Item 1. Business
Item 1. Business
Overview
Product
Candidate - PEDMARK TM
Our only product candidate in the clinical
stage of development is:
PEDMARK TM (sodium thiosulfate (STS) anhydrous
injection). We have announced results of two Phase 3 clinical trials for the prevention of cisplatin induced hearing loss, or ototoxicity
in children, including the pivotal Phase 3 study SIOPEL 6, “A Multicentre Open Label Randomised Phase 3 Trial of the
Efficacy of Sodium Thiosulfate in Reducing Ototoxicity in Patients Receiving Cisplatin Chemotherapy for Standard Risk Hepatoblastoma,”
and the proof of concept Phase 3 study in collaboration with the Children’s Oncology Group (“COG ACCL0431”) “A Randomized
Phase 3 Study of Sodium Thiosulfate for the Prevention of Cisplatin-Induced Ototoxicity in Children”. COG ACCL0431 final
results were published in the Lancet Oncology in 2016. SIOPEL 6 final results were published in the New England Journal of
Medicine in June 2018.
We continue to focus our resources on the development of PEDMARK TM .
PEDMARK TM
We have licensed from Oregon Health & Science University
(“OHSU”) intellectual property rights for the use of PEDMARK TM as a chemoprotectant and are developing PEDMARK TM
as a protectant against the hearing loss often caused by platinum-based anti-cancer agents in children. Preclinical and clinical
studies conducted by OHSU and others have indicated that PEDMARK TM can effectively reduce the incidence of hearing loss
caused by platinum-based anti-cancer agents.
Hearing loss among children receiving platinum-based chemotherapy
is frequent, permanent and often severely disabling. The incidence of hearing loss in these children depends upon the dose and
duration of chemotherapy, and many of these children require lifelong hearing aids. In addition, adults undergoing chemotherapy
for several common malignancies, including ovarian cancer, testicular cancer, and particularly head and neck cancer and brain cancer,
often receive intensive platinum-based therapy and may experience severe, irreversible hearing loss, particularly in the high frequencies.
We estimate in the U.S. and Europe that
annually over 10,000 children with solid tumors are treated with platinum agents. The vast majority of these newly diagnosed
tumors are localized and classified as low to intermediate risk in nature. These localized cancers may have overall survival rates
of greater than 80%, further emphasizing the importance of quality of life after treatment. The incidence of hearing loss in these
children depends upon the dose and duration of chemotherapy, and many of these children require lifelong hearing aids. There is
currently no established preventive agent for this hearing loss and only expensive, technically difficult and sub-optimal cochlear
(inner ear) implants have been shown to provide some benefit. Infants and young children at critical stages of development lack
speech language development and literacy, and older children and adolescents lack speech language development and literacy, and
older children and adolescents lack social-emotional development and educational achievement.
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In March 2018, PEDMARK TM
received Breakthrough Therapy and Fast Track designations from the U.S. Food and Drug Administration (“FDA”). Further,
PEDMARK TM has received Orphan Drug Designation in the U.S. in this setting.
We initiated our rolling New Drug Application
(“NDA”) for PEDMARK TM for the prevention of ototoxicity induced by cisplatin chemotherapy patients 1 month
to < 18 years of age with localized, non-metastatic, solid tumors with the FDA in December 2018. We announced that we had
submitted full completion of the NDA in February 2020. On April 13, 2020, we announced that the FDA had accepted for
filing and granted Priority Review for our NDA. The FDA set a Prescription Drug Fee Act (“PDUFA”) target action date
of August 10, 2020 for the completion of the FDA’s review. On August 10, 2020, we announced that we received a
Complete Response Letter (“CRL”) from the FDA regarding our NDA for PEDMARK TM , which identified deficiencies
in the third-party manufacturing facility that manufactures PEDMARK TM on our behalf. Importantly, no clinical safety
or efficacy issues were identified during the review and there is no requirement for further clinical data. In the fourth quarter
of 2020, we engaged in a Type A meeting with the FDA concerning the CRL that we believe was constructive and collaborative. We
are working closely with our third-party drug manufacturer and the FDA to fully address the CRL, and we plan to resubmit our NDA
for PEDMARK TM in the second quarter of 2021.
In August 2018, the Pediatric Committee
(“PDCO”) of the European Medicines Agency (“EMA”) accepted our pediatric investigation plan (PIP) for sodium
thiosulfate with the trade name Pedmarqsi for the condition of the prevention of platinum-induced hearing loss. An accepted PIP
is a prerequisite for filing a Marketing Authorization Application (“MAA”) for any new medicinal product in Europe. The
indication targeted by our PIP is for the prevention of platinum-induced ototoxic hearing loss for standard risk hepatoblastoma
(SR-HB). Additional tumor types of the proposed indication will be subject to the Committee for Medicinal Products for Human Use
(“CHMP”) assessment at the time of the MAA. No deferred clinical studies were required in the positive opinion given
by PDCO. We were also advised that sodium thiosulfate (tradename to be determined) is eligible for submission of an application
for a Pediatric Use Marketing Authorization (“PUMA”). A PUMA is a dedicated marketing authorization covering the indication
and appropriate formulation for medicines developed exclusively for use in the pediatric population and provides data and market
protection up to 10 years. Therefore, this decision allows us to proceed with the submission of a PUMA in the European Union (EU)
with incentives of automatic access to the centralized procedure and up to 10 years of data and market protection. In February 2020,
we announced that we had submitted a MAA for the prevention of ototoxicity induced by cisplatin chemotherapy patients 1 month to
< 18 years of age with localized, non-metastatic, solid tumors.
