Fennec Pharmaceuticals Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
May 14, 2024

There are 7 speakers on the call.

Operator

Good morning, ladies and gentlemen, and welcome to the Fennec Pharmaceuticals First Quarter 2024 Earnings and Corporate Update Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions on how to participate will be given at that time. As a reminder, today's conference call is being recorded. Now, I would like to turn the conference over to Fennec's Chief Financial Officer, Robert Andrade.

Operator

Please go ahead.

Speaker 1

Thank you, operator, and good morning, everyone. We appreciate you joining us today for Fennec Pharmaceuticals' Q1 2024 Earnings Conference Call, during which we will review our financial results as well as provide a general business update. Joining me from Fennec this morning are Rusty Rykoff, our Chief Executive Officer and Adrian Hay, our Chief Operating Officer. Before we begin, I would like to remind you that during this call, the company will be making forward looking statements that are subject to risks and uncertainties that may cause actual results to differ from the results discussed in the forward looking statements. Reference to these risks and uncertainties are made in today's press release and disclosed in detail in the company's periodic and current event filings with the United States Securities and Exchange Commission.

Speaker 1

In addition, any forward looking statements made on this call represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligation to update or revise any forward looking statements. This conference call is being recorded for audio rebroadcast on Fennec's website, www.fennick pharma.com, where it will be available for the next 30 days. With that, I will now turn the call over to our Chief Executive Officer, Rusty Rykoff. Rusty?

Speaker 2

Thank you, Robert, and good morning, everyone. On today's call, we will detail our Q1 financial results, all of which were outlined in our earnings press release issued this morning prior to this call. We'll also discuss ongoing commercial launch efforts and progress that we're making with PedMark in the U. S. And abroad following the exclusive licensing agreement announcement we executed in March with Norgene to commercialize PedMark's in Europe, Australia and New Zealand.

Speaker 2

In the Q1, PedMark delivered total net revenues of 25,400,000 dollars including $18,000,000 in licensing revenues from Noregene transaction and $7,400,000 in net Fedmark product sales. Robert will further elaborate on the $18,000,000 in the LifeSeq revenue related to the Nord Stream transaction. But to be clear, we received $43,200,000 from the transaction, which is reflected on our balance sheet as of March 31 and cash of $51,200,000 We believe that a couple of things affected FedMark sales during the Q1 of this year. First, the public reminder that the U. S.

Speaker 2

FDA issued healthcare professional organizations in January stating that FedMark is not substitutable with autosodium thiosulfate products may have caused some unintended confusion in the marketplace. Initially, the professional affairs and stakeholder engagement staff at the FDA issued the potential health risks with substitution as a targeted outreach to the following organizations: Alliance For Pharmacy Compounding, American Academy of Pediatrics, American College of Apothecaries, American Hospital Association, American Pharmacists Association, American Society of Clinical Oncology, American Society of Health System Pharmacies, Association of American Cancer Institutes, Children's Hospital Association, Federation of American Hospitals, Hematology, Oncology Pharmacy Association, International Academy of Compounding Pharmacists and Professional Compounding Centers of America. We believe that in turn some of these organizations communicated the FDA safety message to their respective members. Recently, the Office of New Drugs and the FDA added the safety communication issued by SEDAR's professional affairs and stakeholders engagement staff to PedMark's approval at the FDA page. Now it is clear that substitution post potential health risks, including potassium chloride exposure, which at high doses can lead to increased risk of acute cardiac events and other serious adverse reactions.

Speaker 2

Potassium chloride is not present in Denmark. Overexposure to boric acid can cause health risks including headache, hypothermia, restlessness, weariness, renal injury, dermatitis, alopecia, anorexia and indigestion. Although BedMark also contains boric acid, it is at a lower concentration than other SDS products. Overexposure to sodium nitrate, which can lead to health risks including methemoglobinemia. Sodium nitrate is co packaged with sodium thiosulfate as a separate vial in some products and is not present in bedlamide.

