What changed in this filing

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Item 1. Financial Statements

2020-08-05 compared with 2020-05-14 · 350 added, 244 removed, 214 unchanged (74% of the section changed)

3 unchanged sentences

Dollars and shares in thousands)

June 30, 2020

Current assets:

12 unchanged sentences

Total current liabilities

Commitments and Contingencies (Note 7)

Stockholders' equity:

8 unchanged sentences

The accompanying notes are an integral part

of these unaudited interim condensed consolidated financial statements.

Fennec Pharmaceuticals Inc.

Condensed Consolidated Statements of

Dollars and shares in thousands,

except per share amounts)

of these unaudited condensed consolidated financial statements.

Fennec Pharmaceuticals

Condensed Consolidated

Statements of Operations

and shares in thousands, except per share amounts)

Three Months Ended

Six Months Ended

Operating expenses:

2 unchanged sentences

Loss from operations

Other (expense) income :

Other income (expense):

Other gain/(loss)

Amortization expense

Interest income and other

Total other income, net

Total other income/(expense), net

Basic net loss per common share

Diluted net loss per common share

Weighted-average number of common shares outstanding,

Weighted-average number of common shares outstanding, basic

Weighted-average number of common shares outstanding, diluted

The accompanying notes are an integral part

of these unaudited interim condensed consolidated financial statements.

of these unaudited condensed consolidated financial statements.

Fennec Pharmaceuticals Inc.

2 unchanged sentences

Three Months Ended

Six Months Ended

Cash flows used in:

Operating activities:

Adjustments to reconcile net loss to net cash used in operating

Adjustments to reconcile net loss to net cash used in operating activities:

Amortization of deferred issuance cost

8 unchanged sentences

Financing activities:

Issuance of shares, net of issuance costs

Capitalized deferred issuance cost

Net cash used in financing activities

Decrease in cash and cash equivalents

Net cash provided by financing activities

Increase/(decrease) in cash and cash equivalents

Cash and cash equivalents - Beginning of period

Cash and cash equivalents - End of period

Supplemental non-cash disclosure:

Non-cash deferred issuance cost (warrant value)

Non-cash deferred issuance

cost (warrant value)

The accompanying notes are an integral part

of these unaudited interim condensed consolidated financial statements.

of these unaudited condensed consolidated financial statements.

Fennec Pharmaceuticals Inc.

1 unchanged sentence

Stockholders' Equity

Three Months Ended March 31, 2020 and

Three and Six-Months Ended June 30,

2020 and 2019

dollars and shares in thousands)

1 unchanged sentence

Stockholders'

Number (Note 4)

Balance at December 31, 2018

1 unchanged sentence

Stock options issued to contractors

Warrants issued to consultants

Balance at March 31, 2019

Stock options issued to employees

Stock options issued to contractors

Balance at June 30, 2019

Balance at December 31, 2019

1 unchanged sentence

Stock options issued to contractors

Warrants issued to consultants

Balance at March 31, 2020

Issuance of securities

Stock options issued to employees

Stock options issued to contractors

Balance at June 30, 2020

The accompanying notes are an integral part

of these unaudited interim condensed consolidated financial statements.

of these unaudited condensed consolidated financial statements.

Fennec Pharmaceuticals Inc.

1 unchanged sentence

Consolidated Financial Statements

dollars and shares in thousands,

except per share information)

dollars and shares in thousands, except per share information)

Nature of Business and Going Concern

Fennec Pharmaceuticals

Fennec Pharmaceuticals Inc.

(“Fennec,”

2 unchanged sentences

“us,”

or “our”) is a biopharmaceutical

company focused on the development of PEDMARK TM (a unique formulation of Sodium Thiosulfate) for the prevention of platinum-induced

ototoxicity in pediatric cancer patients.

We incorporated under the Canada Business Corporations Act ("CBCA”) in

September 1996.

Effective on August 25, 2011, the Company continued from the CBCA to the Business Corporations Act (British Columbia)

(the “Continuance”).

The Continuance was approved by our shareholders at our June 2011 Annual and Special Meeting and

by resolution of the Board of Directors on August 10, 2011.

or “our”) is a biopharmaceutical company focused on the development of PEDMARK TM

(a unique formulation of sodium thiosulfate) for the prevention of platinum-induced ototoxicity in pediatric cancer patients.

incorporated under the Canada Business Corporations Act (“CBCA”) in September 1996.

Effective on August 25,

2011, the Company continued from the CBCA to the Business Corporations Act (British Columbia) (the “Continuance”).

