Q2 2023 Fennec Pharmaceuticals Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to the Senate currency Cool second quarter, 20th twenty-three 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.
To ask the question during the session you'll need to press star one one on your telephone you will then hear an automated message advising your hand is raised.
To withdraw your question. Please press star one one again.
As a reminder, today's conference call is being recorded.
Now I would like to turn the conference over to send it to Chief Financial Officer, Robert <unk>.
Thank you operator, and good morning, everyone.
During which we will review our financial results as well as provide a general business update.
Joining me for Fennec. This morning is Rusty rykoff, our Chief Executive Officer.
And our newly appointed Chief operating Officer Adrian Hague.
Before we begin I would like to remind you that during this call. The company will be making forward looking statements that are subjects to risks and uncertainties that may cause actual results to differ from the results discussed in the forward looking statements.
References to these risks and uncertainties are made in today's press release and disclosed in detail and the company's periodic current event filings with the U S Securities and Exchange Commission.
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 Phoenix website, Www Dot <unk> dot com, where it will be available for the next 30 days and.
And with that I will now turn this call over to rescue right calf.
Thank you hours and good morning, everyone.
We will be discussing our recent progress as we have achieved many significant milestones over the past several months.
The focus of today's call used to review update on the ongoing launch efforts underway for best Mark in the U S and discuss our global opportunities.
According to recent approval in Europe .
Further will detail our second quarter financial results of which were outlining our earnings press release issued this morning prior to this call.
As a reminder, bed, marking the first and only F. D. A approved therapy to reduce the risk of cislocative use hearing loss.
Trick patients.
One month of age and older with bulk a lifetime metastatic solid tumors.
The availability of spend Mark is critical breakthrough.
For the pediatric oncology community, which was supposed to Seattle, you're waiting or would you repeat tested F. D. A approved option to safely increase the potential longterm quality of life of this young.
Patients.
In June we announced bad Mark C was granted marketing authorization by the European Commission bed Marcy.
The first and on your roof therapy. The E U hoping that should have hearing loss and you'd like to smack in chemotherapy patients. One month 18 years of age we'd walk of life.
<unk>.
Further Mark C was going to pediatric use marketing authorization Boomer, which includes eight years plus three years of data and market protection.
In terms of our commercial strategy, we're pleased to sharing the results of the second quarter. If we believe the underscore the growth potential and mark.
We remain focused on executing the following establishing spend mark is unnecessary compliment agents when prescribing. This is blocking based therapy for childhood <unk>.
Many might be the barriers to access any shrink rapid response as the product questions.
I wish you'd panic it should bring your partner of choice of Monday pediatric oncology convenience.
Who can help address these calls we could establish the best in class patient services and support all freak authentic hears which is a comprehensive single source program designed to connect bad Mark patience too.
Both based on financial and proud of extra support.
In addition, we have built a strong commercial theme to execute use marketing distribution axes and lots of bad Mark with a sales team days highly focused on <unk> you approximately 200 pediatric hospital centres, including C. O G N C I and S. A C N institutions across the U S.
The dry 80 per cent of Slagging us.
More specifically, we're pleased with the second quarter of double digit growth in new pediatric hospital centers prescribed in March and April .
<unk> repeat orders from existing accounts.
<unk> recent success in Lodwrick with next centers, including formulary approvals early in the third quarter at major pediatric hospital centers.
As a reminder, early adoption <unk> from both major academic centers and regional practices <unk>.
More recently, we have got adoption coming from some of the most recognized pediatric centers of excellence.
<unk> rapidly all of our theory, Joyce you've seen hcp's prescribing trademark.
And we keep seem highly encourage adoption we can talk to your account, they're increasing over time.
In terms of patients with a C based on utilization across several tumor types, including habitable stomach osteosarcoma in terms of tumors.
Further given hour brought.
And favorable pay your coverage and streamlined reimbursement process, we could be successful <unk> coverage for prescribed patients.
So we're pleased that the effort and execution of the team is starting to become evident in the 98 per cent net revenue growth experienced in the second quarter.
We're continuing to execute against our strategic launch plans and our confidence in our discipline targeted approach to beauty share with you that you are smart.
With regard to expanding in Europe , we announced in June .
The marketing authorization for bad Mark, which will be marketed sped Marcy Marcy will be the first and only treatment approval.
And the European Union to address this area of significant unmet medical needs.
We continue to evaluate the best commercial pathway for the company in Europe , and the rest of the world either go it alone or with a partner or both whenever pathway. We select we see Europe is not a significant opportunity to create your own Nevada.
Finally announced today I am very pleased to have Adrian Hake joined the executive management team authentic is chief operating officer.
Adrian has been a major contributor to panic success since joining the board in 2014, any Spartans a fan of the panic sandwich, we're fortunate to catch him available <unk> stake in the commercial evolution <unk> agent.
Adrian comes to us from PDC Therapeutics, where he'd lost raw senior Vice President and head of international prior.
Prior to that Adrian works with our chairman Doctor, calling each month is chief operating officer, Gentium, where it keep you up <unk> commercial and medical spiritual penetration.
Also responsible for business development give us a rule change into jazz pharmaceuticals for one day.
