What changed in this filing

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Item 1. Financial Statements

2026-08-13 compared with 2026-05-14 · 172 added, 155 removed, 389 unchanged (46% of the section changed)

3 unchanged sentences

Dollars and shares in thousands)

March 31, 2026

June 30, 2026

December 31, 2025

34 unchanged sentences

Three Months Ended

Six Months Ended

PEDMARK product sales, net

Other revenue

Total revenue

Operating expenses:

4 unchanged sentences

Total operating expenses

Loss from operations

Income/(loss) from operations

Other (expense)/income

5 unchanged sentences

Total other income/(expense)

Income/(loss) before provision for income taxes

Provision for income taxes

Net income/(loss)

6 unchanged sentences

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

Three Months Ended March 31, 2026 and 2025

Three and Six Months Ended June 30, 2026, and 2025

dollars and shares in thousands)

1 unchanged sentence

Stockholders’

Equity (deficit)

Balance at December 31, 2025

Equity-based compensation - employees

Equity-based compensation

Stock option exercise

1 unchanged sentence

Balance at March 31, 2026

Equity-based compensation

Employee stock purchase plan

Stock option exercise

Restricted and performance stock release

Balance at June 30, 2026

Comprehensive

1 unchanged sentence

Balance at December 31, 2024

Equity-based compensation - employees

Equity-based compensation

Stock option exercise

1 unchanged sentence

Balance at March 31, 2025

Equity-based compensation

Stock option exercise

Restricted stock release

Balance at June 30, 2025

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

2 unchanged sentences

Dollars in thousands)

Three Months Ended

Six Months Ended

Cash flows provided by/(used in):

6 unchanged sentences

Unrealized loss on securities

Stock-based compensation - employees

Stock-based compensation

Changes in operating assets and liabilities:

5 unchanged sentences

Accrued liabilities

Contract liability - current

Contract liability

Net cash provided by/(used in) operating activities

1 unchanged sentence

Issuance of shares, options exercise

Cash paid for taxes on restricted/performance share release

Cash paid for taxes on restricted share release

Net cash provided by financing activities

4 unchanged sentences

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

dollars and shares in thousands, except per share information)

4 unchanged sentences

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 focused on the commercialization of PEDMARK ® , which is approved by the U.S.

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.

Food and Drug Administration, the European Medicines Agency (“EMA”), and the Medicines and Healthcare products Regulatory Agency (“MHRA”) 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.

4 unchanged sentences

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 .

As of June 30, 2026, the Company had cash and cash equivalents of $ 41,249 , an accumulated deficit of $ 227,248 and total stockholders’ equity of $ 42,442 .

For the six months ended June 30, 2026, the Company reported income from operations of $ 1,618 , net income of $ 2,174 and net cash provided by operating activities of $ 2,429 .

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.

7 unchanged sentences

Use of 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.

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.

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.

The Company considers historical collection rates, the current financial status of its customers, macroeconomic factors and other industry-specific factors 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.

7 unchanged sentences

The fair value of each award is recognized in the Company’s statements of operations over the requisite service period for such award.

Under the employee stock purchase plan, substantially all employees of the Company and its U.S.

subsidiaries are eligible to participate, subject to statutory limitations, including the exclusion of employees who own 5% or more of the Company’s voting stock.

The Company uses the Black-Scholes option pricing model to value stock option awards without market conditions, which requires the Company to make certain assumptions regarding the expected volatility of its common stock price, the expected term of the option grants, the risk-free interest rate and the dividend yield with respect to its common stock.

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Revenue Recognition

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

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.

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

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License Agreements

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

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

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

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PEDMARK ® is the Company’s first commercial product.

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.

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.

Other Revenue – Material Right Under PEDMARK ® License

Other revenue for the three and six months ended June 30, 2026 of $ 710 relates to the amortization of amounts previously recorded as deferred licensing revenue (contract liability) under the Company’s commercialization agreement for PEDMARK ® with Norgine.

