Q3 2024 Fennec Pharmaceuticals Inc Earnings Call
Speaker Change: Good morning, ladies and gentlemen, and welcome to FANUC Pharmaceuticals' third quarter 2024 earnings and corporate update conference call. At this time, all participants are in listen-only mode.
Later, we will conduct a question and answer session and instructions on how to participate will begin at that time. If anyone requires operator assistance during today's call, please press star zero on your telephone.
As a reminder, today's conference call is being recorded. Now, I would like to turn the conference over to Fenex Chief Financial Officer, Robert Andrade.
Robert Andrade: Thank you, operator, and good morning, everyone. We appreciate you joining us today for Fennec Pharmaceuticals' third 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 is our Chief Executive Officer and Board Member Jeff Hackman.
Speaker Change: As a reminder, Jeff joined Fennec on August 5th, and in just a few short months has made significant progress in positioning the company for near-term and future growth and sustainability.
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. Reference to these risks and uncertainties are made in today's press release.
Speaker Change: and disclosed in detail in the company's periodic and 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.
Speaker Change: We specifically disclaim any obligation to update or revise any forward-looking statements.
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. Now with that behind us, I will now turn the call over to Jeff Hackman. Jeff?
Thank you, Robert, and good morning, everyone.
Jeff Hackman: This morning I'm going to discuss the recent progress that we've been making, along with some key developments, including developments around market expansion, our academic endorsements,
New Demographic Interests
Jeff Hackman: our educational investments, our operational efficiencies, the strengthening of our leadership, and most importantly, our execution, all of which will drive meaningful growth in the quarters ahead.
Speaker Change: So since joining Fennec in August, as Robert mentioned, I've conducted several planning sessions with our senior leadership teams across multiple functional areas.
Speaker Change: I've done a detailed deep dive in each territory of the business.
Jeff Hackman: I know where we are getting our business, and I know where we are not.
We're making adjustments.
including selective modifications to some of the historical spending that we've been doing.
Jeff Hackman: We also are going to align our goals and our actions with the company's long term vision to ensure that all eligible platinum treated cancer patients are spared further hardships by protecting their ears against the profound threat of hearing loss.
Jeff Hackman: I've put into place some strategic imperatives and objectives with my team to drive execution and growth in the coming months and the years to come. These are five pillars that are going to drive our brand vision for Pedmark.
Which, again, is a reminder, it's the first and only therapy approved in the U.S. and Europe to reduce the risk of ototoxicity and permanent hearing loss associated with Cisplatin treatments.
Our first imperative is increasing the awareness.
around the unmet need.
Jeff Hackman: with the unmet patient need and continuing to drive the oncologist to recognize the importance of preventing CIO.
Jeff Hackman: Our second initiative is cementing PEDMARC as the standard of care for all CIO prevention.
Jeff Hackman: Third is PEDMARC's adoption as HCPs, beyond just the oncologists, but gain confidence and first and continued positive experience throughout the offices with PEDMARC.
Jeff Hackman: Fourth is across having advocacy, payers, providers, ensure seamless access for our product.
And fifth, and equally important, is activation.
Jeff Hackman: especially around patients and caregivers, activating them through disease education and demand for PEDMARC.
Jeff Hackman: One of the most exciting developments that we're seeing in addition to the pediatrics this quarter is the proof-of-concept emerging in the adolescent and young adult market segment.
Jeff Hackman: The opportunity in the AYA segment is significant, with at least 10,000 patients treated annually with Cisplatin, including primary tumors such as germ cell tumors and thyroid tumors.
Jeff Hackman: Over the months, I've personally met with some of these opinion leaders in AYA, and I know many of them for years. And I've listened to them and have a better understanding of how we can help them and their patients avoid hearing loss. And the physicians that have used PEDMARC and that are reporting, they are reporting compelling outcomes.
Jeff Hackman: So, let me go into more detail on the AYA market. The market potential for AYA is much greater than the size of the pediatric market, and it has a favorable reimbursement profile via the outpatient reimbursement market. In fact, in the third quarter, we surpassed greater than 90% reimbursement for PEDMARC in the AYA population patients.
Jeff Hackman: including the third quarter, we've been very encouraged by the response from the AYA treating physicians to PEDMARC. Most of them, while being actively or being acutely aware of the hearing loss caused by cisplatin, were not aware of the availability of PEDMARC as a preventative treatment.