Adrian is great to have you with us on this call can you give us a brief overview of the opportunity you see for Fanek given your <unk> your new role.
Thanks for all day, and you're likely to have been asked to join fulltime as Chief operating officer.
Many of you are aware this has been quite a rollercoaster ride over the last 10 years, but through everything we remained laser focused on a mission to ensure that all pediatric cancer patients at risk of hearing less caused by cisplatin chemotherapy have access to <unk>.
I like P. T C. At the end of last year after eight years building and leading the international commercial organization.
Retirement was not to me and I'm delighted that the board believes that my experience in leading global commercial teams in January 18th significant pre and post approval sales while at the same time evaluating all strategic options.
Is the skill set that Senate needs right now.
Example, it <unk>. The fact that we had a small commercial team in place across Europe with all the key H T. A dossier submitted are in preparation combined with significant prelaunch revenue.
It enabled us to generate considerable value for shareholders.
Doing the same <unk> will be a priority.
Now that we have E U approval <unk> needs to be done and done quickly to ensure speedy I'm successful launch whatever strategic direction, we ultimately take.
Of course equally important is accelerating adoption of <unk> in the United States.
As Rusty said, we've made considerable progress in the last quarter, but we still need approval by a number of key pharmacy committees <unk>.
Concluding these reviews and ensuring that Padma is included as standard of Cat and all treatment approach calls will be critical over the coming months.
These will be my two priorities.
So once again, it's a real pleasure to be a full time executive team member and I look forward to the next call, but we will provide further updates on our progress with that I'll now turn the call over to rub It to review our financial results for the quota.
Thank you Adrian.
Our press release contain details of our financial results for the second quarter of 2023.
Which can be viewed on the investor the media section of our website.
Rather than read through all of those details my comments today will focus on some key financial results.
The company recorded net product sales of $3.3 million in the second quarter of 2023.
Versus $1.7 million in the first quarter of 2023 for a net revenue growth of 98 per cent.
As Rusty mentioned, we are pleased with a growing acceptance of pet Mark within health care providers during the second quarter.
And with the recent hospital hospital formulary access approvals, we have gained early in Q3.
G N a for the second quarter of 2023 was $5.5 million, which compares to $4.4 million in the first quarter of 2023.
The increase is largely attributable to non-cash employee we're in it for numeration.
R&D expense is negligible.
Company reduced to research and development costs when it received F D a approval of pet Mark.
The majority of traditional research and development expenses associated with pen Mark are now recorded or capitalized into inventory and eventually recorded two cost of product sales.
The company began recording selling and marketing expenses and expanded its payroll to include an internal salesforce.
Sell in a market expenses include distribution cost logistics shipping and insurance advertising.
<unk> commissions and out of pocket expenses.
The company recorded $2.3 million and sell it on March expenses in the second quarter of 2023 compared to 2.59 and the first quarter of 2023.
Our GAAP net loss for the second quarter of 2023 was $5.4 million or 21 cents per share compared to a <unk> that loss of $5.1 million or 19 pretense for sure.
And finally, our cash position.
We ended the second quarter with approximately $15 million in cash cash equivalents and investment securities.
This includes $25 million a capital drawn in the second quarter under our existing Petrocorp convertible debt facility.
Ah cashback for the second quarter with approximately $3.4 million compared to $5.5 million in the first quarter of 2023.
As a reminder, we anticipate approximately $2 million in monthly cash operating expenses during 2023.
We believe are available capital when coupled with pen Mark revenue assumptions will take us out for at least the next 12 months.
An operator with that we are ready for questions.
Thank you we will know conduct a question and answer session.
As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again.
Please stay on vital we compiled a Q and a roster.
Our first question comes from the line of Chase Knickerbocker of Craig Hallum. Your line is now open.
Good morning, everyone. Thanks for the questions guys, maybe just considering the ramp up accounts.
Cleared P N T. At we're now on the tail that six to nine month period. It takes to get jealous P and T committees at the larger accounts good to hear about the account grow so you're putting a finer point on it you know all those 200 focus accounts. We talk about you know what do you think your number of accounts is today or just general penetration there and you know however, you want to define it I think just a finer point there would be helpful for investors.
Hi Chase. This is rusty. Thank you for the question, where shying away from giving details in terms of number of accounts, what I would say is that what we have at the moment is uhm actually quite significant compared to where we were at this time last quarter.
As I mentioned he might be guarded remarks, the growth in accounts was with double digit.
What's prescribing accounts. In addition to that we have got some major B N T wins in in some of the most recognized in larger institutions pediatric oncology. So hopefully some of these accounts will be coming to a disk water and again that would.
That would really help further we deal with a double digit growth, but we still have significant opportunity ahead of us is there more P and T committees coming up.
Got it you know maybe speak to the ongoing cisplatin shortages or seen in the U S. You know what are you hearing from customers do you think you know <unk>.
That's having any impact on your ramp at this point.
No that that is not being would you heard about the spot shortages may have been ongoing for.
The loss of at least four months that has not been an issue pediatric oncology.
As you know the the.
Pediatrics Uhm.
They're not as many patients to begin with <unk>.