Under ASC 606, a portion of the upfront consideration received from Norgine was allocated to a material right and initially recorded as deferred revenue.

This deferred revenue is recognized as “Other revenue” as PEDMARK ® units are shipped to Norgine and the related material right is satisfied.

Royalties earned under the Norgine agreement on commercial sales of PEDMARK ® are included in PEDMARK ® product sales, net.

Product Sales Discounts and Allowances

The Company records U.S.

based revenues from product sales at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established primarily from discounts, chargebacks, rebates, co-

pay assistance, returns and other allowances that are offered within contracts between the Company and its Customers, health care providers, payors and other indirect customers relating to the sales of its products.

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

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

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.

2 unchanged sentences

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.

3 unchanged sentences

Discounts for Prompt Payment:

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

The customers receive a discount 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.

2 unchanged sentences

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 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.

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.

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.

5 unchanged sentences

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 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 condensed consolidated statements of operations.

Distribution and Other Fees:

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.

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.

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 ® in the United States earned in the three months ended March 31, 2026 and 2025, respectively:

The following table summarizes net product revenues for PEDMARK ® earned during the three and six months ended June 30, 2026, and 2025, respectively:

Three Months Ended

Six Months Ended

Product revenues:

2 unchanged sentences

Net product revenues

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

Other revenue

Total revenue

For the three and six months ended June 30, 2026, the Company had two 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 six months ended June 30, 2026, were as follows:

Rebates, Returns, Customer

Discounts for

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Balance at March 31, 2026

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 consolidated balance sheets.

Provision related to sales made in:

Current period

Prior periods

Payments and customer credits issued

Balance at June 30, 2026

Trade Receivables

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

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

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

1 unchanged sentence

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 condition of the general economy.

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.

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

1 unchanged sentence

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 increased potential for losses.

Sales to other select global distributors have an 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 $ 5,986 as of March 31, 2026.

The Company had a balance in allowance for credit losses of $ 6,273 as of June 30, 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 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.

As of June 30, 2026, the Company capitalized approximately $ 2,374 of costs as inventory on the condensed consolidated balance sheet.

Of the items capitalized, $ 1,157 was capitalized as raw materials, $ 998 was capitalized as work in process, $ 219 was capitalized into finished goods.

Cash and Cash Equivalents

1 unchanged sentence

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.

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.

At June 30, 2026, the Company had $ 41,249 in cash, savings and money market accounts ($ 36,788 at December 31, 2025).

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 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.

Financial instruments recognized on the balance sheets at June 30, 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 variable interest rates that approximate market interest rates.

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

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

As of June 30, 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.

2 unchanged sentences

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

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

All gains and losses from currency transactions are included in the 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 stock options and warrants, if dilutive, as determined using the if-converted method and treasury methods.

Basic net income/(loss) per share is computed by dividing net income/(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.

Reclassifications

3 unchanged sentences

Recent Accounting Pronouncements

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.

The amendments require public business entities to provide additional disaggregated disclosures in the notes to the financial statements for certain income statement expense captions, including specified natural expense categories and selling expenses.

The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027.

Accordingly, the amendments will be effective for the Company’s annual report for the year ending December 31, 2027 and its interim period ending March 31, 2028.

The Company is currently evaluating the impact of the new disclosure requirements and expects adoption to have a significant impact on the level of expense disaggregation included in its financial statement footnotes;

however, the amendments are not expected to affect the Company’s consolidated financial statements, results of operations, or cash flows.

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

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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 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.

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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 amendments are effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted.

Accordingly, the amendments will be effective for the Company beginning with its interim period ending March 31, 2028.

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

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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.

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.

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 March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Net income/(loss)

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Dilutive effect of restricted share units

Dilutive effect of warrants

Incremental dilutive shares

Weighted-average common shares, diluted

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:

For the three and six months ended June 30, 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 and six months ended June 30, 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 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 June 30,

Six Months Ended June 30,

Options to purchase common shares

1 unchanged sentence

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 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:

During the three and six months ended June 30, 2026, and 2025, there were no warrants exercised and no warrants were issued.

