What changed in this filing

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Item 9A. Controls and Procedures

2026-03-27 compared with 2025-03-26 · 279 added, 283 removed, 701 unchanged (44% of the section changed)

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The Company's management evaluated the effectiveness of its internal control over financial reporting based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).

on that evaluation, the Company’s management has concluded that, as of December 31, 2024, our internal controls over financial reporting were effective.

Based on that evaluation, the Company’s management has concluded that, as of December 31, 2025, our internal controls over financial reporting were effective.

Changes in Internal Control over Financial Reporting

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Insider Adoption or Termination of Trading Arrangements

Rostislav Raykov , a current member of our Board of Directors , adopted a trading arrangement on September 23, 2024 , which is intended to satisfy the Rule 10b5-1 affirmative defense.

This trading arrangement covers the disposition of up to 120,000 shares of the Company’s common shares, and will terminate on December 31, 2025 , unless earlier terminated in accordance with its terms.

During the year ended December 31, 2025, two members of our Board of Directors adopted trading arrangements intended to satisfy the Rule 10b5-1 affirmative defense.

Rostislav Raykov adopted a trading arrangement on September 19, 2025 , covering the disposition of up to 109,184 shares of the Company’s common shares, which is scheduled to terminate on June 9, 2026 .

Chris Rallis adopted a trading arrangement on May 19, 2025 , covering the disposition of up to 18,406 shares of the Company’s common shares, which will terminate on June 9, 2026 , unless earlier terminated in accordance with its terms.

No additional directors or officers informed us of the adoption, modification or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408.

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2020 Equity Incentive Plan*

Schedule B to the Management Proxy Circular of the Company filed May 11, 2020

Schedule B to the Management Proxy Circular of the Company filed April 25, 2025

Executive Employment Agreement dated May 3, 2010 by and between Fennec Pharmaceuticals Inc.

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Form of Stock Option Award Agreement under 2020 Equity Incentive Plan*

Filed herewith

Exhibit 10.5 to the Form 10-K of the Company filed March 26, 2025

Form of Restricted Stock Award Agreement under 2020 Equity Incentive Plan*

Filed herewith

Exhibit 10.6 to the Form 10-K of the Company filed March 26, 2025

Confidential Separation Agreement between Fennec Pharmaceuticals (EU) Limited, Fennec Pharmaceuticals Inc., and Adrian Haigh, dated June 30, 2024*

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We have audited the accompanying consolidated balance sheets of Fennec Pharmaceuticals Inc.

(the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations, shareholders’ deficit, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

(the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations, shareholders’ equity (deficit), and cash flows for each of the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2025 and 2024, and the consolidated results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

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Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

The Company is not required to have, nor were we engaged to perform, audits of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Continued)

Norgine License and Supply Agreement

Critical Audit Matter Description

As described in Note 1 to the consolidated financial statements, the Company entered into a 10-year licensing and supply agreement with Norgine Pharma UK Limited (“Norgine”) to commercialize PEDMARQSI in contractually defined territories.

The Company received $43 million in upfront consideration in connection with this agreement, and the agreement provides for up to $227 million in additional commercial and regulatory milestone payments and tiered royalties on net sales of PEDMARQSI in the licensed territories.

During the year ended December 31, 2024, the Company recognized related licensing revenue of $18.0 million and product sales revenue of $813,000, and as of December 31, 2024, the Company has a contract liability of $24.8 million.

How the Critical Audit Matter was Addressed in the Audit

Accounting for this transaction involved significant estimates and judgments to evaluate the contract’s distinct performance obligations, determine the transaction price, estimate related standalone selling prices of distinct performance obligations, and allocate the transaction price to the distinct performance obligations based on standalone selling price.

A high degree of auditor judgment, subjectivity and effort was required in performing procedures and evaluating evidence related to management’s assumptions in these areas.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included, among others:

◾ We obtained and read the customer contract to obtain an understanding of the contractual responsibilities of the parties and the terms and conditions of the relationship;

we evaluated management’s accounting policies and practices with respect to revenue recognition for compliance with accounting principles generally accepted in the United States of America.

◾ We tested the Company’s application of the revenue recognition model under Accounting Standards Codification (“ASC”) Topic 606, including its identification of distinct performance obligations (delivery of a functional intellectual property license and a material supply right);

we tested management’s determination of the transaction price by evaluating the accounting guidance and contract terms;

we assessed the reasonableness of management’s estimates of standalone selling price by testing significant judgments made in the areas of forecasted 10-year sales performance, future market product pricing and sales volumes in the covered territories, market royalty rates, upfront payments and milestone payments in comparable transactions, and discount rates;

we evaluated the timing and pattern of revenue recognition for license fees, milestone payments, and supply arrangements;

and we considered the impact of potential future sales-based royalty and milestone payments on the Company’s application of ASC Topic 606.

◾ We reviewed management’s estimates of variable consideration, including the probability of achieving milestone payments and the constraint applied to revenue recognition.

◾ We assessed the adequacy of the Company’s financial statement disclosures regarding this agreement and related revenue recognition policies.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgment.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Continued)

Estimated Product Allowances and Discounts

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Global Distributors - Estimated Product Allowances and Discounts

Critical Audit Matter Description

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Through interviews, inquiries, and observations, we obtained an understanding of the significant management assumptions supporting the fair value estimates of distinct distributor services and the timing of performance of services.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Continued)

◾ We assessed the methodologies used to determine the allowances and the fair value of distinct distributor services and tested estimated percentages by corroborating the underlying data used to develop the estimate, which included evaluating the completeness and accuracy of such data.

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◾ We evaluated information subsequent to the balance sheet date to determine whether there was any new information that would require adjustment to the previously estimated amounts.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Continued)

Estimated Allowances for Expected Credit Losses

Critical Audit Matter Description

As described in Note 2 to the consolidated financial statements, the Company recognizes an allowance for expected credit losses related to trade receivables from customers.

The determination of the allowance involves significant management judgment, including assessments of historical collection experience, customer creditworthiness, aging of receivables, macroeconomic conditions, country-specific risks in international markets, and management’s expectations of future events.

The estimation uncertainty regarding the allowance is exacerbated by the fact that the Company’s first commercial sale to a domestic customer occurred in October 2022, and its first commercial sale to a global distributor occurred in March 2023.

The allowance is particularly sensitive to evolving payment behaviors of global distributors and changes in economic conditions that may impact the collectability of receivables of these global distributors.

Given the complexity and subjectivity involved in estimating potential uncollectible accounts, especially in emerging markets with heightened credit risk, we identified the evaluation of management’s estimate of an allowance for expected credit loss as a critical audit matter.

