Name: FENNEC PHARMACEUTICALS INC. Q4 2019 Earnings Call
Start: 2020-02-14T00:00:00.000Z

Executive Summary

Pre-commercial quarter with no revenue; Q4 net loss widened to $3.61M ($0.18/share) from $2.98M ($0.15/share) in Q4 2018, driven by higher G&A tied to commercialization and non-cash option expense .
Regulatory execution advanced: the company completed the PEDMARK NDA and EU MAA in February 2020 and indicated that if granted Priority Review, a PDUFA action date would be expected in Q3 2020, positioning launch for 2H 2020 if approved .
Cash and equivalents were $13.65M at 12/31/2019 with no debt; management highlighted access to a $12.5M loan facility upon FDA approval to fund launch activities .
Operating spend trends mixed: R&D down year over year in Q4 as regulatory activities wound down, while G&A rose on commercial build-out and extended option terms (+$1.3M non-cash) .

What Went Well and What Went Wrong

What Went Well
- “Fennec made great progress in 2019…including the recent announcement of regulatory submissions in both the U.S. and EU for PEDMARK” (Rosty Raykov, CEO). Company completed PEDMARK NDA/MAA in Feb 2020 and prepared for potential 2H 2020 launch .
- R&D normalized as major regulatory work completed; Q4 R&D was $1.17M vs $1.72M in Q4 2018 as activities for approval were substantially completed .
- Liquidity sufficient into launch per management; $13.65M cash at year-end and an available $12.5M facility upon FDA approval expected to fund commercialization .
What Went Wrong
- Net loss widened to $(3.61)M in Q4 (vs $(2.98)M LY) and FY loss to $(12.78)M (vs $(9.89)M in 2018) given higher G&A and non-cash comp tied to 10-year option term extension (+$1.3M) and commercialization build-out .
- G&A in Q4 rose to $2.48M vs $1.38M LY on commercialization efforts and added personnel, including a Chief Commercial Officer .
- Cash declined to $13.65M from $22.78M at 12/31/2018 as spending on regulatory and commercial readiness accelerated through 2019 .

Quarterly performance (all figures USD; thousands except per-share)

Metric	Q4 2018	Q2 2019	Q3 2019	Q4 2019
Revenue	$0	$0	$0	$0
R&D Expense	$1,723	$1,969	$795	$1,172
G&A Expense	$1,382	$2,844	$1,068	$2,481
Loss from Operations	$(3,105)	$(4,813)	$(1,863)	$(3,653)
Net Loss	$(2,984)	$(4,730)	$(1,809)	$(3,610)
Basic/Diluted EPS	$(0.15)	$(0.24)	$(0.09)	$(0.18)
Cash & Equivalents (end of period)	$22,781	$17,475	$15,240	$13,650

Additional balance sheet KPIs

KPI	Q4 2018	Q2 2019	Q3 2019	Q4 2019
Working Capital	$21,313	$16,179	$14,722	$11,613
Current Liabilities	$1,637	$1,353	$905	$2,271
Total Stockholders’ Equity	$21,313	$16,476	$15,002	$11,875

Notes:

Metric	Period	Previous Guidance	Current Guidance	Change
PEDMARK NDA timeline	U.S.	“NDA…to be completed in early 2020” (Q3 update)	NDA completed Feb 2020	Achieved/maintained timeline
PEDMARK MAA (EU)	EU	Not previously guided	MAA completed Feb 2020	New disclosure (completed)
PDUFA timing (if Priority Review)	U.S.	Not previously guided	PDUFA action date expected in Q3 2020 if Priority Review	New expectation
Commercial Launch Timing	U.S.	Target 2H 2020 if approved	“Potential launch…in the second half of 2020”	Maintained
Cash Runway/Financing	2020 launch	“Cash…sufficient to fund…2H 2020 launch”	$13.65M cash at 12/31/19; $12.5M loan facility available upon FDA approval to fund launch	Maintained sufficiency; added facility detail

(Company provided business updates via filings/press release; no Q4 2019 earnings call transcript was included in the document set.)

Topic	Previous Mentions (Q2 2019, Q3 2019)	Current Period (Q4 2019)	Trend
Regulatory (NDA/MAA)	Q2: Anticipate NDA completion by early 2020 . Q3: NDA to be completed early 2020 .	NDA and MAA completed in Feb 2020; PDUFA would be expected Q3 2020 if Priority Review .	Progressing to submission; moving to review
Commercial readiness	Q2: Plan launch 2H 2020 if approved . Q3: Hired Chief Commercial Officer; building team/infrastructure .	U.S. commercial readiness underway; targeting 2H 2020 launch if approved .	Ramping commercialization
R&D/manufacturing	Q2: Successfully manufactured PEDMARK; rolling NDA ongoing . Q3: Significant activities for approval completed 1H19 .	Q4 R&D reduced vs LY as approval activities substantially completed .	Development winding down
Financing/liquidity	Q2: $17.5M cash; no debt . Q3: $15.2M cash; no debt; sufficient for launch .	$13.65M cash; no debt; $12.5M loan facility upon approval to support launch .	Cash down; added contingent facility

“Fennec made great progress in 2019 preparing for some important milestones in 2020 including the recent announcement of regulatory submissions in both the U.S. and EU for PEDMARK” – Rosty Raykov, CEO .
“If PEDMARK is granted a Priority Review, the Prescription Drug User Fee Act (PDUFA) action date is expected in the third quarter of 2020” .
On spending dynamics: “Fourth quarter increase in G&A was largely attributable to the commercialization efforts… [and] increase in G&A…attributed to a small rise in compensation… Shareholders passed a motion to increase the duration of all outstanding option contracts to a total of 10 years in 2019. This added $1.3 million in G&A in non-cash compensation” .

No Q4 2019 earnings call transcript was included in the company document set; thus no Q&A highlights or guidance clarifications are available for this period.

Wall Street consensus via S&P Global for Fennec’s Q4 2019 EPS and revenue was unavailable in our data connector for this micro-cap, pre-revenue period. As a result, no estimate comparisons are presented for Q4 2019.

Regulatory execution de-risked near-term: NDA and MAA filings completed Feb 2020; next catalyst is FDA review with a potential Q3 2020 PDUFA if Priority Review is granted, anchoring a potential 2H 2020 launch if approved .
Operating profile remains pre-revenue and loss-making; Q4 net loss widened vs LY on commercialization build and non-cash option expense, a dynamic likely to persist into launch preparation .
Liquidity adequate into launch per management, with $13.65M cash at 12/31/19 and a $12.5M post-approval facility identified; watch FDA decision timing and facility draw as catalysts for the funding path .
Spend mix shifting from R&D to G&A as development activities conclude and commercial infrastructure scales; Q4 R&D down y/y while G&A up significantly on launch prep and compensation structure .
Near-term trading likely driven by regulatory headlines (Priority Review status, PDUFA date assignment) rather than fundamentals, given absence of revenue and limited estimate coverage .

Supporting Data Excerpts