Q1 2024 Fennec Pharmaceuticals Inc Earnings Call

Operator: Good morning, ladies and gentlemen, and welcome to the Fennec Pharmaceuticals First Quarter 2020 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. As a reminder, today's conference call is being recorded. Now, I would like to turn the conference over to Fennec's Chief Financial Officer, Robert Andrade. Please go ahead.

Good morning, ladies and gentlemen that walk through the Fenech Pharmaceuticals first quarter 2024 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. As a reminder, today's conference call is being recorded now I would like to turn the conference over to Phoenix Phoenix.

Robert: Chief Financial Officer, Robert Please go ahead.

Robert C. Andrade: Thank you, operator, and good morning, everyone. We appreciate you joining us today for Fennec Pharmaceuticals' first quarter 2024 earnings conference call, during which we will review our financial results as well as provide a general business update. Joining me from Fennec this morning are Rusty Raykov, our Chief Executive Officer, and Adrian Haigh, our Chief Operating Officer. Before we begin, I would like to remind you that during this call, the company will be making forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ from those discussed in the forward-looking statements.

Robert: Thank you operator, and good morning, everyone.

Robert: Appreciate you joining us today for Fedex Pharmaceuticals, first quarter 2024 earnings conference call.

Robert: During which we will review our financial results as well as provide a general business update.

Robert: Joining me from Fenech. This morning are Rusty Rykoff, our Chief Executive Officer.

Adrian Haigh: And Adrian <unk>, our Chief operating officer.

Robert C. Andrade: Reference to these risks and uncertainties is made in today's press release and disclosed in detail in the company's periodic and current event filings with the United States 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.

Rostislav Raykov: Before we begin I would like to remind you that during this call. The company will be making forward looking statements that are subject to risks and uncertainties that may cause actual results to differ from the results discussed in the forward looking statements.

Speaker Change: Reference to these risks and uncertainties are made in today's press release and disclosed in detail in the company's periodic and current event filings with I'd State Securities and Exchange Commission.

Speaker Change: 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.

Speaker Change: We specifically disclaim any obligation to update or revise any forward looking statements.

Robert C. Andrade: This conference call is being recorded for audio rebroadcast on Fennec's website, www.fennecpharma.com, where it will be available for the next 30 days. With that, I will now turn the call over to our Chief Executive Officer, Rusty Raykov. Rusty? Thank you, Robert, and good morning, everyone.

Rostislav Raykov: Conference call is being recorded for audio rebroadcast on Fedex website.

Rostislav Raykov: W. W Dot spending pharma dotcom.

Rostislav Raykov: Where it will be available for the next 30 days.

Rostislav Raykov: With that I will now turn the call over to our Chief Executive Officer, Rusty Rykoff Rusty.

Rostislav Raykov: $27.4 million in NET FEDMARKT product sales. Robert will further elaborate on the $18 million in licensing revenue related to the Nordgreen transaction, but to be clear, we received $43.2 million from the transaction, which is reflected on our balance sheet as of March 31st, and cash of $51.2 million.

Rostislav Raykov: Thank you, Robert, and good morning, everyone. On today's call, we'll detail our first quarter financial results, all of which were outlined in our earnings press release issued this morning prior to this call, and we will also discuss ongoing commercial launch efforts and progress they are making with PEDMARC in the U.S. and abroad following the exclusive licensing agreement announcement we executed in March with NorGene to commercialize PEDMARC in Europe, Australia, and the U In the first quarter, FedMart delivered total net revenues of $25.4 million, including $18 million in licensing revenues from Norgene transactions.

Robert C. Andrade: Thank you Robert and good morning, everyone on today's call will detail, our first quarter financial results.

Rostislav Raykov: Which were outlined in our earnings press release issued this morning prior to this call.

Rostislav Raykov: We'll also discuss ongoing commercial launch efforts and progress, we're making at mark in the U S and abroad.

Speaker Change: Knowing the exclusive licensing agreement announcement, we executed in March with <unk> to commercialize Pathmark seen Europe, Australia, and New Zealand.

Speaker Change: In the first quarter Fad markedly with total net revenues of $25 4 million, including 18 million licensing revenues from the Orchard transaction seven.

Speaker Change: Seven 4 million in net benchmark product sales.

Robert: Robert will further elaborate on the $18 million in the licensing revenue related to the <unk> transaction, but to be clear, we received $43 2 million from the transaction, which is reflected on our balance sheet as of March 31.

Robert: And cash of $51 2 million.

Rostislav Raykov: We believe that a couple of things affected PEDMARC sales during the first quarter of this year. First, the public reminder that the U.S. FDA issued to healthcare professional organizations in January stating that PEDMARC is not substitutable with other sodium thiosulfate products may have caused some unintended confusion in the marketplace. Initially, the professional affairs and stakeholder engagement staff at the FDA issued the potential health risks with substitution as a targeted outreach to the following organization.

Robert: We believe that a couple of things affected by March sales during the first quarter of this year as far as the public reminder, that the U S. FDA issued two health care professional organizations in January.

Rostislav Raykov: Alliance for Pharmacy Compounding, American Academy of Pediatrics, and American College of Apothecaries. American Hospital Association, American Pharmacists Association, American Society of Clinical Oncology, American Society of Health System Pharmacists, Association of American Cancer Institutes. Children's Hospital Association, Federation of American Hospitals, Hematology and Oncology Pharmacy Association, International Academy of Compounding Pharmacies, and Professional Compounding Centers of America. We believe that, in turn, some of these organizations communicated the FDA safety message to their respective members. Recently, the Office of New Drugs and the FDA added the safety communication issued by CDAR's Professional Affairs and Stakeholder Engagement staff.

Robert: Stating that March is not substitutable with auto sodium sulphate products may have caused some unintended confusion in the marketplace.

Speaker Change: Initially the professional affairs and stakeholder engagement staff at the FDA issued.

Speaker Change: Natural gas risks with substitution.

Speaker Change: Outreach to the following organizations.

FDA: Alliance for Pharmacy, Compounding American Academy of Pediatrics American College.

FDA: Our public areas.

Speaker Change: Merrigan Hospital Association American Pharmacists Association.

Speaker Change: Oregon Society of medical Oncology American Society, Yahtzee, Some pharmacies Association of American cancer Institutes.

Speaker Change: Children's Hospital Association Federation of American hospitals, Hematology Oncology Pharmacy Association International Academy of compounding pharmacies.

Speaker Change: In professional compounding centers of America.

Speaker Change: We believe that in turn some of these organizations communicated the FDA safety message to their respective members.

Speaker Change: Recently, the office of new drugs.

MBA: The MBA added the safety communication issued by SEDAR professional affairs and stakeholder engagement staff.

Rostislav Raykov: Now, it is clear that substitution poses potential health risks, including potassium chloride exposure, which at high doses can lead to increased risk of acute cardiac events and other serious adverse reactions. Potassium chloride is not present in PEDMARC. Overexposure to boric acid can cause health risks including headache, hypothermia, restlessness, weariness, renal injury, dermatitis, alopecia, anorexia, and Indigestion.

MBA: Benchmarks approval.

MBA: Page.

Speaker Change: Now it is clear that substitution post potential health risks, including adapting chloride exposure, which is high for all of this can lead to increased risk of acute cardiac events and other serious adverse reactions.

Speaker Change: But that's in Florida is not president in bedrock.

