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What changed in FENNEC PHARMACEUTICALS INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of FENNEC PHARMACEUTICALS INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+363 added−403 removedSource: 10-K (2024-03-29) vs 10-K (2023-03-29)

Top changes in FENNEC PHARMACEUTICALS INC.'s 2023 10-K

363 paragraphs added · 403 removed · 280 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

81 edited+25 added−37 removed206 unchanged
Biggest changeThese patents where granted will expire in July 2039, exclusive of patent term adjustment and/or extension, unless held invalid or unenforceable by a court of final jurisdiction. We have exclusively licensed from OHSU U.S. Patent No. 10,596,190 (“the US ‘190 Patent”) and a pending US patent application directed to a method of reducing ototoxicity using sodium thiosulfate.
Biggest changeWe own three additional pending US patent applications directed to methods of treatment using the PEDMARK ® formulation, which, if granted, will be eligible for listing in the Orange Book. These patents where granted will expire in July 2039, exclusive of patent term adjustment and/or extension, unless held invalid or unenforceable by a court of final jurisdiction.
The impact of this scrutiny on us and on the pricing of orphan drugs and other drug products generally cannot be determined with any certainty at this time. Orphan Drug Exclusivity and Pediatric Exclusivity Designation Some jurisdictions, including the United States and Europe, may designate drugs for relatively small patient populations as orphan drugs.
The impact of this scrutiny on us and on the pricing of orphan drugs and other drug products generally cannot be determined with any certainty at this time. Orphan Drug Designation and Orphan Drug Exclusivity and Pediatric Exclusivity Designation Some jurisdictions, including the United States and Europe, may designate drugs for relatively small patient populations as orphan drugs.
We have four wholly-owned subsidiaries: Oxiquant, Inc. and Fennec Pharmaceuticals, Inc., both Delaware corporations, Cadherin Biomedical Inc., a Canadian company, and Fennec Pharmaceuticals (EU) Limited (“Fennec Limited”), an Ireland company. With the exception of Fennec Pharmaceuticals, Inc., all subsidiaries are inactive. Our corporate website is www.fennecpharma.com.
We have four wholly-owned subsidiaries: Oxiquant, Inc. and Fennec Pharmaceuticals, Inc., both Delaware corporations, Cadherin Biomedical Inc., a Canadian company, and Fennec Pharmaceuticals (EU) Limited (“Fennec Limited”), an Ireland company. With the exception of Fennec Pharmaceuticals, Inc. and Fennec Limited all subsidiaries are inactive. Our corporate website is www.fennecpharma.com.
These cost containment measures could include: • controls on government-funded reimbursement for drugs; • mandatory rebates or additional charges to manufacturers for their products to be covered on Medicare Part D formularies; • controls on healthcare providers; • controls on pricing of drug products, including the possible reference of the pricing of United States drugs to non-United States drug pricing for the same product; • challenges to the pricing of drugs or limits or prohibitions on reimbursement for specific products through other means; 16 Table of Contents • reform of drug importation laws; • entering into contractual agreements with payors; and • expansion of use of managed-care systems in which healthcare providers contract to provide comprehensive healthcare for a fixed cost per person.
These cost containment measures could include: ● controls on government-funded reimbursement for drugs; ● mandatory rebates or additional charges to manufacturers for their products to be covered on Medicare Part D formularies; ● controls on healthcare providers; 18 Table of Contents ● controls on pricing of drug products, including the possible reference of the pricing of United States drugs to non-United States drug pricing for the same product; ● challenges to the pricing of drugs or limits or prohibitions on reimbursement for specific products through other means; ● reform of drug importation laws; ● entering into contractual ● agreements with payors; and ● expansion of use of managed-care systems in which healthcare providers contract to provide comprehensive healthcare for a fixed cost per person.
Further, Amendment 1 adjusts select milestone payments entered in the OHSU Agreement including but not limited to the royalty rate on net sales for licensed products, royalty rate from sublicensing of the licensed technology and the fee payable upon the regulatory approval of a licensed product.
Further, Amendment 1 adjusts select milestone payments in the OHSU Agreement including but not limited to the royalty rate on net sales for licensed products, royalty rate from sublicensing of the licensed technology and the fee payable upon the regulatory approval of a licensed product.
CIPLA ANDA Litigation On December 1, 2022, we received a letter dated November 30, 2022, notifying us that CIPLA Ltd. and CIPLA USA (“CIPLA”) submitted to the FDA an ANDA (ANDA No. 218028) for a generic version of PEDMARK ® (sodium thiosulfate solution) that contains Paragraph IV Certifications on two of our patents covering PEDMARK ® : the OHSU licensed US ‘190 Patent, expiration date January 2038; and our US 11,291,728 Patent, expiration date July 2039.
CIPLA ANDA Litigation On December 1, 2022, we received a letter dated November 30, 2022, notifying us that CIPLA Ltd. and CIPLA USA (“CIPLA”) submitted to the FDA an ANDA (ANDA No. 218028) for a generic version of PEDMARK ® (sodium thiosulfate solution) that contains Paragraph IV Certifications on two of our patents covering PEDMARK ® : the OHSU licensed ‘190 Patent, expiration date January 2038; and our US 11,291,728 Patent (the “’728 Patent”), expiration date July 2039.
Specifically, every bulk drug 8 Table of Contents substance used in compounding: (1) must comply with an applicable and current USP or NF drug monograph, if one exists, as well as the current USP chapters on pharmacy compounding; (2) if such a monograph does not exist, the bulk drug substance must be a component of an FDA-approved drug; or (3) if a monograph does not exist and the bulk drug substance is not a component of an FDA-approved drug, it must appear on a list of bulk drug substances that may be used in compounding (i.e., the “Section 503A bulk substances list 1”).
Specifically, every bulk drug substance used in compounding: (1) must comply with an applicable and current USP or NF drug monograph, if one exists, as well as the current USP chapters on pharmacy compounding; (2) if such a monograph does not exist, the bulk drug substance must be a component of an FDA-approved drug; or (3) if a monograph does not exist and the bulk drug substance is not a component of an FDA-approved drug, it must appear on a list of bulk drug substances that may be used in 10 Table of Contents compounding (i.e., the “Section 503A bulk substances list 1”).
On January 6, 2023, we received a letter dated January 5, 2023, notifying us that CIPLA submitted to the FDA a Paragraph IV Certification on our newly issued US 11,510,984 Patent. These patents are listed in FDA’s list of Approved Drug Products with Therapeutic Equivalence Evaluations, commonly referred to as the Orange Book, for PEDMARK ® .
On January 6, 2023, we received a letter dated January 5, 2023, notifying us that CIPLA submitted to the FDA a Paragraph IV Certification on our newly issued US 11,510,984 Patent (the “’984 Patent”). These patents are listed in FDA’s list of Approved Drug Products with Therapeutic Equivalence Evaluations, commonly referred to as the Orange Book, for PEDMARK ® .
Under the Orphan Drug Act of 1983 (ODA), the FDA may grant Orphan Drug Designation to drugs intended to treat a rare disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States and for which there is no reasonable expectation that the cost of developing and making available in the United States a drug for this type of disease or condition will be recovered from sales in the United States for that drug.
Under the ODA, the FDA may grant Orphan Drug Designation to drugs intended to treat a rare disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States and for which there is no reasonable expectation that the cost of developing and making available in the United States a drug for this type of disease or condition will be recovered from sales in the United States for that drug.
A drug may obtain a three-year period of exclusivity for a particular condition of approval, or change to a marketed product, such as a new formulation for the previously 14 Table of Contents approved product, if one or more new clinical studies (other than bioavailability or bioequivalence studies) was essential to the approval of the application and was conducted/sponsored by the applicant.
A drug may obtain a three-year period of exclusivity for a particular condition of approval, or change to a marketed product, such as a new formulation for the previously approved product, if one or more new clinical studies (other than bioavailability or bioequivalence studies) was essential to 16 Table of Contents the approval of the application and was conducted/sponsored by the applicant.
Exclusivity Upon NDA approval of a new chemical entity (NCE), which is a drug product that contains an active moiety that has never been approved by FDA in any other NDA, that drug receives five years of marketing exclusivity during which FDA cannot receive any ANDA seeking approval of a generic version of that drug.
Exclusivity Upon NDA approval of a new chemical entity (“NCE”), which is a drug product that contains an active moiety that has never been approved by FDA in any other NDA, that drug receives five years of marketing exclusivity during which FDA cannot receive any ANDA seeking approval of a generic version of that drug.
In some cases, such as cancer indications, Phase 1 clinical trials are conducted in patients rather than healthy volunteers. ● Phase 2 Clinical Trials : Phase 2 clinical trials typically take one to two years to complete and are generally carried out on a relatively small number of patients, generally between 15 and 50, in a specific setting of targeted disease 10 Table of Contents or medical condition, in order to provide an estimate of the drug’s effectiveness in that specific setting.
In some cases, such as cancer indications, Phase 1 clinical trials are conducted in patients rather than healthy volunteers. ● Phase 2 Clinical Trials : Phase 2 clinical trials typically take one to two years to complete and are generally carried out on a relatively small number of patients, generally between 15 and 50, in a specific setting of targeted disease or medical condition, in order to provide an estimate of the drug’s effectiveness in that specific setting.
If the FDA determines that information relating to the use of the new drug in the pediatric population may produce health benefits in the population, the clinical study is deemed to fairly respond to the FDA’s request and the reports of FDA-requested pediatric studies are submitted to and accepted by the FDA within the statutory time limits, whatever statutory or regulatory periods of exclusivity or patent protection covering the product are extended by six months.
If the FDA determines that information relating to the use of the new drug in the pediatric population may produce health benefits in the population, the clinical study is deemed to fairly respond to the FDA’s request and the reports of FDA-requested pediatric studies are submitted 19 Table of Contents to and accepted by the FDA within the statutory time limits, whatever statutory or regulatory periods of exclusivity or patent protection covering the product are extended by six months.
Orphan Drug Act Under the Orphan Drug Act, the FDA may grant orphan drug designation to drugs intended to treat a “rare disease or condition,” which generally is a disease or condition that affects fewer than 200,000 individuals in the U.S.
Orphan Drug Act Under the Orphan Drug Act of 1983, the FDA may grant orphan drug designation to drugs intended to treat a “rare disease or condition,” which generally is a disease or condition that affects fewer than 200,000 individuals in the U.S.
While European, U.S. and Canadian regulatory systems require that medical products be safe, effective, and manufactured according to high quality standards, the drug approval process in Europe differs from that in the United States and Canada and may require us to perform additional preclinical or clinical testing regardless of whether FDA approval has been obtained.
While European, U.S. and Canadian regulatory systems require that medical products be safe, effective, and manufactured according to high quality standards, the drug approval process in Europe differs from that in the U.S. and Canada and may require us to perform additional preclinical or clinical testing regardless of whether FDA or TPD approval has been obtained.
Facilities, procedures, operations, and/or testing of products are subject to periodic inspection by the FDA and other authorities. In addition, the FDA conducts pre-approval and post-approval reviews and inspections to determine whether the systems and processes are in compliance with cGMP and other FDA regulations. There are also user fees for ANDA applicants, sponsors, and manufacturers.
Facilities, procedures, operations, and/or testing of products are subject to periodic inspection by the FDA and other authorities. In addition, the FDA conducts pre-approval and post-approval reviews and inspections to determine whether the systems and processes are in compliance with cGMP and other FDA regulations. 17 Table of Contents There are also user fees for ANDA applicants, sponsors, and manufacturers.
All manufacturing facilities, as well as records required to be maintained under FDA regulations, are subject to inspection or audit by the FDA. In addition, manufacturers generally are required to pay annual user fees for approved products and a user fee for the submission of each new or supplemental application.
All manufacturing facilities, as well as records required to be maintained under FDA 13 Table of Contents regulations, are subject to inspection or audit by the FDA. In addition, manufacturers generally are required to pay annual user fees for approved products and a user fee for the submission of each new or supplemental application.
The European Orphan Drug Regulation is considered for drugs intended to diagnose, prevent or treat a life-threatening or very serious condition afflicting five or fewer per 10,000 people in the EU, including compounds that for serious and chronic conditions would likely not be marketed without incentives due to low market return on the sponsor’s development 17 Table of Contents investment.
The European Orphan Drug Regulation is considered for drugs intended to diagnose, prevent or treat a life-threatening or very serious condition afflicting five or fewer per 10,000 people in the EU, including compounds that for serious and chronic conditions would likely not be marketed without incentives due to low market return on the sponsor’s development investment.
Orphan Drug Exclusivity We were granted Orphan Drug Exclusivity (“ODE”) in January 2023 for the use of PEDMARK ® in the indication to reduce the risk of ototoxicity, or hearing loss, associated with cisplatin use in pediatric patients one month of age and older with localized, non-metastatic solid tumors.
Orphan Drug Exclusivity and European Union Pediatric-Use marketing Exclusivity We were granted Orphan Drug Exclusivity (“ODE”) in January 2023 for the use of PEDMARK ® in the indication to reduce the risk of ototoxicity, or hearing loss, associated with cisplatin use in pediatric patients one month of age and older with localized, non-metastatic solid tumors.
PEDMARK ® is also the only therapeutic agent with proven efficacy and safety data with an established dosing paradigm, across two open-label, randomized Phase 3 clinical studies, the Clinical Oncology Group (COG) Protocol ACCL0431 and SIOPEL 6. In the U.S. and Europe, it is estimated that, annually, more than 10,000 children may receive platinum-based chemotherapy.
PEDMARK ® is also the only therapeutic agent with proven efficacy and safety data with an established dosing paradigm, across two open-label, randomized Phase 3 clinical studies, the Clinical Oncology Group (COG) Protocol ACCL0431 and SIOPEL 6. In the U.S. and Europe, it is estimated that more than 10,000 children may receive platinum-based chemotherapy on an annual basis.
This phase also provides additional safety data and serves to identify possible common short-term side effects and risks in a somewhat larger group of patients. Phase 2 testing frequently relates to a specific disease, such as breast or lung cancer.
This phase also provides additional safety data and serves to identify possible common short-term side effects and risks in a somewhat larger group of patients. Phase 2 testing frequently relates to a specific disease, such as breast or lung 12 Table of Contents cancer.
Also, any post-approval changes in the drug substance, drug product, production process, quality controls, equipment, or facilities that have a substantial potential to have an adverse effect on the identity, strength, quality, purity, or potency of the drug product 11 Table of Contents are subject to FDA review and approval.
Also, any post-approval changes in the drug substance, drug product, production process, quality controls, equipment, or facilities that have a substantial potential to have an adverse effect on the identity, strength, quality, purity, or potency of the drug product are subject to FDA review and approval.
The additional rebate is similar to that discussed above for innovator products, except that the baseline AMP quarter is the fifth full quarter after launch (for non- innovator multiple source drugs launched on April 1, 2013 or later) or the third quarter of 2014 (for those 20 Table of Contents launched before April 1, 2013).
The additional rebate is similar to that discussed above for innovator products, except that the baseline AMP quarter is the fifth full quarter after launch (for non- innovator multiple source drugs launched on April 1, 2013 or later) or the third quarter of 2014 (for those launched before April 1, 2013).
In addition to retroactive rebates, if a manufacturer were found to have knowingly submitted false information to the government, federal law provides for civil monetary penalties for failing to provide required information, late submission of required information, and false information.
In addition to retroactive rebates, if a manufacturer 21 Table of Contents were found to have knowingly submitted false information to the government, federal law provides for civil monetary penalties for failing to provide required information, late submission of required information, and false information.
If the manufacturing plan and data are insufficient, any sNDA we submit will not be approved. Before an sNDA can be approved, our manufacturers must also demonstrate compliance with FDA’s current Good Manufacturing Practices (cGMPs) regulations and policies.
If the manufacturing plan and data are insufficient, any sNDA we submit will not be approved. Before an sNDA can be approved, our manufacturers must also demonstrate compliance with the FDA’s cGMPs regulations and policies.
The FDA does, however, regulate manufacturers’ communications about their drug products and interprets the Federal Food, Drug, and Cosmetic Act (“FFDCA”) to prohibit pharmaceutical companies from promoting their FDA-approved drug products for uses that are not specified in the FDA-approved labeling.
The FDA does, however, regulate manufacturers’ communications about their drug products and interprets the Federal Food, Drug, and Cosmetic Act (“FFDCA”) to prohibit pharmaceutical companies from promoting their FDA-approved drug products for uses that are not 14 Table of Contents specified in the FDA-approved labeling.
Corporate Relationships License Agreement with Oregon Health & Science University On February 20, 2013, we entered into a new exclusive license agreement with OHSU for exclusive worldwide license rights to intellectual property directed to thiol-based compounds, including PEDMARK ® , and their use in oncology (the "OHSU Agreement").
Corporate Relationships License Agreement with Oregon Health & Science University On February 20, 2013, we entered into an exclusive license agreement with OHSU for exclusive worldwide license rights to intellectual property directed to thiol-based compounds, including PEDMARK ® , and their use in oncology (the “OHSU Agreement”).
Sponsors are also obligated to disclose the results of their clinical trials after completion. Disclosure of results of these trials can be delayed in certain circumstances for up to two years after the date of completion of the clinical trial. Competitors may use this publicly-available information to gain knowledge regarding the progress of development programs.
Disclosure of results of these trials can be delayed in certain circumstances for up to two years after the date of completion of the clinical trial. Competitors may use this publicly-available information to gain knowledge regarding the progress of development programs.
Orange Book Listing In seeking approval for a drug through an NDA, applicants are required to list with the FDA each patent with claims covering the applicant’s product or approved methods of using the product.
Orange Book Listing In seeking approval for a drug through a New Drug Application (“NDA”), applicants are required to list with the FDA each patent with claims covering the applicant’s product or approved methods of using the product.
Employee Profile As of December 31, 2022, we had approximately 36 employees, 25 of whom are in our commercial organization, two of whom are in our R&D organization, and the rest of whom are in our G&A organization. We also utilize the services of several full-time consultants who work with our commercial organization.
Employee Profile As of December 31, 2023, we had approximately 29 employees, 21 of whom are in our commercial organization, two of whom are in our R&D organization, and the rest of whom are in our G&A organization. We also utilize the services of several full-time consultants who work with our commercial organization.
The three other applications cover additional sodium thiosulfate formulations for potential future use. Additional applications from these families are pending in Australia, Brazil, Canada, China, the European Patent Office (EPO), Hong Kong, Indonesia, Israel, Japan, South Korea, Mexico, Malaysia, New Zealand, Russia, Singapore, and Thailand.
The four other applications cover additional sodium thiosulfate formulations for potential future use. A patent in this family has been granted in Indonesia. Additional applications from these families are pending in Australia, Brazil, Canada, China, the European Patent Office (EPO), Hong Kong, Israel, Japan, South Korea, Mexico, Malaysia, New Zealand, Russia, Singapore, and Thailand.
The FDA does not regulate the 12 Table of Contents behavior of physicians in their choice of treatments for their individual patients.
The FDA does not regulate the behavior of physicians in their choice of treatments for their individual patients.
Factors affecting competition generally In general, our ability to compete depends in large part upon: • our ability to obtain regulatory approvals for our drug candidates outside the U.S.; • the demonstrated efficacy, safety and reliability of our drug candidates; • the timing and scope of regulatory approvals; • product acceptance by physicians and other health care providers; • the willingness of payors to reimburse for our product; • protection of our proprietary rights and the level of generic competition; • our ability to supply commercial quantities of our product to the market; • our ability to obtain reimbursement from private and/or public insurance entities for product use in approved indications; • our ability to recruit and retain skilled employees; and 9 Table of Contents • the availability of capital resources to fund our development and commercialization activities, including the availability of funding from the federal government.
Factors affecting competition generally In general, our ability to compete depends in large part upon: ● our ability to obtain regulatory approvals for our drug candidate outside the U.S.; ● the demonstrated efficacy, safety and reliability of our drug candidate; ● the timing and scope of regulatory approvals; ● product acceptance by physicians and other health care providers; ● the willingness of payors to reimburse for our product; ● protection of our proprietary rights and the level of generic competition; ● our ability to supply commercial quantities of our product to the market; ● our ability to obtain reimbursement from private and/or public insurance entities for product use in approved indications; ● our ability to recruit and retain skilled employees; and ● the availability of capital resources to fund our development and commercialization activities, including the availability of funding from the federal government. 11 Table of Contents Government Regulation The production and manufacture of our product and our research and development activities are subject to significant regulation for safety, efficacy and quality by various governmental authorities around the world.
We have entered into agreements with a supplier of the active pharmaceutical ingredient (API) contained in PEDMARK ® for future requirements and we have contracted with third-party contract manufacturers who are manufacturing PEDMARK ® vials for us. Any significant change that we make for PEDMARK ® must be approved by the FDA in a supplemental new drug application (sNDA).
We have entered into agreements with a supplier of the active pharmaceutical ingredient (API) contained in PEDMARK ® for future requirements and we have contracted with a third-party contract manufacturer to manufacture PEDMARK ® vials for us. Any significant change that we make for PEDMARK ® must be approved by the FDA in a supplemental new drug application (“sNDA”).
A PUMA is a dedicated marketing authorization covering the indication and appropriate formulation for medicines developed exclusively for use in the pediatric population and provides market protection up to 10 years.
A PUMA is a dedicated marketing authorization covering the indication and appropriate formulation for medicines developed exclusively for use in the pediatric population and provides market protection up to10 years of exclusivity (8 years of data exclusivity + 2 years of market exclusivity).
Patent No. 10,792,363 (“US ’363 Patent”), which relates to an anhydrous form of STS and its method of manufacture, which is the active pharmaceutical 5 Table of Contents ingredient in our PEDMARK ® product. The US ‘190 Patent was issued on March 24, 2020. The US ‘363 Patent was issued on October 6, 2020.
Patent No. 10,792,363 (the “’363 Patent”), which relates to an anhydrous form of STS and its method of manufacture, which is the active pharmaceutical ingredient in the PEDMARK ® product. The ‘363 Patent was issued October 6, 2020.
We protect such information principally through confidentiality agreements with our employees, consultants, outside scientific collaborators, and other advisers. In the case of our employees, these agreements also provide, in compliance with relevant law, that inventions and other intellectual property conceived by such employees during their employment shall be our exclusive property.
In the case of our employees, these agreements also provide, in compliance with relevant law, that inventions and other intellectual property conceived by such employees during their employment shall be our exclusive property.
The PUMA was introduced by the EU Pediatric Regulation for medicines that are: ● Normally contain an already authorized active ingredient; ● Are no longer covered by a supplementary protection certificate (“SPC”) or a patent that qualifies for a SPC; and ● Are to be exclusively developed for use in children. 13 Table of Contents The PUMA process was established to make it more efficient for pharmaceutical companies to invest in the development of drugs for children.
The PUMA was introduced by the EU Pediatric Regulation for medicines that are: ● Normally contain an already authorized active ingredient; ● Are no longer covered by a supplementary protection certificate (“SPC”) or a patent that qualifies for a SPC; and ● Are to be exclusively developed for use in children.
On January 10, 2023 we filed suit against the CIPLA entities in the United States District Court for the District of New Jersey (Case No. 3:23-cv-00123), for infringement of the ‘190 Patent and the ‘728 Patent. The suit is ongoing.
On January 10, 2023, we filed suit against the CIPLA entities in the United States District Court for the District of New Jersey (Case No. 2:23-cv-00123), for infringement of the ‘190 Patent, the ‘728 Patent, and the ‘984 Patent. On April 20, 2023, we filed an Amended Complaint to assert infringement of the ‘728 patent and the ‘984 Patent.
These user fees typically increase each fiscal year. 15 Table of Contents Other regulatory requirements In addition to regulation by the FDA and certain state regulatory agencies, we are also subject to a variety of foreign regulations governing clinical trials and the marketing of other products.
In addition, there is a new annual program fee based on the size of the generic drug applicant. These user fees typically increase each fiscal year. Other regulatory requirements In addition to regulation by the FDA and certain state regulatory agencies, we are also subject to a variety of foreign regulations governing clinical trials and the marketing of other products.
The COG ACCL0431 protocol enrolled childhood cancers typically treated with intensive cisplatin therapy for localized and disseminated disease, including newly diagnosed hepatoblastoma, germ cell tumor, osteosarcoma, neuroblastoma, medulloblastoma, and other solid tumors. SIOPEL 6 enrolled only hepatoblastoma patients with localized tumors. Cisplatin Induced Ototoxicity Cisplatin and other platinum compounds are essential chemotherapeutic agents for the treatment of many pediatric malignancies.
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.
Additional tumor types of the proposed indication will be subject to the Committee for Medicinal Products for Human Use (“CHMP”) assessment at the time of the MAA. No deferred clinical studies were required in the positive opinion given by PDCO. We were also advised that Pedmarqsi is eligible for submission of an application for a Pediatric Use Marketing Authorization (“PUMA”).
Additional tumor types of the proposed indication will be subject to the Committee for Medicinal Products for Human Use (“CHMP”) assessment at the time of the MAA. No deferred clinical studies were required in the positive opinion given by PDCO.
Our patent position and proprietary rights are subject to various risks and uncertainties. Please read the “Risk Factors” in Item 1A of this Annual Report for information about certain risks and uncertainties that may affect our patent position and proprietary rights. We also rely upon unpatented confidential information to remain competitive.
Please read the “Risk Factors” in Item 1A of this Annual Report for information about certain risks and uncertainties that may affect our patent position and proprietary rights. We also rely upon unpatented confidential information to remain competitive. We protect such information principally through confidentiality agreements with our employees, consultants, outside scientific collaborators, and other advisers.
In February 2020, we announced that we had submitted a MAA for the prevention of ototoxicity induced by cisplatin chemotherapy patients 1 month to Third-Party Reimbursement Sales of drug products depend in significant part on the availability of coverage and adequate reimbursement by third party payors, such as state and federal governments, including Medicare and Medicaid, managed care providers, private commercial insurance plans and pharmacy benefit management (PBM) plans.
Third-Party Reimbursement Sales of drug products depend in significant part on the availability of coverage and adequate reimbursement by third party payors, such as state and federal governments, including Medicare and Medicaid, managed care providers, private commercial insurance plans and pharmacy benefit management (PBM) plans.
Disclosure of clinical trial information Sponsors of clinical trials of FDA-regulated products, including drugs, are required to register and disclose certain clinical trial information. Information related to the product, patient population, phase of investigation, study sites and investigators, and other aspects of the clinical trial is then made public as part of the registration.
Information related to the product, patient population, phase of investigation, study sites and investigators, and other aspects of the clinical trial is then made public as part of the registration. Sponsors are also obligated to disclose the results of their clinical trials after completion.
Unfortunately, platinum-based therapies can cause ototoxicity, or hearing loss, which is permanent, irreversible, and particularly harmful to the survivors of pediatric cancer.
Cisplatin Induced Ototoxicity Cisplatin and other platinum compounds are essential chemotherapeutic agents for the treatment of many pediatric malignancies. Unfortunately, platinum-based therapies can cause ototoxicity, or hearing loss, which is permanent, irreversible, and particularly harmful to the survivors of pediatric cancer.
Our benefits programs include company sponsored medical, dental and vision health care coverage, life and AD&D insurance, and a 401(k) plan among others benefits.
Our benefits programs include company sponsored medical, dental and vision health care coverage, life and AD&D insurance, and a 401(k) plan among others benefits. Research and Development Our research and development efforts have been focused on the development of PEDMARK ® since 2013.
FDA Orange Book Listings On April 5, 2022, the USPTO issued U.S. Patent No. 11,291,728 (the “US ‘728 Patent”) that covers the PEDMARK ® pharmaceutical formulation. On November 9, 2022, the USPTO issued U.S. Patent No. 11,510,984 (the “US ‘984 Patent”) that also covers the PEDMARK ® pharmaceutical formulation.
On November 9, 2022, the USPTO issued U.S. Patent No. 11,510,984 (the “US ‘984 Patent”) that also covers the PEDMARK ® pharmaceutical formulation. On April 4, 2023, the USPTO issued U.S. Patent No. 11,617,793 (the “US ‘793”) that covers the PEDMARK ® pharmaceutical formulation.
Our patent position and proprietary rights are subject to various risks and uncertainties. Please 6 Table of Contents read the “Risk Factors” in Item 1A of this Annual Report for information about certain risks and uncertainties that may affect our patent position and proprietary rights. We also rely upon unpatented confidential information to remain competitive.
Please read the “Risk Factors” in Item 1A of this Annual Report for information about certain risks and uncertainties that may affect our patent position and proprietary rights. We also rely upon unpatented confidential information to remain competitive. We protect such information principally through confidentiality agreements with our employees, consultants, outside scientific collaborators, and other advisers.
The Centers for Medicare & Medicaid Services (CMS) has issued a final rule that requires manufacturers of approved prescription drugs to collect and report information on payments or transfers of value to physicians, physician assistants, certain types of advanced practice nurses and teaching hospitals, as well as investment interests held by physicians and their immediate family members.
The majority of states also have statutes or regulations similar to the federal anti-kickback law and false claims laws, which apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payer. 20 Table of Contents The Centers for Medicare & Medicaid Services (CMS) has issued a final rule that requires manufacturers of approved prescription drugs to collect and report information on payments or transfers of value to physicians, physician assistants, certain types of advanced practice nurses and teaching hospitals, as well as investment interests held by physicians and their immediate family members.
Among the remedies available to the government for any failure to properly disclose 21 Table of Contents commercial pricing and/or to extend FSS contract price reductions is recoupment of any FSS overcharges that may result from such omissions.
Among the remedies available to the government for any failure to properly disclose commercial pricing and/or to extend FSS contract price reductions is recoupment of any FSS overcharges that may result from such omissions. 22 Table of Contents Tricare Retail Pharmacy Network Program The DoD provides pharmacy benefits to current and retired military service members and their families through the Tricare healthcare program.
On May 18, 2015, we negotiated an amendment ("Amendment 1") to the OHSU Agreement, which expands our exclusive license to include the use of N-acetylcysteine as a standalone therapy and/or in combination with STS for the prevention of ototoxicity induced by chemotherapeutic agents to treat cancers.
OHSU will receive certain milestone payments, royalty on net sales for licensed products and a royalty on any consideration received from sublicensing of the licensed technology. 9 Table of Contents On May 18, 2015, we negotiated an amendment (“Amendment 1”) to the OHSU Agreement, which expands our exclusive license to include the use of N-acetylcysteine as a standalone therapy and/or in combination with sodium thiosulfate for the prevention of ototoxicity induced by chemotherapeutic agents to treat cancers.
Research and Development Our research and development efforts have been focused on the development of PEDMARK ® since 2013. 22 Table of Contents We have established relationships with contract research organizations (“CROs”), universities and other institutions, which we utilize to perform many of the day-to-day activities associated with our drug development.
We have established relationships with contract research organizations (“CROs”), universities and other institutions, which we utilize to perform many of the day-to-day activities associated with our drug development. Where possible, we have 23 Table of Contents sought to include leading scientific investigators and advisors to enhance our internal capabilities.
Where possible, we have sought to include leading scientific investigators and advisors to enhance our internal capabilities. Research and development issues are reviewed internally by our executive management and supporting scientific team. Research and development expenses totaled $3.5 million and $5.0 million for the fiscal years ended December 31, 2022 and 2021, respectively.
Research and development issues are reviewed internally by our executive management and supporting scientific team. Research and development expenses totaled $0.1 million and $3.5 million for the fiscal years ended December 31, 2023 and 2022, respectively. We have decreased our research and development expenses related to PEDMARK ® as our efforts have shifted to commercial readiness and launch activities.
While we now have, or will shortly receive, additional U.S. patents that cover PEDMARK ® over the IPR challenged patents, an invalidation of our patents covering PEDMARK ® could have a material adverse effect on our ability to protect our rights in PEDMARK ® beyond periods of marketing exclusivity for PEDMARK ® possible in the United States under Orphan Drug Designation and in Europe under European Market Exclusivity for Pediatric Use (“PUMA”).
An invalidation of our patents covering PEDMARK ® could have a material adverse effect on our ability to protect our rights in PEDMARK ® beyond periods of marketing exclusivity for PEDMARK ® in the United States under Orphan Drug Designation.
We currently wholly own two patent families directed to formulations that cover PEDMARK ® and other potential future sodium thiosulfate formulations, and methods of using and manufacturing the same.
We currently wholly own two patent families directed to formulations that cover PEDMARK ® and other potential future sodium thiosulfate formulations, and methods of using and manufacturing the same. The USPTO has now granted three additional U.S. patents that cover the PEDMARK ® formulation, each of which have been listed in the U.S. FDA’s “Orange Book” (U.S.
Now that PEDMARK ® has regulatory approval for sale, it will compete on the basis of drug efficacy, safety, patient convenience, reliability, ease of manufacture, price, marketing, distribution, and patent protection, among other variables. Our competitors may develop technologies or drugs that are more effective, safer or more affordable than PEDMARK ® .
We cannot give any assurances that we can compete effectively with these other biotechnology and pharmaceutical companies. Now that PEDMARK ® has regulatory approval for sale, it will compete on the basis of drug efficacy, safety, patient convenience, reliability, ease of manufacture, price, marketing, distribution, and patent protection, among other variables.
We are not aware of any commercially available agents that reduce the incidence of hearing loss associated with the use of platinum-based anti-cancer agents, which is the purpose of PEDMARK ® . However, there are several potential competitive agents with activity in preclinical or limited clinical settings.
Our competitors may develop technologies or drugs that are more effective, safer or more affordable than PEDMARK ® . We are not aware of any commercially available agents that reduce the incidence of hearing loss associated with the use of platinum-based anti-cancer agents, which is the purpose of PEDMARK ® .
European Marketing Authorization Application In August 2018, the Pediatric Committee (“PDCO”) of the European Medicines Agency (“EMA”) accepted our pediatric investigation plan (“PIP”) for sodium thiosulfate with the trade name Pedmarqsi for the condition of the prevention of 3 Table of Contents platinum-induced hearing loss.
Infants and young children that are affected by ototoxicity at critical stages of development lack speech and language development and literacy, and older children and adolescents often lack social-emotional development and educational achievement. 5 Table of Contents European Commission Marketing Authorization In August 2018, the Pediatric Committee (“PDCO”) of the European Medicines Agency (“EMA”) accepted our pediatric investigation plan (“PIP”) for sodium thiosulfate with the trade name PEDMARQSI ® for the condition of the prevention of platinum-induced hearing loss.
PEDMARK ® is currently protected by methods of use patent that we exclusively license from OHSU in the ‘190 patent that is set to expire in the United States in 2038. The OHSU Agreement is terminable by either us or OHSU in the event of a material breach of the agreement by either party after 45 days prior written notice.
The OHSU Agreement is terminable by either us or OHSU in the event of a material breach of the agreement by the other party after 45 days prior written notice.
During the ‘363 IPR, we disclaimed the patent claims directed to the anhydrous morphic form of STS and continued with claims directed to its method of manufacture. We expect a decision in the ‘363 IPR in May 2023, which can be appealed by the losing party.
During the ‘363 IPR, we disclaimed the patent claims directed to the anhydrous morphic form of STS and continued with claims directed to its method of manufacture. Because the remaining claims in the ‘363 patent are directed to a method of manufacture, the ‘363 patent is not eligible for listing in the Orange Book.
As a result of these factors, we are unable to accurately estimate the nature, timing and future costs necessary to complete the development of this product candidate. Company Information We incorporated under the Canada Business Corporations Act ("CBCA”) in September 1996. In August 2011, we continued from the CBCA to the Business Corporations Act (British Columbia) (the “Continuance”).
Company Information We incorporated under the Canada Business Corporations Act ("CBCA”) in September 1996. In August 2011, we continued from the CBCA to the Business Corporations Act (British Columbia) (the “Continuance”).
There is a risk that PEDMARK ® will be uneconomical to manufacture or market or will not achieve market acceptance. There is also a risk that third parties may hold proprietary rights that preclude us from marketing our product candidate or that others will market a superior or equivalent product.
There is also a risk that third parties may hold proprietary rights that preclude us from marketing our product candidate or that others will market a superior or equivalent product. As a result of these factors, we are unable to accurately estimate the nature, timing and future costs necessary to complete future development of PEDMARK ® .
For fiscal year 2022, the application fees are $225,712 per ANDA application and the facility fees are $195,012 per domestic finished dosage form facility, $210,012 per foreign finished dosage form facility, $42,557 per domestic active pharmaceutical ingredient facility, and $57,557 per foreign active pharmaceutical ingredient facility.
For fiscal year 2023, the application fees are $240,582 per ANDA application and the facility fees are $213,134 per domestic finished dosage form facility, $228,134 per foreign finished dosage form facility, $37,544 per domestic active pharmaceutical ingredient facility, and $52,544 per foreign active pharmaceutical ingredient facility.
Three US patents have been issued from these two families, and two of the issued patents (US ‘984 Patent; US ‘728 Patent) qualify for and have been listed in the FDA Orange Book. Our ‘363 issued patent covers a process of manufacture, which is a patent category that does not qualify for FDA orange book listing.
Our ‘363 issued patent covers a process of manufacture, which is a patent category that does not qualify for FDA orange book listing. Seven additional US patent applications are pending, three of which cover methods of using our PEDMARK ® formulation and are eligible for listing on the FDA Orange Book if issued.
We also have the right to terminate the OHSU Agreement at any time upon 60 days prior written notice and payment of all fees due to OHSU under the OHSU Agreement. COVID-19 Our operations may be affected by the ongoing COVID-19 pandemic.
We also have the right to terminate the OHSU Agreement at any time upon 60 days prior written notice and payment of all fees due to OHSU under the OHSU Agreement. Competition The biotechnology and pharmaceutical industries are extremely competitive. Our potential competitors are many in number and include major and mid-sized pharmaceutical and biotechnology companies.
In developing PEDMARK ® , we are subject to risks of failure that are inherent in the development of products based on innovative technologies. For example, it is possible that our product candidate will be ineffective or toxic, or will otherwise fail to receive the necessary regulatory clearances.
For example, it is possible that our product candidate will be ineffective or toxic, or will otherwise fail to receive the necessary regulatory clearances. There is a risk that PEDMARK ® will be uneconomical to manufacture or market or will not achieve market acceptance.
If a product is developed solely for use in the pediatric population, then a Pediatric Use Marketing Authorization, or PUMA, may provide eight years of data exclusivity and ten years of marketing exclusivity. Breakthrough Therapy Designation Breakthrough therapy designation by the FDA is intended to expedite the development and review of drugs for serious or life-threatening conditions.
If a product is developed solely for use in the pediatric population, then a Pediatric Use Marketing Authorization, or PUMA, may provide eight years of data exclusivity plus two additional years of marketing exclusivity. Disclosure of clinical trial information Sponsors of clinical trials of FDA-regulated products, including drugs, are required to register and disclose certain clinical trial information.
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 PEMARK in January 2023, which provides seven years of market exclusivity from its FDA approval on September 20, 2022 until September 20, 2029.
Fennec 4 Table of Contents HEARS ® also provides access to care coordinators that can answer insurance questions about coverage for PEDMARK ® and provide tips and resources for managing treatment.
Our potential competitors are many in number and include major and mid-sized pharmaceutical and biotechnology companies. Many of our potential competitors have significantly more financial, technical and other resources than we do, which may give them a competitive advantage.
Many of our potential competitors have significantly more financial, technical and other resources than we do, which may give them a competitive advantage. In addition, they may have substantially more experience in effecting strategic combinations, in-licensing technology, developing drugs, obtaining regulatory approvals and manufacturing and marketing products.
We plan to pursue PUMA upon approval of the MAA, which would allow for 10 years of market exclusivity upon PUMA approval. Hope Medical Enterprises, Inc. Inter Partes Review Challenges On October 29, 2021, Hope Medical Enterprises, Inc. (“Hope”) filed two petitions for inter partes review (“IPR”) with the Patent Trial and Appeal Board (“PTAB”) of the USPTO.
This exclusivity is effective until May 26, 2033. Hope Medical Enterprises, Inc. Inter Partes Review Challenges On October 29, 2021, Hope Medical Enterprises, Inc. (“Hope”) filed a Petition for inter partes review (IPR2022-00123) with the Patent Trial and Appeal Board (“PTAB”) of the USPTO to invalidate U.S.
One additional US pending patent application covering our PEDMARK formulation has been allowed (US App. No. 17/871,825), and on issuance will be listed in the FDA Orange Book. Six additional US patent applications are pending, three of which applications cover methods of using our PEDMARK ® formulation and are eligible for listing on the FDA Orange Book if issued.
Our ‘363 issued patent covers a process of manufacture, which is a patent category that does not qualify for FDA orange book listing. Seven additional US patent applications are pending, three of which cover methods of using our PEDMARK ® formulation and are eligible for listing on the FDA Orange Book if issued.
PEDMARK ® received FDA approval in September 2022, however at this time, due to significant uncertainty surrounding timing and magnitude of certain milestones, the Company has only recorded a royalty liability associated with net revenue. ​ 7 Table of Contents The term of the OHSU Agreement as amended by Amendment 1 expires on the date of the last to expire claim(s) covered in the patents licensed to us or 8 years, whichever is later.
The term of the OHSU Agreement, as amended by Amendment 1, expires on the date of the last to expire claim(s) covered in the patents licensed to us or 8 years, whichever is later.
We plan to pursue PUMA upon approval of the MAA, which would allow for 10 years of market exclusivity in Europe upon PUMA approval. Our success is significantly dependent on our ability to obtain and maintain patent protection for PEDMARK ® , both in the United States and abroad.
