What changed in this filing

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Item 1. Financial Statements

2026-05-14 compared with 2025-11-13 · 202 added, 326 removed, 342 unchanged (61% of the section changed)

3 unchanged sentences

Dollars and shares in thousands)

September 30,

March 31, 2026

December 31, 2025

Current assets

2 unchanged sentences

Prepaid expenses

Inventory, net

Other current assets

4 unchanged sentences

Total non-current assets

Liabilities and stockholders’ deficit

Liabilities and stockholders’ equity

Current liabilities:

2 unchanged sentences

Contract liability-current

Operating lease liability - current

Total current liabilities

Long-term liabilities

Debt discount

Contract liability - long-term

2 unchanged sentences

Commitments and contingencies (Note 6)

Stockholders’ deficit:

Stockholders’ equity:

Common stock, no par value;

4 unchanged sentences

Accumulated other comprehensive income

Total stockholders’ deficit

Total liabilities and stockholders’ deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

PEDMARK product sales, net

Licensing revenue

Total revenue

Operating expenses:

4 unchanged sentences

Total operating expenses

(Loss)/income from operations

Loss from operations

Other (expense)/income

4 unchanged sentences

Interest expense

Total other expense

Net (loss)/income

Basic net (loss)/income per common share

Diluted net (loss)/income per common share

Total other income/(expense)

Net income/(loss)

Basic net income/(loss) per common share

Diluted net income/(loss) per common share

Weighted-average number of common shares outstanding basic

3 unchanged sentences

Condensed Consolidated Statements of Stockholders’ Equity / (Deficit)

Three and Nine Months Ended September 30, 2025, and 2024

Three Months Ended March 31, 2026 and 2025

dollars and shares in thousands)

2 unchanged sentences

Balance at December 31, 2025

Stock-based compensation

Equity-based compensation - employees

Stock option exercise

Restricted stock release

Restricted and performance stock release

Balance at March 31, 2026

Stock-based compensation

Stock option exercise

Restricted stock release

Balance at June 30, 2025

Stock-based compensation

Warrant exercise

Stock option exercise

Restricted stock release

Balance at September 30, 2025

Comprehensive

1 unchanged sentence

Balance at December 31, 2024

Stock-based compensation

Equity-based compensation - employees

Stock option exercise

1 unchanged sentence

Balance at March 31, 2025

Stock-based compensation

Stock option exercise

Restricted stock release

Balance at June 30, 2024

Stock-based compensation

Stock option exercise

Restricted stock release

Balance at September 30, 2024

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

Dollars in thousands)

Nine Months Ended

September 30,

Cash flows (used in) provided by:

Three Months Ended

Cash flows provided by/(used in):

Operating activities:

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

Inventory reserve

Net income/(loss)

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

Allowance for credit losses

Amortization of debt discount

Loss on securities

Amortization of Norgine asset

Amortization of debt discount

Unrealized loss on securities

Stock-based compensation - employees

2 unchanged sentences

Prepaid expenses

Other current assets

Other non-current assets

Accounts payable

Accrued liabilities

Contract liability - Norgine

Net cash (used in)/provided by operating activities

Contract liability - current

Net cash provided by/(used in) operating activities

Financing activities:

Issuance of shares, options exercise

Cash paid for taxes on restricted share release

Deferred issuance costs

Net cash provided by/(used in) financing activities

(Decrease)/increase in cash and cash equivalents

Cash paid for taxes on restricted/performance share release

Net cash provided by financing activities

Increase/(decrease) in cash and cash equivalents

Cash and cash equivalents - Beginning of period

Cash and cash equivalents - End of period

Non-cash investing and financing activities:

Capitalized lease asset

The accompanying notes are an integral part of these unaudited condensed consolidated financial statement.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Fennec Pharmaceuticals Inc.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

Nature of Business and Liquidity

Fennec Pharmaceuticals Inc., a corporation existing under the laws of British Columbia (“Fennec,” “the Company,” “we,” “us,” or “our”).

Fennec Pharmaceuticals Inc., a corporation existing under the laws of British Columbia (“Fennec,” “the Company,” “we,” “us,” or “our”) was originally formed as a British Columbia corporation under the name Adherex Technologies Inc.

and subsequently changed its name on September 3, 2014.

Fennec, together with its 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”), collectively referred to herein as the “Company,” is a biopharmaceutical company with one U.S.