Speaker Change: Overexposure to boric acid can cause health risks, including headache, hypothermia restlessness wariness.

Speaker Change: No injury dermatitis alopecia.

Rostislav Raykov: Although PEDMARC also contains boric acid, it is at a lower concentration than other SDS products, overexposure to sodium nitrate can lead to health risks including metamoglobinemia. Sodium nitrate is co-packaged with sodium thiosulfate as a separate bile in some products, and it's not present in. Unfortunately, Fennec continues to see unlawful compounding of copies of PED The majority of these hospitals are affiliated with Children's Oncology Group, and thus far, the FDA safety communications have not changed their behavior.

Speaker Change: <unk> here.

Speaker Change: And in digestion, although benchmark also contains forecasts it is at a lower concentration that auto Sds products.

Speaker Change: Overexposure to sodium nitrate, which can lead to health risks, including met the more global EMEA.

EMEA: Nitrate is called back into certain parts of it as a separate file in some products and is not presently bedrock.

Margaret: Unfortunately panic continues to see a local compounding of copies of bad Margaret Pediatric Hospital pharmacies.

FDA: Unnecessarily putting cost in front of children safety. The majority of these hospitals are affiliated with your recent college group and thus far the FDA safety communication is not changing their behavior.

Rostislav Raykov: Fennec continues to diligently work with the FDA to address these issues. Additionally, prior to April 1st of this year, our J-code did not differentiate between PEDMARK and other formulations of STS. As a consequence, which we discussed in our call last quarter, there had been some confusion and some impact on the adaptation of PEDMARK. The good news is that, as of April 1st, this issue has been fully resolved with CMS amending our JCODE to specify PEDMAR.

FDA: <unk> continues to diligently work with the FDA to address this issue.

Mark: Additionally, prior to April 1st of this year, our J code does not differentiate between bad Mark and auto formulations of SBS as a consequence, which we discussed in our call last quarter. There had been some confusion in some impact with adaptation of bedrock. The good news is that as of April 4th This issue has been before.

Mark: The result, with CMS amending our J code specified benchmark now that these changes are effective we expect uptake to improve in the quarters to follow.

Rostislav Raykov: Now that this change is effective, we expect uptake to improve in the quarters to follow. Despite these acute challenges, we remain optimistic that it will be an exciting year for Fennec, given the strong performance we've had in 2023, the first full fiscal year following our US commercial launch. We're confident in our ability to navigate through these marketplace challenges to achieve our long-term objectives. Our outlook over the next few quarters will largely depend on our ability to successfully target community hospitals and infusion centers that treat in the outpatient setting all the pediatric patients within our label and the NCCN guidelines for adolescents and young adults.

CMS: Despite this acute challenges we remain optimistic that it will be an exciting year for panic, given the strong performance with benchmark in 2023.

Speaker Change: First full fiscal year following our U S. Commercial launch we're confident in our ability to navigate through these marketplace challenges to achieve our long term objectives. Our outlook over the next few quarters will largely depend on our ability to successfully target the community hospitals and infusion centers that treat in the outpatient setting all the pediatric patients.

CMS: Our label and the NCC guidelines for adolescence and young adults.

Rostislav Raykov: PEDMAR continues to have broad and favorable payer coverage, as evidenced by payer-approved U.S. prescription claims with commercial insurance plans and Medicare Part D plans. Regarding our partnership with Norgene to commercialize FedMarkzine in Europe, Australia, and New Zealand, efforts are well underway in these territories with a targeted launch date of Q4 this year. VEDMARC-C is the first and only approved therapy in the EU and UK for prevention of autotoxicity induced by cisplatin chemotherapy in patients one month to 18 years of age with localized non-metastatic solid tumors.

CMS: Benchmark continues to have growth and favorable payer coverage as evidenced by their approval approved U S prescription claims.

CMS: With commercial insurance plans and Medicare part D plans.

<unk>: Regarding our partnership with <unk> to commercialize <unk> in Europe, Australia, New Zealand.

Speaker Change: <unk> are well underway in these territories with targeted targeted launch date.

Speaker Change: The fourth quarter of this year.

Speaker Change: <unk> is the first and only approved therapy.

unknown: In the EU and UK for prevention of Oracle <unk> induced by cisplatin chemotherapy patients one month to 18 years of age with localized non metastatic solid tumors.

Rostislav Raykov: As a reminder, under the terms of the licensing agreement, Fennec received approximately $43.2 million in up-front consideration and the potential of up to approximately $230 million in additional commercial and regulatory milestone payments and tiered royalties on net sales of Fedmark C in the licensed territories up to the mid-20s. Naureen will be responsible for all commercialization activities in the licensed territories and will hold all marketing authorizations. As we previously communicated, this partnership represents an important step in achieving our mission of expanding PEDMARC-C to patients across the globe who are at risk of suffering from cysplatin-induced autosuggestion.

Speaker Change: As a reminder, under the terms of the licensing agreement Fanuc received approximately $43 2 million in a prompt consideration.

Speaker Change: And the potential of the above.

Speaker Change: Up to approximately $230 million.

Fanuc: In addition, no commercial and regulatory milestone payments and tiered royalties on net sales of bad Mark seat in the licensed territories up to the mid twenties.

Fanuc: <unk> will be responsible for all commercialization activities in the licensed territories, who hold all marketing authorizations.

Speaker Change: As we previously communicated this partnership represents an important step in achieving our mission of expanding bed moxie to patients across the globe, who are at risk of suffering from spot you saw its existing.

Rostislav Raykov: The terms provided... provided us with many important benefits, including an upfront payment, further solidifying our balance sheet, driving economic terms, providing meaningful participation in the ex-US success of PEDMARC-C, and importantly, an experienced partner to successfully launch PEDMARC-C in the licensed area. With that, I will now turn the call over to Adrian, who will provide an update on our commercial strategy and operations.

Speaker Change: Terms provided.

Speaker Change: Provided this week, many important benefits, including an upfront payment further solidifying our balance sheet.

Tommy: Tommy terms, providing meaningful participation in the ex U S success at bad Moxie and.

Tommy: And importantly, an experienced partner to successfully launched <unk> in the licensed territories.

Adrian Haigh: With that I will now turn the call over to Adrian who will provide an update on our commercial strategy operations Adrian.

Adrian Haigh: As Rostislav has said, in the first quarter, our sales force switched the focus of their activities to the community treated AYA population that fall within our label. We believe that there are many more patients in this segment compared to the inpatient hospital-treated pediatric population. Additionally, these older patients require approximately four times as much PEDMARC as the younger patients. On our prior quarterly call, I alluded to the challenges that we faced during the early stages of our relaunch into this sector.

Adrian: Thanks Rusty.

Adrian: As Rusty has said in the first quarter. Our Salesforce has switched the focus of their activities to the Humana C treated a Y a population that fall within our label.

Adrian: We believe that there are many more patients in this segment compared to the inpatient hospital treated pediatric population. Additionally.

Rusty: Additionally, these older patients require approximately four times as much Piedmont as the younger patients.

Rusty: On our prior quarterly call I alluded to the challenges that we faced during the early stages of our re launch into this segment.

