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Item 7. Management’s Discussion and Analysis

2026-03-27 compared with 2025-03-26 · 168 added, 93 removed, 170 unchanged (61% of the section changed)

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As a result of many factors, including those factors set forth in the sections entitled “Cautionary Note Regarding Forward-Looking Statements” and “Item 1A - Risk Factors” of this Annual Report, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis.

We are a commercial-stage biopharmaceutical company focused on our only product candidate PEDMARK ® .

On September 20, 2022, we received approval from the FDA for PEDMARK ® (sodium thiosulfate injection) to reduce the risk of ototoxicity associated with cisplatin in pediatric patients one month of age and older with localized, non-metastatic solid tumors.

This approval makes PEDMARK ® the first and only treatment approved by the FDA in this area of unmet medical need.

On October 17, 2022, we announced commercial availability of PEDMARK ® in the U.S.

In addition, in January 2023, PEDMARK ® was included in the National Comprehensive Cancer Network (“NCCN”) clinical practice guidelines for Adolescent and Young Adult (“AYA”) Oncology with a category 2A recommendation.

In June 2023, we received European Commission Marketing Authorization for PEDMARQSI ® (known as PEDMARK ® in the U.S.) Further, the decision included the receipt of a PUMA in the EU with up to 8 years of data exclusivity plus 2 years of market protection.

In March 2024, the Company announced an exclusive licensing agreement with Norgine, which will commercialize PEDMARQSI ® in Europe, Australia and New Zealand.

The licensing agreement provided us with approximately $43,200 up front and may provide us with up to approximately $230,000 in milestone and royalty payments in the future.

Norgine announced the launch of Germany and the U.K.

in early 2025.

In the U.S., we sell PEDMARK ® through an experienced field force and medical science liaisons who are helping to educate the medical communities and patients about cisplatin induced ototoxicity and our programs supporting patient access to PEDMARK ® .

Fennec Pharmaceuticals Inc., a corporation existing under the laws of British Columbia, was originally formed under the name Adherex Technologies Inc.

and subsequently changed its name on September 3, 2014.

Fennec is a commercial stage specialty pharmaceutical company dedicated to preventing cisplatin-induced ototoxicity (“CIO”) , a serious and often irreversible side effect of cancer treatment, with one FDA approved and European Commission approved product, PEDMARK ® in the U.S.

and PEDMARQSI ® , which is the branded name for PEDMARK ® outside of the U.S.

(collectively, “PEDMARK”), developed to reduce the risk of ototoxicity associated with cisplatin in pediatric patients one month of age and older with localized, non-metastatic solid tumors.

The Company has four wholly owned subsidiaries:

Oxiquant, Inc.

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

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

On September 20, 2022, we received approval from the FDA for PEDMARK ® (sodium thiosulfate injection).

This approval makes PEDMARK ® the first and only treatment approved by the FDA in this area of significant unmet medical need.

On October 17, 2022, we announced commercial availability of PEDMARK ® in the United States.

Further, PEDMARQSI ® received European Commission Marketing Authorization in June 2023 and received U.K.

approval in October 2023.

PEDMARK ® is currently the only FDA-approved therapy indicated to reduce the risk of ototoxicity associated with cisplatin in pediatric patients one month of age and older with localized, non-metastatic solid tumors.

In clinical studies in this population, treatment with PEDMARK ® resulted in an approximate 50% relative reduction in the incidence of cisplatin-induced hearing loss compared to cisplatin alone, without evidence of materially compromised antitumor efficacy.

PEDMARK ® is administered as a short intravenous infusion and has generally been associated with a mild-to-moderate and manageable safety profile consistent with its known pharmacology.

In March 2024, we announced that we entered into an agreement with Norgine, a leading European specialist pharmaceutical company.

This is an exclusive licensing agreement under which Norgine will commercialize PEDMARQSI ® in Europe, Australia and New Zealand.

PEDMARQSI ® is the first and only approved therapy in the EU and U.K.

for the prevention of ototoxicity (hearing loss) induced by cisplatin chemotherapy in patients one month to eighteen years of age with localized, non-metastatic solid tumors.

During 2025, Norgine made PEDMARQSI ® commercially available and expects additional launches to occur in 2026 and beyond.

Under the terms of the Norgine licensing agreement, Fennec received approximately $43 million in upfront consideration and may receive up to approximately $230 million in additional commercial and regulatory milestone payments and double-digit tiered royalties (up to the mid-twenties) on net sales of PEDMARQSI ® in the licensed territories.

To date, Fennec has not received any milestone payments.

Norgine will be responsible for all commercialization activities in the licensed territories and will hold all marketing authorizations in the licensed territories.

In the United States, we sell our product through an experienced field force including Regional Pediatric Oncology Specialists and we utilize medical science liaisons within our medical team who help educate the medical communities and patients about CIO and our programs supporting patient access to PEDMARK ® .

Further, we have established Fennec HEARS ® , a comprehensive single source program designed to connect PEDMARK ® patients to both patient financial and product access support.

The program offers assistance and resources, regardless of

insurance type, that can address co-pays or lack of coverage when certain eligibility requirements are met.

Fennec HEARS ® also provides access to care coordinators that can answer insurance questions about coverage for PEDMARK ® and provide tips and resources for managing treatment.

We received Orphan Drug Exclusivity for PEDMARK ® in January 2023, which provides seven years of market exclusivity from its FDA approval on September 20, 2022, until September 20, 2029.

We currently have six patents listed for PEDMARK ® in the FDA Orange Book.

In September 2022, the USPTO issued Patent No.

We currently have six patents listed for PEDMARK ® in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (“FDA Orange Book”).

In September 2022, the United States Patent and Trademark Office (“USPTO”) issued Patent No.

11,291,728 (the “US ‘728 Patent”), in December 2022, the USPTO issued Patent No.

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The US ‘728, US ‘984, US ‘793, US ‘018, US ‘530, and US ‘604 Patents will expire in 2039.

We are also pursuing additional patent applications in both the U.S.

and internationally for PEDMARK ® .

Additional patents covering PEDMARK ® formulation have been granted in Australia, Canada, the European Patent Office (EPO) (described further below), Hong Kong, Indonesia, Japan, Korea, Malaysia, Mexico, and Russia, and patent applications covering PEDMARK ® are pending in Brazil, China, the European Patent Office (EPO), Hong Kong, Israel, Korea, Mexico, New Zealand, Singapore, and Thailand.

Patents covering alternative sodium thiosulfate formulations have been granted in the United States (US 12,311,026 (the “US ‘026 Patent”), Canada, Korea, Mexico, and Russia, and patent applications covering alternative sodium thiosulfate formulations are pending in the United States, Australia, the EPO, Hong Kong, Indonesia, Japan, Malaysia, Mexico, and New Zealand.

Applications from these patent families, where granted, valid, and enforceable, will expire in July 2039, exclusive of any patent term adjustment or extension

There can be no assurance that we do not or will not infringe on patents held by third parties or that third parties in the future will not claim that we have infringed on their patents.

In the event that our product or technologies infringe or violate the patent or other proprietary rights of third parties, there is a possibility we may be prevented from pursuing product development, manufacturing or commercialization of our product until the underlying patent dispute is resolved.

For example, there may be patents or patent applications held by others that contain claims that our product or operations might be determined to infringe or that may be broader than we believe them to be.

Given the complexities and uncertainties of patent laws, there can be no assurance as to the impact that future patent claims against us may have on our business, financial condition, results of operations, or prospects.

PEDMARK ® Product Overview

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In the United States, PEDMARK® is the first and only therapy approved to mitigate the risk of ototoxicity associated with cisplatin in pediatric patients aged one month and older with localized, non-metastatic solid tumors.

Further, the National Comprehensive Cancer Network (NCCN) recommend the use of PEDMARK ® to reduce the risk of cisplatin-induced ototoxicity in patients with localized, non-metastatic solid tumors (category 2A) for Adolescent and Young Adult (AYA) Oncology.

Further, the National Comprehensive Cancer Network (NCCN) recommended the use of PEDMARK ® to reduce the risk of cisplatin-induced ototoxicity in patients with localized, non-metastatic solid tumors (category 2A) for Adolescent and Young Adult (AYA) Oncology.

As of January 2025, all medical compendia have incorporated Fennec’s clinical updates, and AHFS, the largest online platform for pharmacists, has updated its content to reflect and differentiate PEDMARK ® in accordance with its labeling.

PEDMARK ® is the first and only FDA- and EMA-approved agent designed to reduce the risk of cisplatin-induced hearing loss (CIO) in children with localized solid tumors.

PEDMARK ® is the first and only FDA- and EMA-approved agent designed to reduce the risk of CIO in pediatric patients with localized solid tumors.

The strategic imperatives driving the execution of PEDMARK ® ’s strategy include increasing awareness of unmet patient needs and emphasizing the importance of preventing CIO among oncologists.

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Ensuring seamless access for advocacy groups, payers, and providers is also a priority, along with activating patients and caregivers through disease education to drive demand for PEDMARK ® .

Key activities supporting these objectives include an expanded sales team with a strong track record in both academic and community settings, partnerships with group purchasing organizations, and specialty pharmacy offerings such as home infusions, white bag delivery, and direct billing.