Jeff Hackman: Again, as a reminder, PEDMARC is indicated to reduce the risk of ototoxicity associated with cisplatin in pediatric patients one month of age and older with localized non-metastatic solid tumors.
Jeff Hackman: As you know, PEDMARC is recommended for the AYA population by the NCCN or the National Comprehensive Cancer Care Network.
Thank you for watching. Have a great day.
Speaker Change: So what gives us confidence in the proof of concept, the AYA population in Q3? So what is showing us confidence here?
Jeff Hackman: After several quarters of expanded awareness and activities focused on this community, the third quarter achieved multiple patients now being administered PEDMARC and their respective successful reimbursement with major health plans.
Jeff Hackman: Further, we were able to partner with Orsini, a specialty pharmacy company, to administer multiple AYA patients within the Orsini partnership and platform at their homes.
Jeff Hackman: As a reminder, the Orsini partnership enables home administration and white bag delivery to the hospital with direct billing to the insurance provider or to Medicaid.
Jeff Hackman: This is all great news, and it's the beginning of what we believe is a strong, sustainable revenue stream.
Jeff Hackman: We expect this segment to ramp up over the coming quarters. And as an example of the opportunity in AYA, we have seen PEDMARC vials per patient increasing as high as 40 vials per patient, and the centers repeating their orders for PEDMARC.
Jeff Hackman: Further, we are seeing adoption of PEDMARC in select new major academic centers versus substitutions or compounded versions of STS, which pose potential serious health risks to patients.
Jeff Hackman: Academic institutions are critical in setting clinical standards so this transition and endorsement by these select institutions is powerful and it's a signal for broader market acceptance.
Jeff Hackman: This also opens up opportunities in research settings, positioning us well for potential future expansion.
Jeff Hackman: We're working on strategic initiatives to raise awareness in the with the risk of ototoxicity or permanent hearing loss associated with cisplatin treatment.
Jeff Hackman: to drive adoption of PEDMARC to ultimately help address this significant unmet need for cancer patients. These efforts include key opinion leader engagements
Educational Initiatives, and Digital Outreach.
Jeff Hackman: all which are creating broader ecosystems for PEDMARC. We expect these initiatives to continue generating value over the long term and the quarters to come.
Jeff Hackman: In terms of the commercial launch and progress that we're making with PEDMARC outside the U.S., following the exclusive licensing agreement announcement we executed in March with Norgene to commercialize PEDMARC-C, the product is expected to launch in Germany and in the U.K. in the coming months.
Jeff Hackman: This will generate an additional revenue source for FENIC in 2025. We look forward to providing future updates as the launch progresses in these countries.
Jeff Hackman: Also, on the ex-US front, the investigator-initiated trial in Japan evaluating PEDMARC was fully enrolled
Jeff Hackman: as of October 2024. The clinical trial, called FTS-J01, evaluates efficacy and safety of PEDMARC in reducing ototoxicity induced by cisplatin in children and AYAs in localized solid tumors.
Jeff Hackman: The primary endpoint of this trial is to assess the frequency of hearing impairment at the end of the treatment.
Jeff Hackman: Results of the trial are expected sometime in 2025 with the potential evaluation of both the registration and or partnering or licensing of PEDMARC in Japan thereafter.
Jeff Hackman: Finally, we've significantly strengthened our executive leadership team with appointments of a few folks and I'd like to talk about them now.
Jeff Hackman: First is Pierre Sayad, who is now our chief medical officer.
Jeff Hackman: There's Terry Evans, who is now our Chief Commercial Officer, and Christiana Chaffee, our Chief Strategy Officer.
Jeff Hackman: These roles are critically important for PHENIC. Pierre will lead Medical Affairs, Medical Information, our KOL Engagement, and Regulatory.
Jeff Hackman: Terry will lead our sales management, sales training, operations, trade, GPO, and field reimbursement.
Jeff Hackman: and Christy will lead strategy, marketing, business operations, corporate development, business development, and alliance management.
These are all very experienced and multi-talented leaders.
Jeff Hackman: and we expect them to make a big impact on CENIC as we embark on a new chapter in our organization's evolution. We're delighted to have Pierre, Terry, and Christy on board.
Charles Duncan, Dipesh Patel, Chase Knickerbocker,
Jeff Hackman: All of them are seasoned biopharmaceutical industry executives, as I mentioned, with proven clinical, commercial, sales, operation, and oncology market experience.