Adrian Haigh: Prior to April 1, 2024, our J-Code did not differentiate between PEDMARC and other formulations of STS. Consequently, there has been some confusion and some impact on the adoption of PEDMAR in January. CMS did two important things to address this matter. First, they issued a new J code for the Hope STS product, and second, they amended Fennec's J code to specify PEDMAR. However, CMS also stated that the two formulations are not interchangeable.

Rusty: Prior to April one 2024 hour J code did not differentiate between Piedmont and other formulations of STS. Consequently, there has been some confusion and some impact on the adoption of Piedmont.

Rusty: In January.

Rusty: CMS did two important things to address this matter.

CMS: First they issued a new J code for the hub STS product and second the amended finished J code to specified Padma.

Rusty: Encouragingly CMS also stated that the two formulations are not interchangeable.

Adrian Haigh: As a reminder, the new J-code specifying PEDMOC was not active until April 1st. It is also important to understand that the J-code becoming effective on April 1st is not a simple on-off event. It is taking some considerable time to get the code uploaded into the electronic prescribing systems and payment plans, and this task is still ongoing. Additionally, we are awaiting updates to the NCCM compendia and others, for example, drug decks and lexicons. These compendia are the proof source for payers to reimburse Medbark, and this process is expected to take 60 to 90 days to complete and validate from April 1st.

Rusty: Okay.

Speaker Change: As a reminder, the new J code specifying pet milk was not active until April it first.

Rusty: It is also important to understand that the J code, becoming effective on April the first is not a simple.

Rusty: Event.

Rusty: It is taking some considerable time to get the code uploaded into the electronic prescribing systems and payment plans. This task is still ongoing.

NCC: Additionally, we are awaiting updates to the NCC in compendium.

NCC: For example.

NCC: Lexicon. These compendium of approved sells for payers to reimburse setback and this process is expected to take 60 to 90 days to complete and validate from April the first.

Adrian Haigh: Another ongoing challenge has been extending infusion center hours to accommodate the time it takes to administer PEDMARC six hours after the cisplatin infusion. Again, this doesn't happen overnight and requires the intervention of senior management at the infusion center. We've had greater penetration in those centers that are open for 16 to 24 hours.

Speaker Change: Another ongoing challenge has been extending infusion center areas to accommodate the time it takes to administer <unk>.

Speaker Change: Six hours after the cisplatin infusion.

Senior Management: Again, this doesn't happen overnight and requires the intervention of senior management at the infusion Center.

Senior Management: We have had greater penetration in those centers that are open for 16 to 24 hours.

Adrian Haigh: Despite these acute challenges, we remain encouraged by the reaction to BEDMARC and the possibility to dramatically improve the quality of life for cancer survivors by preventing or significantly reducing hearing loss caused by. We are confident that once these logistical hurdles are overcome, PedMart will become the standard of care and be routinely used in the AYA population. We've had a very busy conference season, with participation in 11 regional oncology conferences, as well as 7 key scientific meetings, including the American Society of Pediatric Haematology and Oncology, the Community Oncology Alliance, the National Comprehensive Cancer Network, and the American Academy of Audiology Annual Conference.

Senior Management: Despite these acute challenges we remain encouraged by the reaction to back book and the possibility to dramatically improve the quality of life for cancer survivors by preventing or significantly reducing hearing loss caused by suspected.

Senior Management: We are confident that once these logistical hurdles or overcome Piedmont will become the standard of care and be routinely used in the <unk> population.

Speaker Change: We've had a very busy conference season with participation in 11 regional oncology conferences is what 70 scientific meetings, including the American Society of pediatric hematology oncology.

Speaker Change: The community oncology Alliance the National comprehensive cancer network.

Speaker Change: American Academy of Audiology annual conferences.

Adrian Haigh: And we're looking forward to ASCO, where we intend to spread the word to as many AYA treating physicians as possible. So, in closing, we see promising opportunities for PEDMARC, including the steps we're taking to educate the marketplace, along with executing on our commercialization plan, and we look forward to the acceleration of revenue in the coming months. With that, I'll turn the call over to Robert to go over the financials for the quarter.

Speaker Change: And we're looking forward to ESCO, where we intend to spread the word with many treating.

Speaker Change: Treating physicians as possible.

Speaker Change: So in closing, we see promising opportunities for Piedmont, including the steps we've taken to educate the marketplace along with executing on our commercialization plans and we look forward to the acceleration in revenue in the coming months.

Robert: With that I'll turn the call over to Robert to go over the financials for the quarter.

Robert C. Andrade: Adrian, our press release contains details of our financial results for the first quarter of 2024, which can be viewed in the Investors and Media section of our website rather than read through all of those details, as in previous conference calls.

Speaker Change: Okay.

Robert: Thank you Adrian.

Robert: Our press release contains details of our financial results for the first quarter of 2024, which can be viewed on the investors and media section of our website.

Robert: Rather than read through all of those details.

Robert: Previous conference calls my comments today will focus on some key financial results.

Robert C. Andrade: My comments today will focus on some key financial The company recorded PEDMARC net sales of $7.4 million for the first quarter of 2024. Net sales in the first quarter were more highly impacted than previous quarters by discounts, including an impact from select products that were returned due to expiry. The return product was due to production and launch dynamics in the first year after launch, which we don't anticipate to continue beyond the first quarter of 2024.

Speaker Change: The company recorded pet Mark net sales of $7 4 million for the first quarter of 2024.

Speaker Change: Net sales in the first quarter or more highly impacted than previous quarters by discounts, including the impact from select product that was returned due to expiry.

Speaker Change: The returned product was due to production and launch dynamics in the first year after launch, which we don't anticipate to continue beyond the first quarter of 2024.

Robert C. Andrade: Total net sales for the first quarter were $25.4 million, which, as mentioned, included $18 million for the accounting of licensing revenue for the Noregene transaction. The company evaluated the Norgene license agreement under ASC-606 and concluded that Norgene represents a customer in the transaction.

Speaker Change: Total net sales for the first quarter were $25 4 million, which as mentioned included $18 million for the accounting of licensing revenues for the <unk> transaction.

company: The company evaluated the Norge and license agreement under ASC 606, and concluded that <unk> represents a customer in the transaction.

Robert C. Andrade: As such, a portion of the transaction price was recognized as licensed revenue in the first quarter of 2024, and a portion of the transaction price associated with the material right is deferred and reflected as deferred revenue. But to be clear, for the three months ended March 31st, 2024, the company did not recognize any milestone or royalty revenue from the Noregene transaction. G&A expenses for the first quarter of 2024 were $5.9 million, which compares to $4.3 million in the fourth quarter of 2022.

company: As such a portion of the transaction price was recognized as license revenue in the first quarter of 2024.

company: And a portion of the transaction price associated with the material right is deferred and it reflected as deferred revenue.

Speaker Change: To be clear for the three months ended March 31, 2024, the company did not recognize any milestone or royalty revenue payments from the <unk> transaction.

Speaker Change: G&A expenses for the first quarter of 2024 were $5 9 million, which compares to $4 3 million in the fourth quarter of 2023.

Robert C. Andrade: This increase is largely attributable to pre-commercialization expenses in preparation for the potential European launch or partnership. The company recorded $5.2 million in selling and marketing expenses in the first quarter of 2025, compared to $2.5 million in the fourth quarter of 2023. The increase was largely attributable to higher payroll and increased marketing expenses related to the previously mentioned AYA initiative, and finally, on our cast position.

Speaker Change: This increase is largely attributable to pre commercialization expenses in preparation for the potential European launch or partnership.