Key activities supporting these objectives include an expanded sales team with a strong track record in both academic and community settings,

partnerships with group purchasing organizations, and specialty pharmacy offerings such as home infusions, white bag delivery, and direct billing.

Furthermore, digital materials, a digital speaker bureau to engage pediatric oncologists, audiologists, nurses, and pharmacists, along with a patient access services hub and ongoing support from advocacy groups, are all integral components of the strategy.

and Europe, it is estimated that more than 10,000 pediatric may receive platinum-based chemotherapy on an annual basis.

The incidence of ototoxicity depends upon the dose and duration of chemotherapy, and many of these children require lifelong hearing aids.

PEDMARK® is the first and only therapy approved to mitigate the risk of ototoxicity associated with cisplatin, a form of platinum based chemotherapy, in pediatric patients aged one month and older with localized, non-metastatic solid tumors.

Beyond the use of PEDMARK, only expensive, technically difficult, and sub-optimal cochlear (inner ear) implants have been shown to provide some benefit.

Infants and young children that suffer ototoxicity at critical stages of development lack speech language development and literacy, and older children and adolescents lack social-emotional development and educational achievement.

pediatric oncology landscape includes approximately 200 targeted pediatric hospital centers, such as those within the Children's Oncology Group (COG), National Cancer Institute (NCI), and National Comprehensive Cancer Network (NCCN) institutions.

Around 80% of pediatric cancer patients receive treatment at these key centers.

The Adolescent and Young Adult (AYA) oncology patient is defined as an individual between the ages of 15 and 39 at the time of initial cancer diagnosis.

In the U.S., Fennec estimates that approximately 20,000 cisplatin chemotherapy patients are treated annually with the primary tumor types of thyroid cancer, breast cancer, germ cell cancer and testicular cancer.

Adolescent and Young Adult (AYA) oncology landscape is shaped by a combination of academic and community centers across the nation.

Academic institutions play a critical role in establishing the treatment framework, with 72 NCI-designated academic centers treating approximately 20% of AYA oncology patients.

In contrast, around 80% of patients are treated at 3,750 community centers throughout the country.

Cisplatin Induced Ototoxicity (“CIO”)

Cisplatin and other platinum compounds are essential chemotherapeutic agents for the treatment of many pediatric and adult malignancies.

Unfortunately, platinum-based therapies can cause ototoxicity, or hearing loss, which is permanent, irreversible, and particularly harmful to the survivors of pediatric cancer.

The incidence of ototoxicity depends upon the dose and duration of chemotherapy, and many of these patients require lifelong hearing aids or cochlear implants, which can be helpful for some, but do not reverse the hearing loss and can be costly over time.

Infants and young children that are affected by ototoxicity at critical stages of development lack speech and language development and literacy, and older children and adolescents often lack social-emotional development and educational achievement.

It is estimated that greater than 50% of pediatric patients may suffer permanent hearing loss as a result of CIO and approximately 40-80% of adult patients may suffer permanent hearing loss as a result of CIO.

and Europe, Fennec estimates that there are approximately 11,400 pediatric patients with localized, non-metastatic solid tumors each year, of which include approximately 2,157 cisplatin-treated pediatric patients in the U.S.

and 1,250 in Europe who fall within the current PEDMARK ® market.

The incidence and severity of CIO depends on the cumulative dose and duration of chemotherapy.

Many affected children ultimately require hearing aids or, in more severe cases, cochlear implants, which are costly, technically complex and do not fully restore normal hearing.

PEDMARK ® is the first and only therapy approved in the U.S.

to reduce the risk of ototoxicity associated with cisplatin in pediatric patients one month of age and older with localized, non-metastatic solid tumors.

Infants and young children who experience ototoxicity during critical developmental windows are at risk for impaired speech and language development and literacy, while older children and adolescents may face long-term challenges in academic performance, social-emotional development, career potential and independent living.

In the U.S., approximately 90% of pediatric cancer patients receive care at approximately 200 key pediatric hospital centers, including institutions within the Children’s Oncology Group (COG), National Cancer Institute (NCI) and National Comprehensive Cancer Network (NCCN).

The Adolescent and Young Adult (“AYA”) oncology patient is defined as an individual between 15 and 39 years of age at the time of initial cancer diagnosis.

In the U.S., Fennec estimates that there are approximately 51,282 new AYA solid tumor cases annually, of which approximately 25,536 involve cisplatin-treated patients with localized, non-metastatic solid tumors.

The most common relevant tumor types include germ cell tumors, testicular cancer, thyroid cancer and breast cancer.

