of Chief Executive Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). | |||
| |
| |||
31.2 | | Certification of Chief Financial Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). | |||
| |
| |||
32.1 | | Certification of Chief Executive Officer and Chief Financial Officer of the Company in accordance with Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). | |||
| |
| |||
99.1 | | Press Release for Quarter June 30, 2026 (furnished herewith). | |||
| | | |||
101.INS | | Inline XBRL Instance Document | |||
| | | |||
101.SCH | | Inline XBRL Taxonomy Extension Schema Document | |||
| | | |||
101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||
| | | |||
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101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||
| | | |||
101.LAB | | Inline XBRL Taxonomy Extension Label Linkbase Document | |||
| | | |||
101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||
| | | |||
104 | | Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101) |
* Indicates a management contract or compensatory plan
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SIGNATURES
Pursuant to requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Fennec Pharmaceuticals Inc. | |
|
|
|
Date: August 13, 2026 | By: | /s/ Jeff Hackman |
|
| Jeff Hackman |
|
| Chief Executive Officer |
|
| (principal executive officer) |
|
|
|
Date: August 13, 2026 | By: | /s/ Robert Andrade |
|
| Robert Andrade |
|
| Chief Financial Officer |
|
| (principal financial and chief accounting officer) |
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