The Continuance was approved by our shareholders at our June 2011 Annual and Special Meeting and by resolution of the Board

of Directors on August 10, 2011.

We have four wholly-owned subsidiaries:

Oxiquant, Inc.

and Fennec Pharmaceuticals,

Inc., both Delaware corporations, Cadherin Biomedical Inc., a Canadian company and Fennec Pharmaceuticals (EU) Limited (“Fennec

and Fennec Pharmaceuticals, Inc.,

both Delaware corporations, Cadherin Biomedical Inc., a Canadian company and Fennec Pharmaceuticals (EU) Limited (“Fennec

Limited”), an Ireland company formed in 2018.

With the exception of Fennec Pharmaceuticals, Inc., all subsidiaries are inactive.

These unaudited interim condensed consolidated

financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America

(“US GAAP”) that are applicable to a going concern which contemplates that the Company will continue in operation for

the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business.

During the three-months ended March 31,

2020, the Company incurred a loss from operations of $3,835.

At March 31, 2020, it had an accumulated deficit of $147.9 million

and had experienced negative cash flows from operating activities during the three-months ended March 31, 2020 in the amount of

On February 1, 2019, Fennec entered into

a Loan and Security Agreement with Bridge Bank, a division of Western Alliance Bank, an Arizona corporation, pursuant to which

the Bank agreed to loan $12.5 million to the Company, to be made available upon New Drug Application NDA approval of PEDMARK by

no later than September 30, 2020.

The proceeds from the loan will be used for working capital purposes and to fund general business

requirements in accordance with the terms of the Loan and Security Agreement.

Interest under the Term Loans shall bear interest,

on the outstanding daily balance thereof, at a floating per annum rate equal to the Effective Interest Rate (as defined in the

Loan and Security Agreement) which is equal to the sum of the Prime Rate published in the Wall Street Journal (currently 3.25%)

plus one percent (1.00%).

The debt facility is to have interest-only monthly payments due for the first eighteen months from the

funding date and then monthly principal and interest payments are due through the remainder of the term which has a maturity date

of October 1, 2023.

In connection with the facility, Fennec granted Bridge Bank a warrant to purchase up to 39,130 common shares

at an exercise price of $6.80 per common share, for a term of ten years from the date of issuance, subject to early termination

under certain conditions.

The Company believes

the aforementioned debt facility, plus funds raised subsequent to March 31, 2020 in the public offering which closed in May of

2020, provides sufficient funding for the Company to carry-out its planned activities including NDA approval and the commencement

of commercialization efforts for the at least the next twenty four months as it continues its strategic development of PEDMARK TM .

These financial statements do not reflect

the potentially material adjustments in the carrying values of assets and liabilities, the reported expenses, and the balance sheet

classifications used, that would be necessary if the going concern assumption were not appropriate.

With the exception of Fennec Pharmaceuticals, Inc., all subsidiaries are

These unaudited interim condensed consolidated financial statements

have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”)

that are applicable to a going concern which contemplates that the Company will continue in operation for the foreseeable future

and will be able to realize its assets and discharge its liabilities in the normal course of business.

During the three and six-months ended June 30, 2020, the

Company incurred a loss from operations of $4,845 and $8,680, respectively.

At June 30, 2020, it had an accumulated deficit

of $152.7 million and had experienced negative cash flows from operating activities during the three and six-months ended June 30,

2020 in the amount of $3,116 and $6,865, respectively.

On May 5, 2020, the Company announced

the completion of an underwritten public offering of 4,800,000 common shares at a public offering price of $6.25 per share.

addition, Fennec issued an additional 660,204 common shares in connection with the partial exercise of the underwriters’

over-allotment option.

The approximate total gross proceeds from the offering was $34.1 million ($32.0 million net of commissions,

fees and issue costs).

On February 1, 2019, Fennec entered into a Loan and Security

Agreement with Bridge Bank, a division of Western Alliance Bank, an Arizona corporation, pursuant to which the Bank agreed to loan

$12.5 million to the Company, to be made available upon New Drug Application NDA approval of PEDMARK by no later than September 30,

The proceeds from the loan will be used for working capital purposes and to fund general business requirements in accordance

with the terms of the Loan and Security Agreement.

Interest under the Term Loans shall bear interest, on the outstanding daily

balance thereof, at a floating per annum rate equal to the Effective Interest Rate (as defined in the Loan and Security Agreement)

which is equal to the sum of the Prime Rate published in the Wall Street Journal (currently 3.25%) plus one percent (1.00%).

debt facility is to have interest-only monthly payments due for the first eighteen months from the funding date and then monthly

principal and interest payments are due through the remainder of the term which has a maturity date of October 1, 2023.

connection with the facility, Fennec granted Bridge Bank a warrant to purchase up to 39 common shares at an exercise price of $6.80

per common share, for a term of ten years from the date of issuance, subject to early termination under certain conditions.