The Company recorded a $2.5 million credit loss (bad debt) expense during the year ended December 31, 2024, and as of December 31, 2024, the allowance for credit losses totaled $3.8 million.

How the Critical Audit Matter was Addressed in the Audit

Auditing the Company’s estimated allowances was challenging and required significant judgment due to the reliance on subjective management assumptions about the creditworthiness of global distributors.

While domestic specialty distributor customers pose a lower credit risk due to their size, established relationships, and payment history, estimating expected credit losses for international customers involves greater estimation uncertainty.

These customers have limited credit history with the Company and may lack formal credit ratings, increasing dependence on management’s judgment in assessing creditworthiness and potential payment default risk.

As a result, auditing these estimates required a high degree of judgment, subjectivity, and effort in evaluating management’s assumptions and supporting evidence.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included, among others:

◾ We evaluated management’s accounting policies and practices for estimating expected credit losses with respect to domestic and international customers for compliance with accounting principles generally accepted in the United States of America.

◾ Through interviews, inquiries, and observations, we obtained an understanding of the significant management assumptions used in developing the allowance, including evaluating the reasonableness of key assumptions used in estimating expected credit losses and the recoverability of receivables.

◾ We assessed the historical accuracy of management’s estimates by comparing prior year allowances to actual write-offs.

◾ We evaluated potentially uncollectible accounts on a customer-specific basis, considering each customer’s history and unique circumstances.

We also inspected available objective support, such as customer communications and cash receipts, to assess whether the evidence (or lack thereof) corroborated or contradicted management’s assertions.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (Continued)

◾ We evaluated information subsequent to the balance sheet date to determine whether there was any new information that would require adjustment to the previously estimated amounts.

/s/ Haskell & White LLP

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Non-current assets

Other non-current assets

Other non-current assets amortization

Non-current accounts receivable, net

Other non-current assets, net of amortization

Total non-current assets

Liabilities and shareholders’ deficit

Liabilities and shareholders’ equity/(deficit)

Current liabilities:

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Commitments and contingencies (Note 7)

Shareholders’ deficit:

Shareholders’ equity/(deficit)

Common stock, no par value;

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Accumulated other comprehensive income

Total shareholders’ deficit

Total liabilities and shareholders’ deficit

Total shareholders’ equity/(deficit)

Total liabilities and shareholders’ equity/(deficit)

(The accompanying notes are an integral part of these consolidated financial statements)

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Total operating expenses

Income / (Loss) from operations

Other (expense)/income

Unrealized foreign exchange (loss)/gain

(Loss)/income from operations

Other income/(expense)

Unrealized foreign exchange gain/(loss)

Amortization expense

Unrealized loss on securities

Loss on debt extinguishment (Note 8)

Interest income

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Fennec Pharmaceuticals Inc.

Consolidated Statements of Shareholders’ Deficit

Consolidated Statements of Shareholders’ Equity (Deficit)

dollars and shares in thousands)

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Balance at December 31, 2023

Stock options issued to employees

Equity-based compensation - employees

Exercise of stock options

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Balance at December 31, 2024

Stock options issued to employees

Equity-based compensation - employees

Issuance of common stock, net of offering costs

Warrant exercise

Exercise of stock options

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dollars in thousands)

Cash flows provided by (used in):

Cash flows provided by (used in)/provided by:

Operating activities:

Adjustments to reconcile net loss to net cash provided by / (used in) operating activities:

Adjustments to reconcile net loss to net cash (used in)/provided by operating activities:

Inventory reserve

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Unrealized loss on securities

Stock-based compensation

Equity-based compensation

Loss on debt extinguishment

Changes in operating assets and liabilities:

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Prepaid expenses

Other non-current assets

Accounts payable

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Contract liability

Net cash provided by / (used in) operating activities

Net cash (used in)/provided by operating activities

Financing activities:

Issuance of shares, options exercise

Proceeds form the issuance of common stock, net of offering costs

Payment of long-term debt

Debt discount

Prepayment penalty on debt repayment

Cash paid for taxes on restricted share release

Deferred issuance costs

Net cash (used in) / provided by financing activities

Increase/(decrease) in cash and cash equivalents

Net cash provided by/(used in) by financing activities

Increase in cash and cash equivalents

Cash and cash equivalents - Beginning of year

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Supplemental disclosures of cash flow information:

Cash paid for interest

Cash paid for taxes

Non-cash investing and financing activities:

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and Fennec Pharmaceuticals, Inc., both Delaware corporations, Cadherin Biomedical Inc., a Canadian corporation, and Fennec Pharmaceuticals (EU) Limited, an Ireland company (“Fennec Limited”), collectively referred to herein as the “Company,” is a biopharmaceutical company with one FDA approved product 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.

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

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

These consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) that are applicable to a going concern which contemplates that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business.

During the year ended December 31, 2024, the Company earned a net income from operations of $ 2,568 .

At December 31, 2024, it had an accumulated deficit of $ 219,681 and had experienced positive cash flows from operating activities in the amount of $ 26,980 for the year ended December 31, 2024.

On August 1, 2022, the Company entered into a Securities Purchase Agreement (the “SPA”) with Petrichor Opportunities Fund I LP (the “Petrichor”) in connection with the issuance of up to $ 45,000 of senior secured floating rate convertible notes (the “Notes”), issuable in multiple tranches (the “Note Financing”).

The notes are due in August 2027.

On August 19, 2022, the Company closed on the initial tranche of $ 5,000 (the “First Closing Note”) which has an Initial Conversion Price equal to $ 8.11 per share, which was calculated based on a 20 % premium of the 5 -day volume weighted average price of the Company’s common shares as traded on the Nasdaq Capital Market (the “VWAP”) immediately prior to the announcement of the Securities Purchase Agreement (“SPA”) dated August 1, 2022.

In connection with the first closing, the Company repaid in full its secured indebtedness with Bridge Bank in the amount of $ 5,000 .

On September 23, 2022, the Company closed on the second tranche of the Note Financing in the amount of $ 20,000 (the “Second Closing Note”), which has an Initial Conversion Price equal to $ 7.89 per share, which was calculated based on a 20 % premium of the 5 -day VWAP immediately prior to September 20, 2022, which was the date the Company obtained FDA approval of PEDMARK ® .

A commitment fee of 2.0 % of the Notes was payable under the SPA.

Half of such fee was paid by the issuance on the first closing of warrants to purchase 55,498 Fennec common shares (“First Closing Warrant”) and half was payable in cash or warrants of 55,498 Fennec common shares (“Second Closing Warrant”), at our election, on the second closing.

The warrants are exercisable at a price per share of $ 8.11 and have a term of five years from the date of the grant.

The Company elected to have all the commitment fee of the Notes payable in warrants.