Speaker Change: The company recorded $5 $2 million in selling and marketing expenses in the first quarter of 2024 compared to $2 5 million in the fourth quarter of 2023.

The company: The increase was largely attributable to higher payroll and increased marketing expenses related to the previously mentioned.

Speaker Change: <unk> initiatives.

Speaker Change: And finally on our cash position.

Robert C. Andrade: We ended the first quarter with approximately $51.2 million in cash, cash equivalents, and investment security, which includes the approximately 43 million received from the licensing of Europe, Australia, and New Zealand to Norgea. Further, as a reminder, the next anticipated milestone related to our Norgean agreement will be obtaining pricing approval in Germany, for which Fennec will receive a 10 million euro milestone. Furthermore, Fennec's royalties on net sales will commence in the mid-teens percentage once Petmarxie is launched later in 2020.

Speaker Change: We ended the first quarter with approximately $51 2 million in cash cash equivalents and investment securities.

Speaker Change: Which includes the approximately $43 million received from the licensing of Europe, Australia, and New Zealand to <unk>.

Speaker Change: Further as a reminder reminder, the next anticipated milestone related to our <unk> agreement will be obtaining pricing approval in Germany in which <unk> will receive a $10 million milestone payment.

Speaker Change: Further phenix royalties on net sales will commence in the mid teens percentages. Once <unk> is launched later in 2024.

Robert C. Andrade: We anticipate that our cash, cash equivalents, and investment securities as of March 31st, 2024, when coupled with PEDMARC revenue assumptions and the recently announced license agreement for Europe, March 24 will be sufficient to fund our planned operations for at least the next 12 months. And operating with that, we are ready for questions. Thank you, ladies and gentlemen. If you have a question...

Petsmart CEO: We anticipate that our cash cash equivalents and investment securities as of March 31, 2024, when coupled with Petsmart revenue assumptions and the recently announced license agreement for Europe in March 'twenty four it will be sufficient to fund our planned operations for at least the next 12 months.

Petsmart CEO: And operator with that we're ready for questions.

Operator: Ladies and gentlemen, if you have a question or a comment at this time, please press star 11 on your telephone. If your question has been answered or you wish to move yourself from the queue, please press star 11 again. We'll pause for a moment while we compile our Q&A list. Our first question comes from Charles Duncan on Cantor Fitzgerald. Your line is open.

Petsmart CEO: Thank you ladies and gentlemen, if you have a question or a comment at this time. Please press star one on your telephone. If your question has been answered and wish to move yourself from the queue. Please press star one again, we will pause for a moment, while you compile our Q&A roster.

Petsmart CEO: Our first question comes from Charles Duncan with Cantor Fitzgerald. Your line is open.

Charles Cliff Duncan: Good morning, Rosti and team. Thanks for taking the questions. And congratulations on the progress in the quarter with the NORGENE collaboration. I had a couple of questions, though, regarding unlawful compounding. And you mentioned the Children Oncology Group. I guess I'm wondering if you could provide some additional color on the initiatives that you're taking to really correct this behavior. And then, can you provide us with any color on the level of compounding that you anticipate to occur in Europe versus here?

Charles Cliff Duncan: Yes, good morning, Rusty and team thanks for taking the questions.

Charles Cliff Duncan: And congrats on the progress in the quarter with the <unk>.

Charles Cliff Duncan: Collaboration had a couple of questions so regarding.

Charles Cliff Duncan: The unlawful compounding and you mentioned children oncology group I guess I'm wondering if you could provide some additional color on the initiatives that you're taking to really correct. This behavior.

Speaker Change: And then can you provide us any color on the level of compounding that you anticipate to occur in Europe versus here.

Rostislav Raykov: Hi Charles, I'll take this. Yeah, so as you saw from the FDA announcement and then subsequently putting that announcement on the approval of FedMark on the FDA page, the FDA is taking this issue very seriously. The problem that we run into at the pediatric hospital level is that they have a committee called the Expensive Drug Committee, where typically these committees are stacked with folks in the hospital that are not pediatric oncologists or pharmacists for that matter, but they're really there to do everything possible but to avoid paying for an expensive drug, which they consider PEDMARC to be one. So this is what we're facing.

Speaker Change: Hi, Charles I'll I'll take this.

Speaker Change: Yes, so if you sell from.

Speaker Change: The FDA announcement, and then subsequently putting that announcement on the day approval.

Petsmart CEO: Mark the FDA page.

Charles Cliff Duncan: FDA is taking this issue.

Speaker Change: Very seriously.

FDA: The problem that we run into and the pediatric hospital level is that they have a committee called the expensive drug Committee.

Charles Cliff Duncan: Where.

Speaker Change: And typically these committees are stacked with folks in the hospitals that are not pediatric oncologist or pharmacists for that matter.

FDA: But they're really there to help to do everything possible to avoid paying for an expensive drug which they consider fed market would be one.

Speaker Change: So this is what we're this is what we're facing in terms of initiatives.

Rostislav Raykov: In terms of initiatives, what I would say is that we continue to work with the FDA on this. The FDA is very concerned. There is a significant safety risk associated with the use of compounded products in this vulnerable population, particularly if you're pushing over 15 minutes to make a copy of PEDMARC, a very large and significant dose of potassium chloride in younger children.

FDA: What I would say that we continue to work with the FDA on this.

FDA: The FDA is very concerned there is significant safety risks associated with the use of compounded product in this vulnerable population, particularly if youre pushing over 50 minutes.

FDA: To make a copy spend mark a very large and significant dose of potassium chloride in younger children.

Rostislav Raykov: So with that, I think our engagement with the FDA is ongoing, and if there's anything more to report, we will hopefully. In terms of Europe, what I would say is there's a bit of a difference because there you're dealing with a, so we have a pediatric use marketing authorization, which by definition gives exclusivity to the market on the data from the studies, from the studies, to, in this case now, Norgene. How is that different in the United States is that you're not dealing on a hospital basis; you're dealing with a healthcare system and regulations that have already been approved for the use of an older drug in a pediatric population with a 10-year exclusivity.

Speaker Change: So we did I think our engagement with the FDA is ongoing and if there's anything more to report.

Speaker Change: It will hopefully soon.

Speaker Change: In terms of Europe.

Speaker Change: What I would say is there's a bit of a difference because there youre dealing with.

Europe: So we have a pediatric use marketing authorization, which by definition gifts exclusivity to the market on the data of the studies from the studies.

FDA: In this case out Norton.

Norton: How is that different than the United States is that youre not dealing by hospital by hospital basis, Youre dealing with a healthcare system and regulations that have already been approved for the for the use of an older drug in a pediatric population with any exclusivity.

Rostislav Raykov: So that's well understood, that you're bringing tremendous value to this vulnerable population because you've invested in these studies and you have this 10-year exclusivity. And so you're also dealing with a single-payer system, so there are really the negotiations that will be ongoing between Norgean and each respective country in terms of the price achieved. But once that happens, this drug would be available and approved by a single payer, so there should not be a significant issue with compounding in Europe, and maybe I can turn it over to Adrian to elaborate on that as well.

Speaker Change: So that's well understood that youre, bringing tremendous value to the <unk>.

Speaker Change: Vulnerable population.

Speaker Change: Because he has invested in these studies and you have these 10 years with CBD.