On June 26, 2020, Fennec announced an amendment to the

Loan and Security Agreement with Bridge Bank.

This amendment provides Fennec with an $18 million debt facility comprised

of two term loans.

Term Loan A consists of $12.5 million to be funded upon New Drug Application (NDA) approval of PEDMARK TM

Term Loan B consists of $5.5 million to be funded upon the occurrence of a revenue event in 2021.

The interest-only

period for the facility has the ability to be extended from 18 months to 24 months from the funding of Term Loan A, provided that

Term Loan B is funded, and certain conditions are met.

The fee in connection with Loan B, can either be 2.13% of the Loan B amount

in cash, or the Company can issue a warrant with a value equal to 3.25% of the Loan B amount.

The Company has until August 6,

2020 to decide how to pay for the extended facility.

These statements reflect the fee being settled with a warrant.

Under Accounting

Standards Codification ("ASC") 470-50, Modifications and Extinguishments, the amendment was considered a modification.

As such, the Company is amortizing the loan fee and the value of the warrant over the remainder of the loan term.

The Company intends

to use the proceeds from the loans to provide working capital for commercialization activities for PEDMARK TM upon

NDA approval.

Fennec Pharmaceuticals Inc.

Notes to the Unaudited Interim Condensed

Consolidated Financial Statements

dollars and shares in thousands, except per share information)

The Company believes the aforementioned debt facility, plus

funds raised in the public offering which closed in May 2020, provides sufficient funding for the Company to carry-out its

planned activities including NDA approval and the commencement of commercialization efforts for at least the next twenty months

as it continues its strategic development of PEDMARK TM .

These financial statements do not reflect the potentially material

adjustments in the carrying values of assets and liabilities, the reported expenses, and the balance sheet classifications used,

that would be necessary if the going concern assumption were not appropriate.

Significant Accounting Policies

Basis of presentation

The accompanying unaudited interim condensed

consolidated financial statements have been prepared in accordance with US GAAP and are the responsibility of the Company’s

These unaudited interim condensed consolidated financial statements do not include all of the information and notes

required by US GAAP for annual financial statements.

Accordingly, these unaudited interim condensed consolidated financial statements

should be read in conjunction with the Company's audited consolidated financial statements and notes filed with the Securities

and Exchange Commission (“SEC”) in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.

Company's accounting policies are consistent with those presented in the audited consolidated financial statements included in

the Annual Report on Form 10-K for the year ended December 31, 2019.

These unaudited interim condensed consolidated financial statements

have been prepared in U.S.

The accompanying unaudited interim condensed consolidated financial

statements have been prepared in accordance with US GAAP and are the responsibility of the Company’s management.

These unaudited

interim condensed consolidated financial statements do not include all of the information and notes required by US GAAP for annual

financial statements.

Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction

with the Company's audited consolidated financial statements and notes filed with the Securities and Exchange Commission (“SEC”)

in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.

The Company's accounting policies are

consistent with those presented in the audited consolidated financial statements included in the Annual Report on Form 10-K

for the year ended December 31, 2019.

These unaudited interim condensed consolidated financial statements have been prepared

All amounts presented are in thousands except for per share amounts.

Use of estimates

The preparation of financial statements

in conformity with US GAAP requires management to make estimates and assumptions that impact the reported amounts of assets and

liabilities and disclosure of contingent assets and liabilities as of the date of the interim condensed consolidated financial

statements and the reported amounts of expense during the reporting period.

The preparation of financial statements in conformity with US

GAAP requires management to make estimates and assumptions that impact the reported amounts of assets and liabilities and disclosure

of contingent assets and liabilities as of the date of the interim condensed consolidated financial statements and the reported

amounts of expense during the reporting period.

Actual results could differ from those estimates.

Fennec Pharmaceuticals Inc.

Notes to the Unaudited Interim Condensed

Consolidated Financial Statements

dollars and shares in thousands,

except per share information)

In the opinion of management, these unaudited

interim condensed consolidated financial statements include all adjustments, which are normal and recurring in nature, necessary

for the fair presentation of the Company’s financial position at March 31, 2020 and to state fairly the results for the periods

The most significant estimates utilized during the quarter ended March 31, 2020 included estimates necessary to value

grants of stock options to employees and various contractors, warrants issued to Bridge Bank to secure debt facility, disclosed

In the opinion of management, these unaudited interim condensed

consolidated financial statements include all adjustments, which are normal and recurring in nature, necessary for the fair presentation

of the Company’s financial position at June 30, 2020 and to state fairly the results for the periods presented.

most significant estimates utilized during the quarter ended June 30, 2020 included estimates necessary to value grants of

stock options to employees and various contractors, disclosed in Note 4.