On December 4, 2023, the Company closed a third tranche under the SPA in the amount of $ 5,000 (the “Third Closing Note”), which has an Initial Conversion Price equal to $ 7.89 per share, which was calculated based on a 20 % premium of the 5 -day VWAP immediately prior to September 20, 2022, which was the date the Company obtained FDA approval of PEDMARK ® .

Also on December 4, 2023, the Company entered into a First Amendment to the Securities Purchase Agreement (the “SPA Amendment”) with Petrichor, which, among other things, extends the period that the Company may draw the remaining $ 15,000 under the SPA from December 31, 2023, to December 31, 2024.

The ability to draw the remaining $ 15,000 under the SPA expired on December 31, 2024.

During the year ended December 31, 2025, the Company incurred a net loss from operations of $ 6,282 .

At December 31, 2025, it had an accumulated deficit of $ 229,422 and had experienced negative cash flows from operating activities in the amount of $ 12,473 for the year ended December 31, 2025.

Senior Secured Convertible Notes

In August 2022, the Company entered into a Securities Purchase Agreement with Petrichor Opportunities Fund I LP providing for the issuance of up to $ 45,000 of senior secured floating-rate convertible notes due August 2027.

Between August 2022 and December 2023, the Company issued an aggregate of $ 30,000 of Notes under this agreement.

In December 2024, the Company redeemed approximately $ 13,000 of Notes, including payment-in-kind interest.

On November 17, 2025, the Company redeemed all remaining outstanding Notes for an aggregate redemption price of approximately $ 21,700 , including principal, accrued interest, and applicable redemption fees.

The redemption was funded primarily using proceeds from the Company’s November 2025 public equity offering (Note 6).

As of December 31, 2025, no convertible notes were outstanding.

License Agreement

In March 2024, the Company announced that is had secured an exclusive licensing agreement with Norgine Pharma UK Limited (“Norgine”), to commercialize PEDMARQSI in Europe, Australia and New Zealand.

The deal provided the Company with approximately $ 43 million upfront, with the potential of another approximately $ 230 million in future royalties and milestone payments.

The Company believes current funds, which include funds from the upfront payment from Norgine, provide sufficient funding for the Company to carry out its planned activities, including the continuation of commercialization efforts for at least the next twelve months of PEDMARK ® .

These financial statements do not reflect the potentially material adjustments in the carrying values of assets and liabilities, the reported expenses, and the balance sheet classifications used, that would be necessary if the going concern assumption were not appropriate.

Fennec Pharmaceuticals Inc.

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dollars and shares in thousands, except per share information)

On December 18, 2024, the Company entered into a Waiver and Redemption Agreement (the “Redemption Agreement”) with Petrichor, pursuant to which the Company repurchased and redeemed Notes in an aggregate principal amount of $ 13,000 (consisting of approximately $11,794 of original principal balance and approximately $1,206 in PIK interest) (collectively, the “Note Redemptions”).

As a result of the Note Redemptions , the First and Third Closing Notes were repurchased and redeemed in full, and, as of December 19, 2024, there remains outstanding Second Closing Notes in the aggregate principal amount (inclusive of PIK interest) of approximately $ 19,500 .

In March of 2024, the Company announced that is had secured an exclusive licensing agreement with Norgine to commercialize PEDMARQSI in Europe, Australia and New Zealand.

The deal provided the Company with approximately $ 43,000 up front, with the potential of approximately another $ 230,000 in future royalties and milestone payments.

The Company believes current funds, which include funds from the upfront payment from Norgine Pharma UK Limited (“Norgine”), provide sufficient funding for the Company to carry out its planned activities, including the continuation of commercialization efforts for at least the next twelve months of PEDMARK ® .

Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of Fennec and of all its wholly-owned subsidiaries.

The consolidated financial statements include the accounts of Fennec and its wholly-owned subsidiaries.

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

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The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that impact the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenue and expense during the reporting period.

Significant estimates include revenue recognition, amount and timing of marketing and other services performed by certain distributors, allowance against trade receivables, and measurement of stock-based compensation over the next twelve months from the date of issuance of the consolidated financial statements.

Actual results could differ from those estimates.

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Further, the Company considers macroeconomic factors and the status of the life sciences industry to estimate if there are current expected credit losses within its trade receivables based on the trends and the Company’s expectation of the future status of such economic and industry-specific factors.

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

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.

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.

Segment and Geographic Information

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Due to the lack of the Company’s own historical data, the Company elected to use the “simplified” method for “plain vanilla” options to estimate the expected term of the Company’s stock option grants.

Under this approach, the weighted-average expected life is presumed to be the average of the vesting term and the contractual term of the option.

Under this approach, the weighted-average expected life is presumed

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

to be the average of the vesting term and the contractual term of the option.

The risk-free interest rate used for each grant is based on the United States Treasury yield curve in effect at the time of grant for instruments with a similar expected life.

The Company utilizes a dividend yield of zero based on the fact that the Company has never paid cash dividends and at present, has no intention to pay cash dividends.

In May and August 2025, the Board of Directors approved grants of performance-based units (PSUs) whereby vesting depends on the achievement of specified revenue performance milestones through December 31, 2025.

The Company estimates the likelihood of achievement of the performance milestones for all PSU awards at the end of each reporting period, and to the extent those awards or portions thereof are considered probable of being achieved, such awards or portions thereof are expensed over the performance period.

As of December 31, 2025, the Company determined that the applicable revenue performance milestones had been achieved and recognized the related PSU compensation cost in full.

Inventories are valued under a standard costing methodology on a first-in, first-out basis and are stated at the lower of cost or net realizable value.

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The Company assesses recoverability of inventory each reporting period to determine any write down to net realizable value resulting from excess or obsolete inventories.

The manufacturing costs for PEDMARK ® prior to regulatory approval were not capitalized as inventory but were expensed as research and development costs.

The Company expensed pre-launch inventory as it could not reasonably anticipate FDA approval of PEDMARK ® .

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.

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

License Agreements

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Milestone payments that are not within the Company's control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received and therefore the variable consideration is constrained.

The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied.

The transaction price is then allocated to each performance

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied.

At the end of each reporting period, the Company re-evaluates the probability of achieving development or sales-based milestone payments that may not be subject to a material reversal and, if necessary, adjust the estimate of the overall transaction price.

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For arrangements that include sales-based royalties, including sales-based milestone payments, and a license of intellectual property that is deemed to be the predominant item to which the royalties relate, revenue is recognized at the later of when the related sales occur or when the performance obligation to which some or all of the royalties have been allocated has been satisfied (or partially satisfied).

Costs to Obtain Contract

As the majority of the Company's contracts are short-term in nature, sales commissions are generally expensed when incurred as the amortization period would have been less than one year.

These costs are recorded within selling and marketing expenses in the consolidated statements of operations.

For contracts that extend beyond one year, the incremental expense recognition matches the recognition of related revenue.

Net Product Revenue

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PEDMARK ® is the Company’s first commercial product.

The Company sells its products through select specialty distributors in the U.S.

and through distributors purchasing PEDMARK product globally.

These Customers subsequently resell the Company’s products to health care providers and patients.

In addition to distribution agreements with Customers, the Company enters into arrangements with health care providers and payors that provide for government-mandated and/or privately- negotiated rebates, chargebacks and discounts with respect to the purchase of the Company’s products.

Amongst the Company’s customers are distributors which subsequently resell the Company’s products to health care providers and patients.

In addition to distribution agreements, the Company enters into arrangements with health care providers and payors that provide for government-mandated and/or privately- negotiated rebates, chargebacks and discounts with respect to the purchase of the Company’s products.

Revenues from product sales are recognized when the customer obtains control of the Company’s product, which occurs at a point in time, typically upon delivery to the customer.

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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

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

the amount of consideration to which it is entitled based on the terms of its contracts.

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.

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

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

Chargebacks are discounts that occur when contracted customers purchase directly from a specialty distributor.

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

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

The following table summarizes net product revenues for PEDMARK ® in the years ended December 31, 2025, and 2024, respectively:

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Net product revenues

For the years ended December 31, 2024 and 2023, the Company had four distributors and three distributors that represented more than 10% of net sales, respectively.

For the years ended December 31, 2025 and 2024, the Company had three distributors that represented more than 10 % of net sales.

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

The activities and ending allowance balances for each significant category of discounts and allowances for PEDMARK ® (which constitute variable consideration) for the year ended December 31, 2025, and 2024 were as follows:

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For customers that are large specialty distributors, the Company considered the risk of potential credit losses to be low.

Sales to other select global distributors have the potential for losses.

Sales to other select global distributors have increased the potential for losses.

The Company evaluates the risk of credit losses on sales on an individual basis using the above-mentioned criteria.

The Company had an allowance for credit losses of $ 5,904 as of December 31, 2025.

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

Cost of Products Sold

Cost of products sold is related to the Company's product revenues for PEDMARK ® and consists primarily of product production costs associated with finished goods inventory and royalty ( 1 % of net sales) payments the Company is required to pay to Oregon Health & Science University (“OHSU”) on all net sales of PEDMARK ® .

Cost of products sold is related to the Company's product revenues for PEDMARK ® and consists primarily of product production costs associated with finished goods inventory.

Cost of products sold also consists of shipping and other third-party logistics and distribution costs for the Company’s product.

The manufacturing costs for PEDMARK ® incurred prior to regulatory approval were not capitalized as inventory but were expensed as research and development costs.

After FDA approval in September 2022, the Company had various lots of PEDMARK ® in various stages of production in connection with the fourth quarter product launch.

As of December 31, 2025, the Company capitalized approximately $ 1,565 of costs as inventory, net of obsolescence reserve, on the consolidated balance sheet.

Of the items capitalized, $ 377 was capitalized as raw materials and $ 1,201 was capitalized into finished goods.

There was a reserve against finished goods valuation for inventory which the Company believes will expire before it is sold in the amount of $ 518 .

Of the items capitalized, $ 1,274 was capitalized as raw materials, $ 153 as WIP and $ 138 was capitalized into finished goods.

There was a reserve against WIP valuation for inventory which the Company believes will expire before it is sold in the amount of $ 1,290 .

Cash and Cash Equivalents

Cash equivalents consist of highly liquid investments with original maturities at the date of purchase of three months or less.

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

The Company places its cash and cash equivalents in investments held by highly rated financial institutions in accordance with its investment policy designed to protect the principal investment.

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Financial Instruments

Financial instruments recognized on the balance sheets at December 31, 2024 and 2023, consist of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and term loans, the carrying values of which approximate fair value due to their relatively short time to maturity or interest rates that approximate market interest rates.

Financial instruments recognized on the consolidated balance sheets at December 31, 2025 and 2024, consist of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and term loans, the carrying values of which approximate fair value due to their relatively short time to maturity or interest rates that approximate market interest rates.

The Company does not hold or issue financial instruments for trading.

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

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

The Company conducts certain research and development activities under clinical trial and other research agreements with third parties and records expenses for these activities based on estimates of the work performed during the reporting period.

In developing these estimates, the Company considers factors such as the terms of the underlying contracts, progress of patient visits and related clinical procedures, the achievement of contractual milestones, and data received from CROs and other service providers, and adjusts accruals as actual information becomes available.

Investment tax credits, which are earned as a result of qualifying research and development expenditures, are recognized when the expenditures are made and their realization is reasonably assured.

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This policy also limits the amount of credit exposure to any one issue or type of instrument.

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

The Company’s trade receivables includes amounts billed to customers for product sales of PEDMARK ® .

In the U.S., the customers are a limited group of specialty distributors, and accordingly, the Company considers the risk of potential credit losses to be low.

In the U.S., the customers are a limited group of specialty distributors, and direct customers, and accordingly, the Company considers the risk of potential credit losses to be low.

The Company also sells to a select group of global distributors.

These global distributors are established companies and although the Company regards credit losses with these distributors to be remote, it does recognize the potential for credit losses with this group.

These global distributors are established companies and although the Company regards credit losses with these distributors to be low, it does recognize the increased potential for credit losses with this group.

The Company accounts for income taxes using the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts, using currently enacted tax rates.

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Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the year.

Diluted net loss per share is computed using the same method, except the weighted-average number of common shares outstanding includes convertible debentures, restricted share units, stock options and warrants, if dilutive, as determined using the if-converted method and treasury methods.

Accordingly, warrants to purchase 0.2 million of our common shares, restricted share units of 0.3 million to obtain our common shares, and options to purchase 5.9 million of our common shares at December 31, 2024, were not included in loss per share.

Such options would have an antidilutive effect.

At December 31, 2023, warrants to purchase 0.2 million of our common shares, restricted share units to obtain 0.2 million of our common shares and options to purchase 4.8 million common shares were excluded from the computation of loss per share as their inclusion would have been antidilutive.

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

Basic net loss per share was computed by dividing net loss by the weighted-average number of common shares outstanding during the year.

Diluted net loss per share was computed using the same method, except the weighted-average number of common shares outstanding included convertible debentures, performance share units, restricted share units, stock options and warrants, if dilutive, as determined using the if-converted and treasury stock methods.