Outstanding warrants have a weighted average life of 1.18 years on June 30, 2026.

The following tables detail the Company’s warrant activity for the three and six months ended June 30, 2026:

Common Shares

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Outstanding March 31, 2026

Outstanding June 30, 2026

Equity Incentive Plan

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.

The Company maintains the Fennec Pharmaceuticals Inc.

2020 Equity Incentive Plan, as amended (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”), stock appreciation rights, restricted stock awards, unrestricted stock awards, cash-based awards, dividend equivalent rights and stock purchase rights 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 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 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.

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

On April 27, 2026, the Company’s Board of Directors approved a further amendment to the Plan to increase the maximum number of common shares reserved and available for issuance under the Plan, together with the Prior Plan, to 10,000 common shares, excluding for this purpose any shares issued under the Plan or the Company’s prior stock option plan prior to June 10, 2026.

This amendment was approved by the Company’s shareholders at the Company’s Annual General Meeting of Shareholders held on June 10, 2026.

Prior to the June 2026 amendment, the maximum number of equity instruments issuable under the Plan, together with the Company’s prior stock option plan, was limited to 8,500 common shares, excluding common shares issued prior to June 3, 2025 pursuant to the exercise of options and vesting of RSUs.

Prior to the June 2025 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, which based on the then-current outstanding share count 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.

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

Three Months Ended March 31,

Employee equity expense recognized

Total equity expense recognized

Three Months Ended

Six Months Ended

Stock-based compensation expense recognized

Total stock-based expense recognized

Stock Option Activity

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

The following is a summary of option activity for the three and six months ended June 30, 2026.

Weighted-Average

Options (thousands)

Exercise Price

1 unchanged sentence

Outstanding at March 31, 2026

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

Outstanding at June 30, 2026

Of the 7,039 options granted and outstanding at June 30, 2026, 4,567 are fully vested and exercisable.

The fair value of equity awards valued using the Black-Scholes option pricing model, including stock options awards, was estimated using the assumptions in the table below.

Expected volatility was determined based on the historical volatility of the Company’s common stock over a period consistent with the expected term of the applicable award.

Six Months Ended

Black-Scholes Model Assumptions

March 31, 2026

June 30, 2026

Expected dividend

1 unchanged sentence

Expected volatility

140.87 - 159.22

Expected life

1 unchanged sentence

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.

During the six months ended June 30, 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 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 following is a summary of RSU activity for the three and six months ended June 30, 2026.

During the three and six months ended June 30, 2026, there were 287 and 405 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 Compensation Committee may also award RSUs with alternative vesting.

Number of Restricted

Awards Current Year

Share Units (thousands)

Restricted Share

RSUs Current Periods

Outstanding at December 31, 2025

Outstanding at March 31, 2026

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

Outstanding at June 30, 2026

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.

Employee Stock Purchase Plan

The Company maintains an employee stock purchase plan under the Fennec Pharmaceuticals Inc.

2020 Equity Incentive Plan that allows eligible employees to purchase common shares at a discount through after-tax payroll deductions during recurring six-month offering periods.

The purchase price is generally 85% of the lower of the fair market value of the Company’s common shares on the first or last trading day of the applicable offering period, subject to statutory limits.

The ESPP is accounted for as a compensatory plan under ASC 718, and the grant-date fair value of purchase rights is estimated using the Black-Scholes option pricing model.

ESPP-related stock-based compensation expense for the three and six months ended June 30, 2026 was $ 64 and $ 64 , respectively, reflecting expense only for the second quarter of 2026, when the ESPP became effective.

Under the ESPP, eligible employees of the Company and its participating subsidiaries may purchase common shares through after-tax payroll deductions at a discounted price.

Substantially all employees of the Company and its U.S.

subsidiaries are eligible to participate, except employees who own 5% or more of the Company’s voting stock and employees who may be excluded under the plan’s terms in accordance with Section 423 of the Internal Revenue Code (e.g., based on service requirements, customary hours worked, or highly-compensated status).