New accounting pronouncements

In August 2018, the FASB issued ASU 2018-13,

Fair Value Measurement (Topic 820):

In August 2018, the FASB issued ASU 2018-13, Fair Value

Measurement (Topic 820):

Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.

2018-13 removes certain disclosures, modifies certain disclosures and adds additional disclosures.

The ASU is effective for

us on January 1, 2020, and interim periods within that fiscal year.

Early adoption is permitted.

Certain disclosures in ASU 2018-13

would need to be applied on a retrospective basis and others on a prospective basis.

The Company concluded after evaluation, that

the impact of ASU 2018-13 on our consolidated financial statements and disclosures was de minimis.

ASU 2018-13 removes

certain disclosures, modifies certain disclosures and adds additional disclosures.

The ASU was effective for us on January 1,

2020, and interim periods within that fiscal year.

Certain disclosures in ASU 2018-13 would need to be applied on a retrospective

basis and others on a prospective basis.

The Company concluded after evaluation, that the impact of ASU 2018-13 on our consolidated

financial statements and disclosures was de minimis.

Cash and cash equivalents

Cash equivalents consist of highly liquid

investments with original maturities at the date of purchase of three months or less.

The Company places its cash and cash equivalents

in investments held by highly rated financial institutions in accordance with its investment policy designed to protect the principal

At March 31, 2020, the Company had $9,901 in cash, savings and money market accounts ($13,650 at December 31,

At March 31, 2020, the Company held $382 in cash of which $12 (as presented in U.S.

dollars) was in Canadian dollars ($30

at December 31, 2019 as presented in U.S.

At March 31, 2020, the Company held $9,519 in money market investments.

Money market investments typically have minimal risks.

The Company has not experienced any loss or write-down of its money

market investments since inception.

Cash equivalents consist of highly liquid investments with original

maturities at the date of purchase of three months or less.

The Company places its cash and cash equivalents in investments held

by highly rated financial institutions in accordance with its investment policy designed to protect the principal investment.

June 30, 2020, the Company had $38,729 in cash, savings and money market accounts ($13,650 at December 31, 2019).

June 30, 2020, the Company held $604 in cash of which $34 (as presented in U.S.

dollars) was in Canadian dollars ($24 at December 31,

2019 as presented in U.S.

At June 30, 2020, the Company held $38,125 in money market investments.

investments typically have minimal risks.

The Company has not experienced any loss or write-down of its money market investments

since inception.

Fennec Pharmaceuticals Inc.

Notes to the Unaudited Interim Condensed

Consolidated Financial Statements

dollars and shares in thousands, except per share information)

Earnings per Share

Earnings per common share is presented

under two formats:

basic earnings per common share and diluted earnings per common share.

Basic earnings per common share is computed

by dividing net income attributable to common shareholders by the weighted average number of common shares outstanding during the

Diluted earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding

during the period, plus the potentially dilutive impact of common stock equivalents (i.e.

Earnings per common share is presented under two formats:

earnings per common share and diluted earnings per common share.

Basic earnings per common share is computed by dividing net income

attributable to common shareholders by the weighted average number of common shares outstanding during the period.

Diluted earnings

per common share is computed by dividing net income by the weighted average number of common shares outstanding during the period,

plus the potentially dilutive impact of common stock equivalents (i.e.

stock options and warrants).

common share equivalents consist of the incremental common shares issuable upon exercise of stock options and warrants.

The following

table sets forth the computation of basic and diluted net loss per share:

Three Months Ended March 31,

Dilutive common share equivalents

consist of the incremental common shares issuable upon exercise of stock options and warrants.

The following table sets forth the

computation of basic and diluted net loss per share:

Three Months Ended June 30,

Six Months Ended June 30,

Weighted-average common shares, basic

7 unchanged sentences

have had an anti-dilutive effect:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Options to purchase common stock

Warrants to purchase common stock

Fennec Pharmaceuticals Inc.

Notes to the Unaudited Interim Condensed

Consolidated Financial Statements

dollars and shares in thousands,

except per share information)

Stockholders'

Stockholders' Equity

Authorized capital stock

2 unchanged sentences

Purchase Common Stock

During the quarter ended March 31, 2019,

During the three and six-months

ended June 30, 2020, there were no warrants issued or exercised.