AYA oncology treatment landscape spans both academic and community settings, with 72 NCI-designated academic centers treating roughly 20% of AYA oncology patients, while approximately 80% are managed across approximately 3,750 community oncology centers nationwide.

CIO and Unmet Medical Need

Cisplatin is a cornerstone of modern cancer therapy for many pediatric and AYA solid tumors, with reported overall survival rates in some cisplatin-treated cancers exceeding 80%.

However, cisplatin is associated with a high incidence of ototoxicity.

Published data indicates that approximately 60% to 90% of cisplatin-treated patients may develop some degree of permanent, sensorineural hearing loss, with reported rates of 40% to 80% occurring in adults and 50% to 90% in children.

CIO typically begins as bilateral, high-frequency hearing loss that is progressive and irreversible, occasionally accompanied by tinnitus.

In some cases, it may ultimately require the use of hearing aids or cochlear implants.

Published literature has linked treatment-related hearing loss to impairments in speech and language development, reduced academic performance, challenges in social-emotional development, and enduring impacts on educational attainment, vocational opportunities, and independent living.

Additionally, published research indicates that severe to profound early-onset hearing loss can impose a substantial lifetime economic burden, with per-individual costs estimated at approximately $489 and potentially exceeding $1,000 on an undiscounted basis, primarily due to lost productivity, educational expenses, and medical costs.

These figures are derived from published literature regarding the disease burden of hearing loss and do not represent demonstrated health-economic outcomes specifically attributable to PEDMARK.

European Commission Marketing Authorization

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Under the terms of the licensing agreement, Fennec received approximately $43 million in upfront consideration and may receive up to approximately $230 million in additional commercial and regulatory milestone payments and double-digit tiered royalties on net sales of PEDMARQSI ® in the licensed territories up to the mid-twenties.

To date, Fennec has not received any milestone payments.

Norgine will be responsible for all commercialization activities in the licensed territories and will hold all marketing authorizations in the licensed territories.

Most recently, in December 2024, PEDMARQSI received positive final draft guidance from the National Institute for Health and Care Excellence (NICE).

Further, in early 2025, Norgine announced the launch of PEDMARQSI in Germany.

In December 2024, PEDMARQSI ® received positive final draft guidance from the National Institute for Health and Care Excellence (NICE).

Most recently, in 2025, Norgine launched PEDMARQSI ® in Germany and the U.K

Distribution Agreement – Turkey and the Gulf Cooperation Council

In 2025, we entered into a distribution agreement with Inpharmus for the commercialization of PEDMARK ® in Turkey and the GCC countries.

Under this agreement, Inpharmus will be responsible for certain regulatory, commercialization and distribution activities in the covered territories, and we will supply PEDMARK ® and receive payments, subject to specified terms and conditions.

Commercialization in these markets is subject to obtaining and maintaining necessary regulatory approvals and reimbursement, and there can be no assurance as to the timing or magnitude of future revenues, if any, from these territories.

STS-J01 Investigator-Initiated Trial and Registration Plans

In Japan, an independent investigator-initiated clinical trial, known as STS-J01, has been evaluating PEDMARK ® for the prevention of CIO.

In December 2025, we announced positive topline results from this trial that demonstrated use of PEDMARK ® was associated with a significant reduction in the incidence of hearing loss compared to historically reported rates in patients receiving cisplatin alone, with no evidence of reduced antitumor activity and an approximate 95% clinical response rate.

Based on these results, we are pursuing a regulatory registration strategy for PEDMARK ® in Japan and are evaluating partnering or licensing opportunities in that market, similar to our model with Norgine in Europe.

Any such registration and partnering activities will be subject to applicable regulatory requirements and successful negotiations with potential partners.

Investigator-Initiated Studies and Lifecycle Management

In addition to our pivotal pediatric studies (SIOPEL6 and COG ACCL0431), we support a number of investigator-initiated and other clinical studies designed to further characterize the use of PEDMARK ® in additional tumor types and patient populations.

For example, City of Hope, a U.S.

cancer research and treatment organization, is conducting an investigator-initiated clinical trial evaluating PEDMARK ® in adult men with stage II–III metastatic testicular germ cell tumors receiving cisplatin-based chemotherapy.

We also engage in medical affairs activities and data-generation initiatives to expand the clinical evidence base for PEDMARK ® , including in AYA and adult populations.

These studies are exploratory in nature, and PEDMARK ® is not currently approved for use in metastatic cancers or adult populations outside of its labeled indication.

Any potential label expansion will require additional clinical data and regulatory approvals.

Commercial Infrastructure and Patient Support Programs

During 2025, we significantly expanded our commercial infrastructure and patient support capabilities.

Our Fennec HEARS ® program provides comprehensive education, access, and reimbursement assistance to patients and healthcare providers.