Our success is significantly dependent on our ability to obtain and maintain patent protection for PEDMARK ® , both in the United States and abroad. Our patent position and proprietary rights are subject to various risks and uncertainties.
We protect such information principally through confidentiality agreements with our employees, consultants, outside scientific collaborators, and other advisers. In the case of our employees, these agreements also provide, in compliance with relevant law, that inventions and other intellectual property conceived by such employees during their employment shall be our exclusive property.
In the case of our employees, these agreements also provide, in compliance with relevant law, that inventions and other intellectual property conceived by such employees during their employment shall be our exclusive property. FDA Orange Book Listings On April 5, 2022, the USPTO issued U.S. Patent No. 11,291,728 (the “US ‘728 Patent”) that covers the PEDMARK ® pharmaceutical formulation.
PUMA drugs receive 8 plus 2 years of regulatory data and marketing protection and the applications are, in part, exempt from fees. The regulatory protection does not prevent off-label use of other drugs with the same active substance and indication for adults, nor pharmacy compounding.
The regulatory protection does not prevent off-label use of other drugs with the same active substance and indication for adults, nor pharmacy compounding. Other Laws Our present and future business has been and will continue to be subject to various other laws and regulations.
In its petitions, Hope seeks to invalidate our U.S. Patent No. 10,596,190 (“US ‘190 Patent”), which is exclusively in-licensed from Oregon Health & Science University (“OHSU”) and relates to a method of using our PEDMARK ® product, and our U.S.
Patent No. 10,596,190 (the “‘190 Patent”), which is exclusively in-licensed from Oregon Health & Science University (“OHSU”) and relates to a method of using PEDMARK ® . The ‘190 Patent was issued on March 24, 2020. On April 18, 2023, the PTAB invalidated the only claim of the‘190 Patent. The final written decision became effective June 20, 2023.
On approval of PEDMARK ® , we listed the US ‘190 Patent and US ‘728 Patent in the United Stated Food and Drug Administration’s (FDA) Approved Drug Products with Therapeutic Equivalence Evaluations, commonly referred to as the Orange Book. The US’984 Patent was listed in the FDA Orange Book on December 14, 2022, following its issuance.
The ‘190 Patent was previously listed in the United States Approved Drug Products with Therapeutic Equivalence Evaluations (also known as the “Orange Book”). In light of PTAB’s final written decision on the invalidity of the ‘190 Patent, we requested that the FDA remove the ’190 Patent from the Orange Book.
The pending US patent application, if granted, valid, and enforceable, will expire in November 2037, exclusive of any patent term adjustment or extension. In 2022, OHSU abandoned applications from this family in all ex-US jurisdictions. Our success is significantly dependent on our ability to obtain and maintain patent protection for PEDMARK ® , both in the United States and abroad.
Our success is significantly dependent on our ability to obtain and maintain patent protection for PEDMARK ® , both in the United States and abroad. Our patent position and proprietary rights are subject to various risks and uncertainties.
We have decreased our research and development expenses related to PEDMARK ® as our efforts have shifted to commercial readiness and launch activities. PEDMARK ® still requires significant, time-consuming and costly research and development, testing and regulatory clearances.
PEDMARK ® still requires significant, time-consuming and costly research and development, testing and regulatory clearances. In developing PEDMARK ® , we are subject to risks of failure that are inherent in the development of products based on innovative technologies.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSouthpoint Capital, Essetifin SpA, Sonic Fund II, LP, Avaro Capital Advisors, and our other significant shareholders, and other insiders, acting alone or together, might be able to influence the outcomes of matters that require the approval of our shareholders, including but not limited to certain equity transactions (such as a financing), an acquisition or merger with another company, a sale of substantially all of our assets, the election and removal of directors, or amendments to our incorporating documents.
Biggest changeIn particular, Southpoint Capital Advisors LP (“Southpoint Capital”) owns or exercises control over approximately 4.0 million shares, representing approximately 15.09% of our issued and outstanding common shares; Essetifin SpA, owns approximately 3.2 million shares, or approximately 11.94% of our issued and outstanding common shares; Sonic Fund II, LP, owns approximately 2.4 million shares, or approximately 8.91% of our issued and outstanding common shares; and Solas Capital Management, owns approximately 1.4 million shares, or approximately 5.1% of our issued and outstanding common shares; and Southpoint Capital, Essetifin SpA, Sonic Fund II, LP, Solas Capital Management, and our other significant shareholders, and other insiders, acting alone or together, might be able to influence the outcomes of matters that require the approval of our shareholders, including but not limited to certain equity transactions (such as a financing), an acquisition or merger with another company, a sale of substantially all of our assets, the election and removal of directors, or amendments to our incorporating documents.
If we are sued for any injury allegedly caused by our product, our liability could exceed our ability to pay the liability.
If we are sued for any injury allegedly caused by our product, our liability could exceed our ability to pay the liability.
The applicable federal, state and foreign healthcare laws that may affect our ability to operate include the following: ● the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, lease, order or recommendation of, any good, facility, item or service, for which payment may be made, in whole or in part, under federal and state healthcare programs such as Medicare and Medicaid; ● federal civil and criminal false claims laws and civil monetary penalty laws, including the federal False Claims Act, which impose criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; ● the civil monetary penalties statute, which imposes penalties against any person or entity who, among other things, is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent; ● the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private), knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters; ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and its implementing regulations, which impose obligations on covered entities, including healthcare providers, health plans, and healthcare clearinghouses, as well as their respective business associates that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; 39 Table of Contents ● the federal Open Payments program, created under Section 6002 of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or the Affordable Care Act, and its implementing regulations, which imposed annual reporting requirements for manufacturers of drugs, devices, biologicals and medical supplies for certain payments and “transfers of value” provided to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members, where failure to submit timely, accurately and completely the required information for all covered payments, transfers of value and ownership or investment interests may result in civil monetary penalties; and ● analogous state and foreign laws, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
The applicable federal, state and foreign healthcare laws that may affect our ability to operate include the following: ● the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, lease, order or recommendation of, any good, facility, item or service, for which payment may be made, in whole or in part, under federal and state healthcare programs such as Medicare and Medicaid; ● federal civil and criminal false claims laws and civil monetary penalty laws, including the federal False Claims Act, which impose criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; ● the civil monetary penalties statute, which imposes penalties against any person or entity who, among other things, is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent; ● the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private), knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters; ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and its implementing regulations, which impose obligations on covered entities, including healthcare providers, health plans, and healthcare clearinghouses, as well as their respective business associates that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; ● the federal Open Payments program, created under Section 6002 of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or the Affordable Care Act, and its 37 Table of Contents implementing regulations, which imposed annual reporting requirements for manufacturers of drugs, devices, biologicals and medical supplies for certain payments and “transfers of value” provided to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members, where failure to submit timely, accurately and completely the required information for all covered payments, transfers of value and ownership or investment interests may result in civil monetary penalties; and ● analogous state and foreign laws, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
Moreover, the government may assert that a claim including items and services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act; • HIPAA, which imposes criminal and civil liability, prohibits, among other things, knowingly and willfully executing, or attempting to execute a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services; similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; • HIPAA, as amended by HITECH, which impose obligations on certain healthcare providers, health plans, and healthcare clearinghouses, known as covered entities, as well as their business associates that perform certain services involving the storage, use or disclosure of individually identifiable health information, including mandatory contractual terms, with respect to safeguarding the privacy, security, and transmission of individually identifiable health information, and require notification to affected individuals and regulatory authorities of certain breaches of security of individually identifiable health information; 49 Table of Contents • the federal legislation commonly referred to as the Physician Payments Sunshine Act, enacted as part of the ACA, and its implementing regulations, which requires certain manufacturers of covered drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program, with certain exceptions, to report annually to CMS information related to certain payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), physician assistants, certain types of advanced care practice nurses and teaching hospitals, as well as ownership and investment interests held by the physicians described above and their immediate family members, with the information made publicly available on a searchable website; • the U.S.
Moreover, the government may assert that a claim including items and services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act; 46 Table of Contents • HIPAA, which imposes criminal and civil liability, prohibits, among other things, knowingly and willfully executing, or attempting to execute a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services; similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation; • HIPAA, as amended by HITECH, which impose obligations on certain healthcare providers, health plans, and healthcare clearinghouses, known as covered entities, as well as their business associates that perform certain services involving the storage, use or disclosure of individually identifiable health information, including mandatory contractual terms, with respect to safeguarding the privacy, security, and transmission of individually identifiable health information, and require notification to affected individuals and regulatory authorities of certain breaches of security of individually identifiable health information; • the federal legislation commonly referred to as the Physician Payments Sunshine Act, enacted as part of the ACA, and its implementing regulations, which requires certain manufacturers of covered drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health Insurance Program, with certain exceptions, to report annually to CMS information related to certain payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), physician assistants, certain types of advanced care practice nurses and teaching hospitals, as well as ownership and investment interests held by the physicians described above and their immediate family members, with the information made publicly available on a searchable website; • the U.S.
Our product could fail to receive marketing approval for many reasons, including the following: ● FDA comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials; ● FDA comparable foreign regulatory authorities may find the human subject protections for our clinical trials inadequate and place a clinical hold on an IND at the time of its submission precluding commencement of any trials or a clinical hold on one or more clinical trials at any time during the conduct of our clinical trials; ● we may be unable to demonstrate to the satisfaction of the FDA comparable foreign regulatory authorities that a product candidate is safe and effective for its proposed indication; ● the results of clinical trials may not meet the level of statistical significance required by the FDA comparable foreign regulatory authorities for approval; ● we may be unable to demonstrate that a product’s clinical and other benefits outweigh its safety risks; ● FDA comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials; ● the data collected from clinical trials of our product may not be sufficient to obtain marketing approval outside of the United States; 36 Table of Contents ● FDA comparable foreign regulatory authorities may find inadequate the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies (for example, see the discussion elsewhere concerning the CRLs we received from the FDA in August, 2020 and November 2021); and ● the approval policies or regulations of the FDA comparable foreign regulatory authorities may significantly change in a manner that would delay marketing approval.
Our product could fail to receive marketing approval for many reasons, including the following: ● FDA comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials; ● FDA comparable foreign regulatory authorities may find the human subject protections for our clinical trials inadequate and place a clinical hold on an IND at the time of its submission precluding commencement of any trials or a clinical hold on one or more clinical trials at any time during the conduct of our clinical trials; ● we may be unable to demonstrate to the satisfaction of the FDA comparable foreign regulatory authorities that a product candidate is safe and effective for its proposed indication; ● the results of clinical trials may not meet the level of statistical significance required by the FDA comparable foreign regulatory authorities for approval; ● we may be unable to demonstrate that a product’s clinical and other benefits outweigh its safety risks; ● FDA comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials; ● the data collected from clinical trials of our product may not be sufficient to obtain marketing approval outside of the United States; ● FDA comparable foreign regulatory authorities may find inadequate the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies (for example, see the discussion elsewhere concerning the CRLs we received from the FDA in August 2020 and November 2021); and 34 Table of Contents ● the approval policies or regulations of the FDA comparable foreign regulatory authorities may significantly change in a manner that would delay marketing approval.
Given the small number of patients that we are targeting, our eligible patient population and pricing estimates may differ significantly from the actual market addressable by our product candidate. Coverage and reimbursement may be limited or unavailable in certain market segments for our product, which could make it difficult for us to sell our product profitably.
Given the small number of patients that we are targeting, our eligible patient population and pricing estimates may differ significantly from the actual market addressable by our product. Coverage and reimbursement may be limited or unavailable in certain market segments for our product, which could make it difficult for us to sell our product profitably.
If we receive marketing approval for our product candidate for our proposed indications, physicians may nevertheless use our product for their patients in a manner that is inconsistent with the approved label if the physicians personally believe in their professional medical judgment it could be used in such manner.
If we receive marketing approval for our product for our proposed indications, physicians may nevertheless use our product for their patients in a manner that is inconsistent with the approved label if the physicians personally believe in their professional medical judgment it could be used in such manner.
Factors that could impede our ability to generate commercially viable products through the conduct of clinical trials include: ● insufficient funds to conduct clinical trials; ● the inability to find partners, if necessary, for support, including research, development, manufacturing or clinical needs; ● the failure of clinical trials to demonstrate the safety and efficacy of our product to the extent necessary to obtain regulatory approvals; ● the failure by us or third-party investigators, CROs, or other third parties involved in the research to adhere to regulatory requirements applicable to the conduct of clinical trials; ● the failure of preclinical testing and early clinical trials to predict results of later clinical trials; ● any delay in completion of clinical trials caused by a regional disturbance where we or our collaborative partners are enrolling patients in clinical studies, such as pandemic, terrorist activities, or war, or political unrest, a natural disaster or any other reason or event, resulting in increased costs; ● any delay in obtaining advice from the FDA or similar regulatory authorities; and ● the inability to obtain regulatory approval of our product candidate following completion of clinical trials, or delays in obtaining such approvals.
Factors that could impede our ability to generate commercially viable products through the conduct of clinical trials include: ● insufficient funds to conduct clinical trials; ● the inability to find partners, if necessary, for support, including research, development, manufacturing or clinical needs; ● the failure of clinical trials to demonstrate the safety and efficacy of our product to the extent necessary to obtain regulatory approvals; ● the failure by us or third-party investigators, CROs, or other third parties involved in the research to adhere to regulatory requirements applicable to the conduct of clinical trials; ● the failure of preclinical testing and early clinical trials to predict results of later clinical trials; ● any delay in completion of clinical trials caused by a regional disturbance where we or our collaborative partners are enrolling patients in clinical studies, such as pandemic, terrorist activities, or war, or political unrest, a natural disaster or any other reason or event, resulting in increased costs; 58 Table of Contents ● any delay in obtaining advice from the FDA or similar regulatory authorities; and ● the inability to obtain regulatory approval of our product candidate following completion of clinical trials, or delays in obtaining such approvals.
There can be no assurance that the exclusivity granted in the Orphan Drug Act to orphan drugs approved by the FDA will not be modified in the future, and as to how any such change might affect our product, if approved.
There can be no assurance that the exclusivity granted in the Orphan Drug Act to orphan drugs approved by the FDA will not be modified in the future, and as to how any such change might affect our product.
If a third party claims that we infringe on their products or technology, we could face a number of issues, including: ● infringement and other intellectual property claims which, with or without merit, can be expensive and time-consuming to litigate and can divert management’s attention from our core business; ● substantial damages for past infringement, which we may have to pay if a court decides that our product infringes on a competitor’s patent; ● a court prohibiting us from selling or licensing our product unless the patent holder licenses the patent to us, which the collaborator would not be required to do; ● if a license is available from a patent holder, we may have to pay substantial royalties or grant cross licenses to our patents; and ● redesigning our processes so they do not infringe, which may not be possible or could require substantial funds and time.
If a third party claims that we infringe on their products or technology, we could face a number of issues, including: ● infringement and other intellectual property claims which, with or without merit, can be expensive and time-consuming to litigate and can divert management’s attention from our core business; ● substantial damages for past infringement, which we may have to pay if a court decides that our product infringes on a competitor’s patent; ● a court prohibiting us from selling or licensing our product unless the patent holder licenses the patent to us, which the collaborator would not be required to do; ● if a license is available from a patent holder, we may have to pay substantial royalties or grant cross licenses to our patents; and 54 Table of Contents ● redesigning our processes so they do not infringe, which may not be possible or could require substantial funds and time.
If a third-party claims that we infringe its patents, any of the following may occur: ● we may be required to pay substantial financial damages if a court decides that our technologies infringe a competitor’s patent, which can be tripled if the infringement is deemed willful, or be required to discontinue or significantly delay development, marketing, selling and licensing of our product and intellectual property rights; ● a court may prohibit us from selling or licensing our product without a license from the patent holder, which may not be available on commercially acceptable terms or at all, or which may require us to pay substantial royalties or grant cross-licenses to our patents; and 52 Table of Contents ● we may have to redesign our product so that it does not infringe others’ patent rights, which may not be possible or could require substantial funds or time and require additional studies.
If a third-party claims that we infringe its patents, any of the following may occur: ● we may be required to pay substantial financial damages if a court decides that our technologies infringe a competitor’s patent, which can be tripled if the infringement is deemed willful, or be required to discontinue or significantly delay development, marketing, selling and licensing of our product and intellectual property rights; ● a court may prohibit us from selling or licensing our product without a license from the patent holder, which may not be available on commercially acceptable terms or at all, or which may require us to pay substantial royalties or grant cross-licenses to our patents; and ● we may have to redesign our product so that it does not infringe others’ patent rights, which may not be possible or could require substantial funds or time and require additional studies.
Furthermore, we may not be able to obtain sufficient funding or generate sufficient revenue and cash flows to continue or complete the development of any future product candidates. 37 Table of Contents Now that we have achieved marketing approval for our product in the United States, it will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expense.
Furthermore, we may not be able to obtain sufficient funding or generate sufficient revenue and cash flows to continue or complete the development of any future product candidates. 35 Table of Contents Now that we have achieved marketing approval for our product in the United States, it will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expense.
We believe that our ability to successfully compete will depend on our ability to maintain orphan drug designation as well as: ● achieving and maintaining compliance with regulatory requirements applicable to our business; ● the timing and scope of regulatory approvals, including labeling; ● adequate levels of reimbursement under private and governmental health insurance plans, including Medicare and Medicaid; ● our ability to protect intellectual property rights related to our product; ● our ability to commercialize and market our product; ● our ability to manufacture and sell commercial quantities of our product; ● acceptance of our product by physicians, other healthcare providers and patients; and ● the cost of treatment in relation to alternative therapies.
We believe that our ability to successfully compete will depend on our ability to maintain orphan drug designation as well as: ● achieving and maintaining compliance with regulatory requirements applicable to our business; ● the timing and scope of regulatory approvals, including labeling; ● adequate levels of reimbursement under private and governmental health insurance plans, including Medicare and Medicaid; ● our ability to protect intellectual property rights related to our product; ● our ability to commercialize and market our product; 42 Table of Contents ● our ability to manufacture and sell commercial quantities of our product; ● acceptance of our product by physicians, other healthcare providers and patients; and ● the cost of treatment in relation to alternative therapies.
The 40 Table of Contents implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue or commercialize our drugs. It is likely that federal and state legislatures within the United States and foreign governments will continue to consider changes to existing healthcare legislation.
The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue or commercialize our drugs. 38 Table of Contents It is likely that federal and state legislatures within the United States and foreign governments will continue to consider changes to existing healthcare legislation.
As part of the evaluation undertaken by management pursuant to Section 404, our management concluded that our internal control over financial reporting was effective as of December 31, 2022. However, if we fail to maintain an effective system of disclosure controls or internal controls over financial reporting, we may discover material weaknesses that we would then be required to disclose.
As part of the evaluation undertaken by management pursuant to Section 404, our management concluded that our internal control over financial reporting was effective as of December 31, 2023. However, if we fail to maintain an effective system of disclosure controls or internal controls over financial reporting, we may discover material weaknesses that we would then be required to disclose.
We anticipate incurring substantial additional losses due to the need to spend substantial amounts on activities required for commercialization of PEDMARK ® in the U.S. and regulatory approval of PEDMARK ® outside of the U.S., as well as commercial launch preparation of PEDMARK ® outside of the U.S., anticipated research and development activities, and 26 Table of Contents general and administrative expenses, among other factors.
We anticipate 24 Table of Contents incurring substantial additional losses due to the need to spend substantial amounts on activities required for commercialization of PEDMARK ® in the U.S. and regulatory approval of PEDMARK ® outside of the U.S., as well as commercial launch preparation of PEDMARK ® outside of the U.S., anticipated research and development activities, and general and administrative expenses, among other factors.
If we fail to comply with any of the FDA’s continuing regulations, or any other regulations under which we may be required to comply outside of the United States, we could be subject to reputational harm and sanctions, including: ● delays, warning letters and fines; ● product recalls or seizures and injunctions on sales; ● refusal of the FDA, or other regulators, to review pending applications; ● total or partial suspension of production; 30 Table of Contents ● withdrawals of previously approved marketing applications; and ● civil penalties and criminal prosecutions.
If we fail to comply with any of the FDA’s continuing regulations, or any other regulations under which we may be required to comply outside of the United States, we could be subject to reputational harm and sanctions, including: ● delays, warning letters and fines; ● product recalls or seizures and injunctions on sales; ● refusal of the FDA, or other regulators, to review pending applications; ● total or partial suspension of production; ● withdrawals of previously approved marketing applications; and ● civil penalties and criminal prosecutions.
For example, any efforts to maintain a direct sales and marketing organization are subject to numerous risks, including: ● the expense and time required to recruit, retain, and motivate members of the sales force; 28 Table of Contents ● our inability to recruit, retain or motivate adequate numbers of effective marketing personnel and partner marketing agencies; ● the inability to provide adequate training to sales and marketing personnel; ● the expense and time required to monitor regulatory compliance; ● the inability of sales personnel to obtain access to physicians or convince adequate numbers of physicians to prescribe any product; and ● unforeseen costs and expenses associated with creating an independent sales and marketing organization.