Jeff Hackman: Their leadership, combined with Fenech's talented employee base, will significantly accelerate our ability to build upon and seamlessly execute our commercial strategy for PEDMARC.
Jeff Hackman: As members of the executive leadership team, Pierre, Terry, and Christy will join Robert to partner with me to ensure cross-functional alignment, operational efficiencies, and executional excellence, all while creating high-performing teams and strengthening our culture.
of this organization.
Jeff Hackman: Thank you so much. And now I'm going to turn it back over to Robert to go through some of the financials of the quarter. Robert?
Thank you, Jeff.
Robert Andrade: Our press release contains details of our financial results for the third quarter of 2024, which can be viewed on the Investors and Media section of our website.
Robert Andrade: As customary, rather than read through all of those details, my comments today will focus on some key financial results.
Jeff Hackman: For the first nine months of 2024, the company has recorded approximately 22 million in net product sales, which is more than all of 2023 net product sales.
Jeff Hackman: Specifically for the quarter, the company recorded net product sales of 7.0 million, compared to 6.5 million in the comparable quarter in 2023.
Jeff Hackman: General and administrative expenses for the third quarter of 2024 were $6.1 million, which compares to $3.8 million in the comparable quarter of 2023 and $6.9 million in the second quarter of 2024.
Jeff Hackman: G&A increases year-over-year can be attributed to non-cash stock compensation related both to the separation of our CEO and our new CEO.
Jeff Hackman: Further, cash severance related to our previous CEO and ongoing IP litigation expenses.
Jeff Hackman: Selman and marketing expenses include renumeration of our sales and marketing employees.
Jeff Hackman: dollars spent on marketing campaigns such as sponsorships, trade shows and presentations, and any activities to support marketing and sales activities.
Jeff Hackman: The company recorded $4.6 million in selling and marketing expenses in the third quarter of 2024.
Jeff Hackman: compared to $4.7 million in the second quarter of 2024 and $3.4 million in the comparable quarter in 2023.
Jeff Hackman: Selling and marketing expenses continued to focus on awareness and education with increased marketing expenses related to AYA initiatives on a year-over-year basis.
And finally, to our cash position.
Jeff Hackman: We ended the third quarter with approximately $40.3 million in cash, cash equivalents, and investment securities.
Jeff Hackman: Excluding an approximately $0.7 million severance payment to our previous CEO, cash would have been nearly $41 million, or a decrease of approximately $2 million for the quarter.
Jeff Hackman: The strength and sustainability of our operating model is evident this quarter, as this was the smallest operating cash decrease for the company since launch, and speaks to the operational efficiency and potential cash contribution from a growing and sustainable revenue base.
Jeff Hackman: We anticipate that our cash and cash equivalents and investment securities as of September 30, 2024, will be sufficient to fund our planned operations into at least 2026.
Before we open the call for questions.
I'm going to turn it back to Jeff for questions.
closing remarks.
Thank you, Robert.
So, in closing,
Jeff Hackman: We are embarking on a whole new chapter in phoenix evolution.
Speaker Change: As I've dug into the business over the last 90 days, I'm even more excited to lead Fennec in this new role and direct this organization to continued growth efforts in the future.
Jeff Hackman: We have an incredible opportunity with Pedmark and I'm excited about the potential we have here to drive the product and our company forward.
Raghuram Selvaraju
Jeff Hackman: We believe the developments I've outlined, market expansion, academic endorsements, the new demographic interests, the educational investments, the operating efficiencies, the strong leadership and execution will all drive meaningful growth in the quarters ahead. We're excited about the future.
Jeff Hackman: and we're excited about doing this together. I would like to thank you all today for joining our call and the continued support for FANUC. And we look forward to updating all of you on our ongoing commercial progress and corporate milestones on future quarterly calls.
Speaker Change: And with that, operator, I will now open it up to questions.
Speaker Change: At this time, I would like to remind everyone, in order to ask a question, please press star 1 on your telephone keypad.
Speaker Change: We do request for today's session that you please limit to one question and one follow-up. We will pause for just a moment to compile the Q&A roster.
Speaker Change: And your next question or your first question comes from the line of Chase Knickerbocker with Craig Hallum. Your line is open.
Good morning. Thanks for taking the questions.
Speaker Change: I guess just first to start on the AYA side of things, Jeff, do you feel like you have everything in place from a standpoint of really being able to accelerate and drive growth in that market? Maybe give us an update on kind of the compendium, and again, do you think it's kind of open season for you guys there?