Clinical Studies
PEDMARK TM
has been studied by cooperative groups in two Phase 3 clinical studies of survival and reduction of ototoxicity, COG ACCL0431 and
SIOPEL 6. Both studies have been completed. The COG ACCL0431 protocol enrolled one of five childhood cancers typically treated
with intensive cisplatin therapy for localized and disseminated disease, including newly diagnosed hepatoblastoma, germ cell tumor,
osteosarcoma, neuroblastoma, and medulloblastoma. SIOPEL 6 enrolled only hepatoblastoma patients with localized tumors.
SIOPEL 6
In October 2007, we announced that our collaborative partner,
the International Childhood Liver Tumour Strategy Group, known as SIOPEL, a multi-disciplinary group of specialists under the umbrella
of the International Society of Pediatric Oncology, had launched a randomized Phase 3 clinical trial SIOPEL 6 to investigate whether
STS reduces hearing loss in standard risk hepatoblastoma (liver) cancer patients receiving cisplatin as a monotherapy.
The study was initiated in October 2007 initially in the
United Kingdom and completed enrollment at the end of 2014. 52 sites from 11 countries enrolled 109 evaluable patients. Under the
terms of our agreement, SIOPEL conducted and funded all clinical activities and we provided drug, drug distribution and pharmacovigilance,
or safety monitoring, for the study. SIOPEL 6 was completed in December 2014 and the final results of SIOPEL 6 were published
in The New England Journal of Medicine in June 2018.
The primary objectives of SIOPEL 6 were:
· To assess the efficacy of STS to reduce the hearing impairment caused by cisplatin.
· To carefully monitor any potential impact of STS on response to cisplatin and survival.
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SIOPEL 6 - Results
Background / Objectives:
Bilateral high-frequency hearing loss
is a serious permanent side-effect of cisplatin therapy, particularly debilitating when occurring in young children. STS has been
shown to reduce cisplatin induced hearing loss. SIOPEL 6 was a Phase 3 randomized trial to assess the efficacy of STS in reducing
ototoxicity in young children treated with cisplatin (Cis) for Standard Risk Hepatoblastoma (SR-HB).
Design / Methods:
Newly diagnosed patients with SR-HB,
defined as tumor limited to PRETEXT I, II or III, no portal or hepatic vein involvement, no intra-abdominal extrahepatic disease,
AFP >100ng/ml and no metastases, were randomized to Cis or Cis+STS for 4 preoperative and 2 postoperative courses. Cisplatin
80mg/m2 was administered over 6 hours, STS 20g/m2 was administered intravenously over 15 minutes exactly 6 hours after stopping
cisplatin. Tumor response was assessed after 2 and 4 preoperative cycles with serum AFP and liver imaging. In case of progressive
disease (PD), STS was to be stopped and doxorubicin 60mg/m2 combined with cisplatin. The primary endpoint was centrally reviewed
absolute hearing threshold, at the age of ≥3.5 years by pure tone audiometry.
Results:
109 randomized
patients (52 Cisplatin only ("Cis") and 57 Cis+STS) were evaluable. The combination of Cis+STS was generally well tolerated.
With a patient follow-up time of 52 months, the three-year Event Free Survival ("EFS") for Cis was 78.8% Cisplatin and
82.1% for the Cis + STS. The three-year Overall Survival ("OS") is 92.3% for Cis and 98.2% for Cis + STS. Treatment failure
defined as Progressive Disease ("PD") at 4 cycles was equivalent in both arms. Among the first 101 evaluable patients,
hearing loss occurred in 29/46=63.0% under Cis and in 18/55=32.7% under Cis +STS, corresponding to a relative risk of 0.52(P=0.002).
Conclusions:
This randomized
Phase 3 trial in SR-HB of cisplatin versus cisplatin plus STS shows that the addition of STS significantly reduces the incidence
of cisplatin-induced hearing loss without any evidence of tumor protection.
COG ACCL0431
In
March 2008, we announced the activation of a Phase 3 trial with STS to prevent hearing loss in children receiving cisplatin-based
chemotherapy in collaboration with the Children’s Oncology Group. The goal of this Phase 3 study was to evaluate in a multi-centered,
randomized trial whether STS is an effective and safe means of preventing hearing loss in children receiving cisplatin-based chemotherapy
for newly diagnosed germ cell, liver (hepatoblastoma), brain (medulloblastoma), nerve tissue (neuroblastoma) or bone (osteosarcoma)
cancers. Eligible children, one to eighteen years of age, were to receive cisplatin according to their disease-specific regimen
and, upon enrollment in this study, were randomized to receive STS or not. Efficacy of STS was determined through comparison of
hearing sensitivity at follow-up relative to baseline measurements using standard audiometric techniques. The Children’s
Oncology Group was responsible for funding the clinical activities for the study and we were responsible for providing the drug,
drug distribution and pharmacovigilance, or safety monitoring, for the study. The trial completed enrollment of 131 pediatric patients
in the first quarter of 2012. The final results of COG ACCL0431 were published in Lancet Oncology in December 2016.
COG ACCL0431 - Results
COG Study ACCL0431, “A Randomized
Phase 3 Study of Sodium Thiosulfate for the Prevention of Cisplatin-Induced Ototoxicity in Children,” finished enrollment
of 131 patients of which 125 were eligible patients. The patients had been previously diagnosed with childhood cancers.
