FENNEC PHARMACEUTICALS INC. (FENC)·Q4 2023 Earnings Summary

Executive Summary

• Q4 2023 revenue accelerated to $9.74M, up 49% QoQ and sharply above Q4 2022 ($1.54M), driven by continued account adoption and early AYA uptake; net loss narrowed to $2.68M ($0.10) vs. $6.86M ($0.26) a year ago .
• A transformative ex‑U.S. licensing deal with Norgine delivered ~$43M upfront (plus up to ~$230M in milestones and tiered royalties up to the mid‑20s), lifting pro forma year‑end cash to “in excess of $55M” per the press release; management cited “in excess of $56M” on the call (timing/rounding likely explain the difference) .
• Key near‑term catalysts: April 1 J‑code specificity removes substitution/ASP confusion; FDA reminder that PEDMARK is not substitutable supports adoption, particularly in community AYA settings with higher vial utilization .
• No formal quantitative revenue/EPS guidance; management expects EU launch costs to tail off in 2H24 under the Norgine partnership, extending cash runway ≥12 months alongside growing U.S. PEDMARK revenues .

What Went Well and What Went Wrong

• What Went Well
  • Strong commercial momentum: Q4 net product sales reached $9.74M (FY $21.25M), reflecting growth in new patient starts and accounts; management emphasized sustained execution and momentum into 2024+ .
  • Strategic de‑risking ex‑U.S.: Exclusive PEDMARQSI license to Norgine with ~$43M upfront, up to ~$230M in milestones, and tiered royalties up to the mid‑20s; partner plans meaningful resource allocation across Europe/Australia/NZ .
  • Policy/reimbursement tailwinds: FDA reminded providers PEDMARK is not substitutable with other STS formulations; CMS implemented product‑specific J‑code effective April 1, which should improve ASP clarity and reduce confusion .
• What Went Wrong
  • Formulary and process frictions: Hospital adoption requires P&T reviews and operational changes (e.g., infusion timing), creating lagged uptake despite positive reception; management notes adoption is “not like switching a light on” .
  • Prior coding confusion: Before April 1, lack of clear J‑code differentiation impeded uptake and created ASP confusion; though now resolved, it weighed on AYA adoption timing .
  • Operating leverage still emerging: Q4 opex ($10.87M) and interest expense ($0.92M) pressured profitability; operating loss of $1.82M and net loss of $2.68M despite high gross margin .

Financial Results

Quarterly trend (oldest → newest)

Notes: margins are calculated from the cited revenue/gross profit/operating income cells.

Q4 2023 YoY and sequential compare

• QoQ: Revenue +49% ($9.74M vs. $6.52M) as adoption broadened and AYA use began contributing higher vial volumes .
• YoY: Revenue up sharply ($9.74M vs. $1.54M), EPS improved to $(0.10) from $(0.26) .

Segment breakdown: Not applicable; Fennec reports a single commercial product (PEDMARK/PEDMARQSI) .

KPIs and balance sheet highlights

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “PEDMARK delivered fourth quarter revenues of approximately $9 million… [and] full year 2023 net revenues of approximately $21 million.” – CEO Rosty Raykov .
• “Fennec received approximately $43 million in upfront consideration and the potential for up to approximately $230 million in additional… milestones and tiered royalties… up to the mid‑20s.” – CEO/CFO summary of Norgine deal .
• “CMS issued a new J‑Code… to specify PEDMARK… We do expect a significant acceleration in uptake as a result.” – COO Adrian Haigh .
• “Inclusive of the licensing transaction, pro forma December 31, 2023 cash balance is in excess of $56 million.” – CFO Robert Andrade (press release states “in excess of $55 million”) .

Q&A Highlights

• AYA contribution and timing: Initial AYA patients started in Q4; higher vial use per AYA; broader impact expected as J‑code clarity takes effect and community centers adjust workflows .
• EU launch under Norgine: Norgine assumes all regulatory/commercial responsibilities; European launch likely 2H 2024 for logistical reasons; partner allocating ~50 FTEs and significant spend .
• Hospital adoption cadence: FDA substitution reminder catalyzing P&T reviews; process is gradual with some immediate compounding stops, but broader changes take months .
• OpEx phasing: EU‑related prep elevated Q4 and will continue into Q1 2024, then tail off meaningfully by Q2 and be minimal in 2H 2024 .

Estimates Context

• Wall Street consensus (S&P Global) for Q4 2023 revenue and EPS was unavailable due to a data mapping limitation for FENC; as a result, we cannot present vs‑consensus comparisons for this quarter. Values would have been retrieved from S&P Global if available.

Key Takeaways for Investors

• Commercial ramp intact: Q4 revenue growth (+49% QoQ) with very high gross margins (~93%) underscores the attractiveness of the model as AYA and community channels scale .
• De‑risked ex‑U.S. execution: The Norgine license brings non‑dilutive capital and experienced infrastructure, accelerating EU/AU/NZ market access while preserving meaningful economics .
• Reimbursement clarity is a catalyst: Product‑specific J‑code and FDA substitution reminder should reduce friction, support ASP integrity, and improve velocity of formulary adoption in 2024 .
• Path to operating leverage: With EU prep costs tailing off and U.S. revenues growing, loss narrowing should continue; monitor S&M efficiency versus revenue growth and interest expense on notes .
• Watch hospital formulary progression: P&T cycles and workflow changes take time; sequential revenue cadence remains the best gauge of adoption breadth .
• Cash runway extended: Pro forma cash >$55–56M post‑Norgine upfront supports execution through key 2024 milestones without near‑term equity needs .
• Near‑term trading setup: Evidence of AYA/community uptake post‑Apr 1 J‑code and incremental hospital formularies are likely catalysts for sentiment and revisions.

Citations

• Q4 2023 press release and audited financials:
• Q4 2023 earnings call transcript:
• Q3 2023 press release:
• Q2 2023 press release: