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Item 9A. Controls and Procedures

2022-02-28 compared with 2021-03-30 · 703 added, 1096 removed, 451 unchanged (80% of the section changed)

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Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer (our principal

executive officer) and Chief Financial Officer (our principal financial officer) have concluded based on their evaluation as of

December 31, 2020 that our “disclosure controls and procedures”

(as defined in Rules 13a-15(e) and 15d-15(e) under

the Securities Exchange Act of 1934, as amended (“Exchange Act”)) are effective.

The term “disclosure controls

and procedures,”

as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other

procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports it

files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the

SEC’s rules and forms.

Disclosure controls and procedures also include, without limitation, controls and procedures

designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange

Act is accumulated and communicated to the company’s management, including its principal executive officer and principal

financial officer and principal accounting officer, or persons performing similar functions, as appropriate, to allow timely decisions

regarding required disclosure.

Management's Annual Report on Internal Control over Financial

Our management is responsible for establishing

and maintaining adequate internal control over financial reporting.

Internal control over financial reporting, as defined in rules promulgated

under the Exchange Act, is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial

Officer and affected by our Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability

of financial reporting and the preparation of Consolidated Financial Statements for external purposes in accordance with GAAP.

Our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer) have concluded based on their evaluation as of December 31, 2021 that our “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act are effective.

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures also include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive officer and principal financial officer and principal accounting officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.

Internal control over financial reporting, as defined in rules promulgated under the Exchange Act, is a process designed

by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and affected by our Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Consolidated Financial Statements for external purposes in accordance with GAAP.

Internal control over financial reporting includes those policies and procedures that:

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the

transactions and dispositions of our assets;

Provide reasonable assurance that transactions are recorded as necessary to permit preparation

of Consolidated Financial Statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance

with authorizations of our management and our Board of Directors;

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,

use or disposition of our assets that could have a material effect on our Consolidated Financial Statements.

Internal control over financial reporting

cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations.

Internal control

over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns

resulting from human failures.

● Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of Consolidated Financial Statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and our Board of Directors;

● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our Consolidated Financial Statements.

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations.

Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures.

Internal control over financial reporting can also be circumvented by collusion or improper override.

Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by

internal control over financial reporting.

However, these inherent limitations are known features of the financial reporting process,

and it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

Our management assessed the effectiveness

of our internal control over financial reporting as of December 31, 2020.

In making its assessment, management used the criteria

established by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, in its 2013 Internal Control

Integrated Framework .

Based on its assessment, management has concluded that our internal control over financial reporting

was effective as of December 31, 2020.

Because we are a non-accelerated filer and smaller reporting company, Haskell &

White LLP, our independent registered public accounting firm, is not required to attest to or issue a report on the effectiveness

of our internal control over financial reporting.

Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting.

However, these inherent limitations are known features of the financial reporting process, and it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2021.

In making its assessment, management used the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, in its 2013 Internal Control — Integrated Framework .

Based on its assessment, management has concluded that our internal control over financial reporting was effective as of December 31, 2021.

Because we are a non-accelerated filer and smaller reporting company, Haskell & White LLP, our independent registered public accounting firm, is not required to attest to or issue a report on the effectiveness of our internal control over financial reporting.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting

(as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation

of our internal control over financial reporting that occurred during the last fiscal quarter covered by this Annual Report that

has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation of our internal control over financial reporting that occurred during the last fiscal quarter covered by this Annual Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitation on the Effectiveness of Internal Controls

The effectiveness of any system of internal

control over financial reporting is subject to inherent limitations, including the exercise of judgment in designing, implementing,

operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely.

Accordingly, any system

of internal control over financial reporting can only provide reasonable, not absolute, assurances.

In addition, projections of

any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes

in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

We intend to continue to monitor

and upgrade our internal controls as necessary or appropriate for our business, but cannot assure that such improvements will be

sufficient to provide us with effective internal control over financial reporting.

The effectiveness of any system of internal control over financial reporting is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely.

Accordingly, any system of internal control over financial reporting can only provide reasonable, not absolute, assurances.

In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but cannot assure that such improvements will be sufficient to provide us with effective internal control over financial reporting.

Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Directors, Executive Officers and Corporate Governance

The following table sets forth the name

of each of our executive officers and directors, such person’s principal occupation or employment, all other positions with

us held by such person, if any, the year in which such person became a director of Fennec and such person’s age.

Our Board has an Audit Committee, a Compensation

Committee, and a Governance Committee.

The following table sets forth the name of each of our executive officers and directors, such person’s principal occupation or employment, all other positions with us held by such person, if any, the year in which such person became a director of Fennec and such person’s age.

Our Board has an Audit Committee, a Compensation Committee, and a Governance Committee.

The current members of such committees are noted in the table below:

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Director Since

Rostislav Raykov, New Jersey, USA

Rostislav Raykov, New Jersey,

Chief Executive Officer, Director

CEO of Fennec Pharmaceuticals Inc.;

Co-Founder and Manager, DCML LLC;

previously Portfolio Manager at Alchem Partners;

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previously Portfolio Manager at Millennium Partners

Shubh Goel, New Jersey, USA

Chief Commercial Officer

CCO of Fennec Pharmaceuticals Inc.;

previously VP of Commercial Strategy and Operations at Odonate Therapeutics, Inc.;

previously Executive Director, Global Early Commercialization at Celgene Corporation

Rallis, North Carolina, USA

Rallis, North Carolina,

Director (1)(2)

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Director (2)(3)

CEO of Leadiant Biosciences SpA;

Former Group CEO of Leadiant Biosciences SpA;

previously Global Head Rare Disease and R&D at Sigma-tau;

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previously CEO of Arpida AG

Jodi Cook, Pennsylvania, USA, Director (2)(3)

Jodi Cook, Pennsylvania, USA,

Director (2)(3)

Former SVP, Head of Gene Therapy Strategy PTC Therapeutics, Inc, Former COO Agilis Biotherapeutics, Former Assistant Professor of Audiology Mayo Clinic

September 2019

of the Audit Committee

of the Compensation Committee

of the Governance Committee

(1) Member of the Audit Committee

(2) Member of the Compensation Committee

(3) Member of the Governance Committee

Rostislav Raykov

Raykov has served as a director

of Fennec since July 2009 and as Chief Executive Officer since July 2009.

From January 2006 to December 2007,

Raykov has served as a director of Fennec since July 2009 and as Chief Executive Officer since July 2009.

From January 2006 to December 2007, Mr.

Raykov was a portfolio manager for Alchem Investment Partners and John Levin & Co.

Prior to founding Alchem,

Prior to founding Alchem, Mr.

Raykov was a portfolio manager and securities analyst for John A.

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Levin & Co., Mr.

Raykov was a securities analyst for the Merger Fund at Tiedemann Investment

Group (1999-2002) and an investment banking analyst at Bear Stearns (1998-1999).

Raykov was a securities analyst for the Merger Fund at Tiedemann Investment Group (1999-2002) and an investment banking analyst at Bear Stearns (1998-1999).

Raykov earned a B.S.

Administration from the University of North Carolina at Chapel Hill.

in Business Administration from the University of North Carolina at Chapel Hill.

As a result of these and other professional experiences, Mr.

has financial expertise and experience with the Corporation as it has developed within the drug development industry and, as such,

is able to provide the Corporation with unique insight and guidance.

Raykov has financial expertise and experience with the Corporation as it has developed within the drug development industry and, as such, is able to provide the Corporation with unique insight and guidance.

Robert Andrade

Andrade has served as Chief Financial

Officer since November 2015.

Andrade was previously Chief Financial Officer and Director of Fennec from September 2009

until August 2013.

Andrade has served as Chief Financial Officer since November 2015.

Andrade was previously Chief Financial Officer and Director of Fennec from September 2009 until August 2013.

In addition to his role with Fennec, Mr.

Andrade was a private investor in 2015, and a senior analyst

at Magnetar Capital from 2013 - 2014.

Andrade graduated from University of Southern California, where he earned a Masters

of Arts degree and Bachelor of Arts degree in economics.

Goel has been employed by us since

September 2019.

Goel is a proven leader with 20 years of global commercial

experience successfully building and executing the launch of several oncology products.

Most recently, she served as Vice President

of Commercial Strategy and Operations at Odonate Therapeutics, Inc.

Prior to Odonate, Ms.

Goel previously served in multiple

leadership positions at Celgene Corporation, including serving as Executive Director, Global Early Commercialization and previously

as Head of U.S.

Marketing, Oncology.

While at Celgene, she oversaw the successful execution of the U.S.

launch of Abraxane®

in pancreatic cancer and had overall responsibility for marketing the U.S.

solid tumor franchise.

Goel received a B.Sc.

degree in biochemistry from the University of Bath.

Rallis has served as a

director of Fennec since August 2011.

Rallis has been an executive-in-residence at Pappas Capital, a life science

venture capital firm since January 2008.

Andrade was a private investor in 2015, and a senior analyst at Magnetar Capital from 2013 - 2014.

Andrade graduated from University of Southern California, where he earned a Masters of Arts degree and Bachelor of Arts degree in economics.

Rallis has served as a director of Fennec since August 2011.

Rallis has been an executive-in-residence at Pappas Capital, a life science venture capital firm since January 2008.

Previously, Mr.

Rallis was the President and Chief Executive Officer

of ImmunoBiosciences, Inc.

(“IBI”), a vaccine technology company formerly located in Raleigh, North Carolina

from April 2006 through June 2007.

Rallis was the President and Chief Executive Officer of ImmunoBiosciences, Inc.

(“IBI”), a vaccine technology company formerly located in Raleigh, North Carolina from April 2006 through June 2007.

Prior to joining IBI, Mr.

Rallis served as an executive in residence (part-time)

for Pappas Capital, and as a consultant for Duke University and Panacos Pharmaceuticals, Inc.

the former President and Chief Operating Officer (“COO”) and director of Triangle Pharmaceuticals, Inc., which

was acquired by Gilead Sciences in January 2003 for approximately $465 million.

Prior to assuming the role of President

and COO in March 2000, he was Executive Vice President, Business Development and General Counsel.

While at Triangle,

Rallis served as an executive in residence (part-time) for Pappas Capital, and as a consultant for Duke University and Panacos Pharmaceuticals, Inc.

Rallis is the former President and Chief Operating Officer (“COO”) and director of Triangle Pharmaceuticals, Inc., which was acquired by Gilead Sciences in January 2003 for approximately $465 million.

Prior to assuming the role of President and COO in March 2000, he was Executive Vice President, Business Development and General Counsel.

While at Triangle, Mr.

Rallis participated in 11 equity financings generating gross proceeds of approximately $500 million.

was also primarily responsible for all business development activities which included a worldwide alliance with Abbott Laboratories

and the in-licensing of ten compounds.

He was also primarily responsible for all business development activities which included a worldwide alliance with Abbott Laboratories and the in-licensing of ten compounds.

Before joining Triangle in 1995, Mr.

Rallis served in various business development

and legal management roles with Burroughs Wellcome Co.

over a 13-year period, including Vice President of Strategic Planning and

Business Development.

Rallis also serves on the board of Tenax Therapeutics, Inc., a biopharmaceutical company

located in Morrisville, North Carolina.

Rallis served in various business development and legal management roles with Burroughs Wellcome Co.

over a 13-year period, including Vice President of Strategic Planning and Business Development.

Rallis also serves on the board of Lung Cancer Initiative of NC, located in Raleigh, North Carolina.

Rallis received his A.B.

degree in economics from Harvard College and

degree in economics from Harvard College and a J.D.

from Duke University.

As a result of these and other professional experiences, Mr.

Rallis possesses particular healthcare

industry knowledge and experience which strengthens the Board’s collective qualifications, skills, and experience.

Rallis possesses particular healthcare industry knowledge and experience which strengthens the Board’s collective qualifications, skills, and experience.

Marco Brughera

has been a director of Fennec since August 2016.

Since January 2011, Dr.

Brughera has been CEO of Lediant Biosciences

SpA and has held several positions for the Sigma-Tau Group, including CEO and Global Head of Sigma Tau Rare Disease, President

of Sigma-Tau Research and President of Sigma-Tau Pharmaceuticals.

He drove the commercial revival of a lead oncology product

line resulting in its successful sale for a total of around $900M.

He also successfully out-licensed the Defibrotide US rights

to Jazz Pharmaceuticals.

Brughera has been a director of Fennec since August 2016.

Currently, he is the founder at Brucon srls and Strategic Advisor at Essetifin.

From 2011 until 2021, Dr.

Brughera had been CEO of Lediant Biosciences and has held several positions for the Sigma-Tau Group, including CEO and Global Head of Sigma Tau Rare Disease, President of Sigma-Tau Research and President of Sigma-Tau Pharmaceuticals.