During the three and six-months ended June 30, 2019,

the Company issued warrants to purchase common stock priced in U.S.

dollars with a weighted average price of $6.80 and had weighted

average remaining life of 8.83 years as of March 31, 2020.

During the three-months ended March 31, 2020, there were no warrants

issued or exercised.

The following table details the Company’s warrant activity from March 31, 2019:

dollars with a weighted average price of $6.80.

These warrants

have not been exercised and have weighted average remaining life of 8.58 years as of June 30, 2020.

The following table details

the Company’s warrant activity from December 31, 2019:

Investor Warrants

Common Shares Issuable Upon

Exercise of Outstanding Warrants

Exercise of Outstanding

Weighted-Average

2 unchanged sentences

Outstanding March 31, 2020

Outstanding June 30, 2020

Fennec Pharmaceuticals Inc.

Notes to the Unaudited Interim Condensed

Consolidated Financial Statements

dollars and shares in thousands, except per share information)

Investor Warrants

Common Shares Issuable Upon

Exercise of Outstanding Warrants

Exercise of Outstanding

Weighted-Average

2 unchanged sentences

Outstanding March 31, 2019

Outstanding June 30, 2019

The value of warrants issued was estimated

3 unchanged sentences

The Company capitalized the non-cash expense

of $255 associated with issuing the above warrants on February 1, 2019.

The Company also incurred legal, professional and share

registration fees totaling $71 which were also capitalized.

The combined capitalized asset, deferred issuance cost, has been placed

on the balance sheet.

of $179 associated with the anticipated issuance of warrants for the Loan B facility on August 6, 2020 and the $255 associated

with issuing the above warrants on February 1, 2019.

The Company also incurred legal, professional and share registration

fees totaling $23 in 2020 and $71 in 2019 which were also capitalized.

The combined capitalized asset, deferred issuance cost,

has been placed on the balance sheet and is being amortized over the life of the loan facility.

Valuation Assumptions

6 unchanged sentences

Stock option plan

On June 22, 2020, shareholders

of the Company approved a resolution adopting the Equity Incentive Plan (the “Plan”).

This Plan replaces the Amended

and Restated Stock Option Plan passed by shareholders in 2019.

The Plan expands the types of instruments which may be issued as

incentive compensation to employees, directors and designated contractors.

In addition to stock options, the Plan may also issue:

stock appreciation rights, restricted stock awards, restricted stock units, unrestricted stock awards, cash-based awards and dividend

equivalent rights.

The Company believes this Plan gives it the ability to align incentives with strategic objectives.

The Compensation Committee of the Board

of Directors administers the Company’s stock option plan.

The Compensation Committee designates eligible participants

to be included under the plan and approves the number of options to be granted from time to time under the plan.

Currently, the

maximum number of option shares issuable is twenty-five percent (25%) of the total number of issued and outstanding shares of common

Based upon shares outstanding as of March 31, 2020, a maximum of 4,974 options are authorized for issuance under the

For all options issued under the plan, the exercise price is the fair value of the underlying shares on the date of

All options vest within three years or less and are exercisable for a period of ten years from the date of grant.

stock option plan allows the issuance of Canadian and U.S.

of Directors administers the Company’s Plan.

The Compensation Committee designates eligible participants to be included

under the Plan and approves the number of options to be granted from time to time under the Plan.

Currently, the maximum number

of option shares issuable is twenty-five percent (25%) of the total number of issued and outstanding shares of common stock.

upon the current shares outstanding, a maximum of 6,339 options are authorized for issuance under the Plan.

For all options

issued under the Plan, the exercise price is the fair value of the underlying shares on the date of grant.

All options vest

within three years or less and are exercisable for a period of ten years from the date of grant.

The Plan allows the issuance

of Canadian and U.S.

dollar grants.

The table below outlines recognized contractor and

employee expense for the three-month periods ended March 31, 2020 and 2019.

Three Months Ended March 31,

The table below outlines recognized contractor and employee expense for the three and

six-month periods ended June 30, 2020 and 2019.

Three Months Ended June 30,

Six Months Ended June 30,

Contractor options expense recognized

1 unchanged sentence

Total option expense recognized

Fennec Pharmaceuticals Inc.

Notes to the Unaudited Interim Condensed

Consolidated Financial Statements

dollars and shares in thousands, except per share information)

Stock option activity

The following is a summary of option

activity for each of the quarterly periods in fiscal year 2020 for stock options denominated in U.S.