Speaker Change: And so you're also dealing with a single payer system. So there it's really the <unk>.

Speaker Change: Negotiation, there will be ongoing between our teams in each respective country in terms of the price achieved but once that happens.

Adrian: These truck would be would be available and approved by a single payer. So there should not be a significant issue with compounding in Europe, and maybe I can turn it over to Adrian to elaborate on that as well.

Adrian Haigh: Yeah, thanks, Rusty.

Adrian Haigh: Yeah, thanks, Rosty. It's exactly as you said; we have the Pediatric Use Marketing Authorization, which is specifically designed for older products repurposed for children. And once there's an approved drug, in most of the European markets, compounding is illegal. As you can imagine, there was a lot of diligence done by the parties that were bidding for the European rights. And all of them came to the same conclusion, obviously, including

Adrian: Yes, thanks Rusty.

Adrian: It's exactly as you said, we have the pediatric these marketing authorization, which is specifically designed for older products repurpose for children. Once there's an approved drug in most of the European market compounding is illegal.

Adrian: And imagine there was a lot of agility.

Adrian: <unk> done by the parties that we're bidding for the European rights and all of that and came to the conclusion, obviously, including <unk>. The compounding would not be an issue in Europe.

Charles Cliff Duncan: That makes sense. One quick follow-up then for you, Adrian or Rosty, with regard to the J-code, nice to see that happen in April and appreciate all the caveats with regard to the timing of that going from effective to actually effective. But when you think about either the second quarter or the second half of this year, how would you measure success beyond the obvious of revenue? What are the key operating metrics that you're looking at to see that PEDMARC's getting traction among the AYA population?

Adrian: That makes sense one quick follow up then for you Adrian or Rosty with regard to the J code nice to see that happen in April one and I. Appreciate all the caveat with regard to the timing of that going from effective to actually effective.

Rostislav Raykov: But when you what do you think about either the second quarter or the second half of this year, how would you measure measure success beyond beyond the obvious of revenue what are the key operating metrics that youre looking at to see that pet marks getting traction in the AI a pop.

Rostislav Raykov: Great question, Charles. So let me kind of maybe tell you how I look at the business holistically. So we have several components to this. One is our medical education. So how well do we engage and educate the staff at a community center that historically has not treated for autotoxicity?

Adrian: Thanks.

Charles Cliff Duncan: Question, Charles So let me kind of maybe tell you how.

Charles Cliff Duncan: I look at the business Holistically.

Charles: So we got several components to this one is our magic medical education, So how well do we engage and educate the staff at the community Center.

Charles: Historically has not treated for toxicity.

Rostislav Raykov: So I think that's very, very critical. The second component is market access, and I think Adrian alluded to that in his comments. That's the bear coverage, which so far we haven't had any significant issues with.

Charles: I think that's very very critical.

Adrian: The second component of market access and I think Adrian alluded to that in his comments.

Adrian: That's the payer coverage, which so far we haven't had any significant issues with.

Rostislav Raykov: The Campendia update, which is really important, then we have to deal with field reimbursement and ultimately pull-through, and these are all ongoing activities. Then we have the logistics and distribution piece, where we are working with the offices, but importantly, we must listen to these offices to make sure we can provide FedMart despite the six-hour gap between the splatting therapy and when FedMart is administered. And lastly, I think it's just establishing best practices and really learning from the experiences.

Adrian: The company update which is really important then we have to deal with field reimbursement.

Adrian: And ultimately pull through and these are all ongoing activities.

Speaker Change: Then we have the logistics and distribution fees.

Adrian: Where we are.

The office: Working with the office, but importantly, we must listen to these offices to make sure. We can provide bed mark despite the six hour gap between this monotherapy and when bad market administered.

The office: And lastly, I think he is just establishing best practices and really learning from the experiences.

Rostislav Raykov: It is very important that we get it right. So, basically, I look at this as sort of a mini-pilot at the moment; what we learn from that, and how do we then scale it. And so, and this goes back to the on and off switch that Adrian referred to. It's like, let's get this thing right now so that when it scales, we know exactly how to do this. So, and then we can expect, obviously, a meaningful inflection point when all the barriers are sort of removed, and we've learned how to navigate. So I hope this is helpful.

Speaker Change: Very important that we get it right. So so basically I look at this as sort of a mini pilots at the moment.

Speaker Change: What we learned from that and how do we then scale it.

Adrian: So and this goes back to the on and off switch that Adrian referred to it's like let's get this thing right now so that when it scales, we know how to exactly do this.

Adrian: So and then we can expect obviously a meaningful inflection point when all the barriers are sort of removed and we've learned how to navigate through these.

Adrian: So I hope I hope this is helpful.

Rostislav Raykov: Would that increased visibility occur in the second half of this year, you anticipate, Rossi?

Adrian: Would would that increased visibility.

Adrian: Occur in the second half this year you anticipate Rossi.

Rostislav Raykov: That will be my anticipation, correct? Yeah, I

Rossi: That will be my Dolby mind dissipation correct.

Rostislav Raykov: Yeah, as I said, it's taking you know between 60 to 90 days to get everything sort of loaded up into their dextronic prescribing systems. It just doesn't happen overnight, and once that's done, then we expect to see the inflection. So I think you're right, second half of the year.

Rossi: Yes, as I said I think it's taking between 60 to 90 days to get.

Adrian: Everything sort of.

Speaker Change: Although data up into their extranet approach prescribing systems to get the compendium of data. It just doesn't happen overnight and once that's done then we expect to see the inflection point. So I think you're right second half of the year.

Charles Cliff Duncan: Got it. Thanks for taking the questions. One moment for our next question.

Speaker Change: Got it thanks for taking the question.

Operator: One moment for our next question. Our next question comes from Chase Knickerbocker with Craig Hallam. Your line is open.

Speaker Change: One moment for our next question.

Speaker Change: Okay.

Speaker Change: Okay.

Adrian: The next question comes from Jason Knickerbocker with Craig Hallum. Your line is open.

Chase Richard Knickerbocker: Good morning, guys. Thanks for taking the time to answer the question. So, just maybe dig in a little bit on the inpatient side quickly. I understand the difficulty in signing up new customers, certainly on the inpatient side, if those potential customers aren't coming in. But if we just kind of look at existing customers in Q4, what drove utilization there down sequentially? At least that's kind of what it looks like on the top line number, maybe just a little bit of color around existing customer utilization. Yeah, let me take this.

Adrian: Okay.

Good morning, guys. Thanks for taking the questions.

Chase Richard Knickerbocker: So just maybe dig in a little bit on the inpatient side quickly.

Chase Richard Knickerbocker: I understand the difficulty in signing up new customers certainly on the inpatient side, if those potential customers.

Chase Richard Knickerbocker: Our compounding, but if we just kind of look at existing customers in Q4, what drove utilization theyre down sequentially at least that's kind of what it looks like on the topline number maybe just a little bit of color around existing customer utilization.

Adrian Haigh: Yeah, let me take this. So I would say there are a couple of things. One is that Robert touched on the bad debt expense, and he can elaborate further on that. And then, of course, I can just tell you that the difference between our fourth quarter and first quarter sales, without the bad debt expense, is basically three to five patients. So that's sort of the delta you're looking at.

Let me: Yeah, Let me let me take this.

Robert: So I would say there are a couple of things one is that Robert touched on the bad debt expense and he can elaborate further on that and then the second piece of course is.