Speaker Change: Does anything else need to fall into place, and should we start to expect, you know, some pretty meaningful growth from that market kind of sequentially here kind of per your commentary on the call today. Thanks.
Yep.
Speaker Change: Thank you, Chase. Yeah, we do believe the commercial opportunity is significant for PEDMARC and AYA.
Speaker Change: We're in the process now, and especially as we brought new talent in here.
Speaker Change: around not only the marketing but also the medical side that their impact and the value that these folks are going to bring will be incremental to moving this opportunity forward.
Speaker Change: So, to answer your question, and looking forward, yes, we believe that this is a significant opportunity for us, no doubt, and the progress that we've made already in this quarter
Speaker Change: gives us and gives me the signal that we've got a potential here and we've got a significant growth opportunity.
Certainly and I guess
Speaker Change: You know, if we think about the potential kind of revenue per patient there with the weight-based dosing...
Speaker Change: It seemingly doesn't take many patients or kind of much initial success to kind of really start to drive the model.
Speaker Change: You know, from that perspective, do you feel like you have enough docs who you've gotten in front of where we can kind of start to expect in Q4 that, you know, those patients start to flow through? And then just kind of overarching that question, I think the street's having a little bit of difficulty kind of modeling your business in the near term. Anything that you can kind of help us with, Robert, as far as how to think about Q4, particularly with kind of these AYA comments today?
Thank you very much.
Thanks.
Jeff Hackman: I'll comment first, Robert, and then I'll shoot it over to you. You know, in Q3, we were able not only to begin to have patients
Speaker Change: in the AYA segment put on PEDMARC, but we also saw significant reimbursement, which was also really critically important.
Robert Andrade: So the insights from this market, from what we're seeing, is the incidence is there, the population is open, and the physicians want to hear the information.
Robert Andrade: There is an awareness gap, of course, as you can imagine in the AYA market, but that's an opportunity for us, especially in this segment. We know there's potentially upwards of 10,000 patients that are treated annually with Cisplatin.
Robert Andrade: So, and these are across a bunch of multiple tumor types.
Robert Andrade: So, we know that ototoxicity exists in this population. We know that physicians are interested as we bring them in and educate them. And so, I believe that this is a significant opportunity for the organization in quarters to come.
Robert, do you want to comment on the fourth quarter?
Robert Andrade: Yes, thank you. Thank you, Chase, and thanks for the question. You know, as you could hear in the script and in our commentary, for Q3 we were quite pleased with the momentum we're building, specifically with new customers, and that's both in the AYA and in the pediatric.
Robert Andrade: So, during the quarter, we had several new customers, including large pediatric institutions that had never ordered PedMart before.
Robert Andrade: and obviously the proof of market within the AYA. So, as we get these new customers, as we get repeat orders from what was new customers and hopefully additional customers, we think this is going to be the foundation of growth in the quarters to come.
[inaudible]
Wainwright, your line is open.
Speaker Change: Hi, thanks very much for taking my questions. Just three quick ones here.
Jeff, I was wondering if you could comment on any...
Robert Andrade: and what you expect to potentially accelerate that trend going forward into the future.
Robert Andrade: Secondly, I don't know if you're in a position at this juncture to comment generally and qualitatively on what FENIC anticipates to be the key business development objectives and priorities going forward from a strategic standpoint. And then finally, I don't know whether either Jeff or Robert, you want to talk about the status of ongoing IP litigation at this time and when you expect a resolution on that front.
Thank you.
Sure.
Thank you for your questions. I appreciate it.
Robert Andrade: You know, about what we're seeing on the pediatric side, and we, Robert mentioned it, but we are seeing, and we have multiple institutions this past quarter, where they're starting to move towards PEDMARC, where they haven't, and they were compounding in the past. There are multiple reasons why.
Robert Andrade: In some cases, in particular, and I won't mention the hospital, but there was a side effect.
Robert Andrade: that move them then towards PEDMARC, a side effect of compounding.
Robert Andrade: And so, you know, for me, you know, I've been around a lot of these institutions for a number of years, and as we've said, the timing, in some cases, to get, you know, through
Robert Andrade: everybody that you need to have conversations within these institutions to and consistent conversations as well as targeting P&T committees
as well as getting access.