Accordingly, at December 31, 2025, warrants to purchase 0.1 million of our common shares, performance share units covering 0.3 million of our common shares, restricted share units to obtain 0.4 million of our common shares, and options to purchase 5.9 million of our common shares were excluded from the computation of diluted net loss per share because their inclusion would have been antidilutive.

At December 31, 2024, warrants to purchase 0.2 million of our common shares, restricted share units to obtain 0.3 million of our common shares and options to purchase 5.9 million of our common shares were excluded from the computation of diluted net loss per share because their inclusion would have been antidilutive;

there were no performance share units outstanding at that date.

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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Improvements to Income Tax Disclosures,” which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction.

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.

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

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.

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

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.

Loss per Share

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Net loss per share, basic and diluted

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

The following outstanding options, restricted share units, and warrants were excluded from the computation of basic and diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect (in thousands):

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Restricted share units to obtain common shares

Performance share units to purchase common shares

Warrants to purchase common shares

Stock Options

The Compensation Committee of the Board of Directors administers the Company’s 2020 Equity Incentive Plan (the “Plan”).

The Compensation Committee designates eligible participants to be included under the Plan and approves the number of options, restricted stock, and other awards to be granted from time to time under the Plan.

The maximum number of common shares issuable under the Plan is the number of shares that represents twenty-five percent ( 25 %) of the total number of all the Company’s issued and outstanding common shares.

Based upon the current shares outstanding, a maximum of 6.9 million of our common shares are authorized for issuance under the Plan.

The option exercise price for all options issued under the Plan is based on the fair value of the underlying shares on the date of grant.

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

The Plan allows the issuance of Canadian and U.S.

dollar grants.

Equity Incentive Plan

The Company maintains the 2020 Equity Incentive Plan (the “2020 Plan” or the “Plan”), which is administered by the Compensation Committee of the Board of Directors.

The 2020 Plan provides for the issuance of stock options, restricted share units (“RSUs”), and other equity-based awards to employees, directors, officers, and consultants of the Company.

The Compensation Committee is responsible for determining eligible participants and approving individual award grants under the 2020 Plan.

On April 24, 2025, the Company’s Board of Directors approved an amendment to the Plan to:

(i) increase the number of common shares available for issuance under the Plan (excluding common shares issued prior to the date of the meeting pursuant to the exercise of options and vesting of RSUs) to 8,500 common shares, representing approximately 30.8 % of

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

the total issued and outstanding common shares as of the date of the circular;

and (ii) include provisions for an employee stock purchase program.

The amendment was subsequently approved by the Company’s shareholders on June 3, 2025.

Prior to this amendment, the maximum number of equity instruments issuable under the Plan, together with the Company’s prior stock option plan, was limited to 25 % of the Company’s issued and outstanding common shares.

Based on the then-current outstanding share count, this equated to a maximum of 6,825 common shares available for issuance.

All stock options granted under the Plan have an exercise price equal to the fair value of the Company’s common shares on the date of grant.

Options generally vest over a period of up to three years and are exercisable for a period of up to ten years from the grant date.

Awards under the Plan may be denominated in either U.S.

or Canadian dollars.

In November 2025, we filed a registration statement on Form S-8 registering 8,500 shares of common stock for issuance under the Fennec Pharmaceuticals Inc.

2020 Equity Incentive Plan.

These shares are intended to support future equity-based compensation awards.

The Company recognizes stock-based compensation expense for all share-based awards granted to employees and non-employees based on the fair value of the awards on the grant date.

A summary of the stock option transactions, U.S.

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There are no outstanding $CAD denominated options.

Summary of $USD Option Activity

Summary of Option Activity

(in thousands)

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Outstanding and exercisable at December 31, 2025

Summary of $USD Option Remaining Life

Summary of Option Remaining Life

Number Outstanding and Exercisable at

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These amounts have been included in general and administrative expenses for the respective periods.

The weighted average fair value per share of options granted and or vested during the years ended December 31, 2024, and 2023 was $ 4.55 and $ 4.73 , respectively.

The weighted average fair value per share of options granted during the years ended December 31, 2025, and 2024 was $ 7.33 and $ 4.55 , respectively.

The intrinsic value (being the difference between the share price at December 31, 2025 and exercise price) of stock options exercisable at December 31, 2025 was $ 6,988 .

The intrinsic value of options exercised during the year ended December 31, 2025, was $ 2,214 .

The fair value of all options vested during the year ended December 31, 2025, was $ 3,041 .

The fair values of options granted in years ended December 31, 2025 and 2024 were estimated on the date the options were granted based on the

Fennec Pharmaceuticals Inc.

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dollars and shares in thousands, except per share information)

The fair value of all options vested during the year ended December 31, 2024, was $ 2,622 .

The fair values of options granted in years ended December 31, 2024 and 2023 were estimated on the date the options were granted based on the Black-Scholes option-pricing model, using the following weighted average assumptions for all options with a ten-year expiration:

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

December 31, 2025

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Expected volatility

71.04 - 161.67

55.00 - 162.00

Expected life

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

Performance-Based Units

In May and August 2025, the Board of Directors approved PSU grants whereby vesting depends on certain revenue performance milestones during the year ended December 31, 2025.

The Company estimates the likelihood of achievement of performance milestones for all PSU awards at the end of each reporting period.

To the extent those awards or portions thereof are considered probable of being achieved, such awards or portions thereof are expensed over the performance period.

The performance milestones were achieved for the year ended December 31, 2025.

The expense of $ 2,387 was recognized for 2025.

During 2025, the Company granted a total of 320 performance units and 6 units were forfeited, resulting in 314 unvested performance units outstanding at December 31, 2025 with a weighted-average grant-date fair value of $ 7.46 per share.

Restricted Share Units Activity

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Number of Restricted

US Denominated RSU's

Summary of RSU Activity

Share Units (thousands)

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The Fair Value Measurements Topic defines fair value, establishes a framework for measuring fair value in accordance with US GAAP, and expands disclosure about fair value measurements.

This Topic enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values.

This Topic enables the reader of the financial statements to assess the inputs

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values.

The Topic requires that financial assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

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Unobservable inputs that are not corroborated by market data.

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

Financial assets and liabilities are classified in their entirety within the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement.

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These inputs include reported trades of and broker- dealer quotes on the same or similar securities, issuer credit spreads, benchmark securities and other observable inputs.

As of December 31, 2024, the Company had financial assets valued based on Level 1 inputs consisting of cash and cash equivalents and had financial assets based on Level 2 inputs consisting of Processa common shares.

As of December 31, 2025, the Company had financial assets valued based on Level 1 inputs consisting of cash and cash equivalents and Processa common shares.

The Company also had financial assets based on Level 2 inputs consisting of money market funds.