Robert: I mean I can I can just tell you that the difference between our fourth quarter and first quarter sales.

Robert: The bad debt expense is basically.

Robert: Three to five patients so that's sort of the delta Youre looking at.

Adrian Haigh: And also, historically changed, just to add a little more color. We, you know, if you look at kind of last year as well, maybe there's some seasonality to this as well. We had a stronger fourth quarter than we did in the first quarter. But another thing, it's too early to tell.

Adrian Haigh: [inaudible]

Robert: And also historically changes to also add a little more color.

Robert: We.

unknown: If you look at kind of last year as well maybe there is some seasonality to this as well we had a stronger fourth quarter than we did first quarter.

Adrian Haigh: Brian.

Adrian Haigh: It's too early to tell.

Adrian Haigh: I would just add, Chase, that, as Rosty mentioned, the FDA publishing the Do Not Substitute guidance on the, on the, on the website, on the, on the PEDMARC label side of the website, seems to have had an impact. We've had a couple of really important paediatric hospitals just in the last week order for the first time. So that's an encouraging trend; it's early days, but I think FDA publishing on the website has made an impact. But up until then, it really hadn't.

Adrian Haigh: Got it and then maybe Ralph.

Robert: Chase that as Rusty mentioned, the FDA publishing the do not substitute guidance on.

Adrian Haigh: On the on the website.

Rosty: Padma label side of the web site seems to have had an impact we've had a couple.

Rosty: Really important pediatric hospitals just in the last week have owned it for the first time.

Rosty: So that's an encouraging trend it's early days, but I think FDA publishing on the website has made an impact.

Rostislav Raykov: Right, because the confusion came from us getting this message communicated from these organizations instead of what the FDA is really saying. Now we have to look at what the FDA is really saying. But again, this is very early. We're dealing with a very challenging hospital system with these expensive drug committees, so I want to make sure that we sort of tame expectations on this, and as we're getting some of them to switch, obviously, that will be welcome news, but we have not, obviously, been very, very patient with everyone, and we're working with the FDA to resolve all of this. I think at some point, it will happen, Chase, I just don't know when.

Robert: Up until then.

Robert: Right because the confusion came from we're getting this message communicated from these organizations instead of what is the FDA really saying to now looking what the Fda's really saying, but again. This is very early we're dealing with a very challenging children's hospital system with this.

Chase: Expensive drug committees.

Rostislav Raykov: No.

Chase: I want to I want to make sure that we sort of frame expectations on this and as we're getting some of them to switch obviously that would be welcome news, but we have not obviously, we have been very very patient with everyone and we're working with the FDA to resolve all of this I think at one point what happened Chase I just don't know when.

Chase Richard Knickerbocker: And then, Robert, maybe can you just quantify what that return was as far as a headwind to top-line revenue?

Speaker Change: Understood and then Robert maybe can you just quantify what that return was as far as the headlines.

Rostislav Raykov: A headwind to top line revenue, sorry, and then just to kind of dig in a little bit on those comments.

Chase Richard Knickerbocker: And then just to kind of dig in a little bit on those comments, you have seen some change in behavior in Q2, but it really hasn't been material to revenue yet. But early signs of behavior are changing. Is that kind of the right way to characterize it?

Rostislav Raykov: You have seen some change in behavior in Q2, but really hasn't been material to revenue yet, but early signs of behavior changing is that kind of the right way to characterize it.

Chase Richard Knickerbocker: Correct.

Chase Richard Knickerbocker: with a couple of larger accounts.

Chase Richard Knickerbocker: We had a couple of larger accounts.

Robert C. Andrade: Yeah, I'll start with your question, Chase, as well. Just from a framework perspective, in Q4, we had gross sales of a little over 11 million and reported net sales of 9.7, and in Q1, we had gross sales of $9.7 million and reported net sales of $7.4.

Chase Richard Knickerbocker: Yes, I'll start with your question Chase as well.

Speaker Change: Just from a framework perspective in Q4.

Robert C. Andrade: We had gross sales of a little over $11 million and reported net sales of $9 7 million.

Robert C. Andrade: In Q1.

Speaker Change: We had gross sales of $9 7 million and reported net sales of seven four.

Robert C. Andrade: So that delta and that, you know, that jump up and

Robert C. Andrade: And that, you know, that jump up in percentage was, as I mentioned, largely as a result of product that was due to expiry. We had to give a credit to some distributors.

Robert C. Andrade: So that delta.

Robert C. Andrade: That jump up in percentage was as I mentioned largely as a result.

Speaker Change: Product that due to expiry.

Speaker Change: We had to give a credit.

Robert C. Andrade: To some to some distributors in the quarter.

Chase Richard Knickerbocker: Got it. Thank you.

Robert C. Andrade: Got it thank you.

Chase Richard Knickerbocker: And then maybe just trends.

Speaker Change: And digging in a little bit more there it sounds like Q3 should kind of be our expectation of when that accelerates and really kind of influx in the model and biggest driver there. It probably is going to take some more time too.

Chase Richard Knickerbocker: Obviously get those clinics to stay open. So is the biggest driver of kind of that compendium add or just kind of walk us through what the big kind of unlock on the inflection is there.

Chase Richard Knickerbocker: And then maybe just trends. [inaudible] The big kind of unlock on the inflection is there. Yeah, I mean, I would say...

Rostislav Raykov: Yeah, I mean, I would say it's all of the above that I listed in the previous question. It's really, you know, getting the medical education. I can't stress the importance of that, to be honest, because we have people that want to listen to our message. It's important how well the message is delivered, how well we're engaging. Just remember these physicians are not treating for ototoxicity.

Rostislav Raykov: Yes, I mean, I would say, it's all of the above that I listed in the in the previous question it's really.

Speaker Change: Getting the medical education, I can't I cannot stress the importance of that to be honest because we've got a.

Rostislav Raykov: A.

Rostislav Raykov: We have people that want to listen to our message.

Speaker Change: Important how well the message deliberate however, we're engaging.

Speaker Change: Let's remember these physicians are not treating protocol. They havent seen historically because these are these are centers that are treating basically chemo drugs.

Rostislav Raykov: They haven't treated historically because these are centers that are treating the patients basically with chemo drugs. So that's one that's ongoing. And obviously, we're refining our strategy there. We're learning from them, et cetera. So that engagement piece is critical. Then once they want to work with us, it's obviously all the logistics, the market access, making sure that all these pieces are in place. Compendia is a very important piece of that as well.

Rostislav Raykov: <unk>.

Rostislav Raykov: So so that's one.

Speaker Change: It's ongoing and obviously, we're refining our strategy there we are learning from them et cetera.

Rostislav Raykov: So that engagement piece is critical and then once they want to work with US. It's obviously all the logistics the market access making sure that all of these pieces together it <unk> any very important piece from that as well.

Rostislav Raykov: There's also will be fuel reimbursement pulled through a bunch of things that we kind of think about, and we have seen in actually in a few patients. Again, the sample size is relatively small. So we want to make sure that we have a larger sample size. As I mentioned, these are kind of like mini-pilots, at least in my mind. Because one thing we learned in this company historically, what's worked for us well is when we simplify things and we get it down to the very, very basics. And the very basics here, are you truly treating one patient at a time? And is that a success for the patient, for the center, and ultimately for Fennec? Can you create this win-win-win?

