10-Q: Fennec Pharmaceuticals Q2 2025: PEDMARK Sales Up 33%

Fennec Pharmaceuticals reports strong Q2 2025 net product sales growth of 33% for PEDMARK, driven by increased market penetration and AYA population focus, despite a net loss.

Summary

• Net product sales for PEDMARK increased to $9.652 million in Q2 2025, up 33% from $7.262 million in Q2 2024.
• Net product sales for the six months ended June 30, 2025, were $18.403 million, up from $14.681 million in the same period of 2024.
• Total revenue for the six months ended June 30, 2025, was $18.403 million, a decrease from $32.639 million in 2024, primarily due to the $17.958 million licensing revenue from Norgine in Q1 2024.
• Net loss for Q2 2025 was $(3.152) million, an improvement from $(5.553) million in Q2 2024.
• Net loss for the six months ended June 30, 2025, was $(4.317) million, compared to a net income of $7.284 million in the same period of 2024.
• Cash and cash equivalents decreased to $18.705 million as of June 30, 2025, from $26.634 million at December 31, 2024.
• Operating activities used $(8.004) million cash for the six months ended June 30, 2025, compared to providing $30.660 million in the same period of 2024.
• Selling and marketing expenses decreased to $4.354 million in Q2 2025 from $4.672 million in Q2 2024, due to the elimination of European pre-commercial activities.
• General and administrative expenses increased to $7.0 million in Q2 2025 from $6.9 million in Q2 2024, driven by increased intellectual property expenses and salaries.
• Interest expense decreased by $450 thousand in Q2 2025 due to a $13 million debt paydown in December 2024.
• A new patent, US 12,311,026, covering a method of using sodium thiosulfate compositions to reduce ototoxicity, was granted on May 27, 2025, expiring in July 2039.
• Litigation against CIPLA for patent infringement is ongoing, with a new suit filed on May 27, 2025, for the US 026 Patent, and a motion to consolidate granted on July 14, 2025.
• The company believes current funds, which include funds from the upfront payment from Norgine, provide sufficient funding for at least the next twelve months.

Sentiment

Score: 7

Explanation: The significant 33% quarter-over-quarter growth in PEDMARK net product sales, coupled with expanding market access (AYA population, formulary additions, NCODA PQI) and a strengthened patent portfolio, indicates strong commercial execution and future potential. While the company recorded a net loss for the six-month period and experienced cash burn from operations, this is largely attributable to the absence of a one-time licensing payment from the prior year and ongoing investment in commercialization. Management's assertion of sufficient liquidity for the next 12 months provides stability. However, the persistent net losses and ongoing patent litigation against a generic competitor introduce elements of risk and uncertainty, preventing a higher score.

Positives

• PEDMARK net product sales increased by 33% to $9.652 million in Q2 2025 compared to $7.262 million in Q2 2024.
• PEDMARK sales growth is driven by increased market penetration and expanded focus on the Adolescent and Young Adult (AYA) population.
• A large national oncology group has added PEDMARK to its formulary for patients under 40, signaling broader adoption in community settings.
• NCODA PQI (Positive Quality Intervention) issued for PEDMARK, providing clinical guidance for multidisciplinary oncology care teams.
• Quarter-over-quarter growth in enrollment in Fennec HEARS and Specialty Pharmacy Program, indicating improved patient support offerings.
• New U.S. Patent 12,311,026 granted on May 27, 2025, strengthening the patent portfolio for PEDMARK until July 2039.
• Successful initial uptake of PEDMARQSI in the United Kingdom and Germany following Norgine's launch.
• Net loss for Q2 2025 improved to $(3.152) million from $(5.553) million in Q2 2024.
• Interest expense decreased by $450 thousand in Q2 2025 due to a $13 million debt paydown in December 2024.

Negatives

• Net loss for the six months ended June 30, 2025, was $(4.317) million, compared to a net income of $7.284 million in the same period of 2024.
• Total revenue for the six months ended June 30, 2025, decreased to $18.403 million from $32.639 million in 2024, primarily due to the non-recurring $17.958 million licensing revenue in 2024.
• Cash and cash equivalents decreased by $7.929 million to $18.705 million as of June 30, 2025, from $26.634 million at December 31, 2024.
• Net cash used in operating activities was $(8.004) million for the six months ended June 30, 2025, a significant shift from $30.660 million provided in the same period of 2024.
• Accumulated deficit increased to $223.998 million as of June 30, 2025, from $219.681 million at December 31, 2024.
• Stockholders deficit increased to $(7.463) million as of June 30, 2025, from $(5.872) million at December 31, 2024.
• Interest income decreased by $399 thousand in Q2 2025 due to lower average cash balances.
• General and administrative expenses increased by $92 thousand in Q2 2025, partly due to increased intellectual property expenses related to ongoing litigation.

Risks

• Projections of future capital requirements are subject to substantial uncertainty and may fluctuate depending on factors such as the ability to obtain additional financial resources, progress in clinical trials, drug substance requirements, changes in R&D focus, patent costs, competitive advances, and regulatory requirements.
• The effectiveness of any system of internal control over financial reporting is subject to inherent limitations, including judgment in design and implementation, and the inability to eliminate misconduct completely.
• The company maintains deposits in highly rated, federally-insured financial institutions in excess of federally insured limits, and amounts held in money market accounts are substantially above the $250 thousand FDIC insured amount and may lose value.
• Ongoing patent infringement litigation against CIPLA could result in an adverse outcome, potentially impacting market exclusivity and revenue.
• Tiered royalty payments from Norgine are subject to material reduction if an alternative or generic version of PEDMARQSI becomes available in any respective country or jurisdiction within the Territory.
• The ability to draw the remaining $15 million under the Securities Purchase Agreement (SPA) with Petrichor expired on December 31, 2024, limiting a potential source of funding.

Future Outlook

The company expects results from the investigator-initiated clinical trial STS-J01 in Japan in the second half of 2025, with evaluation of both registration and partnering or licensing expected thereafter. Management believes current funds, including the upfront payment from Norgine, provide sufficient funding for at least the next twelve months to continue commercialization efforts for PEDMARK.

Management Comments

• "We are pleased to have delivered three consecutive quarters of strong performance, with second quarter revenue up 33% over the same quarter in 2024." Jeff Hackman, CEO.
• "This acceleration reflects significant progress in both large community practices and academic centers – driven by a completely overhauled go-to-market approach, increased awareness of the importance of preventing cisplatin-induced ototoxicity (CIO) and expanded patient support program offerings." Jeff Hackman, CEO.
• "The results demonstrate the scalability of our model and the strong demand for PEDMARK across key segments of the market." Jeff Hackman, CEO.
• "With the U.S. momentum for PEDMARK building, coupled with Norgine’s ex-U.S. PEDMARQSI launches and results from the investigator-initiated clinical trial STS-J01 in Japan expected in the coming months, we believe the global opportunity for both patients and Fennec shareholders is significant." Jeff Hackman, CEO.

Industry Context

Fennec Pharmaceuticals operates in the specialized biopharmaceutical sector, focusing on pediatric oncology and the prevention of cisplatin-induced ototoxicity (CIO). PEDMARK is the first and only FDAand EMA-approved therapy for this unmet medical need. The market includes an estimated 10,000 pediatric patients annually in the U.S. and Europe receiving platinum-based chemotherapy, with an expanded focus on the Adolescent and Young Adult (AYA) population (ages 15-39), estimated at 20,000 cisplatin chemotherapy patients annually in the U.S. The NCCN's Category 2A recommendation for AYA oncology and the NCODA PQI for PEDMARK indicate growing recognition and integration into clinical practice guidelines, supporting its establishment as a standard of care.

Comparison to Industry Standards

• PEDMARK is the first and only FDAand EMA-approved agent designed to reduce the risk of cisplatin-induced hearing loss (CIO) in children with localized solid tumors, setting a new standard in this specific therapeutic area.
• The NCCN's Category 2A recommendation for PEDMARK in Adolescent and Young Adult (AYA) Oncology positions it as a recognized treatment option within established clinical guidelines, comparable to other therapies with strong clinical evidence.
• The issuance of an NCODA PQI for PEDMARK provides clinical data and guidance for multidisciplinary oncology care teams, similar to how other leading oncology therapies are supported for optimal use.
• The company's patent protection for PEDMARK until 2039 in the U.S. and internationally, along with Orphan Drug Exclusivity and Pediatric Use Marketing Authorization, provides a competitive moat, which is a common strategy for novel therapies in specialized markets.
• The licensing agreement with Norgine for commercialization in Europe, Australia, and New Zealand aligns with common strategies for biopharmaceutical companies to expand global reach through established regional partners.

