Executive Summary

Q2 2023 net product sales were $3.33M, up 98% sequentially vs Q1 ($1.70M), with gross profit of $3.18M; GAAP net loss improved to $(5.44)M and diluted EPS $(0.21) .
Management highlighted double‑digit growth in prescribing centers, repeat orders from existing accounts, and early Q3 formulary wins at major pediatric institutions, supporting continued momentum .
European Commission granted marketing authorization (Pedmarqsi) in June; company is preparing HTA dossiers and Germany hospital license to enable an EU launch toward end of Q1 next year (partnering optionality under evaluation) .
Cash and equivalents ended Q2 at $14.96M; company estimates ~$2M monthly cash operating expenses and believes capital plus revenue supports ≥12 months of runway; $25M drawn under Petrichor convertible debt in Q2 .
Near‑term stock reaction catalysts: accelerating U.S. formulary access/repeat orders, EU launch preparations/timeline, and continued sequential revenue growth .

What Went Well and What Went Wrong

What Went Well

“Net revenue of $3.3 million,” a 98% sequential increase, driven by “strong growth in patient starts and new account orders” .
Double‑digit growth in prescribing centers and “consistent repeat orders from existing accounts,” with early Q3 formulary approvals at major pediatric centers .
EU approval (Pedmarqsi) broadens global opportunity and was granted PUMA (8+2 years protection), with launch planning underway; “another significant opportunity to create shareholder value” .

What Went Wrong

GAAP net loss remained sizable at $(5.44)M; interest expense rose to $(0.83)M reflecting financing costs; total operating expenses increased to $7.84M .
G&A increased by $1.6M YoY and $1.1M QoQ, primarily due to non‑cash employee remuneration; overall operating expense growth pressured near‑term profitability .
Company provided no numerical revenue/EPS guidance; reliance on further formulary approvals and account adoption creates execution risk, and shareholder equity was a deficit of $(9.73)M at quarter‑end .

Financial Results

Metric	Q2 2022	Q1 2023	Q2 2023
Revenue ($USD Millions)	$0.00	$1.70	$3.33
Gross Profit ($USD Millions)	—	—	$3.18
Total Operating Expenses ($USD Millions)	$5.01	—	$7.84
Net Loss ($USD Millions)	$(5.07)	$(6.00)	$(5.44)
Diluted EPS ($USD)	$(0.19)	$(0.23)	$(0.21)
Cost of Products Sold ($USD Millions)	—	—	$0.15
Cash & Equivalents ($USD Millions)	—	$18.40	$14.96

Notes:

Gross margin Q2 2023 ≈ 95.5% (Gross profit $3.18M / Revenue $3.33M) .
Q1 2023 totals by expense line: Selling & Marketing $2.50M; G&A $4.30M .

Segment breakdown (single product):

Segment	Revenue Q2 2023	Notes
PEDMARK	$3.33M	Only FDA‑approved product; no segment reporting

Selected KPIs and operating items:

KPI	Q1 2023	Q2 2023	Comment
Sequential revenue growth	—	+98%	Driven by new patient starts and account adoption
Prescribing centers	Early adoption at major/regional practices	Double‑digit growth; repeat orders; early Q3 formulary wins	Execution traction improving
Reimbursement/J‑Code	Permanent J‑Code effective Apr 1	Streamlined reimbursement; aiding access	Supports adoption

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Monthly cash operating expenses	FY 2023	~“$25M per year” framework (≈$2M/month)	“Approximately $2 million in monthly cash operating expenses during 2023”	Maintained
Cash runway	Next 12 months	“Sufficient to fund planned operations for at least the next 12 months”	“Available capital when coupled with PEDMARK revenue assumptions will take us out for at least the next 12 months”	Maintained
Revenue/EPS	FY/Qtr	None disclosed	None disclosed	N/A

Earnings Call Themes & Trends

Topic	Previous Mentions (Q‑2 prior: not found)	Previous Mentions (Q‑1 2023)	Current Period (Q2 2023)	Trend
U.S. launch/adoption	Not available (no Q4 2022 doc found)	Early adoption; building formulary access; targeting ~200 centers	Double‑digit growth in prescribing centers; repeat orders; early Q3 formulary wins	Improving
Reimbursement/J‑Code	Not available	Permanent J‑Code effective Apr 1; streamlines process	Continued benefits; aiding orders and access	Improving
EU strategy/approval	Not available	CHMP positive opinion; evaluating go‑it‑alone vs partner	EC marketing authorization granted; EU launch targeted end of Q1 next year; HTA work underway	Advancing
Supply chain/cisplatin	Not available	—	Cisplatin shortages not affecting pediatrics; nedaplatin shortages noted	Stable
R&D execution	Not available	R&D de minimis; investigator‑initiated trials to support potential label expansion	R&D minimal; key focus on commercial execution	Stable
Regulatory/Exclusivity	Not available	FDA Orphan Drug Exclusivity; NCCN AYA guideline update	EU PUMA granted; U.S. orphan exclusivity reiterated	Strengthened

Management Commentary

“Delivering net revenue of $3.3 million, which is a 98% increase… These results reflect strong growth in patient starts and new account orders.” — CEO Rosty Raykov .
“Double‑digit growth in new pediatric hospital centers prescribing PEDMARK, and the consistent repeat orders from existing accounts… recent success in larger academic centers, including formulary approvals early in the third quarter.” — CEO .
“Cash burn for the second quarter was approximately $3.4 million… anticipate approximately $2 million in monthly cash operating expenses during 2023… believe our available capital… will take us out for at least the next 12 months.” — CFO Robert Andrade .
“Pedmarqsi… granted marketing authorization by the European Commission… first and only treatment approval in the EU… evaluating the best commercial pathway… go it alone or with a partner or both.” — CEO .
“There hasn’t been an A report… speaks to how good this drug is.” — CEO (on safety experience to date) .

Q&A Highlights

Accounts penetration and formulary: Management declined to give counts but emphasized double‑digit growth in prescribing accounts and major P&T wins at recognized pediatric centers, with more committees upcoming .
Supply chain: U.S. cisplatin shortages have not impacted pediatric oncology; nedaplatin shortages noted; pediatric demand prioritized .
Europe launch timing and strategy: EU launch targeted toward end of Q1 next year; HTA dossiers and Germany hospital license in motion; evaluating partner vs go‑it‑alone paths .
Organizational addition: COO Adrian Haigh brings global commercialization and BD expertise, positioning Fennec for accelerated U.S adoption and EU launch readiness .
Commercial dynamics: Revenue can vary by patient mix due to vial usage differences across ages/sizes; repeat orders increase post‑formulary inclusion .

Estimates Context

S&P Global consensus estimates for Q2 2023 (Revenue, EPS) were unavailable via our data link during this analysis (CIQ mapping for FENC not found), so comparisons to Wall Street consensus could not be performed at this time. We attempted retrieval, but no values were returned [functions.GetEstimates error].
Given the 98% sequential revenue increase and ongoing formulary wins, sell‑side estimates may need upward revisions for near‑term revenue trajectory and gross margin durability as scale builds .

Key Takeaways for Investors

Commercial momentum: Sequential net sales growth (+98%) underscores building adoption, repeat orders, and expanding formulary access; watch for continued acceleration as major centers onboard .
EU optionality: Pedmarqsi approval creates a 2026‑27 revenue runway in Europe; partner vs go‑it‑alone decision and Q1‑end launch timeline are medium‑term catalysts .
Unit economics: High gross margin (≈95.5%) and low COGS support operating leverage as volumes scale; near‑term G&A normalization could improve loss trajectory .
Liquidity/runway: ~$15.0M cash, $25M convertible debt drawn, and ~$2M/month opex suggest ≥12 months runway; track cash burn vs revenue ramp and interest expense burden .
Execution risks: Absence of explicit revenue guidance and equity deficit highlight dependence on continued formulary approvals and center‑level protocol inclusion .
Trading implications (near term): Positive momentum headlines (formulary wins, EU launch prep) and sequential revenue growth can be stock‑supportive; any delays in EU launch or softness in account adoption could pressure sentiment .
Medium‑term thesis: Durable orphan exclusivity, first‑in‑class positioning, and growing clinical acceptance position PEDMARK/Pedmarqsi to become standard adjunct to cisplatin in approved settings; EU commercialization and broader protocol inclusion are keys to unlocking scale .

Footnote: We searched for prior two quarters’ earnings documents; Q1 2023 transcript was found and read; Q4 2022 primary earnings materials were not returned in the document catalog for the specified windows, so year‑over‑year (Q2 2022) and sequential (Q1 2023) comparisons are provided .

FENNEC PHARMACEUTICALS INC. (FENC)·Q2 2023 Earnings Summary