Federal Drug Administration (“FDA”), European Medicines Agency (“EMA”) and U.K.

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.

Food and Drug Administration 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.

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

During the three and nine-month period ended September 30, 2025, the Company experienced a net loss from operations of $( 189 ) and $( 3,728 ), respectively.

On September 30, 2025, it had an accumulated deficit of $( 224,636 ), and had experienced negative cash flows from operating activities in the amount of $( 6,511 ) for the nine-month period ended September 30, 2025.

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 SPA.

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, extend the period that the Company could 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.

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 $ 1,271 in Payment-in-kind (“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 September 30, 2025, there remains outstanding Second Closing Notes in the aggregate principal amount (inclusive of PIK interest) of approximately $ 19,477 .

In March of 2024, the Company announced that it had secured an exclusive licensing agreement with Norgine Pharma UK Limited (“Norgine”) to commercialize PEDMARQSI ® , which is the branded name for PEDMARK ® , 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 and current operating activities, provide sufficient funding for the Company to carry out its planned activities, including the continuation of commercialization efforts of PEDMARK ® , for at least the next twelve months.

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.

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.

Accordingly, they do not include all of the information and footnotes required by U.S.

GAAP for complete annual financial statements, and these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

The Company’s accounting policies are consistent with those presented in the audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2025.

As of March 31, 2026, the Company had cash and cash equivalents of $ 40,179 , an accumulated deficit of $ 229,221 and total stockholders’ equity of $ 37,675 .

For the three months ended March 31, 2026, the Company reported loss from operations of $ 119 , net income of $ 201 and net cash provided by operating activities of $ 2,379 .

The Company believes that its existing cash and cash equivalents, together with expected revenues from operations, will be sufficient to fund its operating plan for at least the next twelve months from the issuance date of these unaudited interim condensed consolidated financial statements.

Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with US GAAP and are the responsibility of the Company’s management.

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

Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited condensed consolidated financial statements and notes filed with the Securities and Exchange Commission (“SEC”) in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

These unaudited interim condensed consolidated financial statements have been prepared in U.S.

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

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) and are the responsibility of the Company’s management.

These unaudited interim condensed consolidated financial statements do not include all of the information and notes required by U.S.

GAAP for annual financial statements.

Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Use of Estimates

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

Significant estimates include revenue recognition, allowance against trade receivables, measurement of stock-based compensation and estimates of the Company’s capital requirements over the next twelve months from the date of issuance of the consolidated financial statements.

Actual results could differ from those estimates.

The preparation of financial statements in conformity with U.S.

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

Significant estimates include revenue recognition and related reserves for variable consideration, allowance for credit losses on trade receivables, measurement of stock-based compensation and estimates of the

Company’s capital requirements over at least the next twelve months from the date of issuance of the condensed consolidated financial statements.

Actual results could differ materially from those estimates.

Credit Losses

The Company estimates and records a provision for expected credit losses related to its trade receivables.

The Company considers historical collection rates, the current financial status of its customers, macroeconomic factors and other industry-specific factors, as well as forward-looking information, when evaluating expected credit losses.

To determine the provision for credit losses for accounts receivable, the Company disaggregates its receivables by class of customer because the risk profile of its customers may vary based on characteristics such as credit history, past payment history and geography.

Each class of customer is analyzed individually for estimated credit losses, and specific allowance amounts are established, when appropriate, based on a review of outstanding invoices for customers with a higher probability of default.

Segment and Geographic Information

Operating segments are defined as components of an enterprise engaging in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

The Company views its operations and manages its business in one operating segment and employees support only one operating segment which is the production and commercialization of PEDMARK ® .

The Company views its operations and manages its business in one operating segment, which is the commercialization of PEDMARK, and its employees support only one operating segment.

Stock-Based Compensation

8 unchanged sentences

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 performance-based units (“PSUs”) grants whereby vesting depends on certain revenue performance milestones through 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.

As of September 30, 2025, the Company deems the achievement of the performance milestones to be probable.

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.

4 unchanged sentences

Revenue Recognition

Under Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, the Company recognizes revenue when its customers obtain control of promised goods or services, in an amount that reflects the consideration which the Company determines it expects to receive in exchange for those goods or services.

consideration which the Company determines it expects to receive in exchange for those goods or services.

To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps:

2 unchanged sentences

License Agreements

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

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

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

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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.

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

5 unchanged sentences

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 condensed 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.

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.

These specialty distributors 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.