Corporate Governance

Legal Proceedings

• Ongoing patent infringement litigation against CIPLA Ltd. and CIPLA USA regarding generic versions of PEDMARK, asserting infringement of multiple patents (US 190, US 728, US 984, US 793, US 018, US 530, US 604, and US 026 Patents).
• A new suit was filed on May 27, 2025, against CIPLA for infringement of the newly granted US 12,311,026 Patent.
• On July 14, 2025, the court granted a motion to consolidate the new suit (Case No. 2:25-cv-05709) with the existing litigation (Case No. 2:23-cv-00123).
• On July 14, 2025, the court issued an Order on Claim Construction, adopting Fennec's proposed constructions for two disputed claim terms.
• The litigation benefits from a 30-month stay on FDA final approval for generic products and 7 years of Orphan Drug Exclusivity until September 20, 2029.

Related Party Transactions

• Securities Purchase Agreement (SPA) with Petrichor Opportunities Fund I LP for senior secured floating rate convertible notes. As of June 30, 2025, approximately $19.477 million (inclusive of PIK interest) of Second Closing Notes remain outstanding.
• Waiver and Redemption Agreement with Petrichor on December 18, 2024, for the repurchase and redemption of $13 million in Notes.

Stakeholder Impact

• Shareholders: Potential for increased value from growing PEDMARK sales, strengthened patent portfolio, and global expansion. However, ongoing net losses and cash burn, along with litigation costs, pose risks to profitability and share value. The increase in authorized shares for the equity incentive plan could lead to dilution.
• Employees: Enhanced incentives through an expanded equity incentive plan and a new employee stock purchase program. Increased headcount mentioned in G&A expenses suggests growth in the workforce.
• Customers (Healthcare Providers/Patients): Improved access to PEDMARK through expanded market penetration, inclusion in oncology group formularies, NCODA PQI guidance, and enhanced patient support programs (Fennec HEARS). This directly benefits pediatric and AYA cancer patients at risk of cisplatin-induced ototoxicity.
• Suppliers: Continued demand for product manufacturing and distribution services due to increased PEDMARK sales.
• Creditors (Petrichor): The company has partially repaid its debt to Petrichor ($13 million redeemed), but approximately $19.477 million in notes remain outstanding, with interest accruing.

Next Steps

• Continue commercialization efforts for PEDMARK in the U.S., focusing on increasing awareness and establishing it as the standard of care.
• Support Norgine's ongoing and planned launches of PEDMARQSI in additional EU countries.
• Await results from the investigator-initiated clinical trial STS-J01 in Japan in the second half of 2025.
• Evaluate registration and partnering or licensing opportunities in Japan following trial results.
• Fennec's senior leadership team will ring the NASDAQ Stock Market Closing Bell on September 5, 2025.
• Present at the H.C. Wainwright 27th Annual Global Investment Conference from September 8-10, 2025.
• Monitor and upgrade internal controls as necessary.
• Evaluate the effect of adopting new accounting standards (ASU 2023-09 and ASU 2024-03) on consolidated financial statements.

Key Dates

Recommendation

Fennec Pharmaceuticals demonstrates strong commercial momentum with PEDMARK sales increasing by 33% quarter-over-quarter, driven by effective market penetration and expansion into the AYA population. The strengthening patent portfolio and positive clinical guideline inclusions (NCCN, NCODA) are significant long-term positives. However, the company continues to report net losses and negative cash flow from operations, albeit with an improved net loss for the quarter compared to the prior year. The decrease in total revenue for the six-month period is largely due to the absence of a one-time licensing payment received in the prior year, which distorts the year-over-year comparison. While management asserts sufficient liquidity for the next 12 months, the ongoing patent litigation against CIPLA introduces uncertainty and potential future costs. Given the strong product performance offset by continued losses and litigation risks, a "Hold" recommendation is appropriate for investors to monitor the company's path to profitability and the outcome of legal challenges.

Keywords

Fennec Pharmaceuticals, PEDMARK, PEDMARQSI, cisplatin-induced ototoxicity, hearing loss prevention, pediatric oncology, biopharmaceutical, SEC filing, Q2 2025 results, patent infringement, Norgine, Orphan Drug Exclusivity, AYA oncology, sodium thiosulfate