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Item 9A. Controls and Procedures

2021-03-30 compared with 2020-02-14 · 1004 added, 805 removed, 543 unchanged (77% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

Our management, under the supervision and

with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure

controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act).

Based upon that evaluation, our Chief

Executive Officer and Chief Financial Officer concluded that, as of December 31, 2019, our disclosure controls and procedures were

effective in ensuring that information required to be disclosed by us in the reports filed or submitted by us under the Exchange

Act is (i) recorded, processed, summarized, and reported, within the time periods specified in the Commission’s rules and

forms and (ii) accumulated and communicated to our management, including our principal executive and principal accounting officers,

or persons performing similar functions, as appropriate to allow timely decisions regarding required

Management's Annual Report on Internal

Control over Financial Reporting

Our Chief Executive Officer (our principal

executive officer) and Chief Financial Officer (our principal financial officer) have concluded based on their evaluation as of

December 31, 2020 that our “disclosure controls and procedures”

(as defined in Rules 13a-15(e) and 15d-15(e) under

the Securities Exchange Act of 1934, as amended (“Exchange Act”)) are effective.

The term “disclosure controls

and procedures,”

as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other

procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports it

files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the

SEC’s rules and forms.

Disclosure controls and procedures also include, without limitation, controls and procedures

designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange

Act is accumulated and communicated to the company’s management, including its principal executive officer and principal

financial officer and principal accounting officer, or persons performing similar functions, as appropriate, to allow timely decisions

regarding required disclosure.

Management's Annual Report on Internal Control over Financial

Our management is responsible for establishing

and maintaining adequate internal control over financial reporting.

Internal control over financial reporting, as defined in rules

promulgated under the Exchange Act, is a process designed by, or under the supervision of, our Chief Executive Officer and Chief

Financial Officer and affected by our Board of Directors, management and other personnel to provide reasonable assurance regarding

the reliability of financial reporting and the preparation of Consolidated Financial Statements for external purposes in accordance

Internal control over financial reporting, as defined in rules promulgated

under the Exchange Act, is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial

Officer and affected by our Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability

of financial reporting and the preparation of Consolidated Financial Statements for external purposes in accordance with GAAP.

Internal control over financial reporting includes those policies and procedures that:

Pertain to the maintenance of records

that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

Provide reasonable assurance that transactions

are recorded as necessary to permit preparation of Consolidated Financial Statements in accordance with GAAP, and that our receipts

and expenditures are being made only in accordance with authorizations of our management and our Board of Directors;

Provide reasonable assurance regarding

prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect

on our Consolidated Financial Statements.

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the

transactions and dispositions of our assets;

Provide reasonable assurance that transactions are recorded as necessary to permit preparation

of Consolidated Financial Statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance

with authorizations of our management and our Board of Directors;

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,

use or disposition of our assets that could have a material effect on our Consolidated Financial Statements.

Internal control over financial reporting

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and it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

Our management assessed the

effectiveness of our internal control over financial reporting as of December 31, 2019.

In making its assessment, management

used the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, in its

2013 Internal Control —

Our management assessed the effectiveness

of our internal control over financial reporting as of December 31, 2020.

In making its assessment, management used the criteria

established by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, in its 2013 Internal Control

Integrated Framework .

Based on its assessment, management has concluded that our

internal control over financial reporting was effective as of December 31, 2019.

Changes in Internal Control over Financial

There was no change in our internal control

over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the

evaluation of our internal control over financial reporting that occurred during the last fiscal quarter covered by this Annual

Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitation on the Effectiveness

of Internal Controls

Based on its assessment, management has concluded that our internal control over financial reporting

was effective as of December 31, 2020.

Because we are a non-accelerated filer and smaller reporting company, Haskell &

White LLP, our independent registered public accounting firm, is not required to attest to or issue a report on the effectiveness

of our internal control over financial reporting.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting

(as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation

of our internal control over financial reporting that occurred during the last fiscal quarter covered by this Annual Report that

has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitation on the Effectiveness of Internal Controls

The effectiveness of any system of internal

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Directors, Executive Officers and Corporate Governance

The following table sets forth the name of

each of our executive officers and directors, such person’s principal occupation or employment, all other positions with

The following table sets forth the name

of each of our executive officers and directors, such person’s principal occupation or employment, all other positions with

us held by such person, if any, the year in which such person became a director of Fennec and such person’s age.

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The current members of such committees are noted in the table below:

Name and Province/State and Country of Residence, Position

Current Principal Occupation and Principal Occupation For Previous Five Years

Name and Province/State and

Country of Residence, Position

Current Principal Occupation and Principal Occupation

For Previous Five Years

Director Since

Rostislav Raykov, New Jersey, USA Chief Executive Officer, Director

Rostislav Raykov, New Jersey, USA

Chief Executive Officer, Director

CEO of Fennec Pharmaceuticals Inc.;

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previously Portfolio Manager at John Levin & Company

Robert Andrade, Texas, USA Chief Financial Officer

Robert Andrade, Texas, USA

Chief Financial Officer

CFO of Fennec Pharmaceuticals;

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previously Portfolio Manager at Millennium Partners

September 2009- August 2013;

November 2015-Present

Shubh Goel, New Jersey, USA Chief Commercial Officer

Shubh Goel, New Jersey, USA

Chief Commercial Officer

CCO of Fennec Pharmaceuticals Inc.;

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previously Executive Director, Global Early Commercialization at Celgene Corporation

September 2019

Rallis, North Carolina, USA Director (1)(2)

Rallis, North Carolina, USA

Director (1)(2)

Executive in-residence at Pappas Capital;

previously CEO of ImmunoBiosciences

Marco Brughera, Milano, Italy Director (2)(3)

Marco Brughera, Milano, Italy

Director (2)(3)

CEO of Leadiant Biosciences SpA;

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VP Preclinical Development at Nerviano Medical Sciences .

Haigh, Dublin, Ireland Director (1)(3)

Haigh, Dublin, Ireland

Director (1)(3)

Senior Vice President and General Manager of EMEA Region at PTC Therapeutics;

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previously Regional VP Commercial Operations at Biogen Idec

Khalid Islam, Zug, Switzerland Chairman of Board, Director (1)

Khalid Islam, Zug, Switzerland

Chairman of Board, Director (1)

Founder/co-founder of Sirius Healthcare Partners GMbH;

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previously CEO of Arpida AG

Jodi Cook, Cambridge, Massachusetts, Director (2)(3)

SVP, Head of Gene Therapy Strategy PTC Therapeutics, Inc.

Jodi Cook, Pennsylvania, USA, Director (2)(3)

Former SVP, Head of Gene Therapy Strategy PTC Therapeutics, Inc, Former COO Agilis Biotherapeutics, Former Assistant Professor of Audiology Mayo Clinic

September 2019

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Rostislav Raykov

Raykov has served as a director of Fennec

since July 2009 and as Chief Executive Officer since July 2009.

From January 2006 to December 2007, Mr.

Raykov was a portfolio

manager for Alchem Investment Partners and John Levin & Co.

Prior to founding Alchem, Mr.

Raykov was a portfolio manager and

securities analyst for John A.

Raykov has served as a director

of Fennec since July 2009 and as Chief Executive Officer since July 2009.

From January 2006 to December 2007,

Raykov was a portfolio manager for Alchem Investment Partners and John Levin & Co.

Prior to founding Alchem,

Raykov was a portfolio manager and securities analyst for John A.

Event Driven Fund (2002-2005).

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Levin & Co., Mr.

was a securities analyst for the Merger Fund at Tiedemann Investment Group (1999-2002) and an investment banking analyst at Bear

Stearns (1998-1999).

Raykov was a securities analyst for the Merger Fund at Tiedemann Investment

Group (1999-2002) and an investment banking analyst at Bear Stearns (1998-1999).

Raykov earned a B.S.

in Business Administration from the University of North Carolina at Chapel

Administration from the University of North Carolina at Chapel Hill.

As a result of these and other professional experiences, Mr.

Raykov has financial expertise and experience with the Company

as it has developed within the drug development industry and, as such, is able to provide us with unique insight and guidance.

has financial expertise and experience with the Corporation as it has developed within the drug development industry and, as such,

is able to provide the Corporation with unique insight and guidance.

Robert Andrade

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Officer since November 2015.

Andrade was previously Chief Financial Officer and Director of Fennec from September 2009 until

Andrade was previously Chief Financial Officer and Director of Fennec from September 2009

until August 2013.

In addition to his role with Fennec, Mr.

Andrade was a senior analyst at Magnetar Capital, a portfolio manager for

Millennium Partners and a senior analyst at Caxton Associates.

Andrade graduated from University of Southern California, where

he earned a Masters of Arts degree and Bachelor of Arts degree in economics.

Goel has been employed by us since September

Pursuant to an employment agreement dated September 9, 2019, Ms.

Goel is employed as Fennec’s Chief Commercial Officer

(a) received an initial annual salary in the amount of $360,000, subject to annual adjustment by our Board of Directors, and

(b) may receive annual bonus of up to 40% of her base salary per twelve month period, at the discretion of the CEO and the Board

of Directors.

Goel’s employment is terminated by us for any reason other than “for cause”, we are obligated

Goel (i) severance in the amount of three months of employees base salary or if such termination occurs either (a) after

the second anniversary of her employment or (b) as a result of a Change of Control a severance in the amount of six months, (ii)

prorate share of any target bonus earned by Ms.

Goel and, (iii) accelerated vesting of stock options.

The initial term of the agreement

was for one year and the agreement automatically extends for additional one-year periods unless terminated by either party in accordance

with the agreement.

Rallis has served as a director

of Fennec since August 2011.

Rallis has been an executive-in-residence at Pappas Capital, a life science venture capital

firm since January 2008.

Andrade was a private investor in 2015, and a senior analyst

at Magnetar Capital from 2013 - 2014.

Andrade graduated from University of Southern California, where he earned a Masters

of Arts degree and Bachelor of Arts degree in economics.

Goel has been employed by us since

September 2019.

Goel is a proven leader with 20 years of global commercial

experience successfully building and executing the launch of several oncology products.

Most recently, she served as Vice President

of Commercial Strategy and Operations at Odonate Therapeutics, Inc.

Prior to Odonate, Ms.

Goel previously served in multiple

leadership positions at Celgene Corporation, including serving as Executive Director, Global Early Commercialization and previously

as Head of U.S.

Marketing, Oncology.

While at Celgene, she oversaw the successful execution of the U.S.

launch of Abraxane®

in pancreatic cancer and had overall responsibility for marketing the U.S.

solid tumor franchise.

Goel received a B.Sc.

degree in biochemistry from the University of Bath.

Rallis has served as a

director of Fennec since August 2011.

Rallis has been an executive-in-residence at Pappas Capital, a life science

venture capital firm since January 2008.

Previously, Mr.

Rallis was the President and Chief Executive Officer of ImmunoBiosciences, Inc.

(“IBI”), a vaccine technology company formerly located in Raleigh, North Carolina from April 2006 through June

Rallis was the President and Chief Executive Officer

of ImmunoBiosciences, Inc.

(“IBI”), a vaccine technology company formerly located in Raleigh, North Carolina

from April 2006 through June 2007.

Prior to joining IBI, Mr.

Rallis served as an executive in residence (part-time) for Pappas Ventures, and as a

consultant for Duke University and Panacos Pharmaceuticals, Inc.

Rallis is the former President and Chief Operating

Officer (“COO”) and director of Triangle Pharmaceuticals, Inc., which was acquired by Gilead Sciences in January

2003 for approximately $465 million.

Prior to assuming the role of President and COO in March 2000, he was Executive

Vice President, Business Development and General Counsel.

While at Triangle, Mr.

Rallis participated in 11 equity financings

generating gross proceeds of approximately $500 million.