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.

Product Sales Discounts and Allowances

The Company records 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 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 ® and PEDMARQSI ® (European branded product name) is the Company’s first and only 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 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.

1 unchanged sentence

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.

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

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Discounts for Prompt Payment:

The customers receive a discount for prompt payment which may range from 0.5 % to 2.0 %.

The Customers receive a discount of for prompt payment which may range from 0.5 % to 2.0 %.

The Company expects its customers will earn 100 % of their prompt payment discounts and, therefore, the Company deducts the full amount of these discounts from total product sales when revenues are recognized.

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The allowance for rebates is based on statutory or contractual discount rates and expected utilization.

The Company’s estimates for the expected utilization of rebates are based on customer and payor data received from the specialty distributors and historical utilization rates that will develop over time, as PEDMARK ® is the Company’s first and only commercial product.

The Company’s estimates for the expected utilization of rebates are based on Customer and payer data received from the specialty distributors and historical utilization rates that will develop over time as PEDMARK ® is the Company’s first commercial product.

Rebates are generally invoiced by the payor and paid in arrears, such that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s shipments to the Customers, plus an accrual balance for known prior quarters’ unpaid rebates.

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The Company pays fees to its customers for account management, data management and other administrative services.

To the extent the services received are distinct from the sale of products to its customers, the Company classifies these payments in selling and marketing expenses in its condensed consolidated statements of operations.

To the extent the services received are distinct from the sale of products to its customers, the Company classifies these payments in selling and marketing expenses in its Consolidated Statements of Operations.

Distribution and Other Fees:

The Company pays distribution and other fees to certain customers in connection with the sales of PEDMARK ® .

The Company records distribution and other fees paid to its customers as a reduction of revenue, unless the payment is for a distinct good or service from the customer and the Company can reasonably estimate the fair value of the goods or services received.

If both conditions are met, the Company records the consideration paid to the customer as an operating expense.

We pay distribution and other fees to certain customers in connection with the sales of our products.

We record distribution and other fees paid to our customers 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 customer as an operating expense.

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

The following table summarizes net product revenues for PEDMARK ® earned during the three and nine months ended September 30, 2025, and 2024, respectively:

The following table summarizes net product revenues for PEDMARK ® in the United States earned in the three months ended March 31, 2026 and 2025, respectively:

Three Months Ended

Nine Months Ended

September 30,

Product revenues:

2 unchanged sentences

Net product revenues

For the three and nine months ended September 30, 2025, the Company had two and three distributors that each represented more than 10% of net sales, respectively.

The activities and ending allowance balances for each significant category of discounts and allowances for PEDMARK ® (which constitute variable consideration) for the nine months ended September 30, 2025, were as follows:

For the three months ended March 31, 2026 and 2025, the Company had four distributors that each represented more than 10 % of net sales.

The activities and ending allowance balances for each significant category of discounts and allowances for PEDMARK ® (which constitute variable consideration) for the three months ended March 31, 2026, was as follows:

Rebates, Customer

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Balance at March 31, 2026

Provision related to sales made in:

Current period

Prior periods

Payments and customer credits issued

Balance at June 30, 2025

Provision related to sales made in:

Current period

Prior periods

Payments and customer credits issued

Balance at September 30, 2025

The allowances for chargebacks, fees due to customers, rebates and discounts for prompt payment are recorded as a contra-asset to accounts receivable, while Medicaid rebates and return allowances are in accrued liabilities in the accompanying condensed consolidated balance sheets.

Trade Receivables

The Company records gross trade receivables at the time of product sale to its customers.

The Company records gross trade receivables at the time of product sale to its customers, both specialty and other select global distributors.

Trade accounts receivable are recorded at the invoiced amount and are typically non-interest bearing.

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The Company determines its allowance methodology by pooling receivable balances at the customer level.

The Company considers various factors, including loss history, individual credit risk associated with each customer, and the current and future condition of the general economy.

The Company considers various factors, including loss history, individual credit risk associated with each customer, and the current condition of the general economy.

These credit risk factors are monitored on a quarterly basis and updated as necessary.

To the extent that any individual debtor is identified whose credit quality has

deteriorated, the Company establishes allowances based on the individual risk characteristics of such a customer.

To the extent that any individual debtor is identified whose credit quality has deteriorated, the Company establishes allowances based on the individual risk characteristics of such a customer.

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 an increased potential for losses.