The program includes:

● Financial support:

A $0 copay savings program for eligible patients with commercial or private insurance and the Fennec Patient Assistance Program for eligible patients without insurance.

● Patient and product support:

Dedicated care coordinators to answer insurance questions, assist with prior authorizations, and provide treatment resources.

● Distribution network:

Established third-party logistics providers (3PL) and specialty pharmacy partnerships with home infusion support capabilities.

● Provider engagement:

Peer-to-peer speaker bureau, medical science liaison (MSL) team, and comprehensive marketing initiatives across multiple channels.

We have achieved formulary adoption at certain large oncology networks and academic institutions, with successful activations in both academic centers and community oncology practices occurring throughout 2025.

Results of Operations

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Total operating expense

Income / (loss) from operations

(Loss)/Income from operations

Unrealized loss on securities

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Interest expense

Unrealized foreign exchange (loss)/gain

Unrealized foreign exchange gain/(loss)

Loss on debt extinguishment

Interest income

Loss before income tax

● The Company recorded net product sales of $29.6 million in fiscal 2024 compared to $21.3 million in 2023 as the Company increased market penetration and access for PEDMARK as the Company expanded its focus to the adolescent and young adult (AYA) population.

Further, the Company recorded $18.0 million in licensing revenue related to the Norgine transaction.

The Company recorded discounts and allowances against sales in the amount of $9.3 million and cost of products sold of approximately $3.2 million in 2024.

● Research and development expense increased by $0.3 million in fiscal 2024 as compared to fiscal 2023.

Our research and development activities for this period consisted of costs associated with investigator initiated clinical trials.

● Selling and marketing expenses include distribution costs, logistics, shipping and insurance, advertising, wages commissions and out-of-pocket expenses.

We recorded $18.4 million in selling and marketing expenses for 2024, compared to $12.1 million for 2023.

The increase is largely related to increased payroll and additional marketing expenses in the comparable period as we focused on expanding our outreach to community oncology centers and AYA population.

● There was a $2.8 million increase in general and administrative expenses 2024 compared to 2023.

There was an increase in consulting and professional costs compared to same period in 2023 which is largely attributable to increased European pre-commercialization related expenses and expenses associated with the Norgine transaction and intellectual property expenses related to ongoing litigation.

● The value of our Processa shares declined by $0.01 million for the year ended December 31, 2024.

For year ended December 31, 2023, there was a loss of $0.04 million.

● Amortization expense decreased $0.2 million in fiscal 2024.

● Interest expense increased by $0.7 million in fiscal 2024 compared to fiscal 2023.

The increase was driven mainly by higher average debt balances and higher interest rates on long-term debt.

Prospective interest expense is expected to decline as a result of the Company’s debt paydown of $13 million in December 2024.

● Interest income increased in fiscal 2024 as compared to fiscal 2023 by $1.2 million, due to higher cash balances and higher rates on money market accounts for the comparable periods.

● Income tax expense increased due to the Company’s income inclusion from Norgine licensing transaction in March 2024.

● The Company recorded net product sales of $44,642 in fiscal 2025 compared to $29,580 in fiscal 2024, reflecting increased market penetration and expanded access for PEDMARK ® , including continued expansion of the Company’s focus on the AYA population.

Total revenue decreased to $44,642 in fiscal 2025 from $47,538 in fiscal 2024, primarily due to the absence of $17,958 of licensing revenue recorded in fiscal 2024 related to the Norgine transaction, partially offset by higher net product sales in 2025.

The Company recorded discounts and allowances against sales of $9,165 and cost of product sales of approximately $3,764 during fiscal year 2025, consistent with higher commercial volumes and expanded payer mix.

● Research and development expense decreased by approximately $57 in fiscal 2025 compared to fiscal 2024, reflecting lower overall development spending, partially offset by increasing costs associated with investigator-initiated clinical trials supporting PEDMARK ® and potential lifecycle expansion opportunities.

● Selling and marketing expenses increased modestly to $18,616 in fiscal 2025 from $18,426 in fiscal 2024, driven primarily by higher payroll-related costs, expanded commercial field activities, and increased marketing expenditures as the Company continued to broaden outreach to community oncology centers and expand its focus on the AYA population offset by a decrease in pre commercial activities related to Europe which occurred in 2024.

● General and administrative expenses increased by $5,241 in fiscal 2025 compared to fiscal 2024, primarily due to higher consulting and professional fees, and increased equity remuneration.

● Amortization expense decreased by approximately $25 in fiscal 2025 compared to fiscal 2024, primarily due to the continued amortization of deferred financing costs.