He drove the commercial revival of a lead oncology product line resulting in its successful sale for a total of around $900M.

He also successfully out-licensed the Defibrotide US rights to Jazz Pharmaceuticals.

From 2004 to 2010, Dr.

Brughera served as the Vice President of Preclinical Development at Nerviano

Medical Sciences (NMS), a pharmaceutical oncology-focused integrated discovery and development company.

He also served as

the Managing Director at Accelera, an independent contract research organization with the NMS Group.

Brughera served as the Vice President of Preclinical Development at Nerviano Medical Sciences (NMS), a pharmaceutical oncology-focused integrated discovery and development company.

He also served as the Managing Director at Accelera, an independent contract research organization with the NMS Group.

From 1999 to 2004, Dr.

held several senior level positions in the areas of research and development with Pharmacia and Pfizer.

Prior to 1999, he held

various positions at Pharmacia & Upjohn and Farmitalia Carlo Erba SpA, an Italian pharmaceutical company.

serves on the Board of Exelead and Naicons and previously was Board member of Soligenix, Lee’s Pharmaceuticals and Gentium.

Brughera earned his degree in

veterinary medicine from the University of Milan and is a European Registered Toxicologist.

Brughera has wide-spread experience

and knowledge of pharmaceutical drug development in international companies.

His knowledge in particular, of clinical drug development

in Europe, deepens the Board’s collective qualifications, skills and experience.

Haigh has been a director of Fennec

since April 2014.

Haigh has been Senior Vice President and Head of International Operations at PTC Therapeutics since

September 2014.

Brughera held several senior level positions in the areas of research and development with Pharmacia and Pfizer.

Prior to 1999, he held various positions at Pharmacia & Upjohn and Farmitalia Carlo Erba SpA, an Italian pharmaceutical company.

He currently serves on the Board of Naicons and previously was Board member of Soligenix, Lee’s Pharmaceuticals, Exelead and Gentium.

Brughera earned his degree in veterinary medicine from the University of Milan and is a European Registered Toxicologist.

Brughera has wide-spread experience and knowledge of pharmaceutical drug development in international companies.

His knowledge in particular, of clinical drug development in Europe, deepens the Board’s collective qualifications, skills and experience.

Haigh has been a director of Fennec since April 2014.

Haigh has been Senior Vice President and Head of International Operations at PTC Therapeutics since September 2014.

Previously Mr.

Haigh served as Chief Operating Officer at Gentium GmbH since March 2011.

joining Gentium, Mr.

Haigh served as Regional VP Commercial Operations at Biogen Idec where he managed several affiliates and

also the global distributor business and prior to that was the General Manager of Amgen Nordis and Portugal.

He served as the Executive

Vice President of Global Marketing and Corporate Planning at EUSA Pharma and joined EUSA from Amgen where he led the international

oncology franchise.

Haigh previously has held senior commercial and marketing positions at SmithKline Beecham, Schering

Plough, Organon and Novo Nordisk.

Prior to joining Gentium, Mr.

Haigh served as Regional VP Commercial Operations at Biogen Idec where he managed several affiliates and also the global distributor business and prior to that was the General Manager of Amgen Nordis and Portugal.

He served as the Executive Vice President of Global Marketing and Corporate Planning at EUSA Pharma and joined EUSA from Amgen where he led the international oncology franchise.

Haigh previously has held senior commercial and marketing positions at SmithKline Beecham, Schering Plough, Organon and Novo Nordisk.

He has been a Director of Fennec Pharmaceuticals Inc.

since April 28, 2014 and a Director

at Arch Biopartners Inc.

since August 21, 2014.

He received a Bachelor of Arts with Honors in Economic History from Huddersfield

Polytechnic, West Yorkshire, England and a Diploma in Marketing from the Institute of Marketing.

As a result of these and other

professional experiences, Mr.

Haigh has extensive international oncology development expertise which strengthens the Board’s

collective qualifications, skills and experience.

Islam has been a director of Fennec since

April 2014 and is our current Chairman of the Board.

since April 28, 2014.

He received a Bachelor of Arts with Honors in Economic History from Huddersfield Polytechnic, West Yorkshire, England and a Diploma in Marketing from the Institute of Marketing.

As a result of these and other professional experiences, Mr.

Haigh has extensive international oncology development expertise which strengthens the Board’s collective qualifications, skills and experience.

Islam has been a director of Fennec since April 2014 and is our current Chairman of the Board.

Islam was the Chairman and CEO of Gentium S.p.A.

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2009-2014) where he led the transition from a loss-making to a cash-flow positive and profitable company.

Under his leadership, the company

value increased from US$25 million leading to a successful all cash US$1 billion merger with Jazz Pharmaceuticals, plc.

Subsequent to

the sale of Gentium, Dr.

Islam has been involved from both an advisory and board level in several public and private healthcare related

Under his leadership, the company value increased from US$25 million leading to a successful all cash US$1 billion merger with Jazz Pharmaceuticals, plc.

Subsequent to the sale of Gentium, Dr.

Islam has been involved from both an advisory and board level in several public and private healthcare related companies.

From 1999-2008, Dr.

Islam was President and CEO of Arpida AG where he transitioned the early-stage start-up to a SWX-listed

company and raised US$300 million in the IPO and follow-ons.

Islam was President and CEO of Arpida AG where he transitioned the early-stage start-up to a SWX-listed company and raised US$300 million in the IPO and follow-ons.

From 1987-1999, he held various positions in HMR & MMD (now Sanofi-Aventis).

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Islam worked in academia at Imperial College (Univ.

of London) and in Milan University, where he was a contract

of London) and in Milan University, where he was a contract professor.

Islam is a graduate of Chelsea College and received his Ph.D.

from Imperial College, University of London.

several patents and has published over 80 articles in leading journals.

He holds several patents and has published over 80 articles in leading journals.

He is an advisor to the venture group Kurma Biofund (Paris).

is a founder/co-founder of Sirius Healthcare Partners GmbH (Zurich), PrevAbr LLC (D.C.), BioAim LLC (L.A.) & Life Sciences Management

He is a founder/co-founder of Sirius Healthcare Partners GmbH (Zurich), PrevAbr LLC (D.C.), BioAim LLC (L.A.) & Life Sciences Management GmbH (Zug).

Islam is Board Chair at Minoryx Therapeutics (Spain) and Gain Therapeutics (Switzerland), a public company.

serves on the board of Gain Therapeutics (GAIN) and Processa Pharmaceuticals (PCSA), both of which are publicly traded.

In the past, he

has served as Chairman of the Board of Directors of Immunomedics (USA), Pcovery Aps (Copenhagen), Adenium Aps (Copenhagen) and C10 Pharma

AS (Oslo) and on the board of Karolinska Development (Sweden) and MolMed S.p.A.

Islam’s extensive international pharmaceutical expertise in transitioning companies from development to

production strengthens the Board’s collective qualifications, skills and experience.

Cook has been a director of Fennec

since September 2019.

Cook previously served as SVP and Head of Gene Therapy Strategy at PTC Therapeutics from August 2018

until February 2020.

Previously she was one of the founding members and Chief Operating Officer of Agilis Biotherapeutics,

a clinical-stage company focused on gene therapies for rare diseases of the central nervous system, from December 2013 until

its acquisition by PTC Therapeutics in August 2018.

While at Agilis she led the sale of the company to PTC in a deal that

represented significant value to all parties.

Cook’s career spans a wide range of experiences including VP of Clinical

Research at InSound Medical and Director of Audiology at Songbird Hearing, both successful biotech start-up companies within the

hearing industry.

He currently serves on the board of Processa Pharmaceuticals (PCSA), which is publicly traded.

In the past, he has served on the Board of Directors of Immunomedics (USA), Pcovery Aps (Copenhagen), Adenium Aps (Copenhagen), C10 Pharma AS (Oslo), Karolinska Development (Sweden) and MolMed S.p.A.

Islam’s extensive international pharmaceutical expertise in transitioning companies from development to production strengthens the Board’s collective qualifications, skills and experience.

Cook has been a director of Fennec since September 2019.

Cook previously served as SVP and Head of Gene Therapy Strategy at PTC Therapeutics from August 2018 until February 2020.

Previously she was one of the founding members and Chief Operating Officer of Agilis Biotherapeutics, a clinical-stage company focused on gene therapies for rare diseases of the central nervous system, from December 2013 until its acquisition by PTC Therapeutics in August 2018.

While at Agilis she led the sale of the company to PTC in a deal that represented significant value to all parties.

Cook’s career spans a wide range of experiences including VP of Clinical Research at InSound Medical and Director of Audiology at Songbird Hearing, both successful biotech start-up companies within the hearing industry.

She has been Assistant Professor of Audiology and Director of the Hearing Aid Program at Mayo Clinic.

earned a BA from Loyola University in Maryland, M.Aud.

from University of South Carolina, and PhD from Arizona State University

in Hearing Science.

Cook earned a BA from Loyola University in Maryland, M.Aud.

from University of South Carolina, and PhD from Arizona State University in Hearing Science.

She completed a clinical fellowship at Johns Hopkins School of Medicine in Baltimore, MD.

Her extensive scientific,

clinical and executive business experience strengthens the Board’s collective qualifications, skills and expertise.

Her extensive scientific, clinical and executive business experience strengthens the Board’s collective qualifications, skills and expertise.

Audit Committee

On behalf of the Board, the Audit Committee

of the Board retains, oversees and evaluates our independent auditors, reviews the financial reports and other financial information

provided by us, including audited financial statements, and discusses the adequacy of disclosure with management and the auditors.

Audit Committee also reviews the performance of the independent auditors in the annual audit and in assignments unrelated to the

audit, assesses the independence of the auditors, and reviews their fees.

The Audit Committee is also responsible for reviewing

our internal controls over financial reporting and disclosure.

The Audit Committee operates under a written charter adopted

by the Board.

directors have appointed an Audit Committee consisting of three directors:

Rallis, Khalid Islam and Adrian Haigh, each

of whom is independent and financially literate within the meaning of National Instrument 52-110 –

Audit Committees and is

independent under Rule 5605(a)(2) of the Nasdaq listing

On behalf of the Board, the Audit Committee of the Board retains, oversees and evaluates our independent auditors, reviews the financial reports and other financial information provided by us, including audited financial statements, and discusses the adequacy of disclosure with management and the auditors.

The Audit Committee also reviews the performance of the independent auditors in the annual audit and in assignments unrelated to the audit, assesses the independence of the auditors, and reviews their fees.

The Audit Committee is also responsible for reviewing our internal controls over financial reporting and disclosure.

The Audit Committee operates under a written charter adopted by the Board.

The directors have appointed an Audit Committee consisting of three directors:

Rallis, Khalid Islam and Adrian Haigh, each of whom is independent and financially literate within the meaning of National Instrument 52-110 – Audit Committees and is independent under Rule 5605(a)(2) of the Nasdaq listing standards.

In addition, the Board has determined that Mr.

Rallis qualifies as an “audit committee financial expert,”

as defined in Item 407(d)(5) of Regulation S-K promulgated by the SEC based on his business and financial experience described

Rallis qualifies as an “audit committee financial expert,” as defined in Item 407(d)(5) of Regulation S-K promulgated by the SEC based on his business and financial experience described above.

Code of Ethics

In February 2004, our Board adopted

a Mandate of the Board of Directors, Corporate Governance Guidelines and a Code of Business Conduct and Ethics (the “Conduct

and Ethics Code”) applicable to all of our officers, directors and employees.

We are committed to adhering to applicable

legal requirements and maintaining the highest standards of conduct and integrity.

The Conduct and Ethics Code sets out the

legal and ethical standards of conduct for our personnel and addresses topics such as:

In February 2004, our Board adopted a Mandate of the Board of Directors, Corporate Governance Guidelines and a Code of Business Conduct and Ethics (the “Conduct and Ethics Code”) applicable to all of our officers, directors and employees.

We are committed to adhering to applicable legal requirements and maintaining the highest standards of conduct and integrity.

The Conduct and Ethics Code sets out the legal and ethical standards of conduct for our personnel and addresses topics such as:

reporting obligations and procedures;

and ethical conduct and conflicts of interest;

honest and ethical conduct and conflicts of interest;

compliance with applicable laws and Company policies and procedures;

confidentiality

of corporate information;

confidentiality of corporate information;

use of corporate assets and opportunities;

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The Conduct and Ethics Code was updated in June of 2019 and is available on our website at www.fennecpharma.com.

We will post any amendment to this code,

as well as any waivers that are required to be disclosed by the rules of the SEC, on our website promptly following the date

of such amendment or waiver.