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

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

1 unchanged sentence

The Company has determined any financing component of non-current receivables to be immaterial.

The Company had a balance in allowance for credit losses of $ 3,845 as of September 30, 2025.

Credit Losses

The Company estimates and records a provision for its expected credit losses related to its trade receivables.

The Company considers historical collection rates, the current financial status of its customers, macroeconomic factors, and other industry-specific factors when evaluating for current expected credit losses.

Forward-looking information is also considered in the evaluation of current expected credit losses.

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 may vary based on certain characteristics such as credit history, past payment history and geography.

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

In doing so, the Company establishes a customer profile, based on the previous collections of accounts receivable by the age of such receivables, and evaluates the current and forecasted financial position of its customers, as available.

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.

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.

The Company had a balance in allowance for credit losses of $ 5,986 as of March 31, 2026.

Cost of Products Sold

1 unchanged sentence

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

As of September 30, 2025, the Company capitalized approximately $ 2,477 of costs as inventory on the condensed consolidated balance sheet.

Of the items capitalized, $ 1,437 was capitalized as raw materials, $ 851 was capitalized as work in process, $ 189 was capitalized into finished goods.

As of March 31, 2026, the Company capitalized $ 1,856 of costs as inventory on the condensed consolidated balance sheet.

Of the items capitalized, $ 1,769 was capitalized as work in process and raw materials, and $ 87 was capitalized as finished goods.

Cash and Cash Equivalents

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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.

At September 30, 2025, the Company had $ 21,947 in cash, savings and money market accounts ($ 26,634 at December 31, 2024).

As of March 31, 2026, the Company had $ 40,179 in cash, savings and money market accounts ($ 36,788 at December 31, 2025).

Money market investments typically have minimal risks.

While the Company has not experienced any loss or write-down of its money market investments, the amounts it holds in money market accounts are substantially above the $ 250 amount insured by the FDIC and may lose value.

Financial Instruments

Financial instruments recognized on the balance sheets at September 30, 2025 and December 31, 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 variable interest rates that approximate market interest rates.

Financial instruments recognized on the balance sheets at March 31, 2026 and December 31, 2025 consist of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, the carrying values of which approximate fair value due to their relatively short time to maturity or interest rates that approximate market interest rates.

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

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The Company has chosen to avoid investments of a trading or speculative nature to preserve cash.

Common Shares and Warrants

As of September 30, 2025, the Company has 111 warrants with a weighted average strike price of $ 8.00 outstanding to purchase common shares that have a weighted average life of 1.93 years.

Research and Development Costs and Investment Tax Credits

1 unchanged sentence

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

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

As of September 30, 2025, we maintained a full valuation allowance against our deferred tax assets.

As of March 31, 2026, we maintained a full valuation allowance against our deferred tax assets.

The provisions of the Financial Accounting Standards Board (“FASB”) ASC 740-10, Uncertainty in Income Taxes, address the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.

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dollar is the functional currency for the Company’s consolidated operations.

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

Net Income/(Loss) Per Share

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

Income/(Loss) per Share

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

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

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

Reclassifications

Certain prior period amounts in the accompanying condensed consolidated financial statements have been reclassified to conform to the current period presentation.

Specifically, certain equity-based compensation costs previously classified within general and administrative expenses have been reclassified to selling and marketing expenses.

These reclassifications had no effect on previously reported net loss or stockholders' equity.

Recent Accounting Pronouncements

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

2023-09, “Income Taxes (Topic 740):

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 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 condensed financial statements.

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

Disaggregation of Income Statement Expenses,” which requires disclosure of additional disaggregated information about significant expenses within relevant income statement captions, such as purchases of inventory, employee compensation, depreciation, amortization and depletion.

The new guidance is effective for annual periods beginning after December 15, 2026, and interim periods within annual periods beginning after December 15, 2027.

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

Net Income/(Loss) Per Share

Net income/(loss) per common share is presented under two formats:

basic net income/(loss) per common share and diluted income/(loss) per common share.

Basic net income/(loss) per common share is computed by dividing net income/(loss) attributable to common shareholders by the weighted average number of common shares outstanding during the period.

Diluted income/(loss) per common share is computed by dividing net income/(loss) by the weighted average number of common shares outstanding during the period, plus the potentially dilutive impact of common shares equivalents (e.g.

convertible debt, stock options and warrants).