The primary endpoint was to evaluate the
efficacy of STS for prevention of hearing loss in children receiving cisplatin chemotherapy (hypothesis: 50% relative reduction
in hearing loss).
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Secondary endpoints included:
· Compare change in mean hearing thresholds.
· Compare incidence of other Grade 3/4 toxicities (renal and hematological).
· Monitor Event Free Survival (EFS) and Overall Survival (OS) in two groups.
125 eligible subjects were enrolled with
germ cell tumor (32), osteosarcoma (29), neuroblastoma (26), medulloblastoma/pnet (26), hepatoblastoma (7), or other (5). Of these,
104 subjects (64 male and 29 <5 years old) were evaluable for the primary endpoint.
Subjects were randomized either to no treatment
(control) or treatment with STS 16 grams/m2 IV over 15 minutes, 6 hours after each cisplatin dose. Hearing was measured using standard
audiometry for age and data was reviewed centrally using American Speech-Language-Hearing Association criteria.
The proportion of subjects with hearing
loss assessed at 4 weeks post the final cisplatin dose (primary endpoint):
· The proportion of hearing loss for STS vs. Control was 28.6% (14/49) vs. 56.4% (31/55), respectively (p=0.004).
· In a predefined subgroup of patients less than 5 years old with 29 eligible subjects: STS vs. Control was 21.4% (3/14) vs.
73.3% (11/15), respectively (p=0.005).
Conclusions:
· STS protects against cisplatin-induced hearing loss in children across a heterogeneous range of tumor types, with even stronger
efficacy in the protocol predefined subgroup of patients under five years old, and is not associated with serious adverse events
attributed to its use.
· Further potential clinical use will be informed by the final results of SIOPEL 6 study.
Intellectual Property
Patents are important to developing and protecting our competitive
position. Our general policy is to seek patent protection in the United States, major European countries, Japan, Canada and other
jurisdictions as appropriate for our compounds and methods. U.S. patents, as well as most foreign patents, are generally effective
for 20 years from the date the earliest (priority) application was filed; however, U.S. patents that issue on applications filed
before June 8, 1995 may be effective until 17 years from the issue date, if that is later than the twenty-year date. In some
cases, the patent term may be extended to recapture a portion of the term lost during the U.S. FDA regulatory review or because
of U.S. Patent and Trademark Office, or USPTO, delays in prosecuting the application. The duration of foreign patents varies similarly,
in accordance with local law. Currently, we have licensed from OHSU two U.S. and nine foreign patents. The patents licensed from
OHSU expire in Europe in April of 2021 and expire in the United States in December of 2038. Further, in September 2020,
a U.S. patent was issued to us that captures the unique anhydrous form of
the active ingredient in our PEDMARK TM product, as well as related methods of synthesis. This patent is
eligible for listing in the FDA Orange Book, and reflects our strategy to expand and diversify our intellectual property portfolio
to obtain protection for our PEDMARKTM product. Additionally, there is one patent pending that we license from OHSU and one additional
patent pending owned by us.
In addition, periods of marketing exclusivity for PEDMARK TM
may also be possible in the United States under orphan drug status and in Europe under European Market Exclusivity for Pediatric
Use. We obtained U.S. Orphan Drug Designation for the use of PEDMARK TM in the prevention of platinum-induced ototoxicity
in pediatric patients in 2004 which provides 7.5 years of market exclusivity upon FDA approval of our NDA. We plan to pursue European
Market Exclusivity for Pediatric Use upon approval of the MAA which would allow for 10 years of market exclusivity.
Our success is significantly dependent on our ability to obtain
and maintain patent protection for PEDMARK TM , both in the United States and abroad. Our patent position and proprietary
rights are subject to various risks and uncertainties. Please read the “Risk Factors” in Item 1A of this Annual Report
for information about certain risks and uncertainties that may affect our patent position and proprietary rights.
We also rely upon unpatented confidential information to remain
competitive. We protect such information principally through confidentiality agreements with our employees, consultants, outside
scientific collaborators, and other advisers. In the case of our employees, these agreements also provide, in compliance with relevant
law, that inventions and other intellectual property conceived by such employees during their employment shall be our exclusive
property.
Corporate Relationships
License Agreement with Oregon Health & Science University
On February 20, 2013, we 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.
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On May 18, 2015, we negotiated an amendment ("Amendment
1") to the OHSU Agreement, which expands our 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 us 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. PEDMARK is currently protected by methods of use patents that we
exclusively license from OHSU that expire in Europe in 2021 and that expire in the United States in 2038. The OHSU Agreement is
terminable by either us or OHSU in the event of a material breach of the agreement by either party after 45 days prior written
notice. We also have 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.
COVID-19
Our operations may be affected by the ongoing
COVID-19 pandemic. The ultimate disruption which may be caused by the outbreak is uncertain; however, it may result in a material
adverse impact on our financial position, operations and cash flows. Possible effects may include, but are not limited to, disruption
to our product launch which includes the ability of sales reps to communicate with oncologists, absenteeism in our labor workforce,
unavailability of products and supplies used in operations, and a decline in value of our assets, including inventories, property
and equipment, and marketable securities.
COVID-19 has not had a material effect
on our operations to date as we have historically had a workforce which works remotely, preparations for product launch have been
under the assumption of a virtual launch, and product supplies have not been impacted.