● Interest expense decreased by approximately $1,989 in fiscal 2025 compared to fiscal 2024, primarily due to lower average outstanding debt balances and the impact of debt repayments during the year.

Interest expense is expected to decline to zero after the full debt paydown in November 2025.

Fiscal 2025 interest expense also decreased due to the early repayment of debt.

● Interest income decreased by approximately $895 in fiscal 2025 compared to fiscal 2024, primarily due to lower average invested cash balances during the year and lower yields on money market investments.

● Income tax expense decreased to $106 in fiscal 2025 compared to $365 in fiscal 2024, as the prior-year amount primarily reflected income tax expense related to taxable income generated from the Norgine licensing transaction, with less comparable taxable income recorded in fiscal 2025.

Selected Asset and Liability Data (thousands):

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Accumulated deficit

Shareholders’ deficit

Liquidity and Capital Resources

● There was a $13.4 million net increase in cash and cash equivalents between December 31, 2024, and December 31, 2023.

The net increase was primarily the result of cash inflows of $43.2 million from the Norgine licensing transaction, cash collections on product sales and proceeds from the exercise of options which were offset by $13.0 million paid off on the Petrichor Financing note and cash operating expenses.

● The increase in other current assets of $3.8 million between December 31, 2023, and December 31, 2024, primarily relates to an increase of $4.1 million in accounts receivable, an decrease of $1.1 million in inventory and an increase of $0.5 million in prepaid expenses.

● Current liabilities at December 31, 2024 decreased $0.6 million compared to December 31, 2023.

● Working capital increased by $17.8 million between December 31, 2024, and December 31, 2023.

The increase was primarily as a result of cash inflows from the Norgine licensing transaction and cash collections on product sales offset by cash used in operations for the commercialization of PEDMARK and the paydown of the Petrichor notes.

Shareholders’ equity/(deficit)

● There was a $10,154 net increase in cash and cash equivalents between December 31, 2025 and December 31, 2024, increasing to $36,788 at December 31, 2025 from $26,634 at December 31, 2024.

The increase was primarily driven by cash inflows from net product sales, proceeds from equity issuances and option exercises, and improved operating cash flow, $42,000 of net proceeds from our November 2025 public equity offering and concurrent Canadian private placement, partially offset by $21,729 paid toward the Petrichor Financing note, ongoing operating expenditures related to the commercialization of PEDMARK, and other working capital uses.

● Other current assets increased by $12,765 between December 31, 2025 and December 31, 2024, primarily due to an increase in accounts receivable associated with higher product sales volumes, an increase in prepaid expenses and other current assets, and changes in inventory balances as the Company scaled commercial operations.

● Current liabilities increased by $3,599 at December 31, 2025 compared to December 31, 2024, primarily reflecting higher accrued expenses and other current liabilities associated with increased commercial activity and operating scale, partially offset by reductions in debt-related current obligations following repayments during the year.

● Working capital increased by $19,320 between December 31, 2025 and December 31, 2024, primarily as a result of higher cash balances, increased accounts receivable from higher product sales, partially offset by increased current liabilities and cash used in operations related to the continued commercialization of PEDMARK and the repayment of the Petrichor Financing note.

Selected Cash Flow Data

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December 31, 2024

Net cash provided by / (used in) operating activities

Net cash (used in)/provided by operating activities

Net cash provided by investing activities

Net cash (used in) / provided by financing activities

Net cash provided by /(used in) financing activities

Net cash flow

The net cash flow from operating activities for the year ended December 31, 2024 was approximately $27.0 million as compared to $17.1 million net cash used from operating activities in 2023.

There was a decrease in net loss of $15.6 million in fiscal 2024 compared to fiscal 2023.

In 2024, non-cash items added back to net loss increased by $4.7 million over fiscal 2023 and net changes in balance sheet accounts added $23.4 million in fiscal 2024.

Net financing activities in fiscal 2024 provided approximately $20.3 million less than in fiscal 2023.

This was mainly from $5 million being borrowed in 2023 and $13 million being paid back in 2024 on the Petrichor notes, net of fees, and approximately $0.5 million less arising from various option exercises in 2024 versus 2023.

Net cash used in operating activities for the year ended December 31, 2025 was approximately $12,473, compared to net cash provided by operating activities of $26,980 for the year ended December 31, 2024.

The decrease in operating cash flows was primarily attributable to the 2024 benefit from the licensing of the Norgine transaction, changes in working capital, including increases in accounts receivable and inventory and increases in accrued liabilities and other operating liabilities, partially offset by non-cash expenses such as stock-based compensation and amortization.

Net cash provided by financing activities for the year ended December 31, 2025 was approximately $22,627, compared to net cash used in financing activities of $13,615 for the year ended December 31, 2024.