Dilutive common share equivalents consist of the incremental common shares issuable upon exercise of convertible debt, restricted share units, stock options and warrants.

In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets.

This ASU introduces optional practical expedients intended to simplify the estimation of expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, Revenue from Contracts with Customers.

The amendments in ASU 2025-05 are intended to reduce complexity in applying

the current expected credit loss model to short-term receivables and contract assets while maintaining decision-useful information for financial statement users.

The Company adopted this amended standard in the first quarter of 2026 and such adoption did not have a material impact on its consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Improvements to Interim Reporting.

This ASU clarifies the applicability of interim reporting guidance, improves the navigability of Topic 270, identifies interim disclosure requirements included in other Topics of the Accounting Standards Codification, and establishes a principle requiring disclosure of events since the end of the last annual reporting period that have a material impact on an entity.

The amendments in ASU 2025-11 are not intended to fundamentally expand or reduce existing interim disclosure requirements, but rather to improve clarity and consistency in the application of interim reporting guidance.

The Company is currently assessing the effect of this guidance on its interim disclosures and presentation.

The Company does not currently expect the adoption of this standard to have a material impact on its condensed consolidated financial statements other than potential additional or clarified interim disclosure requirements.

In December 2025, the FASB issued ASU 2025-12, Codification Improvements.

ASU 2025-12 includes technical corrections, clarifications, and other minor improvements to various Topics within the Accounting Standards Codification.

The Company is currently evaluating the effect of this guidance on its consolidated financial statements and related disclosures.

The Company does not expect the adoption of this standard to have a material impact on its condensed consolidated financial statements.

Other than the pronouncements discussed above, the Company reviewed other recently issued accounting standards and concluded that they are either not applicable to its business or are not expected to have a material impact on its condensed consolidated financial statements or related disclosures.

Income/(Loss) per Share

Income/(loss) per common share is presented under two formats:

basic income/(loss) per common share and diluted income/(loss) per common share.

Basic income/(loss) per common share is computed by dividing net income/(loss) attributable to common shareholders by the weighted-average number of common shares outstanding during the period.

Diluted income/(loss) per common share is computed by dividing net income/(loss) by the weighted-average number of common shares outstanding during the period, plus the potentially dilutive impact of common share equivalents (e.g., stock options, restricted share units and warrants).

Dilutive common share equivalents consist of the incremental common shares issuable upon exercise or settlement of stock options, restricted share units and warrants.

The following table sets forth the computation of basic and diluted net income/(loss) per share (in thousands except per share data):

Three Months Ended September 30,

Nine Months Ended September 30,

Net (loss)/income

Three Months Ended March 31,

Net income/(loss)

Weighted-average common shares, basic

Dilutive effect of stock options

Dilutive effect of warrants

Dilutive effect of restricted share units

Incremental dilutive shares

Weighted-average common shares, diluted

Net (loss)/income per share, basic

Net (loss)/income per share, diluted

The following common stock equivalents, outstanding convertible debt, options and warrants were excluded from the computation of diluted net income/(loss) per share for the periods presented because including them would have had an anti-dilutive effect:

Diluted Earnings Per Share

Three Months Ended September 30,

Nine Months Ended September 30,

Net income/(loss) per share basic

Net income/(loss) per share diluted

For the three months ended March 31, 2026, the Company reported net income and therefore included the effect of dilutive common share equivalents to the extent they were dilutive.

For the three months ended March 31, 2025, the Company

reported a net loss and, accordingly, all potentially dilutive securities were excluded from diluted net loss per share because their inclusion would have been anti-dilutive.

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

Options to purchase common shares

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Restricted share units to purchase common shares

Performance share units to purchase common shares

Warrants to purchase common shares

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Warrants to Purchase Common Stock

During the three and nine months ended September 30, 2025, and 2024, there were 39 warrants exercised and no warrants were issued.

Outstanding warrants have a weighted average life of 1.93 years on September 30, 2025.

The following tables detail the Company’s warrant activity for the three and nine months ended September 30, 2025, and 2024, respectively:

During the three months ended March 31, 2026, there were no warrants issued or exercised.

Outstanding warrants had a weighted average life of 1.43 years on March 31, 2026.

The following tables detail the Company’s warrant activity for the three months ended March 31, 2026:

Common Shares

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Investor Warrants

Exercise Price $USD

Exercise Price

Outstanding December 31, 2025

Outstanding March 31, 2026

Outstanding June 30, 2025

Outstanding September 30, 2025

On July 17, 2025 Bridge Bank opted for a cashless exercise of 39 warrants.