Competition
The
biotechnology and pharmaceutical industries are extremely competitive. Our potential competitors are many in number and include
major and mid-sized pharmaceutical and biotechnology companies. Many of our potential competitors have significantly more financial,
technical and other resources than we do, which may give them a competitive advantage. In addition, they may have substantially
more experience in effecting strategic combinations, in-licensing technology, developing drugs, obtaining regulatory approvals
and manufacturing and marketing products. We cannot give any assurances that we can compete effectively with these other biotechnology
and pharmaceutical companies. We expect that if PEDMARK TM achieves regulatory approval for sale, it will compete
on the basis of drug efficacy, safety, patient convenience, reliability, ease of manufacture, price, marketing, distribution, and
patent protection, among other variables. Our competitors may develop technologies or drugs that are more effective, safer or more
affordable than any we may develop.
We are not aware of any commercially available agents that reduce
the incidence of hearing loss associated with the use of platinum-based anti-cancer agents, for which purpose we are developing
PEDMARK TM . There are several potential competitive agents with activity in preclinical or limited clinical settings.
These include: D-methionine, an amino acid that has been shown to protect against hearing loss in experimental settings but was
demonstrated to be inferior to PEDMARK TM in comparative studies; SPI-3005, an oral agent primarily being developed by
Sound Pharmaceuticals for noise and age-related hearing loss but in early Phase II trials for chemotherapy related hearing loss,
which mimics glutathione peroxidase and induces the intracellular induction of glutathione; N-acetylcysteine and amifostine, which
have shown effectiveness (but less than PEDMARK TM ) in experimental systems; and Vitamin E, salicylate and tiopronin,
which have all demonstrated moderate activity in rat models to protect against cisplatin-induced ototoxicity, but no clinical trials
have been completed and DB-020 a clinical stage candidate in an ongoing Phase1b trial being developed by Decibel Therapeutics.
Cochlear implants, which are small electronic devices that are surgically placed in the inner ear to assist with certain types
of deafness, are utilized to offer some relief for hearing loss associated with the use of platinum-based anti-cancer agents, but
are often suboptimal.
Manufacturing
and Clinical Supplies
We
do not own or operate manufacturing facilities for the production of commercial or clinical quantities of any product, including
PEDMARK TM . We currently rely on a small number of third-party manufacturers to produce compounds used in our
product development and commercial activities and expect to continue to do so to meet the preclinical and clinical requirements
of our potential products and for all of our commercial needs. We currently have long-term commercial supply agreements with
certain third-party manufacturers. Our manufacturing and processing agreements require that all third-party contract manufacturers
and processors produce active pharmaceutical ingredients and finished products in accordance with the FDA’s current Good
Manufacturing Practices (“cGMP”) and all other applicable laws and regulations. We maintain confidentiality agreements
with potential and existing manufacturers in order to protect our proprietary rights related to PEDMARK TM .
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Some
of the critical materials and components used in manufacturing PEDMARK TM are sourced from single suppliers. An
interruption in the supply of a key material could significantly delay our research and development process or increase our expenses
for commercialization or development of PEDMARK TM . Specialized materials must often be manufactured for the first time
for use in drug delivery technologies, or materials may be used in the technologies in a manner that is different from their customary
commercial uses. The quality of materials can be critical to the performance of a drug delivery technology, so a reliable source
that provides a consistent supply of materials is important. Materials or components needed for our drug delivery technologies
may be difficult to obtain on commercially reasonable terms, particularly when relatively small quantities are required or if the
materials traditionally have not been used in pharmaceutical products.
Government Regulation
The production and manufacture of our product candidate and
our research and development activities are subject to significant regulation for safety, efficacy and quality by various governmental
authorities around the world. Before new pharmaceutical products may be sold in the U.S. and other countries, clinical trials of
the product must be conducted, and the results submitted to appropriate regulatory agencies for approval. Clinical trial programs
must establish efficacy, determine an appropriate dose and regimen, and define the conditions for safe use. This is a high-risk
process that requires stepwise clinical studies in which the candidate product must successfully meet predetermined endpoints.
In the U.S., the results of the preclinical and clinical testing of a product are then submitted to the FDA in the form of a Biologics
License Application or a NDA. In response to these submissions, the FDA may grant marketing approval, request additional information
or deny the application if it determines the application does not provide an adequate basis for approval. Similar submissions are
required by authorities in other jurisdictions who independently assess the product and may reach the same or different conclusions.
The receipt of regulatory approval often takes a number of years,
involves the expenditure of substantial resources and depends on a number of factors, including the severity of the disease in
question, the availability of alternative treatments and the risks and benefits demonstrated in clinical trials. On occasion, regulatory
authorities may require larger or additional studies, leading to unanticipated delay or expense. Even after initial approval from
the FDA or other regulatory agencies has been obtained, further clinical trials may be required to provide additional data on safety
and effectiveness. Additional trials are required to gain clearance for the use of a product as a treatment for indications other
than those initially approved. Furthermore, the FDA and other regulatory agencies require companies to disclose clinical trial
results. Failure to disclose such results within applicable time periods could result in penalties, including civil monetary penalties.
In Canada, these activities are subject to regulation by Health
Canada’s Therapeutic Products Directorate, or TPD, and the rules and regulations promulgated under the Food and Drug
Act. In the United States, drugs and biological products are subject to regulation by the FDA. The FDA requires licensing of manufacturing
and contract research facilities, carefully controlled research and testing of products and governmental review and approval of
results prior to marketing therapeutic products. Additionally, the FDA requires adherence to “Good Laboratory Practices”
as well as “Good Clinical Practices” during clinical testing and “Good Manufacturing Practices” and adherence
to labeling and supply controls. The systems of new drug approvals in Canada and the United States are substantially similar and
are generally considered to be among the most rigorous in the world.