He was also primarily responsible for all business development

activities which included a worldwide alliance with Abbott Laboratories and the in-licensing of ten compounds.

Before joining

Triangle in 1995, Mr.

Rallis served in various business development and legal management roles with Burroughs Wellcome

over a 13-year period, including Vice President of Strategic Planning and Business Development.

Rallis also served

on the boards of Aeolus Pharmaceuticals, a biopharmaceutical company located in Mission Viejo, California (no longer active)

and Tenax Therapeutics, Inc., a biopharmaceutical company located in Morrisville, North Carolina.

Rallis received his

degree in economics from Harvard College and a J.D.

Rallis served as an executive in residence (part-time)

for Pappas Capital, and as a consultant for Duke University and Panacos Pharmaceuticals, Inc.

the former President and Chief Operating Officer (“COO”) and director of Triangle Pharmaceuticals, Inc., which

was acquired by Gilead Sciences in January 2003 for approximately $465 million.

Prior to assuming the role of President

and COO in March 2000, he was Executive Vice President, Business Development and General Counsel.

While at Triangle,

Rallis participated in 11 equity financings generating gross proceeds of approximately $500 million.

was also primarily responsible for all business development activities which included a worldwide alliance with Abbott Laboratories

and the in-licensing of ten compounds.

Before joining Triangle in 1995, Mr.

Rallis served in various business development

and legal management roles with Burroughs Wellcome Co.

over a 13-year period, including Vice President of Strategic Planning and

Business Development.

Rallis also serves on the board of Tenax Therapeutics, Inc., a biopharmaceutical company

located in Morrisville, North Carolina.

Rallis received his A.B.

degree in economics from Harvard College and

from Duke University.

As a result of these and other professional

experiences, Mr.

Rallis possesses particular healthcare industry knowledge and experience which strengthens the Board’s collective

qualifications, skills, and experience.

As a result of these and other professional experiences, Mr.

Rallis possesses particular healthcare

industry knowledge and experience which strengthens the Board’s collective qualifications, skills, and experience.

Marco Brughera

has been a director of Fennec since August 2016.

Since January 2011, Dr.

Brughera has been

CEO of Lediant Biosciences SpA and has held several positions for the Sigma-Tau Group, including CEO and Global Head of Sigma Tau

Rare Disease, President of Sigma-Tau Research and President of Sigma-Tau Pharmaceuticals.

He drove the commercial revival

of a lead oncology product line resulting in its successful sale for a total of around $900M.

He also successfully out-licensed

the Defibrotide US rights to Jazz Pharmaceuticals.

Brughera has been CEO of Lediant Biosciences

SpA and has held several positions for the Sigma-Tau Group, including CEO and Global Head of Sigma Tau Rare Disease, President

of Sigma-Tau Research and President of Sigma-Tau Pharmaceuticals.

He drove the commercial revival of a lead oncology product

line resulting in its successful sale for a total of around $900M.

He also successfully out-licensed the Defibrotide US rights

to Jazz Pharmaceuticals.

From 2004 to 2010, Dr.

Brughera served as the Vice President of Preclinical

Development at Nerviano Medical Sciences (NMS), a pharmaceutical oncology-focused integrated discovery and development company.

also served as the Managing Director at Accelera, an independent contract research organization with the NMS Group.

Brughera held several senior level positions in the areas of research and development with Pharmacia and Pfizer.

to 1999, he held various positions at Pharmacia & Upjohn and Farmitalia Carlo Erba SpA, an Italian pharmaceutical company.

He currently serves on the Board of Solgenix and Lee’s Pharmaceutical and until early 2014 was a member of the Board of Gentium

Brughera earned his degree in veterinary medicine from the University of Milan and is a European Registered Toxicologist

Brughera has wide-spread experience and knowledge of pharmaceutical drug development in international companies.

His knowledge

in particular, of clinical drug development in Europe, deepens the Board’s collective qualifications, skills and experience.

Adrian Haigh has been Senior Vice President

and General Manager of EMEA Region and Asia Pacific at PTC Therapeutics, Inc.

since September 2014.

Brughera served as the Vice President of Preclinical Development at Nerviano

Medical Sciences (NMS), a pharmaceutical oncology-focused integrated discovery and development company.

He also served as

the Managing Director at Accelera, an independent contract research organization with the NMS Group.

From 1999 to 2004, Dr.

held several senior level positions in the areas of research and development with Pharmacia and Pfizer.

Prior to 1999, he held

various positions at Pharmacia & Upjohn and Farmitalia Carlo Erba SpA, an Italian pharmaceutical company.

serves on the Board of Exelead and Naicons and previously was Board member of Soligenix, Lee’s Pharmaceuticals and Gentium.

Brughera earned his degree in

veterinary medicine from the University of Milan and is a European Registered Toxicologist.

Brughera has wide-spread experience

and knowledge of pharmaceutical drug development in international companies.

His knowledge in particular, of clinical drug development

in Europe, deepens the Board’s collective qualifications, skills and experience.

Haigh has been a director of Fennec

since April 2014.

Haigh has been Senior Vice President and Head of International Operations at PTC Therapeutics since

September 2014.

Previously Mr.

as Senior Vice President, Commercial Operations and Chief Operating Officer of Gentium GmbH since March 2011.

Prior to joining

Haigh served as Regional Vice President, Commercial Operations at Biogen Idec where he managed several affiliates and

Haigh served as Chief Operating Officer at Gentium GmbH since March 2011.

joining Gentium, Mr.

Haigh served as Regional VP Commercial Operations at Biogen Idec where he managed several affiliates and

also the global distributor business and prior to that was the General Manager of Amgen Nordis and Portugal.

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He has been a Director of Fennec Pharmaceuticals Inc.

since April 28, 2014 and a Director at

Arch Biopartners Inc.

since April 28, 2014 and a Director

at Arch Biopartners Inc.

since August 21, 2014.

He received a Bachelor of Arts with Honors in Economic History from Huddersfield Polytechnic,

West Yorkshire, England and a Diploma in Marketing from the Institute of Marketing.

As a result of these and other professional

experiences, Mr.

Haigh has extensive international oncology development expertise which strengthens the Board’s collective

qualifications, skills and experience.

Khalid Islam was the Chairman and CEO

of Gentium S.p.A.

He received a Bachelor of Arts with Honors in Economic History from Huddersfield

Polytechnic, West Yorkshire, England and a Diploma in Marketing from the Institute of Marketing.

As a result of these and other

professional experiences, Mr.

Haigh has extensive international oncology development expertise which strengthens the Board’s

collective qualifications, skills and experience.

Islam has been a director of Fennec since

April 2014 and is our current Chairman of the Board.

Islam was the Chairman and CEO of Gentium S.p.A.

(a Nasdaq-listed company;

2009-2014) where he led the transition from a loss-making to a cash-flow positive

and profitable company.

Under his leadership, the company value increased from US$25 million leading to a successful all cash

US$1 billion merger with Jazz Pharmaceuticals, plc.

Subsequent to the sale of Gentium, Dr.

Islam has been involved from both an

advisory and board level in several public and private healthcare related companies.

2009-2014) where he led the transition from a loss-making to a cash-flow positive and profitable company.

Under his leadership, the company

value increased from US$25 million leading to a successful all cash US$1 billion merger with Jazz Pharmaceuticals, plc.

Subsequent to

the sale of Gentium, Dr.

Islam has been involved from both an advisory and board level in several public and private healthcare related

From 1999-2008, Dr.

Islam was President and

CEO of Arpida AG where he transitioned the early-stage start-up to a SWX-listed company and raised US$300 million in the IPO and

Islam was President and CEO of Arpida AG where he transitioned the early-stage start-up to a SWX-listed

company and raised US$300 million in the IPO and follow-ons.

From 1987-1999, he held various positions in HMR & MMD (now Sanofi-Aventis).

From 1977-1987, Dr.

in academia at Imperial College (Univ.

of London) and in Milan University, where he was a contract professor.

Islam is a graduate

of Chelsea College and received his Ph.D.

Islam worked in academia at Imperial College (Univ.

of London) and in Milan University, where he was a contract

Islam is a graduate of Chelsea College and received his Ph.D.

from Imperial College, University of London.

He holds several patents and has published

over 80 articles in leading journals.

several patents and has published over 80 articles in leading journals.

He is an advisor to the venture group Kurma Biofund (Paris).

He is a founder/co-founder

of Sirius Healthcare Partners GmbH (Zurich), PrevAbr LLC (D.C.), BioAim LLC (L.A.) & Life Sciences Management GmbH (Zug).

Islam is Board Chair at Minoryx Therapeutics (Spain).

He serves on the board of Karolinska Development (Sweden), MolMed S.p.A.

(Italy) and Immunomedics Inc.

(IMMU) all of which are traded publicly, and the private company OxThera (Sweden).

He is also is

Chairman of the board of Gain Therapeutics (Switzerland) a private company.

In the past, he has served as Chairman of the Board

of Directors of Pcovery Aps (Copenhagen), Adenium Aps (Copenhagen) and C10 Pharma AS (Oslo).

Islam’s extensive international

pharmaceutical expertise in transitioning companies from development to production strengthens the Board’s collective qualifications,

skills and experience.

Cook currently serves as Head of Gene

Therapy Strategy at PTC Therapeutics, Inc., a global biopharmaceutical company focused on the development and commercialization

of clinically differentiated medicines that provide benefits to patients with rare disorders.

Prior to joining PTC Therapeutics,

she was one of the founding members and Chief Operating Officer of Agilis Biotherapeutics, a clinical-stage company focused on

gene therapies for patients with rare diseases.

Importantly, her career spans a wide range of experience relevant to Fennec’s

business interests including Assistant Professor of Audiology and Director of the Hearing Aid Program at Mayo Clinic, and executive

positions in a number of successful biotech start-ups within the hearing industry.

While at Agilis, she led the sale of the company

to PTC Therapeutics in a deal that has represented significant value to all parties.

Her extensive scientific, clinical and executive

business experience deepens the Board’s collective qualifications, skills and experience.

is a founder/co-founder of Sirius Healthcare Partners GmbH (Zurich), PrevAbr LLC (D.C.), BioAim LLC (L.A.) & Life Sciences Management

Islam is Board Chair at Minoryx Therapeutics (Spain) and Gain Therapeutics (Switzerland), a public company.

serves on the board of Gain Therapeutics (GAIN) and Processa Pharmaceuticals (PCSA), both of which are publicly traded.

In the past, he

has served as Chairman of the Board of Directors of Immunomedics (USA), Pcovery Aps (Copenhagen), Adenium Aps (Copenhagen) and C10 Pharma

AS (Oslo) and on the board of Karolinska Development (Sweden) and MolMed S.p.A.

Islam’s extensive international pharmaceutical expertise in transitioning companies from development to

production strengthens the Board’s collective qualifications, skills and experience.

Cook has been a director of Fennec

since September 2019.

Cook previously served as SVP and Head of Gene Therapy Strategy at PTC Therapeutics from August 2018

until February 2020.

Previously she was one of the founding members and Chief Operating Officer of Agilis Biotherapeutics,

a clinical-stage company focused on gene therapies for rare diseases of the central nervous system, from December 2013 until

its acquisition by PTC Therapeutics in August 2018.

While at Agilis she led the sale of the company to PTC in a deal that

represented significant value to all parties.

Cook’s career spans a wide range of experiences including VP of Clinical

Research at InSound Medical and Director of Audiology at Songbird Hearing, both successful biotech start-up companies within the

hearing industry.

She has been Assistant Professor of Audiology and Director of the Hearing Aid Program at Mayo Clinic.

earned a BA from Loyola University in Maryland, M.Aud.

from University of South Carolina, and PhD from Arizona State University

in Hearing Science.

She completed a clinical fellowship at Johns Hopkins School of Medicine in Baltimore, MD.