We undertake to provide to any person without charge, upon request, a copy of the Conduct and Ethics

Code by writing to Attn:

Code of Ethics Request, Fennec Pharmaceuticals Inc., 68 TW Alexander Drive, PO Box 13628, Research Triangle

Park, North Carolina 27709.

Delinquent Section 16(a) Reports

Under Section 16(a) of the Exchange

Act, our directors and executive officers and any person who beneficially owns more than 10% of our outstanding common shares (“reporting

persons”) are required to report their initial beneficial ownership of our common shares and any subsequent changes in that

ownership to the SEC and Nasdaq.

Reporting persons are required by SEC regulations to furnish to us copies of all reports they

file in accordance with Section 16(a).

Based solely upon our review of the copies of such reports received by us, or written

representations from certain reporting persons that no other reports were required, we believe that during the fiscal year ended

December 31, 2020, all Section 16(a) filing requirements applicable to our reporting persons were met.

We will post any amendment to this code, as well as any waivers that are required to be disclosed by the rules of the SEC, on our website promptly following the date of such amendment or waiver.

We undertake to provide to any person without charge, upon request, a copy of the Conduct and Ethics Code by writing to Attn:

Code of Ethics Request, Fennec Pharmaceuticals Inc., 68 TW Alexander Drive, PO Box 13628, Research Triangle Park, North Carolina 27709.

Executive Compensation

Summary Compensation Table

The following table sets out certain information

respecting the compensation paid to our Chief Executive Officer, our Chief Financial Officer, and our Chief Commercial Officer

(“Named Executive Officers”) for the fiscal years ended December 31, 2020 and December 31, 2019.

Name and Principal Position

The following table sets out certain information respecting the compensation paid to our Chief Executive Officer, our Chief Financial Officer, and our former Chief Commercial Officer (“Named Executive Officers”) for the fiscal years ended December 31, 2021 and December 31, 2020.

Restricted Share

Option Awards

Name and Principal Position

Unit Awards ($) (2)

Rostislav Raykov, CEO

2 unchanged sentences

(1) Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718.

value amounts are based on individual grants to each of Mr.

Raykov and Mr.

Andrade of 250,000 and 150,000 and 125,000

and 80,000 options, respectively, on May 15, 2020 and April 4, 2019, at an exercise price of $6.93 and $4.38 per common

share, respectively.

Grants to Ms.

Goel were for 25,000 and 175,000 options granted on May 15, 2020 and September 9,

2019, respectively, at an exercise price of $6.93 and $4.74, respectively.

Dollar value amounts are based on individual grants to each of Mr.

Andrade and Ms.

Goel of 300,000, 250,000 and 250,000 and 75,000, 100,000 and 125,000, and 75,000, 100,000 and 25,000 options, respectively, on December 20, 2021, June 2, 2021 and May 15, 2020, at an exercise price of $4.08, $7.53 and $6.93 per common share, respectively.

On December 20, 2021, Mr.

Andrade and Ms.

Goel were also awarded 37,500 Restricted Share Units each.

The December 20, 2021 awards and grants to the executives all vest conditionally upon FDA approval of

PEDMARK TM in calendar year 2022.

All option grants expire 10 years after grant date.

One-third of these options shall vest and may be exercised one year after the grant date (the “Vesting Commencement Date”).

The remaining two-thirds of the options shall vest monthly at a rate of 1/24 th of the remaining grant and shall be exercisable

as of the last day of each following month after the Vesting Commencement Date.

As of the third anniversary of the grant date,

all of the options shall be vested.

Goel was hired as our Chief Commercial Officer in September 2019.

The June, 2021 and May, 2020 grants vest in the following manner:

one-third of these options shall vest and may be exercised one year after the grant date (the “Vesting Commencement Date”).

The remaining two-thirds of the options shall vest monthly at a rate of 1/24 th of the remaining grant and shall be exercisable as of the last day of each following month after the Vesting Commencement Date.

As of the third anniversary of the grant date, all of the options shall be vested.

Rostislav Raykov

Raykov has been employed by us

since July 2009.

Raykov has been employed by us since July 2009.

Pursuant to an employment agreement dated May 3, 2010 between Mr.

Raykov and Fennec, Mr.

is employed as our Chief Executive Officer and:

(a) received an initial annual salary in the amount of $140,000, subject to

annual adjustment by our Board of Directors, (b) upon approval by shareholders of our amended stock option plan was granted

options to purchase up to 5.0% of our common shares estimated by us to be outstanding upon completion of our 2010 rights offering,

and (c) may receive annual bonuses at the sole discretion of the Board.

Raykov’s employment terminates

due to a change of control of Fennec, Mr.

Raykov’s remaining unvested options shall immediately vest and be fully exercisable.

Raykov is dismissed from employment by us for any reason other than “for cause,”

we are obligated to pay

Raykov is employed as our Chief Executive Officer and:

(a) received an initial annual salary in the amount of $140,000, subject to annual adjustment by our Board of Directors, (b) upon approval by shareholders of our amended stock option plan was granted options to purchase up to 5.0% of our common shares estimated by us to be outstanding upon completion of our 2010 rights offering, and (c) may receive annual bonuses at the sole discretion of the Board.

Raykov’s employment terminates due to a change of control of Fennec, Mr.

Raykov’s remaining unvested options shall immediately vest and be fully exercisable.

Raykov is dismissed from employment by us for any reason other than “for cause,” we are obligated to pay Mr.

Raykov severance compensation equal to twelve months of salary.

The initial term of the agreement was for one year and

the agreement automatically extends for additional one-year periods unless terminated by either party in accordance with the agreement.

Effective February 10, 2020, Mr.

Raykov’s salary was increased from $400,000 to $430,000 per year.

The initial term of the agreement was for one year and the agreement automatically extends for additional one-year periods unless terminated by either party in accordance with the agreement.

Effective January 1, 2022, Mr.

Raykov’s current salary is $458,402 per year.

Robert Andrade

Andrade has been employed by us

since November 2015.

Andrade has been employed by us since November 2015.

Pursuant to an employment agreement dated November 13, 2015, Mr.

Andrade is employed as our

Chief Financial Officer and:

(a) received an initial annual salary in the amount of $165,000, and (b) may receive annual

bonuses at the sole discretion of the Board.

Andrade’s employment terminates due to a change of control

of the Fennec, Mr.

Andrade’s remaining unvested options shall immediately vest and be fully exercisable.

is dismissed from employment by us for any reason other than “for cause,”

we are obligated to pay Mr.

severance compensation equal to six months of salary.

Effective February 10, 2020, Mr.

Andrade’s salary was increased

from $290,000 to $311,750 per year.

Goel has been employed by us since

September 2019.

Andrade is employed as our Chief Financial Officer and:

(a) received an initial annual salary in the amount of $165,000, and (b) may receive annual bonuses at the sole discretion of the Board.

Andrade’s employment terminates due to a change of control of the Fennec, Mr.

Andrade’s remaining unvested options shall immediately vest and be fully exercisable.

Andrade is dismissed from employment by us for any reason other than “for cause,” we are obligated to pay Mr.

Andrade severance compensation equal to six months of salary.

Effective January 1, 2022, Mr.

Andrade’s current salary is $332,075 per year.

Goel commenced employment with us in September 2019.

Pursuant to an employment agreement dated September 9, 2019, Ms.

Goel is employed as Fennec’s

Chief Commercial Officer and:

(a) receives an initial annual salary in the amount of $360,000, subject to annual adjustment

by our Board of Directors, and (b) may receive annual bonus of up to 40% of her base salary per twelve month period, at the

discretion of the CEO and the Board of Directors.

Goel’s employment is terminated by us for any reason other

than “for cause”, we are obligated to pay Ms.

Goel (i) severance in the amount of three months of employees

base salary, (ii) prorate share of any target bonus earned by Ms.

Goel was employed as our Chief Commercial Officer and:

(a) received an initial annual salary in the amount of $360,000, subject to annual adjustment by our Board of Directors, and (b) was eligible to receive an annual bonus of up to 40% of her base salary per twelve month period, at the discretion of the CEO and the Board of Directors.

Goel’s employment was terminated by us for any reason other than “for cause”, we would have been obligated to pay Ms.

Goel (i) severance in the amount of six months of employees base salary, (ii) prorated share of any target bonus earned by Ms.

Goel and, (iii) accelerated vesting of stock options.

The initial term of the agreement was for one year and the agreement automatically extends for additional one-year periods unless

terminated by either party in accordance with the agreement.

In addition to their employment agreements,

The initial term of the agreement was for one year and the agreement automatically extended for additional one-year periods unless terminated by either party in accordance with the agreement.

Goel tendered her resignation on January 31, 2022.

In addition to their employment agreements, Mr.

Andrade and Ms.

Goel are a party to a confidentiality and intellectual property agreement with the

Goel are a party to a confidentiality and intellectual property agreement with the Company.

In the employment agreements for each of Mr.

Goel, “for cause”

is generally defined as (1) material breach of the terms of the employment or intellectual

property agreements;

(2) failure to perform the duties inherent in their position in good faith and in a reasonable and appropriate

Andrade and Ms.

Goel, “for cause” is generally defined as (1) material breach of the terms of the employment or intellectual property agreements;

(2) failure to perform the duties inherent in their position in good faith and in a reasonable and appropriate manner;

or (3) acts of fraud or embezzlement or other intentional misconduct which adversely affects our business.

Payments on Termination

The following table provides details regarding

the estimated incremental payments from us to each of the current Named Executive Officers assuming termination without cause on

December 31, 2020.

The following table provides details regarding the estimated incremental payments from us to each of the Named Executive Officers assuming termination without cause on December 31, 2021.

Goel’s resignation was voluntary and there is no severance owed.

Estimated Bonus

4 unchanged sentences

Payments on Change of Control

The following table provides details regarding

the estimated incremental payments from us to each of the current Named Executive Officers upon change of control.

The following table provides details regarding the estimated incremental payments from us to each of the Named Executive Officers upon change of control.

Change of Control

4 unchanged sentences

(1) Change of control payments are calculated based on the two-year annualized average salary plus cash bonus as calculated as of December 31, 2021.

In addition to the payments above, an incentive plan has been

established pursuant to which, upon completion of a change in control transaction, 1% of the transaction value (up to a maximum

of $2,000,000) be set aside and paid to key personnel upon completion of such change in control transaction, with 50% of such incentive

pool being payable to the CEO and the balance to other key personnel as determined by the CEO in consultation with the Compensation

In addition to the payments above, an incentive plan has been established pursuant to which, upon completion of a change in control transaction, 1% of the transaction value (up to a maximum of $2,000,000) be set aside and paid to key personnel upon completion of such change in control transaction, with 50% of such incentive pool being payable to the CEO and the balance to other key personnel as determined by the CEO in consultation with the Compensation Committee.

Equity Grants, Exercises and Holdings

The following table sets forth information concerning the number

and value of unexercised options held by each Named Executive Officer as of December 31, 2020.

All executive awards, with

the exception of those expiring 06/27/2027, 02/06/2028, 04/04/2029 and 05/15/2030, vest and are exercisable immediately.

stock option plan provides for grants denominated in US and CAD dollars.

The following table sets forth information concerning the number and value of unexercised restricted share units and options held by each Named Executive Officer as of December 31, 2021.

All executive awards, with the exception of those expiring 04/04/2029, 09/09/2029, 05/15/2030 and 06/02/2031, vest and are exercisable immediately.

Grants expiring 12/20/2031 will vest immediately upon FDA approval of PEDMARK TM if that approval occurs in 2022 and the

Named Executive Officer is still employed by us at that time.

If those conditions are not met, those grants will be forfeited.

Our current stock option plan provides for equity awards and grants denominated in US and CAD dollars.

Number of Restricted Share Units

Number of Options

5 unchanged sentences

Director Compensation Table

The following table summarizes the compensation earned by our

non-executive directors for the year ended December 31, 2020.

The following table summarizes the compensation earned by our non-executive directors for the year ended December 31, 2021.

Fees paid in Cash

5 unchanged sentences

Option Exercise Price $USD

August 13, 2020

The annual compensation considerations

for non-executive directors also include the awarding of stock options.

We believe that granting of options to the non-executive

directors serves three primary purposes:

(1) to recognize the significant time and effort commitments of being a member of

(2) to provide long-term incentives for future efforts since the value of the options is directly dependent on

our market valuation;

June 29, 2021

The annual compensation considerations for non-executive directors also include the awarding of stock options.

We believe that granting of options to the non-executive directors serves three primary purposes:

(1) to recognize the

significant time and effort commitments of being a member of our Board;

(2) to provide long-term incentives for future efforts since the value of the options is directly dependent on our market valuation;

and (3) to retain quality individuals.

When determining whether and how many new option grants will

be made, the Compensation Committee takes into account the amount and terms of any outstanding options.

We do not require our non-executive

directors to own a specific amount of our common shares.

When determining whether and how many new option grants will be made, the Compensation Committee takes into account the amount and terms of any outstanding options.

We do not require our non-executive directors to own a specific amount of our common shares.

Each of Adrian J.

Haigh, Khalid Islam,

Marco Brughera, Jodi Cook and Chris A.

Rallis has entered into an Independent Director Agreement

with the Company, which provides for cash compensation as set forth by the Compensation Committee commensurate with that member’s

responsibilities.

The Compensation Committee may also remunerate members in the form of a grant of options to purchase shares of

our common shares.

The options immediately vest when granted and are otherwise subject to the terms and conditions of our

stock option plan, as amended.

The Independent Director Agreements also provide for the reimbursement of such director’s

reasonable travel and related expenses incurred in the course of attending board meetings.

Haigh, Khalid Islam, Marco Brughera, Jodi Cook and Chris A.

Rallis has entered into an Independent Director Agreement with the Company, which provides for cash compensation as set forth by the Compensation Committee commensurate with that member’s responsibilities.

The Compensation Committee may also remunerate members in the form of a grant of options to purchase shares of our common shares.

The options immediately vest when granted and are otherwise subject to the terms and conditions of our stock option plan, as amended.

The Independent Director Agreements also provide for the reimbursement of such director’s reasonable travel and related expenses incurred in the course of attending board meetings.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth information

regarding our common shares beneficially owned as of March 29, 2021 by:

The following table sets forth information regarding our common shares beneficially owned as of February 25, 2022 by:

(i) each of our officers and directors;

officers and directors as a group;

and (iii) each person known by us to beneficially own five percent or more of our outstanding

(ii) all officers and directors as a group;

and (iii) each person known by us to beneficially own five percent or more of our outstanding common shares.

Except as indicated below, the security holders listed possess sole voting and investment power with respect to the shares beneficially owned by that person.

Except as otherwise indicated below, the address for each listed shareholder is c/o Fennec Pharmaceuticals Inc., 68 TW Alexander Drive, PO Box 13628, Research Triangle Park, North Carolina 27709.

Common shares

Except as indicated below, the security holders listed possess sole voting and investment power with respect to

the shares beneficially owned by that person.

Except as otherwise indicated below, the address for each listed shareholder

is c/o Fennec Pharmaceuticals Inc., 68 TW Alexander Drive, PO Box 13628, Research Triangle Park, North Carolina 27709.

Common shares

Total Stock and

Common shares

Within 60 Days

Common shares

Within 60 Days

Total Stock and

Ownership (1)

5 unchanged sentences

Essetifin SpA (3)

Avoro Capital Advisors (4)

Sonic Fund II, LP.

For purposes of this table “beneficial ownership”

is determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, pursuant to which a person or group of persons is deemed to have “beneficial ownership”

of any common shares that such person or group has the right to acquire within 60 days after March 29, 2021.

(1) For purposes of this table “beneficial ownership” is determined in accordance with Rule 13d-3 under the Exchange Act, pursuant to which a person or group of persons is deemed to have “beneficial ownership” of any common shares that such person or group has the right to acquire within 60 days after February 25, 2022.

For purposes of computing the percentage of outstanding common shares held by each person or group of persons named above, any shares that such person or group has the right to acquire within 60 days after February 25, 2022 are deemed outstanding but are not deemed to be outstanding for purposes of computing the percentage ownership of any other person or group.

As of March 29, 2021, there were 26,002,853 common shares issued and outstanding.

As of February 25, 2022 there were 26,013,519 common shares issued and outstanding.

(2) Southpoint Capital Advisors, LP, 623 Fifth Avenue, Suite 2503, New York, New York 10022.

Clark, II holds dispositive power over the shares owned by Southpoint Capital Advisors, LP.

Clark, II holds voting and investment power over the shares owned by Southpoint Capital Advisors, LP.

(3) Essetifin SpA, Via Sudafrica 20, Rome, Italy 00144.

Mario Artali holds dispositive power over the shares owned by Essetifin SpA.

Avoro Capital Advisors, 110 Greene Street, Suite 800, New York, NY 10012.

Scott Esptein holds dispositive power over the shares held by Avoro Capital Advisors

(5) Sonic Fund II, LP, 400 Hobron Lane, Suite 3709,

Honolulu, HI 96815.

Lawrence Kam holds dispositive power over the shares held by Sonic Fund II, LP.

Mario Artali holds voting and investment power over the shares owned by Essetifin SpA.

(4) Sonic Fund II, LP, 400 Hobron Lane, Suite 3709, Honolulu, HI 96815.

Lawrence Kam holds voting and investment power over the shares held by Sonic Fund II, LP.

Equity Compensation Plan Information

The following table provides certain information with respect

to securities authorized for issuance under equity incentive plans as of December 31, 2020.

The following table provides certain information with respect to securities authorized for issuance under equity incentive plans as of December 31, 2021.

(share amounts are in thousands):

Plan Category

Number of securities to be issued

upon exercise of outstanding

options warrants and rights

Weighted-average exercise price of

outstanding options, warrants and

Number of securities remaining

available for future issuance under

Number of securities to be issued

Weighted-average exercise price of

equity compensation plans

upon exercise of outstanding

outstanding options, warrants and

(excluding securities reflected in

Plan Category

options warrants and rights

Equity compensation plans approved by security holders

* Our current stock option plan allows for the issuance of stock options denominated in both U.S.

Our current stock option plan allows for the issuance of equity awards and grants denominated in both U.S.

dollars and Canadian dollars.

December 31, 2020, there were 3.55 million common shares available for future grants under our current stock option plan.

At December 31, 2021, there were 2.2 million common shares available for future grants under our current stock option plan.

Certain Relationships and Related Transactions, and Director Independence

Related Party Transactions

There were no reportable transactions with

related parties during the year ended December 31, 2020 in which the amount involved exceeded the lesser of $120,000 or one

percent of the average of our total assets at year-end for the last two completed fiscal years.

Indemnifications

Related to Officers and the Board of Directors.

We have agreed to indemnify members of

our Board of Directors (the “Board”) and certain of our officers if they are named or threatened to be named as a party

to any proceeding by reason of the fact that they acted in such capacity.

We maintain directors’

and officers’

(“D&O”)

insurance coverage to protect against such losses.

There were no reportable transactions with related parties during the year ended December 31, 2021 in which the amount involved exceeded the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years.

Indemnifications Related to Officers and the Board of Directors.

We have agreed to indemnify members of our Board of Directors (the “Board”) and certain of our officers if they are named or threatened to be named as a party to any proceeding by reason of the fact that they acted in such capacity.

We maintain directors’ and officers’ (“D&O”) insurance coverage to protect against such losses.

We have not historically incurred any losses related to these types of indemnifications.

Presently, we are defending a suit against our Board and certain named officers.

Management is unable to estimate a dollar value

related to the suit, nor can it determine the probability of an outcome either in favour or against the Company.

As a result, we

have not recorded any liabilities related to such indemnifications as of December 31, 2020.

In addition, as a result of the

insurance policy coverage, we believe these indemnification agreements are not significant to our results of operations.

Management is unable to estimate a dollar value related to the suit, nor can it determine the probability of an outcome either in favour or against the Company.

As a result, we have not recorded any liabilities related to such indemnifications as of December 31, 2021.

In addition, as a result of D&O insurance policy coverage, we believe these indemnification agreements are not significant to our results of operations.

Director Independence

The Board of Directors is composed of a

majority of independent directors.

The Board applies the definition of independence found in the Nasdaq listing standards and in

Canadian National Instrument 58-101 and National Policy 58-201.

The Board of Directors is composed of a majority of independent directors.

The Board applies the definition of independence found in the Nasdaq listing standards and in Canadian National Instruments 52-110 and 58-101 and National Policy 58-201.

The Board has determined that Mr.

Brughera, Haigh, Islam,

Rallis and Ms.

Cook are “independent.”

Raykov, our Chief Executive Officer, is considered to have a material

relationship with us by virtue of his executive officer position and is therefore not independent.

We are of the view that the

composition of our Board reflects a diversity of background and experience that are important for effective corporate governance.

Other directorships held by Board members are described in this Annual Report under the heading “Directors and Executive

Officers.”

Brughera, Haigh, Islam, Rallis and Ms.

Cook are “independent.” Mr.

Raykov, our Chief Executive Officer, is considered to have a material relationship with us by virtue of his executive officer position and is therefore not independent.

We are of the view that the composition of our Board reflects a diversity of background and experience that are important for effective corporate governance.

Other directorships held by Board members are described in this Annual Report under the heading “Directors and Executive Officers.”

Principal Accounting Fees and Services

The following presents the aggregate fees for professional services

and other services rendered by our independent auditors, Haskell & White LLP in fiscal year 2020 and 2019:

The following presents the aggregate fees for professional services and other services rendered by our independent auditors, Haskell & White LLP (PCAOB ID# 200 ), in fiscal year 2021 and 2020:

Audit Fees (1)

2 unchanged sentences

(1) Audit Fees include fees for the standard audit work that needs to be performed each year in order to issue an opinion on the consolidated financial statements of the Company.

It also includes fees for services that can only be provided by the Company’s auditor such as auditing of non-recurring transactions.

(2) Audit-Related Fees include fees assurance and related services that are reasonably related to the performance of the audit or review and are traditionally performed by the independent accountant.

(4) All Other Fees include fees for products and services other than Audit Fees, Audit Related Fees and Tax Fees.

The Audit Committee does not have formal pre-approval policies

and procedures;

however, prior to their engagement by us, the Audit Committee approved all of the services performed by Haskell &

White LLP as required by SEC regulation.

Exhibits, Financial Statement Schedules

(a) The following documents are included

as part of this Annual Report filed on Form 10-K:

Financial Statements –

See Index to Financial Statements

All schedules are omitted as the information required

is inapplicable or the information is presented in the financial statements.

The Audit Committee does not have formal pre-approval policies and procedures;

however, prior to their engagement by us, the Audit Committee approved all of the services performed by Haskell & White LLP as required by SEC regulation.

Exhibits and Financial Statement Schedules

(a) The following documents are included as part of this Annual Report filed on Form 10-K:

Financial Statements – See Index to Financial Statements on page F-1.

All schedules are omitted as the information required is inapplicable or the information is presented in the financial statements.

Notice of Articles dated August 25, 2011

21 unchanged sentences

Exhibit 10.1 to the Form 8-K of the Company filed June 26, 2020

Second Amendment to Loan and Security Agreement dated as of June 24, 2021 by and between Fennec Pharmaceuticals, Inc and Western Alliance Bank

Exhibit 10.1 to the form 8-K of the Company filed June 24, 2021

Third Amendment to Loan and Security Agreement dated as of January 27, 2022 by and between Fennec Pharmaceuticals, Inc and Western Alliance Bank

Exhibit 10.1 to the form 8-K of the Company filed January 31, 2022

At The Market Offering Agreement, dated October 30, 2020, between Fennec Pharmaceuticals Inc.

1 unchanged sentence

Exhibit 1.1 to the Form 8-K of the Company filed October 30, 2020

Executive Employment Agreement of Shubh Goel

Exhibit 10.1 to the form 8-K of the Company filed September 9, 2019

Letter Regarding Change in Certifying Accountant

13 unchanged sentences

Filed herewith

Cover Page Interactive Data File – The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

Filed herewith

Indicates a management contract or compensatory plan.

The Company has received confidential treatment with respect to certain portions of this exhibit.

Those portions have been omitted from this exhibit and are filed separately with the U.S.

Securities and Exchange Commission.

Form 10-K Summary

Pursuant to the requirements of Section 13 of 15(d) the

Securities Exchange Act of 1934, the registrant has duly caused this Annual Report to be signed on its behalf by the undersigned,

thereunto duly authorized.

Pursuant to the requirements of Section 13 of 15(d) the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Fennec Pharmaceuticals Inc.

2 unchanged sentences

Chief Executive Officer and Director

March 30, 2021

We, the undersigned directors and officers of Fennec Pharmaceuticals

Inc., do hereby constitute and appoint Rostislav Raykov, as our true and lawful attorney-in-fact and agent with power of substitution,

to do any and all acts and things in our name and behalf in our capacities as directors and officers and to execute any and all

instruments for us and in our names in the capacities indicated below, which such attorney-in-fact and agent may deem necessary

or advisable to enable said corporation to comply with the Securities Exchange Act of 1934, as amended, and any rules, regulations

and requirements of the Securities and Exchange Commission, in connection with this Annual Report on Form 10-K, including

specifically but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below,

any and all amendments hereto;

and we do hereby ratify and confirm all that said attorney-in-fact and agent, shall do or cause

to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act

of 1934, this Annual Report has been signed below by the following persons on behalf of the registrant and in the capacities and

on the dates indicated.

February 28, 2022

We, the undersigned directors and officers of Fennec Pharmaceuticals Inc., do hereby constitute and appoint Rostislav Raykov, as our true and lawful attorney-in-fact and agent with power of substitution, to do any and all acts and things in our name and behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which such attorney-in-fact and agent may deem necessary or advisable to enable said corporation to comply with the Securities Exchange Act of 1934, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Annual Report on Form 10-K, including specifically but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments hereto;

and we do hereby ratify and confirm all that said attorney-in-fact and agent, shall do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Rostislav Raykov

Chief Executive Officer

March 30, 2021

February 28, 2022

Rostislav Raykov

2 unchanged sentences

Chief Financial Officer

March 30, 2021

February 28, 2022

Robert Andrade

2 unchanged sentences

/s/ Adrian J.

March 30, 2021

February 28, 2022

/s/ Marco Brughera

March 30, 2021

February 28, 2022

Marco Brughera

/s/ Jodi Cook

March 30, 2021

February 28, 2022

FENNEC PHARMACEUTICALS INC.

4 unchanged sentences

Consolidated Statements of Cash Flows

Consolidated Statements of Shareholders’

Consolidated Statements of Shareholders’ Equity

Notes to the Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors and

Fennec Pharmaceuticals Inc.

Opinion on the Consolidated Financial

We have audited the accompanying consolidated

balance sheets of Fennec Pharmaceuticals Inc.

and subsidiaries (the “Company”) as of December 31, 2020 and 2019,

and the related consolidated statements of operations, shareholders’

equity, and cash flows for each of the years then ended,

and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated

financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company

as of December 31, 2020 and 2019, and the consolidated results of its operations and its cash flows for each of the years

then ended, in conformity with accounting principles generally accepted in the United States of America.

Opinion on the Consolidated Financial Statements

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

and subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2021 and 2020, and the consolidated results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements

are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight

Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with

the standards of the PCAOB and Canadian generally accepted auditing standards.

Those standards require that we plan and perform

the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due

to error or fraud.

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

As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but

not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

We conducted our audits in accordance with the standards of the PCAOB and Canadian generally accepted auditing standards.

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

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

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

Accordingly, we express no such opinion.

Our audits included performing procedures

to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing

procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and

disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

that our audits provide a reasonable basis for our opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

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

Critical Audit Matters

The critical audit matter communicated

below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required

to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated

financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the

critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we

are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts

or disclosures to which they relate.

Fair Value of Stock Options –

Refer to Note 4 to the Consolidated Financial Statements

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

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

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

Fair Value of Stock Options – Refer to Note 4 to the Consolidated Financial Statements

Critical Audit Matter Description:

The Company uses the Black-Scholes option-pricing

model to estimate the fair value of its stock options.

The Black-Scholes option-pricing model involves the use of significant estimates,

including the following:

The Company uses the Black-Scholes option-pricing model to estimate the fair value of its stock options.

The Black-Scholes option-pricing model involves the use of significant estimates, including the following:

● Expected dividend yield;

2 unchanged sentences

● Expected life of the award.

Given the significant estimates involved

in estimating the fair value of stock options, the related audit effort in evaluating management’s estimates in determining

the fair value of stock options was extensive and required a high degree of auditor judgment.

How the Critical Audit Matter was Addressed

in the Audit:

We obtained an understanding over the Company’s

process to estimate the fair value of stock options, including how the Company develops each of the estimates required to utilize

the Black-Scholes option-pricing model.

We applied the following audit procedures related to testing the Company’s estimates

utilized in the Black-Scholes option-pricing model:

We performed a look-back at the Company’s previously issued dividends, noting there were

Given the significant estimates involved in estimating the fair value of stock options, the related audit effort in evaluating management’s estimates in determining the fair value of stock options was extensive and required a high degree of auditor judgment.

How the Critical Audit Matter was Addressed in the Audit:

We obtained an understanding over the Company’s process to estimate the fair value of stock options, including how the Company develops each of the estimates required to utilize the Black-Scholes option-pricing model.

We applied the following audit procedures related to testing the Company’s estimates utilized in the Black-Scholes option-pricing model:

● We performed a look-back at the Company’s previously issued dividends, noting there were none.

We inquired with management of the Company who informed us that no future dividends were currently anticipated.

We compared the Company’s risk-free interest rate used to the comparable United States treasury

yield for a term comparable to the stock options’

expected term.

We recalculated the Company’s historical share price volatility for a term comparable to

the stock options’

expected term.

We recalculated the expected term of stock options granted to employees and non-employee directors

using the simplified method, whereby, the expected term equals the average of the vesting term and the original contractual term

of the option.

● We compared the Company’s risk-free interest rate used to the comparable United States treasury yield for a term comparable to the stock options’ expected term.

● We recalculated the Company’s historical share price volatility for a term comparable to the stock options’ expected term.

● We recalculated the expected term of stock options granted to employees and non-employee directors using the simplified method, whereby, the expected term equals the average of the vesting term and the original contractual term of the option.

/s/ Haskell & White LLP

HASKELL & WHITE LLP

We have served as the Company’s auditor since 2017.

Irvine, California

March 30, 2021

February 28, 2022

Fennec Pharmaceuticals Inc.

5 unchanged sentences

Other current assets

Total current assets

Non-current assets

Deferred issuance cost

Deferred issuance cost (amortization)

Deferred issuance cost, net amortization

Total non-current assets

Liabilities and Shareholders’ Equity

3 unchanged sentences

Total current liabilities

Long term liabilities

Debt discount

Total long term liabilities

Total liabilities

7 unchanged sentences

Accumulated other comprehensive income

Total shareholders’

Total liabilities and shareholders’

(The accompanying notes

are an integral part of these consolidated financial statements)

Total shareholders’ equity

Total liabilities and shareholders’ equity

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

Fennec Pharmaceuticals Inc.

Statements of Operations

Consolidated Statements of Operations

dollars and shares in thousands, except per share information)

Eniluracil royalty

Operating expenses:

3 unchanged sentences

Loss from operations

Other income/(expense):

Other (expense)/income

Unrealized foreign exchange loss

Amortization expense

Unrealized gain on securities

Other (loss)/income

Unrealized (loss)/gain on securities

Interest income

Interest expense

Total other (expense)/income

Loss per common share, basic and diluted

Weighted-average number of common shares outstanding basic and diluted (Note 3)

(The accompanying notes are an integral

part of these consolidated financial statements)

Basic net loss per common share

Diluted net loss per common share

Weighted-average number of common shares outstanding basic

Weighted-average number of common shares outstanding diluted

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

Fennec Pharmaceuticals Inc.

4 unchanged sentences

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

Amortization of deferred issuance costs

Amortization of debt access fees

Amortization of debt discount

Unrealized loss on securities

Stock-based compensation - consultants

6 unchanged sentences

Financing activities:

Cash paid for issuance costs

Issuance of shares, options exercise

Issuance of shares, net of issuance costs

Net cash provided by/used in financing activities

Increase in cash and cash equivalents

Cash and cash equivalents - Beginning of year

Cash and cash equivalents - End of year

Supplemental disclosures of cash flow information:

Proceeds from long-term debt

Debt discount

Capitalized deferred issuance costs

Net cash provided by financing activities

(Decrease)/increase in cash and cash equivalents

Cash and cash equivalents - Beginning of period

Cash and cash equivalents - End of period

Non-cash investing and financing activities:

Non-cash financing (insurance policy)

Non-cash deferred issuance cost (warrant value)

(The accompanying notes are an integral

part of these consolidated financial statements)

Financed insurance policy

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

Fennec Pharmaceuticals Inc.

Consolidated Statements of Shareholders'

Consolidated Statements of Shareholders’ Equity

dollars and shares in thousands)

5 unchanged sentences

Stock options issued to employees

Warrants issued to consultants

Issuance of securities

Exercise of stock options

Balance at December 31, 2020

1 unchanged sentence

Stock options issued to employees

Issuance of securities

Exercise of stock options

Balance at December 31, 2021

(The accompanying notes are an integral

part of these consolidated financial statements)

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

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial

dollars and shares in thousands,

except per share information)

of Business and Liquidity

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

Nature of Business and Liquidity

Fennec Pharmaceuticals Inc.

(“Fennec,”

“the Company,”

“we,”

“us,”

or “our”) was originally formed as a British Columbia

corporation under the name Adherex Technologies Inc.

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

and subsequently changed its name on September 3, 2014.

Fennec, together

with its wholly owned subsidiaries Oxiquant, Inc.

(“Oxiquant”) and Fennec Pharmaceuticals, Inc., both Delaware

corporations, and Cadherin Biomedical Inc.

(“CBI”), a Canadian corporation and Fennec Pharmaceuticals (EU) Limited

(“Fennec Limited”), collectively referred to herein as the “Company,”

is a biopharmaceutical company with

a product candidate under development for use in the treatment of cancer.

With the exception of Fennec Pharmaceuticals, Inc.,

all subsidiaries are inactive.

These consolidated financial statements

have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”)

that are applicable to a going concern which contemplates that the Company will continue in operation for the foreseeable future

and will be able to realize its assets and discharge its liabilities in the normal course of business.

During the year ended December 31,

2020, the Company incurred a loss from operations of $17,885 and still has not earned any significant revenue in its history from

the commercial sale of its product candidate.

At December 31, 2020 it had an accumulated deficit of $162,140 and had

experienced negative cash flows from operating activities in the amount of $15,595 for the year ended December 31, 2020.

On May 5, 2020, the Company announced

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

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

over-allotment option.

The approximate total gross proceeds from the offering was $34,100 ($32,189 net of commissions, fees and

issue costs).

On February 1, 2019, Fennec entered

into a Loan and Security Agreement with Bridge Bank, a division of Western Alliance Bank, an Arizona corporation, pursuant to which

the Bank agreed to loan $12.5 million to the Company, to be made available upon New Drug Application (“NDA”) approval

of PEDMARK TM by no later than September 30, 2020.

The proceeds from the loan will be used for working capital purposes

and to fund general business requirements in accordance with the terms of the Loan and Security Agreement.

Interest under the Term

Loans shall bear interest, on the outstanding daily balance thereof, at a floating per annum rate equal to the Effective Interest

Rate (as defined in the Loan and Security Agreement) which is equal to the sum of the Prime Rate published in the Wall Street Journal

(currently 3.25%) plus one percent (1.00%).

The debt facility is to have interest-only monthly payments due for the first eighteen

months from the funding date and then monthly principal and interest payments are due through the remainder of the term which has

a maturity date of October 1, 2023.

In connection with the facility, Fennec has agreed to grant Bridge Bank a warrant to purchase

up to 39,130 common shares at an exercise price of $6.80 per common share, for a term of ten years from the date of issuance, subject

to early termination under certain conditions.

On June 26, 2020, Fennec announced

an amendment to the Loan and Security Agreement with Bridge Bank.

This amendment provides Fennec with an $18.0 million debt facility

comprised of two term loans.

Term Loan A consists of $12.5 million to be funded upon NDA approval of PEDMARK TM in the

to be made available upon NDA approval of PEDMARK TM by no later than December 31, 2020 and Term Loan B consists

of $5.5 million to be funded upon the occurrence of a revenue event in 2021.

The interest-only period for the facility has the

ability to be extended from 18 months to 24 months from the funding of Term Loan A, provided that Term Loan B is funded, and certain

conditions are met.

The fee in connection with Loan B, can either be 2.13% of the Loan B amount in cash, or the Company can issue

a warrant with a value equal to 3.25% of the Loan B amount.

Fennec, together with its wholly owned subsidiaries Oxiquant, Inc.

(“Oxiquant”) and Fennec Pharmaceuticals, Inc., both Delaware corporations, and Cadherin Biomedical Inc.

(“CBI”), a Canadian corporation and Fennec Pharmaceuticals (EU) Limited (“Fennec Limited”), collectively referred to herein as the “Company,” is a biopharmaceutical company with a product candidate under development for use in the treatment of cancer.

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

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

During the year ended December 31, 2021, the Company incurred a loss from operations of $ 17,223 and still has not earned any significant revenue in its history from the commercial sale of its product candidate.

At December 31, 2021, it had an accumulated deficit of $ 179,486 and had experienced negative cash flows from operating activities in the amount of $ 14,222 for the year ended December 31, 2021.

On May 5, 2020, the Company announced the completion of an underwritten public offering of 4,800,000 common shares at a public offering price of $ 6.25 per share.

In addition, Fennec issued an additional 660,204 common shares in connection with the partial exercise of the underwriters' over-allotment option.

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

On February 1, 2019, Fennec entered into a Loan and Security Agreement with Bridge Bank, a division of Western Alliance Bank, an Arizona corporation, pursuant to which the Bank agreed to loan $ 12.5 million to the Company, to be made available upon New Drug Application ("NDA") approval of PEDMARKTM by no later than September 30, 2020.

Interest under the Term Loans shall bear interest, on the outstanding daily balance thereof, at a floating per annum rate equal to the Effective Interest Rate (as defined in the Loan and Security Agreement) which is equal to the sum of the Prime Rate published in the Wall Street Journal (currently 3.25 %) plus one percent ( 1.00 %).

The debt facility was to have interest-only monthly payments due for the first eighteen months from the funding date and then monthly principal and interest payments are due through the remainder of the term which had a maturity date of October 1, 2023.

In connection with the facility, Fennec granted Bridge Bank a warrant to purchase up to 39,130 common shares at an exercise price of $ 6.80 per common share, for a term of ten years from the date of issuance, subject to early termination under certain conditions.

On June 25, 2020, Fennec entered into an amendment to the Loan and Security Agreement with Bridge Bank.

This amendment provided Fennec with an $ 18.0 million debt facility comprised of two term loans.

Term Loan A consisted of $ 12.5 million to be funded upon NDA approval of PEDMARK TM by no later than December 31, 2020 and Term Loan B consists of $ 5.5 million to be funded upon the occurrence of a revenue event in 2021.

The interest-only period for the facility had the ability to be extended from 18 months to 24 months from the funding of Term Loan A, provided that Term Loan B is funded, and certain conditions are met.

The fee in connection with Loan B, would either be 2.13 % of the Loan B amount in cash, or the Company could issue a warrant with a value equal to 3.25 % of the Loan B amount.

On August 6, 2020, the Company paid cash for the extended facility.

These statements reflect that fee being settled with cash instead of a warrant.

Under Accounting Standards Codification ("ASC")

470-50, Modifications and Extinguishments, the amendment was considered a modification.

As such, the Company had been amortizing

the loan fee and the value of the warrant over the remainder of the loan term.

Under Accounting Standards Codification ("ASC") 470-50, Modifications and Extinguishments, the amendment was considered a modification.

As such, the Company had been amortizing the loan fee and the value of the warrant over the remainder of the loan term.

Following the receipt of the U.S.

Food and Drug

Administration’s (“FDA”) Complete Response Letter (“CRL”), management decided to fully amortize the

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

On August 10, 2020, the Company received

a CRL from the FDA regarding its NDA for PEDMARK TM .

According to the CRL, after recent completion of a pre-approval

inspection of the manufacturing facility of our drug product manufacturer, the FDA identified deficiencies that are required to

be resolved prior to the approval of PEDMARK TM .

Importantly, no clinical safety or efficacy issues were identified during

the review and there is no requirement for further clinical data.

The Company plans to work closely with the third-party drug manufacturer

and the FDA to fully address the CRL and plans to resubmit the NDA for PEDMARK TM in the second quarter of 2021.

The Company believes the funds raised in

the public offering which closed in May 2020 provide sufficient funding for the Company to carry out its planned activities

including potential NDA approval and the commencement of commercialization efforts for at least the next twelve months as it continues

its strategic development of PEDMARK TM .

Food and Drug Administration's ("FDA") Complete Response Letter ("CRL"), management decided to fully amortize the remaining portions of the loan fee and the value of the warrants.

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial

dollars and shares in thousands,

except per share information)

These financial statements do not reflect the potentially material

adjustments in the carrying values of assets and liabilities, the reported expenses, and the balance sheet classifications used,

that would be necessary if the going concern assumption were not appropriate.

Accounting Policies

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

On June 24, 2021, the Company entered into a second amendment to the Bridge Bank Loan and Security Agreement.

This amendment provides Fennec with a $ 20,000 debt facility comprised of three term loans.

Term Loan A consists of $ 5,000 , which was funded upon closing.

Term Loan B consists of $ 7,500 that would be funded upon NDA approval of PEDMARK TM not later than January 31, 2022.

Term Loan C consists of $ 7,500 to be funded upon the occurrence the Company achieving consolidated trailing six-month revenues of $ 11,000 on or before December 31, 2022.

The interest-only period for the facility has the ability to be extended from 18 months to 24 months from the funding of Term Loan B, provided that Term Loan C is funded, and certain other conditions are met.

On January 27, 2022, the Company entered into a third amendment to the Bridge Bank Loan and Security Agreement extending the outside date to receive NDA approval of PEDMARK TM to September 30, 2022.

Among other customary events of default, failure to obtain NDA approval by September 30, 2022 constitutes an event of default under the Bridge Bank Loan and Security Agreement, upon which Bridge Bank may declare the entire balance of the facility immediately due and payable.

Although Bridge Bank has previously extended the deadline to receive NDA approval, there is no assurance that it will do so again if the NDA is not approved by the current September 30, 2022 deadline.

The proceeds from the loan will to be used for working capital purposes and to fund general business requirements in accordance with the terms of the Loan and Security Agreement.

On August 10, 2020, the Company received a CRL from the FDA regarding its NDA for PEDMARK TM .

According to the CRL, after recent completion of a pre-approval inspection of the manufacturing facility of our drug product manufacturer, the FDA again identified deficiencies that are required to be resolved prior to the approval of PEDMARK TM .

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

On November 29, 2021, the Company received a second CRL from the FDA regarding its NDA for PEDMARK TM .

In the CRL, the FDA identifies deficiencies required to be resolved by the manufacturer prior to approval of the NDA.

The Company plans to resubmit the NDA in the first quarter of 2022.

The Company believes the funds raised in its May 2020 public offering, along with the funds from the Bridge Bank Loan and Security Agreement, provide sufficient funding for the Company to carry out its planned activities, including, if PEDMARK TM is approved by the FDA, the commencement of commercialization efforts, for at least the next twelve months as it continues its strategic development of PEDMARK TM .

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

Significant Accounting Policies

Basis of presentation

The consolidated financial statements include the accounts of

Fennec and of all its wholly-owned subsidiaries.

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

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

Use of estimates

The preparation of financial statements in conformity with US

GAAP requires management to make estimates and assumptions that impact the reported amounts of assets and liabilities and disclosure

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

and expense during the reporting period.

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 the valuation of stock-based compensation.

results could differ from those estimates.

Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash equivalents consist of highly liquid investments with original

maturities at the date of purchase of three months or less.

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.

December 31, 2020, the Company had $30.3 million in cash and money market accounts (2019- $13.7 million).

investments typically have minimal risks.

While the Company has not experienced any loss or write-down of its money market

investments, the amounts it holds in money market accounts are substantially above the $250,000 amount insured by the FDIC and

may lose value.

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

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

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

At December 31, 2021, the Company had $ 21.1 million in cash and money market accounts (2020- $ 30.3 million).

Money market investments typically have minimal risks.

While the Company has not experienced any loss or write-down of its money market investments, the amounts it holds in money market accounts are substantially above the $ 250,000 amount insured by the FDIC and may lose value.

Financial instruments

Financial instruments recognized on the balance sheets at December 31,

2020 and December 31, 2019 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.

The Company does not

hold or issue financial instruments for trading.

The Company’s 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.

when made, are made in U.S.

Financial instruments recognized on the balance sheets at December 31, 2021 and December 31, 2020 consist of cash and cash equivalents, accounts payable, accrued liabilities and long term debt, the carrying values of which, approximate fair value due to their relatively short time to maturity.

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

The Company’s 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.

Investments, when made, are made in U.S.

or Canadian 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 risks are primarily the opportunity cost of the conservative

nature of the allowable investments.

As the main purpose of the Company is research and development, the Company has chosen

to avoid investments of a trading or speculative nature.

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

As the main purpose of the Company is research and development, the Company has chosen to avoid investments of a trading or speculative nature.

Common shares and warrants

The Company has 0.04 million warrants with a weighted average

strike price of $6.80 outstanding to purchase common shares that were denominated in United States dollars (“USD”).

The Company's revenue is

generated through sales of intellectual property (“IP”).

The Company generates its revenue through one segment

and the revenue recognized under each of the Company's arrangements during the current period is described below.

these agreements may contain multiple promised goods or services or optional goods and services, including licenses to product

candidates, referred to as exclusive licenses, as well as research and development activities to be performed by the Company on

behalf of the collaboration partner related to the licensed product candidates.

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial

dollars and shares in thousands,

except per share information)

The Company has 0.04 million warrants with a weighted average strike price of $ 6.80 outstanding to purchase common shares that were denominated in United States dollars (“USD”).

The Company's revenue is generated through sales of intellectual property ("IP").

For periods when the Company has generated revenue, the revenue recognized under each of the Company’s arrangements during those periods is described below.

The terms of these agreements may contain multiple promised goods or services or optional goods and services, including licenses to product candidates, referred to as exclusive licenses, as well as research and development activities to be performed by the Company on behalf of the collaboration partner related to the licensed product candidates.

Revenue recognition

Revenue is recognized when

control of the promised goods or services are transferred to customers in an amount that reflects the consideration the Company

expects to be entitled to in exchange for transferring those goods or providing services.

The Company accounts for a contract when

it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract

has commercial substance and collectability of consideration is probable.

When determining whether

the customer has obtained control of the goods or services, the Company considers the point at which the customer may benefit from

the goods or services.

For sale of IP to, revenue is recognized upon grant or transfer of the IP, as the Company's IP is considered

functional in nature.

Revenue is recognized when control of the promised goods or services are transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for transferring those goods or providing services.

The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable.

When determining whether the customer has obtained control of the goods or services, the Company considers the point at which the customer may benefit from the goods or services.

For sale of IP, revenue is recognized upon grant or transfer of the IP, as the Company's IP is considered functional in nature.

Performance obligations

A performance obligation

is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606.

A contract’s

transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation

is satisfied.

The Company's contracts may contain multiple performance obligations if a promise to transfer goods or services is

separately identifiable from other promises in a contract and, therefore, is considered distinct.

For contracts with multiple performance

obligations, the Company determines the standalone selling price of each performance obligation and allocates the total transaction

price using the relative selling price basis.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606.

A contract's transaction price is allocated to each distinct performance obligation and recognized

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

as revenue when, or as, the performance obligation is satisfied.

The Company's contracts may contain multiple performance obligations if a promise to transfer goods or services is separately identifiable from other promises in a contract and, therefore, is considered distinct.

For contracts with multiple performance obligations, the Company determines the standalone selling price of each performance obligation and allocates the total transaction price using the relative selling price basis.

The Company recognizes performance obligations based on their nature.

Significant payment

The Company’s revenue

arrangements include payments to the Company of one or more of the following:

Significant payment terms

The Company's revenue arrangements include payments to the Company of one or more of the following:

a non-refundable, upfront payment;

milestone payments

and royalties on commercial sales of IP product candidates, if any.

To date, the Company has received upfront payments and several

milestone payments but has not received any license or option fees or earned royalty revenue as a result of product sales.

Under ASC 606, the Company

estimates the amount of consideration to which it will be entitled in exchange for satisfying performance obligations.

the Company’s current contracts, variable consideration primarily exists in the following forms:

development and regulatory

milestones, royalties and sales-based milestones.

milestone payments and royalties on commercial sales of IP product candidates, if any.

To date, the Company has received upfront payments and several milestone payments but has not received any license or option fees or earned royalty revenue as a result of product sales.

Under ASC 606, the Company estimates the amount of consideration to which it will be entitled in exchange for satisfying performance obligations.

Based on the Company's current contracts, variable consideration primarily exists in the following forms:

development and regulatory milestones, royalties and sales-based milestones.

The Company utilizes the "most likely amount"

variable consideration

method for estimating development and regulatory milestone consideration to include in the transaction price.

The Company only

includes an amount of variable consideration in the transaction price to the extent it is probable that a significant reversal

in the cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently

variable consideration method for estimating development and regulatory milestone consideration to include in the transaction price.

The Company only includes an amount of variable consideration in the transaction price to the extent it is probable that a significant reversal in the cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

The Company refers to this as the variable consideration constraint.

to the uncertainty associated with the occurrence of the underlying events which would trigger development and regulatory milestone

consideration under its revenue arrangements, with the exception of certain initial conditions precedent milestones ,

the Company has concluded the variable consideration associated with all development and regulatory milestones to be fully constrained

as of the ASC 606 transition date and as of December 31, 2020, and therefore has not included such consideration in the transaction

price for any of its revenue arrangements.

The Company will reassess this conclusion at each subsequent reporting period and will

only include amounts associated with regulatory or development milestones in the transaction price when, or if, the variable consideration

is determined to be released from the constraint.

In accordance with ASC

606, the Company is required to adjust the transaction price for the effects of the time value of money if the timing of payments

agreed to by the parties to the contract, explicitly or implicitly, provides the Company or its customer with a significant benefit

of financing the transfer of goods or services.

The Company concluded that its licensing and collaboration arrangements do not

contain a significant financing component because the payment structure of its agreements arise from reasons other than providing

a significant benefit of financing.

Due to the uncertainty associated with the occurrence of the underlying events which would trigger development and regulatory milestone consideration under its revenue arrangements, with the exception of certain initial conditions precedent milestones, the Company has concluded the variable consideration associated with all development and regulatory milestones to be fully constrained as of the ASC 606 transition date and as of December 31, 2021, and therefore has not included such consideration in the transaction price for any of its revenue arrangements.

The Company will reassess this conclusion at each subsequent reporting period and will only include amounts associated with regulatory or development milestones in the transaction price when, or if, the variable consideration is determined to be released from the constraint.

In accordance with ASC 606, the Company is required to adjust the transaction price for the effects of the time value of money if the timing of payments agreed to by the parties to the contract, explicitly or implicitly, provides the Company or its customer with a significant benefit of financing the transfer of goods or services.

The Company concluded that its licensing and collaboration arrangements do not contain a significant financing component because the payment structure of its agreements arise from reasons other than providing a significant benefit of financing.

Contract assets

The Company did not

have a contract asset as of December 31, 2020 or 2019.

The Company did not have a contract asset as of December 31, 2021 or 2020.

Contract liabilities

The Company did not

have a contract liability as of December 31, 2020 or 2019.

The Company did not have a contract liability as of December 31, 2021 or 2020.

Revenue arrangements

In May 2016, Fennec sold its rights to the drug Eniluracil to Elion Oncology, LLC (“Elion”).

The agreement called for $ 40,000 in cash and 5 % royalties to be paid to Fennec for any income derived from the sale of Eniluracil.

The agreement was for the sale, not license of Fennec’s rights in Eniluracil.

In addition, the agreement did not call for any additional good or service beyond the transfer of Fennec’s rights in Eniluracil and related assets (e.g.

"all information and know-how", documentation, etc.).

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial

dollars and shares in thousands,

except per share information)

In May 2016, Fennec Pharmaceuticals

(Fennec or the “Company”) sold Eniluracil to Elion Oncology, LLC (Elion).

The agreement called for $40,000 in

cash and 5% royalties to be paid to Fennec for any income derived from the sale of Eniluracil.

The agreement was for the sale,

not license of IP.

In addition, the agreement did not call for any additional good or service beyond the transfer of IP and related

“all information and know-how”, documentation, etc.).

In August 2020, Elion entered into

a license agreement with Processa Pharmaceuticals, Inc.

The license agreement called for equity and cash upon

satisfying the “Condition Precedent”, along with development and regulatory milestone payments, Sales Milestone Payments,

and Product Royalties.

The grant of the license was conditioned upon the “Condition Precedent”

which was defined as

(i) Processa’s closing of a public offering by October 30, 2020 in which Processa raised at least $15M and (ii) Processa’s

shares being listed on NASDAQ.

Upon satisfying the “Condition Precedent”

Elion was entitled to receive $100,000 in

cash and 825,000 in shares of Processa of which the Company is entitled to 5%.

In January 2021, the Company received $5,000

in cash and 41,250 restricted shares of Processa common shares.

The agreement between Elion

and Processa entitles Elion to the payments outlined in the table below.

Fennec would be eligible to receive 5% of the following

based on future milestone events:

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

In August 2020, Elion entered into a license agreement with Processa Pharmaceuticals, Inc.

(“Processa”) for Eniluracil.

The license agreement called for equity and cash upon satisfying the "Condition Precedent", along with development and regulatory milestone payments, Sales Milestone Payments, and Product Royalties.

The grant of the license was conditioned upon the "Condition Precedent"

which was defined as (i) Processa's closing of a public offering by October 30, 2020 in which Processa raised at least $ 15 million and (ii) Processa's shares being listed on NASDAQ.

Upon satisfying the "Condition Precedent"

Elion was entitled to receive $ 100,000 in cash and 825,000 in shares of Processa of which the Company is entitled to 5 %.

In January 2021, the Company received $ 5,000 in cash and 41,250 restricted shares of Processa common shares.

The agreement between Elion and Processa entitles Elion to the payments outlined in the table below.

Fennec would be eligible to receive 5 % of the following based on future milestone events:

Milestone Event

12 unchanged sentences

2nd Regulatory Approval Outside US

The Company notes that the above payments

are conditioned upon the “Condition Precedent”

and thus even the restricted shares that are due only upon the passage

of time are in fact variable.

However, once the “Condition Precedent”

occurred only the passage of time occur in order

for the 1 st and 2 nd Year Anniversary payments to become due and as such the Company must conclude as of the

date the “Condition Precedent”

is satisfied that the 1 st and 2 nd Year Anniversary milestone payments

are also probable of coming to fruition and thus should be included in the transaction price during the 4 th quarter

of 2020 along with the aforementioned “Condition Precedent”

The arrangement with Elion

contains consideration that is variable based on the customer’s achievement of certain development and regulatory milestones.

The next milestone payment the Company may be entitled to receive is 5,000 restricted shares for 1 st patient in

Dose Confirmation Study and then another 15,000 restricted shares for the NDA submission.

These are considered variable consideration

that is fully constrained due to the uncertainty associated with the achievement of the development milestone.

The considerations

related to royalties (first and second FDA approval in US and first and second regulatory approval outside of US) are also variable

consideration that are fully constrained in accordance with the royalty recognition constraint.

The variable consideration related

to royalties will be recognized in the period the products are sold by Processa and the Company has a present right to payment.

The Company recognized $0.2

million in revenue associated with the aforementioned cash and shares it became entitled to for the year ended December 31,

Due to the one year lockup provision on the Processa shares, the Company deemed it reasonable to apply a liquidity discount

of 20% to the valuation of the shares associated with the achievement of the October 30, 2020 milestone.

Shares associated

with the one- and two-year anniversary milestones had a 30 and 40% liquidity discount applied to their fair market valuations.

Subsequent changes to the

fair value of the underlying securities are recognized as unrealized gains or losses on marketable equity securities within the

consolidated statement of operations and comprehensive loss.

and development costs and investment tax credits

Research costs, including employee compensation, laboratory

fees, lab supplies, and research and testing performed under contract by third parties, are expensed as incurred.

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

Investment tax credits, which are earned as a result of qualifying

research and development expenditures, are recognized when the expenditures are made, and their realization is reasonably assured.

are applied to reduce related capital costs and research and development expenses in the year recognized.

The Company notes that the above payments are conditioned upon the “Condition Precedent” and thus even the restricted shares that are due only upon the passage of time are in fact variable.

However, once the “Condition Precedent” occurred only the passage of time must occur in order for the 1 st and 2 nd Year Anniversary payments to become due and as such the Company must conclude as of the date the “Condition Precedent” is satisfied that the 1 st and 2 nd Year Anniversary milestone payments are also probable of coming to fruition and thus should be included in the transaction price during the 4 th quarter of 2020 along with the aforementioned “Condition Precedent” payments.

The arrangement with Elion contains consideration that is variable based on the customer’s achievement of certain development and regulatory milestones.

The next milestone payment the Company may be entitled to receive is 5,000 restricted shares for 1 st patient in Dose Confirmation Study and then another 15,000 restricted shares for the NDA submission.

These are considered variable consideration that is fully constrained due to the uncertainty associated with the achievement of the development milestone.

The considerations related to royalties (first and second FDA approval in US and first and second regulatory approval outside of US) are also variable consideration that are fully constrained in accordance with the royalty recognition constraint.

The Company recognized $ 0.2 million in revenue associated with the aforementioned cash and shares it became entitled to for the year ended December 31, 2020.

Due to the one year lockup provision on the Processa shares, the Company deemed it reasonable to apply a liquidity discount of 20 % to the valuation of the shares associated with the achievement of the October 30, 2020 milestone.

Shares associated with the one- and two-year anniversary milestones had a 30 and 40 % liquidity discount applied to their fair market valuations.

Recognizing the passage of time, the Company adjusted its liquidity discount to the original shares of 0 % and then 20 % and 25 % for the one- and two-year anniversary tranches.

Subsequent changes to the fair value of the underlying securities are recognized as unrealized gains or losses on marketable equity securities within the consolidated statement of operations.

During the year ended December 31, 2021, the Company reported $ 25 in unrealized loss on the fair value of the underlying Processa shares.

There is a total unrealized gain on the Processa shares of $ 75 since inception.

Research and development costs and investment tax credits

Research costs, including employee compensation, laboratory fees, lab supplies, and research and testing performed under contract by third parties, are expensed as incurred.

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

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial

dollars and shares in thousands,

except per share information)

The Company accounts for income taxes using the asset and liability

method to compute the differences between the tax basis of assets and liabilities and the related financial amounts, using currently

enacted tax rates.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

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

They are applied to reduce related capital costs and research and development expenses in the year recognized.

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

The Company has deferred tax assets, which are subject to periodic recoverability assessments.

Valuation allowances

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

December 31, 2020, we maintained a full valuation allowance against our deferred tax assets.

The provisions of the Financial Accounting Standards Board (“FASB”)

Accounting Standards Codification (“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.

Under ASC 740-10,

we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be

sustained on examination by taxing authorities, based on the technical merits of the position.

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

As of December 31, 2021, we maintained a full valuation allowance against our deferred tax assets.

The provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“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.

Under ASC 740-10, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position.

Foreign currency translation

dollar is the functional currency for the Company’s

consolidated operations.

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

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

Loss per share

Basic net loss per share is computed by dividing net loss by

the weighted average number of common shares outstanding during the year.

Diluted net earnings 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.

Accordingly, warrants to purchase

0.04 million of our common shares and options to purchase 3.0 million of our common shares at December 31, 2020, were not

included in earnings per share.

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

Diluted net earnings 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.

Accordingly, warrants to purchase 0.04 million of our common shares and options to purchase 4.3 million of our common shares at December 31, 2021, were not included in earnings per share.

Such options would have an antidilutive effect.

In 2019, options to purchase 3.1 million common

shares were excluded from the computation of earnings per share as their inclusion would have been antidilutive.

In 2020, warrants to purchase 0.04 million of our common shares and options to purchase 3.0 million common shares were excluded from the computation of earnings per share as their inclusion would have been antidilutive.

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

In January 2021, the FASB issued ASU No.

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.

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.

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial

dollars and shares in thousands,

except per share information)

Loss per common share is presented under

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.

Loss per Share

Loss per common share is presented under two formats:

basic loss per common share and diluted loss per common share.

Basic loss per common share is computed by dividing

net loss attributable to common shareholders by the weighted average number of common shares outstanding during the period.

loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period,

plus the potentially dilutive impact of common shares equivalents (e.g.

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

Diluted loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period, plus the

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

potentially dilutive impact of common shares equivalents (e.g.

stock options and warrants).

Dilutive common share equivalents

consist of the incremental common shares issuable upon exercise of stock options and warrants.

The following table sets forth the

computation of basic and diluted net loss per share (in thousands except per share data):

Dilutive common share equivalents consist of the incremental common shares issuable upon exercise of stock options and warrants.

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

December 31, 2021

December 31, 2020

Weighted-average common shares, basic

4 unchanged sentences

Net loss per share, basic and diluted

The following outstanding options and warrants were excluded

from the computation of basic and diluted net loss per share for the periods presented because including them would have had an

anti-dilutive effect (in thousands):

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

December 31, 2021

2 unchanged sentences

Warrants to purchase common shares

The Compensation Committee of the Board of Directors administers

the Company’s stock option plan.

The Compensation Committee designates eligible participants to be included under the

plan and approves the number of options to be granted from time to time under the plan.

On June 24, 2010, at the Company’s

annual meeting, shareholders approved an amendment to the Company’s Stock Option Plan (the “Plan Maximum Amendment”).

The Plan Maximum Amendment relates to changing the maximum number of common shares issuable under the stock option plan from a

fixed number of 6.7 million to the number of shares that represents twenty-five percent (25%) of the total number of all issued

and outstanding common shares.

Based upon the current shares outstanding, a maximum of 6.5 million of our common shares are authorized

for issuance under the plan.

The option exercise price for all options issued under the plan is based on the fair value of

the underlying shares on the date of grant.

All options vest within three years or less and are exercisable for a period of

ten years from the date of grant.

Stock options

The Compensation Committee of the Board of Directors administers the Company’s stock option plan.

The Compensation Committee designates eligible participants to be included under the plan and approves the number of options to be granted from time to time under the plan.