Weighted-Average

US Denominated Options

Options (thousands)

Exercise Price $USD

Outstanding December 31, 2019

Outstanding at March 31, 2020

Outstanding at June 30, 2020

During the three-month period ended June 30,

2020, there were 475 US denominated options issued.

Of the 2,915 US denominated options granted and outstanding at June 30,

2020, 2,023 are fully vested and exercisable.

The following is a summary of option activity

6 unchanged sentences

Outstanding at March 31, 2019

Fennec Pharmaceuticals

Notes to the Unaudited Interim Condensed

Consolidated Financial Statements

dollars and shares in thousands,

except per share information)

During the three-month period ended March

31, 2020, there was no US denominated option activity.

Of the 2,440 options granted and outstanding at March 31, 2020, 1,864 are

fully vested and exercisable.

Outstanding at June 30, 2019

The following is a summary of option activity

for the three-month periods ended March 31, 2020 for stock options denominated in Canadian dollars:

for the three and six-month periods ended June 30, 2020 for stock options denominated in Canadian dollars:

Weighted-Average

4 unchanged sentences

Outstanding at March 31, 2020

For the three-month period ended March

31, 2020, there was no issuance activity related to Canadian dollar denominated options.

As of March 31, 2020, all 648 outstanding

options denominated in Canadian dollars were fully vested and exercisable.

Outstanding at June 30, 2020

For the three and six-month periods ended

June 30, 2020, there was no issuance activity related to Canadian dollar denominated options.

As of June 30, 2020, all

648 outstanding options denominated in Canadian dollars were fully vested and exercisable.

The following is a summary of option activity

for the three and six-month periods ended June 30, 2019 for stock options denominated in Canadian dollars:

Weighted-Average

Canadian Denominated Options

Options (thousands)

Exercise Price $CAD

Outstanding December 31, 2018

Outstanding at March 31, 2019

Outstanding at June 30, 2019

Fennec Pharmaceuticals Inc.

Notes to the Unaudited Interim Condensed

Consolidated Financial Statements

dollars and shares in thousands, except per share information)

Valuation assumptions

The value of options granted were

estimated using the Black-Scholes option pricing model using the following assumptions in the table below.

The expected volatility

was determined using historical volatility of our stock based on the contractual life of the award.

There were 475 options issued

during the three months ended June 30, 2020, (345 for the same period in 2019).

Assumptions for the valuation of the option

grants are described in the table below:

Three Months Ended June 30,

Black-Scholes Model Assumptions

Expected dividend

Risk free rate

Expected volatility

Expected life

Fair Value Measurements

16 unchanged sentences

corroborated by market data.

Value Measurement at March 31, 2020 and December 31, 2019, (in thousands)

Price in Active

Fair Value Measurement at June 30, 2020

and December 31, 2019

(in thousands)

Quoted Price in Active

Market for Identical

Significant Other

Observable Inputs

Unobservable Inputs

Cash and cash

Derivative liabilities

The Company held approximately, $382 in cash as of March 31, 2020, of which approximately, $12 was in Canadian funds (translated into U.S.

Cash and cash equivalents

The Company held approximately, $604 in cash as of June 30, 2020, of which approximately, $34 was in Canadian funds (translated into U.S.

As of December 31, 2019, the Company held approximately $347 of which approximately $30 was in Canadian funds (translated into U.S.

Commitments and

Contingencies

Commitments and Contingencies

Oregon Health & Science University

On February 20, 2013, Fennec entered into a new exclusive license

agreement with OHSU for exclusive worldwide license rights to intellectual property directed to thiol-based compounds, including

sodium thiosulfate and their use in oncology (the "OHSU Agreement").

OHSU will receive certain milestone payments,

royalty on net sales for licensed products and a royalty on any consideration received from sublicensing of the licensed technology.

On February 20, 2013, Fennec

entered into a new exclusive license agreement with OHSU for exclusive worldwide license rights to intellectual property directed

to thiol-based compounds, including sodium thiosulfate and their use in oncology (the "OHSU Agreement").

receive certain milestone payments, royalty on net sales for licensed products and a royalty on any consideration received from

sublicensing of the licensed technology.

On May 18, 2015, Fennec negotiated an amendment ("Amendment

1") to the OHSU Agreement, which expands Fennec’s exclusive license to include the use of N-acetylcysteine as a standalone

therapy and/or in combination with sodium thiosulfate for the prevention of ototoxicity induced by chemotherapeutic agents to treat

Further, Amendment 1 adjusts select milestone payments entered in the OHSU Agreement including but not limited to the

royalty rate on net sales for licensed products, royalty rate from sublicensing of the licensed technology and the fee payable

upon the regulatory approval of a licensed product.