Rostislav Raykov: There is also will be fuel reimbursement both through.

Rostislav Raykov: A bunch of things that we kind of and we have seen actually a few patients again the sample size is relatively small.

Rostislav Raykov: So we want to make sure that we have a larger sample sizes as I mentioned these are kind of like many pilots at least.

Fennec: In my mind, because one thing we learned this company historically, what's worked for US well is when we simplify things and we get it down to like the very very basics and the very basics you argue treating one patient at a time truly and is that a success for the patients for the center and ultimately for Phoenix can you create this win win win and all of these components.

Rostislav Raykov: And all of these components are really critical to that, and we're working through them. And I think there will be an inflection point because when you look at the number of patients that these centers are seeing, it's actually quite encouraging that those numbers are substantially higher than what we've discussed with pediatrics. So this is really the opportunity ahead of us. And then how do we accelerate it once we've established these best practices? How do we accelerate that?

Speaker Change: <unk> are really critical to that and.

Speaker Change: And we're working through those and I think there will be an inflection point because when you look at the number of volume of patients with these centers are seeing it.

Rostislav Raykov: Actually quite encouraging that those numbers are substantially higher than than what we've discussed.

Rostislav Raykov: Pediatrics.

Speaker Change: So this is really the the opportunity ahead of US and then how do we accelerated once we've established best practices, how do we accelerate.

Speaker Change: <unk> debt to the network.

Chase Richard Knickerbocker: And just last for me, maybe Adrian, what you're hearing from the field around the kind of willingness of these clinics to stay open longer, are you getting some pushback there, or is it mainly just kind of working with the administration takes time to kind of change protocols there?

Rostislav Raykov: Okay.

Adrian Haigh: And then just last for me and maybe Adrian what are you hearing from the field around kind of willingness of these clinics to stay open longer.

Chase Richard Knickerbocker: Are you getting some pushback there or is it mainly just kind of working with the administration takes time to kind of change protocols there.

Adrian Haigh: Yes, we're getting pushback when you speak to the people in the clinic because they don't have the authority to stay up longer, so you've got to work your way up through senior management to find the decision maker and then explain things to them, and it just is taking a longer time than initially anticipated. But it's, you know, it's happening, and in the meantime, as I said in the prepared remarks, we're kind of searching for the centers that are open sort of 12 hours plus, because then there are no issues, and that's where we're really seeing uptake now.

Adrian Haigh: Yes.

Speaker Change: We're getting pushback when you speak to the people in the clinic because they don't have the authority to they have longer so you've got you've.

Adrian Haigh: <unk> got to work your way up to the senior management to fund the decision maker.

Senior Management: Then explain things to them.

Adrian Haigh: And it just is taking.

Adrian Haigh: A longer time than initially anticipated.

Adrian Haigh: But it is happening and in the meantime, as I said in the prepared remarks, we've kind of.

Adrian Haigh: We're searching for the centers that are opened sort of 12 hours plus because then there's no issues and thats where were really seeing uptake now.

Adrian Haigh: The other component to this, and this is again credit to the team and how resourceful they are, we also have a relationship with a home infusion network that is able to provide the infusion of PEDMARC to the patient at home. And so we're just starting to utilize that, which is also encouraging because, again, we're providing basically a suite of services. We're problem solving for a lot of them, and so there's initiatives ongoing there as well. But, as Adrian mentioned, it takes a bit of time to work through all of this.

Adrian Haigh: The other components that thanks for the questions guys.

Adrian Haigh: The components of this and I just want them in this is a credit to the team and how resourceful they are.

Adrian Haigh: We're also have a relationship with the home infusion.

Speaker Change: <unk> network that is able to provide.

Speaker Change: The infusion of benchmark.

Adrian Haigh: To the patient at home and so we're just starting to utilize that which is to me is also encouraging because again where were providing basically a suite of services were problem solving for a lot of places.

Adrian Haigh: And so so there's initiatives ongoing there as well, but it's Adrian mentioned this takes a bit of time to work through all of these.

Operator: Thank you. One moment for our next question. Our next question comes from Jason McCarthy with Maxim Group. Your line is open.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Our next question comes from Jason Mccarthy with Maxim Group. Your line is open.

Jason Mccarthy: Hey there. Thank you for taking my question. This is Michael Okunowicz on the line for Jason.

Michael Okunowicz: Thank you for taking my question. This is Michael <unk> on the line for Jason.

Michael Okunowicz: I guess I'd like to see if you could give me a bit more color on how the value proposition varies between the under-15s and the adolescent and young adult population. And then, given that they do require more vials on average, is this something where you'd have to, or where you'd expect you'd need additional discounts to adequately capture this larger market?

Michael Okunowicz: I guess I would like to see if you could give me a bit more color on how the value proposition varies between.

Michael Okunowicz: Under <unk> and the adolescent young adult population and then given that they do require more.

Speaker Change: Vials on average is this something where you would have to or ready to expect you'd need additional discounts to adequately captured this larger market.

Rostislav Raykov: Yeah, it's a very good question. So, let me just sort of compare for you a disease that starts occurring at the age of 15, all the way to the age of 39, which is germ cell testicular cancer. So largely, how you treat the 15-year-old is the same as how you treat the adolescent, the adult, and the adolescent, and as well as the older patient. What changes there, of course, is the body surface area, and our drug is administered based on that.

Michael Okunowicz: Yes.

Rostislav Raykov: It's a very good question. So let me just sort of compare for you.

Rostislav Raykov: Sure.

Rostislav Raykov: Disease, which starts occurring from the age of 15.

Rostislav Raykov: All the way through the age of 39, which is germ cell testicular cancer.

Rostislav Raykov: So largely the.

Rostislav Raykov: How you treat the 15 Europe is the same as how you treat.

Rostislav Raykov: The other lesson the young adult and adolescent.

Rostislav Raykov: As well as the older patient.

Rostislav Raykov: What what changes there of course is the is the body surface area.

Rostislav Raykov: Our drug is administered based on that.

Rostislav Raykov: So typically, you have, and also there's a decision-making process there whether they go with the three cycles or the five cycles, which also could vary. But the bottom line is, kind of, when you compare it to the typical sort of pediatric patient versus you, the young adult or adolescent or older patient, you have three to four times more vials. Again, just to get a flavor for that.

Rostislav Raykov: So typically you have and also there's a decision making there whether they go into three cycles or the fight cycles, which also could vary.

Rostislav Raykov: But bottom line is kind of when you compare it to the typical sort of pediatric patient.

Speaker Change: Versus U the young adult adolescent or older patients.

Rostislav Raykov: You have a.

Rostislav Raykov: Three to four times more vials.

Rostislav Raykov: Again, just to just to get a flavor for that.

Rostislav Raykov: So when I truly mention the difference between the fourth quarter versus the first quarter numbers, it's really a difference of three to five patients. Now in terms of giving discounts, so now recall that you are dealing with the outpatient community, where a meaningful discount is not really necessary because they have mechanisms in place by which they get to. They get to make, you know, over 5% on this upfront.

Rostislav Raykov: So when I truly mentioned the difference between the fourth quarter versus the first quarter numbers.

Rostislav Raykov: It's really a defensive.

Speaker Change: Three patients.

Rostislav Raykov: Okay.

Rostislav Raykov: Now in terms of in terms of giving discounts and so now recall that.