Speaker Change: In some cases, we're starting to see some of the early work that was done at Fennec coming to fruition there. And I think that that's, you know, that's one of the things that we're seeing. And your second, repeat your second question again, sorry.
Speaker Change: I was just wondering if you could provide us with some qualitative color regarding what you see as the business development priorities and principle initiatives for FENIC going forward at this point.
Speaker Change: Sure, sure. Yeah, I mean there are some open territories that we're evaluating and as we said about Japan
Robert Andrade: It's an evaluation that we will conduct here in the first half of next year.
Robert Andrade: is where, you know, where we go with that market and is there a potential opportunity for...
for options there.
Robert Andrade: For options. There there are multiple things that obviously can be done in a market the size of Japan and now but the trials completed enrollment we will soon in some time next year in the first half of next year start to get indications of how the trial the.
Robert Andrade: There are multiple things that obviously can be done in a market the size of Japan and now that the trial has completed enrollment, we'll soon in sometime next year, in the first half of next year, start to get indications of how the trial, the results of that trial. And so again, stay tuned on where potentially that could go from a business development standpoint.
Robert Andrade: The results of that trial, and so again stay tuned on on where potentially that could go from a business development standpoint.
Robert Andrade: Robert do you want to take the final question Yeah on IP.
Robert Andrade: Robert, do you want to take the final question on IP? Yeah, thank you, Jeff. And I'll just add one other thing in terms of business development. We're very excited, and we announced the Norgene deal back in March.
Robert Andrade: Jeff and I will just add one other thing in terms of business development. While we were very excited and we announced the <unk> deal back in March.
Robert Andrade: As we've made progress, as we've seen the progress of Norgene, we're quite enthusiastic in terms of their launch and being able to report their progress in 2025.
Robert Andrade: As we've made progress as we've seen the progress of Nord gene.
Robert Andrade: We're quite enthusiastic in terms of their launch and being able to report their progress in 2025.
Robert Andrade: And I do believe that that's the part that's that's not fully appreciated by the market is that is that value.
Robert Andrade: And I do believe that that's a part that's not fully appreciated by the market, is that value that's going to be attributable to Fennec in the future.
Robert Andrade: That's gonna be attributable to the fennec in the future.
Robert Andrade: With respect to the IP, as you know, it's prudent for me not to comment publicly too much, except for to say the case is ongoing.
Robert Andrade: With respect to the IP as you know, it's prudent not to meet it for.
Robert Andrade: For me not to comment publicly too much except for to say the cases ongoing.
Robert Andrade: As you've probably seen in our filings our IP portfolio has strengthened.
Robert Andrade: As you've probably seen in our filings, our IP portfolio has strengthened significantly, not only this year, but over the last two years, with six orange book patents in our portfolio. So stay tuned there, and thank you for the question.
Robert Andrade: Significantly not only this year, but over the last two years with six Orange book patents in our portfolio. So stay tuned there.
Robert Andrade: And thank you for the question.
Speaker Change: Thank you.
Thank you.
Speaker Change: I will now turn the call back to Jeff Hoffman for closing remarks.
Speaker Change: I will now turn the call back to Jeff Hackman for closing remarks.
Jeff Hackman: Thank you so much so.
Speaker Change: Thank you so much. So I want to thank all of you for for joining the call today and also thank many of you for your continued support and thank.
Jeff Hackman: Want to thank all of you for joining the call today.
Speaker Change: And also thank many of you for your continued support in <unk>.
Speaker Change: We look forward to updating you more.
Speaker Change: You know, we look forward to updating you more, either on one-on-one calls or ongoing commercial calls that we'll have over the quarter.
Speaker Change: One one on one calls our ongoing commercial.
Speaker Change: Calls that youll that will have over the quarter.
Speaker Change: And we look forward to future milestones achieved and as well.
Speaker Change: And we look forward to future milestones achieved and as well our future quarterly calls where we can update you as well. So thank you so much. We appreciate it. And operator, I'm going to throw it back to you to close the call.
Speaker Change: Our future quarterly calls, where we can update you as well so thank you. So much we appreciate it and.
Speaker Change: And operator, I'm going to throw it back to you.
Speaker Change: And to close the call.
Speaker Change: Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.
Speaker Change: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
Please wait, the conference will begin shortly.
Speaker Change: Please wait the conference will begin shortly.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Sure.
Speaker Change: [music].
And until next time, Keep e Follow-ing!