Cash provided by financing activities in 2025 was primarily attributable to net proceeds from equity financings, partially offset by repayments under the Company’s debt arrangements, including amounts due under the Petrichor agreement, and lower proceeds from stock option exercises.

Cash used in financing activities in 2024 primarily reflected repayments of debt and related fees, partially offset by proceeds from stock option exercises.

Net cash increased by approximately $10,154 during the year ended December 31, 2025, compared to an increase of approximately $13,365 during the year ended December 31, 2024.

We continue to pursue various strategic alternatives including collaborations with other pharmaceutical and biotechnology companies.

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and commercialization activities, if any.

We had cash and cash equivalents of approximately $26.6 million as of December 31, 2024.

We had cash and cash equivalents of approximately $36,788 as of December 31, 2025.

We currently anticipate that our available capital resources, including our existing cash and cash equivalents and the accounts receivable balances will be sufficient to meet our expected working capital and capital expenditure requirements as our business is currently conducted for at least the next 12 months.

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We invest excess cash and cash equivalents in high credit quality investments held by financial institutions in accordance with our investment policy designed to protect the principal investment.

At December 31, 2024, we had approximately $26.6 million in our cash accounts and $24.6 million in savings and money market accounts.

While we have never experienced any loss or write down of our money market investments since our inception, the amounts we hold in money market accounts are substantially above the $0.25 million amount insured by the FDIC and may lose value.

At December 31, 2025, we had approximately $36,788 in our cash accounts and $33,716 in savings and money market accounts.

While we have never experienced any loss or write down of our money market investments since our inception, the amounts we hold in money market accounts are substantially above the $250,000 amount insured by the FDIC and may lose value.

Our 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.

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however, we have not held any instruments that were classified as short-term investments during the periods presented in this Annual Report.

On November 17, 2025, we completed an underwritten public offering of 5,367 of our common shares (including 700 common shares issued upon the underwriters’ full exercise of their option to purchase additional shares) at a public offering price of $7.50 per share, for gross proceeds of approximately $40.25 million, before deducting underwriting discounts and offering expenses.

Concurrently with the public offering in the United States, we completed a non-brokered private offering of our common shares in Canada to certain existing institutional shareholders at a price of $7.50 per share, for aggregate gross proceeds of approximately $5.025 million, before offering expenses.

We used a substantial portion of the net proceeds from the offering to redeem our outstanding debt obligations.

The remaining net proceeds are intended to be used for working capital and other general corporate purposes.

Off-Balance Sheet Arrangements

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Contractual Obligations and Commitments

None, other than the OHSU Agreement, lease agreements, and the severance amounts described in notes to our consolidated financial statements contained elsewhere in this Annual Report.

None, other than the severance amounts described in notes to our consolidated financial statements contained elsewhere in this Annual Report.

Critical Accounting Policies and Estimates

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However, because of the short time to the expected receipt of accounts receivable, the Company believes that the carrying value, net of excepted losses, approximates fair value and therefore, relies more on historical and current analysis of its trade receivables.

To determine the provision for credit losses for accounts receivable, the Company has disaggregated its accounts receivable by class of customer, as the Company determined that risk profile of its customers is consistent based on the life sciences industry.

Each class of customer component is analyzed for estimated credit losses individually.

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Also, specific allowance amounts are established based on review of outstanding invoices to record the appropriate provision for customers that have a higher probability of default.

In addition to the quantitative information disclosed in Note 2, the allowance for credit losses on trade receivables is closely linked to the estimates and assumptions that underlie our gross-to-net deductions, including expected chargebacks,

rebates, co-pay assistance and other commercial and government discounts.

Changes in payer mix and utilization trends could result in meaningful increases or decreases in the allowance for credit losses and related expense in future periods.

Revenue Recognition

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As part of the accounting for these arrangements, the Company must make significant judgments, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each performance obligation.

Product Sales Discounts and Allowances

The Company records U.S.

based revenues from product sales at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established primarily from discounts, chargebacks, rebates, co-pay assistance, returns and other allowances that are offered within contracts between the Company and its Customers, health care providers, payors and other indirect customers relating to the sales of its products.

These reserves are based on the amounts to be claimed on the related sales and are classified as a contra-asset or a current liability.

Where appropriate, these estimates take into consideration a range of possible outcomes that are probability-weighted for relevant factors such as current contractual and statutory requirements, specific known market events and trends, industry data, forecasted Customer buying and payment patterns, and the Company’s historical experience that will develop over time as PEDMARK ® is the Company’s first commercial product.

Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of its contracts.

The amount of variable consideration that is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period.

Actual amounts of consideration ultimately received may differ from the Company’s estimates.