Her extensive scientific,

clinical and executive business experience strengthens the Board’s collective qualifications, skills and expertise.

Audit Committee

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by the Board.

The directors have appointed an Audit Committee

consisting of three directors:

Rallis, Khalid Islam and Adrian Haigh, each of whom is independent and financially literate

within the meaning of National Instrument 52-110 –

Audit Committees and is independent under Rule 5605(a)(2) of the

Nasdaq listing standards.

directors have appointed an Audit Committee consisting of three directors:

Rallis, Khalid Islam and Adrian Haigh, each

of whom is independent and financially literate within the meaning of National Instrument 52-110 –

Audit Committees and is

independent under Rule 5605(a)(2) of the Nasdaq listing

In addition, the Board has determined that Mr.

Rallis qualifies as an “audit committee financial

expert,”

as defined in Item 407(d)(5) of Regulation S-K promulgated by the SEC based on his business and financial experience

described above.

Rallis qualifies as an “audit committee financial expert,”

as defined in Item 407(d)(5) of Regulation S-K promulgated by the SEC based on his business and financial experience described

Code of Ethics

In February 2004, our Board adopted a Mandate

of the Board of Directors, Corporate Governance Guidelines and a Code of Business Conduct and Ethics (the “Conduct and Ethics

Code”) applicable to all of our officers, directors and employees.

We are committed to adhering to applicable legal

requirements and maintaining the highest standards of conduct and integrity.

The Conduct and Ethics Code sets out the legal

and ethical standards of conduct for our personnel and addresses topics such as:

In February 2004, our Board adopted

a Mandate of the Board of Directors, Corporate Governance Guidelines and a Code of Business Conduct and Ethics (the “Conduct

and Ethics Code”) applicable to all of our officers, directors and employees.

We are committed to adhering to applicable

legal requirements and maintaining the highest standards of conduct and integrity.

The Conduct and Ethics Code sets out the

legal and ethical standards of conduct for our personnel and addresses topics such as:

reporting obligations and procedures;

ethical conduct and conflicts of interest;

and ethical conduct and conflicts of interest;

compliance with applicable laws and Company policies and procedures;

5 unchanged sentences

The Conduct and Ethics Code was updated in June of 2019 and is available on our website at www.fennecpharma.com.

We will post any amendment to this code, as

well as any waivers that are required to be disclosed by the rules of the SEC, on our website promptly following the date of such

amendment or waiver.

We undertake to provide to any person without charge, upon request, a copy of the Conduct and Ethics Code

by writing to Attn:

We will post any amendment to this code,

as well as any waivers that are required to be disclosed by the rules of the SEC, on our website promptly following the date

of such amendment or waiver.

We undertake to provide to any person without charge, upon request, a copy of the Conduct and Ethics

Code by writing to Attn:

Code of Ethics Request, Fennec Pharmaceuticals Inc., 68 TW Alexander Drive, PO Box 13628, Research Triangle

Park, North Carolina 27709.

Section 16(a) Beneficial Ownership Reporting

Under Section 16(a) of the Exchange Act,

our directors and executive officers and any person who beneficially owns more than 10% of our outstanding common shares (“reporting

Delinquent Section 16(a) Reports

Under Section 16(a) of the Exchange

Act, our directors and executive officers and any person who beneficially owns more than 10% of our outstanding common shares (“reporting

persons”) are required to report their initial beneficial ownership of our common shares and any subsequent changes in that

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The following table sets out certain information

respecting the compensation paid to our Chief Executive Officer and our Chief Financial Officer (“Named Executive Officers”)

for the fiscal years ended December 31, 2019 and December 31, 2018.

respecting the compensation paid to our Chief Executive Officer, our Chief Financial Officer, and our Chief Commercial Officer

(“Named Executive Officers”) for the fiscal years ended December 31, 2020 and December 31, 2019.

Name and Principal Position

6 unchanged sentences

Raykov and Mr.

Andrade of 150,000 and 100,000 and 80,000 and 50,000

options, respectively, on April 4, 2019 and February 6, 2018, at an exercise price of $4.38 and $8.38 per common share, respectively.

The grant to Ms.

Goel was dated September 9, 2019 at an exercise price of $4.74.

All option grants expire 10 years after grant

One-third of these options shall vest and may be exercised one year after the grant date (the “Vesting Commencement

Date”).

The remaining two-thirds of the options shall vest monthly at a rate of 1/36 th of the remaining grant

and shall be exercisable as of the last day of each following month after the Vesting Commencement Date.

As of the third anniversary

of the grant date, all of the options shall be vested.

Andrade of 250,000 and 150,000 and 125,000

and 80,000 options, respectively, on May 15, 2020 and April 4, 2019, at an exercise price of $6.93 and $4.38 per common

share, respectively.

Grants to Ms.

Goel were for 25,000 and 175,000 options granted on May 15, 2020 and September 9,

2019, respectively, at an exercise price of $6.93 and $4.74, respectively.

All option grants expire 10 years after grant date.

One-third of these options shall vest and may be exercised one year after the grant date (the “Vesting Commencement Date”).

The remaining two-thirds of the options shall vest monthly at a rate of 1/24 th of the remaining grant and shall be exercisable

as of the last day of each following month after the Vesting Commencement Date.

As of the third anniversary of the grant date,

all of the options shall be vested.

Goel was hired as our Chief Commercial Officer in September 2019.

Rostislav Raykov

Raykov has been employed by us since July

Raykov has been employed by us

since July 2009.

Pursuant to an employment agreement dated May 3, 2010 between Mr.

Raykov and Fennec, Mr.

Raykov is employed as

our Chief Executive Officer and:

(a) received an initial annual salary in the amount of $140,000, subject to annual adjustment

by our Board of Directors, (b) upon approval by shareholders of our amended stock option plan was granted options to purchase up

to 5.0% of our common shares estimated by us to be outstanding upon completion of the 2010 Rights Offering, and (c) may receive

annual bonuses at the sole discretion of the Board.

Raykov’s employment terminates due to a change of control

of Fennec, Mr.

is employed as our Chief Executive Officer and:

(a) received an initial annual salary in the amount of $140,000, subject to

annual adjustment by our Board of Directors, (b) upon approval by shareholders of our amended stock option plan was granted

options to purchase up to 5.0% of our common shares estimated by us to be outstanding upon completion of our 2010 rights offering,

and (c) may receive annual bonuses at the sole discretion of the Board.

Raykov’s employment terminates

due to a change of control of Fennec, Mr.

Raykov’s remaining unvested options shall immediately vest and be fully exercisable.

dismissed from employment by us for any reason other than “for cause,”

we are obligated to pay Mr.

Raykov severance

compensation equal to twelve months of salary.

The initial term of the agreement was for one year and the agreement automatically

extends for additional one-year periods unless terminated by either party in accordance with the agreement.

Effective April 1,

Raykov’s salary was increased to $400,000 per year.

Raykov is dismissed from employment by us for any reason other than “for cause,”

we are obligated to pay

Raykov severance compensation equal to twelve months of salary.

The initial term of the agreement was for one year and

the agreement automatically extends for additional one-year periods unless terminated by either party in accordance with the agreement.

Effective February 10, 2020, Mr.

Raykov’s salary was increased from $400,000 to $430,000 per year.

Robert Andrade

Andrade has been employed by us since

November 2015.

Andrade is employed as Fennec’s Chief Financial Officer.

Pursuant to an employment agreement dated

November 13, 2015, Mr.

Andrade (a) receives an initial annual salary in the amount of $165,000, and (b) may receive annual bonuses

at the sole discretion of the Board.

Andrade’s employment terminates due to a change of control of the Fennec,

Andrade has been employed by us

since November 2015.

Pursuant to an employment agreement dated November 13, 2015, Mr.

Andrade is employed as our

Chief Financial Officer and:

(a) received an initial annual salary in the amount of $165,000, and (b) may receive annual

bonuses at the sole discretion of the Board.

Andrade’s employment terminates due to a change of control

of the Fennec, Mr.

Andrade’s remaining unvested options shall immediately vest and be fully exercisable.

Andrade is dismissed from

employment by us for any reason other than “for cause,”

is dismissed from employment by us for any reason other than “for cause,”

we are obligated to pay Mr.

Andrade severance compensation

equal to six months of salary.

Effective April 1, 2019, Mr.

Andrade’s salary was increased to $290,000 per year.

Goel has been employed by us since September

severance compensation equal to six months of salary.

Effective February 10, 2020, Mr.

Andrade’s salary was increased

from $290,000 to $311,750 per year.

Goel has been employed by us since

September 2019.

Pursuant to an employment agreement dated September 9, 2019, Ms.

Goel is employed as Fennec’s Chief Commercial Officer

(a) received an initial annual salary in the amount of $360,000, subject to annual adjustment by our Board of Directors, and

(b) may receive annual bonus of up to 40% of her base salary per twelve month period, at the discretion of the CEO and the Board

of Directors.

Goel’s employment is terminated by us for any reason other than “for cause”, we are obligated

Goel (i) severance in the amount of three months of employees base salary, (ii) prorate share of any target bonus earned

Goel is employed as Fennec’s

Chief Commercial Officer and:

(a) receives an initial annual salary in the amount of $360,000, subject to annual adjustment

by our Board of Directors, and (b) may receive annual bonus of up to 40% of her base salary per twelve month period, at the

discretion of the CEO and the Board of Directors.

Goel’s employment is terminated by us for any reason other

than “for cause”, we are obligated to pay Ms.

Goel (i) severance in the amount of three months of employees

base salary, (ii) prorate share of any target bonus earned by Ms.

Goel and, (iii) accelerated vesting of stock options.

The initial term of the agreement was for one year and the agreement

automatically extends for additional one-year periods unless terminated by either party in accordance with the agreement.

The initial term of the agreement was for one year and the agreement automatically extends for additional one-year periods unless

terminated by either party in accordance with the agreement.

In addition to their employment agreements,

Andrade and Ms.

Goel are a party to a confidentiality and intellectual property agreement with the Company.

Goel are a party to a confidentiality and intellectual property agreement with the

In the employment agreements for each of Mr.

Andrade and Ms.

Goel, “for cause”

is generally defined as (1) material breach of the terms of the employment

or intellectual property agreements;

(2) failure to perform the duties inherent in their position in good faith and in a reasonable

and appropriate manner;

is generally defined as (1) material breach of the terms of the employment or intellectual

property agreements;

(2) failure to perform the duties inherent in their position in good faith and in a reasonable and appropriate

or (3) acts of fraud or embezzlement or other intentional misconduct which adversely affects our business.

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The following table provides details regarding

the estimated incremental payments from the Corporation to each of the current Named Executive Officers assuming termination without

cause on December 31, 2019.

the estimated incremental payments from us to each of the current Named Executive Officers assuming termination without cause on

December 31, 2020.

Estimated Bonus

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The following table provides details regarding

the estimated incremental payments from the Corporation to each of the current Executive Officers upon change of control.

Change of Control Multiple

the estimated incremental payments from us to each of the current Named Executive Officers upon change of control.

Change of Control

Estimated Bonus (1)

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Change of control payments are calculated based on the two-year annualized average salary plus cash bonus as calculated as of December 31, 2020.

In addition to the payments above, an incentive

plan has been established pursuant to which, upon completion of a change in control transaction, 1% of the transaction value (up

to a maximum of $2,000,000) be set aside and paid to key personnel upon completion of such change in control transaction, with

50% of such incentive pool being payable to the CEO and the balance to other key personnel as determined by the CEO in consultation

with the Compensation Committee.

In addition to the payments above, an incentive plan has been

established pursuant to which, upon completion of a change in control transaction, 1% of the transaction value (up to a maximum

of $2,000,000) be set aside and paid to key personnel upon completion of such change in control transaction, with 50% of such incentive

pool being payable to the CEO and the balance to other key personnel as determined by the CEO in consultation with the Compensation

Equity Grants, Exercises and Holdings

The following table sets forth information

concerning the number and value of unexercised options held by each Named Executive Officer as of December 31, 2019.