Speaker 2

Unfortunately, Pfenex continues to see unlawful compounding of copies of PedMart with pediatric hospital pharmacies, unnecessarily putting costs in front of children's safety. The majority of these hospitals are affiliated with Children's Oncology Group and thus far the FDA safety communication has not changed their behavior. PENEC continues to diligently work with the FDA to address this issue. Additionally, prior to April 1 this year, our J code did not differentiate between PedMark and other formulations of STS. As a consequence, which we discussed in our call last quarter, there had been some confusion and some impact to the adaptation of PedMark.

Speaker 2

The good news is that as of April 1, this issue has been fully resolved with CMS amending our J code to specify PedMark. Now that this change is effective, we expect uptake to improve in the quarters to follow. Despite these acute challenges, we remain optimistic that it will be an exciting year for Fennec given the strong performance with Bedmark in 2023, the 1st full fiscal year following our U. S. Commercial launch.

Speaker 2

We're confident in our ability to navigate through these marketplace challenges to achieve our long term objectives. Our outlook over the next few quarters will largely depend on our ability to successfully target the community hospitals and infusion centers, the treat in the outpatient setting, all the pediatric patients within our label and the NCCN guidelines for adolescents and young adults. Padmark continues to have broad and favorable payer coverage as evidenced by payer approval, approved U. S. Prescription claims with commercial insurance plans and Medicare Part D plans.

Speaker 2

Regarding our partnership with Norgene to commercialize FedMarks in Europe, Australia and New Zealand, efforts are well underway in these territories with a targeted launch date of Q4 this year. PET MARC is the 1st and only approved therapy in the EU and U. K. For prevention of autotoxicity induced by cisplatin chemotherapy in patients 1 month to 18 years of age with localized nonmetastatic solid tumors. As a reminder, under the terms of the licensing agreement, Pfenex received approximately $43,200,000 in upfront consideration and the potential of up approximately $230,000,000 in additional commercial and regulatory milestone payments and tiered royalties on net sales of PedMark C in the license territories up to the mid-20s.

Speaker 2

Norgene will be responsible for all commercialization activities in the licensed territories and will hold all marketing authorizations. As we previously communicated, this partnership represents an important step in achieving our mission of expanding PedMarkzib to patients across the globe who are at risk of suffering from cisplatin induced ototoxicity. The terms provided us with many important benefits, including an upfront payment for the solidifying our balance sheet, economic terms providing meaningful participation in the ex U. S. Success of BedMark C and importantly an experienced partner to successfully launch BedMark C in the licensed territories.

Speaker 2

With that, I will now turn the call over to Adrian, who will provide an update on our commercial strategy and operations. Adrian?

Speaker 3

Thanks, Rossy. As Rossy has said, in the Q1, our sales force has switched the focus of their activities to the community treated AYA population that fall within our label. We believe that there are many more patients in this segment compared to the inpatient hospital treated pediatric population. Additionally, these older patients require approximately 4 times as much Pedmar as the younger patients. On our prior quarterly call, I alluded to the challenges that we faced during the early stages of our relaunch into this segment.

Speaker 3

Prior to April 1, 2024, our J code did not differentiate between PedMark and other formulations of STS. Consequently, there has been some confusion and some impact on the adoption of PEDMARK. In January, CMS did 2 important things to address this matter. First, they issued a new J code for the HUBSTS product and second, they amended Fenax J code to specify PEDMARK. Encouragingly, CMS also stated that the two formulations are not interchangeable.

Speaker 3

As a reminder, the new J code specifying PEDMOC was not active until April 1. It is also important to understand that the J code becoming effective on April 1 is not a simple onoff event. It is taking some considerable time to get the code uploaded into the electronic prescribing systems and payment plans, and this task is still ongoing. Additionally, we are awaiting updates to the NCCN compendia and others, for example, DrugDex and Lexicon. These compendia are the proof cells for payers to reimburse Medbark, and this process is expected to take 60 to 90 days to complete and validate from April 1.