For example, any efforts to maintain a direct sales and marketing organization are subject to numerous risks, including: ● the expense and time required to recruit, retain, and motivate members of the sales force; ● our inability to recruit, retain or motivate adequate numbers of effective marketing personnel and partner marketing agencies; ● the inability to provide adequate training to sales and marketing personnel; ● the expense and time required to monitor regulatory compliance; ● the inability of sales personnel to obtain access to physicians or convince adequate numbers of physicians to prescribe any product; and ● unforeseen costs and expenses associated with creating an independent sales and marketing organization.
However, if a replacement to our future internal or contract manufacturers were required, the ability to establish second-sourcing or find a replacement manufacturer may be difficult due to the lead times generally required to manufacture drugs and the need for FDA compliance inspections and approvals of any replacement manufacturer, all of which factors could result in production delays and additional commercialization costs.
However, if a replacement to our future internal or contract manufacturers were required, the ability to establish second-sourcing or find a replacement manufacturer may be difficult due to the lead times generally required to manufacture drugs and the need for FDA compliance inspections and approvals of any replacement manufacturer, all of which factors could result in production 30 Table of Contents delays and additional commercialization costs.
These enforcement actions include, not only civil and criminal penalties, but also exclusion from participation in government-funded healthcare programs, and exclusion from eligibility for the award of government contracts for our product. Efforts to ensure that our current and future business arrangements with third parties comply with applicable healthcare laws and regulations could involve substantial costs.
These enforcement actions include not only civil and criminal penalties, but also exclusion from participation in government-funded healthcare programs, and exclusion from eligibility for the award of government contracts for our product. 47 Table of Contents Efforts to ensure that our current and future business arrangements with third parties comply with applicable healthcare laws and regulations could involve substantial costs.
Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States federal court necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid as unpatentable even though the same evidence may be insufficient to invalidate the claim if first presented in a district court 58 Table of Contents action.
Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States federal court necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid as unpatentable even though the same evidence may be insufficient to invalidate the claim if first presented in a district court action.
Generally, unless we perform clinical trials meeting that standard comparing our product 38 Table of Contents candidate to competitive products and these claims are approved in our product labeling, we will not be able promote our product as superior to other products. If we are found to have made such claims, we may become subject to significant liability.
Generally, unless we perform clinical trials meeting that standard comparing our product 36 Table of Contents to competitive products and these claims are approved in our product labeling, we will not be able promote our product as superior to other products. If we are found to have made such claims, we may become subject to significant liability.
Moreover, the other foreign regulatory authorities require us to comply with IND and human subject protection regulations and cGCP standards, for conducting, monitoring, recording, and reporting the results of clinical trials to ensure that the data and results are scientifically credible and accurate and that the trial subjects are adequately informed of the potential risks of participating in clinical trials.
Moreover, the other foreign regulatory authorities require us to comply with IND and human subject protection regulations and cGCP standards, for conducting, monitoring, recording, and reporting the results of clinical trials to ensure that the data and 48 Table of Contents results are scientifically credible and accurate and that the trial subjects are adequately informed of the potential risks of participating in clinical trials.
Specifically, we were named in putative securities class action complaints as a result of the decline in our stock price following the August 10, 2020 announcement that we had received a CRL from the FDA regarding our NDA for PEDMARK ® and as result of the decline in our stock price following the November 29, 2021 announcement that we expected to receive another CRL from the FDA regarding our NDA for PEDMARK ® .
Specifically, we were named in putative securities class action complaints as a result of the decline in our stock price following the August 10, 2020 announcement that we had received a CRL from the FDA regarding our NDA for PEDMARK ® and as result of the decline in our stock price following the November 29, 2021 announcement that we expected to receive another CRL from the 31 Table of Contents FDA regarding our NDA for PEDMARK ® .
These problems could include the possibility that we may not be able to manufacture sufficient quantities of materials for use in our clinical trials, conduct clinical trials at our preferred sites, enroll a sufficient number of patients for our clinical trials at one or more sites, or begin or successfully 51 Table of Contents complete clinical trials in a timely fashion, if at all.
These problems could include the possibility that we may not be able to manufacture sufficient quantities of materials for use in our clinical trials, conduct clinical trials at our preferred sites, enroll a sufficient number of patients for our clinical trials at one or more sites, or begin or successfully complete clinical trials in a timely fashion, if at all.
In addition, if third parties file patent applications or issue patents claiming technology that is also claimed by us in pending applications, we may be required to participate in interference proceedings with the USPTO or in other proceedings outside 53 Table of Contents the United States, including oppositions, to determine priority of invention or patentability.
In addition, if third parties file patent applications or issue patents claiming technology that is also claimed by us in pending applications, we may be required to participate in interference proceedings with the USPTO or in other proceedings outside the United States, including oppositions, to determine priority of invention or patentability.
Despite the contractual provisions employed when working with third parties, the need to share trade secrets and other confidential information increases the risk that such trade secrets become known by our competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements.
Despite the contractual provisions employed when working with third parties, the need to share 57 Table of Contents trade secrets and other confidential information increases the risk that such trade secrets become known by our competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements.
Moreover, our ability to effectively generate significant product revenue from PEDMARK ® will depend on our ability to, among other things: • educate patients and physicians successfully about efficacy expectations, side effects expectations, and how to successfully dose and titrate the medication to optimal patient benefit in order to minimize discontinuation due to perceived lack of efficacy or side effects; 27 Table of Contents • educate pediatric cancer patients who will have cisplatin administration, and the physicians who treat them, as to the benefits to such patients of treatment using PEDMARK ® (in addition to the treatments they are receiving for their cancer); • achieve and maintain compliance with regulatory requirements, including those related to our required post-approval studies, promotion and advertising requirements; • increase awareness for and achieve market acceptance of PEDMARK ® through our sales and marketing activities and other arrangements established for the promotion of PEDMARK ® ; • train, deploy, support, and retain a qualified field sales and marketing force; • secure continued formulary approvals for PEDMARK ® with a substantial number of targeted payors; • ensure that our third-party manufacturers manufacture PEDMARK ® in sufficient quantities, in compliance with requirements of the FDA and at acceptable quality and pricing levels, in order to meet commercial demand; • ensure that our third-party manufacturers develop, validate and maintain commercially viable manufacturing processes that are compliant with cGMP regulations; • implement and maintain agreements with wholesalers, distributors and group purchasing organizations on commercially reasonable terms; • ensure that our entire supply chain efficiently and consistently delivers PEDMARK ® to our customers; • provide co-pay assistance to help qualified patients with out-of-pocket costs associated with their PEDMARK ® prescription, and/or other programs to ensure patient access to our product, educate physicians and patients about the benefits, administration and use of PEDMARK ® , and obtain acceptance of PEDMARK ® as safe and effective by patients and the medical community; • receive adequate levels of coverage and reimbursement for PEDMARK ® from commercial health plans and governmental health programs; • generate positive experience with our FennecHears program in helping patients obtain access to PEDMARK ® at an acceptable patient out-of-pocket cost; • maintain quality relationships with patient advocacy groups; • influence the nature of publicity related to our product relative to the publicity related to our competitors’ products; and • obtain regulatory approvals for additional indications for the use of PEDMARK ® in treating other patient populations.
Moreover, our ability to effectively generate significant product revenue from PEDMARK ® will depend on our ability to, among other things: ● educate patients and physicians successfully about efficacy expectations, side effects expectations, and how to successfully dose and titrate the medication to optimal patient benefit in order to minimize discontinuation due to perceived lack of efficacy or side effects; 25 Table of Contents ● educate pediatric cancer patients who will have cisplatin administration, and the physicians who treat them, as to the benefits to such patients of treatment using PEDMARK ® (in addition to the treatments they are receiving for their cancer); ● achieve and maintain compliance with regulatory requirements, including those related to our required post-approval studies, promotion and advertising requirements; ● increase awareness for and achieve market acceptance of PEDMARK ® through our sales and marketing activities and other arrangements established for the promotion of PEDMARK ® ; ● train, deploy, support, and retain a qualified field sales and marketing force; ● secure continued formulary approvals for PEDMARK ® with a substantial number of targeted payors; ● ensure that our third-party manufacturers manufacture PEDMARK ® in sufficient quantities, in compliance with requirements of the FDA and at acceptable quality and pricing levels, in order to meet commercial demand; ● ensure that our third-party manufacturers develop, validate and maintain commercially viable manufacturing processes that are compliant with cGMP regulations; ● implement and maintain agreements with wholesalers, distributors and group purchasing organizations on commercially reasonable terms; ● ensure that our entire supply chain efficiently and consistently delivers PEDMARK ® to our customers; ● provide co-pay assistance to help qualified patients with out-of-pocket costs associated with their PEDMARK ® prescription, and/or other programs to ensure patient access to our product, educate physicians and patients about the benefits, administration and use of PEDMARK ® , and obtain acceptance of PEDMARK ® as safe and effective by patients and the medical community; ● receive adequate levels of coverage and reimbursement for PEDMARK ® from commercial health plans and governmental health programs; ● generate positive experience with our Fennec HEARS ® program in helping patients obtain access to PEDMARK ® at an acceptable patient out-of-pocket cost; ● maintain quality relationships with patient advocacy groups; ● influence the nature of publicity related to our product relative to the publicity related to our competitors’ products; and ● obtain regulatory approvals for additional indications for the use of PEDMARK ® in treating other patient populations. 26 Table of Contents Any disruption in our ability to generate product revenue from the sale of PEDMARK ® will have a material and adverse impact on our results of operations.
We cannot predict the impact of such changes and cannot be certain of our future compliance. We do not currently carry biological or hazardous waste insurance coverage. 41 Table of Contents Our employees, sales agents and consultants may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.
We cannot predict the impact of such changes and cannot be certain of our future compliance. We do not currently carry biological or hazardous waste insurance coverage. Our employees, sales agents and consultants may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.
Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us.
Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other 52 Table of Contents aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us.
Such lead times would vary based on the situation but might be twelve months or longer. 32 Table of Contents We conduct our business internationally and are subject to laws and regulations of several countries which may affect our ability to access regulatory agencies and may affect the enforceability and value of our licenses.
Such lead times would vary based on the situation but might be twelve months or longer. We conduct our business internationally and are subject to laws and regulations of several countries which may affect our ability to access regulatory agencies and may affect the enforceability and value of our licenses.
If successful in obtaining such patent protection, our competitors could limit our use of our trade secrets and/or confidential know-how. 59 Table of Contents We may need to license certain intellectual property from third parties, and such licenses may not be available or may not be available on commercially reasonable terms.
If successful in obtaining such patent protection, our competitors could limit our use of our trade secrets and/or confidential know-how. We may need to license certain intellectual property from third parties, and such licenses may not be available or may not be available on commercially reasonable terms.
This may result in managed care organizations influencing prescription decisions for a larger segment of the population and a corresponding constraint on prices and reimbursement for our product. Since its enactment, there have been judicial and Congressional challenges to numerous aspects of the Affordable Care Act.
This may result in managed care organizations influencing prescription decisions for a larger segment of the population and a corresponding constraint on prices and reimbursement for our product. 59 Table of Contents Since its enactment, there have been judicial and Congressional challenges to numerous aspects of the Affordable Care Act.
Market acceptance of PEDMARK ® depends on a number of factors, including: ● the timing of market introduction; ● its efficacy and safety, as demonstrated in clinical trials; ● the clinical indications for which it is approved, and the label approved by regulatory authorities for use with the product, including any precautions, warnings or contraindications that may be required on the label; ● acceptance by physicians, key opinion leaders and patients of PEDMARK ® as a safe and effective treatment; ● the cost, safety and efficacy of treatment in relation to alternative treatments; ● the availability of coverage and adequate reimbursement and pricing by third-party payors and government authorities; ● the number and clinical profile of competing products; ● the growth of drug markets in our various indications; ● relative convenience and ease of administration; ● marketing and distribution support; ● the prevalence and severity of adverse side effects; and ● the effectiveness of our sales and marketing efforts. 42 Table of Contents Market acceptance is critical to our ability to generate revenue.
Market acceptance of PEDMARK ® depends on a number of factors, including: ● the timing of market introduction; ● its efficacy and safety, as demonstrated in clinical trials; ● the clinical indications for which it is approved, and the label approved by regulatory authorities for use with the product, including any precautions, warnings or contraindications that may be required on the label; ● acceptance by physicians, key opinion leaders and patients of PEDMARK ® as a safe and effective treatment; ● the cost, safety and efficacy of treatment in relation to alternative treatments; ● the availability of coverage and adequate reimbursement and pricing by third-party payors and government authorities; ● the number and clinical profile of competing products; ● the growth of drug markets in our various indications; ● relative convenience and ease of administration; ● marketing and distribution support; ● the prevalence and severity of adverse side effects; and ● the effectiveness of our sales and marketing efforts.
As a result of the foregoing factors, we cannot be certain how much protection from competition patent rights will provide us. Our success will depend significantly on our ability to operate without infringing the patents and other proprietary rights of third parties.
As a result of the foregoing factors, we cannot be certain how much protection from competition patent rights will provide us. 49 Table of Contents Our success will depend significantly on our ability to operate without infringing the patents and other proprietary rights of third parties.
Since we conduct a significant portion of our research and development through collaborations, our success may depend significantly on the performance of such collaborators, as well as any future collaborators. Collaborators might not commit 29 Table of Contents sufficient resources to the research and development or commercialization of our product candidate.
Since we conduct a significant portion of our research and development through collaborations, our success may depend significantly on the performance of such collaborators, as well as any future collaborators. Collaborators might not commit sufficient resources to the research and development or commercialization of our product candidate.
Whether or not we are ultimately successful in any adverse litigation, such litigation could consume substantial amounts of our financial and managerial resources, all of which could have a material adverse effect on our business, financial condition, results of operations, prospects and stock price.
Whether or not we are ultimately successful in any adverse litigation, such litigation could 33 Table of Contents consume substantial amounts of our financial and managerial resources, all of which could have a material adverse effect on our business, financial condition, results of operations, prospects and stock price.
In the event that our technologies infringe or violate the patent or other proprietary rights of third parties, we may be prevented from pursuing product development, manufacturing or commercialization of our product that utilize such technologies. There may be patents held by others of which we are unaware that contain claims that our product or operations infringe.
In the event that our product infringe or violate the patent or other proprietary rights of third parties, we may be prevented from pursuing product development, manufacturing or commercialization of our product. There may be patents held by others of which we are unaware that contain claims that our product or operations infringe.
The CRL that we received from the FDA in August, 2020 and in November, 2021 as a result of deficiencies in the third-party manufacturing facility that manufactures PEDMARK ® on our behalf is a specific example of the risks associated with our third-party manufacturers.
The CRL that we received 28 Table of Contents from the FDA in August 2020 and in November 2021 as a result of deficiencies in the third-party manufacturing facility that manufactures PEDMARK ® on our behalf is a specific example of the risks associated with our third-party manufacturers.
We lack the resources and the capability to manufacture our product on a clinical or commercial scale. Instead, we rely on, and expect to continue to rely on, third parties for the supply of raw materials and manufacture of drug supplies necessary to 50 Table of Contents conduct our preclinical studies and clinical trials.
We lack the resources and the capability to manufacture our product on a clinical or commercial scale. Instead, we rely on, and expect to continue to rely on, third parties for the supply of raw materials and manufacture of drug supplies necessary to conduct our preclinical studies and clinical trials.
We cannot predict all of the possible harms or side effects that may result from the use of our drug and, therefore, the amount of insurance coverage we currently hold 45 Table of Contents may not be adequate to cover all liabilities we might incur.
We cannot predict all of the possible harms or side effects that may result from the use of our drug and, therefore, the amount of insurance coverage we currently hold may not be adequate to cover all liabilities we might incur.
If we fail to comply with applicable continuing regulatory requirements, we may be subject to fines, suspension, or withdrawal of regulatory approval, product recalls and seizures, operating restrictions, and criminal prosecutions. Our product promotion and advertising are also subject to regulatory requirements and continuing regulatory review.
If we fail to comply with applicable continuing regulatory requirements, we may be subject to fines, 43 Table of Contents suspension, or withdrawal of regulatory approval, product recalls and seizures, operating restrictions, and criminal prosecutions. Our product promotion and advertising are also subject to regulatory requirements and continuing regulatory review.
The market price of our common shares may be significantly affected by many factors, including without limitation: ● the commercialization of our sole product candidate, PEDMARK ® ; ● the need to raise additional capital and the terms of any transaction we are able to enter into; ● other external factors generally or stock market trends in the pharmaceutical or biotechnology industries specifically; ● announcements of licensing agreements, joint ventures, collaborations or other strategic alliances that involve our product or those of our competitors; ● innovations related to our or our competitors’ products; ● actual or potential clinical trial results related to our or our competitors’ products; ● the status, timing and outcome of regulatory approvals; 63 Table of Contents ● our financial results or those of our competitors; ● reports of securities analysts regarding us or our competitors; ● developments or disputes concerning our licensed or owned patents or those of our competitors; ● developments with respect to the efficacy or safety of our product or those of our competitors; and ● health care reforms and reimbursement policy changes nationally and internationally.
It is likely that the market price of our common shares will continue to fluctuate significantly in the future. 60 Table of Contents The market price of our common shares may be significantly affected by many factors, including without limitation: ● the commercialization of our sole product candidate, PEDMARK ® ; ● the need to raise additional capital and the terms of any transaction we are able to enter into; ● other external factors generally or stock market trends in the pharmaceutical or biotechnology industries specifically; ● announcements of licensing agreements, joint ventures, collaborations or other strategic alliances that involve our product or those of our competitors; ● innovations related to our or our competitors’ products; ● actual or potential clinical trial results related to our or our competitors’ products; ● the status, timing and outcome of regulatory approvals; ● our financial results or those of our competitors; ● reports of securities analysts regarding us or our competitors; ● developments or disputes concerning our licensed or owned patents or those of our competitors; ● developments with respect to the efficacy or safety of our product or those of our competitors; and ● health care reforms and reimbursement policy changes nationally and internationally.
PEDMARK ® , may be accepted in only limited capacities or not at all. If PEDMARK ® is not accepted by the market to the extent that we expect, we may not be able to generate revenue and our business would suffer.
Market acceptance is critical to our ability to generate revenue. PEDMARK ® , may be accepted in only limited capacities or not at all. If PEDMARK ® is not accepted by the market to the extent that we expect, we may not be able to generate revenue and our business would suffer.
In addition, potential infringers of our intellectual property rights may have 56 Table of Contents substantially more resources than we do to defend their position, which could adversely affect the outcome of any such dispute.
In addition, potential infringers of our intellectual property rights may have substantially more resources than we do to defend their position, which could adversely affect the outcome of any such dispute.
Alternatively, we may rely on debt financing and assume debt obligations that require us to make 64 Table of Contents substantial interest and capital payments and to pledge some or all of our assets as collateral to secure such debt obligations.
Alternatively, we may rely on debt financing and assume debt obligations that require us to make substantial interest and capital payments and to pledge some or all of our assets as collateral to secure such debt obligations.
Our board of directors has concluded that the benefit to stockholders of improved corporate governance outweighs any possible adverse effects on stockholders of reducing the exposure of directors to liability and broadened indemnification rights. Our business and operations could be adversely affected by the effects of health epidemics, including the ongoing COVID-19 pandemic.
Our board of directors has concluded that the benefit to stockholders of improved corporate governance outweighs any possible adverse effects on stockholders of reducing the exposure of directors to liability and broadened indemnification rights. Our business and operations could be adversely affected by the effects of health epidemics, like the recent COVID-19 pandemic.
One third-party payor’s decision to cover a particular drug product does not ensure that other payors will also provide coverage for the drug product, or even if coverage is available, establish an adequate reimbursement rate. 43 Table of Contents We cannot be sure that coverage or adequate reimbursement will be available for our product.
One third-party payor’s decision to cover a particular drug product does not ensure that other payors will also provide coverage for the drug product, or even if coverage is available, establish an adequate reimbursement rate. We cannot be sure that coverage or adequate reimbursement will be available for our product.
If we are a PFIC for any taxable year, we intend to provide to a U.S. Holder such information as the Internal Revenue Service (“IRS”) may require, including a PFIC annual information statement, in order to enable the U.S. Holder to make and maintain a “qualified electing fund” election.
If we are a PFIC for any taxable year, we intend to provide to a U.S. Holder such information as the Internal Revenue Service (“IRS”) may require, including a PFIC annual information 62 Table of Contents statement, in order to enable the U.S. Holder to make and maintain a “qualified electing fund” election.
Regulatory approval of our product is time-consuming, expensive and uncertain, and could result in unexpectedly high expenses and delay our ability to sell our product outside of the United States. Development, manufacture and marketing of our product is subject to extensive regulation by governmental authorities in the United States and other countries.