All executive

awards, with the exception of those expiring 6/27/2027, 02/06/2028 and 04/04/2029 vest and are exercisable immediately.

The following table sets forth information concerning the number

and value of unexercised options held by each Named Executive Officer as of December 31, 2020.

All executive awards, with

the exception of those expiring 06/27/2027, 02/06/2028, 04/04/2029 and 05/15/2030, vest and are exercisable immediately.

stock option plan provides for grants denominated in US and CAD dollars.

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Director Compensation Table

The following table summarizes the compensation

earned by our non-executive directors for the year ended December 31, 2019.

The following table summarizes the compensation earned by our

non-executive directors for the year ended December 31, 2020.

Fees paid in Cash

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(1) Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718.

(2) Detail of grants are presented in the following table:

(2) Detail of option grants are presented in the following table:

Date of Grant

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Option Exercise Price $USD

June 18, 2019

November 13, 2019

The annual compensation considerations for

non-executive directors also include the awarding of stock options.

We believe that granting of options to the non-executive directors

serves three primary purposes:

(1) to recognize the significant time and effort commitments of being a member of our Board;

to provide long-term incentives for future efforts since the value of the options is directly dependent on our market valuation;

August 13, 2020

The annual compensation considerations

for non-executive directors also include the awarding of stock options.

We believe that granting of options to the non-executive

directors serves three primary purposes:

(1) to recognize the significant time and effort commitments of being a member of

(2) to provide long-term incentives for future efforts since the value of the options is directly dependent on

our market valuation;

and (3) to retain quality individuals.

When determining whether and how many new option grants will be made, the Compensation Committee

takes into account the amount and terms of any outstanding options.

We do not require our non-executive directors to own a specific

amount of our common shares.

When determining whether and how many new option grants will

be made, the Compensation Committee takes into account the amount and terms of any outstanding options.

We do not require our non-executive

directors to own a specific amount of our common shares.

Each of Adrian J.

Haigh, Khalid Islam, Marco

Brughera, Jodi Cook and Chris A.

Haigh, Khalid Islam,

Marco Brughera, Jodi Cook and Chris A.

Rallis has entered into an Independent Director Agreement

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The following table sets forth information

regarding our common shares beneficially owned as of February 11, 2020 by:

regarding our common shares beneficially owned as of March 29, 2021 by:

(i) each of our officers and directors;

(ii) all officers

and directors as a group;

and (iii) each person known by us to beneficially own five percent or more of our outstanding common

Except as indicated below, the security holders listed possess sole voting and investment power with respect to the shares

beneficially owned by that person.

Except as otherwise indicated below, the address for each listed shareholder is c/o Fennec

Pharmaceuticals Inc., 68 TW Alexander Drive, PO Box 13628, Research Triangle Park, North Carolina 27709.

officers and directors as a group;

and (iii) each person known by us to beneficially own five percent or more of our outstanding

common shares.

Common shares Options Exercisable Within 60 Days

Common shares Purchase Warrants Exercisable Within 60 Days

Total Stock and Stock Based Holdings (1)

Except as indicated below, the security holders listed possess sole voting and investment power with respect to

the shares beneficially owned by that person.

Except as otherwise indicated below, the address for each listed shareholder

is c/o Fennec Pharmaceuticals Inc., 68 TW Alexander Drive, PO Box 13628, Research Triangle Park, North Carolina 27709.

Common shares

Within 60 Days

Common shares

Within 60 Days

Total Stock and

Ownership (1)

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Essetifin SpA (3)

venBio Select Fund LLC (4)

Avoro Capital Advisors (4)

Sonic Fund II, LP.

For purposes of this table “beneficial ownership”

is determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, pursuant to which a person or group of persons is deemed to have “beneficial ownership”

of any common shares that such person or group has the right to acquire within 60 days after February 11, 2020.

of any common shares that such person or group has the right to acquire within 60 days after March 29, 2021.

For purposes of computing the percentage of outstanding common shares held by each person or group of persons named above, any shares that such person or group has the right to acquire within 60 days after February 11, 2020 are deemed outstanding but are not deemed to be outstanding for purposes of computing the percentage ownership of any other person or group.

As of February 11, 2020, there were 19,895,830 common shares issued and outstanding.

As of March 29, 2021, there were 26,002,853 common shares issued and outstanding.

Southpoint Capital Advisors, LP, 623 Fifth Avenue, Suite 2503, New York, New York 10022.

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Mario Artali holds dispositive power over the shares owned by Essetifin SpA.

venBio Select Fund LLC, 110 Greene Street, Suite 800, New York, NY 10012.

Scott Esptein holds dispositive power over the shares held by venBio Select Fund LLC

Avoro Capital Advisors, 110 Greene Street, Suite 800, New York, NY 10012.

Scott Esptein holds dispositive power over the shares held by Avoro Capital Advisors

(5) Sonic Fund II, LP, 400 Hobron Lane, Suite 3709,

Honolulu, HI 96815.

Lawrence Kam holds dispositive power over the shares held by Sonic Fund II, LP.

Equity Compensation Plan Information

The following table provides certain information

with respect to securities authorized for issuance under equity incentive plans as of December 31, 2019 (share amounts are in thousands):

The following table provides certain information with respect

to securities authorized for issuance under equity incentive plans as of December 31, 2020.

(share amounts are in thousands):

Plan Category

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Equity compensation plans approved by security holders

* Our current stock option plans allow for the issuance of stock options denominated in both U.S.

and Canadian dollars.

This table presents the number and weighted-average exercise price of outstanding options by the currency

associated with the original grants.

At December 31, 2019, we had outstanding options to purchase 2.44 million of our common

shares denominated in U.S.

dollars with a weighted-average exercise price of $4.05 and outstanding options to purchase 648,000

of our common shares denominated in CAD dollars with a weighted-average exercise price of CAD$2.43 (for total outstanding options

to purchase 3.10 million of our common shares with a combined weighted-average exercise price of USD$3.59 with Canadian denominated

exercise prices converted using the December 31, 2019 exchange rate of 0.7682 CAD/USD).

At December 31, 2019, there were 1.89 million

common shares available for future grants under our current stock option plan.

There were also 0.04 million warrants outstanding

with an exercise price of $6.80.

* Our current stock option plan allows for the issuance of stock options denominated in both U.S.

dollars and Canadian dollars.

December 31, 2020, there were 3.55 million common shares available for future grants under our current stock option plan.

Certain Relationships and Related Transactions, and Director Independence

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There were no reportable transactions with

related parties during the year ended December 31, 2019 in which the amount involved exceeded the lesser of $120,000 or one percent

of the average of our total assets at year-end for the last two completed fiscal years.

related parties during the year ended December 31, 2020 in which the amount involved exceeded the lesser of $120,000 or one

percent of the average of our total assets at year-end for the last two completed fiscal years.

Indemnifications

Related to Officers and the Board of Directors.

We have agreed to indemnify members of

our Board of Directors (the “Board”) and certain of our officers if they are named or threatened to be named as a party

to any proceeding by reason of the fact that they acted in such capacity.

We maintain directors’

and officers’

(“D&O”)

insurance coverage to protect against such losses.

We have not historically incurred any losses related to these types of indemnifications.

Presently, we are defending a suit against our board and certain named officers.

Management is unable to estimate a dollar value

related to the suit, nor can it determine the probability of an outcome either in favour or against the Company.

As a result, we

have not recorded any liabilities related to such indemnifications as of December 31, 2020.

In addition, as a result of the

insurance policy coverage, we believe these indemnification agreements are not significant to our results of operations.

Director Independence

The Board of Directors is composed of a majority

of independent directors.

The Board applies the definition of independence found in the Nasdaq listing standards and in Canadian

National Instrument 58-101 and National Policy 58-201.

The Board of Directors is composed of a

majority of independent directors.

The Board applies the definition of independence found in the Nasdaq listing standards and in

Canadian National Instrument 58-101 and National Policy 58-201.

The Board has determined that Mr.

Brughera, Haigh, Islam, Rallis and Ms.

Brughera, Haigh, Islam,

Rallis and Ms.

Cook are “independent.”

Raykov, our Chief Executive Officer, is considered to have a material relationship with

us by virtue of his executive officer position and is therefore not independent.

We are of the view that the composition of our

Board reflects a diversity of background and experience that are important for effective corporate governance.

Other directorships

held by Board members are described in this Annual Report under the heading “Directors and Executive Officers.”

Raykov, our Chief Executive Officer, is considered to have a material

relationship with us by virtue of his executive officer position and is therefore not independent.

We are of the view that the

composition of our Board reflects a diversity of background and experience that are important for effective corporate governance.

Other directorships held by Board members are described in this Annual Report under the heading “Directors and Executive

Officers.”

Principal Accounting Fees and Services

The following presents the aggregate fees

for professional services and other services rendered by our independent auditors, Haskell & White LLP in fiscal year 2019

The following presents the aggregate fees for professional services

and other services rendered by our independent auditors, Haskell & White LLP in fiscal year 2020 and 2019:

Audit Fees (1)

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All Other Fees include fees for products and services other than Audit Fees, Audit Related Fees and Tax Fees.

The Audit Committee does not have formal pre-approval

policies and procedures;

however, prior to their engagement by us, the Audit Committee approved all of the services performed by

Haskell & White LLP as required by SEC regulation.

The Audit Committee does not have formal pre-approval policies

and procedures;

however, prior to their engagement by us, the Audit Committee approved all of the services performed by Haskell &

White LLP as required by SEC regulation.

Exhibits, Financial Statement Schedules

(a) The following documents

are included as part of this Annual Report filed on Form 10-K:

(a) The following documents are included

as part of this Annual Report filed on Form 10-K:

Financial Statements –

See Index to Financial Statements on page F-1.

All schedules are omitted as

the information required is inapplicable or the information is presented in the financial statements.

See Index to Financial Statements

All schedules are omitted as the information required

is inapplicable or the information is presented in the financial statements.

Notice of Articles dated August 25, 2011

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Exhibit 10.31 to the Form 10-Q of the Company filed May 14, 2010

Form of Subscription Agreement from June 8, 2017 Private Placement

Exhibit 10.15 to the Form S-1 of the Company filed August 10, 2017

Subscription Agreement,

dated November 15, 2013, between the Company, Technologies Inc.

and Manchester Management LLC

Exhibit 10.19 to the Form 10K/A of the Company filed April 2, 2014

Form of Subscription Agreement from December 3, 2014 private placement

Exhibit 10.20 to the Form 10K of the Company filed March 31, 2015

Executive Employment Agreement dated November 12, 2015 by and between Fennec and Robert Andrade*

Exhibit 10.40 to the Form 10-Q of the Company filed November 12, 2015

Subscription Agreement, dated April 8,2016, between Fennec Pharmaceuticals Inc.

and Sigma Tau Finanzaria

Exhibit 10.41 to the Form 10-Q of the Company filed May 12, 2016

Purchase Agreement, dated May 9, 2016, between Fennec Pharmaceuticals Inc.

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Exhibit 10.1 to the Form 8-K of the Company filed February 4, 2019

First Amendment to Loan and Security Agreement dated as of June 25, 2020 by and between Fennec Pharmaceuticals, Inc.

and Western Alliance Bank

Exhibit 10.1 to the Form 8-K of the Company filed June 26, 2020

At The Market Offering Agreement, dated October 30, 2020, between Fennec Pharmaceuticals Inc.