Speaker 3

Another ongoing challenge has been extending infusion center hours to accommodate the time it takes to administer Pedmark 6 hours after the cisplatin infusion. Again, this doesn't happen overnight and requires the intervention of senior management at the infusion center. We've had greater penetration in those centers that are open for 16 to 24 hours. Despite these acute challenges, we remain encouraged by the reaction to BedMark and the possibility to dramatically improve the quality of life for cancer survivors by preventing or significantly reducing hearing loss caused by cisplatin. We are confident that once these logistical hurdles are overcome, PedMark will become the standard of care and be routinely used in the AYA population.

Speaker 3

We've had a very busy conference season with participation in 11 regional oncology conferences, as well as 7 key scientific meetings, including the American Society of Pediatric Hematology Oncology, the Community Oncology Alliance, the National Comprehensive Cancer Network and the American Academy of Audiology Annual Conferences. And we're looking forward to ASCO, where we intend to spread the word to as many AYA treating physicians as possible. So in closing, we see promising opportunities for Pedmark, including the steps we're taking to educate the marketplace, along with executing on our commercialization plans, and we look forward to the acceleration in revenue in the coming months. With that, I'll turn the call over to Robert to go over the financials for the quarter.

Speaker 1

Thank you, Adrian. Our press release contains details of our financial results for the Q1 of 2024, which can be viewed on the Investors and Media section of our website. Rather than read through all of those details as previous conference calls, my comments today will focus on some key financial results. The company recorded PedMark net sales of $7,400,000 for the Q1 of 2024. Net sales in the Q1 were more highly impacted than previous quarters by discounts, including an impact from select product that was returned due to expiry.

Speaker 1

The returned product was due to production and launch dynamics in the 1st year after launch, which we don't anticipate to continue beyond the Q1 of 2024. Total net sales for the Q1 were $25,400,000 which as mentioned included $18,000,000 for the accounting of licensing revenues for the Noregene transaction. The company evaluated the Noregene license agreement under ASC 606 and concluded that Noregene represents a customer in the transaction. As such, a portion of the transaction price was recognized as license revenue in the Q1 of 2024 and a portion of the transaction price associated with the material right is deferred and reflected as deferred revenue. To be clear, for the 3 months ended March 31, 2024, the company did not recognize any milestone or royalty revenue payments from the Norgene transaction.

Speaker 1

G and A expenses for the Q1 of 2024 were $5,900,000 which compares to $4,300,000 in the Q4 of 2023. This increase is largely attributable to pre commercialization expenses in preparation for the potential European launch or partnership. The company recorded $5,200,000 in selling and marketing expenses in the first quarter of 2024 compared to $2,500,000 in the Q4 of 2023. The increase was largely attributable to higher payroll and increased marketing expenses related to the previously mentioned AYA initiatives. And finally, on our cash position.

Speaker 1

We ended the Q1 with approximately $51,200,000 in cash, cash equivalents and investment securities, which includes the approximately $43,000,000 received from the licensing of Europe, Australia and New Zealand to Norgene. Further, as a reminder, the next anticipated milestone related to our Norgene agreement will be obtaining pricing approval in Germany, in which FENIC will receive a €10,000,000 milestone payment. Further, Fennec's royalties on net sales will commence in the mid teens percentages once Pedmarxi is launched later in 2024. We anticipate that our cash, cash equivalents and investment securities as of March 31, 2024, when coupled with PedMark revenue assumptions and the recently announced license agreement for Europe in March 24 will be sufficient to fund our planned operations for at least the next 12 months. And operator, with that, we are ready for questions.

Speaker 1

Thank

Operator

Our first question comes from Charles Duncan with Cantor Fitzgerald. Your line is open.

Speaker 4

Yes. Good morning, Rusty and team. Thanks for taking the questions. And congrats on the progress in the quarter with the Norgene collaboration. I had a couple of questions though regarding the unlawful compounding and you mentioned Children Oncology Group.