Generally, the steps required for drug approval in Canada and
the United States, specifically in cancer related therapies, include:
· Preclinical Studies : Preclinical studies, also known as non-clinical studies, primarily involve evaluations of pharmacology,
toxic effects, pharmacokinetics and metabolism of a drug in animals to provide evidence of the relative safety and bioavailability
of the drug prior to its administration to humans in clinical studies. A typical program of preclinical studies takes 18 to 24
months to complete. The results of the preclinical studies as well as information related to the chemistry and comprehensive descriptions
of proposed human clinical studies are then submitted as part of the Investigational New Drug Application to the FDA, a Clinical
Trial Application to the TPD, or similar submission to other foreign regulatory bodies. This is necessary in Canada, the United
States and most other countries prior to undertaking clinical studies. Additional preclinical studies are conducted during clinical
development to further characterize the toxic effects of a drug prior to submitting a marketing application.
· Phase 1 Clinical Trials : Most Phase 1 clinical trials take approximately one year to complete and are usually conducted
on a small number of healthy human subjects to evaluate the drug’s safety, tolerability and pharmacokinetics. In some cases,
such as cancer indications, Phase 1 clinical trials are conducted in patients rather than healthy volunteers.
· Phase 2 Clinical Trials : Phase 2 clinical trials typically take one to two years to complete and are generally carried
out on a relatively small number of patients, generally between 15 and 50, in a specific setting of targeted disease or medical
condition, in order to provide an estimate of the drug’s effectiveness in that specific setting. This phase also provides
additional safety data and serves to identify possible common short-term side effects and risks in a somewhat larger group of patients.
Phase 2 testing frequently relates to a specific disease, such as breast or lung cancer. Some contemporary methods of developing
drugs, particularly molecularly targeted therapies, do not require broad testing in specific diseases, and instead permit testing
in subsets of patients expressing the particular marker. In some cases, such as cancer indications, the company sponsoring the
new drug may submit a marketing application to seek accelerated approval of the drug based on evidence of the drug’s effect
on a “surrogate endpoint” from Phase II clinical trials. A surrogate endpoint is a laboratory finding or physical sign
that may not be a direct measurement of how a patient feels, functions or survives, but is still considered likely to predict therapeutic
benefit for the patient. If accelerated approval is received, the company sponsoring the new drug must continue testing to demonstrate
that the drug indeed provides therapeutic benefit to the patient.
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· Phase 3 Clinical Trials : Phase 3 clinical trials typically take two to four years to complete and involve tests on a
much larger population of patients suffering from the targeted condition or disease. These studies involve conducting controlled
testing and/or uncontrolled testing in an expanded patient population, numbering several hundred to several thousand patients,
at separate test sites, known as multi-center trials, to establish clinical safety and effectiveness. These trials also generate
information from which the overall benefit-risk relationship relating to the drug can be determined and provide a basis for drug
labeling. Phase 3 trials are generally the most time consuming and expensive part of a clinical trial program. In some instances,
governmental authorities, such as the FDA, will allow a single Phase 3 clinical trial to serve as a pivotal efficacy trial to support
a Marketing Application.
· Marketing Application : Upon completion of Phase 3 clinical trials, the pharmaceutical company sponsoring the new drug
assembles all the chemistry, preclinical and clinical data and submits it to the TPD or the FDA as part of a New Drug Submission
in Canada or a NDA in the United States. The marketing application is then reviewed by the applicable regulatory body for approval
to market the product. The review process generally takes twelve to eighteen months.
Any clinical trials that we conduct may not be successfully
completed, either in a satisfactory time period or at all. The typical time periods described above may vary substantially and
may be materially longer. In addition, the FDA and its counterparts in other countries have considerable discretion to discontinue
trials if they become aware of any significant safety issues or convincing evidence that a therapy is not effective for the indication
being tested. It is possible the FDA and its counterparts in other countries may not (i) allow clinical trials to proceed
at any time after receiving an Investigational New Drug, (ii) allow further clinical development phases after authorizing
a previous phase, or (iii) approve marketing of a drug after the completion of clinical trials.
While European, U.S. and Canadian regulatory systems require
that medical products be safe, effective, and manufactured according to high quality standards, the drug approval process in Europe
differs from that in the United States and Canada and may require us to perform additional preclinical or clinical testing regardless
of whether FDA or TPD approval has been obtained. The amount of time required to obtain necessary approvals may be longer or shorter
than that required for FDA or TPD approval. European Union Regulations and Directives generally classify health care products either
as medicinal products, medical devices or in vitro diagnostics. For medicinal products, marketing approval may be sought using
either the centralized procedure of the European Agency for the Evaluation of Medicinal Products, or EMEA, or the decentralized,
mutual recognition process. The centralized procedure, which is mandatory for some biotechnology derived products, results in an
approval recommendation from the EMEA to all member states, while the European Union mutual recognition process involves country
by country approval.
The NDA Approval Process
Assuming
successful completion of the required clinical testing, the results of the preclinical studies and clinical trials, including negative
or ambiguous results as well as positive findings, together with detailed information relating to the product’s chemistry,
manufacture, controls and proposed labeling, among other things, are submitted to the FDA as part of an NDA to support approval
to market the product for one or more indications. In most cases, the submission of an NDA is subject to a substantial application
user fee. Fennec anticipates a waiver of the application user fee related to its NDA for PEDMARK TM .