Wainwright & Co., LLC

Exhibit 1.1 to the Form 8-K of the Company filed October 30, 2020

Letter Regarding Change in Certifying Accountant

Exhibit 16.1 to the Form 8-K of the Company filed May 17, 2017

Filed herewith

Exhibit 21 to the 10-K of the Company filed February 14, 2020

Consent of Haskell & White LLP Independent Registered Public Accounting Firm

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Form 10-K Summary

Pursuant to the requirements of Section 13

of 15(d) the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report to be signed on its behalf by the

undersigned, thereunto duly authorized.

Pursuant to the requirements of Section 13 of 15(d) the

Securities Exchange Act of 1934, the registrant has duly caused this Annual Report to be signed on its behalf by the undersigned,

thereunto duly authorized.

Fennec Pharmaceuticals Inc.

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Chief Executive Officer and Director

February 14, 2020

We, the undersigned directors and officers

of Fennec Pharmaceuticals Inc., do hereby constitute and appoint Rostislav Raykov, as our true and lawful attorney-in-fact and

agent with power of substitution, to do any and all acts and things in our name and behalf in our capacities as directors and officers

and to execute any and all instruments for us and in our names in the capacities indicated below, which such attorney-in-fact and

agent may deem necessary or advisable to enable said corporation to comply with the Securities Exchange Act of 1934, as amended,

and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Annual Report on

Form 10-K, including specifically but without limitation, power and authority to sign for us or any of us in our names in the capacities

indicated below, any and all amendments hereto;

and we do hereby ratify and confirm all that said attorney-in-fact and agent, shall

do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities

Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of the registrant and in the

capacities and on the dates indicated.

March 30, 2021

We, the undersigned directors and officers of Fennec Pharmaceuticals

Inc., do hereby constitute and appoint Rostislav Raykov, as our true and lawful attorney-in-fact and agent with power of substitution,

to do any and all acts and things in our name and behalf in our capacities as directors and officers and to execute any and all

instruments for us and in our names in the capacities indicated below, which such attorney-in-fact and agent may deem necessary

or advisable to enable said corporation to comply with the Securities Exchange Act of 1934, as amended, and any rules, regulations

and requirements of the Securities and Exchange Commission, in connection with this Annual Report on Form 10-K, including

specifically but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below,

any and all amendments hereto;

and we do hereby ratify and confirm all that said attorney-in-fact and agent, shall do or cause

to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act

of 1934, this Annual Report has been signed below by the following persons on behalf of the registrant and in the capacities and

on the dates indicated.

/s/ Rostislav Raykov

Chief Executive Officer

February 14, 2020

March 30, 2021

Rostislav Raykov

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Chief Financial Officer

February 14, 2020

March 30, 2021

Robert Andrade

(principal financial officer and

(principal financial officer and principal

accounting officer)

/s/ Adrian J.

February 14, 2020

March 30, 2021

/s/ Marco Brughera

February 14, 2020

March 30, 2021

Marco Brughera

/s/ Jodi Cook

February 14, 2020

March 30, 2021

FENNEC PHARMACEUTICALS INC.

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ACCOUNTING FIRM

To the Shareholders and Board of Directors

To the Shareholders and Board of Directors and

Fennec Pharmaceuticals Inc.

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balance sheets of Fennec Pharmaceuticals Inc.

and subsidiaries (the “Company”) as of December 31, 2019 and 2018, and

the related consolidated statements of operations, shareholders’

and subsidiaries (the “Company”) as of December 31, 2020 and 2019,

and the related consolidated statements of operations, shareholders’

equity, and cash flows for each of the years then ended,

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financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company

as of December 31, 2019 and 2018, and the consolidated results of its operations and its cash flows for each of the years then

ended, in conformity with accounting principles generally accepted in the United States of America.

as of December 31, 2020 and 2019, and the consolidated results of its operations and its cash flows for each of the years

then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matter communicated

below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required

to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated

financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the

critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we

are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts

or disclosures to which they relate.

Fair Value of Stock Options –

Refer to Note 4 to the Consolidated Financial Statements

Critical Audit Matter Description:

The Company uses the Black-Scholes option-pricing

model to estimate the fair value of its stock options.

The Black-Scholes option-pricing model involves the use of significant estimates,

including the following:

Expected dividend yield;

Risk-free interest rate;

Expected share price volatility;

Expected life of the award.

Given the significant estimates involved

in estimating the fair value of stock options, the related audit effort in evaluating management’s estimates in determining

the fair value of stock options was extensive and required a high degree of auditor judgment.

How the Critical Audit Matter was Addressed

in the Audit:

We obtained an understanding over the Company’s

process to estimate the fair value of stock options, including how the Company develops each of the estimates required to utilize

the Black-Scholes option-pricing model.

We applied the following audit procedures related to testing the Company’s estimates

utilized in the Black-Scholes option-pricing model:

We performed a look-back at the Company’s previously issued dividends, noting there were

We inquired with management of the Company who informed us that no future dividends were currently anticipated.

We compared the Company’s risk-free interest rate used to the comparable United States treasury

yield for a term comparable to the stock options’

expected term.

We recalculated the Company’s historical share price volatility for a term comparable to

the stock options’

expected term.

We recalculated the expected term of stock options granted to employees and non-employee directors

using the simplified method, whereby, the expected term equals the average of the vesting term and the original contractual term

of the option.

/s/ Haskell & White LLP

HASKELL & WHITE LLP

We have served as the Company’s auditor

We have served as the Company’s auditor since 2017.

Irvine, California

February 14, 2020

March 30, 2021

Fennec Pharmaceuticals Inc.

Balance Sheets

Consolidated Balance Sheets

dollars and shares in thousands)

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Total liabilities and shareholders’

(The accompanying notes are an integral

part of these consolidated financial statements)

(The accompanying notes

are an integral part of these consolidated financial statements)

Fennec Pharmaceuticals Inc.

Consolidated Statements

of Operations

Statements of Operations

dollars and shares in thousands, except per share information)

Eniluracil royalty

Operating expenses:

1 unchanged sentence

General and administrative

Total operating expenses

Loss from operations

Other income/(expense):

Unrealized gain/(loss) on derivatives (Note 5)

Amortization expense

Other income/(loss)

Net interest income

Total other income/(loss), net

Unrealized gain on securities

Other (loss)/income

Interest income

Total other (expense)/income

Loss per common share, basic and diluted

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Fennec Pharmaceuticals Inc.

Statements of Cash Flows

Consolidated Statements of Cash Flows

dollars in thousands)

2 unchanged sentences

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

Unrealized (gain)/loss on derivatives

Amortization of deferred issuance costs

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Cash paid for issuance costs

Short swing profit judgment offset with settlement expense

Issuance of shares, options exercise

Issuance of shares, warrants exercise

Net cash (used in)/provided by financing activities

Issuance of shares, net of issuance costs

Net cash provided by/used in financing activities

Increase in cash and cash equivalents

1 unchanged sentence

Cash and cash equivalents - End of year

Supplemental disclosures of cash flow information:

Non-cash investing and financing activities:

Non-cash financing (insurance policy)

Non-cash deferred issuance cost (warrant value)

2 unchanged sentences

Fennec Pharmaceuticals Inc.

Statements of Shareholders' Equity

Consolidated Statements of Shareholders'

dollars and shares in thousands)

1 unchanged sentence

Stockholders'

Number (Note 7)

Balance at December 31, 2018

Short swing profit judgment offset with settlement expense

Stock options issued to consultants

Stock options issued to employees

Exercise of stock options

Exercise of warrants

Warrants issued to consultants

Balance at December 31, 2019

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Stock options issued to employees

Warrants issued to consultants

Issuance of securities

Exercise of stock options

Balance at December 31, 2020

2 unchanged sentences

Fennec Pharmaceuticals Inc.

to the Consolidated Financial Statements

Notes to the Consolidated Financial

dollars and shares in thousands,

9 unchanged sentences

and subsequently changed its name on September 3, 2014.

Fennec, together with

its wholly owned subsidiaries Oxiquant, Inc.

(“Oxiquant”) and Fennec Pharmaceuticals, Inc., both Delaware corporations,

and Cadherin Biomedical Inc.

(“CBI”), a Canadian corporation and Fennec Pharmaceuticals (EU) Limited (“Fennec

Limited”), collectively referred to herein as the “Company,”

is a biopharmaceutical company with a product candidate

under development for use in the treatment of cancer.

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

are inactive.

These consolidated financial statements have

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

Fennec, together

with its wholly owned subsidiaries Oxiquant, Inc.

(“Oxiquant”) and Fennec Pharmaceuticals, Inc., both Delaware

corporations, and Cadherin Biomedical Inc.

(“CBI”), a Canadian corporation and Fennec Pharmaceuticals (EU) Limited

(“Fennec Limited”), collectively referred to herein as the “Company,”

is a biopharmaceutical company with

a product candidate under development for use in the treatment of cancer.

With the exception of Fennec Pharmaceuticals, Inc.,

all subsidiaries are inactive.

These 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 year ended December 31, 2019, the

Company incurred a net loss from operations of $12,775 and still has not earned any revenue in its history.

At December 31,

2019 it had an accumulated deficit of $144,031 and had experienced negative cash flows from operating activities in the amount

of $9,060 for the year ended December 31, 2019.

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 4.75%)

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 has agreed to grant 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 raise, along with the current cash on hand, provides sufficient funding for the Company to carry-out its planned

activities for the next fifteen to eighteen 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.

During the year ended December 31,

2020, the Company incurred a loss from operations of $17,885 and still has not earned any significant revenue in its history from

the commercial sale of its product candidate.

At December 31, 2020 it had an accumulated deficit of $162,140 and had

experienced negative cash flows from operating activities in the amount of $15,595 for the year ended December 31, 2020.

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 $34,100 ($32,189 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 TM 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 has agreed to grant 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.

On June 26, 2020, Fennec announced

an amendment to the Loan and Security Agreement with Bridge Bank.

This amendment provides Fennec with an $18.0 million debt facility

comprised of two term loans.

Term Loan A consists of $12.5 million to be funded upon NDA approval of PEDMARK TM in the

to be made available upon NDA approval of PEDMARK TM by no later than December 31, 2020 and 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.

On August 6, 2020, the Company paid cash for the extended facility.

These statements reflect that fee being settled with cash instead of a warrant.

Under Accounting Standards Codification ("ASC")

470-50, Modifications and Extinguishments, the amendment was considered a modification.

As such, the Company had been amortizing

the loan fee and the value of the warrant over the remainder of the loan term.

Following the receipt of the U.S.

Food and Drug

Administration’s (“FDA”) Complete Response Letter (“CRL”), management decided to fully amortize the

remaining portions of the loan fee and the value of the warrants.

On August 10, 2020, the Company received

a CRL from the FDA regarding its NDA for PEDMARK TM .

According to the CRL, after recent completion of a pre-approval

inspection of the manufacturing facility of our drug product manufacturer, the FDA identified deficiencies that are required to

be resolved prior to the approval of PEDMARK TM .

Importantly, no clinical safety or efficacy issues were identified during

the review and there is no requirement for further clinical data.

The Company plans to work closely with the third-party drug manufacturer

and the FDA to fully address the CRL and plans to resubmit the NDA for PEDMARK TM in the second quarter of 2021.

The Company believes the funds raised in

the public offering which closed in May 2020 provide sufficient funding for the Company to carry out its planned activities

including potential NDA approval and the commencement of commercialization efforts for at least the next twelve months as it continues

its strategic development of PEDMARK TM .

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial

dollars and shares in thousands,

except per share information)

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.

Accounting Policies

Basis of presentation

The consolidated financial statements include

the accounts of Fennec and of all its wholly-owned subsidiaries.

All inter-company transactions and balances have been eliminated

upon consolidation.

The consolidated financial statements include the accounts of

Fennec and of all its wholly-owned subsidiaries.

All inter-company transactions and balances have been eliminated upon consolidation.