Speaker 4

I guess I'm wondering if you could provide some additional color on the initiatives that you're taking to really correct this behavior. And then can you provide us any color on the level of compounding that you anticipate to occur in Europe versus here? Thanks.

Speaker 2

Hi, Charles. I'll take this. Yes. So as you saw from the FDA announcement and then subsequently putting that announcement on the approval of Fedmark at the FDA page, The FDA is taking this issue very seriously. The problem that we run into at the pediatric hospital level is that they have a committee called the Expensive Drug Committee, where and typically, these committees are stacked with folks in the hospital that are not pediatric oncologists or pharmacists for that matter.

Speaker 2

But it's they're really there to do everything possible but to avoid paying for an expensive drug, which they consider Fedmark to be 1. So this is what we're facing. In terms of initiatives, what I would say is that we continue to work with the FDA on this. The FDA is very concerned. There is significant safety risk associated with the use of compounded products in this vulnerable population, particularly if you're pushing over 15 minutes to make a copy of Fedmark a very large and significant dose of potassium chloride in younger children.

Speaker 2

So with that, I think our engagement with the FDA is ongoing. And if there's anything more to report, we will hopefully soon. In terms of Europe, what I would say is there's a bit of a difference because there you're dealing with so we have a pediatric use marketing authorization, which by definition gives exclusivity to the market on the data of the studies from the studies to, in this case, now Norgene. How is that different in the United States is that you're not dealing by hospital by hospital basis, you're dealing with a health care system that and regulations that have already been approved for the use of an older drug in a pediatric population with a 10 year exclusivity. So that's well understood that you're bringing in tremendous value to this vulnerable population because you can invest it in these studies and you have this 10 year exclusivity.

Speaker 2

And so you're also dealing with a single payer system. So there it's really the negotiations that will be ongoing between Norgene and each respective country in terms of the price achieved. But once that happens, this drug would be available and approved by a single payer. So there should not be a significant issue with compounding in Europe. And maybe I can turn it over to Adrian to elaborate on that as well.

Speaker 3

Yes. Thanks, Rusty. Yes. It's exactly, as you said, we have the pediatric use marketing authorization, which is specifically designed for all the products repurposed for children. And once it's an approved drug, in most of the European markets, compounding is illegal.

Speaker 3

As you can imagine, there was a lot of diligence done by the parties that were bidding for the European rights. And all of them came to the conclusion, obviously, including Norgene, that compounding would not be an issue in Europe.

Speaker 4

That makes sense. One quick follow-up then for you Adrian or Rasti. With regard to the J code, nice to see that happen in April and appreciate all the caveat with regard to the timing of that going from effective to actually effective. But when you think about either the second quarter or the second half of this year, how would you measure success beyond the obvious of revenue? What are the key operating metrics that you're looking at to see that, PedMark's getting traction in the AYA population?

Speaker 4

Thanks.

Speaker 2

Great question, Charles. So let me kind of maybe tell you how I look at the business holistically. So we got several components to this. One is our medical education, so how well do we engage and educate the staff at the community center that historically has not treated for aorticicity. So I think that's very, very critical.

Speaker 2

The second component is market access, and I think Adrian alluded to that in his comments. That's the payer coverage, which so far we haven't had any significant issues with. The Compendi update, which is really important. Then we have to deal with field reimbursement and ultimately pull through. And these are all ongoing activities.

Speaker 2

Then we have the logistics and distribution piece, where we are working with the office. But importantly, we must listen to these offices to make sure we can provide FedMart despite the 6 hour gap between the splatting therapy and when FedMart is administered. And lastly, I think it's just establishing best practices and really learning from the experiences. It is very important that we get it right. So basically, I look at this as sort of a mini pilot at the moment, what we learned from that and how do we then scale it.

Speaker 2

And so and this goes back to the on and off switch that Adrian referred to. It's like let's get this thing right now so that when it scales, we know how to exactly do this. So and then we can expect obviously a meaningful inflection point when all the barriers are sort of removed and we've learned how to navigate through this. So I hope this is helpful.