Regulatory approval of our product is time-consuming, expensive and uncertain, and could result in unexpectedly high expenses and delay our ability to sell our product in the U.S. and abroad. Development, manufacture and marketing of our product is subject to extensive regulation by governmental authorities in the United States and other countries.
We are currently and may in the future be the target of securities litigation, which may be costly and time-consuming to defend. Following periods of market volatility in the price of a company’s securities or the reporting of unfavorable news, security purchasers have often instituted class action litigation.
We have been in the past and may in the future be the target of securities litigation, which may be costly and time-consuming to defend. Following periods of market volatility in the price of a company’s securities or the reporting of unfavorable news, security purchasers have often instituted class action litigation.
If we fail to maintain the patents and patent applications directed to our product, our competitors might be able to enter the market earlier than should otherwise have been the case, which would have a material adverse effect on our business.
If we fail to maintain the patents and patent applications 53 Table of Contents directed to our product, our competitors might be able to enter the market earlier than should otherwise have been the case, which would have a material adverse effect on our business.
Any material weaknesses identified in our internal controls could have an adverse effect on 65 Table of Contents our business. We may not be able to accurately or timely report on our financial results, and we might be subject to investigation by regulatory authorities.
Any material weaknesses identified in our internal controls could have an adverse effect on our business. We may not be able to accurately or timely report on our financial results, and we might be subject to investigation by regulatory authorities.
From September 13, 2017 (the date our common shares were first listed on the Nasdaq Capital Market) to March 27, 2023, the closing trading price of our stock fluctuated from a high of $14.33 per share to a low of $3.30 on the Nasdaq Capital Market.
From September 13, 2017 (the date our common shares were first listed on the Nasdaq Capital Market) to March 25, 2024, the closing trading price of our stock fluctuated from a high of $14.33 per share to a low of $3.30 on the Nasdaq Capital Market.
From January 1, 2018 to March 27, 2023, the closing trading price of our stock fluctuated from a high of $18.45 Canadian dollars (“CAD”) per share to a low of CAD$4.38 per share on the TSX.
From January 1, 2018 to March 25, 2024, the closing trading price of our stock fluctuated from a high of $18.45 Canadian dollars (“CAD”) per share to a low of CAD$4.38 per share on the TSX.
The extent of the impact on our operations depends in part on the time these restrictions remain in place, and whether restrictions are reinstated as a result of a rising surge in COVID-19 cases. These and similar disruptions in our operations could negatively impact our business, 34 Table of Contents operating results and financial condition.
The extent of the impact on our operations depends in part on the time these restrictions remain in place, and whether restrictions are reinstated as a result 32 Table of Contents of rising cases. These and similar disruptions in our operations could negatively impact our business, operating results and financial condition.
The following examples are illustrative: ● Others may be able to make products that are similar to our product but that are not covered by the claims of the patents that we license from others or may license or own in the future; ● Others may independently develop similar or alternative technologies or otherwise circumvent any of our technologies without infringing our intellectual property rights; ● Any of our collaborators might not have been the first to conceive and reduce to practice the inventions covered by the patents or patent applications that we own or license or will, in the future, own or license; ● Issued patents that have been licensed to us may not provide us with any competitive advantage, or may be held invalid or unenforceable, as a result of legal challenges by our competitors; ● Our competitors might conduct research and development activities in countries where we do not have license rights, or in countries where research and development safe harbor laws exist, and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; ● Ownership of patents or patent applications licensed to us may be challenged by third parties; ● The patents of third parties or pending or future applications of third parties, if issued, may have an adverse effect on our business.
The following examples are illustrative: ● Others may be able to make products that are similar to our product but that are not covered by the claims of the patents that we license from others or may license or own in the future; ● Others may independently develop similar or alternative technologies or otherwise circumvent any of our technologies without infringing our intellectual property rights; ● Any of our collaborators might not have been the first to conceive and reduce to practice the inventions covered by the patents or patent applications that we own or license or will, in the future, own or license; ● Issued patents that have been licensed to us may not provide us with any competitive advantage, or may be held invalid or unenforceable, as a result of legal challenges by our competitors; ● Our competitors might conduct research and development activities in countries where we do not have license rights, or in countries where research and development safe harbor laws exist, and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; ● Ownership of patents or patent applications licensed to us may be challenged by third parties; ● The patents of third parties or pending or future applications of third parties, if issued, may have an adverse effect on our business. 56 Table of Contents Confidentiality agreements with employees, consultants and others may not adequately prevent disclosure of trade secrets and protect other proprietary information.
In addition, periods of marketing exclusivity for PEDMARK ® may also be possible in the United States under orphan drug status and in Europe under PUMA. We may be required to obtain licenses under patents or other proprietary rights of third parties, but the extent to which we may wish or need to do so is unknown.
In addition, periods of marketing exclusivity for PEDMARK ® have been granted in the United States under orphan drug exclusivity and in Europe under PUMA. We may be required to obtain licenses under patents or other proprietary rights of third parties, but the extent to which we may wish or need to do so is unknown.
The global pandemic of COVID-19 continues to evolve rapidly, and the ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change.
The global pandemic of COVID-19, and the ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change.
We may rely on trade secrets and/or confidential know-how to protect our technology, especially where patent protection is believed by us to be of limited value. However, trade secrets and/or confidential know-how can be difficult to maintain as confidential.
We consider proprietary trade secrets and/or confidential know-how and unpatented know-how to be important to our business. We may rely on trade secrets and/or confidential know-how to protect our technology, especially where patent protection is believed by us to be of limited value. However, trade secrets and/or confidential know-how can be difficult to maintain as confidential.
However, we are responsible for all costs relating to such potential litigation. We have the right to any proceeds received as a result of such litigation, but, even if we are successful in such litigation, there is no assurance we would be awarded any monetary damages. Our involvement in intellectual property litigation could result in significant expense to us.
We have the right to any proceeds received as a result of such litigation, but, even if we are successful in such litigation, there is no assurance we would be awarded any monetary damages. Our involvement in intellectual property litigation could result in significant expense to us.
Our business could be negatively impacted if our competitors’ present or future offerings are more effective, safer or less expensive than ours, or more readily accepted by regulators, healthcare providers or third-party payors. Further, we may also compete with respect to manufacturing efficiency and marketing capabilities. For all of these reasons, we may not be able to compete successfully.
Our business could be negatively impacted if our competitors’ present or future offerings are more effective, safer or less expensive than ours, or more readily accepted by regulators, healthcare providers or third-party payors. Further, we may also compete with respect to manufacturing efficiency and marketing capabilities.
Based on available resources, we believe that our cash and cash equivalents of $23.8 million available as of December 31, 2022 are sufficient to fund our anticipated operating and capital requirements for at least the next 12 months.
Based on available resources, we believe that our cash and cash equivalents of $13.3 million available as of December 31, 2023 are sufficient to fund our anticipated operating and capital requirements for at least the next 12 months.
The outcome of intellectual property litigation is subject to substantial uncertainties and may, for example, turn on the interpretation of claim language by the court, which may not be to our advantage, or on the testimony of experts as to technical facts upon which experts may reasonably disagree.
The outcome of intellectual property litigation is subject to substantial uncertainties and may, for example, turn on the interpretation of claim language by the court, which may not be to our advantage, or on the testimony of experts as to technical facts upon which experts may reasonably disagree. As discussed above under the section entitled “Item 3.
Conducting clinical trials is a lengthy, time-consuming and expensive process. Before obtaining regulatory approvals for the commercial sale of any products, we, or our potential partners, must demonstrate through preclinical testing and clinical trials that our product candidates are safe and effective for their intended uses in humans.
Before obtaining regulatory approvals for the commercial sale of any products, we, or our potential partners, must demonstrate through preclinical testing and clinical trials that our product candidates are safe and effective for their intended uses in humans.
Our existing principal shareholders hold a substantial number of our common shares and may be able to exercise influence in matters requiring approval of our shareholders. At March 29, 2023, our current shareholders separately representing more than 5% ownership of our common shares collectively represented beneficial ownership of approximately 43.51% of our common shares.
Our existing principal shareholders hold a substantial number of our common shares and may be able to exercise influence in matters requiring approval of our shareholders. At March 25, 2024, our current shareholders separately representing more than 5% ownership of our common shares collectively represented beneficial ownership of approximately 47.03% of our common shares.
As a result of all of these factors, maintaining orphan drug designation for our product candidate is essential to our viability since our competitors may, among other things: ● have greater name and brand recognition, financial, manufacturing, marketing, development, technical and human resources; ● develop and commercialize products that are safer, more effective, less expensive, or more convenient or easier to administer; ● obtain quicker marketing approval; ● establish superior proprietary positions; ● have access to more manufacturing capacity as well as to more cost-effective manufacturing capacity; ● implement more effective approaches to sales and marketing; or ● form more advantageous strategic alliances. 44 Table of Contents Should any of these events occur, our business, financial condition, results of operations, and prospects could be materially adversely affected.
As a result of all of these factors, maintaining orphan drug designation for our product is essential to our viability since our competitors may, among other things: ● have greater name and brand recognition, financial, manufacturing, marketing, development, technical and human resources; ● develop and commercialize products that are safer, more effective, less expensive, or more convenient or easier to administer; ● obtain quicker marketing approval; ● establish superior proprietary positions; ● have access to more manufacturing capacity as well as to more cost-effective manufacturing capacity; ● implement more effective approaches to sales and marketing; or ● form more advantageous strategic alliances.
Litigation may also be necessary to enforce or defend patents issued or licensed to us or our collaborators or to determine the scope and validity of a third party’s proprietary rights.
Litigation may also be necessary to enforce or defend patents issued or licensed to us or our collaborators or to determine the scope and validity of a third party’s proprietary rights. By example we have outstanding litigation against CIPLA.
By example we have outstanding lititagation against CIPLA. 31 Table of Contents We could incur substantial costs if litigation is required to defend ourselves in patent suits brought by third parties, if we participate in patent suits brought against or initiated by our collaborators, or if we initiate such suits. We might not prevail in any such action.
We could incur substantial costs if litigation is required to defend ourselves in patent suits brought by third parties, if we participate in patent suits brought against or initiated by our collaborators, or if we initiate such suits. We might not prevail in any such action.
Supreme Court dismissed the challenge to the Health Care Reform Law in a 7-2 decision. 47 Table of Contents Additionally, in response to controversies regarding pricing of drug products, there has been a recent push to propose legislation, both on state and federal levels, that would require greater disclosure as to the reasoning behind drug prices and, in some cases, could give state or federal-level commissions the right to impose cost controls on certain drugs.
Additionally, in response to controversies regarding pricing of drug products, there has been a recent push to propose legislation, both on state and federal levels, that would require greater disclosure as to the reasoning behind drug prices and, in some cases, could give state or federal-level commissions the right to impose cost controls on certain drugs.
Termination of any of our collaborative arrangements could materially adversely affect our business. For example, if we are unable to make the necessary payments under these agreements, the licensor might terminate the agreement which might have a material adverse impact. In addition, our collaborators might not perform as agreed in the future.
For example, if we are unable to make the necessary payments under these agreements, the licensor might terminate the agreement which might have a material adverse impact. In addition, our collaborators might not perform as agreed in the future.
Historically, our common shares have had a low trading volume, and may continue to have a low trading volume in the future. This low volume may contribute to the volatility of the market price of our common shares. It is likely that the market price of our common shares will continue to fluctuate significantly in the future.
Historically, our common shares have had a low trading volume, and may continue to have a low trading volume in the future. This low volume may contribute to the volatility of the market price of our common shares.
It is not possible for us to be certain that we are the original and first creator of inventions encompassed by our pending patent applications or that we were the first to file patent applications for any such inventions. Further, any of our patents, once issued, may be declared by a court to be invalid or unenforceable.
It is not possible for us to be certain that we are the original and first creator of inventions encompassed by our pending patent applications or that we were the first to file patent applications for any such inventions.
In addition, we do not know whether: ● we or our licensors were the first to make the inventions covered by each of our issued patents and pending patent applications; ● we or our licensors were the first to file patent applications for these inventions; ● any of the patents that cover our product will be eligible to be listed in the FDA’s compendium of “Approved Drug Products with Therapeutic Equivalence Evaluation,” sometimes referred to as the FDA’s Orange Book; ● others will independently develop similar or alternative technologies or duplicate any of our technologies; ● any of our or our licensors’ pending patent applications will result in issued patents; ● any patents issued to us or our licensors and collaborators will provide us with any competitive advantages, or will be challenge by third parties; ● we will develop additional proprietary technologies that are patentable; ● the United States government will exercise any of its statutory rights to our intellectual property that was developed with government funding; or ● our business may infringe the patents or other proprietary rights of others. 54 Table of Contents The actual protection afforded by a patent varies based on products or processes, from country to country and depends upon many factors, including the type of patent, the scope of its coverage, the availability of regulatory related extensions, the availability of legal remedies in a particular country, the validity and enforceability of the patents and our financial ability to enforce our patents and other intellectual property.
In addition, we do not know whether: ● we or our licensors were the first to make the inventions covered by each of our issued patents and pending patent applications; 51 Table of Contents ● we or our licensors were the first to file patent applications for these inventions; ● any of the patents that cover our product will be eligible to be listed in the FDA’s compendium of “Approved Drug Products with Therapeutic Equivalence Evaluation,” sometimes referred to as the FDA’s Orange Book; ● others will independently develop similar or alternative technologies or duplicate any of our technologies; ● any of our or our licensors’ pending patent applications will result in issued patents; ● any patents issued to us or our licensors and collaborators will provide us with any competitive advantages, or will be challenge by third parties; ● we will develop additional proprietary technologies that are patentable; ● the United States government will exercise any of its statutory rights to our intellectual property that was developed with government funding; or ● our business may infringe the patents or other proprietary rights of others.
It is not clear what other, if any, impact the AIA will have on the operation of our business. Moreover, the AIA and its implementation could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of patent rights, all of which could have a material adverse effect on our business and financial condition.
Moreover, the AIA and its implementation could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of patent rights, all of which could have a material adverse effect on our business and financial condition.
Coverage policies, third-party reimbursement rates and drug pricing regulation may change at any time, and there is the potential for significant movement in these areas in the foreseeable future. Even if favorable coverage and reimbursement status is attained for our product, less favorable coverage policies and reimbursement rates may be implemented in the future.
Coverage policies, third-party reimbursement rates and drug pricing regulation may change at any time, and there is the potential for significant movement in these areas in the foreseeable future.
Monetary penalties in such cases have often been substantial, and civil penalties can include costly mandatory compliance programs and potential exclusion of a company’s products from federal healthcare programs. 46 Table of Contents Enacted and future legislation or judicial action may increase the difficulty and cost for us to commercialize PEDMARK ® In the United States, there have been a number of court cases, legislative and regulatory changes, and other potential changes relating to the healthcare system that restrict or regulate post-approval activities, which may affect our ability to profitably sell PEDMARK ® or any other drug candidates for which we obtain marketing approval.
Enacted and future legislation or judicial action may increase the difficulty and cost for us to commercialize PEDMARK ® In the United States, there have been a number of court cases, legislative and regulatory changes, and other potential changes relating to the healthcare system that restrict or regulate post-approval activities, which may affect our ability to profitably sell PEDMARK ® or any other drug candidates for which we obtain marketing approval.
The AIA includes a number of significant changes to United States patent law, including provisions that affect the way patent applications will be prosecuted, reviewed after issuance, and may also affect patent litigation. The USPTO is currently developing regulations and procedures to govern administration of the AIA, and many of the substantive changes to patent law associated with the AIA.
The AIA includes a number of significant changes to United States patent law, including provisions that affect the way patent applications will be prosecuted, reviewed after issuance, and may also affect patent litigation.
The risk of accidental contamination or injury from these materials cannot be completely eliminated. We could be held liable for any damages that result and any such liability could exceed our resources and may not be covered by our general liability insurance. We currently do not carry insurance specifically for hazardous materials claims.
We could be held liable for any damages that result and any such liability could exceed our resources and may not be covered by our general liability insurance. We currently do not carry insurance specifically for hazardous materials claims.
Our strategy is to successfully commercialize PEDMARK ® in the United States and abroad. There are risks involved both with maintaining our own sales and marketing capabilities, and with entering into arrangements with third parties to perform these services.
There are risks involved both with maintaining our own sales and marketing capabilities, and with entering into arrangements with third parties to perform these services.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Office Service Agreement had an initial term of January 27, 2020 to July 31, 2020 and thereafter automatically renews for successive six-month periods. Either party is able to terminate the agreement by providing no less than three months’ advance written notice of termination. ​
Biggest changeThe Office Service Agreement had an initial term of January 27, 2020 to July 31, 2020 and thereafter automatically renews for successive six-month periods.
Added
Either party is able to terminate the agreement by providing no less than three months’ advance written notice of termination. ​ On August 1, 2023, the Company entered into a second Office Service Agreement (the “Second Office Service Agreement”) with Regus to lease office space in Dublin, Ireland.
Added
Per the terms of the Second Office Service Agreement, the monthly rent payments are €2,000. The Company was required to pay a security deposit of €4,000, which is the equivalent of two months rent.
Added
The Second Office Service Agreement commenced on August 1, 2023 and terminates on January 31, 2025, thereafter the lease may continue on a month-to-month basis with either party being able to terminate the agreement by providing one months’ advance written notice of termination. ​ ​

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changePatent No. 10,596,190 (“US ‘190 Patent”), which is exclusively in-licensed from Oregon Health & Science University 67 Table of Contents (“OHSU”) and relates to a method of using our PEDMARK ® product, and our U.S.
Biggest changePatent No. 10,596,190 (the “‘190 Patent”), which is exclusively in-licensed from Oregon Health & Science University (“OHSU”) and relates to a method of using PEDMARK ® . The ‘190 Patent was issued on March 24, 2020. On April 18, 2023, the PTAB invalidated the only claim of the‘190 Patent. The final written decision became effective June 20, 2023.
Patent No. 10,792,363 (“US ’363 Patent”), which relates to an anhydrous form of STS and its method of manufacture, which is the active pharmaceutical ingredient in our PEDMARK ® product. The US ‘190 Patent was issued on March 24, 2020. The US ‘363 Patent was issued on October 6, 2020.
Patent No. 10,792,363 (the “’363 Patent”), which relates to an anhydrous form of STS and its method of manufacture, which is the active pharmaceutical ingredient in the PEDMARK ® product. The ‘363 Patent was issued October 6, 2020.
Inter Partes Review (IPR) Challenges On October 29, 2021, Hope Medical Enterprises, Inc. (“Hope”) filed two petitions for inter partes review (“IPR”) with the Patent Trial and Appeal Board (“PTAB”) of the USPTO. In its petitions, Hope seeks to invalidate our U.S.
Item 3. Legal Proceedings Hope Medical Enterprises, Inc. Inter Partes Review (IPR) Challenges On October 29, 2021, Hope Medical Enterprises, Inc. (“Hope”) filed a Petition for inter partes review (IPR2022-00123) with the Patent Trial and Appeal Board (“PTAB”) of the USPTO to invalidate U.S.
CIPLA Litigation On December 1, 2022, we received a letter dated November 30, 2022, notifying us that CIPLA submitted to the FDA an ANDA for a generic version of PEDMARK ® (sodium thiosulfate solution) that contains Paragraph IV certifications with respect to two of our patents covering PEDMARK ® , ‘190, expiration date May 2038; and ‘728, expiration date May 2039.
CIPLA Litigation On December 1, 2022, we received a letter dated November 30, 2022, notifying us that CIPLA Ltd. and CIPLA USA (“CIPLA”) submitted to the FDA an ANDA (ANDA No. 218028) for a generic version of PEDMARK ® (sodium thiosulfate solution) that contains Paragraph IV Certifications on two of our patents covering PEDMARK ® : the OHSU licensed ‘190 Patent, expiration date January 2038; and our US 11,291,728 Patent (the “’728 Patent”), expiration date July 65 Table of Contents 2039.
While we now have, or will shortly receive, additional U.S. patents that cover PEDMARK ® over the IPR challenged patents, an invalidation of our patents covering PEDMARK ® could have a material adverse effect on our ability to protect our rights in PEDMARK ® beyond periods of marketing exclusivity for PEDMARK ® possible in the United States under Orphan Drug Designation and in Europe under PUMA.
An invalidation of our patents covering PEDMARK ® could have a material adverse effect on our ability to protect our rights in PEDMARK ® beyond periods of marketing exclusivity for PEDMARK ® in the United States under Orphan Drug Designation.