If actual results in the future vary from the Company’s estimates, the Company will adjust these estimates, which would affect net product revenues and earnings in the period such variances become known.

The Company also utilizes select distributors to introduce its product into global markets.

These distributors take on the function of shipping, storage, marketing and other services related to the sale of our product.

We record distribution and other fees paid to these distributors as a reduction of revenue, unless the payment is for a distinct good or service from the customer and we can reasonably estimate the fair value of the goods or services received.

If both conditions are met, we record the consideration paid to the distributor as an operating expense.

These costs are typically known at the time of sale, resulting in minimal adjustments subsequent to the period of sale.

License Agreements

The Company generates revenue from license or similar agreements with pharmaceutical companies for the commercialization of its product.

Such agreements may include the transfer of intellectual property rights in the form of

Such agreements may include the transfer of intellectual property rights in the form of licenses.

Payments made by the customers may include non-refundable upfront fees, payments based upon the achievement of defined milestones, and royalties on sales of product.

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If they are not distinct, they are combined with other promised goods or services to create a bundle of promised goods or services that is distinct.

Optional future services where any additional consideration paid to the Company reflects their standalone selling prices do not provide the customer with a material right and, therefore, are not considered performance obligations.

performance obligations.

If optional future services are priced in a manner which provides the customer with a significant or incremental discount, they are material rights, and are accounted for as separate performance obligations.

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Expected volatility

71.04 - 161.67

55.00 - 162.00

Expected life

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1.5 - 6.0 years

Performance-based units

For performance share units, the Company also makes significant estimates regarding the probability of achieving specified revenue-based performance milestones and recognizes compensation expense based on the grant-date fair value of the awards over the applicable performance period.

The revenue performance milestones for the PSU awards granted in 2025 were achieved during the year, and the related compensation cost has been fully recognized as of December 31, 2025.

Common shares and warrants

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Outstanding Share Information

Our outstanding comparative share data at December 31, 2024 and December 31, 2023 is as follows (in thousands):

Our outstanding comparative share data at December 31, 2025 and December 31, 2024 are as follows (in thousands):

Outstanding Share Type

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Newly Adopted and Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued amended guidance for improvements to reportable segment disclosures (ASU) No.

2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures,” that requires a public entity disclose significant segment expenses regularly reviewed by the chief operating decision maker (CODM), including public entities with a single reportable segment.

The amended guidance is effective for fiscal years beginning January 1, 2024, and interim periods beginning January 1, 2025 and should be applied on a retrospective basis.

The Company adopted the annual and interim disclosure requirements of ASU 2023-07 effective December 31, 2024 (refer to Note 11.

Segment Reporting ).

The adoption of this ASU only affects the Company’s disclosures, with no impact to its financial condition and results of operations .

In December 2023, the FASB issued Accounting Standards Update (ASU) No.

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This guidance will be effective for the annual periods beginning the year ended December 31, 2025.

The Company is currently evaluating the effect the adoption of this ASU will have on its consolidated financial statements.

On March 21, 2024, the FASB issued Accounting Standards Update (ASU) 2024-01, Compensation-Stock Compensation (Topic 718):

Scope Application of Profits Interest and Similar Awards, which provides illustrative guidance to help entities determine whether profits interest and similar awards should be accounted for as share-based payment arrangements within the scope of FASB Accounting Standards Codification (FASB ASC) 718, Compensation-Stock Compensation.

This guidance will be effective for the annual periods beginning the year ended December 31, 2025.

The Company believes that ASU 2024-01 will not have a material impact on the Company’s consolidated financial statements.

The Company adopted ASU 2023-09 on January 1, 2025, on a prospective basis, and the adoption affected only the Company’s income tax disclosures and did not have an impact on its consolidated results of operations, financial position or cash flows.

In November 2024, the FASB issued ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

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We are currently evaluating the impact of this standard on our consolidated financial statements.

In July 2025, the FASB issued ASU No.

2025-05, “Measurement of Credit Losses for Accounts Receivable and Contract Assets” (“ASU 2025-05”).

The guidance in ASU 2025-05 amends ASC Topic 326, Financial Instruments-Credit Losses, to provide a practical expedient to simplify estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC Topic 606, Revenue from Contracts with Customers.

The practical expedient, if elected, allows entities to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset.

The standard is effective for annual fiscal years beginning after December 15, 2025 and interim periods within fiscal years beginning after December 15, 2025, with early adoption permitted.

Entities that elect the practical expedient should apply the guidance prospectively.

The Company is currently evaluating the impact that the adoption of ASU 2025-05 may have on its consolidated financial statements.

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 7. Management’s Discussion and Analysis