During the year ended December 31, 2025, the Company did not have any transfers of financial assets between Levels 1 and 2.

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(1) The Company held approximately, $ 3,072 in cash as of December 31, 2025, of which approximately $ 154 was in Canadian funds and $ 327 in Euro (both translated into U.S.

As of December 31, 2023, the Company held approximately $ 1,340 in cash, of which approximately $ 33 was in Canadian funds (translated into U.S.

As of December 31, 2024, the Company held approximately $ 2,020 in cash, of which approximately $ 110 was in Canadian funds and $ 245 in Euro (both translated into U.S.

(2) The Company has 51 unrestricted common shares of Processa (Nasdaq:

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The Company’s authorized capital stock consists of an unlimited number of shares of no -par common shares.

Public Offering and Concurrent Private Placement

On November 17, 2025, the Company completed an underwritten public offering of 5,367 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, the Company completed a non-brokered private placement of 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.

The Company used a substantial portion of the combined net proceeds from these

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

equity offerings to redeem all remaining outstanding senior secured convertible notes, with the balance intended for working capital and other general corporate purposes.

Warrants to Purchase Common Shares

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Outstanding and exercisable at December 31, 2025

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

Commitments and Contingencies

Oregon Health & Science University (“OHSU”) Agreement

On February 20, 2013, Fennec entered into an exclusive license agreement with OHSU for exclusive worldwide license rights to intellectual property directed to thiol-based compounds, including PEDMARK ® and their use in oncology (the "OHSU Agreement").

OHSU will receive certain milestone payments, royalty on net sales for licensed products and a royalty on any consideration received from sublicensing of the licensed technology.

On May 18, 2015, Fennec negotiated an amendment ("Amendment 1") to the OHSU Agreement, which expands Fennec's exclusive license to include the use of N-acetylcysteine as a standalone therapy and/or in combination with PEDMARK ® 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.

Certain milestone payments are due upon FDA approval and achievement of sufficient positive EBITDA over a specified period.

PEDMARK ® received FDA approval in September 2022.

The Company has accrued $201 based on EBITDA targets as of December 31, 2024.

The term of the OHSU Agreement as amended by Amendment 1 expires on the date of the last to expire claim(s) covered in the patents licensed to Fennec or 8 years, whichever is later.

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

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

The Company had accrued approximately $ 576 ( 1 % net sales) in royalty expense to OHSU at December 31, 2024.

CIPLA Litigation

CIPLA ANDA Litigation

On December 1, 2022, we received a letter dated November 30, 2022, notifying us that CIPLA Ltd.

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On May 11, 2023, we received written notice of CIPLA’s Paragraph IV Certification as to the US ‘793 Patent, which was dated May 10, 2023, along with an enclosed statement of alleged factual and legal bases for stating that the US ‘793 Patent is invalid, unenforceable, and/or will not be infringed by CIPLA’s ANDA Product.

On July 27, 2023, we filed a Second

On July 27, 2023, we filed a Second Amended Complaint to assert the US ‘793 Patent.

CIPLA filed an Answer to the Second Amended Complaint on August 31, 2023.

Fennec Pharmaceuticals Inc.

1 unchanged sentence

dollars and shares in thousands, except per share information)

Amended Complaint to assert the US ‘793 Patent.

CIPLA filed an Answer to the Second Amended Complaint on August 31, 2023.

On April 23, 2024, we were granted US 11,964,018 Patent (the “US ‘018 Patent) covering a method of using our PEDMARK ® product to reduce ototoxicity in a patient receiving a platinum based chemotherapeutic for the treatment of a cancer, which was listed in the Orange Book on or around May 8, 2024, and has an expiration date of July 2039.

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In coordination with the Third Amended Complaint, we entered into a covenant not to sue CIPLA on the US ‘363 Patent, US ‘728 Patent, US ‘984 Patent, US ‘530 Patent, and US ‘604 Patent, subject to the limitation that such shall not apply to the extent CIPLA alters the product or formulation described in its FDA ANDA application.

The suit is ongoing.

On May 27, 2025, we were granted US 12,311,026 (the “US ‘026 Patent”) covering a method of using pharmaceutical compositions comprising sodium thiosulfate and specific stabilizers to reduce ototoxicity in a patient receiving a platinum based chemotherapeutic for the treatment of a cancer.

The US ‘026 Patent has an expiration date of July 2039.

On May 27, 2025, we filed suit against the CIPLA entities in the United States District Court for the District of New Jersey (Case No.

2:25-cv-05709), for infringement of the US ‘026 Patent based on the Cipla entities’ ANDA filing.

Subsequently, we filed a Motion to Consolidate Case No.

2:25-cv-05709 and Case No.

2:23-cv-00123.

On July 14, 2025, the court granted the Motion to Consolidate Case No.

2:25-cv-05709 with Case No.

2:23-cv-00123.

On July 14, 2025, the court issued its Order on Claim Construction on two claim terms in dispute in the ‘793 Patent and ‘018 Patent, adopting our proposed constructions for both.

On August 25, 2025, the CIPLA entities filed an Answer and Counterclaims to the complaint, alleging that the ‘026 Patent was invalid, not infringed, and/or unenforceable.

On September 18, 2025, we filed an Answer to CIPLA’s Counterclaims.

On March 16, 2026, Fennec entered into an agreement with Cipla Limited and Cipla USA, Inc.

to settle the litigation between them regarding Cipla’s application to FDA for approval to market a generic version of Fennec’s PEDMARK® (sodium thiosulfate injection) product.

See Fennec Pharmaceuticals Inc.

Cipla Limited and Cipla USA, Inc ., C.A.

2:23-cv-00123-JKS-MAH (D.N.J.).

Under the terms of the agreement, the lawsuit will be dismissed with each party bearing their own costs, and Cipla will not enter the market with its generic sodium thiosulfate product until September 1, 2033, or earlier under certain circumstances.

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

Executive Severance

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The Company was required to pay a security deposit of $ 5 , which is the equivalent of two months rent.

The Second Office Service Agreement commenced on August 1, 2023 and terminates on January 31, 2025, thereafter the lease may continue on a month-to-month basis with either party being able to terminate the agreement by providing one month’s advance written notice of termination.

This lease was terminated.

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

The Second Office Service Agreement does not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring the operating lease liability.

The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease within a particular currency environment.

The Company uses an incremental borrowing rate consisting of the current prime rate plus 150 basis points for operating leases that commenced after August 2023.

The depreciable lives of operating leases and leasehold improvements are limited by the expected lease term.