On January 10, 2023 we filed suit against the CIPLA entities in the United States District Court for the District of New Jersey (Case No. 3:23-cv-00123), for infringement of the ‘190 Patent and the ‘728 Patent. The suit is ongoing. ​ 68 Table of Contents Item 4. Mine Safety Disclosures Not applicable. ​ PART II
On January 10, 2023, we filed suit against the CIPLA entities in the United States District Court for the District of New Jersey (Case No. 2:23-cv-00123), for infringement of the ‘190 Patent, the ‘728 Patent, and the ‘984 Patent. On April 20, 2023, we filed an Amended Complaint to assert infringement of the ‘728 patent and the ‘984 Patent.
These patents are listed in FDA’s list of Approved Drug Products with Therapeutic Equivalence Evaluations, commonly referred to as the Orange Book, for PEDMARK ® . The certifications allege these patents are invalid or will not be infringed by the manufacture, use or sale of CIPLA’s sodium thiousulfate solution.
The certifications allege these patents are invalid or will not be infringed by the manufacture, use, or sale of CIPLA’s sodium thiosulfate solution.
Removed
Item 3. Legal Proceedings Chapman v. Fennec Pharmaceuticals Inc. et al. On September 3, 2020, plaintiff Jim Chapman filed a putative federal securities class action lawsuit against the Company, our Chief Executive Officer, Rostislav Raykov, and Chief Financial Officer, Robert Andrade, in the United States District Court for the Middle District of North Carolina, captioned Chapman v.
Added
The ‘190 Patent was previously listed in the United States Approved Drug Products with Therapeutic Equivalence Evaluations (also known as the “Orange Book”). In light of PTAB’s final written decision on the invalidity of the ‘190 Patent, we requested that the FDA remove the ’190 Patent from the Orange Book.
Removed
Fennec Pharmaceuticals Inc. et al ., Case No. 1:20-cv-00812.
Added
Two United States patent applications claiming priority through the ‘190 Patent remain pending at the United States Patent and Trademark Office (“USPTO”). ​ On October 29, 2021, Hope Medical Enterprises, Inc. (“Hope”) filed a Petition for inter partes review (IPR2022-00125) to invalidate our wholly owned U.S.
Removed
The complaint alleged that prior to our August 10, 2020 receipt of a CRL from the FDA concerning our NDA for PEDMARK ® , defendants made materially false or misleading statements and failed to disclose material facts about our third-party PEDMARK ® product manufacturing facility and the impact the facility would have on regulatory approval for PEDMARK ® .
Added
During the ‘363 IPR, we disclaimed the patent claims directed to the anhydrous morphic form of STS and continued with claims directed to its method of manufacture. Because the remaining claims in the ‘363 patent are directed to a method of manufacture, the ‘363 patent is not eligible for listing in the Orange Book.
Removed
On December 3, 2020, the court appointed a lead plaintiff to represent the putative class. On February 1, 2021, the lead plaintiff filed an amended complaint.
Added
In September 2023, the PTAB issued a Final Written Decision in favor of Fennec and upholding the amended claim. The USPTO has now granted three additional U.S. patents that cover the PEDMARK ® formulation, each of which have been listed in the U.S. FDA’s “Orange Book” (U.S. Patent No. 11,291,728 (issued April 5, 2022), U.S.
Removed
The amended complaint added members of our Board of Directors as defendants, asserts a putative class period from December 20, 2018 through August 10, 2020, makes allegations similar to those in the original complaint, claims the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, and seeks an unspecified amount of compensatory damages and attorneys’ fees and costs.
Added
Patent No. 11,510,984 (issued November 29, 2022), and U.S. Patent No. 11,617,793 (issued April 4, 2023)), and seven additional United States patent applications from this family are pending at the USPTO. We plan to vigorously defend our intellectual property rights to PEDMARK ® if challenged.
Removed
On March 3, 2021, defendants filed a motion to dismiss the amended complaint. On April 2, 2021, lead plaintiff filed an opposition to the motion to dismiss.
Added
On January 6, 2023, we received a letter dated January 5, 2023, notifying us that CIPLA submitted to the FDA a Paragraph IV Certification on our newly issued US 11,510,984 Patent (the “’984 Patent”). These patents are listed in FDA’s list of Approved Drug Products with Therapeutic Equivalence Evaluations, commonly referred to as the Orange Book, for PEDMARK ® .
Removed
On April 16, 2021, defendants filed a reply in support of the motion to dismiss, and on December 16, 2021, the Magistrate Judge entered an order recommending that defendants’ motion to dismiss be granted in its entirety. On January 24, 2022, lead plaintiff filed objections to the Magistrate Judge’s recommendation, and defendants filed their response on February 3, 2022.
Added
On April 4, 2023, we were granted US 11,617,793 Patent (the “’793 Patent”) covering the formulation of the PEDMARK ® product, which was listed in the Orange Book on or around April 17, 2023, and has an expiration date of July 2039.
Removed
On March 2, 2022, the U.S. District Court Judge adopted the Magistrate Judge’s order and recommendation and entered an order and judgment dismissing the amended complaint with prejudice. 66 Table of Contents On March 30, 2022, lead plaintiff filed a motion for post judgment relief, seeking leave to file a second amended complaint.
Added
On May 11, 2023, we received written notice of CIPLA’s Paragraph IV Certification as to the ’793 Patent, which was dated May 10, 2023, along with an enclosed statement of alleged factual and legal bases for stating that the ’793 Patent is invalid, unenforceable, and/or will not be infringed by CIPLA’s ANDA Product.
Removed
In his proposed second amended complaint, lead plaintiff seeks to add allegations stemming from the receipt of a second CRL following our resubmission of our NDA for PEDMARK ® , which we received on November 29, 2021, among other things. Defendants filed an opposition to plaintiff’s motion for post judgment relief on April 20, 2022.
Added
On July 27, 2023, we filed a Second Amended Complaint to assert the ‘793 Patent. The suit is ongoing. PEDMARQSI ® (EU Brand name for PEDMARK ® ) received European Commission approval in June 2023 and was granted eight year of market exclusivity plus two years of data exclusivity in Europe under PUMA. ​ Item 4.
Removed
On May 4, 2022, lead plaintiff submitted a reply in support of his motion. On September 27, 2022, defendants filed a request for judicial notice regarding the FDA’s press release announcing that it has approved PEDMARK ® . On October 18, 2022, lead plaintiff filed his opposition to request for judicial notice.
Added
Mine Safety Disclosures Not applicable. ​ PART II
Removed
On October 21, 2022, defendants filed a reply in support of the request for judicial notice. On February 15, 2023, the Magistrate Judge recommended the motion for post judgment relief be denied. Lead plaintiff filed no timely objection to the recommendation, and on March 2, 2023, the U.S.
Removed
District Court Judge issued an order adopting the Magistrate Judge’s recommendation, denying the motion for post judgment relief, and entering judgment for defendants. We believe that this lawsuit is without merit and intend to defend it vigorously. We cannot predict the outcome of this lawsuit.
Removed
Failure by us to obtain a favorable resolution of the lawsuit could have a material adverse effect on our business, results of operations, and financial condition.
Removed
We have not recorded a liability as of December 31, 2022, because we believe a potential loss is not probable or reasonably estimable given the nature of the proceedings and our success so far by obtaining a dismissal with prejudice of the amended complaint. Fisher v. Fennec Pharmaceuticals Inc. et al. On February 9, 2022, plaintiff Jeffrey D.
Removed
Fisher filed a putative federal securities class action lawsuit against the Company and our CEO and CFO in the United States District Court for the Middle District of North Carolina, captioned Fisher v. Fennec Pharmaceuticals Inc. et al. , Case No. 1:22-cv-00115.
Removed
The complaint asserts a putative class period from May 28, 2021 through November 28, 2021, and alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 by making materially false and misleading statements or omissions regarding the status of our third-party PEDMARK ® product manufacturing facility, the facility’s compliance with cGMP, and the impact its status and compliance would have on regulatory approval for PEDMARK ® in the period leading up to the Company’s November 29, 2021 receipt of a CRL for a subsequent NDA for PEDMARK ® .
Removed
The complaint seeks an unspecified amount of damages and attorneys’ fees and costs. On April 11, 2022, plaintiff Jeffrey D. Fisher filed a motion to be appointed lead plaintiff and represent the putative class and on May 9, 2022, the court appointed him as lead plaintiff. On June 23, 2022, lead plaintiff filed an amended complaint.
Removed
The amended complaint asserts the same putative class period from May 28, 2021 through November 28, 2021, is brought against the same defendants and makes allegations similar to those in the original complaint. On August 5, 2022, defendants filed a motion to dismiss the amended complaint. On August 26, 2022, lead plaintiff filed an opposition to the motion to dismiss.
Removed
On September 9, 2022, defendants filed a reply in support of the motion to dismiss. On September 27, 2022, defendants filed a request for judicial notice regarding the FDA’s press release announcing that it approved PEDMARK ® On September 30, 2022, lead plaintiff filed an opposition to the request for judicial notice.
Removed
On October 6, 2022, defendants filed a reply in support of the request for judicial notice. On October 12, 2022, the U.S. District Court Judge issued a memorandum opinion and order dismissing the amended complaint in its entirety and with prejudice, and on October 14, 2022, entered judgment.
Removed
Lead plaintiff had until November 14, 2022 to file a notice of appeal and did not file a notice of appeal. We believe that the lawsuit is without merit and intend to defend it vigorously. We cannot predict the outcome of this lawsuit.
Removed
Failure by us to obtain a favorable resolution of the lawsuit could have a material adverse effect on our business, results of operations, and financial condition.
Removed
We have not recorded a liability as of December 31, 2022, because we believe a potential loss is not probable or reasonably estimable given the nature of the proceedings and our success so far by obtaining a dismissal with prejudice of the amended complaint. ​ Hope Medical Enterprises, Inc.
Removed
On January 11, 2022, OHSU filed a Request for Supplemental Examination of US ‘190 Patent (Control No. 96.000,390) requesting the consideration by the Central Re-examination Unit (“CRU”) of the USPTO of certain prior art references, including references cited by Hope in its Petition for IPR that are relevant to the granted claim of the patent.
Removed
On January 28, 2022, the CRU issued a Supplemental Examination Certificate, identified a Substantial New Question (“SNQ”) on the patentability of the US ‘190 Patent claims, and ordered a Reexamination of US ‘190 Patent on March 9, 2022.
Removed
On May 9, the PTAB granted Hope Medical’s Petition to Institute the IPR against the US ‘190 Patent and a stayed the US ‘190 Patent Reexamination pending the result of the US ‘190 Patent IPR.
Removed
On August 12, 2022, OHSU filed a Motion to Amend the single claim of the US ‘190 Patent in the IPR to focus on the treatment of medulloblastoma. On December 5, 2022, OHSU filed a Revised Motion to Amend the single claim of the US ‘190 Patent.
Removed
We expect a decision in the ‘190 Patent IPR in May 2023, which can be appealed by the losing party. On April 5, 2022, the USPTO issued U.S. Patent No. 11,291,728 (‘728) that covers the PEDMARK ® pharmaceutical formulation.
Removed
On September 14, 2022, the USPTO issued Notices of Allowance to us for two additional patent applications that cover the PEDMARK ® pharmaceutical formulation. We expect these two additional U.S. patents to issue in Q4 of 2022 or Q1 of 2023. These patents will expire in 2039, unless held invalid or unenforceable by a court of final jurisdiction.
Removed
On approval of PEDMARK ® , we listed the ‘728 and the ‘190 patents in the FDA Orange Book.
Removed
We were granted Orphan Drug Exclusivity in January 2023 for the use of PEDMARK ® in the indication to reduce the risk of ototoxicity, or hearing loss, associated with cisplatin use in pediatric patients one month of age and older with localized, non-metastatic solid tumors.
Removed
We plan to pursue PUMA upon approval of the MAA, which would allow for 10 years of market exclusivity upon PUMA approval. We plan to vigorously defend our intellectual property rights related to PEDMARK ® . However, we are unable to predict the outcome of Hope’s IPR petitions, or the Supplemental Examination.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

17 edited+2 added−2 removed74 unchanged
Biggest changeThe look-through rules require a foreign corporation that owns at least 25% by value of the stock of another corporation to treat a proportionate amount of assets and income as held or received directly by the foreign corporation. 73 Table of Contents We have not made the analysis necessary to determine whether or not we are currently a PFIC or whether we have ever been a PFIC.
Biggest changePassive income for this purpose generally includes dividends, interest, rents, royalties and gains from securities and commodities transactions. The look-through rules require a foreign corporation that owns at least 25% by value of the stock of another corporation to treat a proportionate amount of assets and income as held or received directly by the foreign corporation.
Holders that: ● are tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts; ● are financial institutions, underwriters, insurance companies, real estate investment trusts, or regulated investment companies; ● are broker-dealers, dealers, or traders in securities or currencies that elect to apply a mark-to-market accounting method; ● have a “functional currency” other than the U.S. dollar; ● own common shares as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position; 70 Table of Contents ● acquired common shares in connection with the exercise of employee stock options or otherwise as compensation for services; ● hold common shares other than as a capital asset within the meaning of section 1221 of the Code (generally, property held for investment purposes); ● are partnerships or other “pass-through” entities for U.S. federal income tax purposes (or investors in such partnerships or entities); ● own, have owned, or will own (directly, indirectly, or by attribution) 10% or more of the total combined voting power of the outstanding shares of your company; ● are U.S. expatriates who are former citizens or long-term residents of the United States; ● have been, are, or will be residents or deemed to be residents in Canada for purposes of the Income Tax Act (Canada) (the “Tax Act”); ● use or hold, will use or hold, or that are or will be deemed to use or hold common shares in connection with carrying on a business in Canada; ● are persons whose common shares constitute “taxable Canadian property” under the Tax Act; or ● have a permanent establishment in Canada for the purposes of the Canada-U.S.
Holders that: ● are tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts; ● are financial institutions, underwriters, insurance companies, real estate investment trusts, or regulated investment companies; ● are broker-dealers, dealers, or traders in securities or currencies that elect to apply a mark-to-market accounting method; ● have a “functional currency” other than the U.S. dollar; ● own common shares as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position; ● acquired common shares in connection with the exercise of employee stock options or otherwise as compensation for services; ● hold common shares other than as a capital asset within the meaning of section 1221 of the Code (generally, property held for investment purposes); ● are partnerships or other “pass-through” entities for U.S. federal income tax purposes (or investors in such partnerships or entities); ● own, have owned, or will own (directly, indirectly, or by attribution) 10% or more of the total combined voting power of the outstanding shares of your company; ● are U.S. expatriates who are former citizens or long-term residents of the United States; ● have been, are, or will be residents or deemed to be residents in Canada for purposes of the Income Tax Act (Canada) (the “Tax Act”); ● use or hold, will use or hold, or that are or will be deemed to use or hold common shares in connection with carrying on a business in Canada; ● are persons whose common shares constitute “taxable Canadian property” under the Tax Act; or ● have a permanent establishment in Canada for the purposes of the Canada-U.S.
Holder or a person in (a) directly or indirectly hold membership interests, held shares and/or rights to acquire shares representing 25% or more of the issued shares of any class of our capital stock; and (b) more than 50% of the fair market value of our common stock was derived directly or indirectly from one or any combination of (i) real or immovable property situated in Canada, (ii) Canadian resource properties, (iii) timber resource properties, and (iv) options in respect of, or interests in, or for civil law rights in, property described in any of (i) to (iii).
Holder or a person in (a) directly or indirectly hold membership interests, held shares and/or rights to acquire shares representing 25% or more of the issued shares of any class of our capital stock; and (b) more than 50% of the fair market value of our common stock was derived 72 Table of Contents directly or indirectly from one or any combination of (i) real or immovable property situated in Canada, (ii) Canadian resource properties, (iii) timber resource properties, and (iv) options in respect of, or interests in, or for civil law rights in, property described in any of (i) to (iii).
Holders who are individuals, estates or trusts may pay substantially more tax on GILTI income, as they are subject to ordinary tax rates (ranging from 10% to 37% plus 74 Table of Contents the net investment income tax of 3.8%). Such U.S. Holders are not entitled to a deduction on GILTI income or a reduced foreign tax credit.
Holders who are individuals, estates or trusts may pay substantially more tax on GILTI income, as they are subject to ordinary tax rates (ranging from 10% to 37% plus the net investment income tax of 3.8%). Such U.S. Holders are not entitled to a deduction on GILTI income or a reduced foreign tax credit.
If we do not do so, any distribution may be required to be regarded as a dividend, even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain. The amount of the dividend will generally be treated as foreign-source dividend income to U.S. Holders. 71 Table of Contents Non-corporate U.S.
If we do not do so, any distribution may be required to be regarded as a dividend, even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain. The amount of the dividend will generally be treated as foreign-source dividend income to U.S. Holders. Non-corporate U.S.
Holder that pays (whether directly or through withholding) Canadian income tax with respect to dividends paid on the common shares generally will be entitled, at the election of such U.S. 72 Table of Contents Holder, to receive either a deduction or a credit for such Canadian income tax paid. Generally, a credit will reduce a U.S.
Holder that pays (whether directly or through withholding) Canadian income tax with respect to dividends paid on the common shares generally will be entitled, at the election of such U.S. Holder, to receive either a deduction or a credit for such Canadian income tax paid. Generally, a credit will reduce a U.S.
For purposes of this calculation, all of the days present in the current year, one-third of the days present in the immediately preceding year, and one-sixth of the days present in the second preceding year are counted. Residents are taxed for U.S. federal income tax purposes as if they were U.S. citizens. Non-U.S.
For purposes of this calculation, all of the days present in the current year, one-third of the days present in the immediately preceding year, and one-sixth of the days present in the second preceding year are counted. Residents are taxed for U.S. federal income tax purposes as if they were U.S. citizens. 67 Table of Contents Non-U.S.
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common shares currently trade in the U.S. on the Nasdaq Capital Market under the trading symbol “FENC” and in Canada on the TSX under the trading symbol “FRX”. ​ Record Holders As of March 27, 2023, there were approximately 27 shareholders of record of our common shares, one of which was Cede & Co., a nominee for Depository Trust Company, and one of which was The Canadian Depository for Securities Limited (“CDS”).
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common shares currently trade in the U.S. on the Nasdaq Capital Market under the trading symbol “FENC” and in Canada on the TSX under the trading symbol “FRX”. ​ Record Holders As of March 25, 2024, there were approximately 26 shareholders of record of our common shares, one of which was Cede & Co., a nominee for Depository Trust Company, and one of which was The Canadian Depository for Securities Limited (“CDS”).
Material United States Federal and Canadian Income Tax Consequences Material U.S. Federal Income Tax Considerations The following summary describes the material U.S. federal income tax consequences to U.S. Holders (as defined below) of acquiring, owning, and disposing of our common shares, subject to the qualifications set forth herein.
Federal Income Tax Considerations The following summary describes the material U.S. federal income tax consequences to U.S. Holders (as defined below) of acquiring, owning, and disposing of our common shares, subject to the qualifications set forth herein.
Additionally, to determine the amount of any capital gain from the sale or other taxable disposition of common shares that will be subject to the additional tax on net investment income, a U.S.
Additionally, to determine the amount of any capital gain from the sale or other taxable disposition of common shares that will be subject to the additional tax on net investment 71 Table of Contents income, a U.S.
We have not sought, and will not seek, a ruling from the IRS regarding any matter discussed herein, 69 Table of Contents and no assurance can be given that the IRS would not assert, or that a court would not sustain, a position that is different from, and contrary to, the positions taken in this summary.
We have not sought, and will not seek, a ruling from the IRS regarding any matter discussed herein, and no assurance can be given that the IRS would not assert, or that a court would not sustain, a position that is different from, and contrary to, the positions taken in this summary.
Members of such entities are regarded as holding their proportionate share of our common shares held by the entity for the purposes of the Tax Treaty. ​ Item 6. Reserved Not applicable. ​ 75 Table of Contents
Members of such entities are regarded as holding their proportionate share of our common shares held by the entity for the purposes of the Tax Treaty. ​ Item 6. Reserved Not applicable. ​
U.S. Holders may be subject to these reporting requirements unless their common shares are held in an account at certain financial institutions. Significant penalties may apply for failure to satisfy applicable reporting obligations.
U.S. Holders may be subject to these reporting requirements unless their 70 Table of Contents common shares are held in an account at certain financial institutions. Significant penalties may apply for failure to satisfy applicable reporting obligations.
The gain or loss will generally be U.S.-source gain or loss for foreign tax credit purposes. Additional Medicare Tax on Net Investment Income Certain U.S.
The gain or loss will generally be U.S.-source gain or loss for foreign tax credit purposes. 69 Table of Contents Additional Medicare Tax on Net Investment Income Certain U.S.
There can be no assurance that we are not, have never been or will not in the future be a PFIC.
We have not made the analysis necessary to determine whether or not we are currently a PFIC or whether we have ever been a PFIC. There can be no assurance that we are not, have never been or will not in the future be a PFIC.
Cede & Co. and CDS are each considered to be one shareholder of record. Dividend Policy We have never declared or paid cash dividends on our common shares. We currently expect to retain future earnings, if any, for use in the operation and expansion of business and do not anticipate paying any cash dividends in the foreseeable future.