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 consolidated financial statements and the reported amounts

of revenue and expense during the reporting period.

Significant estimates include the valuation of derivative warrant liability

and the valuation of stock-based compensation.

Actual results could differ from those 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 consolidated financial statements and the reported amounts of revenue

and expense during the reporting period.

Significant estimates include the valuation of stock-based compensation.

results could differ from those estimates.

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 December 31, 2019, the Company had $13.7 million in cash and money market accounts (2018- $22.8 million).

market investments typically have minimal risks.

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

Fennec Pharmaceuticals Inc.

to the Consolidated Financial Statements

dollars and shares in thousands,

except per share information)

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.

December 31, 2020, the Company had $30.3 million in cash and money market accounts (2019- $13.7 million).

investments typically have minimal risks.

While the Company has not experienced any loss or write-down of its money market

investments, the amounts it holds in money market accounts are substantially above the $250,000 amount insured by the FDIC and

may lose value.

Financial instruments

Financial instruments recognized on the balance

sheets at December 31, 2019 and December 31, 2018 consist of cash and cash equivalents, accounts payable and accrued liabilities, the carrying values of which, approximate fair value due to their relatively short time to maturity.

Financial instruments recognized on the balance sheets at December 31,

2020 and December 31, 2019 consist of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities,

the carrying values of which, approximate fair value due to their relatively short time to maturity.

The Company does not

hold or issue financial instruments for trading.

The Company’s investment policy is to

manage investments to achieve, in the order of importance, the financial objectives of preservation of principal, liquidity and

return on investment.

Investments, when made, are made in U.S.

The Company’s investment policy is to manage investments

to achieve, in the order of importance, the financial objectives of preservation of principal, liquidity and return on investment.

when made, are made in U.S.

or Canadian bank securities, commercial paper of U.S.

industrial companies, utilities, financial institutions and consumer loan companies, and securities of foreign banks provided the

obligations are guaranteed or carry ratings appropriate to the policy.

Securities must have a minimum Dun & Bradstreet

rating of A for bonds or R1 low for commercial paper.

The policy risks are primarily the opportunity

cost of the conservative nature of the allowable investments.

As the main purpose of the Company is research and development,

the Company has chosen to avoid investments of a trading or speculative nature.

or Canadian industrial companies, utilities,

financial institutions and consumer loan companies, and securities of foreign banks provided the obligations are guaranteed or

carry ratings appropriate to the policy.

Securities must have a minimum Dun & Bradstreet rating of A for bonds or

R1 low for commercial paper.

The policy risks are primarily the opportunity cost of the conservative

nature of the allowable investments.

As the main purpose of the Company is research and development, the Company has chosen

to avoid investments of a trading or speculative nature.

Common shares and warrants

The Company has warrants outstanding to purchase

common shares that were denominated in both United States dollars (“USD”) and Canadian dollars (“CAD”),

which resulted in the Company having warrants outstanding that were denominated outside of the Company’s U.S.

dollar functional

The Company’s outstanding warrants denominated

in Canadian dollars were not considered to be indexed to the Company’s own stock and should therefore be treated as derivative

financial instruments and recorded at their fair value as a liability.

During the year ended December 31, 2018, all warrants

accounted for as derivatives were exercised.

These exercises reduced the derivative liability to $0 as of December 31, 2018.

December 31, 2017, the derivative liabilities were valued at approximately $167,000.

There was an unrealized, non-cash gain on

derivative liabilities of approximately $167,000 upon expiry for the year ended December 31, 2018.

The Company has 0.04 million warrants with a weighted average

strike price of $6.80 outstanding to purchase common shares that were denominated in United States dollars (“USD”).

The Company's revenue is

generated through sales of intellectual property (“IP”).

The Company generates its revenue through one segment

and the revenue recognized under each of the Company's arrangements during the current period is described below.

these agreements may contain multiple promised goods or services or optional goods and services, including licenses to product

candidates, referred to as exclusive licenses, as well as research and development activities to be performed by the Company on

behalf of the collaboration partner related to the licensed product candidates.

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial

dollars and shares in thousands,

except per share information)

Revenue recognition

At this time, the Company does not have any

Research and development costs and investment

Research costs, including employee compensation,

laboratory fees, lab supplies, and research and testing performed under contract by third parties, are expensed as incurred.

Revenue is recognized when

control of the promised goods or services are transferred to customers in an amount that reflects the consideration the Company

expects to be entitled to in exchange for transferring those goods or providing services.

The Company accounts for a contract when

it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract

has commercial substance and collectability of consideration is probable.

When determining whether

the customer has obtained control of the goods or services, the Company considers the point at which the customer may benefit from

the goods or services.

For sale of IP to, revenue is recognized upon grant or transfer of the IP, as the Company's IP is considered

functional in nature.

Performance obligations

A performance obligation

is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606.

A contract’s

transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation

is satisfied.

The Company's contracts may contain multiple performance obligations if a promise to transfer goods or services is

separately identifiable from other promises in a contract and, therefore, is considered distinct.

For contracts with multiple performance

obligations, the Company determines the standalone selling price of each performance obligation and allocates the total transaction

price using the relative selling price basis.

The Company recognizes performance obligations based on their nature.

Significant payment

The Company’s revenue

arrangements include payments to the Company of one or more of the following:

a non-refundable, upfront payment;

milestone payments

and royalties on commercial sales of IP product candidates, if any.

To date, the Company has received upfront payments and several

milestone payments but has not received any license or option fees or earned royalty revenue as a result of product sales.

Under ASC 606, the Company

estimates the amount of consideration to which it will be entitled in exchange for satisfying performance obligations.

the Company’s current contracts, variable consideration primarily exists in the following forms:

development and regulatory

milestones, royalties and sales-based milestones.

The Company utilizes the "most likely amount"

variable consideration

method for estimating development and regulatory milestone consideration to include in the transaction price.

The Company only

includes an amount of variable consideration in the transaction price to the extent it is probable that a significant reversal

in the cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently

The Company refers to this as the variable consideration constraint.

to the uncertainty associated with the occurrence of the underlying events which would trigger development and regulatory milestone

consideration under its revenue arrangements, with the exception of certain initial conditions precedent milestones ,

the Company has concluded the variable consideration associated with all development and regulatory milestones to be fully constrained

as of the ASC 606 transition date and as of December 31, 2020, and therefore has not included such consideration in the transaction

price for any of its revenue arrangements.

The Company will reassess this conclusion at each subsequent reporting period and will

only include amounts associated with regulatory or development milestones in the transaction price when, or if, the variable consideration

is determined to be released from the constraint.

In accordance with ASC

606, the Company is required to adjust the transaction price for the effects of the time value of money if the timing of payments

agreed to by the parties to the contract, explicitly or implicitly, provides the Company or its customer with a significant benefit

of financing the transfer of goods or services.

The Company concluded that its licensing and collaboration arrangements do not

contain a significant financing component because the payment structure of its agreements arise from reasons other than providing

a significant benefit of financing.

Contract assets

The Company did not

have a contract asset as of December 31, 2020 or 2019.

Contract liabilities

The Company did not

have a contract liability as of December 31, 2020 or 2019.

Revenue arrangements

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial

dollars and shares in thousands,

except per share information)

In May 2016, Fennec Pharmaceuticals

(Fennec or the “Company”) sold Eniluracil to Elion Oncology, LLC (Elion).

The agreement called for $40,000 in

cash and 5% royalties to be paid to Fennec for any income derived from the sale of Eniluracil.

The agreement was for the sale,

not license of IP.

In addition, the agreement did not call for any additional good or service beyond the transfer of IP and related

“all information and know-how”, documentation, etc.).

In August 2020, Elion entered into

a license agreement with Processa Pharmaceuticals, Inc.

The license agreement called for equity and cash upon

satisfying the “Condition Precedent”, along with development and regulatory milestone payments, Sales Milestone Payments,

and Product Royalties.

The grant of the license was conditioned upon the “Condition Precedent”

which was defined as

(i) Processa’s closing of a public offering by October 30, 2020 in which Processa raised at least $15M and (ii) Processa’s

shares being listed on NASDAQ.

Upon satisfying the “Condition Precedent”

Elion was entitled to receive $100,000 in

cash and 825,000 in shares of Processa of which the Company is entitled to 5%.

In January 2021, the Company received $5,000

in cash and 41,250 restricted shares of Processa common shares.

The agreement between Elion

and Processa entitles Elion to the payments outlined in the table below.

Fennec would be eligible to receive 5% of the following

based on future milestone events:

Milestone Event

Milestone Payment ($)

1st Year Anniversary of Effective Date

100,000 Restricted Shares

2nd Year Anniversary of Effective Date

100,000 Restricted Shares

1st Patient in Dose Confirmation Study

100,000 Restricted Shares

NDA Submission

300,000 Restricted Shares

1st FDA Approval in US

2nd FDA Approval in US

1st Regulatory Approval Outside US

2nd Regulatory Approval Outside US

The Company notes that the above payments

are conditioned upon the “Condition Precedent”

and thus even the restricted shares that are due only upon the passage

of time are in fact variable.

However, once the “Condition Precedent”

occurred only the passage of time occur in order

for the 1 st and 2 nd Year Anniversary payments to become due and as such the Company must conclude as of the

date the “Condition Precedent”

is satisfied that the 1 st and 2 nd Year Anniversary milestone payments

are also probable of coming to fruition and thus should be included in the transaction price during the 4 th quarter

of 2020 along with the aforementioned “Condition Precedent”

The arrangement with Elion

contains consideration that is variable based on the customer’s achievement of certain development and regulatory milestones.

The next milestone payment the Company may be entitled to receive is 5,000 restricted shares for 1 st patient in

Dose Confirmation Study and then another 15,000 restricted shares for the NDA submission.

These are considered variable consideration

that is fully constrained due to the uncertainty associated with the achievement of the development milestone.

The considerations

related to royalties (first and second FDA approval in US and first and second regulatory approval outside of US) are also variable

consideration that are fully constrained in accordance with the royalty recognition constraint.

The variable consideration related

to royalties will be recognized in the period the products are sold by Processa and the Company has a present right to payment.

The Company recognized $0.2

million in revenue associated with the aforementioned cash and shares it became entitled to for the year ended December 31,

Due to the one year lockup provision on the Processa shares, the Company deemed it reasonable to apply a liquidity discount

of 20% to the valuation of the shares associated with the achievement of the October 30, 2020 milestone.

Shares associated

with the one- and two-year anniversary milestones had a 30 and 40% liquidity discount applied to their fair market valuations.

Subsequent changes to the

fair value of the underlying securities are recognized as unrealized gains or losses on marketable equity securities within the

consolidated statement of operations and comprehensive loss.

and development costs and investment tax credits

Research costs, including employee compensation, laboratory

fees, lab supplies, and research and testing performed under contract by third parties, are expensed as incurred.

costs, including drug substance costs, clinical study expenses and regulatory expenses are expensed as incurred.

Investment tax credits, which are earned as

a result of qualifying research and development expenditures, are recognized when the expenditures are made, and their realization

is reasonably assured.

They are applied to reduce related capital costs and research and development expenses in the year

The Company accounts for income taxes using

the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial

amounts, using currently enacted tax rates.

The Company has deferred tax assets, which are subject to periodic recoverability assessments.

Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that more likely than not will

As of December 31, 2019, we maintained a full valuation allowance against our deferred tax assets.

The provisions of the Financial Accounting

Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740-10, Uncertainty in Income Taxes,

address the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial

Under ASC 740-10, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not

that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position.

Investment tax credits, which are earned as a result of qualifying

research and development expenditures, are recognized when the expenditures are made, and their realization is reasonably assured.

are applied to reduce related capital costs and research and development expenses in the year recognized.