Net shares of 9 were issued.

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 Company maintains an equity incentive plan (the “Plan”), which is administered by the Compensation Committee of the Board of Directors.

The 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.

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The following table summarizes stock-based compensation expense related to equity awards:

Three Months Ended

Nine Months Ended

September 30,

Stock-based expense recognized

Total option expense recognized

Three Months Ended March 31,

Employee equity expense recognized

Total equity expense recognized

Stock Option Activity

The following is a summary of option activity for the three and nine months ended September 30, 2025.

The following is a summary of option activity for the three months ended March 31, 2026, and 2025.

Weighted-Average

Options (thousands)

Exercise Price $USD

Exercise Price

Outstanding at December 31, 2025

Outstanding at March 31, 2026

Outstanding at June 30, 2025

Outstanding at September 30, 2025

Of the 5,915 options granted and outstanding at September 30, 2025, 4,493 are fully vested and exercisable.

Of the 7,229 options granted and outstanding at March 31, 2026, 4,617 are fully vested and exercisable.

The value of options issued was estimated using the Black-Scholes option pricing model using the assumptions in the table below.

The expected volatility was determined using historical volatility of our stock based on the expected term of the award.

Valuation Assumptions

Black-Scholes Model Assumptions

September 30, 2025

March 31, 2026

Expected dividend

Risk free rate

3.93 - 4.19 %

Expected volatility

71.04 - 161.67 %

Expected life

1.5 - 6.0 years

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 ending 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.

As of September 30, 2025, the Company deems the achievement of the performance milestones to be probable.

The following table summarizes PSU activity under the 2020 Plan during the three and nine months ended September 30, 2025:

Weighted-Average

Grant Date Fair Value

Unvested balance at January 1, 2025

Unvested balance at June 30, 2025

Unvested balance at September 30, 2025

In May and August 2025, the Board of Directors approved grants of performance-based restricted share units (“PSUs”) that vest based on the achievement of specified revenue performance milestones for 2025, and the related compensation cost was fully recognized in 2025.

During the three months ended March 31, 2026, no additional PSUs were granted, and certain PSUs vested and were released in accordance with the original terms of the awards.

Restricted Share Units Activity

The Plan allows for the issuance of restricted share units (“RSUs”).

The following is a summary of RSU activity for the three and nine months ended September 30, 2025.

During the three and nine months ended September 30, 2025, there were 66 and 181 RSUs released from restriction, respectively.

Standard vesting of RSUs is over three years with 1/3 vesting on the first anniversary date of the grant and then 1/24 on the last day of each subsequent month.

The following is a summary of RSU activity for the three months ended March 31, 2026, and 2025.

The Company recognized $ 384 in RSU expense for the three months ended March 31, 2026, and $ 255 for the same period in 2025.

Standard vesting of RSUs is over three years with 1 /3 vesting on

the first anniversary date of the grant and then 1 /24 on the last day of each subsequent month.

The Compensation Committee may also award RSUs with alternative vesting.

Restricted Share

RSUs Current Year

Units (thousands)

Number of Restricted

Awards Current Year

Share Units (thousands)

Outstanding at December 31, 2025

Outstanding at March 31, 2026

Outstanding at June 30, 2025

Outstanding at September 30, 2025

The value of RSUs issued was estimated using the share price on the date of the award multiplied by the number of common shares granted.

The value of RSUs issued was estimated using the share price on the date of the award multiplied by the number of shares granted.

Fair Value Measurements

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

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

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

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.

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Quoted market prices in active markets for identical assets or liabilities.

Observable market-based inputs or unobservable inputs that are corroborated by market data.

Unobservable inputs that are not corroborated by market data.

Fair Value Measurement at September 30, 2025 and December 31, 2024

Observable inputs other than quoted prices included in Level 1, including quoted prices for similar assets or liabilities in active markets or other inputs that are observable or can be corroborated by observable market data.

Unobservable inputs supported by little or no market activity that are significant to the fair value of the assets or liabilities.

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

The Company measures the fair value of its Processa Pharmaceuticals, Inc.

(“Processa”) common shares using quoted market prices in active markets.

As of March 31, 2026, 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.

During the three months ended March 31, 2026, the Company did not have any transfers of financial assets between Levels 1 and 2.