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 U.S.

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 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.

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

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)

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 June 30, 2026 and December 31, 2025

Quoted Price in Active

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Processa common shares

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.

The Company held approximately $ 2,544 in cash accounts as of June 30, 2026, of which approximately $ 404 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 (NASDAQ:PCSA) .

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

(NASDAQ:PCSA).

Commitments and Contingencies

CIPLA Litigation

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

and CIPLA USA (“CIPLA”) submitted to the FDA an ANDA (ANDA No.

218028) for a generic version of PEDMARK ® (sodium thiosulfate solution) that contained Paragraph IV Certifications on two of our patents covering PEDMARK ® :

the OHSU licensed ‘190 Patent, expiration date January 2038;

and our US 11,291,728 Patent (the “’728 Patent”), expiration date July 2039.

On January 6, 2023, we received a letter dated January 5, 2023, notifying us that CIPLA submitted to the FDA a Paragraph IV Certification on our newly issued US 11,510,984 Patent (the “’984 Patent”).

These patents are listed in FDA’s list of Approved Drug Products with Therapeutic Equivalence Evaluations, commonly referred to as the Orange Book, for PEDMARK ® .

The certifications allege these patents are invalid or will not be infringed by the manufacture, use, or sale of CIPLA’s sodium thiosulfate solution .

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, 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.

2:23-cv-00123), for infringement of the US ‘190 Patent, the US ‘728 Patent, and the US ‘984 Patent.

On April 20, 2023, we filed an Amended Complaint to assert infringement of the US ‘728 Patent and the US ‘984 Patent.

On April 4, 2023, we were granted US 11,617,793 Patent (the “US ‘793 Patent”) covering the formulation of the PEDMARK product, which was listed in the Orange Book on or around April 17, 2023, and has an expiration date of July 2039.

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 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.

On May 28, 2024, we were granted US 11,992,530 Patent (the “US ‘530 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 20, 2024, and has an expiration date of July 2039.

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, 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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The Office Service Agreement commenced on January 27, 2020, and terminated on July 31, 2020, thereafter the lease has been continuing 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.

On August 1, 2023, the Company entered into a second Office Service Agreement (the “Second Office Service Agreement”) with Regus to lease office space in Dublin, Ireland.

Per the terms of the Second Office Service Agreement, the monthly rent payments are $ 2 .

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 terminated 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.

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

Effective June 1, 2026, the Company began matching employee contributions to the 401(k) Plan at 100 % of employee contributions, up to 3 % of eligible compensation.

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”).

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”).

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

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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.

As of June 30, 2026 and December 31, 2025, contract liabilities related to the Agreement were $ 24,099 and $ 24,809 , respectively, consisting of $ 3,182 classified as current and $ 20,917 classified as long-term.

For the six months ended June 30, 2026, the Company recognized $ 710 of revenue related to the deferred material right and $ 326 of royalty revenue under the Agreement.

No milestone was recognized during the period.

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

As of June 30, 2026, $ 666 in incremental cost was capitalized.

The Company accounts for income taxes under ASC 740, Income Taxes .

The income tax provision for interim periods is determined using an estimate of the Company’s annual effective tax rate, adjusted for discrete items, if any, recognized in the period in which they occur.

For the three and six months ended June 30, 2026, the Company recorded an income tax provision of $ 42 , compared to no income tax provision for the three and six months ended June 30, 2025.

The 2026 provision relates primarily to state income taxes, as federal taxable income was substantially offset by available net operating loss carryforwards.

provision was recorded in the 2025 periods, in which the Company incurred net losses.

The Company continues to maintain a full valuation allowance against its deferred tax assets.

The Company continues to maintain a valuation allowance against deferred tax assets for jurisdictions where, based on all available evidence, it is more likely than not that such deferred tax assets will not be realized.

The Company will continue to evaluate the realizability of deferred tax assets in future periods, including the impact of sustained profitability, future taxable income and the reversal of temporary differences.

Segment Reporting

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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