Fennec Pharmaceuticals Inc.

to the Consolidated Financial Statements

Notes to the Consolidated Financial

dollars and shares in thousands,

except per share information)

The Company accounts for income taxes using the asset and liability

method to compute the differences between the tax basis of assets and liabilities and the related financial amounts, using currently

enacted tax rates.

The Company has deferred tax assets, which are subject to periodic recoverability assessments.

Valuation allowances

are established, when necessary, to reduce deferred tax assets to the amount that more likely than not will be realized.

December 31, 2020, we maintained a full valuation allowance against our deferred tax assets.

The provisions of the Financial Accounting Standards Board (“FASB”)

Accounting Standards Codification (“ASC”) 740-10, Uncertainty in Income Taxes, address the determination of whether

tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.

Under ASC 740-10,

we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be

sustained on examination by taxing authorities, based on the technical merits of the position.

Foreign currency translation

dollar is the functional currency

for the Company’s consolidated operations.

dollar is the functional currency for the Company’s

consolidated operations.

All gains and losses from currency translations are included in results of operations.

Loss per share

Basic net loss per share is computed by dividing

net loss by the weighted average number of common shares outstanding during the year.

Diluted net earnings per share is computed

using the same method, except the weighted average number of common shares outstanding includes convertible debentures, stock options

Basic net loss per share is computed by dividing net loss by

the weighted average number of common shares outstanding during the year.

Diluted net earnings per share is computed using

the same method, except the weighted average number of common shares outstanding includes convertible debentures, stock options

and warrants, if dilutive, as determined using the if-converted method and treasury methods.

Accordingly, warrants to purchase

0.04 million of our common shares and options to purchase 3.1 million of our common shares at December 31, 2019, were not included

in earnings per share.

0.04 million of our common shares and options to purchase 3.0 million of our common shares at December 31, 2020, were not

included in earnings per share.

Such options would have an antidilutive effect.

In 2018, options to purchase 2.5 million common shares were

excluded from the computation of earnings per share as their inclusion would have been antidilutive.

In 2019, options to purchase 3.1 million common

shares were excluded from the computation of earnings per share as their inclusion would have been antidilutive.

Recent accounting pronouncements

2 unchanged sentences

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

ASU 2018-13 will have no significant effect on our consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07

to expand the scope of ASC Topic 718, Compensation - Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment

Accounting, to include share-based payment transactions for acquiring goods and services from nonemployees.

The pronouncement is

effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018.

We adopted this

policy as of January 1, 2019.

The Company concluded after evaluation that the impact of ASU 2018-07 on our consolidated financial

statements and disclosures was de minimis.

In February 2016, the FASB issued ASU 2016-02, Leases

The new guidance requires the recognition of lease liabilities, representing future minimum lease payments, on

a discounted basis, and corresponding right-of-use assets on a balance sheet for most leases, along with requirements

for enhanced disclosures to give financial statement users the ability to assess the amount, timing and uncertainty of cash flows

arising from leasing arrangements.

In July 2018, the FASB issued ASU 2018-10 and 2018-11 which permit application of the new guidance

at the beginning of the year of adoption, recognizing a cumulative-effect adjustment to the opening balance of retained earnings

in the period of adoption, in addition to the method of applying the new guidance retrospectively to each prior reporting period

The ASU was effective for us on January 1, 2019.

We concluded the impact of this guidance is negligible on our consolidated

financial statements, given we have no material leases.

Loss per common share is presented under two

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

The Company adopted

this ASU on January 1, 2020.

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

on a prospective basis.

We concluded after evaluation that ASU 2018-13 has no significant effect on our consolidated financial

In January 2021, the FASB issued ASU

2021-01, Reference Rate Reform (Topic 848).

In this ASU, the FASB refines the scope of Topic 848 to clarify that certain

optional expedients and exceptions therein for contract modifications and hedge accounting apply to contracts that are affected

by the discounting transition.

Specifically, modifications related to reference rate reform would not be considered an event that

requires reassessment of previous accounting conclusions.

The ASU also amends the expedients and exceptions in Topic 848 to capture

the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected

by the discounting transition.

The amendments in the ASU are effective immediately for all entities.

Entities may choose to apply

the amendments retrospectively as of any date from the beginning of an interim period that includes or is subsequent to March 12,

2020, or prospectively to new modifications from any date within an interim period that includes or is subsequent to January 7,

2021, up to the date that financial statements are available to be issued.

The Company chose to apply amendments prospectively

and concluded after evaluation that ASU 2021-01 has no significant effect on our consolidated financial statements.

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial

dollars and shares in thousands,

except per share information)

Loss per common share is presented under

basic loss per common share and diluted loss per common share.

Basic loss per common share is computed by dividing net

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

Basic loss per common share is computed by dividing

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

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

6 unchanged sentences

December 31, 2019

December 31, 2018

Weighted-average common shares, basic

4 unchanged sentences

Net loss per share, basic and diluted

Fennec Pharmaceuticals Inc.

to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

The following outstanding options and warrants

were excluded from the computation of basic and diluted net loss per share for the periods presented because including them would

have had an anti-dilutive effect (in thousands):

The following outstanding options and warrants were excluded

from the computation of basic and diluted net loss per share for the periods presented because including them would have had an

anti-dilutive effect (in thousands):

December 31, 2020

2 unchanged sentences

Warrants to purchase common shares

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.

On June 24, 2010,

at the Company’s annual meeting, shareholders approved an amendment to the Company’s Stock Option Plan (the “Plan

Maximum Amendment”).

The Plan Maximum Amendment relates to changing the maximum number of common shares issuable under the

stock option plan from a fixed number of 6.7 million to the number of shares that represents twenty-five percent (25%) of the total

number of all issued and outstanding common shares.

Based upon the current shares outstanding, a maximum of 5.0 million of our

common shares are authorized for issuance under the plan.

The option exercise price for all options issued under the plan

is based on 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 stock option plan, as amended, allows the issuance of

Canadian and U.S.

dollar grants.

A summary of the stock option transactions, for both the Canadian and U.S.

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.

On June 24, 2010, at the Company’s

annual meeting, shareholders approved an amendment to the Company’s Stock Option Plan (the “Plan Maximum Amendment”).

The Plan Maximum Amendment relates to changing the maximum number of common shares issuable under the stock option plan from a

fixed number of 6.7 million to the number of shares that represents twenty-five percent (25%) of the total number of all issued

and outstanding common shares.

Based upon the current shares outstanding, a maximum of 6.5 million of our common shares are authorized

for issuance under the plan.

The option exercise price for all options issued under the plan is based on 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 stock option plan, as amended, allows the issuance of Canadian and U.S.

dollar grants.

through the year ended December 31, 2019 is below.

summary of the stock option transactions, for both the Canadian and U.S.

dollar grants, through the year ended December 31,

2020 is below.

Summary of $CAD Option Activity

Share Prices Reported in $CAD

(in thousands)

Weighted Average

(in thousands)

Outstanding and exercisable at December 31, 2018

1 unchanged sentence

Outstanding and exercisable at December 31, 2020

Summary of $CAD Option Remaining Life

Outstanding and Exercisable at

December 31, 2019

(in thousands)

Weighted Average Remaining Life

Summary of $USD Option Activity

(in thousands)

Weighted Average

(in thousands)

Outstanding and exercisable at December 31, 2018

$ 0.45 –

Outstanding and exercisable at December 31, 2019

$ 0.45 –

Outstanding and exercisable at December 31, 2020

Summary of $USD Option Remaining Life

Number Outstanding and Exercisable at

December 31, 2019

(in thousands)

Remaining Life

$ 0.45 –

Fennec Pharmaceuticals Inc.

to the Consolidated Financial Statements

Notes to the Consolidated Financial

dollars and shares in thousands,

except per share information)

Number Outstanding and Exercisable at

December 31, 2019

(in thousands)

Summary of $USD Option Remaining Life

Outstanding and Exercisable at December 31, 2020

Remaining Life

Stock compensation expense for the fiscal

years ended December 31, 2019 and 2018 was $3.1 million and $2.1 million respectively.

These amounts have been included in

the general and administrative expenses for the respective periods.

The weighted average fair value per share of options granted

and or vested during the fiscal years ended December 31, 2019 and 2018 was $4.83 and $9.12, respectively.

The intrinsic value

(being the difference between the share price at December 31, 2019 and exercise price) of stock options exercisable at December

31, 2019 was $9.1 million.

Stock compensation expense for the fiscal years ended December 31,

2020 and 2019 was $2.9 million and $3.1 million respectively.

These amounts have been included in the general and administrative

expenses for the respective periods.

The weighted average fair value per share of options granted and or vested during the fiscal

years ended December 31, 2020 and 2019 was $6.84 and $4.83, respectively.

The intrinsic value (being the difference between

the share price at December 31, 2020 and exercise price) of stock options exercisable at December 31, 2020 was $12.0

The intrinsic value of options exercised during the fiscal year ended December 31, 2020 was $2.8 million.

The fair value of all options vested during the fiscal year ended December 31, 2019 was $2.1 million.

The fair values of options granted in fiscal

years ended December 31, 2019 and 2018 were estimated on the date the options were granted based on the Black-Scholes option-pricing

model, using the following weighted average assumptions for all options with a ten-year expiration:

value of all options vested during the fiscal year ended December 31, 2020 was $2.4 million.

The fair values of options granted in fiscal years ended December 31,

2020 and 2019 were estimated on the date the options were granted based on the Black-Scholes option-pricing model, using the

following weighted average assumptions for all options with a ten-year expiration:

Year Ended December 31, 2020

4 unchanged sentences

Expected life

The Company uses the historical volatility

and adjusts for available relevant market information pertaining to the Company’s share price.

Fennec Pharmaceuticals Inc.

to the Consolidated Financial Statements

Notes to the Consolidated Financial

dollars and shares in thousands,

except per share information)

Modification of Existing US Dollar Denominated

In 2019, the Company modified the terms of

all outstanding US denominated options extending the expiration date by a weighted average amount of 2.98 years.

The Company recorded

option modification expense of approximately $1.34 million in the year ended December 31, 2019, included in the $3.1 million of

stock compensation in general and administrative expense, discussed above.

Some of the option grants were not fully vested, as

a result, the Company will recognize $0.1 million in expense over the next nine quarters.

The following table summarizes the effect

of the June 18, 2019 transaction:

The Company uses the historical volatility and adjusts for available

relevant market information pertaining to the Company’s share price.

Modification of Existing US Dollar Denominated Options

In 2019, the Company modified the terms of all outstanding US

denominated options extending the expiration date by a weighted average amount of 2.98 years.

The Company recorded option modification

expense of approximately $1.34 million in the year ended December 31, 2019, included in the $3.1 million of stock compensation

in general and administrative expense, discussed above.

Some of the option grants were not fully vested, as a result, the Company

will recognize $0.2 million in expense over the next nine quarters.

The following table summarizes the effect of the June 18,

2019 transaction:

Exercise Price

Modification of Existing Canadian Dollar

Denominated Options

In 2018, the Company modified the terms of

certain options granted to executives and directors by extending the expiration date by a weighted average amount of 2.0 years.

The Company recorded option modification expense of approximately $112,000 included in general and administrative expense.

expense was calculated using the Black-Scholes valuation method with a June 7, 2018 exchange rate of $CAD/$USD 0.7715.

The following

table summarizes the effect of the June 7, 2018 transaction:

Fennec Pharmaceuticals Inc.

to the Consolidated Financial Statements

dollars and shares in thousands,

except per share information)

Number of Options

Share Price $CAD

The Company's derivative

instruments on January 1, 2018 included options to purchase 19,441 common shares, the exercise prices for which are denominated

in a currency other than the Company's functional currency, as follows:

Contractor options to purchase 17,394 common shares exercisable at CAD$1.62 per whole common share that expire on April 4, 2018;

Contractor options to purchase 2,047 common shares exercisable at CAD$2.43 per whole common share that expire on May 18, 2018.