Rostislav Raykov: You are youre dealing with the outpatient community.

Rostislav Raykov: We're.

Speaker Change: A discount.

Rostislav Raykov: From discount is not really necessary because they have mechanisms in place by which they get too.

Rostislav Raykov: They've got to make.

Rostislav Raykov: Over 5% for this on the on the upfront and of course if you.

Rostislav Raykov: And of course, if you, if you, There are also some volume discounts available to them as well, but they're not meaningful relative to the opportunity to treat this patient. And again, these patients are reimbursed based on the NCCN Type 2A recommendation.

Rostislav Raykov: If you.

Rostislav Raykov: There is also some volume discounts.

Rostislav Raykov: Available to them as well, but there, but they're not meaningful realm.

Rostislav Raykov: Relative to the.

Rostislav Raykov: So the opportunity to treat these patients.

Rostislav Raykov: And again these patients are reimbursed based on the.

NCCN: <unk> pathway recommendation.

Michael Okunowicz: All right, thank you. And then, as a follow-up, I just want to ask you a quick housekeeping question. With the EU partnered out now, should we expect that GNA line to start to come in a little bit in subsequent quarters?

Speaker Change: Alright, Thank you and then.

Speaker Change: Follow up I, just wanted to do a quick housekeeping question.

Michael Okunowicz: With the EU partnered out now should we expect that.

Michael Okunowicz: G&A line to start to come in a little bit in subsequent quarters.

Robert C. Andrade: And maybe that's over to you, Robert. Yeah, thanks, Michael.

Michael Okunowicz: All right, thank you very much. Please take a moment for our next question.

Robert: And maybe that's over to you Robert Yeah. Thanks, Michael Yes that is the expectation after this quarter being Q2 that we're in it.

Robert C. Andrade: Yeah, thanks, Michael. Yes, that is the expectation after this quarter being Q2 that we're in, it should come in significantly. So we did see a step up quite a bit in Q1, also some in Q4, and it's just tailing off here in Q2. But then, yes, that's all being assumed by Nordstrom.

Robert C. Andrade: It should come in significantly so we did see a step up.

Robert C. Andrade: Quite a bit in Q1 and also some in Q4 and its just tailing off here in Q2.

Nordstrom: But then yes, that's all being assumed by <unk> going forward.

Speaker Change: Alright, Thank you very much.

Speaker Change: One moment for our next question.

Operator: Our next question comes from Raghuram Selvarajah, with AC Rainwright. Your line is open.

Speaker Change: Our next question comes from Brooks <unk> Silver Roger with H C. Wainwright Your line is open.

Raghuram Selvaraju: Thanks so much for taking my questions. Just two very quick ones.

Raghuram Selvaraju: Thanks, very much for taking my questions. Just two very quick ones. Firstly can you just give us a sense of what.

Raghuram Selvaraju: The repercussions would be if any for those hospitals and hospital systems that deliberately do not elect to follow the FDA guidance and secondly, if you can maybe elaborate upon the level of sales and marketing infrastructure that <unk> has communicated to you we'll be play.

Raghuram Selvaraju: Firstly, can you just give us a sense of what the repercussions would be, if any, for those hospitals and hospital systems that deliberately do not elect to follow the FDA's guidance? And secondly, could you maybe elaborate upon the level of sales and marketing infrastructure that Norgene has communicated to you will be placed in the service of commercializing peg marxie in its territory? Thank you.

Raghuram Selvaraju: And the service of commercializing pegged moxie and its territory. Thank you.

Rostislav Raykov: Thank you, these are these are great questions so the repercussions really are It's really, are they causing harm, and what is that harm? And ultimately...

Speaker Change: Thank you.

Rostislav Raykov: Great questions. So the repercussions really are.

Speaker Change: It's really are they causing harm and what the armies.

Rostislav Raykov: And ultimately.

Rostislav Raykov: The parents filing a suit against the hospital for their child being treated with an unauthorized copy of an FDA-approved drug, which clearly states on its label, do not substitute. Now there is a public message announcement as to why it's not a good idea to substitute. In terms of Fennec repercussions, legal repercussions, we're exploring all these options, but as you know, typically in business, it's not a best practice to go after your customers.

Rostislav Raykov: <unk>.

Speaker Change: The the parents filing a suit against the hospital.

Rostislav Raykov: For for being for their child being treated with the unauthorized copy.

Rostislav Raykov: FDA approved drug, which clearly states on its label do not substitute and now there is a public message announcements as to why it's not a good idea to substitute.

Rostislav Raykov: In terms of.

Rostislav Raykov: Fenech.

Rostislav Raykov: Precautions legal repercussions, we're exploring all of these options, but as you know typically business he's not he's not a best practice to go after your customers.

Rostislav Raykov: So again, we have been very, very patient, and we're working through the FDA with that. Uh... On the Norgene transaction, maybe Adrian can elaborate a little more in terms of their commitment to PEDMARC and how important that is for them in Europe, in particular.

Rostislav Raykov: So again, we have been very very patient and we're working through the FDA with that.

Rostislav Raykov:

Adrian Haigh: On the on the <unk> transaction.

Rostislav Raykov: Maybe Adrian can elaborate a little more in terms of their commitment to <unk>, Mark and how important that is for them.

Adrian Haigh: Yes, it's one of the reasons why we picked Noregene, in that they promised and have committed to resource the launch appropriately, and what we understand is that it's north of 50 FTEs, and what I consider to be a very appropriate level of spend in terms of promotional results. So it's, you know, much, much more firepower than Fennec could ever have done on our own. I'm confident things are going to go off very well. And, as a reminder, the launch is scheduled in Germany in October.

Rostislav Raykov: In Europe in particular.

Adrian Haigh: Yes, it's one of the reasons why we paid no ti.

Adrian Haigh: They.

Adrian Haigh: They promised and have committed to resource the launch.

Adrian Haigh: <unk>.

Adrian Haigh: Appropriately.

Noregene: What we understand is that its north of 50 Ftes.

Adrian Haigh: And what I consider it to be.

Adrian Haigh: Appropriate level.

Adrian Haigh: Spend in terms of promotional results.

Adrian Haigh: So it's much much more firepower than fenech could ever have done on our own.

Adrian Haigh: So I'm confident things are going to go off very well and as a reminder.

Adrian Haigh: The launch is scheduled in Germany.

Adrian Haigh: October.

Rostislav Raykov: Thank you. I'm not showing any further questions at this time. I'd like to turn the call back over to Rossi for any closing remarks.

Adrian Haigh: Thank you I'm not showing any further questions at this time I'd like to turn the call back over to Rusty for any closing remarks.

Rostislav Raykov: Thank you all for today, and we look forward to updating everyone on our progress this quarter and beyond. Thank you for your patience with us, and stay tuned. We are working very hard to get this right.

Rostislav Raykov: Yes.

Rossi: Thank you all for.

Rossi: For today, and we look forward to updating everyone on our progress.

Rostislav Raykov: This quarter and beyond but thank you for your patience with us and stay tuned we are working very hard to get this right. Thank you.

Operator: Ladies and gentlemen, this concludes today's presentation. You may now disconnect and have a wonderful day.

Operator: Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

Operator: Okay.

Operator: [music].

Operator: Okay.

Operator: Okay.

Operator: [music].

Operator: Okay.

Operator: [music].