Fair Value Measurement at March 31, 2026 and December 31, 2025

(in thousands)

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Processa common shares

The Company held approximately $ 1,659 in cash accounts as of September 30, 2025, of which approximately $ 440 was held in foreign currencies (translated into U.S.

The Company held approximately $ 3,553 in cash as of March 31, 2026, of which approximately $ 438 was held in foreign currencies (translated into U.S.

As of December 31, 2025, the Company held approximately $ 3,072 in cash of which approximately $ 481 was in foreign currencies (translated into U.S.

The Company holds 51 unrestricted common shares of Processa Pharmaceuticals, Inc.

(NASDAQ:PCSA), which it received as part of a royalty arrangement in 2020.

The Company holds 51 unrestricted common shares of Processa (NASDAQ:PCSA) .

Commitments and Contingencies

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Under the Food, Drug, and Cosmetic Act, as amended by the Drug Price Competition and Patent Term Restoration Act of 1984, as amended, after receipt of a valid Paragraph IV notice, the Company may bring a patent infringement suit in a federal district court against CIPLA within 45 days from the receipt of the Notice Letter and if such a suit is commenced within the 45 -day period, the Company is entitled to a 30 month stay on the FDA’s ability to give final approval to any proposed products that reference PEDMARK.

In addition to the 30-month stay, because we have received Orphan Drug

Exclusivity, the FDA may not approve CIPLA’s ANDA for at least 7 years from PEDMARK ® ’s FDA approval date of September 20, 2022, which is September 20, 2029.

In addition to the 30 -month stay, because we have received Orphan Drug Exclusivity, the FDA may not approve CIPLA’s ANDA for at least 7 years from PEDMARK’s FDA approval date of September 20, 2022, which is September 20, 2029.

In addition, PEDMARK® has received orphan drug exclusivity in the United States.

On January 10, 2023, we filed suit against the CIPLA entities in the United States District Court for the District of New Jersey (Case No.

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On June 4, 2024, we were granted US 11,998,604 Patent (the “US ‘604 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 June 24, 2024, and has an expiration date of July 2039.

On June 13, 2024, we filed a Motion for Leave to File a Third Amended Complaint to focus the ANDA litigation against CIPLA on the US ‘018 Patent and the US ‘793 Patent only.

The non-asserted patents remain listed in the Orange Book.

On July 22, 2024, CIPLA filed a response indicating that they do not oppose our Motion for Leave to File a Third Amended Complaint.

On July 30, 2024, the court granted us leave to file the Third Amended Complaint, which we filed on September 16, 2024.

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.

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, 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.

The suit is ongoing.

On June 13, 2024, the Company filed a motion for leave to file a third amended complaint to focus the ANDA litigation against CIPLA on the ’018 Patent and the ’793 Patent only.

On July 30, 2024, the court granted leave to file the third amended complaint, which the Company filed on September 16, 2024.

In connection with the third amended complaint, the Company entered into a covenant not to sue CIPLA on the U.S.

’363, ’728, ’984, ’530 and ’604 patents, subject to the limitation that the covenant does not apply to the extent CIPLA alters the product or formulation described in its ANDA.

On March 16, 2026, the Company announced that it had entered into a settlement and license agreement with Cipla Limited and Cipla USA, Inc.

resolving the litigation.

Under the terms of the agreement, the lawsuit will be dismissed with each party bearing its own costs, and CIPLA will not enter the U.S.

market with its generic sodium thiosulfate product until September 1, 2033, or earlier under certain specified circumstances.

Executive Severance

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This lease was terminated.

Because the Company’s lease arrangements are short-term or month-to-month in nature, no operating lease liability was recorded on the condensed consolidated balance sheets as of March 31, 2026 or December 31, 2025.

Employee Benefit Plan

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Eligible employees are permitted to contribute to the 401(k) Plan within statutory and 401(k) Plan limits.

As of September 30, 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.

On September 23, 2022, the Company closed on the second tranche of the Note Financing in the amount of $ 20,000 , 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 and half was payable in cash or warrants of 55,498 Fennec common shares, 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 , 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 the SPA Amendment with the Petrichor, which, among other things, extended the period that the Company could 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 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 $ 1,271 in PIK interest).

Cash interest on outstanding principal shall accrue at a rate of prime, plus 4.5 % per annum, from the date of funding ( 11.75 % at September 30, 2025, and 12.25% at December 31, 2024, respectively).