Cede & Co. and CDS are each considered to be one shareholder of record. Dividend Policy We have never declared or paid cash dividends on our common shares.
Tax Convention. U.S. Holders that are subject to special provisions under the Code, including, but not limited to, U.S. Holders described immediately above, should consult their own tax advisors regarding the U.S. federal income, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local, and non-U.S. tax consequences of acquiring, owning, and disposing of our common shares.
Holders described immediately above, should consult their own tax advisors regarding the U.S. federal income, U.S. federal alternative 68 Table of Contents minimum, U.S. federal estate and gift, U.S. state and local, and non-U.S. tax consequences of acquiring, owning, and disposing of our common shares. The following summary is not a substitute for careful tax planning and advice. U.S.
Removed
The following summary is not a substitute for careful tax planning and advice. U.S.
Added
We currently expect to retain future earnings, if any, for use in the operation and expansion of business and do not anticipate paying any cash dividends in the foreseeable future. 66 Table of Contents Material United States Federal and Canadian Income Tax Consequences Material U.S.
Removed
Passive income for this purpose generally includes dividends, interest, rents, royalties and gains from securities and commodities transactions.
Added
Tax Convention. U.S. Holders that are subject to special provisions under the Code, including, but not limited to, U.S.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 6. Reserved 75 ​ ​ ​ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 76 ​ ​ ​ Item 7A. Quantitative and Qualitative Disclosures About Market Risk 83 ​ ​ ​ Item 8. Financial Statements and Supplementary Data 84 ​ ​ ​
Biggest changeItem 6. Reserved 73 ​ ​ ​ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 73 ​ ​ ​ Item 7A. Quantitative and Qualitative Disclosures About Market Risk 81 ​ ​ ​ Item 8. Financial Statements and Supplementary Data 81 ​ ​ ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

51 edited+24 added−19 removed14 unchanged
Biggest changeDollars December 31, 2022 % December 31, 2021 % (Decrease) PEDMARK product sales, net ​ $ 1,535 ​ $ — ​ $ 1,535 Cost of product sales ​ ​ (86) ​ ​ ​ ​ — ​ ​ ​ ​ (86) Gross profit ​ ​ 1,449 ​ ​ ​ ​ — ​ ​ ​ ​ 1,449 Operating expenses: ​ ​ ​ Research and development ​ 117 2 % 523 36 % (406) Selling and marketing ​ ​ 2,785 ​ 37 % ​ — ​ — % ​ 2,785 General and administration ​ 4,682 62 % 3,684 64 % 998 Total operating expense ​ 7,584 100 % 4,207 100 % 3,377 Loss from operations ​ 6,135 ​ 4,207 ​ 1,928 Unrealized (loss)/gain on securities ​ (58) ​ (162) ​ 104 Interest income ​ 153 ​ 13 ​ 140 Amortization expense ​ (70) ​ (8) ​ (62) Interest expense ​ ​ (744) ​ ​ ​ ​ (62) ​ ​ ​ ​ (682) Other (loss), net ​ (3) ​ (1) ​ (2) Net loss ​ $ (6,857) ​ $ (4,427) ​ $ (2,430) ​ Revenues reported in the three months ended December 31, 2022, represent product sales of PEDMARK ® .
Biggest changeDollars December 31, 2023 % December 31, 2022 % (Decrease) PEDMARK (R) product sales, net ​ $ 9,735 ​ $ 1,535 ​ $ 8,200 Cost of product sales ​ ​ (685) ​ ​ ​ ​ (86) ​ ​ ​ ​ (599) Gross profit ​ ​ 9,050 ​ ​ ​ ​ 1,449 ​ ​ ​ ​ 7,601 Operating expenses: ​ ​ ​ Research and development ​ 32 0.3 % 117 36 % (85) Selling and marketing ​ ​ 3,868 ​ 36 % ​ 2,785 ​ — % ​ 1,083 General and administration ​ 6,968 64 % 4,682 64 % 2,286 Total operating expense ​ 10,868 100 % 7,584 100 % 3,284 Loss from operations ​ 1,818 ​ 6,135 ​ (4,317) Unrealized (loss)/gain on securities ​ 4 ​ (58) ​ 62 Interest income ​ 115 ​ 153 ​ (38) Amortization expense ​ (70) ​ (70) ​ — Interest expense ​ ​ (915) ​ ​ ​ ​ (744) ​ ​ ​ ​ (171) Other (loss), net ​ 2 ​ (3) ​ 5 Net loss ​ $ (2,682) ​ $ (6,857) ​ $ 4,175 ​ Revenues reported for the three months ended December 31, 2023, were $9.7 million, which is an increase of $8.2 million over the same period in 2022.
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; results of our research and development activities; 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 80 Table of Contents 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.
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; results of our research and development activities; 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.
Our research and development expenses, which include expenses associated with our clinical trials, drug manufacturing to support clinical programs, consulting fees, sponsored research costs, toxicology studies, license fees, milestone payments, and other fees and costs related to the comercialization of our product, will depend on the availability of financial resources, the results of our clinical trials, and any directives from regulatory agencies, which are difficult to predict.
Our research and development expenses, which include expenses associated with our clinical trials, drug manufacturing to support clinical programs, consulting fees, sponsored research costs, toxicology studies, license fees, milestone payments, and other fees and costs related to the commercialization of our product, will depend on the availability of financial resources, the results of our clinical trials, and any directives from regulatory agencies, which are difficult to predict.
Quarterly Information The following table presents selected consolidated financial data for each of the last eight quarters through December 31, 2022, as prepared under generally accepted accounting principles within the United States, or U.S.
Quarterly Information The following table presents selected consolidated financial data for each of the last eight quarters through December 31, 2023, as prepared under generally accepted accounting principles within the United States, or U.S.
The Company is currently evaluating the effect the adoption of this ASU will have on the consolidated financial statements. ​ In June 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which (1) clarifies the guidance in Topic 820 on the fair value measurement of an equity security that is subject to contractual restrictions that prohibit the sale of an equity security and (2) requires specific disclosures related to such an equity security.
The Company is currently evaluating the effect the adoption of this ASU will have on the consolidated financial statements. ​ In June 2022, the FASB issued Accounting Standards Update ("ASU") 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which (1) clarifies the guidance in Topic 820 on the fair value measurement of an equity security that is subject to contractual restrictions that prohibit the 80 Table of Contents sale of an equity security and (2) requires specific disclosures related to such an equity security.
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 $250,000 amount insured by the FDIC and may lose value.
While we have never 78 Table of Contents 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 $250,000 amount insured by the FDIC and may lose value.
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 Annual Report. Off-Balance Sheet Arrangements Since our inception, we have not had any material off-balance sheet arrangements. Contractual Obligations and Commitments None.
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 Annual Report. Off-Balance Sheet Arrangements Since our inception, we have not had any material off-balance sheet arrangements.
We currently anticipate that our available capital resources, including our existing cash and cash equivalents, accounts receivable balances and the remaining $20 million available under the SPA by mutual agreement between the Company and Petrichor, will be sufficient to meet our expected working capital and capital expenditure requirements as our business is currently conducted for at least the next 12 months.
We currently anticipate that our available capital resources, including our existing cash and cash equivalents, accounts receivable balances and the remaining $15 million available under the SPA and subject to mutual agreement between the Company and Petrichor, will be sufficient to meet our expected working capital and capital expenditure requirements as our business is currently conducted for at least the next 12 months.
In valuing options granted in the fiscal years ended December 31, 2022 and 2021, we used the following weighted average assumptions: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended Year Ended ​ ​ December 31, ​ December 31, ​ 2022 2021 ​ Expected dividend — % — % Risk-free interest rate 1.18 - 3.96 % 1.41 – 1.62 % Expected volatility 150 - 181 % 122 % Expected life 5 - 6 years 10 years ​ ​ Common shares and warrants Common shares are recorded as the net proceeds received on issuance after deducting all share issuance costs and the relative fair value of investor warrants.
In valuing options granted in the fiscal years ended December 31, 2023 and 2022, we used the following weighted average assumptions: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended Year Ended ​ ​ December 31, ​ December 31, ​ 2023 2022 ​ Expected dividend — % — % Risk-free interest rate 3.58 - 5.31% % 1.18 - 3.96 % Expected volatility 59 - 167 % 150 - 181 % Expected life 1.50 - 6 years 5 - 6 years ​ ​ Common shares and warrants Common shares are recorded as the net proceeds received on issuance after deducting all share issuance costs and the relative fair value of investor warrants.
As a result of many factors, including those factors set forth in the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” section of this Annual Report, 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.
As a result of many factors, including those factors set forth in the sections entitled “Cautionary Note Regarding Forward-Looking Statements” and “Item 1A - Risk Factors” of this Annual Report, 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.
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.
This approval makes PEDMARK® the first and only treatment approved by the FDA in this area of unmet medical need. On October 17, 2022, we announced commercial availability of PEDMARK® in the U. S.
We sell our product through an experienced field force including Regional Pediatric Oncology Specialists and medical science liaisons who are helping to educate the medical communities and patients about cisplatin induced ototoxicity and our programs supporting patient access to PEDMARK ® .
In the U.S., we sell our product through an experienced field force including Regional Pediatric Oncology Specialists and medical science liaisons who are helping to educate the medical communities and patients about cisplatin induced 73 Table of Contents ototoxicity and our programs supporting patient access to PEDMARK ® .
This ASU will be effective for the year ended December 31, 2024. The Company is currently evaluating the effect the adoption of this ASU will have on the consolidated financial statements. ​
This guidance will be effective for the annual periods beginning the year ended December 31, 2025. The Company is currently evaluating the effect the adoption of this ASU will have on the consolidated financial statements. ​
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 December 31, 2022, we had approximately $0.3 million in our cash accounts and $23.5 million in savings and money market accounts.
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 December 31, 2023, we had approximately $1.4 million in our cash accounts and $11.9 million in savings and money market accounts.
The expected volatility was determined using historical volatility of our stock based on the contractual life of the award. The risk-free interest rate assumption was based on the yield on zero-coupon U.S. Treasury strips at the award grant date. We also used historical data to estimate forfeiture experience.
The risk-free interest rate assumption was based on the yield on zero-coupon U.S. Treasury strips at the award grant date. We also used historical data to estimate forfeiture experience.
Net financing activities in 2022 provided approximately $20.7 million from funding of the Petrichor Note, net of fees, and approximately $0.9 million arising from various 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.
This was mainly from the funding of the Petrichor Note, net of fees, and approximately $0.8 million arising from various 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.
The Company recorded net product sales of $1.54 million in fiscal 2022. The Company recorded discounts and allowances against sales in the amount of $0.2 million and cost of products sold of $0.1 million. The Company had gross profit of $1.4 million for fiscal year ended 2022.
The Company recorded net product sales of $21.3 million in fiscal 2023 compared to $1.5 million in 2022. The Company recorded discounts and allowances against sales in the amount of $2.5 million and cost of products sold of $1.3 million in 2023. The Company had gross profit of $20.0 million for fiscal year ended 2023.
During the period ended December 31, 2022, cash for operations was used mainly on the pre-commercialization activities of PEDMARK ® prior to FDA approval and then commercialization activities post NDA approval. ● The increase in other current assets of $1.7 million between December 31, 2021 and December 31, 2022 primarily relates to an increase of $2.1 million in inventory and accounts receivable offset by $0.4 million decrease in the value of Processa shares and prepaid assets. ● Current liabilities at December 31, 2022 increased $3.0 million compared to December 31, 2021.
During the period ended December 31, 2023, cash for 77 Table of Contents operations was used mainly on the pre-commercialization activities of PEDMARK ® prior to FDA approval and then commercialization activities post NDA approval. ● The increase in other current assets of $10.6 million between December 31, 2022, and December 31, 2023, primarily relates to an increase of $7.3 million in accounts receivable, an increase of $1.6 million in inventory and an increase of $1.8 million in pre-paid expenses and the value of Processa shares. ● Current liabilities at December 31, 2023 increased $2.9 million compared to December 31, 2022.
Stock-based Compensation The calculation of the fair values of our stock-based compensation plans requires estimates that require management’s judgments. Under ASC 718, the fair value of each stock option is estimated on the grant date using the Black-Scholes option-pricing model. The valuation models require assumptions and estimates to determine expected volatility, expected life, expected dividends and expected risk-free interest rates.
Under ASC 718, the fair value of each stock option is estimated on the grant date using the Black-Scholes option-pricing model. The valuation models require assumptions and estimates to determine expected volatility, expected life, expected dividends and expected risk-free interest rates. The expected volatility was determined using historical volatility of our stock based on the contractual life of the award.
We believe that our cash and cash equivalents as of December 31, 2022, which totaled $23.8 million, cash from product sales, plus the remaining Petrichor Financing of $20 million in convertible notes subject to mutual agreement between the Company and Petrichor (see Note 1 and Note 7 to consolidated financial statements contained elsewhere in this report), will be sufficient to meet our cash requirements through at least the next twelve months.
We believe that our cash and cash equivalents as of December 31, 2023, which totaled $13.3 million, cash from product sales, plus the remaining Petrichor Financing of $15 million in convertible notes, which are subject to mutual agreement between us and Petrichor (see Note 1 and Note 8 to consolidated financial statements contained elsewhere in this Annual Report), along with the approximately $43 million we received in the Norgine licensing deal will be sufficient to meet our cash requirements through at least the next twelve months.
In fiscal 2021, the Company had no revenues. ● Research and development expense decreased by $1.5 million in fiscal 2022 as compared to fiscal 2021. The Company reduced research and development costs when it received FDA approval of PEDMARK ® .
In fiscal 2022, the Company had gross profit of $1.4 million. 75 Table of Contents ● Research and development expense decreased by $3.5 million in fiscal 2023 as compared to fiscal 2022. The Company reduced research and development costs when it received FDA approval of PEDMARK ® .
The increase was a result of cash used in operations offset by net inflow of cash of $20.0 million received from the Petrichor Note, and $0.9 million received from stock option exercises and interest income. ​ ​ ​ ​ ​ ​ ​ Selected Cash Flow Data ​ Year Ended Year Ended (dollars and shares in thousands) ​ December 31, 2022 ​ December 31, 2021 Net cash used in operating activities ​ $ (18,058) ​ $ (14,222) Net cash provided by investing activities ​ — ​ — Net cash provided by financing activities ​ 20,732 ​ 4,978 Net cash flow ​ $ 2,674 ​ $ (9,244) ​ The net cash flow used in operating activities for the year ended December 31, 2022 was approximately $18.1 million as compared to $14.2 million in 2021.
The decrease was a result of cash used in operations offset by net inflow of cash from collections of accounts receivable of $7.8 million, $5.0 million received from the Petrichor Note, and $1.7 million received from stock option exercises and interest income. ​ ​ ​ ​ ​ ​ ​ Selected Cash Flow Data ​ Year Ended Year Ended (dollars and shares in thousands) ​ December 31, 2023 ​ December 31, 2022 Net cash used in operating activities ​ $ (17,143) ​ $ (18,058) Net cash provided by investing activities ​ — ​ — Net cash provided by financing activities ​ 6,638 ​ 20,732 Net cash flow ​ $ (10,505) ​ $ 2,674 ​ The net cash flow used in operating activities for the year ended December 31, 2023 was approximately $17.1 million as compared to $18.1 million in 2022.
We generated a net loss of approximately $23.7 million for the fiscal year ended December 31, 2022, and a net loss of $17.4 million for the fiscal year ended December 31, 2021. As of December 31, 2022, our accumulated deficit was approximately $203.2 million ($179.5 million at December 31, 2021).
We generated a net loss of approximately $16.05 million for the fiscal year ended December 31, 2023, and a net loss of $23.71 million for the fiscal year ended December 31, 2022. As of December 31, 2023, our accumulated deficit was approximately $219.2 million ($203.2 million at December 31, 2022).
Research and development expenses totaled $0.1 million for the three months ended December 31, 2022, down by $0.4 million over the same period in 2021. The Company recorded selling and marketing expenses of $2.8 million in the quarter ended December 31, 2022.
Research and development expenses decreased by $0.09 for the three months ended December 31, 2023, over the same period in 2022. The Company recorded selling and marketing expenses of $3.9 million in the quarter ended December 31, 2023, as compared to $2.8 million in the same period in 2022.
The vast majority of this is interest and is driven by larger debt load and higher interest rates. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As at ​ As at Selected Asset and Liability Data (thousands): December 31, 2022 December 31, 2021 Cash and equivalents ​ $ 23,774 ​ $ 21,100 Other current assets ​ 2,954 ​ 1,287 Current liabilities ​ (4,608) ​ (1,654) Working capital (1) ​ 22,120 ​ 20,733 (1) [Current assets – current liabilities] ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selected Equity: ​ ​ ​ ​ Common stock and additional paid in capital ​ ​ 199,388 ​ ​ 194,015 Accumulated deficit ​ (203,200) ​ (179,486) Shareholders’ (deficit) equity ​ (2,569) ​ 15,772 ​ Liquidity and Capital Resources ● There was a $2.7 million increase in cash and cash equivalents between December 31, 2022 and December 31, 2021.
The vast majority of this is interest and is driven by larger debt load and higher interest rates. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As at ​ As at Selected Asset and Liability Data (thousands): December 31, 2023 December 31, 2022 Cash and equivalents ​ $ 13,269 ​ $ 23,774 Other current assets ​ 13,589 ​ 2,954 Current liabilities ​ (7,553) ​ (4,608) Working capital (1) ​ 19,305 ​ 22,120 (1) [Current assets – current liabilities] ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Selected Equity: ​ ​ ​ ​ Common stock and additional paid in capital ​ ​ 206,380 ​ ​ 199,388 Accumulated deficit ​ (219,245) ​ (203,200) Shareholders’ (deficit) equity ​ (11,622) ​ (2,569) ​ Liquidity and Capital Resources ● There was a $10.5 million net decrease in cash and cash equivalents between December 31, 2023, and December 31, 2022.
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.
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. 79 Table of Contents Stock-based Compensation The calculation of the fair values of our stock-based compensation plans requires estimates that require management’s judgments.
The following description of critical accounting policies, judgments and estimates should be read in conjunction with our December 31, 2022 consolidated financial statements. 81 Table of Contents 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.
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.
We had cash and cash equivalents of approximately $23.8 million as of December 31, 2022.
We had cash and cash equivalents of approximately $13.3 million as of December 31, 2023.
Our general and administration expenses include expenses associated with the compensation of employees, stock-based compensation, professional fees, consulting fees, insurance and other administrative matters associated in support primarily of our commercialization of PEDMARK ® . 77 Table of Contents Results of Operations Fiscal 2022 versus Fiscal 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year Ended ​ ​ Fiscal Year Ended ​ ​ Increase In thousands of U.S.
Our general and administration expenses include expenses associated with the compensation of employees, stock-based compensation, professional fees, consulting fees, insurance and other administrative matters associated in support primarily of our commercialization of PEDMARK ® .
GAAP (dollars in thousands, except per share information). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net (Loss)/Income for the ​ Basic Net (Loss)/Income per ​ Diluted Net (Loss)/Income per Period Period Common Share Common Share March 31, 2021 $ (4,733) $ (0.18) $ (0.18) June 30, 2021 ​ (4,001) ​ (0.15) ​ (0.15) September 30, 2021 ​ (4,185) ​ (0.16) ​ (0.16) December 31, 2021 ​ ​ (4,427) ​ ​ (0.18) ​ ​ (0.18) March 31, 2022 ​ (3,696) ​ (0.14) ​ (0.14) June 30, 2022 ​ (5,075) ​ (0.19) ​ (0.19) September 30, 2022 ​ (8,089) ​ (0.31) ​ (0.31) December 31, 2022 ​ ​ (6,857) ​ ​ (0.26) ​ ​ (0.26) ​ Quarter ended December 31, 2022 versus 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter Ended ​ ​ ​ Quarter Ended ​ ​ Increase In thousands of U.S.
GAAP (dollars in thousands, except per share information). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net (Loss)/Income for the ​ Basic Net (Loss)/Income per ​ Diluted Net (Loss)/Income per Period Period Common Share Common Share March 31, 2022 ​ (3,696) ​ (0.14) ​ (0.14) June 30, 2022 ​ (5,072) ​ (0.19) ​ (0.19) September 30, 2022 ​ (8,089) ​ (0.31) ​ (0.31) December 31, 2022 ​ ​ (6,857) ​ ​ (0.26) ​ ​ (0.26) March 31, 2023 ​ (6,052) ​ (0.23) ​ (0.23) June 30, 2023 ​ (5,444) ​ (0.21) ​ (0.21) September 30, 2023 ​ (1,867) ​ (0.07) ​ (0.07) December 31, 2023 ​ ​ (2,682) ​ ​ (0.10) ​ ​ (0.10) ​ ​ ​ ​ ​ ​ ​ 76 Table of Contents ​ Quarter ended December 31, 2023 versus 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter Ended ​ ​ ​ Quarter Ended ​ ​ Increase In thousands of U.S.