December 31, 2024

Remaining lease terms (in months)

Discount rate

Maturities of lease liabilities as of December 31, 2024 were as follows (in thousands):

Year Ending December 31,

Less imputed interest

Total lease liabilities

Current operating lease liabilities

Non-current operating lease liabilities

Total lease liabilities

The Second Office Service Agreement commenced on August 1, 2023 and terminated on January 31, 2025.

Employee Benefit Plan

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As of December 31, 2025, the Company does not offer matching contributions.

On August 1, 2022, the Company entered into the SPA with the Petrichor in connection with the issuance of up to $ 45,000 of Notes, issuable in multiple tranches.

On August 19, 2022, the Company closed on the initial tranche of $ 5,000 , which has an Initial Conversion Price equal to $ 8.11 per share, which was calculated based on a 20 % premium of the 5 -day VWAP immediately prior to the announcement of the SPA.

In connection with the first closing, the Company repaid in full its secured indebtedness with Bridge Bank in the amount of $ 5,000 .

The Notes become due on the maturity date, which is August 19, 2027.

A commitment fee of 2.0 % of the Notes was payable under the SPA.

The warrants are exercisable at a price per share of $ 8.11 and have a term of five years from the date of the grant.

The Company elected to have all the commitment fee of the Notes payable in warrants.

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

Also on December 4, 2023, the Company entered into a First Amendment to the Securities Purchase Agreement (the “SPA Amendment”) with the Petrichor, which, among other things, extends the period that the Company may draw the remaining $ 15,000 under the SPA from December 31, 2023, to December 31, 2024.

The ability for subsequent draws expired on December 31, 2024.

On December 18, 2024, the Company entered into a Waiver and Redemption Agreement (the “Redemption Agreement”) with Petrichor, pursuant to which the Company repurchased and redeemed Notes in an aggregate principal amount of $ 13,000 (consisting of approximately $ 11,800 of original principal balance and approximately $ 1,270 in PIK interest) (collectively, the “Note Redemptions”).

Cash interest on outstanding principal shall accrue at a rate of prime, plus 4.5 % per annum, from the date of funding ( 12 % and 13 % at December 31, 2024 and 2023, respectively).

Cash interest is due on the first business day of each calendar quarter (“Interest Date”).

Payment-in-kind (“PIK”) interest will commence on funding date and accrue at a rate of 3.5 % per annum.

PIK interest stopped accruing on August 24, 2024.

All accrued PIK interest shall remain outstanding and was payable on each Interest Date and added to the outstanding principal amount.

The Company has accrued $ 1,271 in PIK interest and has classified the PIK interest in long-term liabilities.

The SPA notes are convertible into fully paid, non-assessable share of common shares at any point after their issuance dates and before the maturity date.

Any amount of the SPA notes may be converted into common shares so long as it does not create partial shares.

The conversion rate is determined by dividing the conversion amount by the conversion price.

Provisions of the PSA create legal, valid and enforceable liens on, and security interests in, all of the Company’s and each of its subsidiaries’ assets.

Aggregate annual payments due on the SPA as of December 31, 2024, are as follows (in thousands):

Years Ending December 31,

Payment in kind interest

Total future payments

unamortized debt discount

Total term loan, net of debt discount

In the event of default or change of control, all unpaid principal and all accrued and unpaid interest amounts (if any) become immediately due and payable.

Events of default include, but are not limited to, a payment default, a material adverse change, and insolvency.

The SPA facility is secured by all of the Company’s assets, including all capital stock held by the Company.

Debt issuance costs of $ 175 were paid in cash for legal fees and to the Petrichor in 2022 and warrants valued at $ 441 were granted the Petrichor to secure access to the SPA.

These amounts were capitalized and are being amortized over the access period of the SPA.

Upon drawing under the First Closing Note, the Second Closing Note, and the Third Closing Note, the Company recorded a debt discount of $ 314 , which was based on a pro-rata allocation of the issue costs to secure the SPA,

Between August 2022 and December 2023, the Company issued an aggregate of $ 30,000 of Notes under this agreement.

In December 2024, the Company redeemed approximately $ 13,000 of Notes, including payment-in-kind interest.

On November 17, 2025, the Company redeemed all remaining outstanding Notes for an aggregate redemption price of approximately $ 21,729 , including principal, accrued interest, and applicable redemption fees.

The redemption was funded primarily using proceeds from the Company’s November 2025 public equity offering (Note 6).

As of December 31, 2025, no convertible notes were outstanding.

Fennec Pharmaceuticals Inc.

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dollars and shares in thousands, except per share information)

reducing the capitalized amount by the same amount.

The debt discount is being amortized over the life of the SPA.

We account for income taxes in accordance with ASC 740, Income Taxes.

Our income tax expense (benefit) is based on income (loss) from continuing operations before income taxes and reflects current and deferred tax expense (benefit) attributable to U.S.

federal, state, and foreign jurisdictions.

We adopted ASU 2023-09, Improvements to Income Tax Disclosures, on January 1, 2025 on a prospective basis.

The adoption did not have an impact on our consolidated financial position or results of operations but resulted in expanded income tax disclosures.

The Company operates in U.S., Canadian and Ireland tax jurisdictions.

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A reconciliation of the combined Canadian federal and provincial income tax rate with the Company’s effective tax rate is as follows (in thousands except for percentage rates):

Income (loss) from continuing operations before income taxes:

Domestic loss

Foreign income/(loss)

Foreign income

Total Pretax Income (Loss) From Continuing Operations

The provision for income taxes consists of the following (in thousands):

Current income tax expense

Provincial, local and other

Deferred income tax expense

Provincial, local and other

Provision for income taxes

The Canadian statutory income tax rate of 26.5 percent is comprised of federal income tax at approximately 15.0 percent and provincial income tax at approximately 11.5 percent.

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

A reconciliation of the combined Canadian federal and provincial income tax rate to our effective tax rate for the year ended December 31, 2025 is as follows:

Loss before income taxes

Expected statutory rate

Federal Statutory Tax Rate and Tax Expense (1)

Provincial Tax (2)

Foreign Tax Effects

Foreign Rate Differential

Non-deductible meals and entertainment

Valuation allowance

Effect of Cross-Border Tax Laws

Domestic taxes on foreign earnings

Non-taxable or Non-deductible Items

Stock Compensation

Valuation allowance

Provision for income taxes

(1) Represents the Canadian federal statutory income tax rate.

(2) Provincial taxes in Ontario comprised the majority of the tax effect in this category.

A reconciliation of the Canadian federal statutory income tax rates to our effective tax rate for the years ended December 31, 2024 is as follows:

Domestic loss

Foreign income

Loss before income taxes

Income (loss) before income taxes

Statutory tax rate

Expected provision for (recovery of) income tax

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Provision for income taxes

The Canadian statutory income tax rate of 26.5 percent is comprised of federal income tax at approximately 15.0 percent and provincial income tax at approximately 11.5 percent.