The FDA is required to conduct a preliminary review of an NDA
within the first 60 days after submission, before accepting it for filing, to determine whether it is sufficiently complete to
permit a substantive review. The FDA may accept the NDA for filing, potentially refuse to file the NDA due to deficiencies but
work with the applicant to rectify the deficiencies (in which case the NDA is filed upon resolution of the deficiencies) or refuse
to file the NDA. The FDA must notify the applicant of a refusal to file a decision within 60 days after the original receipt date
of the application. If the FDA refuses to file the NDA the applicant may resubmit the NDA with the deficiencies addressed. The
resubmitted NDA is considered a new application subject to a new review goal, as described below. If the NDA is refused for filing,
the FDA will refund 75 percent of the application fee. Upon resubmission, a new application fee will be required, unless the applicant
is eligible for a waiver or reduction. The resubmitted application is also subject to review before the FDA accepts it for filing.
Once an NDA is accepted for filing, the FDA begins an in-depth substantive review. Under the Prescription Drug User Fee Act, or
PDUFA, and the FDA’s commitments under the current PDUFA reauthorization, the FDA has a goal of reviewing and acting on 90%
of standard non-priority NDA applications for drugs that are not new molecular entities within ten months from the FDA’s
receipt of the NDA.
The FDA reviews an NDA to determine, among other things, whether
the drug is safe and effective for its intended use and whether the facility in which it is manufactured, processed, packaged or
held meets standards designed to assure the product’s continued safety, quality and purity. The FDA is required to refer
an application for a novel drug to an advisory committee or explain why such referral was not made. An advisory committee is a
panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates and provides a recommendation
in response to specific questions raised by the FDA, which may include whether the application should be approved and under what
conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully
when making decisions.
Before approving an NDA, the FDA may inspect the facility or
facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing
processes and facilities are in compliance with current Good Manufacturing Practices (cGMP) requirements and adequate to assure
consistent production of the product within required specifications. Additionally, before approving an NDA, the FDA will typically
inspect one or more clinical investigational sites to evaluate the integrity of the data and confirm compliance with current Good
Clinical Practices (cGCP).
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After the FDA evaluates the NDA and conducts its inspections, it may
issue an approval letter or a CRL. An approval letter authorizes the commercial marketing of the drug subject to specific prescribing
information for specific indications and, if applicable, specific post-approval requirements. A CRL indicates that the review cycle of
the application is complete and the application is not ready for approval in its present form. After receiving a CRL, the applicant must
decide within twelve months (subject to extension), if it wants to resubmit the NDA addressing the deficiencies identified by the FDA
in the CRL, withdraw the NDA, or request an opportunity for a hearing to challenge the FDA’s determination. A CRL may require additional
clinical data and/or an additional pivotal Phase 3 clinical trial(s), and/or other significant, expensive and time-consuming requirements
related to clinical trials, nonclinical studies or manufacturing. Even if such data are submitted, the FDA may ultimately decide that
the NDA does not satisfy the criteria for approval. Data from clinical trials are not always conclusive and the FDA may interpret data
differently than we interpret data.
The FDA also may require implementation of a Risk Evaluation
and Mitigation Strategy, or REMS, to mitigate any identified or suspected serious risks. The REMS could include a medication guide,
physician communication plan, assessment plan and elements to assure safe use, such as restricted distribution methods, patient
registries or other risk minimization tools.
The drug testing and approval process requires substantial time,
effort and financial resources, and may take several years to complete. Data obtained from clinical activities are not always conclusive
and may be susceptible to varying interpretations, which could delay, limit or prevent marketing approval. The FDA may not grant
marketing approval on a timely basis, or at all.
Even if the FDA approves a product, it may limit the approved
indications for use for the product. The FDA requires that the approved product labeling include information regarding contraindications,
warnings or precautions. It may also require that post-approval studies, including a long-term registry, be conducted to further
assess a drug’s safety after approval, require testing and surveillance programs to monitor the product after commercialization,
or impose other conditions, including distribution restrictions or other risk management mechanisms, which can materially affect
the potential market and profitability of the product. The FDA may prevent or limit further marketing of a product based on the
results of post-marketing studies or surveillance programs. After approval, some types of changes to the approved product, such
as adding new indications or labeling claims or manufacturing changes may be subject to further testing requirements and FDA review
and approval. Also after approval, the FDA may require labeling changes as new information becomes known, particularly if new risks
are identified, such as unexpected adverse events. The FDA has the authority to prevent or limit further marketing of a drug based
on the results of these post-marketing studies and programs or other information that may become known after approval.
Other
Regulatory Requirements .
Drugs manufactured or distributed pursuant to FDA approvals
are subject to pervasive and continuing regulation by the FDA, including, among other things, annual establishment registration,
product listing, user fees, compliance with requirements regarding cGMP, recordkeeping, periodic reporting, product sampling and
distribution, advertising and promotion, and adverse drug experience monitoring and reporting with the product. After approval,
most changes to the approved product labeling, such as adding new indications, are subject to prior FDA review and approval. Also,
any post-approval changes in the drug substance, drug product, production process, quality controls, equipment, or facilities that
have a substantial potential to have an adverse effect on the identity, strength, quality, purity, or potency of the drug product
are subject to FDA review and approval. Any such changes that have a moderate potential to have an adverse effect on the identity,
strength, quality, purity, or potency of the drug product may not be implemented until 30 days after the FDA receives a supplement
for the change. All manufacturing facilities, as well as records required to be maintained under FDA regulations, are subject to
inspection or audit by the FDA. In addition, manufacturers generally are required to pay annual user fees for approved products
and a user fee for the submission of each new or supplemental application.