Fennec Pharmaceuticals Inc.

1 unchanged sentence

Consolidated Financial Statements

dollars and shares in thousands,

except per share information)

On May 18, 2015, Fennec negotiated

an amendment ("Amendment 1") to the OHSU Agreement, which expands Fennec’s exclusive license to include the use

of N-acetylcysteine as a standalone therapy and/or in combination with sodium thiosulfate for the prevention of ototoxicity induced

by chemotherapeutic agents to treat cancers.

Further, Amendment 1 adjusts select milestone payments entered in the OHSU Agreement

including but not limited to the royalty rate on net sales for licensed products, royalty rate from sublicensing of the licensed

technology and the fee payable upon the regulatory approval of a licensed product.

dollars and shares in thousands, except per share information)

The term of the OHSU Agreement as amended by Amendment 1 expires

on the date of the last to expire claim(s) covered in the patents licensed to Fennec or 8 years, whichever is later.

a licensed product obtains regulatory approval and is covered by the Orphan Drug Designation, the parties will in good faith amend

the term of the agreement.

Sodium thiosulfate is currently protected by methods of use patents that the Company exclusively licensed

from OHSU that expire in Europe in 2021 and are currently pending in the United States.

The OHSU Agreement is terminable by either

Fennec or OHSU in the event of a material breach of the agreement by either party after 45 days prior written notice.

has the right to terminate the OHSU Agreement at any time upon 60 days prior written notice and payment of all fees due to OHSU

under the OHSU Agreement.

event a licensed product obtains regulatory approval and is covered by the Orphan Drug Designation, the parties will in good faith

amend the term of the agreement.

Sodium thiosulfate is currently protected by methods of use patents that the Company exclusively

licensed from OHSU that expire in Europe in 2021 and that expire in the United States in 2038.

The OHSU Agreement is terminable

by either Fennec or OHSU in the event of a material breach of the agreement by either party after 45 days prior written notice.

Fennec also has the right to terminate the OHSU Agreement at any time upon 60 days prior written notice and payment of all fees

due to OHSU under the OHSU Agreement.

Executive Severance

1 unchanged sentence

other than for cause, we will be obligated to pay Mr.

Raykov a one-time severance payment equal to twelve months of salary (as

of May 8, 2020 $430,000).

In the event of his termination with us other than for cause, we will be obligated to pay Mr.

a one-time severance payment equal to six months of salary (as of May 8, 2020 $155,875).

In the event of her termination with us

other than for cause, we will be obligated to pay Ms.

Goel a one-time severance payment equal to three months of salary (as of

May 8, 2020 $90,000)

Raykov a one-time severance payment equal to twelve months of salary

(as of August 5, 2020 $430,000).

In the event of his termination with us other than for cause, we will be obligated to pay

Andrade a one-time severance payment equal to six months of salary (as of August 5, 2020 $155,875).

of her termination with us other than for cause, we will be obligated to pay Ms.

Goel a one-time severance payment equal to

three months of salary (as of August 5, 2020 $90,000)

We have an operating lease in Research

6 unchanged sentences

On January 23, 2020, the Company entered into an

Office Service Agreement (the “Office Service Agreement”) with Regus to lease office space at 221 River Street,

Hoboken, New Jersey.

Office Service Agreement (the “Office Service Agreement”) with Regus to lease office space at in Hoboken,

Per the terms of the Office Service Agreement, the monthly rent payments are $1,150.

The Company was required

to pay a security deposit of $2,300, which is the equivalent to two months of rent.

The Office Service Agreement

commenced on January 27, 2020 and terminates on July 31, 2020, thereafter the lease may continue on a month-to-month basis

The Company was required to pay

a security deposit of $2,300, which is the equivalent to two months of rent.

The Office Service Agreement commenced

on January 27, 2020 and terminates on July 31, 2020, thereafter the lease may continue on a month-to-month basis

with either party being able to terminate the agreement by providing one months' advance written notice of termination.

3 unchanged sentences

The ultimate disruption which may be caused by the outbreak is uncertain;

however, it may result in a material adverse

impact on the Company’s financial position, operations and cash flows.

Possible effects may include, but are not limited

to, disruption to the Company’s product launch, absenteeism in the Company’s labor workforce, unavailability of products

and supplies used in operations, and a decline in value of assets held by the Company, including inventories, property and equipment,

and marketable securities.

COVID-19 has not had a material effect on the Company’s operations.

Fennec Pharmaceuticals Inc.

