Sign in

You're signed outSign in or to get full access.

FP

FENNEC PHARMACEUTICALS INC. (FENC)·Q3 2023 Earnings Summary

Executive Summary

  • PEDMARK net product revenue reached $6.52M, up 96% sequentially from $3.33M in Q2; GAAP net loss narrowed to $1.87M ($0.07 per share) from $5.44M ($0.21 per share) in Q2, reflecting strong adoption and controlled OpEx .
  • Gross profit was $6.18M, with total operating expenses of $7.20M, and cash/cash equivalents at $12.40M at quarter-end; management indicated OpEx would remain consistent into Q4 .
  • U.K. MHRA approved PEDMARQSI in October, following EU marketing authorization in June; management is preparing for a European launch and evaluating partner vs. go-it-alone strategies (pricing ~70–100% of U.S. with caps) .
  • Management reiterated focus on U.S. breakeven with Q3 cash OpEx ~$7–$7.5M; breakeven feasible at >$7M quarterly revenue (earlier guidance), creating a near-term catalyst as adoption broadens (including AYA segment) .

What Went Well and What Went Wrong

What Went Well

  • PEDMARK revenue growth accelerated: $6.5M in Q3 (+96% q/q), “more than tripling” since Q1, driven by new patient starts, account adoption, repeat orders, and formulary wins at major centers .
  • Operating discipline and cash runway: OpEx remained “well controlled,” GAAP net loss improved to $1.87M; cash/cash equivalents of ~$12.4M, sufficient for at least the next 12 months under revenue assumptions .
  • Strategic progress ex-U.S.: MHRA approval in U.K. and active HTA/pricing work in Germany, France, Italy, Spain; management sees compelling pharmacoeconomic case and favorable initial price levels .

Management quote: “PEDMARK delivered strong third quarter revenues of $6.5 million, a 96% increase over the second quarter of 2023” .

What Went Wrong

  • G&A volatility YoY and sequentially: while G&A fell to $3.81M in Q3 (from $5.50M in Q2), management cited prior non-cash remuneration and legal expense swings; marketing spend rose to $3.38M to support U.S. and pre-commercial EU activities .
  • Breakeven still not reached: GAAP net loss remained ($1.87M), and interest expense from the convertible debt facility weighed on other income/expense .
  • European launch complexity: execution path (partner vs. self) and pricing caps vary by country; manufacturing type 2 variation progress and dossier submissions are critical gating steps .

Financial Results

Income Statement Snapshot (Quarterly)

MetricQ1 2023Q2 2023Q3 2023
Net Product Sales ($USD Millions)$1.70 $3.33 $6.52
Gross Profit ($USD Millions)—$3.18 $6.18
Selling & Marketing ($USD Millions)$2.50 $2.34 $3.38
G&A ($USD Millions)$4.30 $5.50 $3.81
Total Operating Expenses ($USD Millions)—$7.84 $7.20
GAAP Net Loss ($USD Millions)$(6.00) $(5.44) $(1.87)
GAAP Diluted EPS ($)$(0.23) $(0.21) $(0.07)

Year-over-Year Comparison (Q3 2023 vs. Q3 2022)

MetricQ3 2022Q3 2023
Net Product Sales ($USD Millions)$0.00 $6.52
Gross Profit ($USD Millions)—$6.18
G&A ($USD Millions)$7.05 $3.81
GAAP Net Loss ($USD Millions)$(8.09) $(1.87)
GAAP Diluted EPS ($)$(0.31) $(0.07)

Balance Sheet & Liquidity

MetricQ1 2023Q2 2023Q3 2023
Cash & Equivalents ($USD Millions)$18.40 $14.96 $12.40
Accounts Receivable, net ($USD Millions)—$2.45 $4.53
Inventory ($USD Millions)—$1.44 $1.76
Term Loan ($USD Millions)$25.00 $25.00 $25.00
Working Capital ($USD Millions)—$15.55 $15.03

KPIs and Commercial Metrics

KPIQ1 2023Q2 2023Q3 2023
Estimated HCP Payer Mix (Commercial / Gov’t)~50% / ~50% ~50% / ~50% ~50% / ~50%
Salesforce Headcount——12 reps
Centers Prescribing PEDMARK (share of targeted ~200)—Double-digit growth in prescribing centers (qualitative) ~20% have written a prescription (estimate)
Formulary AccessJ-Code effective Apr 1 streamlining reimbursement Early Q3 major center approvals Several leading institutions approved in Q3