The FDA may impose a number of post-approval requirements as
a condition of approval of an NDA. For example, the FDA may require post-approval testing, including Phase 4 clinical trials, and
surveillance to further assess and monitor the product’s safety and effectiveness after commercialization. The Food and Drug
Administration Amendments Act of 2007 gave the FDA the authority to require a REMS from drug manufacturers to manage a known or
potential serious risk associated with the drug and to ensure that the benefits of a drug outweigh its risks. Examples of a REMS
include, but are not limited to, a Medication Guide, a patient package insert to help mitigate a serious risk of the drug, and
a communication plan to healthcare providers to support the implementation of an element of the REMS.
In addition, drug manufacturers and other entities involved
in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and register or
obtain permits or licenses in states where they do business, and are subject to periodic unannounced inspections by the FDA and
state regulatory authorities with jurisdiction over their activities to determine compliance with regulatory requirements. A drug
manufacturer is responsible for ensuring that its third-party contractors operate in compliance with applicable laws and regulations
including the cGMP regulation. The failure of a drug manufacturer or any of its third-party contractors to comply with federal
or state laws or regulations may subject the drug manufacturer to possible legal or regulatory action, such as an untitled letter,
warning letter, recall, suspension of manufacturing or distribution or both, suspension of state permit or license, seizure of
product, import detention, injunctive action, and civil and criminal penalties.
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Changes to the manufacturing process are strictly regulated
and often require prior FDA approval before being implemented. FDA regulations also require a drug manufacturer to conduct investigations
and implement appropriate corrective actions to address any deviations from cGMP requirements and impose reporting and
documentation requirements upon the manufacturer and any third-party contractors (including contract manufacturers and laboratories)
involved in the manufacture of a drug product. Accordingly, manufacturers must continue to expend significant time, money and effort
to maintain and ensure ongoing cGMP compliance and to confirm and ensure ongoing cGMP compliance of their third-party contractors.
Once an approval is granted, the FDA may withdraw the approval
if, among other things, there is information that the drug is unsafe for use under the approved conditions of use; new information
or evidence that, evaluated together with evidence available to the FDA at the time of approval, shows that the drug is not shown
to be safe for use under the approved conditions of use; new information that, evaluated together with the evidence available to
the FDA at the time of approval, shows there is a lack of substantial evidence of effectiveness; the approved application contains
an untrue statement of material fact; or that the required patient information was not submitted within 30 days after receiving
notice from the FDA of the failure to submit such information. Later discovery of previously unknown problems with a product, including
adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements,
may result in revisions to the approved labeling to add new safety and risk information; imposition of a post-market study requirement
to assess new safety risks; or implementation of a REMS that may include distribution or other restrictions.
The FDA closely regulates drug advertising and promotional activities,
including promotion of an unapproved drug, direct-to-consumer advertising, dissemination of scientific information about a drug
not on the approved labeling, off-label promotion, communications with payors and formulary committees, industry-sponsored scientific
and educational activities, and promotional activities involving the internet and social media. A company’s product claims
must be true and not misleading, provide fair balance, provide adequate risk information, and be consistent with the product labeling
approved by the FDA. Failure to comply with these requirements can lead to legal or regulatory actions including, among other things,
warning letters, corrective advertising, injunction, violation and related penalties under the False Claims Act and can result
in reputational and economic harm.
Physicians may prescribe FDA-approved drugs for uses that are
not described in the product’s labeling and that differ from those uses tested by the manufacturer. Such off-label uses occur
across medical specialties. Physicians may believe that such off-label uses are the best treatment for many patients in varied
circumstances. The FDA does not regulate the behavior of physicians in their choice of treatments for their individual patients.
The FDA does, however, regulate manufacturers’ communications about their drug products and interprets the FFDCA to prohibit
pharmaceutical companies from promoting their FDA-approved drug products for uses that are not specified in the FDA-approved labeling.
Companies that market drugs for off-label uses have been subject to warning letters, related costly litigation, criminal prosecution,
and civil liability under the FFDCA and the False Claims Act.
In addition, the distribution of prescription pharmaceutical
products is subject to the Prescription Drug Marketing Act, or PDMA, as amended by the Drug Supply Chain Security Act, which regulates
the distribution of drug and drug samples at the federal level, and sets minimum standards for the registration and regulation
of wholesale drug distributors by the states.
Good Clinical Practices
The FDA and other regulatory agencies promulgate regulations
and standards, commonly referred to as current Good Clinical Practices, for designing, conducting, monitoring, auditing and reporting
the results of clinical trials to ensure that the data and results are accurate and that the trial participants are adequately
protected. The FDA and other regulatory agencies enforce Good Clinical Practices through periodic inspections of trial sponsors,
principal investigators and trial sites. If our study sites fail to comply with applicable Good Clinical Practices, the clinical
data generated in our clinical trials may be deemed unreliable and relevant regulatory agencies may require us to perform additional
clinical trials before approving our marketing applications.
Good Manufacturing Practices
The FDA and other regulatory agencies regulate and inspect equipment,
facilities and processes used in the manufacture of pharmaceutical and biological products prior to approving a product. If, after
receiving approval from regulatory agencies, a company makes a material change in manufacturing equipment, location or process,
additional regulatory review and approval may be required. All facilities and manufacturing techniques that may be used for the
manufacture of our products must comply with applicable regulations governing the production of pharmaceutical products known as
"Good Manufacturing Practices."
