Fennec Pharmaceuticals Sees Strong Growth with Approval and Launch of PEDMARK®

Fennec Pharmaceuticals, a commercial-stage biopharmaceutical company, has reported impressive financial results for fiscal year 2024, driven by the successful approval and launch of its lead product PEDMARK® in the United States and Europe.

Product Approval and Commercialization The highlight of the year was the FDA approval of PEDMARK® in September 2022 to reduce the risk of ototoxicity (hearing loss) associated with cisplatin chemotherapy in pediatric patients. This made PEDMARK® the first and only treatment approved by the FDA for this unmet medical need. The company then announced the commercial availability of PEDMARK® in the U.S. in October 2022.

In June 2023, Fennec also received European Commission Marketing Authorization for PEDMARQSI® (the brand name for PEDMARK® in Europe), including a Pediatric Use Marketing Authorization (PUMA) with up to 8 years of data exclusivity plus 2 years of market protection. The company subsequently entered into an exclusive licensing agreement with Norgine, a leading European specialty pharmaceutical company, to commercialize PEDMARQSI® in Europe, Australia and New Zealand.

The strategic focus for PEDMARK® has been to increase awareness of the unmet need for preventing cisplatin-induced hearing loss, establish it as the standard of care, and ensure seamless access for healthcare providers and patients. This has involved an expanded sales team, partnerships with group purchasing organizations, specialty pharmacy offerings, digital engagement, and support from patient advocacy groups.

Financial Performance Fennec’s financial results for fiscal 2024 reflect the successful commercialization of PEDMARK®. The company reported net product sales of $29.6 million, up from $21.3 million in the prior year, as it expanded market penetration and access. Additionally, the company recorded $18.0 million in licensing revenue related to the Norgine transaction.

Operating expenses increased to $45.0 million in 2024, up from $34.0 million in 2023, primarily due to higher selling and marketing costs as the company focused on expanding outreach to community oncology centers and the adolescent and young adult (AYA) population. Research and development expenses also increased slightly by $0.3 million, while general and administrative expenses rose by $2.8 million, largely due to increased European pre-commercialization activities and expenses associated with the Norgine transaction and intellectual property.

Despite the increase in operating expenses, Fennec reported income from operations of $2.6 million in 2024, compared to a loss of $12.8 million in the prior year. This turnaround was driven by the strong revenue growth and the licensing deal with Norgine.

Liquidity and Capital Resources Fennec ended 2024 with $26.6 million in cash and cash equivalents, up from $13.3 million at the end of 2023. The increase was primarily due to $43.2 million in cash inflows from the Norgine licensing transaction, as well as cash collections on product sales and proceeds from the exercise of stock options. These cash inflows were partially offset by $13.0 million paid to pay down the Petrichor Financing note and cash used in operations for the commercialization of PEDMARK®.

The company’s working capital increased by $17.8 million between 2023 and 2024, reflecting the strong cash position and the ability to fund ongoing operations. Fennec’s management believes the company’s available capital resources, including existing cash and cash equivalents, as well as anticipated accounts receivable, will be sufficient to meet its expected working capital and capital expenditure requirements for at least the next 12 months.

Outlook and Opportunities The approval and launch of PEDMARK® in the U.S. and Europe have positioned Fennec for continued growth and success. The company estimates that over 10,000 pediatric patients may receive platinum-based chemotherapy annually in the U.S. and Europe, with a significant risk of developing permanent hearing loss. PEDMARK® is the first and only approved therapy to mitigate this risk, providing a critical solution for this unmet medical need.

Furthermore, the company’s focus on expanding adoption of PEDMARK® beyond pediatric oncologists to include the broader healthcare provider community, such as audiologists, nurses, and pharmacists, is expected to drive increased utilization. The inclusion of PEDMARK® in the National Comprehensive Cancer Network (NCCN) guidelines for Adolescent and Young Adult (AYA) Oncology, and its incorporation into major medical compendia, are also expected to support wider adoption.

In Europe, the exclusive licensing agreement with Norgine provides Fennec with a strong commercial partner to drive the launch and commercialization of PEDMARQSI®. The upfront payment of $43 million, along with the potential for up to $230 million in additional milestone and royalty payments, represents a significant source of non-dilutive funding to support the company’s ongoing operations and future growth initiatives.

Risks and Challenges While Fennec’s financial performance and outlook are promising, the company faces several risks and challenges that could impact its future success:

1. Competitive Landscape: Although PEDMARK® is currently the only approved therapy for preventing cisplatin-induced hearing loss, the company may face competition from alternative treatments or approaches in the future.

2. Regulatory Hurdles: Maintaining regulatory approvals and navigating any potential changes in the regulatory environment could pose challenges for the company.

3. Reimbursement and Pricing: Ensuring adequate reimbursement and pricing for PEDMARK® in both the U.S. and Europe will be crucial for the product’s commercial success.

4. Intellectual Property Protection: Fennec’s ability to protect its intellectual property rights, including its patents, will be essential to maintaining its competitive advantage.

5. Reliance on Third-Party Partners: The success of the Norgine partnership and the company’s ability to effectively collaborate with other third-party partners will be critical to the global commercialization of PEDMARK®.

6. Ongoing Research and Development: The company will need to continue investing in research and development to expand the potential applications of PEDMARK® and maintain its position as a leader in the prevention of cisplatin-induced hearing loss.

Conclusion Fennec Pharmaceuticals has demonstrated its ability to successfully navigate the regulatory and commercial landscape, culminating in the approval and launch of PEDMARK® in the U.S. and Europe. The company’s strong financial performance in fiscal 2024, driven by robust product sales and a lucrative licensing agreement, positions it for continued growth and success.

As Fennec focuses on expanding the adoption of PEDMARK® and leveraging its exclusive partnerships, the company is well-positioned to address the significant unmet need for preventing cisplatin-induced hearing loss in pediatric and adolescent cancer patients. While challenges and risks remain, Fennec’s strategic execution, innovative product, and robust financial resources provide a solid foundation for the company to capitalize on the significant market opportunity and deliver value to shareholders.