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

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 remained 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 September 30, 2025, 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) under the SPA notes 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 Investor in 2022 and warrants valued at $ 441 were granted the Investor to secure access to the SPA.

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

Upon drawing tranche 1 and tranche 2, the Company recorded a debt discount of $ 314 , which was based on a pro-rata allocation of the issue costs to secure the SPA, reducing the capitalized amount by the same amount.

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

As of March 31, 2026, the Company does not offer matching contributions.

License Agreement

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On March 17, 2024, the Company announced that, through its wholly-owned subsidiary, Fennec Pharmaceuticals, Inc.

entered into a License and Supply Agreement (the “Agreement”) with Norgine, pursuant to which Norgine is granted an exclusive license to commercialize the Company’s product PEDMARQSI® (known as PEDMARK® in the United States) for all human indications in the European Economic Area, Switzerland, the United Kingdom, Australia and New Zealand (collectively, the “Territory”).

(collectively, the “Territory”).

On July 26, 2024, Norgine and Fennec amended the Agreement.

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The term of the Agreement shall be automatically renewed for additional three-year periods unless either party provides the other party written notice of its intent not to renew the Agreement at least one year prior to the applicable termination date of the Agreement.

The Company evaluated the Norgine License Agreement under ASC 606 and concluded that Norgine represents a customer in the transaction.

There were two performance obligations:

A license of functional IP and a material right for future supply.

The Company will allocate the transaction price, including currently unrecognized variable consideration, to the two performance obligations based on estimated standalone selling price, which was estimated using projected cash flows.

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.

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

The remaining forms of consideration are variable because they are dependent on the achievement of sales-based or other milestones.

The Company evaluated the constraint on variable consideration and concluded that the milestone payments are dependent on regulatory approvals and actions of third parties, and thus are highly susceptible to factors outside the Company’s influence.

Therefore, at contract inception, the milestones are not included in the transaction price as it is not probable that a significant reversal of revenue would not occur.

Sales-based milestones will be recognized as revenue or deferred as part of the material right in the period when the related sales threshold is met.

All other milestones will be recognized as revenue or deferred as part of the material right immediately in the period the underlying milestone is achieved.

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 the nine months ended September 30, 2025, the Company did not recognize any milestone payments from Norgine sales of PEDMARQSI ® pursuant to the Agreement.

The Company evaluated the Agreement under ASC 606 and concluded that Norgine is a customer in the arrangement.

The Company identified two performance obligations under the Agreement:

a license of functional intellectual property and a material right for future supply.

A portion of the non-refundable upfront payment was allocated to the license and recognized as license revenue in 2024, and the portion associated with the material right was deferred and is reflected as contract liabilities in the condensed consolidated balance sheets.

As of March 31, 2026 and December 31, 2025, contract liabilities related to the Agreement were $ 24,809 and $ 24,809 , respectively, consisting of $ 248 classified as current and $ 24,561 classified as long-term.

For the three months ended March 31, 2026, the Company did no t recognize any milestone or royalty revenue under 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.

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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 September 30, 2025, $ 743 in incremental cost was capitalized.

As of March 31, 2026, $ 691 in incremental cost was capitalized.

Segment Reporting

The Company views its operations and manages its business in one operating segment principally in the United States.

Fennec’s chief operating decision maker is the senior executive team that includes the chief executive officer and chief financial officer.

The chief operating decision maker uses net loss to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the single segment or any other part of the entity, such as for acquisitions or to pay dividends.

Operating segments are defined as components of an enterprise engaging in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker (“CODM”) in deciding how to allocate resources and assess performance.

The Company operates as a single operating and reportable segment focused on the commercialization of PEDMARK®/PEDMARQSI ® .

The Company’s CODM is its Chief Executive Officer.

The CODM reviews consolidated net income (loss) to assess performance, make operating decisions and allocate resources.

This measure is reported on the condensed consolidated statements of operations.

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 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.

The chief operating decision maker uses net loss to monitor budget versus actual results and to analyze cash flows in assessing performance of the segment and allocating resources.

The significant expenses are presented in the Company’s Statements of Operations.

Segment assets are reported on the condensed consolidated balance sheets as total assets.

The CODM also reviews significant expense categories, which are presented on the condensed consolidated statements of operations, including cost of product sales, research and development, selling and marketing, and general and administrative expenses.

Subsequent Events

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

What changed 10-Q

Item 1. Financial Statements