Orphan Drug Act
Under the Orphan Drug Act, the FDA may grant orphan drug designation
to drugs intended to treat a “rare disease or condition,” which generally is a disease or condition that affects fewer
than 200,000 individuals in the U.S. If a product which has an orphan drug designation subsequently receives the first FDA approval
for that drug for the indication for which it has such designation, the product is entitled to orphan exclusivity, i.e., the FDA
may not approve any other application submitted by a different applicant to market the same drug for the same indication for a
period of seven years following marketing approval, except in certain very limited circumstances, such as if the later product
is shown to be clinically superior to the approved product with orphan drug exclusivity. Legislation similar to the Orphan Drug
Act has been enacted in other countries, including within the European Union.
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Pediatric Marketing Use Authorization
The PUMA approval is typically granted by the European Commission,
based on a review by the European Medecines Agency, and is intended exclusively for pediatric (patients under 18 years of age)
use. Such PUMA approval is ultimately valid in all countries within the European Economic Area (which excludes the United Kingdom
as of February 1, 2020).
The PUMA was introduced by the EU Paediatric Regulation for
medicines that are:
· Normally contain an already authorized active ingredient;
· Are no longer covered by a supplementary protection certificate (SPC) or a patent that qualifies for a SPC;
· Are to be exclusively developed for use in children.
The PUMA process was established to make it more efficient for
pharmaceutical companies to invest in the development of drugs for children. PUMA drugs receive 8 plus 2 years of regulatory data
and marketing protection. and the applications are, in part, exempt from fees. The regulatory protection does not prevent off-label
use of other drugs with the same active substance and indication for adults, nor pharmacy compounding.
Other Laws
Our present and future business has been and will continue to
be subject to various other laws and regulations. Various laws, regulations and recommendations relating to safe working conditions,
laboratory practices, the experimental use of animals, and the purchase, storage, movement, import and export and use and disposal
of hazardous or potentially hazardous substances, including radioactive compounds and infectious disease agents, used in connection
with our research work are or may be applicable to our activities. Certain agreements entered into by us involving exclusive license
rights may be subject to national or supranational antitrust regulatory control, the effect of which cannot be predicted. The extent
of government regulation, which might result from future legislation or administrative action, cannot accurately be predicted.
Research and Development
Our research and development efforts have been focused on the
development of PEDMARK TM since 2013.
We have established relationships with
contract research organizations, universities and other institutions, which we utilize to perform many of the day-to-day activities
associated with our drug development. Where possible, we have sought to include leading scientific investigators and advisors to
enhance our internal capabilities. Research and development issues are reviewed internally by our executive management and supporting
scientific team.
Research and development
expenses totaled $5.1 million and $5.6 million for the fiscal years ended December 31, 2020 and 2019, respectively. We have
decreased slightly our research and development expenses related to PEDMARK TM as the Company’s efforts have shifted
to pre-commercialization activities with some continued regulatory and manufacturing expenses associated with the resubmission
of the NDA for PEDMARK TM in response to the CRL discussed above under the heading “Business – Overview –
Product Candidate” and elsewhere in this Annual Report.
Our product candidate
still requires significant, time-consuming and costly research and development, testing and regulatory clearances. In developing
our product candidate, we are subject to risks of failure that are inherent in the development of products based on innovative
technologies. For example, it is possible that our product candidate will be ineffective or toxic, or will otherwise fail to receive
the necessary regulatory clearances. There is a risk that our product candidate will be uneconomical to manufacture or market or
will not achieve market acceptance. There is also a risk that third parties may hold proprietary rights that preclude us from marketing
our product candidate or that others will market a superior or equivalent product. As a result of these factors, we are unable
to accurately estimate the nature, timing and future costs necessary to complete the development of this product candidate. In
addition, we are unable to reasonably estimate the period when material net cash inflows could commence from the sale, licensing
or commercialization of such product candidate, if ever.
Employees
At December 31, 2020, we had nine employees all of which
are full time. In addition, we use independent contractors to perform certain of our daily operations.
Company Information
We incorporated under the Canada Business
Corporations Act ("CBCA”) in September 1996. Effective on August 25, 2011, the Company continued from the
CBCA to the Business Corporations Act (British Columbia) (the “Continuance”). We have four wholly-owned subsidiaries:
Oxiquant, Inc. and Fennec Pharmaceuticals, Inc., both Delaware corporations, Cadherin Biomedical Inc., a Canadian company,
and Fennec Pharmaceuticals (EU) Limited (“Fennec Limited”), an Ireland company. With the exception of Fennec Pharmaceuticals, Inc.,
all subsidiaries are inactive.
10
Our corporate website is www.fennecpharma.com. We make our periodic
and current reports, together with amendments to these reports, filed or furnished pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended, or the Exchange Act, available on our website, free of charge, as soon as reasonably
practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission, or the SEC.
Members of the public may also read and copy any materials we file with, or furnish to, the SEC at the SEC’s Public Reference
Room at 100 F Street, NE, Washington, DC 20549. To obtain information on the operation of the Public Reference Room, please call
the SEC at 1-800-SEC-0330. The SEC maintains a website at www.sec.gov that contains the reports, proxy statements and other information
that we file or furnish electronically with the SEC. The Canadian securities regulatory authorities maintain a website at www.sedar.com
that contains our filings with the Canadian securities regulatory authorities. Our website and the information contained therein
or connected thereto is not intended to be incorporated into this Annual Report or any other report or information we file with
the SEC or Canadian securities regulatory authorities.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.