Speaker 4

Would that increased visibility occur in the second half of this year, you anticipate, Rossy?

Speaker 2

That will be my anticipation, correct.

Speaker 3

Yes. As I said, I think it's taking between 60 to 90 days to get everything sort of loaded up into the electronic prescribing systems to get the compendia updated just doesn't happen overnight. And once that's done, then we expect to see the inflection point. So I think you're right, second half of the year.

Speaker 4

Got it. Thanks for taking the questions.

Operator

One moment for our next question. Next question comes from Chase Knickerbocker with Craig Hallum. Your line is open.

Speaker 2

Good morning, guys. Thanks for taking

Speaker 5

the questions. So just maybe digging in a little bit on the inpatient side quickly. I understand the difficulty in signing up new customers certainly on the inpatient side if those potential customers are compounding. But if we just kind of look at existing customers in Q4, what drove utilization there down sequentially? At least that's kind of what looks like on the top line number, maybe just a little bit of color around existing customer utilization.

Speaker 2

Yes. Let me take this. So I would say there are a couple of things. One is that Robert touched on the bad debt expense, and he can elaborate further on that. And then the second piece, of course, is I mean, I can just tell you that the difference between our Q4 and Q1 sales without the bad debt expense is basically 3 to 5 patients.

Speaker 2

So that's sort of the delta you're looking at. And also historically, Jay, just to also add a little more color, we if you look at kind of last year as well, maybe there's some seasonality to this as well. We had a stronger Q4 than we did Q1. But it's too early to tell. Yes.

Speaker 2

I would just

Speaker 5

Got it. And then maybe Rob?

Speaker 2

I would

Speaker 3

just add, Chase, that as Rusty mentioned, the FDA publishing the do not substitute guidance on the website, on the Pedmark label side of the website seems to have had an impact. We've had a couple of really important pediatric hospitals just in the last week have ordered for the first time. So that's an encouraging trend. It's early days. But I think FDA publishing on the website has made an impact.

Speaker 3

But up until then, it really happened.

Speaker 2

Right. Because the confusion came from we're getting this message communicated from these organizations instead of what is the FDA really saying to now look at what the FDA is really saying. But again, this is very early. We're dealing with a very challenging challenged hospital system with these expensive drug committees. So I want to make sure that we sort of tame expectations on this.

Speaker 2

And as we're getting some of them to switch, obviously, that will be welcome news. But we have not obviously, we have been very, very patient with everyone and we're working with the FDA to resolve all of this. I think at one point would happen Chase, I just don't know when.

Speaker 5

Understood. And then Robert maybe can you just quantify what that return was as far as a headline to a headwind to top line revenue? Sorry. And then just to kind of dig in a little bit on those comments. You have seen some change in behavior in Q2, but really hasn't been material to revenue yet, but early signs of behavior or changing.

Speaker 5

Is that kind of the right way to characterize it?

Speaker 3

Correct.

Speaker 2

With a couple of larger accounts.

Speaker 1

Yes. I'll start with your question, Chase, as well. Just from a framework perspective, in Q4, we had gross sales of a little over $11,000,000 and reported net sales of $9,700,000 In Q1, we had gross sales of $9,700,000 and reported net sales of $7,400,000 So that delta and that jump up in percentage was, as I mentioned, largely as a result of product that due to expiry, we had to give a credit to some distributors in the quarter.

Speaker 5

Got it. Thank you. And then maybe just trends in AYA digging in a little bit more there. It sounds like Q3 should kind of be our expectation of when that accelerates and really kind of influx in the model. And biggest driver there, it probably is going to take some more time to obviously get those clinics to stay open.

Speaker 5

So is the biggest driver kind of that compendium ad? Or just kind of walk us through what the big kind of unlock on the inflection is there?

Speaker 2

Yes. I mean, I would say it's all of the above that I listed in the previous question. It's really getting the medical education. I cannot stress the importance of that, to be honest, because we've got a we have people that want to listen to our message. It's important how well the message is delivered, how well we're engaging.