And <unk>.
<unk> go through those hospitals first we actually we're hearing a lot about maths along shortages at the moment, but not be spot.
Got it yeah, how should we be thinking about bringing adrienne on here and the seal overall now is this you know there's the implication that Adrian has been playing a large role in partnership discussions in Europe and US you know, it's kind of just submitting the role there or should we be thinking you know, there's an increased appetite for new guys to maybe go it alone in Europe , now and you know Adrian through his P. T C <unk>.
Since launching their international businesses is obviously it would be a good fit there building those capabilities out.
Yeah, No me not prepared remarks, what you personally have known Adrian for over 10 years, now and and we had furnished we're a small company would work very very closely with our board members.
So I'm very very thankful that he was able to to join US a dispute with a moment Uhm S. You could see from he's resume he kept the necessary experience to help us with all of the above.
<unk> from from helping set the ground up for launching Europe .
To overseen D U S sales organization and and medical Affairs.
And access to partnering opportunities both in Europe globally or all of the above so maybe Adrian you. You may you may want to say a couple of things as well yeah. Yeah, No no no not really to add I think my my experience is that you know I've.
Third time, if we do build a commotion organization that I've done it.
I know how to do they send you to I have to do it quickly and and knew how to do it you know minimal cost.
S as Rusty said will.
You run into prepared remarks.
<unk> I was heavily involved in business development and ultimately in the sale of the gentium to jazz so.
<unk> I think I take all the boxes and as I said it.
The board believes.
The right person at the right time and.
Quite honestly I was getting very bored in retirement and I've been quite active engaged too it's been over the last couple of months, helping at the bulb remember and we all agreed kind of makes sense for me to to take on that Uhm a full camera.
Yep Yep that makes a lotta sense slash from you'll have that kind of cute guys any kind of update on how we should be thinking about launch in Europe . You know you know whether or not it's on your own or you know with a partner you know how should investors be thinking about a potential launch timing there.
I think with with evaluating all options I think Ah launch will be.
Towards the end of the first quarter.
Next year.
To enable that to happen we have to do a lot of work. For example, you have to apply for a special license in Germany called with no license that has to be submitted by end of November if that isn't in place then there's no way that anybody can sell in Germany and hospitals in 2020.
<unk> and that requires quite a lot of preparation.
<unk>, whether it's through some kind of a partnership and it's the most successful speedy lowest possible.
Yep got it congrats on progress guys and great to have you on board agent. Thanks.
One moment for our next question.
Our next question comes from the line of David New in Garden Wedbush Securities You're lying is now open.
Alright, Thanks for taking my question.
A couple of what kind of on the penetration markets first has there been the centers I know thankfully.
Thankfully childhood cancers, a rare occurrence, but have there been any mm centres that are repeated.
<unk> repeat <unk>.
The dosage.
<unk> and then <unk>.
On your coverage of the academic centers or do you have a estimate on how many patients uhm.
Uhm utilize those centers as a percentage and I'd like to <unk>.
40, 50 80 per cent.
Hi, David Yeah, So maybe I can answer the second one first yeah. So if you look at the center silver all.
<unk>. So you have centres, where the the the repeat customer orders, where they're they're utilizing mostly dishes. So utilizing it there's some sandwich where half the <unk> utilizing it so so <unk>.
It's it's sort of senator by Senator comforted by <unk> from a physician to physician disease by disease of course, because our label up making to several tumor types.
And and their experience and the ground that we're seeing comes from from me, writing scripts, putting patients on drugs.
And see the outstanding results are both from an advocacy perspective, but importantly safety perspective with this product I mean here. We are you know almost nine months he to launch.
And they there hasn't been on a report which speaks to how good the drug is in reality, what did you see anything in pediatric oncology that or any apology product for that matter that has that.
So that's what makes it very very excited because we we have a really really good treatment for these kids.
I'm sorry, what was the first question again.
Oh I think that's the first question was actually I'll repeat customers excellent was the.
The number of academic centers or.
The number of academics other signed up in every yeah percentage of patients typically that the treatment you're out of the total population down. So yeah majority is 70 per sorry, or something yeah. Yeah. It's pretty it's like I said, it's pretty well distributed maybe Robert do you have some very <unk> more granularity on these numbers, but it's it's pretty wild to shoot it.
Between the academic centers and some of the smaller hospitals, which typically in the early launched tend to be some of the early adopters.
Yeah, I'll I'll add David similar to what Rusty said every every center is is unique in the sense of the amount of patience type of patients it sees and their philosophy on how they they they roll out whether the forefront formulary approval or after forming.
<unk> you know similar to what we said already we have gained some major academic centers recently and so we're at work we're quite excited about that and anticipating some orders. There. So you know hopefully as as the months go out we we actually learn more from <unk> from from all our centers in terms of.
Patient numbers pet market Clickability.
X.
Thank you.
This concludes our question and answer session I would now like to turn it back to the rest of your <unk>.
I would like to thank you all for joining US today, we look forward to updating you on our continued lunch progress in corporate milestones in the future quarterly calls thank you and have a great morning.
This concludes today's conference call. Thank you for participating you may now disconnect.
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