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Cash Operating ExpensesFY 2023$2M/month ($25M/year) Q3 cash OpEx ~$7–$7.5M for quarter; OpEx consistent into Q4 Maintained/clarified
Breakeven Target (U.S.)2H 2023Breakeven feasible with >$7M quarterly revenue “On our way to breakeven”; excluding EU launch costs Maintained
EU Launch Timing (PEDMARQSI)2024End of Q1 2024 (earlier commentary) Q2 2024 (May–June) best current estimate Deferred
EU Pricing ApproachLaunch window—Initial pricing ~70–100% of U.S. with likely caps; country-specific HTA dossiers advancing New detail
Sales & Marketing SpendQ4 2023—Levels to continue in Q4; total OpEx consistent with Q3 New detail

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q2 2023)Previous Mentions (Q-1: Q1 2023)Current Period (Q3 2023)Trend
U.S. Adoption & FormularyDouble-digit growth in prescribing centers; early Q3 major center approvals J-Code effective; building access; targeting ~200 centers Continued double-digit center adds; several leading P&T approvals; repeat orders Improving
AYA Opportunity & NCCN—NCCN updated AYA guidelines to include PEDMARK Focus on AYA; 12-rep salesforce; specialty pharmacy/home admin; community oncology push Accelerating
Reimbursement & Payer MixFavorable coverage ~50% commercial/~50% gov’t; permanent J-Code Broad/favorable coverage continues; ~50/50 mix Stable
EU Regulatory & Launch PrepEU marketing authorization (PUMA) CHMP positive opinion under EC review U.K. MHRA approval; German price application accepted; HTA dossiers advancing Advancing
Pricing & Pharmacoeconomics (EU)——Initial pricing expectations ~70–100% of U.S.; caps likely for heavier patients; strong economic case Clarified
Supply Chain (cisplatin)No issues impacting pediatrics despite national shortages —No pediatric impact noted Stable
R&D Execution—Investigator-initiated trial in second-line hepatoblastoma (label expansion potential) R&D negligible; focus on commercial execution Limited near-term R&D

Management Commentary

  • “We continued to see strong commercial performance with PEDMARK… net product revenue of $6.5 million representing 96% quarter over quarter growth” — CEO Rosty Raykov .
  • “Based on those Q3 results, we are on our way to getting to breakeven… we feel comfortable that our existing cash… will give us sufficient capital to fund our operations to cash flow breakeven and positivity” — CFO Robert Andrade .
  • “We benefited during the third quarter from growth in adoption and importantly, repeat orders… we’re now putting increased focus on… the AYA population” — COO Adrian Haigh .

Q&A Highlights

  • Breakeven path: Cash OpEx ~$7–$7.5M in Q3; breakeven feasible at >$7M quarterly revenue; comfort with capital sufficiency for 12+ months .
  • Europe strategy: Considering Western Europe self-commercialization with distributors elsewhere vs. licensing; aiming for Q2 2024 launch; German early price accepted, HTA dossiers Q1 submissions .
  • Pricing: Initial EU price around 70–100% of U.S. with patient-level caps; economic argument emphasizes downstream societal and health costs of deafness .
  • Site-of-care expansion: Specialty pharmacy partnership enabling home administration and white-bagging; targeting community oncology for AYA segment .
  • Adoption metrics: ~20% of target centers have written at least one prescription; continued double-digit growth, repeat orders, and major center formulary wins .

Estimates Context

  • Wall Street consensus estimates via S&P Global were unavailable due to missing CIQ mapping for ticker FENC; as a result, no comparison to consensus EPS or revenue can be provided for Q3 2023, Q2 2023, Q1 2023, or FY 2023. Values retrieved from S&P Global were unavailable for this ticker.

Key Takeaways for Investors

  • Commercial traction is strong: sequential net sales nearly doubled to $6.5M; repeat orders and formulary approvals at leading centers support sustainability .
  • Breakeven within reach: with Q3 cash OpEx ~$7–$7.5M and prior indication that >$7M quarterly revenue supports breakeven, Q4 trajectory is critical; monitor U.S. ramp and AYA adoption .
  • AYA expansion is a meaningful volume driver: NCCN endorsement and community oncology focus, plus home administration capability, expand addressable vials per patient .
  • European optionality: MHRA approval and EU PUMA create near-term ex-U.S. catalysts; partner vs. go-it-alone decision may deliver upfront cash and royalties or retained economics .
  • Pricing clarity emerging: initial EU pricing at ~70–100% of U.S. (with caps) and favorable early signals in Germany underpin ex-U.S. value potential .
  • Operating discipline: G&A reduced in Q3; OpEx guidance suggests consistency into Q4 as revenue grows; watch interest expense from the convertible facility .
  • Balance sheet: $12.4M cash/cash equivalents; receivables building with sales; working capital ~$15.0M supports operations while scaling .