Notes to the Unaudited Interim Condensed

Consolidated Financial Statements

dollars and shares in thousands,

except per share information)

however, it may result in a material

adverse impact on the Company’s financial position, operations and cash flows.

Possible effects may include, but are not

limited to, disruption to the Company’s product launch which includes the ability of sales reps to communicate with oncologists,

absenteeism in the Company’s labor workforce, unavailability of products and supplies used in operations, and a decline in

value of assets held by the Company, including inventories, property and equipment, and marketable securities.

COVID-19 has not

had a material effect on the Company’s operations to date as the Company has historically had a workforce which works remotely,

preparations for product launch have been under the assumption of a virtual launch and product supplies have not been impacted.

Loan Security Agreement

On February 1, 2019, the Company’s

wholly owned subsidiary of Fennec Pharmaceuticals Inc.

entered into a Loan and Security Agreement (the “Loan and Security

Agreement”) with Bridge Bank, a division of Western Alliance Bank, an Arizona corporation (the “Bank”), pursuant

to which the Bank agreed to loan $12.5 million to Fennec Pharmaceuticals, Inc., to be made available upon New Drug Application

(“NDA”) approval of PEDMARK by no later than September 30, 2020.

The proceeds from the loan will be used for working

capital purposes and to fund general business requirements in accordance with the terms of the Loan and Security Agreement.

wholly owned subsidiary Fennec Pharmaceuticals Inc.

entered into a Loan and Security Agreement (the “Loan and Security Agreement”)

with Bridge Bank, a division of Western Alliance Bank, an Arizona corporation (the “Bank”), pursuant to which the Bank

agreed to loan $12.5 million to Fennec Pharmaceuticals, Inc., to be made available upon New Drug Application (“NDA”)

approval of PEDMARK by no later than September 30, 2020.

The proceeds from the loan will be used for working capital purposes

and to fund general business requirements in accordance with the terms of the Loan and Security Agreement.

Interest under the Term

Loans shall bear interest, on the outstanding daily balance thereof, at a floating per annum rate equal to the Effective Interest

5 unchanged sentences

In connection with the facility, Fennec granted Bridge Bank a warrant to purchase up to

common shares at an exercise price of $6.80 per common share, for a term of ten years from the date of issuance, subject to early

termination under certain conditions.

39 common shares at an exercise price of $6.80 per common share, for a term of ten years from the date of issuance, subject to

early termination under certain conditions.

Fennec Pharmaceuticals Inc.

Notes to the Unaudited Interim Condensed

Consolidated Financial Statements

dollars and shares in thousands, except per share information)

On June 26, 2020, Fennec announced an amendment to the

Loan and Security Agreement with Bridge Bank.

This amendment provides Fennec with an $18 million debt facility comprised

of two term loans.

Term Loan A consists of $12.5 million to be funded upon New Drug Application (NDA) approval of PEDMARK TM

Term Loan B consists of $5.5 million to be funded upon the occurrence of a revenue event in 2021.

The interest-only

period for the facility has the ability to be extended from 18 months to 24 months from the funding of Term Loan A, provided that

Term Loan B is funded, and certain conditions are met.

Under Accounting Standards Codification ("ASC") 470-50, Modifications

and Extinguishments, the amendment was considered a modification.

As such, the Company is amortizing the loan fee and the value

of the warrant over the remainder of the loan term.

The Company intends to use the proceeds from the loans to provide working capital

for commercialization activities for PEDMARK TM upon NDA approval.

The combined value of the granted warrants

1 unchanged sentence

The asset, deferred issuance cost, will be amortized evenly over the full term of the agreement (56 months).

quarter ended March 31, 2020, the Company recorded interest expense of roughly $17 as a result of the amortization of the asset

related to deferred issuance cost.

A total of $81 has been amortized as of March 31, 2020.

quarter ended June 30, 2020, the Company recorded amortization expense of roughly $30 as a result of the amortization of the

asset related to deferred issuance cost.

A total of $111 has been amortized as of June 30, 2020.

Subsequent Events

On April 13, 2020 Fennec announced that the U.S.

Food and Drug

Administration (“FDA”) had accepted for filing and granted Priority Review for Fennec’s New Drug Application

The FDA set a Prescription Drug Fee Act (PDUFA) target action date of August 10, 2020 for the completion of the FDA’s

On May 4, of 2020, the Company announced the completion of an

underwritten public offering for gross proceeds of $30.0 million .

On May 7, 2020, the Company announced Cantor

Fitzgerald exercised its overallotment option resulting in gross proceeds of approximately $4.2 million.

Management has evaluated subsequent events through the date

of this filing and concluded there are no events of significance which require disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements