What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2022-02-28 compared with 2021-03-30 · 174 added, 795 removed, 127 unchanged (88% of the section changed)

Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer’s Purchases of Equity Securities

Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common shares currently trade in the U.S.

on the Nasdaq

Capital Market under the trading symbol “FENC”

and in Canada on the TSX under the trading symbol “FRX”.

following table sets forth the quarterly high and low market closing prices, and average daily trading volume on the Nasdaq Capital

Market , and the TSX, for the two most recent full fiscal years:

on the Nasdaq Capital Market under the trading symbol “FENC” and in Canada on the TSX under the trading symbol “FRX”.

The following table sets forth the quarterly high and low market closing prices and average daily trading volume on the Nasdaq Capital Market and the TSX for the two most recent full fiscal years:

Nasdaq Capital Market

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Quarter ended 03/31/20

As of March 29, 2021, the last reported sale on the TSX was CAD$7.80

per share and the last reported sale on the Nasdaq Capital Market was $6.21 per share.

As of February 25, 2022, the last reported sale on the TSX was CAD$6.96 per share and the last reported sale on the Nasdaq Capital Market was $5.43 per share.

Record Holders

As of March 29, 2020, there were approximately

38 shareholders of record of our common shares, one of which was Cede & Co., a nominee for Depository Trust Company, or DTC,

and one of which was The Canadian Depository for Securities Limited, or CDS.

All of our common shares held by brokerage firms, banks

and other financial institutions in the U.S.

or Canada as nominees for beneficial owners are considered to be held of record by Cede &

As of February 25, 2022, there were approximately 29 shareholders of record of our common shares, one of which was Cede & Co., a nominee for Depository Trust Company, and one of which was The Canadian Depository for Securities Limited (“CDS”).

All of our common shares held by brokerage firms, banks and other financial institutions in the U.S.

or Canada as nominees for beneficial owners are considered to be held of record by Cede & Co.

in respect of brokerage firms, banks and other financial institutions located in Canada.

and CDS are each

considered to be one shareholder of record.

and CDS are each considered to be one shareholder of record.

Dividend Policy

We have never declared or paid cash dividends on our common

We currently expect to retain future earnings, if any, for use in the operation and expansion of business and do not

anticipate paying any cash dividends in the foreseeable future.

We have never declared or paid cash dividends on our common shares.

We currently expect to retain future earnings, if any, for use in the operation and expansion of business and do not anticipate paying any cash dividends in the foreseeable future.

Material United States Federal and Canadian Income Tax Consequences

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Federal Income Tax Considerations

The following summary

describes the material U.S.

The following summary describes the material U.S.

federal income tax consequences to U.S.

Holders (as defined below) of acquiring, owning, and disposing

of our common shares, subject to the qualifications set forth herein.

Holders (as defined below) of acquiring, owning, and disposing of our common shares, subject to the qualifications set forth herein.

Tax Consequences Not Addressed

This summary does not

address all potential U.S.

This summary does not address all potential U.S.

federal income tax considerations that may be relevant to a particular U.S.

In addition, this

summary does not take into account the individual facts and circumstances that may affect the U.S.

federal income tax consequences

to a particular U.S.

In addition, this summary does not take into account the individual facts and circumstances that may affect the U.S.

federal income tax consequences to a particular U.S.

Holder, including specific tax consequences under an applicable income tax treaty.

Accordingly, this summary

is not intended to be, and should not be construed as, legal or U.S.

Accordingly, this summary is not intended to be, and should not be construed as, legal or U.S.

federal income tax advice with respect to any U.S.

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tax considerations, and does not discuss tax reporting requirements that may be applicable to any particular U.S.

prospective investor should consult a professional tax advisor with respect to the U.S.

Each prospective investor should consult a professional tax advisor with respect to the U.S.

federal income, U.S.

alternative minimum,

alternative minimum, U.S.

federal estate and gift, U.S.

state and local, and non-U.S.

tax consequences of acquiring, owning, and disposing of our common

This summary is based

upon the provisions of the United States Internal Revenue Code (the “Code”), the United States Treasury Regulations

(whether final, temporary, or proposed) promulgated thereunder, the Convention Between Canada and the United States of America

with Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended (the “Canada-U.S.

Tax Convention”),

and administrative rulings and judicial decisions interpreting the Code and the United States Treasury Regulations, all as currently

in effect, and all subject to differing interpretations or change, possibly on a retroactive basis.

We have not sought, and will

not seek, a ruling from the IRS regarding any matter discussed herein, and no assurance can be given that the IRS would not assert,

or that a court would not sustain, a position that is different from, and contrary to, the positions taken in this summary.

summary does not discuss the potential effects, whether adverse or beneficial, of any proposed legislation.

For purposes of this summary, the term “U.S.

Holder”

means a beneficial owner of our common shares that is for U.S.

tax consequences of acquiring, owning, and disposing of our common shares.

This summary is based upon the provisions of the United States Internal Revenue Code (the “Code”), the United States Treasury Regulations (whether final, temporary, or proposed) promulgated thereunder, the Convention Between Canada and the United States of America with Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended (the “Canada-U.S.

Tax Convention”), and administrative rulings and judicial decisions interpreting the Code and the United States Treasury Regulations, all as currently in effect, and all subject to differing interpretations or change, possibly on a retroactive basis.

We have not sought, and will not seek, a ruling from the IRS regarding any matter discussed herein, and no assurance can be given that the IRS would not assert, or that a court would not sustain, a position that is different from, and contrary to, the positions taken in this summary.

This summary does not discuss the potential effects, whether adverse or beneficial, of any proposed legislation.

For purposes of this summary, the term “U.S.

Holder” means a beneficial owner of our common shares that is for U.S.

federal income tax purposes:

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● a corporation (or other entity treated as a corporation for U.S.

federal income tax purposes) created or organized in or under

the laws of the United States or of any political subdivision of the United States;

federal income tax purposes) created or organized in or under the laws of the United States or of any political subdivision of the United States;

● an estate, the income of which is subject to U.S.

federal income taxation regardless of its source;

a trust that (i) is subject to the primary supervision of a court within the United States and the control of one or more

persons for all substantial decisions or (ii) has a valid election in effect under applicable United States Treasury

Regulations to be treated as a U.S.

● a trust that (i) is subject to the primary supervision of a court within the United States and the control of one or more U.S.

persons for all substantial decisions or (ii) has a valid election in effect under applicable United States Treasury Regulations to be treated as a U.S.

An individual may be a resident for U.S.

federal income tax

purposes in any calendar year if the individual was present in the United States for at least 31 days in that calendar year and

for an aggregate of at least 183 days during the three-year period ending with the current calendar year.

For purposes of this

calculation, all of the days present in the current year, one-third of the days present in the immediately preceding year, and

one-sixth of the days present in the second preceding year are counted.

federal income tax purposes in any calendar year if the individual was present in the United States for at least 31 days in that calendar year and for an aggregate of at least 183 days during the three-year period ending with the current calendar year.

For purposes of this calculation, all of the days present in the current year, one-third of the days present in the immediately preceding year, and one-sixth of the days present in the second preceding year are counted.

Residents are taxed for U.S.

federal income tax purposes

as if they were U.S.

federal income tax purposes as if they were U.S.

Holders Not Addressed

For purposes of this summary, a “non-U.S.

Holder”

is a beneficial owner of common shares that is not a U.S.

For purposes of this summary, a “non-U.S.

Holder” is a beneficial owner of common shares that is not a U.S.

Holder and is not a partnership for U.S.

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federal income tax consequences to non-U.S.

Holders of acquiring, owning, and disposing

our common shares.

Holders of acquiring, owning, and disposing our common shares.

Each non-U.S.

Holder investor should consult a professional tax advisor with respect to the U.S.

federal income,

federal income, U.S.

alternative minimum, U.S.

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state and local, and non-U.S.

tax consequences of acquiring, owning,

and disposing of our common shares.

tax consequences of acquiring, owning, and disposing of our common shares.

Holders Not Addressed

This summary does not address the U.S.

federal income tax considerations

applicable U.S.

federal income tax considerations applicable U.S.

Holders that are subject to special provisions under the Code, including, but not limited to, U.S.

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● are broker-dealers, dealers, or traders in securities or currencies that elect to apply a mark-to-market accounting method;

have a “functional currency”

other than the U.S.

own common shares as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement

involving more than one position;

● have a “functional currency” other than the U.S.

● own common shares as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position;

● acquired common shares in connection with the exercise of employee stock options or otherwise as compensation for services;

hold common shares other than as a capital asset within the meaning of section 1221 of the Code (generally, property held for

investment purposes);

are partnerships or other “pass-through”

entities for U.S.

federal income tax purposes (or investors in such partnerships

or entities);

own, have owned, or will own (directly, indirectly, or by attribution) 10% or more of the total combined voting power of the

outstanding shares of your company;

● hold common shares other than as a capital asset within the meaning of section 1221 of the Code (generally, property held for investment purposes);

● are partnerships or other “pass-through” entities for U.S.

federal income tax purposes (or investors in such partnerships or entities);

● own, have owned, or will own (directly, indirectly, or by attribution) 10% or more of the total combined voting power of the outstanding shares of your company;

expatriates who are former citizens or long-term residents of the United States;

have been, are, or will be residents or deemed to be residents in Canada for purposes of the Income Tax Act (Canada) (the “Tax

use or hold, will use or hold, or that are or will be deemed to use or hold common shares in connection with carrying on a

business in Canada;

are persons whose common shares constitute “taxable Canadian property”

under the Tax Act;

● have been, are, or will be residents or deemed to be residents in Canada for purposes of the Income Tax Act (Canada) (the “Tax Act”);

● use or hold, will use or hold, or that are or will be deemed to use or hold common shares in connection with carrying on a business in Canada;

● are persons whose common shares constitute “taxable Canadian property” under the Tax Act;

● have a permanent establishment in Canada for the purposes of the Canada-U.S.

Tax Convention.

Holders that are subject to special provisions under the

Code, including, but not limited to, U.S.

Holders described immediately above, should consult their own tax advisors regarding

Holders that are subject to special provisions under the Code, including, but not limited to, U.S.

Holders described immediately above, should consult their own tax advisors regarding the U.S.

federal income, U.S.

2 unchanged sentences

state and local, and non-U.S.

consequences of acquiring, owning, and disposing of our common shares.

The following summary is not a substitute

for careful tax planning and advice.

tax consequences of acquiring, owning, and disposing of our common shares.

The following summary is not a substitute for careful tax planning and advice.

Holders of common shares are urged to consult their own tax advisors concerning the U.S.

federal income tax consequences of the issues discussed herein, in light of their particular circumstances, as well as any considerations

arising under the laws of any foreign, state, local, or other taxing jurisdiction.

General Rules Applicable to the Ownership and Disposition

of Common Shares

The following discussion describes the

general rules applicable to the ownership and disposition of the common shares but is subject in its entirety to the special

rules described below under the headings entitled “Tax Consequences if We Are a Passive Foreign Investment Company”

and “Tax Consequences if We are a Controlled Foreign Corporation.”

federal income tax consequences of the issues discussed herein, in light of their particular circumstances, as well as any considerations arising under the laws of any foreign, state, local, or other taxing jurisdiction.

General Rules Applicable to the Ownership and Disposition of Common Shares

The following discussion describes the general rules applicable to the ownership and disposition of the common shares but is subject in its entirety to the special rules described below under the headings entitled “Tax Consequences if We Are a Passive Foreign Investment Company” and “Tax Consequences if We are a Controlled Foreign Corporation.”

Distributions on Common Shares

The gross amount of any distribution (including

amounts, if any, withheld in respect of Canadian withholding tax) actually or constructively received by a U.S.

Holder with respect

to our common shares will be taxable to the U.S.

Holder as a dividend to the extent of our current or accumulated earnings and

profits as determined under U.S.

The gross amount of any distribution (including amounts, if any, withheld in respect of Canadian withholding tax) actually or constructively received by a U.S.

Holder with respect to our common shares will be taxable to the U.S.

Holder as a dividend to the extent of our current or accumulated earnings and profits as determined under U.S.

federal income tax principles.

Distributions to a U.S.

Holder in excess of earnings and profits

will be treated first as a return of capital that reduces a U.S.

Holder’s tax basis in such common shares (thereby increasing

the amount of gain or decreasing the amount of loss that a U.S.

Holder would recognize on a subsequent disposition of our common

shares), and then as gain from the sale or exchange of such common shares (see “Sale or Other Taxable Disposition of Our

Common Shares”).

The amount of any distribution of property other than cash will be the fair market value of that property

on the date of distribution.

In the event we make distributions to holders of common shares, we may or may not calculate our earnings

and profits under U.S.

Holder in excess of earnings and profits will be treated first as a return of capital that reduces a U.S.

Holder’s tax basis in such common shares (thereby increasing the amount of gain or decreasing the amount of loss that a U.S.

Holder would recognize on a subsequent disposition of our common shares), and then as gain from the sale or exchange of such common shares (see “Sale or Other Taxable Disposition of Our Common Shares”).

The amount of any distribution of property other than cash will be the fair market value of that property on the date of distribution.

In the event we make distributions to holders of common shares, we may or may not calculate our earnings and profits under U.S.

federal income tax principles.

If we do not do so, any distribution may be required to be regarded as a

dividend, even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain.

of the dividend will generally be treated as foreign-source dividend income to U.S.

If we do not do so, any distribution may be required to be regarded as a dividend, even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain.

The amount of the dividend will generally be treated as foreign-source dividend income to U.S.

Non-corporate U.S.

Holders, including individuals,

will generally be eligible for the preferential U.S.

federal rate on “qualified dividend income,”

provided that we

are a “qualified foreign corporation,”

the stock on which the dividend is paid is held for a minimum holding period,

and other requirements are satisfied.

A “qualified foreign corporation”

includes a foreign corporation that is not

a PFIC in the year of the distribution or in the prior taxable year and that is eligible for the benefits of an income tax treaty

with the United States that contains an exchange of information provision and has been determined by the United States Treasury

Department to be satisfactory for purposes of the legislation (such as the Canada-U.S.

Holders, including individuals, will generally be eligible for the preferential U.S.

federal rate on “qualified dividend income,” provided that we are a “qualified foreign corporation,” the stock on which the dividend is paid is held for a minimum holding period, and other requirements are satisfied.

A “qualified foreign corporation” includes a foreign corporation that is not a PFIC in the year of the distribution or in the prior taxable year and that is eligible for the benefits of an income tax treaty with the United States that contains an exchange of information provision and has been determined by the United States Treasury Department to be satisfactory for purposes of the legislation (such as the Canada-U.S.

Tax Convention).

Distributions to U.S.

Holders generally

will not be eligible for the “dividends received deduction”

generally allowed to U.S.

corporations in respect of dividends

received from other U.S.

Holders generally will not be eligible for the “dividends received deduction” generally allowed to U.S.

corporations in respect of dividends received from other U.S.

corporations.

Sale or Other Taxable Disposition of

Our Common Shares

Upon the sale, exchange, or other taxable

disposition of our common shares, a U.S.

Holder generally will recognize gain or loss equal to the difference between the amount

realized upon the sale, exchange, or other disposition and such U.S.

Holder’s tax basis in such common shares sold or otherwise

Sale or Other Taxable Disposition of Our Common Shares

Upon the sale, exchange, or other taxable disposition of our common shares, a U.S.

Holder generally will recognize gain or loss equal to the difference between the amount realized upon the sale, exchange, or other disposition and such U.S.

Holder’s tax basis in such common shares sold or otherwise disposed of.

holder receives Canadian dollars in the transaction, the amount realized will be the U.S.

of the Canadian dollars received, which is determined for cash basis taxpayers on the settlement date for the transaction and for

accrual basis taxpayers on the trade date (although accrual basis taxpayers can also elect the settlement date).

Holder’s

tax basis in common shares generally will be such holder’s U.S.

dollar value of the Canadian dollars received, which is determined

for cash basis taxpayers on the settlement date for the transaction and for accrual basis taxpayers on the trade date (although accrual basis taxpayers can also elect the settlement date).

Holder’s tax basis in common shares generally will be such holder’s U.S.

dollar cost for such common shares.

Gain or loss recognized

on such sale or other disposition generally will be long-term capital gain or loss if, at the time of the sale or other disposition,

the common shares have been held for more than one year.

Preferential tax rates currently apply

to long-term capital gain of a U.S.

Gain or loss recognized on such sale or other disposition generally will be long-term capital gain or loss if, at the time of the sale or other disposition, the common shares have been held for more than one year.

Preferential tax rates currently apply to long-term capital gain of a U.S.

Holder that is an individual, estate, or trust.

There are currently no preferential tax rates

for long-term capital gain of a corporate U.S.

Deductions for capital losses are subject to significant limitations under

There are currently no preferential tax rates for long-term capital gain of a corporate U.S.

Deductions for capital losses are subject to significant limitations under the Code.

The gain or loss will generally be U.S.-source gain or loss for foreign tax credit purposes.

Additional Medicare Tax on Net Investment

Holders that are individuals,

estates, or trusts (other than trusts that are exempt from tax) are subject to a tax of 3.8% on “net investment income”

(or undistributed “net investment income,”

in the case of estates and trusts) for each taxable year, with such tax

applying to the lesser of such income or the excess of such person’s adjusted gross income (with certain adjustments) over

a specified amount.

Net investment income includes dividends on the common shares and net gains from the disposition of the common

Holders that are individuals, estates,

or trusts should consult their own tax advisors regarding the applicability of this tax to any of their income or gains in respect

of the common shares.

Additional Medicare Tax on Net Investment Income

Holders that are individuals, estates, or trusts (other than trusts that are exempt from tax) are subject to a tax of 3.8% on “net investment income” (or undistributed “net investment income,” in the case of estates and trusts) for each taxable year, with such tax applying to the lesser of such income or the excess of such person’s adjusted gross income (with certain adjustments) over a specified amount.

Net investment income includes dividends on the common shares and net gains from the disposition of the common shares.

Holders that are individuals, estates, or trusts should consult their own tax advisors regarding the applicability of this tax to any of their income or gains in respect of the common shares.

Receipt of Foreign Currency

amount of any distribution paid to a U.S.

Holder in foreign currency, or on the sale, exchange, or other taxable disposition of

common shares, generally will be equal to the U.S.

dollar value of such foreign currency based on the exchange rate applicable

on the date of receipt (regardless of whether such foreign currency is converted into U.S.

The amount of any distribution paid to a U.S.

Holder in foreign currency, or on the sale, exchange, or other taxable disposition of common shares, generally will be equal to the U.S.

dollar value of such foreign currency based on the exchange rate applicable on the date of receipt (regardless of whether such foreign currency is converted into U.S.

dollars at that time).

foreign currency received is not converted into U.S.

If the foreign currency received is not converted into U.S.

dollars on the date of receipt, a U.S.

Holder will have a tax basis in the

foreign currency equal to its U.S.

Holder will have a tax basis in the foreign currency equal to its U.S.

dollar value on the date of receipt.

Holder who converts or otherwise disposes of the

foreign currency after the date of receipt may have a foreign currency exchange gain or loss that would be treated as ordinary

income or loss, and generally will be U.S.

Holder who converts or otherwise disposes of the foreign currency after the date of receipt may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss, and generally will be U.S.

source income or loss for foreign tax credit purposes.

Different rules apply to

Different rules apply to U.S.

Holders who use the accrual method of tax accounting.

Holder should consult its own U.S.

tax advisors regarding

tax advisors regarding the U.S.

federal income tax consequences of receiving, owning, and disposing of foreign currency.

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Subject to the PFIC rules discussed below, a U.S.

that pays (whether directly or through withholding) Canadian income tax with respect to dividends paid on the common shares generally

will be entitled, at the election of such U.S.

Holder that pays (whether directly or through withholding) Canadian income tax with respect to dividends paid on the common shares generally will be entitled, at the election of such U.S.

Holder, to receive either a deduction or a credit for such Canadian income tax paid.

Generally, a credit will reduce a U.S.

Holder’s U.S.

federal income tax liability on a dollar-for-dollar basis, whereas a

deduction will reduce a U.S.

Holder’s income that is subject to U.S.

Holder’s U.S.

federal income tax liability on a dollar-for-dollar basis, whereas a deduction will reduce a U.S.

Holder’s income that is subject to U.S.

federal income tax.

This election is made on a year-by-year

basis and applies to all foreign taxes paid (whether directly or through withholding) by a U.S.

This election is made on a year-by-year basis and applies to all foreign taxes paid (whether directly or through withholding) by a U.S.

Holder during a year.

Complex limitations apply to the foreign tax credit, including

the general limitation that the credit cannot exceed the proportionate share of a U.S.

Holder’s U.S.

federal income tax liability

that such U.S.

Holder’s “foreign source”

taxable income bears to such U.S.

Holder’s worldwide taxable income.

Complex limitations apply to the foreign tax credit, including the general limitation that the credit cannot exceed the proportionate share of a U.S.

Holder’s U.S.

federal income tax liability that such U.S.

Holder’s “foreign source” taxable income bears to such U.S.

Holder’s worldwide taxable income.

In applying this limitation, a U.S.

Holder’s various items of income and deduction must be classified, under complex rules,

as either “foreign source”

or “U.S.

source.”

Generally, dividends paid by a foreign corporation (including

constructive dividends) should be treated as foreign source for this purpose, and gains recognized on the sale of stock of a foreign

corporation by a U.S.

Holder’s various items of income and deduction must be classified, under complex rules, as either “foreign source” or “U.S.

source.” Generally, dividends paid by a foreign corporation (including constructive dividends) should be treated as foreign source for this purpose, and gains recognized on the sale of stock of a foreign corporation by a U.S.

Holder should be treated as U.S.

source for this purpose, except as otherwise provided in an applicable income

tax treaty, and if an election is properly made under the Code.

However, the amount of a distribution with respect to the common

shares that is treated as a “dividend”

may be lower for U.S.

federal income tax purposes than it is for Canadian federal

income tax purposes, resulting in a reduced foreign tax credit allowance to a U.S.

In addition, this limitation is calculated

separately with respect to specific categories of income.

source for this purpose, except as otherwise provided in an applicable income tax treaty, and if an election is properly made under the Code.

However, the amount of a distribution with respect to the common shares that is treated as a “dividend” may be lower for U.S.

federal income tax purposes than it is for Canadian federal income tax purposes, resulting in a reduced foreign tax credit allowance to a U.S.

In addition, this limitation is calculated separately with respect to specific categories of income.

The foreign tax credit rules are complex, and each U.S.

Holder should

consult its own U.S.

Holder should consult its own U.S.

tax advisors regarding the foreign tax credit rules.

Information Reporting and Backup Withholding

federal income tax law, certain

categories of U.S.

federal income tax law, certain categories of U.S.

Holders must file information returns with respect to their investment in, or involvement in, a foreign corporation.

For example, certain U.S.

Holders who hold certain “specified foreign financial assets”

that exceed certain thresholds

are required to report information relating to such assets.

The definition of “specified foreign financial assets”

generally includes not only financial accounts maintained in foreign financial institutions, but also, unless held in accounts

maintained by a financial institution, any stock or security issued by a non-U.S.

person, any financial instrument or contract

held for investment that has an issuer or counterparty other than a U.S.

Holders who hold certain “specified foreign financial assets” that exceed certain thresholds are required to report information relating to such assets.

The definition of “specified foreign financial assets” generally includes not only financial accounts maintained in foreign financial institutions, but also, unless held in accounts maintained by a financial institution, any stock or security issued by a non-U.S.

person, any financial instrument or contract held for investment that has an issuer or counterparty other than a U.S.

person, and any interest in a foreign entity.

may be subject to these reporting requirements unless their common shares are held in an account at certain financial institutions.

Holders may be subject to these reporting requirements unless their common shares are held in an account at certain financial institutions.

Significant penalties may apply for failure to satisfy applicable reporting obligations.

Distributions paid with respect to common

shares and proceeds from a sale, exchange, or redemption of common shares made within the United States or through certain U.S.-related

financial intermediaries may be subject to information reporting to the IRS and possible U.S.

Distributions paid with respect to common shares and proceeds from a sale, exchange, or redemption of common shares made within the United States or through certain U.S.-related financial intermediaries may be subject to information reporting to the IRS and possible U.S.

backup withholding (at a rate of 28%).

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Holder who furnishes a correct U.S.

taxpayer identification number

and makes any other required certification on IRS Form W-9 or that is a corporation or other entity that is otherwise exempt

from backup withholding.

taxpayer identification number and makes any other required certification on IRS Form W-9 or that is a corporation or other entity that is otherwise exempt from backup withholding.

Holder should consult its own tax advisors regarding the application of the U.S.

reporting and backup withholding rules.

information reporting and backup withholding rules.

Backup withholding is not an additional tax.

Amounts withheld as backup withholding may

be credited against a holder’s U.S.

federal income tax liability, and such holder may obtain a refund of any excess amounts

withheld under the backup withholding rules by filing an appropriate claim for refund with the IRS and furnishing any required

information in a timely manner.

The discussion of reporting requirements

set forth above is not intended to constitute a complete description of all reporting requirements that may apply to a U.S.

A failure to satisfy certain reporting requirements may result in an extension of the time period during which the IRS can assess

a tax and, under certain circumstances, such an extension may apply to assessments of amounts unrelated to any unsatisfied reporting

Holders should consult with their own tax advisors regarding their reporting obligations, if any, as a result

of their acquisition, ownership, or disposition of our common shares.

Tax Consequences if We are a Passive

Foreign Investment Company

A foreign corporation generally will be

treated as a PFIC if, after applying certain “look-through”

rules, either (i) 75% or more of its gross income

is passive income or (ii) 50% or more of the average value of its assets is attributable to assets that produce or are held

to produce passive income.

Passive income for this purpose generally includes dividends, interest, rents, royalties and gains from

securities and commodities transactions.

The look-through rules require a foreign corporation that owns at least 25% by value

of the stock of another corporation to treat a proportionate amount of assets and income as held or received directly by the foreign

We have not made the analysis necessary

to determine whether or not we are currently a PFIC or whether we have ever been a PFIC.

There can be no assurance that we are

not, have never been or will not in the future be a PFIC.

Amounts withheld as backup withholding may be credited against a holder’s U.S.

federal income tax liability, and such holder may obtain a refund of any excess amounts withheld under the backup withholding rules by filing an appropriate claim for refund with the IRS and furnishing any required information in a timely manner.

The discussion of reporting requirements set forth above is not intended to constitute a complete description of all reporting requirements that may apply to a U.S.

A failure to satisfy certain reporting requirements may result in an extension of the time period during which the IRS can assess a tax and, under certain circumstances, such an extension may apply to assessments of amounts unrelated to any unsatisfied reporting requirement.

Holders should consult with their own tax advisors regarding their reporting obligations, if any, as a result of their acquisition, ownership, or disposition of our common shares.

Tax Consequences if We are a Passive Foreign Investment Company

A foreign corporation generally will be treated as a PFIC if, after applying certain “look-through” rules, either (i) 75% or more of its gross income is passive income or (ii) 50% or more of the average value of its assets is attributable to assets that produce or are held to produce passive income.

Passive income for this purpose generally includes dividends, interest, rents, royalties and gains from securities and commodities transactions.

The look-through rules require a foreign corporation that owns at least 25% by value of the stock of another corporation to treat a proportionate amount of assets and income as held or received directly by the foreign corporation.

We have not made the analysis necessary to determine whether or not we are currently a PFIC or whether we have ever been a PFIC.

There can be no assurance that we are not, have never been or will not in the future be a PFIC.

If we were to be treated as a PFIC, any gain recognized by a U.S.

upon the sale (or certain other dispositions) of our common shares (or the receipt of certain distributions) generally would be

treated as ordinary income, and a U.S.

shareholder may be required, in certain circumstances, to pay an interest charge together

with tax calculated at maximum rates on certain “excess distributions,”

including any gain on the sale or certain dispositions

of our common shares.

shareholder upon the sale (or certain other dispositions) of our common shares (or the receipt of certain distributions) generally would be treated as ordinary income, and a U.S.

shareholder may be required, in certain circumstances, to pay an interest charge together with tax calculated at maximum rates on certain “excess distributions,” including any gain on the sale or certain dispositions of our common shares.

In order to avoid this tax consequence, a U.S.

shareholder (i) may be permitted to make a “qualified

electing fund”

election, in which case, in lieu of such treatment, such shareholder would be required to include in its taxable

income certain undistributed amounts of our income or (ii) may elect to mark-to-market our common shares and recognize ordinary

income (or possible ordinary loss) each year with respect to such investment and on the sale or other disposition of the common

shareholder (i) may be permitted to make a “qualified electing fund” election, in which case, in lieu of such treatment, such shareholder would be required to include in its taxable income certain undistributed amounts of our income or (ii) may elect to mark-to-market our common shares and recognize ordinary income (or possible ordinary loss) each year with respect to such investment and on the sale or other disposition of the common shares.

Additionally, if we are deemed to be a PFIC, a U.S.

shareholder who acquires our common shares from a decedent will be

denied the normally available step-up in tax basis to fair market value for the common shares at the date of the death and instead

will have a tax basis equal to the decedent’s tax basis if lower than fair market value.

Neither we nor our advisors have

the duty to or will undertake to inform U.S.

shareholder who acquires our common shares from a decedent will be denied the normally available step-up in tax basis to fair market value for the common shares at the date of the death and instead will have a tax basis equal to the decedent’s tax basis if lower than fair market value.

Neither we nor our advisors have the duty to or will undertake to inform U.S.

shareholders of changes in circumstances that would cause us to become a PFIC.

shareholders should consult their own tax advisors regarding the application of the PFIC rules including eligibility for and

the manner and advisability of making certain elections in the event we are determined to be a PFIC at any point in time.

to take the action necessary for a U.S.

shareholder to make a “qualified electing fund”

election in the event we are

Further, excess distributions treated as

dividends, gains treated as excess distributions and mark-to-market inclusions and deductions, all under the PFIC rules discussed

above, are all included in the calculation of net investment income for purposes of the 3.8% tax described above under the subheading

entitled “Additional Medicare Tax on Net Investment Income”.

United States Treasury Regulations provide, subject to

the election described in the following paragraph, that solely for purposes of this additional tax, distributions of previously

taxed income will be treated as dividends and included in net investment income subject to the additional 3.8% tax.

Additionally,

to determine the amount of any capital gain from the sale or other taxable disposition of common shares that will be subject to

the additional tax on net investment income, a U.S.

Holder who has made a “qualified electing fund”

election will be

required to recalculate its basis in the common shares excluding basis adjustments resulting from the “qualified electing

shareholders should consult their own tax advisors regarding the application of the PFIC rules including eligibility for and the manner and advisability of making certain elections in the event we are

determined to be a PFIC at any point in time.

We intend to take the action necessary for a U.S.

shareholder to make a “qualified electing fund” election in the event we are a PFIC.

Further, excess distributions treated as dividends, gains treated as excess distributions and mark-to-market inclusions and deductions, all under the PFIC rules discussed above, are all included in the calculation of net investment income for purposes of the 3.8% tax described above under the subheading entitled “Additional Medicare Tax on Net Investment Income”.

United States Treasury Regulations provide, subject to the election described in the following paragraph, that solely for purposes of this additional tax, distributions of previously taxed income will be treated as dividends and included in net investment income subject to the additional 3.8% tax.

Additionally, to determine the amount of any capital gain from the sale or other taxable disposition of common shares that will be subject to the additional tax on net investment income, a U.S.

Holder who has made a “qualified electing fund” election will be required to recalculate its basis in the common shares excluding basis adjustments resulting from the “qualified electing fund” election.

Alternatively, a U.S.

Holder may make an election which will be effective with respect to all interests in

a PFIC for which a “qualified electing fund”

election has been made and which is held in that year or acquired in future

Holder may make an election which will be effective with respect to all interests in a PFIC for which a “qualified electing fund” election has been made and which is held in that year or acquired in future years.

Under this election, a U.S.

Holder pays the additional 3.8% tax on income inclusions resulting from the “qualified

electing fund”

election and on gains calculated after giving effect to related tax basis adjustments.

Tax Consequences if We are a Controlled

Foreign Corporation

A foreign corporation will be treated as

a “controlled foreign corporation”

(“CFC”) for U.S.

federal income tax purposes if, on any day during the

taxable year of such foreign corporation, more than 50% of the equity interests in such corporation, measured by reference to the

combined voting power or value of the equity of the corporation, is owned directly or by application of the attribution and constructive

ownership rules of Sections 958(a) and 958(b) of the Code by United States Shareholders.

For this purpose, a “United

States Shareholder”

is any United States person that possesses directly, or by application of the attribution and constructive

ownership rules of Sections 958(a) and 958(b) of the Code, 10% or more of the combined voting power of all classes

of equity in such corporation or 10% or more of the total value of shares of all classes in such corporation.

If a foreign corporation

is a CFC on any day during any taxable year, each United States Shareholder of our Company who owns, directly or indirectly, our

common shares on the last day of the taxable year on which we are a CFC will be required to include in its gross income for United

States federal income tax purposes its pro rata share of our “Subpart F income,”

even if the Subpart F income is not

Subpart F income generally includes passive income but also includes certain related party sales, manufacturing and

services income.

In addition to the inclusion of “Subpart

F income”

of a CFC in the gross income of a United States Shareholder, there may be exposure to an additional tax under the

recently enacted Global Intangible Low Tax Income regime (“GILTI”).

Specifically, the GILTI rules impose an annual

minimum tax on U.S.

Holder pays the additional 3.8% tax on income inclusions resulting from the “qualified electing fund” election and on gains calculated after giving effect to related tax basis adjustments.

Tax Consequences if We are a Controlled Foreign Corporation

A foreign corporation will be treated as a “controlled foreign corporation” (“CFC”) for U.S.

federal income tax purposes if, on any day during the taxable year of such foreign corporation, more than 50% of the equity interests in such corporation, measured by reference to the combined voting power or value of the equity of the corporation, is owned directly or by application of the attribution and constructive ownership rules of Sections 958(a) and 958(b) of the Code by United States Shareholders.

For this purpose, a “United States Shareholder” is any United States person that possesses directly, or by application of the attribution and constructive ownership rules of Sections 958(a) and 958(b) of the Code, 10% or more of the combined voting power of all classes of equity in such corporation or 10% or more of the total value of shares of all classes in such corporation.

If a foreign corporation is a CFC on any day during any taxable year, each United States Shareholder of our Company who owns, directly or indirectly, our common shares on the last day of the taxable year on which we are a CFC will be required to include in its gross income for United States federal income tax purposes its pro rata share of our “Subpart F income,” even if the Subpart F income is not distributed.

Subpart F income generally includes passive income but also includes certain related party sales, manufacturing and services income.

In addition to the inclusion of “Subpart F income” of a CFC in the gross income of a United States Shareholder, there may be exposure to an additional tax under the recently enacted Global Intangible Low Tax Income regime (“GILTI”).

Specifically, the GILTI rules impose an annual minimum tax on U.S.

Holders of their share of GILTI income generated through CFCs.

This GILTI income very generally equals a CFC’s

income over a 10% return on the CFCs tangible depreciable trade or business assets.

The GILTI tax is 10.5% (until 2026 and 13.12%

for tax years after) on U.S.

Holders who are C corporations, as they are entitled to a 50% deduction (37.5% after 2025) of the

GILTI income as well as a reduced foreign tax credit on foreign taxes paid on the GILTI income.

Holders who are individuals,

estates or trusts may pay substantially more tax on GILTI income, as they are subject to ordinary tax rates (ranging from 10% to

37% plus the net investment income tax of 3.8%).

Holders are not entitled to a deduction on GILTI income or a reduced

foreign tax credit.

This GILTI income very generally equals a CFC’s income over a 10% return on the CFCs tangible depreciable trade or business assets.

The GILTI tax is 10.5% (until 2026 and 13.12% for tax years after) on U.S.

Holders who are C corporations, as they are entitled to a 50% deduction (37.5% after 2025) of the GILTI income as well as a reduced foreign tax credit on foreign taxes paid on the GILTI income.

Holders who are individuals, estates or trusts may pay substantially more tax on GILTI income, as they are subject to ordinary tax rates (ranging from 10% to 37% plus the net investment income tax of 3.8%).

Holders are not entitled to a deduction on GILTI income or a reduced foreign tax credit.

There is, however, an election available to such U.S.

Holders to mitigate the tax impact.

If we are a CFC, the PFIC rules set

forth above, even if we are otherwise considered to be a PFIC, will not be applicable.

United States persons who might, directly,

indirectly or constructively, acquire 10% or more of our common shares, and therefore might be a United States Shareholder, should

consider the possible application of the CFC rules and GILTI rules and consult a tax advisor with respect to such matters.

If we are a CFC, the PFIC rules set forth above, even if we are otherwise considered to be a PFIC, will not be applicable.

United States persons who might, directly, indirectly or constructively, acquire 10% or more of our common shares, and therefore might be a United States Shareholder, should consider the possible application of the CFC rules and GILTI rules and consult a tax advisor with respect to such matters.

Material Canadian Federal Income Tax Considerations

Non-Residents of Canada

The following portion of the summary is generally applicable

The following portion of the summary is generally applicable to a U.S.

Special rules, which are not discussed in this summary, may apply to a U.S.

Holder that is an insurer that carries

on an insurance business in Canada and elsewhere.

Holder that is an insurer that carries on an insurance business in Canada and elsewhere.

Disposition of Common Shares

Upon the disposition by a U.S.

Holder of common shares in our

Company, the U.S.

Holder will not be subject to tax under the Tax Act in respect of any capital gain realized unless the common

shares disposed of constitutes “taxable Canadian property”

Holder of common shares in our Company, the U.S.

Holder will not be subject to tax under the Tax Act in respect of any capital gain realized unless the common shares disposed of constitutes “taxable Canadian property” of the U.S.

Holder and the U.S.

Holder is not entitled to

relief under an applicable tax treaty or convention.

Common shares will generally not constitute “taxable Canadian property”

Holder is not entitled to relief under an applicable tax treaty or convention.

Common shares will generally not constitute “taxable Canadian property” of such U.S.

Holder unless at any time in the preceding 60 months both of the following statements were true:

Holder, together with either (i) persons with whom the U.S.

Holder does not deal at arm’s length or (ii) partnerships

in which the U.S.

Holder or a person in (a) directly or indirectly hold membership interests, held shares and/or rights to

acquire shares representing 25% or more of the issued shares of any class of our capital stock;

and (b) more than 50% of the

fair market value of our common stock was derived directly or indirectly from one or any combination of (i) real or immovable

property situated in Canada, (ii) Canadian resource properties, (iii) timber resource properties, and (iv) options

in respect of, or interests in, or for civil law rights in, property described in any of (i) to (iii).

Holders whose common shares constitute “taxable Canadian

property”

should consult their own tax advisors for advice having regard to their particular circumstances.

Holder does not deal at arm’s length or (ii) partnerships in which the U.S.

Holder or a person in (a) directly or indirectly hold membership interests, held shares and/or rights to acquire shares representing 25% or more of the issued shares of any class of our capital stock;

and (b) more than 50% of the fair market value of our common stock was derived directly or indirectly from one or any combination of (i) real or immovable property situated in Canada, (ii) Canadian resource properties, (iii) timber resource properties, and (iv) options in respect of, or interests in, or for civil law rights in, property described in any of (i) to (iii).

Holders whose common shares constitute “taxable Canadian property” should consult their own tax advisors for advice having regard to their particular circumstances.

Dividends Paid on Common Shares

Dividends paid, credited or deemed to have

been paid or credited on our common shares held by a U.S.

Holder will be subject to a Canadian withholding tax under the Tax Act

at a rate of 25% of the gross amount of the dividends, subject to reduction by any applicable tax convention.

Under the tax convention

between Canada and the United States (the “Tax Treaty”), the rate of withholding tax on dividends generally applicable

Dividends paid, credited or deemed to have been paid or credited on our common shares held by a U.S.

Holder will be subject to a Canadian withholding tax under the Tax Act at a rate of 25% of the gross amount of the dividends, subject to reduction by any applicable tax convention.

Under the tax convention between Canada and the United States (the “Tax Treaty”), the rate of withholding tax on dividends generally applicable to U.S.

Holders who beneficially own the dividends is reduced to 15%.

In the case of U.S.

Holders that are corporations that beneficially

own at least 10% of our voting shares, the rate of withholding tax on dividends generally is reduced to 5%.

So-called “fiscally

transparent”

entities, such as United States limited liability companies, or LLCs, are not entitled to rely on the terms

of the Tax Treaty, however a member of such entity will be considered to have received the dividend directly and to benefit from

the reduced rates under the Tax Treaty, where the member is considered under U.S.

taxation law to have derived the dividend through

that entity and by reason of the entity being a fiscally transparent entity, the treatment of the dividend is the same as its treatment

would be if the amount had been derived directly by the member.

Members of such entities are regarded as holding their proportionate

share of our common shares held by the entity for the purposes of the Tax Treaty.

Holders that are corporations that beneficially own at least 10% of our voting shares, the rate of withholding tax on dividends generally is reduced to 5%.

So-called “fiscally transparent” entities, such as United States limited liability companies, or LLCs, are not entitled to rely on the terms of the Tax Treaty, however a member of such entity will be considered to have received the dividend directly and to benefit from the reduced rates under the Tax Treaty, where the member is considered under U.S.

taxation law to have derived the dividend through that entity and by reason of the entity being a fiscally transparent entity, the treatment of the dividend is the same as its treatment would be if the amount had been derived directly by the member.

Members of such entities are regarded as holding their proportionate share of our common shares held by the entity for the purposes of the Tax Treaty.

Selected Financial Data

Not applicable.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY STATEMENT

following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated

financial statements and related notes appearing at the end of this Annual Report.

Some of the information contained in this discussion

and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our

business, includes forward looking statements that involve risks and uncertainties.

As a result of many factors, including those

factors set forth in the “Risk Factors”

section of this Annual Report, our actual results could differ materially from

the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis.

Our only product

candidate in the clinical stage of development is PEDMARK TM (sodium thiosulfate (STS) anhydrous injection).

announced results of two Phase 3 clinical trials for the prevention of cisplatin induced hearing loss, or ototoxicity in children

including the pivotal Phase 3 study SIOPEL 6 , “A Multicentre Open Label Randomised Phase 3 Trial of the Efficacy of

Sodium Thiosulfate in Reducing Ototoxicity in Patients Receiving Cisplatin Chemotherapy for Standard Risk Hepatoblastoma,”

and the proof of concept Phase 3 study “A Randomized Phase 3 Study of Sodium Thiosulfate for the Prevention of

Cisplatin-Induced Ototoxicity in Children”.

We have announced

results of two Phase 3 clinical trials for the prevention of cisplatin induced hearing loss, or ototoxicity in children including

the pivotal Phase 3 study SIOPEL 6 , “A Multicentre Open Label Randomised Phase 3 Trial of the Efficacy of Sodium Thiosulfate

in Reducing Ototoxicity in Patients Receiving Cisplatin Chemotherapy for Standard Risk Hepatoblastoma,”

and the proof of

concept Phase 3 study “A Randomized Phase 3 Study of Sodium Thiosulfate for the Prevention of Cisplatin-Induced

Ototoxicity in Children”.

We continue to focus our resources on the

development of PEDMARK TM .

We have licensed from OHSU intellectual

property rights for the use of PEDMARK TM as a chemoprotectant and are developing PEDMARK TM as a protectant

against the hearing loss often caused by platinum-based anti-cancer agents in children.

Preclinical and clinical studies conducted

by OHSU and others have indicated that PEDMARK TM can effectively reduce the incidence of hearing loss caused by platinum-based

anti-cancer agents.

Hearing loss among children receiving platinum-based

chemotherapy is frequent, permanent and often severely disabling.

The incidence of hearing loss in these children depends upon

the dose and duration of chemotherapy, and many of these children require lifelong hearing aids.

In addition, adults undergoing

chemotherapy for several common malignancies, including ovarian cancer, testicular cancer, and particularly head and neck cancer

and brain cancer, often receive intensive platinum-based therapy and may experience severe, irreversible hearing loss, particularly

in the high frequencies.

We estimate in the U.S.

and Europe that

annually over 10,000 children with solid tumors are treated with platinum agents.

The vast majority of these newly diagnosed

tumors are localized and classified as low to intermediate risk in nature.

These localized cancers may have overall survival rates

of greater than 80%, further emphasizing the importance of quality of life after treatment.

The incidence of hearing loss in these

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

currently no established preventive agent for this hearing loss and only expensive, technically difficult and sub-optimal cochlear

(inner ear) implants have been shown to provide some benefit.

Infants and young children at critical stages of development lack

speech language development and literacy, and older children and adolescents lack speech language development and literacy, and

older children and adolescents lack social-emotional development and educational achievement.

In March 2018, PEDMARK TM

received Breakthrough Therapy and Fast Track designations from the FDA.

Further, PEDMARK TM has received Orphan Drug

Designation in the U.S.

in this setting.

We initiated our rolling New Drug Application

(“NDA”) for PEDMARK TM for the prevention of ototoxicity induced by cisplatin chemotherapy patients 1 month to <

18 years of age with localized, non-metastatic, solid tumors with the FDA in December 2018.

We announced that we had submitted full

completion of the NDA in February 2020.

On April 13, 2020, we announced that the FDA had accepted for filing and granted Priority

Review for our NDA.

The FDA set a Prescription Drug Fee Act (“PDUFA”) target action date of August 10, 2020 for the completion

of the FDA’s review.

On August 10, 2020, we announced that we received a CRL from the FDA regarding our NDA for PEDMARK TM ,

which identified deficiencies in the third-party manufacturing facility that manufactures PEDMARK TM on our behalf.

no clinical safety or efficacy issues were identified during the review and there is no requirement for further clinical data.

fourth quarter of 2020, we engaged in a Type A meeting with the FDA concerning the CRL that we believe was constructive and collaborative.

We are working closely with our third-party drug manufacturer and the FDA to fully address the CRL, and we plan to resubmit our NDA for

PEDMARK TM in the second quarter of 2021.

In August 2018, the Pediatric Committee

(“PDCO”) of the European Medicines Agency (“EMA”) accepted our pediatric investigation plan (PIP) for sodium

thiosulfate with the trade name Pedmarqsi for the condition of the prevention of platinum-induced hearing loss.

An accepted PIP

is a prerequisite for filing a Marketing Authorization Application (“MAA”) for any new medicinal product in Europe.

indication targeted by our PIP is for the prevention of platinum-induced ototoxic hearing loss for standard risk hepatoblastoma

Additional tumor types of the proposed indication will be subject to the Committee for Medicinal Products for Human Use

(“CHMP”) assessment at the time of the MAA.

No deferred clinical studies were required in the positive opinion given

We were also advised that sodium thiosulfate (tradename to be determined) is eligible for submission of an application

for a Pediatric Use Marketing Authorization (“PUMA”).

A PUMA is a dedicated marketing authorization covering the indication

and appropriate formulation for medicines developed exclusively for use in the pediatric population and provides data and market

protection up to 10 years.

Therefore, this decision allows us to proceed with the submission of a PUMA in the European Union (EU)

with incentives of automatic access to the centralized procedure and up to 10 years of data and market protection.

In February 2020,

we announced that we had submitted a MAA for the prevention of ototoxicity induced by cisplatin chemotherapy patients 1 month to

< 18 years of age with localized, non-metastatic, solid tumors.

have not received and do not expect to have significant revenues from our product candidate until we are either able to sell our

product candidate after obtaining applicable regulatory approvals or we establish collaborations that provide us with up-front

payments, licensing fees, milestone payments, royalties or other revenue.

We generated a net loss of $18.1 million for the year

ended December 31, 2020.

We generated a net loss of approximately $12.8 million for the year ended December 31,

As of December 31, 2020, our accumulated deficit was approximately $162.1 million.

Our projections of our capital requirements are

subject to substantial uncertainty, and more capital than we currently anticipate may be required thereafter.

To finance our

continuing operations, we may need to raise substantial additional funds through either the sale of additional equity, the issuance

of debt, the establishment of collaborations that provide us with funding, the out-license or sale of certain aspects of our intellectual

property portfolio or from other sources.

We may not be able to raise the necessary capital or such funding may not be

available on financially acceptable terms if at all.

If we cannot obtain adequate funding in the future, we might be required

to further delay, scale back or eliminate certain research and development studies, consider business combinations or even shut

down some, or all, of our operations.

Our operating expenses will depend on many

factors, including the progress of our drug development efforts and efficiency of our operations and current resources.

and development expenses, which include expenses associated with our clinical trials, drug manufacturing to support clinical programs,

stock-based compensation, consulting fees, sponsored research costs, toxicology studies, license fees, milestone payments, and

other fees and costs related to the development of our product candidate, will depend on the availability of financial resources,

the results of our clinical trials, and any directives from regulatory agencies, which are difficult to predict.

Our general and

administration expenses include expenses associated with the compensation of employees, stock-based compensation, professional

fees, consulting fees, insurance and other administrative matters associated in support of our drug development programs.

On May 5, 2020, we announced the completion

of an underwritten public offering of 4,800,000 of our common shares at a public offering price of $6.25 per share.

we issued an additional 660,204 common shares in connection with the partial exercise of the underwriters’

over-allotment

The approximate total gross proceeds from the offering were $34,100 ($32,189 net of commissions, fees and issue costs).

On February 1, 2019, our wholly owned

subsidiary Fennec Pharmaceuticals, Inc.

entered into a Loan and Security Agreement (the “Loan and Security Agreement”)

with Bridge Bank, a division of Western Alliance Bank, an Arizona corporation (“Bridge Bank”), pursuant to which Bridge

Bank agreed to loan $12.5 million to Fennec Pharmaceuticals, Inc., to be made available upon NDA approval of PEDMARK TM

by no later than September 30, 2020.

The Loan and Security Agreement was amended on June 26, 2020 to increase the total

potential amount of the loan to $18 million and to extend the outside date for us to receive NDA approval of PEDMARK TM

to December 31, 2020.

In connection with this facility, we issued the Bridge Bank a warrant to purchase up to 39,000 of our

common shares at an exercise price of $6.80 per share, with an exercise period of ten years from the date of issuance subject to

certain early termination conditions.

Under Accounting Standards Codification ("ASC") 470-50, Modifications and Extinguishments,

the amendment to the facility was considered a modification.

As such, we had been amortizing the loan fee and the value of the

warrant over the remainder of the loan term.

Following the receipt of the FDA’s CRL in August 2020, we decided to fully

amortize the remaining portions of the loan fee and the value of the warrants.

The Loan and Security Agreement expired on December 31,

2020 as a result of us not obtaining NDA approval of PEDMARK TM by that date, with no amounts advanced under the facility

prior to its termination.

We believe that the funds raised in our

May 2020 public offering provides us sufficient funding to carry-out our planned activities, including potential NDA approval

and the commencement of commercialization efforts, for at least the next twelve months as we continue our strategic development

of PEDMARK TM .

Results of Operations

Fiscal 2020 versus Fiscal 2019

Fiscal Year Ended

In thousands of U.S.

December 31, 2020

December 31, 2019

Operating expenses:

Research and development

General and administration

Total operating expense

Loss from operations

Amortization expense

Unrealized gain on securities

Interest income and other, net

Revenues reported represent royalties related to Elion deal with Processa Pharmaceuticals, Inc.

Fennec received $0.005 million in cash and 41,250 in restricted shares of Processa Pharmaceuticals, Inc.

and development expense decreased by $0.5 million in fiscal 2020 as compared to fiscal 2019,

primarily due to the shift from research and development to pre-commercialization efforts

for PEDMARK TM which took place in the first nine months of 2020.

The $5.5 million increase in general and administrative expenses is

attributed to the increase in pre-commercialization expenses.

Further there was a small rise in compensation to officers, directors and

key contract employees in fiscal 2020 as compared to fiscal 2019.

Amortization expense relates to the Bridge Bank loan facility as the loan origination fees were

capitalized in fiscal 2019 and 2020.

After receiving the CRL from the FDA in August 2020, management decided to amortize the

remaining amounts associated with the loan facility.

The facility expired on December 31, 2020.

Interest income decreased in fiscal 2020 as compared to 2019, due to lower interest rates on money

market accounts for the comparable periods.

There was an unrealized gain of $0.1 million on the Processa shares between the date acquired,

October 30, 2020, and December 31, 2020.

Going forward, the Processa shares will be marked to market at each balance

The resulting change in value will result in an unrealized gain or loss.

Quarterly Information

The following table presents selected consolidated

financial data for each of the last eight quarters through December 31, 2020, as prepared under generally accepted accounting

principles within the United States, or U.S.

GAAP (dollars in thousands, except per share information).

Net (Loss)/Income for the

Basic Net (Loss)/Income per

Diluted Net (Loss)/Income per

March 31, 2019

June 30, 2019

September 30, 2019

December 31, 2019

March 31, 2020

June 30, 2020

September 30, 2020

December 31, 2020

Quarter ended December 31, 2020 versus 2019

Quarter Ended

In thousands of U.S.

December 31, 2020

December 31, 2019

Operating expenses:

Research and development

General and administration

Total operating expense

Loss from operations

Unrealized gain on securities

Interest income

Amortization expense

Other(loss)/income, net

Revenues reported represent royalties

related to Elion deal with Processa Pharmaceuticals, Inc.

Fennec received $0.005 million in cash and 41,250 in

restricted shares of Processa Pharmaceuticals, Inc.

We reported a loss from operations of $3.3 million for the three

months ended December 31, 2020, compared to a loss from operations of $3.7 million for the same period in 2019.

and development expenses totaled $1.2 million for the three months ended December 31, 2020, which was the same for the

same period in 2019.

General and administrative expenses decreased by $0.2 million in the three months ended

December 31, 2020, as compared to the same period in 2019.

The decrease arises from our reduced pre-commercialization

activities for PEDMARK TM as we focus on preparing to resubmit our NDA application to the FDA.

unrealized gain of $0.1 million on the Processa shares between the date acquired, October 30, 2020, and

December 31, 2020.

Going forward, the Processa shares will be marked to market at each balance sheet date.

The resulting

change in value will result in an unrealized gain or loss.

Selected Asset and Liability Data (thousands):

December 31, 2020

December 31, 2019

Cash and equivalents

Other current assets

Current liabilities

Working capital [current assets –

current liabilities]

Selected Equity:

Common stock and additional paid in capital

Accumulated deficit

Shareholders’

Liquidity and Capital Resources

There was a $16.7 million increase in cash and cash equivalents between December 31, 2020

and December 31, 2019.

The net increase was the result of our May 2020 public offering of common shares, which raised

net proceeds of $32.0 million, as well as $0.5 million from various stock option exercises, offset by cash used for operating activities.

During the period ended December 31, 2020, cash for operations was used mainly on the pre-commercialization activities of

PEDMARK TM and regulatory submission activities relating to the NDA.

The increase in other current assets between December 31, 2020 and December 31, 2019

primarily relates to the value of the Processa shares and an increase in the prepaid amount for Director and Officer insurance

premiums and costs associated with our at the market offering agreement, which was disclosed on October 20, 2020.

Current liabilities at December 31, 2020 increased $0.076 million compared to December 31, 2019 primarily due to a minor rise in accounts payable associated with our commercialization and manufacturing activities for the production of PEDMARK TM and related regulatory expenses at year-end 2020.

Working capital increased between December 31, 2020 and December 31, 2019 by $17.5 million.

increase was a result of cash used in operations offset by $32.0 million from our May 2020 public offering of common shares,

$0.5 million from stock option exercises and $0.1 million in interest income.

Cash outflows related to the regulatory and pre-commercial

development activities of PEDMARK TM and general and administrative expenses.

Selected Cash Flow Data

(dollars and shares in thousands)

December 31, 2020

December 31, 2019

Net cash used in operating activities

Net cash provided from investing activities

Net cash provided by financing activities

Net cash flow

The net cash flow used in operating activities

for the year ended December 31, 2020 was approximately $15.6 million as compared to $9.1 million in 2019.

This increase

relates to the commercial development of PEDMARK TM , preparation for product launch and regulatory activities.

Net financing

activities provided approximately $32.0 million from a public offering in May of 2020, and approximately $0.5 million from

the exercise of stock options.

We continue to pursue various strategic

alternatives including collaborations with other pharmaceutical and biotechnology companies.

Our projections of further capital

requirements are subject to substantial uncertainty.

Our working capital requirements may fluctuate in future periods depending

upon numerous factors, including:

our ability to obtain additional financial resources;

our ability to enter into collaborations

that provide us with up-front payments, milestones or other payments;

results of our research and development activities;

or lack of progress in our preclinical studies or clinical trials;

unfavorable toxicology in our clinical programs, our drug substance

requirements to support clinical programs;

change in the focus, direction, or costs of our research and development programs;

the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing our patent claims;

and technological advances;

the potential need to develop, acquire or license new technologies and products;

our business development

new regulatory requirements implemented by regulatory authorities;

the timing and outcome of any regulatory review

and commercialization activities, if any.

We had cash and cash equivalents of approximately

$30.3 million as of December 31, 2020.

We currently anticipate that our available capital resources, including our existing

cash and cash equivalents and accounts receivable balances, will be sufficient to meet our expected working capital and capital

expenditure requirements as our business is currently conducted for at least the next 12 months.

Financial Instruments

We invest excess cash and cash equivalents

in high credit quality investments held by financial institutions in accordance with our investment policy designed to protect

the principal investment.

At December 31, 2020, we had approximately $0.7 million in our cash accounts and $29.6 million

in savings and money market accounts.

While we have never experienced any loss or write down of our money market investments

since our inception, the amounts we hold in money market accounts are substantially above the $250,000 amount insured by the FDIC

and may lose value.

Our investment policy is to manage investments

to achieve, in the order of importance, the financial objectives of preservation of principal, liquidity and return on investment.

may be made in U.S.

or Canadian obligations and bank securities, commercial paper of U.S.

or Canadian industrial companies, utilities,

financial institutions and consumer loan companies, and securities of foreign banks provided the obligations are guaranteed or

carry ratings appropriate to the policy.

Securities must have a minimum Dun & Bradstreet rating of A for bonds or

R1 low for commercial paper.

The policy also provides for investment limits on concentrations of securities by issuer and

maximum-weighted average time to maturity of twelve months.

This policy applies to all of our financial resources.

policy risks are primarily the opportunity cost of the conservative nature of the allowable investments.

As our main purpose

is research and development, we have chosen to avoid investments of a trading or speculative nature.

We classify investments with original maturities

at the date of purchase greater than three months which mature at or less than twelve months as current.

We carry investments

at their fair value with unrealized gains and losses included in other comprehensive income (loss);

however, we have not held any

instruments that were classified as short-term investments during the periods presented in this Annual Report.

Off-Balance Sheet Arrangements

Since our inception, we have not had any

material off-balance sheet arrangements.

Contractual Obligations and Commitments

Critical Accounting Policies and Estimates

The preparation of financial statements

in conformity with U.S.

GAAP requires management to make estimates that affect the reported amounts of assets and liabilities and

disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue

and expense during the reporting period.

These estimates are based on assumptions and judgments that may be affected by commercial,

economic and other factors.

Actual results could differ from these estimates.

An accounting policy is considered to be

critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time

the estimate is made, and if different estimates reasonably could have been used, or changes in the accounting estimates that are

reasonably likely to occur periodically, could materially impact the financial statements.

The following description of critical

accounting policies, judgments and estimates should be read in conjunction with our December 31, 2020 consolidated financial

Stock-based Compensation

The calculation of the fair values of our

stock-based compensation plans requires estimates that require management’s judgments.

Under ASC 718, the fair value

of each stock option is estimated on the grant date using the Black-Scholes option-pricing model.

The valuation models require

assumptions and estimates to determine expected volatility, expected life, expected dividends and expected risk-free interest rates.

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

risk-free interest rate assumption was based on the yield on zero-coupon U.S.

Treasury strips at the award grant date.

used historical data to estimate forfeiture experience.

In valuing options granted in the fiscal years ended December 31,

2020 and 2019, we used the following weighted average assumptions:

Year Ended December

Expected dividend

Risk-free interest rate

Expected volatility

Expected life

Common shares and warrants

Common shares are recorded as the net proceeds received on issuance

after deducting all share issuance costs and the relative fair value of investor warrants.

Warrants are recorded at relative

fair value and are deducted from the proceeds of common shares and recorded on the consolidated statements of shareholders’

equity as additional paid-in capital.

Outstanding Share Information

Our outstanding comparative share data at December 31,

2020 and December 31, 2019 is as follows (in thousands):

Outstanding Share Type

December 31, 2020

December 31, 2019

Common shares

Warrants to purchase common shares

Options to purchase common shares

Newly Adopted and Recent Accounting Pronouncements

In August 2018, the FASB issued ASU

2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.

ASU 2018-13 removes certain disclosures, modifies certain disclosures and adds additional disclosures.

The Company adopted

this ASU on January 1, 2020.

Certain disclosures in ASU 2018-13 would need to be applied on a retrospective basis and others

on a prospective basis.

We concluded after evaluation that ASU 2018-13 has no significant effect on our consolidated financial

In January 2021, the FASB issued ASU

2021-01, Reference Rate Reform (Topic 848).

In this ASU, the FASB refines the scope of Topic 848 to clarify that certain

optional expedients and exceptions therein for contract modifications and hedge accounting apply to contracts that are affected

by the discounting transition.

Specifically, modifications related to reference rate reform would not be considered an event that

requires reassessment of previous accounting conclusions.

The ASU also amends the expedients and exceptions in Topic 848 to capture

the incremental consequences of the scope clarification and to tailor the existing guidance to derivative instruments affected

by the discounting transition.

The amendments in the ASU are effective immediately for all entities.

Entities may choose to apply

the amendments retrospectively as of any date from the beginning of an interim period that includes or is subsequent to March 12,

2020, or prospectively to new modifications from any date within an interim period that includes or is subsequent to January 7,

2021, up to the date that financial statements are available to be issued.

The Company chose to apply amendments prospectively

and concluded after evaluation that ASU 2021-01 has no significant effect on our consolidated financial statements.

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

What changed 10-K

Item 5. Market for Registrant’s Common Equity