Speaker 2

Just remember, these physicians are not treating for autotoxicity. They haven't treated historically because these are centers that are treating basically the chemo drugs, the patients. So that's one that we that's ongoing and obviously we're refining our strategy there. We're learning from them, etcetera. So that engagement piece is critical.

Speaker 2

Then once they want to work with us, it's obviously all the logistics, the market access, making sure that all these pieces are together. And Compandia is a very important piece from that as well. There is also will be fuel reimbursement pull through, a bunch of things that we kind of and we have seen actually in a few patients. Again, the sample size is relatively small. So we want to make sure that we have a larger sample size.

Speaker 2

As I mentioned, these are kind of like mini pilots, at least in my mind, because one thing we learned in this company historically, what's worked for us well is when we simplify things and we get it down to like the very, very basics. The very basics here are you treating one patient at a time truly and is that a success for the patient, for the center and ultimately for FANUC? Can you create this win win win? And all these components are really critical to that. And we're working through those.

Speaker 2

And I think there will be an inflection point because when you look at the number of volume of patients that these centers are seeing, it's actually quite encouraging that those numbers are substantially higher than what we've discussed with pediatrics. So this is really the opportunity ahead of us and then how do we accelerate it once we've established these best practices, how do we accelerate that through this network.

Speaker 5

And then just last for me, maybe Adrian, what you're hearing from the field around kind of willingness of these clinics to stay open longer? Are you getting some pushback there? Or is it mainly just kind of working with the administration takes time to kind of change protocols there?

Speaker 3

Yes. It's we're getting pushback when you speak to the people in the clinic, because they don't have the authority to stay up longer. So, you've got to work your way up through the senior management to find the decision maker and then explain things to them. And it just is taking a longer time than initially anticipated. But it's happening.

Speaker 3

And in the meantime, as I said in the prepared remarks, we've kind of we're searching for the centers that are open sort of 12 hours plus because then there's no issues. And that's where we're really seeing uptake

Speaker 2

now. The other component Thanks for the questions, guys. Yes, yes. No, the other component to this, and I just want to and this is, again, credit to the team and how resourceful they are, we also have a relationship with a home infusion network that is able to provide the infusion of Fedmark to the patient at home. And so we're just starting to utilize that, which is to me is also encouraging because, again, we're providing basically a suite of services.

Speaker 2

We're problem solving for a lot of places. And so there's initiatives ongoing there as well. But as Adrian mentioned, this takes a bit of time to work through all of this.

Operator

Thank you. One moment for our next question. Our next question comes from Jason McCarthy with Maxim Group. Your line is open.

Speaker 6

This is Michael Okunovich on the line for Jason.

Speaker 5

I guess I'd like to see

Speaker 6

if you could give me a bit more color on how the value proposition varies between the under 15s and the adolescent young adult population. And then given that they do require more vials on average, is this something where you'd have to or where you'd expect you'd need additional discounts to adequately capture this larger market?

Speaker 2

Yes. It's a very good question. So let me just sort of compare for you a disease which starts occurring from the age of 15 all the way to the age of 39, which is germ cell testicular cancer. So largely, the how you treat the 15 year old is the same as how you treat the adolescent the adult and the adolescent as well as the older patient. What changes there, of course, is the body surface area and our drug is administered based on that.

Speaker 2

So typically, you have and also there's a decision making there whether they go with the 3 cycles or the 5 cycles, which also could vary. But bottom line is kind of when you compare it to the typical sort of pediatric patient versus you, the young adult and adolescent or older patient, you have a 3 to 4 times more vials, again, just to get a flavor for that. So when I truly mentioned the difference between the Q4 versus the Q1 numbers, it's really a difference of that 3 to 5 patients. And now in terms of giving discounts, so now recall that you're dealing with the outpatient community where a discount a meaningful discount is not really necessary because they have mechanisms in place by which they get to make over 5% for this on the upfront. And of course, if you there's also some volume discounts available to them as well, but they're not meaningful relative to the opportunity to treat these patients.