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

The primary temporary differences which gave rise to future income taxes (recovery) at December 31, 2025 and December 31, 2024:

Future tax assets:

SR&ED expenditures

Income tax loss carryforwards

3 unchanged sentences

Debt discount

Gross future tax assets

valuation allowance

Net future tax assets

Future tax liabilities:

Gross future tax liabilities

Total deferred tax assets, net

For 2025, cash paid for income taxes, net of refunds received, was $ 418 , all of which related to foreign income taxes in the United States;

we did no t pay any federal, provincial , or other foreign income taxes during the year.

Tax Cuts and Jobs Act

3 unchanged sentences

In December 2017, in accordance with the SEC Staff Accounting Bulletin (“SAB”) 118– Income Tax Accounting Implications of the TCJA, the Company recorded tax effects on a provisional basis based on a reasonable estimate.

The TCJA did not have a material impact on the Company's financial statements because its deferred temporary differences

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

are fully offset by a valuation allowance and the Company does not have any offshore earnings from which to record the mandatory transition tax.

The TCJA did not have a material impact on the Company's financial statements because its deferred temporary differences are fully offset by a valuation allowance and the Company does not have any offshore earnings from which to record the mandatory transition tax.

During 2018, the Company completed its analysis under SAB 118 and no additional tax effects due to rate-remeasurement were required to be recorded.

1 unchanged sentence

Once those losses are used up, the Company will owe income taxes.

As of December 31, 2024, the Company has unclaimed Scientific Research and Experimental Development ("SR&ED") expenditures, income tax loss carry-forwards and non-refundable investment tax credits.

As of December 31, 2025, the Company

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

has unclaimed Scientific Research and Experimental Development ("SR&ED") expenditures, income tax loss carry-forwards and non-refundable investment tax credits.

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

10 unchanged sentences

Pursuant to the terms of the Agreement, Fennec shall receive the following payments from Norgine:

(i) an upfront payment in the amount of € 40,000 or approximately $ 43,200 , which was paid to Fennec on March 15, 2024, (ii) up to € 210,000 (or

(i) an upfront payment in the amount of € 40,000 or approximately $ 43,200 , which was paid to Fennec on March 15, 2024, (ii) up to € 210,000 (or approximately $ 230,000 ) upon the achievement of certain regulatory and commercial milestones, and (iii) tiered royalty payments based on net sales of PEDMARQSI ® in the Territory, which royalty payment range from mid- teen percent to mid- twenty percent based on the aggregate net sales of PEDMARQSI ® in the Territory.

The tiered royalty payments are subject to material reduction if an alternative or generic version of PEDMARQSI ® becomes available in any respective country or jurisdiction within the Territory.

Fennec Pharmaceuticals Inc.

1 unchanged sentence

dollars and shares in thousands, except per share information)

approximately $ 230,000 ) upon the achievement of certain regulatory and commercial milestones, and (iii) tiered royalty payments based on net sales of PEDMARQSI ® in the Territory, which royalty payment range from mid-teen percent to mid-twenty percent based on the aggregate net sales of PEDMARQSI ® in the Territory.

The tiered royalty payments are subject to material reduction if an alternative or generic version of PEDMARQSI ® becomes available in any respective country or jurisdiction within the Territory.

Subject to customary rights of each party to earlier terminate the Agreement, the term of the Agreement continues for the longer of:

6 unchanged sentences

The initial transaction price consisted of the non-refundable upfront payment, a portion of which was allocated to and recognized as License Revenue in the first quarter of 2024 as the requirements for revenue recognition under ASC 606 were met.

The portion of the transaction price associated with the material right is deferred and reflected as deferred revenue in the condensed consolidated balance sheets.

The portion of the transaction price associated with the material right is deferred and reflected as deferred revenue in the consolidated balance sheets.

Deferred revenue associated with the material right is recognized as contract liabilities under the supply arrangement are made.

5 unchanged sentences

Any consideration related to sales-based royalties will be recognized as revenue or deferred as part of the material right when the related sales occur.

For year ended December 31, 2024, the Company did not recognize any milestone or royalty revenue payments from Norgine sales of PEDMARQSI ® pursuant to the Agreement.

For year ended December 31, 2025, the Company recognized $ 426 of royalty revenue and did not recognize any milestone revenue payments from Norgine sales of PEDMARQSI ® pursuant to the Agreement.

In conjunction with entering into the Agreement, the Company paid approximately $ 1,700 in incremental costs, which were capitalized and recorded within other non-current assets.

The Company amortizes the asset over the period of expected benefit using a systematic basis that reflects the pattern of transfer to the customer.

A portion that represents the license was recognized immediately and is recorded within selling and marketing expense in the condensed consolidated statements of operations.

A portion that represents the license was recognized immediately and is recorded within selling and marketing expense in the consolidated statements of operations.

As of December 31, 2025, $ 717 in incremental cost was capitalized.

5 unchanged sentences

The accounting policies of the operating segment are the same as those described in Note 2, Significant Accounting Policies.

The chief operating decision maker evaluates the performance of the operating segment and allocates resources

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

based on net loss that also is reported on the consolidated income statement as net loss.

The chief operating decision maker evaluates the performance of the operating segment and allocates resources based on net loss that also is reported on the consolidated income statement as net loss.

The measure of the operating segment assets is reported on the consolidated balance sheet as total assets.

1 unchanged sentence

The significant expenses are presented in the Company’s statements of operations.

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

Subsequent Events

On February 7, 2024, the Company announced that Norgine Pharmaceuticals Ltd.

had commercially launched PEDMARQSI ® in Germany.

On March 16, 2026, the Company entered into a settlement agreement with Cipla Limited and Cipla USA, Inc.

(together, “Cipla”) to resolve the litigation relating to Cipla’s application to the U.S.

Food and Drug Administration (“FDA”) for approval to market a generic version of PEDMARK® (sodium thiosulfate injection), captioned Fennec Pharmaceuticals Inc.

Cipla Limited and Cipla USA, Inc., C.A.

2:23-cv-00123-JKS-MAH (D.N.J.).

Under the terms of the settlement, the lawsuit will be dismissed with each party bearing its own costs, and Cipla has agreed not to enter the market with its generic sodium thiosulfate product until September 1, 2033, or earlier under certain specified circumstances.

The settlement was entered into subsequent to December 31, 2025, and did not exist at that date.

Accordingly, the settlement has been accounted for as a non-recognized subsequent event and no adjustments have been made to the consolidated financial statements as of and for the year ended December 31, 2025.

There were no other subsequent events that required adjustment to or disclosure in the accompanying 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 9A. Controls and Procedures