During the year ended

December 31, 2018, all of these derivative options were exercised.

This resulted in gross proceeds of $26,109, the issuance of

19,441 common shares and a non-cash, realized gain on the extinguishment of the remaining derivative liability of $167,131.

During the fiscal years ended December 31,

2011 and 2010, the Company issued 35,892 and 28,796, respectively, options to contractors with a Canadian dollar denominated strike

Consequently, the Company had derivatives relating to these options since the strike price is denominated in a currency

other than the US dollar functional currency of the Company.

While there is an exception to this rule for employees in ASU 2010-13

"Compensation-Stock Compensation (Topic 718):

Effect of Denominating the exercise price of a share-based payment award in

the currency of the market in which the underlying equity security trades", no such exception exists for contractors.

options were marked to market until the earlier of their expiry or exercise.

All Canadian denominated options issued to contractors

fully vested at issuance and were to expire seven years from date of issuance.

The fair value of these options at December 31,

2019 and December 31, 2018 was $0.

The unrealized gain for these options for the year ended December 31, 2018 was $167,131.

The following is a summary of Canadian denominated

contractor option activity for the year ended December 31, 2018 and 2019.

Share Prices Reported in $CAD

Number of Options

Outstanding and Exercisable

(in thousands)

Weighted Average Exercise Price

Outstanding and exercisable at December 31, 2017

Outstanding and exercisable at December 31, 2018

Outstanding and exercisable at December 31, 2019

The following table presents gain on change

in derivative valuation for the year ended December 31, 2019 and December 31, 2018:

Derivative Warrants/Options

Gain (in thousands) on

Instruments at December 31,

Options (various expiration dates)

Value Measurements

The Company has adopted ASC 820 Fair Value

Measurements and Disclosure Topic of the FASB.

This Topic applies to certain assets and liabilities that are being measured and

reported on a fair value basis.

The Fair Value Measurements Topic defines fair value, establishes a framework for measuring fair

value in accordance with US GAAP, and expands disclosure about fair value measurements.

This Topic enables the reader of the financial

statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability

of the information used to determine fair values.

The Topic requires that financial assets and liabilities carried at fair value

be classified and disclosed in one of the following three categories:

Quoted market prices in active markets

for identical assets or liabilities.

Observable market-based inputs or

unobservable inputs that are corroborated by market data.

Unobservable inputs that are not

corroborated by market data.

Expense Recognized $USD

Fennec Pharmaceuticals Inc.

to the Consolidated Financial Statements

Notes to the Consolidated Financial

dollars and shares in thousands,

except per share information)

Assets/Liabilities Measured at Fair Value

on a Recurring Basis

Value Measurements

The Company has adopted ASC 820 Fair Value Measurements and

Disclosure Topic of the FASB.

This Topic applies to certain assets and liabilities that are being measured and reported on a fair

The Fair Value Measurements Topic defines fair value, establishes a framework for measuring fair value in accordance

with US GAAP, and expands disclosure about fair value measurements.

This Topic enables the reader of the financial statements to

assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the

information used to determine fair values.

The Topic requires that financial assets and liabilities carried at fair value be classified

and disclosed in one of the following three categories:

Quoted market prices in active markets for identical

assets or liabilities.

Observable market-based inputs or unobservable inputs

that are corroborated by market data.

Unobservable inputs that are not corroborated by market

Assets/Liabilities Measured at Fair Value on a Recurring

Fair Value Measurement at December 31, (in thousands)

1 unchanged sentence

Market for Identical

Significant Other

Observable Inputs

Significant Other Observable Inputs

Unobservable Inputs

Cash and cash equivalents

(1) The Company held approximately, $347,000 in cash as of December 31, 2019, of which approximately,

Processa common shares

(1) The Company held approximately, $678,000 in cash as of December 31, 2020, of which approximately, $45,000 was in Canadian

funds (translated into U.S.

As of December 31, 2019, the Company held approximately $347,000, of which approximately

30,000 was in Canadian funds (translated into U.S.

As of December 31, 2018, the Company held approximately $770,000,

of which approximately 121,000 was in Canadian funds (translated into U.S.

(2) The Company received 41,250 restricted common shares of Processa (PSCA).

The share restriction will expire in three tranches:

50%, 25% and 25% at the 6, 9 and 12 month intervals, respectively from October 30, 2020.

At October 30, 2020 PSCA shares

were trading at $4.11 per share.

The Company applied a 20% liquidity discount to the shares and will mark to market at each balance

Stockholders’

Authorized capital stock

The Company’s authorized capital stock

consists of an unlimited number of shares of no-par common shares.

The Company’s authorized capital stock consists of an

unlimited number of shares of no-par common shares.

Warrants to Purchase Common Shares

At December 31, 2019, the Company had 39,130

warrants outstanding to purchase common shares at an exercise price of $6.80.

At December 31, 2020, the Company had 39,130 warrants outstanding

to purchase common shares at an exercise price of $6.80.

The following table summarized our warrant activity.

Number of Warrants

(in thousands)

1 unchanged sentence

Outstanding and exercisable at December 31, 2018

$ 1.50 –

Outstanding and exercisable at December 31, 2019

Outstanding and exercisable at December 31, 2020

Party Transactions

In the second quarter of 2018, the Company

recorded approximately $25 related to the net recovery of short-swing profits from one of the Company’s shareholders under

Section 16(b) of the Securities Exchange Act of 1934, as amended.

The Company recognized these related party proceeds, net of $7

related legal fees and taxes, as an increase to additional paid-in capital consolidated balance sheet as of December 31, 2018,

as well as cash proceeds of approximately $18 as cash provided by financing activities in the consolidated statement of cash flows

for the period ended December 31, 2018.

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 STS 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 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 STS 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.

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.

In the 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.

STS 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

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.

Fennec Pharmaceuticals Inc.

to the Consolidated Financial Statements

Notes to the Consolidated Financial

dollars and shares in thousands,

except per share information)

and Contingencies

Oregon Health & Science University Agreement

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 PEDMARK TM 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 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 PEDMARK TM 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.

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

In the 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

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.

Securities Class Action Suit

Following the U.S.

Food and Drug Administration’s

(FDA’s) CRL regarding its NDA for PEDMARK TM as described in Note 1, a putative lawsuit was filed against us purportedly

on behalf of purchasers of the Company’s securities between December 20, 2018 and August 10, 2020.

The lawsuit seeks to

recover damages for Fennec investors under federal securities laws.

While we believe that the lawsuit is without merit and intend to vigorously

defend against it, the lawsuit is in its early stages and no assessment can be made as to its likely outcome or whether the outcome will

be material to us.

This litigation, and any other securities class actions that may be brought against us, could result in substantial

costs and a diversion of our management’s attention and resources.

Executive Severance

In the event of his termination with us other

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

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

In the event of his termination with us

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

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

(currently $430,000).

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

Andrade a one-time severance

payment equal to six months of salary (currently $145,000).

a one-time severance payment equal to six months of salary (currently $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 (currently

Subsequent Events

On February 11, 2020, Fennec announced it

had completed its rolling submission of a New Drug Application (NDA) to the U.S.

Food and Drug Administration ( FDA ) and submitted

a Marketing Authorization Application (MAA) to the European Medicines Agency (EMA) for PEDMARK TM (sodium thiosulfate

anhydrous injection) for intravenous use.

Management has evaluated subsequent events through February

14, 2020, the date the financial statements were available to be issued and has concluded there are no additional events that

would require adjustment to our disclosure in the statements.

Management has evaluated subsequent events through March 29,

2021, the date the financial statements were available to be issued and has concluded there are no additional events that would

require adjustment to our disclosure in the statements.

The Company operates in both U.S.

tax jurisdictions.

Its income is subject to varying rates of tax and losses incurred in one jurisdiction cannot be used to

offset income taxes payable in another.

A reconciliation of the combined Canadian federal and provincial income tax rate with

the Company’s effective tax rate is as follows (in thousands except for percentage rates):

and Canadian tax jurisdictions.

income is subject to varying rates of tax and losses incurred in one jurisdiction cannot be used to offset income taxes payable

A reconciliation of the combined Canadian federal and provincial income tax rate with the Company’s effective

tax rate is as follows (in thousands except for percentage rates):

Domestic (loss)/gain

9 unchanged sentences

Provision for income taxes

The Canadian statutory come tax rate of 26.0 percent

is comprised of federal income tax at approximately 15.0 percent and provincial income tax at approximately 11.0 percent.

The primary temporary differences which gave

rise to future income taxes (recovery) at December 31, 2019 and December 31, 2018:

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial

dollars and shares in thousands,

except per share information)

The Canadian statutory come tax rate of 26.0 percent is

comprised of federal income tax at approximately 15.0 percent and provincial income tax at approximately 11.0 percent.

The primary temporary differences which gave rise to future

income taxes (recovery) at December 31, 2020 and December 31, 2019:

Future tax assets:

8 unchanged sentences

Fennec Pharmaceuticals Inc.

to the Consolidated Financial Statements

Notes to the Consolidated Financial

dollars and shares in thousands,

1 unchanged sentence

Tax Cuts and Jobs Act

On December 22, 2017, the United States government

enacted comprehensive tax legislation commonly referred to as the Tax Cuts and jobs Act (the “Tax Act”).

reduces the corporate tax rate to 21%, effective January 1, 2018.

The Securities and Exchange Commission issued Staff Accounting

118 (“SAB 118”) on December 23, 2017.

SAB 118 provides a one-year measurement period from a registrant’s

reporting period that includes the United States Tax Act’s enactment date to allow the registrant sufficient time to obtain,

prepare and analyze information to complete the accounting required under ASC 740.

The ultimate impact of the Tax Act on our reported

results may differ from the estimates provided herein, possibly material, due to, among other things, changes in interpretations

and assumptions we have made, guidance that may be issued, and other actions we may take as a result of the Tax Act different from

presently contemplated.

There are no current income taxes owed, nor

are any income taxes expected to be owed in the near term.

At December 31, 2019 the Company has unclaimed Scientific Research and

Experimental Development ("SR&ED") expenditures, income tax loss carry-forwards and non-refundable investment tax

On December 22, 2017,

the then President of the United States signed into law an Act to provide for reconciliation pursuant to titles II and V of the

concurrent resolution on the budget for fiscal year 2018 (commonly known as “the Tax Cuts and Jobs Act or the “TCJA”),

which introduced a comprehensive set of tax reforms.

The Tax Cuts and Jobs Act significantly revises U.S.

tax law by, among

other provisions, lowering the Company’s corporate tax rate from 34% to 21% and eliminating or reducing certain income tax

In December 2017,

in accordance with the SEC Staff Accounting Bulletin (“SAB”) 118–Income Tax Accounting Implications of the TCJA,

the Company recorded tax effects on a provisional basis based on a reasonable estimate.

The TCJA did not have a material impact

on the Company's financial statements because its deferred temporary differences are fully offset by a valuation allowance and

the Company does not have any offshore earnings from which to record the mandatory transition tax.

During 2018, the Company completed

its analysis under SAB 118 and no additional tax effects due to rate-remeasurement were required to be recorded.

On March 27, 2020

the US government enacted the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) which includes numerous modifications

to income tax provisions, including a limitation on business interest expense and net operating loss provisions and the acceleration

of alternative minimum tax credits.

Given the Company’s history of losses, the CARES Act did not have a material impact on

its tax provision.

There are no current income taxes owed,

nor are any income taxes expected to be owed in the near term.

At December 31, 2020 the Company has unclaimed Scientific Research

and Experimental Development ("SR&ED") expenditures, income tax loss carry-forwards and non-refundable investment

The unclaimed amounts and their expiry dates are as listed below:

4 unchanged sentences

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-K

Item 9A. Controls and Procedures