Speaker 2

And again, these patients are reimbursed based on the NCCN type 2a recommendation.

Speaker 6

All right. Thank you. And then as a follow-up, I just want to give you a quick housekeeping question. With the EU partnered out now, should we expect that G and A line to start to come in a little bit in subsequent quarters?

Speaker 2

And maybe that's over to you, Robert.

Speaker 1

Yes. Thanks, Michael. Yes, that is the expectation after this quarter being Q2 that we're in, it should come in significantly. So we did see a step up quite a bit in Q1, also some in Q4 and it's just tailing off here in Q2. But then yes, that's all being assumed by Norgene going forward.

Speaker 6

All right. Thank you very much.

Operator

One moment for our next question. Our next question comes from Karam Selvaraju with A. C. Wainwright. Your line is open.

Speaker 2

Thanks very much for taking my questions. Just 2 very quick ones. Firstly, can you just give us a sense of what the repercussions would be, if any, for those hospitals and hospital systems that deliberately do not elect to follow the FDA's guidance? And secondly, if you can maybe elaborate upon the level of sales and marketing infrastructure that Norgene has communicated to you will be placed in the service of commercializing peg Marcy in its territory? Thank you.

Speaker 2

Thank you. These are great questions. So the repercussions really are it's really are they causing harm and what that harm is. And ultimately, the parents filing a suit against the hospital for being for their child being treated with an unauthorized copy of an FDA approved drug, which clearly states on its label do not substitute. And now there is a public message announcement as to why it's not a good idea to substitute.

Speaker 2

In terms of fenik repercussions, legal repercussions, we're exploring all these options. But as you know, typically in business, it's not a best practice to go after your customers. So again, we have been very, very patient. We're working through the FDA with that. On the Norgene transaction, maybe Adrian can elaborate a little more in terms of their commitment to Pedmark and how important that is for them in Europe in particular.

Speaker 3

Yes. It's one of the reasons why we picked Norgene and they promised and have committed to resource the launch appropriately. And what we understand is that it's north of 50 FT feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet Es. So it's much, much more firepower than Fennec could ever have done on our own. So I'm confident things are going to go off very well.

Speaker 3

And as a reminder, the launch is scheduled in Germany for October.

Operator

Thank you. I'm not showing any further questions at this time. I'd like to turn the call back over to Rossy for any closing remarks.

Speaker 2

Well, thank you all for today, and we look forward to updating everyone on our progress this quarter and beyond. But thank you for your patience with us, and stay tuned. We are working very hard to get this right. Thank you.

Operator

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

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Key Takeaways

  • Fennec reported Q1 2024 net revenues of $25.4 million, including $18 million in licensing fees from the Norgene agreement and $7.4 million in PedMark product sales, ending the quarter with $51.2 million in cash.
  • Uptake of PedMark in the U.S. was hampered by an FDA safety communication warning against substitution with compounded thiosulfate, continued unlawful compounding in hospital pharmacies, and a non-specific J-code that was only amended on April 1 to distinguish PedMark from other formulations.
  • The commercial focus has shifted to outpatient/community infusion centers treating adolescents and young adults, who require roughly four times the product per patient, with an anticipated revenue inflection in H2 as coding, compendia updates, market access and infusion-center scheduling are resolved.
  • Under the exclusive licensing partnership with Norgene, Fennec received approximately $43.2 million upfront to commercialize PedMark in Europe, Australia and New Zealand, plus up to $230 million in milestones and mid-20s royalties, with Norgene responsible for securing pediatric use marketing authorizations and deterring compounding in those territories.
  • Pre-commercial expenses rose in Q1—G&A to $5.9 million and selling and marketing to $5.2 million—to prepare for the ex-U.S. launch, and Fennec expects its cash position, PedMark revenues and the upcoming €10 million German pricing milestone to fund operations for at least the next 12 months.
A.I. generated. May contain errors.
Earnings Conference Call
Fennec Pharmaceuticals Q1 2024
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