General and administrative expenses increased by $1.0 million in the three months ended December 31, 2022, as compared to the same period in 2021. There was an increase of $795 related to product launch activities, $334 related to professional fees, $89 in payroll and benefits and an $87 increase in miscellaneous items.
General and administrative expenses increased by $2.3 million in the three months ended December 31, 2023, as compared to the same period in 2022. There was an increase of $1.8 million related to commercial spending and consulting, $0.3 million related to increased payroll and benefits and $0.1 million in legal fees.
These increases were offset by a decrease in non-cash equity expenses of $318. There was an unrealized loss of $0.06 million on the Processa shares for quarter ended December 31, 2022. The Processa shares will be marked to market at each balance sheet date.
These increases were offset by a decrease in non-cash equity expenses of $318. There was an unrealized loss of $0.004 million on the Processa shares for the quarter ended December 31, 2023. Interest income increased $0.04 million for the quarter ended December 31, 2023, compared to the same period a year prior.
We announced product launch of PEDMARK ® on October 17, 2022. We reported a loss from operations of $6.1 million for the three months ended December 31, 2022, compared to a loss from operations of $4.2 million for the same period in 2021.
Gross profit from sales of PEDMARK ® increased by $7.6 million for the three months ended December 31, 2023, over the same period in 2022. We reported a loss from operations of $1.8 million for the three months ended December 31, 2023, compared to a loss from operations of $6.1 million for the same period in 2022.
Outstanding Share Information Our outstanding comparative share data at December 31, 2022 and December 31, 2021 is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ Outstanding Share Type ​ 2022 ​ 2021 Change Common shares ​ 26,361 ​ 26,014 347 Warrants 150 39 ​ 111 Stock options 4,539 4,259 ​ 280 Total 31,050 30,312 ​ 738 ​ Newly Adopted and Recent Accounting Pronouncements I n May 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40).
Outstanding Share Information Our outstanding comparative share data at December 31, 2023 and December 31, 2022 is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ Outstanding Share Type ​ 2023 ​ 2022 Change Common shares ​ 27,027 ​ 26,361 666 Warrants 150 150 ​ — Stock options 4,798 4,539 ​ 259 Total 31,975 31,050 ​ 925 ​ Newly Adopted and Recent Accounting Pronouncements In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40).
The increase in amortization relates to the relative size of the deferred asset created by the capitalization of the loan origination and access fees. 78 Table of Contents ● Other losses increased by $0.6 million, driven mainly by interest on long-term debt. ● Interest income increased in fiscal 2022 as compared to fiscal 2021 by $0.1 million, due to higher average balances and sharply increased rates on money market accounts for the comparable periods.
The increase was driven mainly by higher average debt balances and higher interest rates on long-term debt. ● Interest income increased in fiscal 2023 as compared to fiscal 2022 by $0.2 million, due to higher rates on money market accounts for the comparable periods.
Accounts payable was up $1.6 million over prior year highlighting our post commercialization activity. Accrued expenses were up $1.4 million over prior year primarily due to a $1.3 million increase in anticipated bonus payments and employee paid time off. ● Working capital increased by $1.4 million between December 31, 2022 and December 31, 2021.
Accrued expenses were up $1.5 million over prior year primarily due to a $0.7 million increase in sales and inventory related items and $0.5 million increase in anticipated bonus payments and employee paid time off. ● Working capital decreased by $2.8 million between December 31, 2023, and December 31, 2022.
The net increase was the result of cash operating expenses, offset by the net $20.0 million received from the Petrichor note and $0.9 million received from the exercise of 273 options.
The net decrease was the result of cash operating expenses, offset by the collection of accounts receivable in the amount of $7.8 million, net $5.0 million received from the Petrichor note and $1.7 million received from the exercise of 2,058 options.
Non-cash expenses associated with equity remuneration increased by $0.2 million. ● The value of our Processa shares declined by $0.2 million for the year ended December 31, 2022. For fiscal year ended December 31, 2021, there was a gain of $0.03 million. We acquired the Processa shares on October 30, 2020.
There was an increase in consulting and professional costs of $0.8 million in fiscal 2023 over fiscal 2022. ● The value of our Processa shares declined by $0.04 million for the year ended December 31, 2023. For fiscal year ended December 31, 2022, there was a loss of $0.2 million. We acquired the Processa shares on October 30, 2020.
There was an increase in net loss of $6.4 million in fiscal 2022 compared to fiscal 2021. In 2022 non-cash items added back to net loss increased by $0.5 million over 2021 and net changes in balance sheet accounts added back another $0.2 million over 2021.
There was a decrease in net loss of $7.7 million in fiscal 2023 compared to fiscal 2022. In 2023, non-cash items added back to net loss increased by $1.1 million over 2022 and net changes in balance sheet accounts subtracted $6.8 million in 2023. Net financing activities in 2023 provided approximately $14.1 million less than in 2022.
Critical Accounting Policies and Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expense during the reporting period.
GAAP requires management to make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expense during the reporting period. These estimates are based on assumptions and judgments that may be affected by commercial, economic and other factors.
The incidence of ototoxicity depends upon the dose and duration of chemotherapy. Other than PEDMARK ® , there is currently no established preventive agent for this hearing loss and only expensive, technically difficult and sub-optimal cochlear (inner ear) implants have been shown to provide some benefit.
There is currently no established preventive agent for this hearing loss and only expensive, technically difficult, and sub-optimal cochlear (inner ear) implants have been shown to provide some benefit. Infants and young children that suffer ototoxicity at critical stages of development lack speech language development and literacy, and older children and adolescents lack social-emotional development and educational achievement.
In February 2020, we announced that we had submitted a MAA for the prevention of ototoxicity induced by cisplatin chemotherapy patients 1 month to Now that we have obtained applicable regulatory approval to sell PEDMARK ® in the United States, we recognize there may still be a need to establish collaborations that provide us with up-front payments, licensing fees, milestone payments, royalties or other revenue.
Infants and young children that are affected by ototoxicity at critical stages of development lack speech and language development and literacy, and older children and adolescents often lack social-emotional development and educational achievement. 74 Table of Contents Now that we have obtained applicable regulatory approval to sell PEDMARK ® in the United States, we recognize there may still be a need to establish collaborations that provide us with up-front payments, licensing fees, milestone payments, royalties or other revenue.
Dollars December 31, 2022 % December 31, 2021 % (Decrease) PEDMARK product sales, net ​ $ 1,535 ​ $ — ​ $ 1,535 Cost of product sales ​ ​ (86) ​ ​ ​ ​ — ​ ​ ​ ​ (86) Gross profit ​ ​ 1,449 ​ ​ ​ ​ — ​ ​ ​ ​ 1,449 Operating expenses: ​ ​ ​ Research and development ​ 3,531 15 % 4,981 29 % (1,450) Selling and marketing ​ ​ 2,785 ​ 12 % ​ — ​ - % ​ 2,785 General and administrative ​ 17,722 74 % 12,242 71 % 5,480 Total operating expense ​ 24,038 100 % 17,223 100 % 6,815 Loss from operations ​ 22,589 ​ 17,223 ​ 5,280 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized loss on securities ​ ​ (184) ​ ​ ​ ​ (25) ​ ​ ​ ​ (159) Amortization expense ​ (149) ​ (16) ​ (133) Interest expense ​ ​ (978) ​ ​ ​ ​ (126) ​ ​ ​ ​ (852) Unrealized foreign exchange loss ​ (9) ​ (10) ​ 1 Interest income ​ 195 ​ 54 ​ 141 Net loss ​ $ (23,714) ​ $ (17,346) ​ $ (5,430) ​ ● Commercial launch of PEDMARK ® commenced in October 2022.
Dollars December 31, 2023 % December 31, 2022 % (Decrease) PEDMARK (R) product sales, net ​ $ 21,252 ​ $ 1,535 ​ $ 19,717 Cost of product sales ​ ​ (1,259) ​ ​ ​ ​ (86) ​ ​ ​ ​ (1,173) Gross profit ​ ​ 19,993 ​ ​ ​ ​ 1,449 ​ ​ ​ ​ 18,544 Operating expenses: ​ ​ ​ Research and development ​ 56 0 % 3,531 14 % (3,475) Selling and marketing ​ ​ 12,123 ​ 37 % ​ 2,785 ​ 12 % ​ 9,338 General and administrative ​ 20,585 63 % 17,722 74 % 2,863 Total operating expense ​ 32,764 100 % 24,038 100 % 8,726 Loss from operations ​ 12,771 ​ 22,589 ​ (9,818) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized loss on securities ​ ​ (39) ​ ​ ​ ​ (184) ​ ​ ​ ​ 145 Amortization expense ​ (287) ​ (149) ​ (138) Interest expense ​ ​ (3,394) ​ ​ ​ ​ (978) ​ ​ ​ ​ (2,416) Unrealized foreign exchange gain/(loss) ​ 5 ​ (9) ​ 14 Interest income ​ 441 ​ 195 ​ 246 Net loss ​ $ (16,045) ​ $ (23,714) ​ $ 7,669 ​ ● Commercial launch of PEDMARK ® commenced in October 2022.
The Processa shares are marked to market at each balance sheet date with the resulting change in value being booked as an unrealized gain or loss. ● Amortization expense was up $0.1 million in fiscal 2022, as we wrote off the entire capitalized amount associated with the Bridge Bank Loan and Security Agreement origination costs but replaced it with the Petrichor Opportunities Fund I LP Senior Secured Securities Notes.
The Processa shares are marked to market at each balance sheet date with the resulting change in value being booked as an unrealized gain or loss. ● Amortization expense increased $0.1 million in fiscal 2023. ● Interest expenses were up by $2.4 million in fiscal 2023 compared to fiscal 2022.
Interest income was up $0.14 million for the quarter ended December 31, 2022 compared to the same period a year prior. This was driven by higher daily balances and higher interest rates. Amortization and interest expenses were up 79 Table of Contents $0.74 million for the quarter ended December 31, 2022 over the same period in 2021.
Amortization and interest expenses were up $0.17 million for the quarter ended December 31, 2023 over the same period in 2022.
Payroll and benefits related expenses rose by $4.0 million in fiscal 2022 compared to fiscal 2021. There was an increase in legal costs of $1.4 million in fiscal 2022 over fiscal 2021.
Non-cash expenses associated with equity remuneration increased by $1.3 million in fiscal year 2023 over 2022. Payroll and benefits related expenses rose by $0.7 million in fiscal 2023 compared to fiscal 2022.
Our operating expenses will depend on many factors, including the progress of our commercialization efforts and efficiency of our operations and current resources.
We continue to look to establish collaborations that will provide us with funding, for the out-license or sale of certain aspects of our intellectual property portfolio or from other sources. Our operating expenses will depend on many factors, including the progress of our commercialization efforts and efficiency of our operations and current resources.
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 currently have three patents listed for PEDMARK ® in the FDA’s Orange Book which are the “190”, “728” and “984” patents.
Fennec HEAR® 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 the date of its FDA approval on September 20, 2022 until September 20, 2029.
We are also pursuing additional patent applications in both the U.S. and internationally for PEDMARK ® . Hearing loss among children receiving platinum-based chemotherapy is frequent, permanent and often severely disabling. The incidence of hearing loss in these children depends upon the dose and duration of chemotherapy, and many of these children require lifelong hearing aids.
In the U.S. and Europe, it is estimated that more than 10,000 children annually may receive platinum-based chemotherapy. The incidence of ototoxicity depends upon the dose and duration of chemotherapy, and many of these children require lifelong hearing aids.
Selling and marketing expenses include distribution costs, logistics, shipping and insurance, advertising, wages commissions and out-of-pocket expenses. The Company recorded $2.8 million in selling and marketing expenses in fiscal 2022. ● There was a $5.5 million increase in general and administrative expenses in fiscal 2022 compared to fiscal 2021.
The Company recorded $12.1 million in selling and marketing expenses in fiscal 2023, compared to $2.8 million in fiscal year 2022.
The majority of traditional research and development expenses associated with PEDMARK ® are now recorded as general and administrative expenses or capitalized into inventory and eventually recorded to costs of product sales. ● The Company began incurring selling and marketing expenses when it expanded its payroll to include an internal salesforce.
Once FDA approval was obtained for PEDMARK ® , almost all research and development activities ceased. ● The Company began incurring selling and marketing expenses when it expanded its payroll to include an internal sales force. Selling and marketing expenses include distribution costs, logistics, shipping and insurance, advertising, wages commissions and out-of-pocket expenses.
Removed
The “190” patent is exclusively in-licensed from Oregon Health & Science University (“OHSU”) and relates to a method of using our PEDMARK ® product. The “190” expires in 2038 and the “728” and “984” patents expire in 2039, respectively, unless held invalid or unenforceable by a court or final jurisdiction.
Added
In addition, in January 2023, PEDMARK® was included in the National Comprehensive Cancer Network (“NCCN”) clinical practice guidelines for Adolescent and Young Adult (“AYA”) Oncology with a category 2A recommendation.
Removed
Further, in January 2023, the USPTO issued Notices of Allowance to us for one additional patent applications that cover the PEDMARK ® pharmaceutical formulation. We expect this additional U.S. patent to issue in Q1 of 2023 or Q2 of 2023. This patent will expire in 2039, unless held invalid or unenforceable by a court of final jurisdiction.
Added
In June 2023, we received European Commission Marketing Authorization for PEDMARQSI ® (known as PEDMARK ® in the U.S.) Further, the decision included the receipt of a PUMA in the EU with up to 8 years of data exclusivity plus 2 years of market protection.
Removed
In addition, adults undergoing chemotherapy for several common malignancies, including ovarian cancer, testicular cancer, and particularly head and neck cancer and brain cancer, often receive intensive platinum-based therapy and may experience severe, irreversible hearing loss, particularly in the high frequencies. In the U.S. and Europe, it is estimated that, annually, over 10,000 children may receive platinum-based chemotherapy.
Added
In March 2024, the Company announced an exclusive licensing agreement with Norgine, which will commercialize PEDMARQSI ® in in Europe, Australia and New Zealand in 2024.
Removed
Infants and young children that suffer ototoxicity at critical stages of development lack speech language development and literacy, and older children and adolescents lack social-emotional development and educational achievement.
Added
We have obtained applicable regulatory approval to sell PEDMARK ® in the U.S. and authorization from the European Commission Marketing Authorization for PEDMARQSI ® in the EU. Commercialization of PEDMARQSI ® in Europe, Australia and New Zealand will be undertaken by Norgine.
Removed
In August 2018, the Pediatric Committee (“PDCO”) of the European Medicines Agency (“EMA”) accepted our pediatric investigation plan (“PIP”) for sodium thiosulfate with the trade name Pedmarqsi for the condition of the prevention of platinum-induced hearing loss. An accepted PIP is a prerequisite for filing a Marketing Authorization Application (“MAA”) for any new medicinal product in Europe.
Added
The Company recognizes there may still be a need to establish collaborations that provide us with up-front payments, licensing fees, milestone payments, royalties, or other revenue to further commercialize our product around the world.
Removed
The indication targeted by our PIP is for the prevention of platinum- 76 Table of Contents induced ototoxic hearing loss for standard risk hepatoblastoma (“SR-HB”). Additional tumor types of the proposed indication will be subject to the Committee for Medicinal Products for Human Use (“CHMP”) assessment at the time of the MAA.
Added
We currently have three patents listed for PEDMARK ® in the FDA’s Orange Book. In September 2022, the USPTO issued the 728 patent, in December 2022, the USPTO issued the 984 patent and in April 2023, the USPTO issued the 793 patent, each that cover PEDMARK ® pharmaceutical formulation.
Removed
No deferred clinical studies were required in the positive opinion given by PDCO. We were also advised that sodium thiosulfate (tradename to be determined) is eligible for submission of an application for a PUMA.
Added
The 728 patent, the 984 patent and the 793 patent will expire in 2039. We are also pursuing additional patent applications in both the U.S. and abroad for PEDMARK ® .
Removed
A PUMA is a dedicated marketing authorization covering the indication and appropriate formulation for medicines developed exclusively for use in the pediatric population and provides market protection up to 10 years.
Added
PEDMARK ® Product Overview PEDMARK ® is the first and only therapy approved by the FDA indicated to reduce the risk of ototoxicity associated with cisplatin treatment in pediatric patients with localized, non-metastatic, solid tumors. Further, PEDMARQSI ® , known as PEDMARK ® in the U.S. was granted marketing authorization by the European Commission in June 2023.
Removed
Therefore, this decision allows us to proceed with the submission of a PUMA in the European Union (“EU”) with incentives of automatic access to the centralized procedure and up to 10 years of market protection.
Added
PEDMARK ® is a unique formulation of sodium thiosulfate in single-dose, ready-to-use vials for intravenous use in pediatric patients. PEDMARK ® is also the only therapeutic agent with proven efficacy and safety data with an established dosing paradigm, across two open-label, randomized Phase 3 clinical studies, the Clinical Oncology Group (“COG”) Protocol ACCL0431 and SIOPEL 6.
Removed
Our projections of our capital requirements are subject to substantial uncertainty, and more capital than we currently anticipate may be required thereafter.
Added
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.
Removed
To finance our continuing operations, we may need to raise substantial additional funds through either the sale of additional equity, the issuance of debt, the establishment of collaborations that provide us with funding, the out-license or sale of certain aspects of our intellectual property portfolio or from other sources.
Added
The COG ACCL0431 protocol enrolled pediatric patients with cancers typically treated with intensive cisplatin therapy for localized and disseminated disease, including newly diagnosed hepatoblastoma, germ cell tumor, osteosarcoma, neuroblastoma, medulloblastoma, and other solid tumors. SIOPEL 6 enrolled only hepatoblastoma patients with localized tumors.
Removed
We may not be able to raise the necessary capital, or such funding may not be available on financially acceptable terms if at all.
Added
Cisplatin Induced Ototoxicity Cisplatin and other platinum compounds are essential chemotherapeutic agents for the treatment of many pediatric malignancies. Unfortunately, platinum-based therapies can cause ototoxicity, or hearing loss, which is permanent, irreversible, and particularly harmful to the survivors of pediatric cancer.
Removed
If we cannot obtain adequate funding in the future, we might be required to further delay, scale back or eliminate certain research and development studies, consider business combinations, or even shut down some, or all, of our operations.
Added
The incidence of ototoxicity depends upon the dose and duration of chemotherapy, and many of these children require lifelong hearing aids or cochlear implants, which can be helpful for some, but do not reverse the hearing loss and can be costly over time.
Removed
This net increase is comprised of an increase in $0.2 million in class action suit defense, a decrease in general legal expense of $0.2 million and an increase of $1.4 million in intellectual property litigation. Pre-commercialization activities rose by $0.4 million in fiscal 2022 over fiscal 2021.
Added
We anticipate the Norgine licensing deal will alleviate the need to find alternative sources of financing and help us to fund operations while we expand our markets to areas outside of U.S., Europe, Australia and New Zealand.
Removed
These estimates are based on assumptions and judgments that may be affected by commercial, economic and other factors. Actual results could differ from these estimates.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeTo date, we have not employed the use of derivative instruments; however, we do hold Canadian dollars which we use to pay vendors in Canada and other corporate obligations. At December 31, 2022, we held approximately CAD$0.05. ​ 83 Table of Contents
Biggest changeTo date, we have not employed the use of derivative instruments; however, we do hold Canadian dollars and Euros which we use to pay vendors in Canada and the EU in addition to other corporate obligations. At December 31, 2023, we held approximately CAD$0.47 and €0.1. ​
We currently do not use interest rate derivative instruments to manage exposure to interest rate changes. As our main purpose is research and development, we have chosen to avoid investments of a trade or speculative nature. Foreign Currency Exposure We are subject to foreign currency risks as we purchase goods and services which are denominated in Canadian dollars.
We currently do not use interest rate derivative instruments to manage exposure to interest rate changes. As our main purpose is research and development, we have chosen to avoid investments of a trade or speculative nature. Foreign Currency Exposure We are subject to foreign currency risks as we purchase goods and services which are denominated in Canadian dollars and Euros.
We have not experienced any loss or write down of our money market investments for the years ended December 31, 2022 and 2021; however, the amounts we hold in money market accounts are substantially above the $250,000 amount insured by the FDIC and may lose value.
We have not experienced any loss or write down of our money market investments for the years ended December 31, 2023 and 2022; however, the amounts we hold in money market accounts are substantially above the $250,000 amount insured by the FDIC and may lose value.
At December 31, 2022, we had $23.5 million in money market investments and savings accounts as compared to $21.0 million at December 31, 2021; these investments typically have minimal risk.
At December 31, 2023, we had $11.9 million in money market investments and savings accounts as compared to $23.5 million at December 31, 2022; these investments typically have minimal risk.

Other FENC 10-K year-over-year comparisons