On June 24, 2010, at the Company’s annual meeting, shareholders approved an amendment to the Company’s Stock Option Plan (the “Plan Maximum Amendment”).

The Plan Maximum Amendment relates to changing the maximum number of common shares issuable under the stock option plan from a fixed number of 6.7 million to the number of shares that represents twenty-five percent ( 25 %) of the total number of all issued and outstanding common shares.

Based upon the current shares outstanding, a maximum of 6.5 million of our common shares are authorized for issuance under the plan.

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

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

The stock option plan, as amended, allows the issuance of Canadian and U.S.

dollar grants.

summary of the stock option transactions, for both the Canadian and U.S.

dollar grants, through the year ended December 31,

2020 is below.

A summary of the stock option transactions, for both the Canadian and U.S.

dollar grants, for the years ended December 31, 2021 and 2020 is below.

Summary of $CAD Option Activity

Share Prices Reported in $CAD

Weighted Average

(in thousands)

2 unchanged sentences

Outstanding and exercisable at December 31, 2021

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

Summary of $USD Option Activity

Weighted Average

(in thousands)

Outstanding and exercisable at December 31, 2019

$ 0.45 –

Outstanding and exercisable at December 31, 2020

$ 0.45 –

Outstanding and exercisable at December 31, 2021

$ 0.45 –

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial

dollars and shares in thousands,

except per share information)

Summary of $USD Option Remaining Life

Outstanding and Exercisable at December 31, 2020

Number Outstanding and Exercisable at

Weighted Average Strike Price

Weighted Average

December 31, 2021

Remaining Life

Stock compensation expense for the fiscal years ended December 31,

2020 and 2019 was $2.9 million and $3.1 million respectively.

These amounts have been included in the general and administrative

expenses for the respective periods.

The weighted average fair value per share of options granted and or vested during the fiscal

years ended December 31, 2020 and 2019 was $6.84 and $4.83, respectively.

The intrinsic value (being the difference between

the share price at December 31, 2020 and exercise price) of stock options exercisable at December 31, 2020 was $12.0

(in thousands)

Stock compensation expense for the fiscal years ended December 31, 2021 and 2020 was $ 4.0 million and $ 2.9 million, respectively.

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

The weighted average fair value per share of options granted and or vested during the fiscal years ended December 31, 2021 and 2020 was $ 5.93 and $ 6.84 , respectively.

The intrinsic value (being the difference between the share price at December 31, 2021 and exercise price) of stock options exercisable at December 31, 2021 was $ 0.30 million.

The intrinsic value of options exercised during the fiscal year ended December 31, 2021 was $ 0.06 million.

value of all options vested during the fiscal year ended December 31, 2020 was $2.4 million.

The fair values of options granted in fiscal years ended December 31,

2020 and 2019 were estimated on the date the options were granted based on the Black-Scholes option-pricing model, using the

following weighted average assumptions for all options with a ten-year expiration:

Of the 658 options issued in December 2021, 140 have standard vesting.

There were 68 options awarded to various contractors.

These 68 options were fully vested on the grant date of the award.

There were 450 options awarded to our CEO, CFO and CCO.

These options are performance-based and will vest, only upon FDA approval of our NDA.

That FDA approval must occur in calendar year 2022 and the executives must still be employed by the Company.

Currently, the Company has not recognized any expense associated with these performance-based awards.

We will evaluate the probability of NDA approval at each balance sheet date and revise our expense extimate accordingly.

The fair value of all options vested during the fiscal year ended December 31, 2021 was $ 0.5 million.The fair values of options granted in fiscal years ended December 31, 2021 and 2020 were estimated on the date the options were granted based on the Black-Scholes option-pricing model, using the following weighted average assumptions for all options with a ten-year expiration:

Year Ended December 31, 2021

4 unchanged sentences

Expected life

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial

dollars and shares in thousands,

except per share information)

The Company uses the historical volatility and adjusts for available

relevant market information pertaining to the Company’s share price.

Modification of Existing US Dollar Denominated Options

In 2019, the Company modified the terms of all outstanding US

denominated options extending the expiration date by a weighted average amount of 2.98 years.

The Company recorded option modification

expense of approximately $1.34 million in the year ended December 31, 2019, included in the $3.1 million of stock compensation

in general and administrative expense, discussed above.

Some of the option grants were not fully vested, as a result, the Company

will recognize $0.2 million in expense over the next nine quarters.

The following table summarizes the effect of the June 18,

2019 transaction:

Exercise Price

Number of Options

Expense Recognized $USD

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

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 periods ended December 31, 2021 and 2020.

All granted RSUs are denominated in U.S.

Prior to June 2021, there

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial

dollars and shares in thousands,

except per share information)

Value Measurements

The Company has adopted ASC 820 Fair Value Measurements and

Disclosure Topic of the FASB.

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

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.

The Topic requires that financial assets and liabilities carried at fair value be classified

and disclosed in one of the following three categories:

Quoted market prices in active markets for identical

assets or liabilities.

Observable market-based inputs or unobservable inputs

that are corroborated by market data.

Unobservable inputs that are not corroborated by market

Assets/Liabilities Measured at Fair Value on a Recurring

Fair Value Measurement at December 31, (in thousands)

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

was no activity involving RSUs.

Of the 219 RSUs granted and outstanding , 0 are vested.

The Company recognized $ 0.1 million in RSU expense for the year ended December 31, 2021.

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.

Of the 219 RSUs issued in 2021, 110 have standard vesting.

There were 34 RSUs awarded to various contractors.

These 34 RSUs will fully vest on the first anniversary date of the award.

There were 75 RSUs awarded to our CFO and CCO.

These RSUs are performance-based and will vest, only upon FDA approval of our NDA.

That FDA approval must occur in calendar year 2022 and the executives must still be employed by the Company.

Currently, the Company has not recognized any expense associated with these performance-based awards.

We will evaluate the probability of NDA approval at each balance sheet date and revise our expense extimate accordingly.

Number of Restricted

US Denominated RSU's

Share Units (thousands)

Outstanding at December 31, 2019

Outstanding at December 31, 2020

Outstanding at December 31, 2021

Fair Value Measurements

The Company has adopted ASC 820 Fair Value Measurements and Disclosure Topic of the FASB.

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

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

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.

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

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

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

Unobservable inputs that are not corroborated by market data.

Assets/Liabilities Measured at Fair Value on a Recurring Basis

Fair Value Measurement at December 31, 2021 and December 31, 2020

(in thousands)

Quoted Price in Active

Market for Identical

Significant Other Observable Inputs

Significant Other

Observable Inputs

Unobservable Inputs

1 unchanged sentence

Processa common shares

(1) The Company held approximately, $678,000 in cash as of December 31, 2020, of which approximately, $45,000 was in Canadian

funds (translated into U.S.

As of December 31, 2019, the Company held approximately $347,000, of which approximately

30,000 was in Canadian funds (translated into U.S.

(1) The Company held approximately, $ 82,000 in cash as of December 31, 2021, of which approximately $ 34,000 was in Canadian funds (translated into U.S.

As of December 31, 2020, the Company held approximately $ 678,000 , of which approximately $ 45,000 was in Canadian funds (translated into U.S.

(2) The Company received 41,250 restricted common shares of Processa (PSCA).

1 unchanged sentence

50 % , 25 % and 25 % at the 6, 9 and 12 month intervals, respectively from October 30, 2020.

At October 30, 2020 PSCA shares

were trading at $4.11 per share.

The Company applied a 20% liquidity discount to the shares and will mark to market at each balance

Stockholders’

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

At October 30, 2020 PSCA shares were trading at $ 4.11 per share.

The Company applied a 20 % liquidity discount to the shares and will mark to market at each balance sheet date .

Stockholders’ Equity

Authorized capital stock

The Company’s authorized capital stock consists of an

unlimited number of shares of no-par common shares.

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

Warrants to Purchase Common Shares

At December 31, 2020, the Company had 39,130 warrants outstanding

to purchase common shares at an exercise price of $6.80.

The following table summarized our warrant activity.

Number of Warrants

At December 31, 2021, the Company had 39,130 warrants outstanding to purchase common shares at an exercise price of $ 6.80 .

The following table summarized our warrant activity for the fiscal years ended December 31, 2021 and 2020.

(in thousands)

Weighted Average

Outstanding and exercisable at December 31, 2019

1 unchanged sentence

Outstanding and exercisable at December 31, 2021

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial

dollars and shares in thousands,

except per share information)

and Contingencies

Commitments and Contingencies

Oregon Health & Science University Agreement

On February 20, 2013, Fennec entered

into a new exclusive license agreement with OHSU for exclusive worldwide license rights to intellectual property directed to thiol-based

compounds, including PEDMARK TM and their use in oncology (the "OHSU Agreement").

OHSU will receive certain

milestone payments, royalty on net sales for licensed products and a royalty on any consideration received from sublicensing of

the licensed technology.

On May 18, 2015, Fennec negotiated

an amendment ("Amendment 1") to the OHSU Agreement, which expands Fennec’s exclusive license to include the use

of N-acetylcysteine as a standalone therapy and/or in combination with PEDMARK TM for the prevention of ototoxicity induced

by chemotherapeutic agents to treat cancers.

Further, Amendment 1 adjusts select milestone payments entered in the OHSU Agreement

including but not limited to the royalty rate on net sales for licensed products, royalty rate from sublicensing of the licensed

technology and the fee payable upon the regulatory approval of a licensed product.

The term of the OHSU Agreement as amended

by Amendment 1 expires on the date of the last to expire claim(s) covered in the patents licensed to Fennec or 8 years, whichever

In the event a licensed product obtains regulatory approval and is covered by the Orphan Drug Designation, the parties

will in good faith amend the term of the agreement.

Sodium thiosulfate is currently protected by methods of use patents that the

Company exclusively licensed from OHSU that expire in Europe in 2021 and that expire in the United States in 2038.

The OHSU Agreement

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

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

all fees due to OHSU under the OHSU Agreement.

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

OHSU Agreement").

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

On May 18, 2015, Fennec negotiated an amendment ("Amendment 1") to the OHSU Agreement, which expands Fennec's exclusive license to include the use of N-acetylcysteine as a standalone therapy and/or in combination with PEDMARK TM for the prevention of ototoxicity induced by chemotherapeutic agents to treat cancers.

Further, Amendment 1 adjusts select milestone payments entered in the OHSU Agreement including but not limited to the royalty rate on net sales for licensed products, royalty rate from sublicensing of the licensed technology and the fee payable upon the regulatory approval of a licensed product.

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

In the event a licensed product obtains regulatory approval and is covered by the Orphan Drug Designation, the parties will in good faith amend the term of the agreement.

Sodium thiosulfate is currently protected by methods of use patents that the Company exclusively licensed from OHSU that expired in Europe in 2021 and that expire in the United States in 2038.

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

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

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

Securities Class Action Suit

Following the U.S.

Food and Drug Administration’s

(FDA’s) CRL regarding its NDA for PEDMARK TM as described in Note 1, a putative lawsuit was filed against us purportedly

on behalf of purchasers of the Company’s securities between December 20, 2018 and August 10, 2020.

The lawsuit seeks to

recover damages for Fennec investors under federal securities laws.

While we believe that the lawsuit is without merit and intend to vigorously

defend against it, the lawsuit is in its early stages and no assessment can be made as to its likely outcome or whether the outcome will

be material to us.

This litigation, and any other securities class actions that may be brought against us, could result in substantial

costs and a diversion of our management’s attention and resources.

Chapman et al.

On September 2, 2020, a putative class action lawsuit, Chapman v.

Fennec Pharmaceuticals Inc., was filed against us, our Chief Executive Officer, Rostislav Raykov, and our Chief Financial Officer, Robert Andrade, in the United States District Court for the Middle District of North Carolina.

The complaint alleged that prior to our August 10, 2020 receipt of a CRL from the FDA concerning our NDA for PEDMARK TM , we made materially false or misleading statements and failed to disclose material facts about the status of our PEDMARK TM manufacturing facility, the facility’s compliance with cGMP, and the impact its status and compliance would have on regulatory approval for PEDMARK TM .

On December 3, 2020, the court appointed a lead plaintiff to represent the putative class.

On February 1, 2021, the lead plaintiff filed an amended complaint.

The amended complaint added members of our Board of Directors as defendants, asserts a putative class period from December 10, 2018 through August 10, 2020, makes allegations similar to those in the original complaint, and claims the defendants violated Section 10(b) of the Exchange Act.

On March 3, 2021, we and the other defendants filed a motion to dismiss the amended complaint.

On April 2, 2021, plaintiffs filed an opposition to the motion.

On April 16, 2021, we and the other defendants filed a reply brief in support of the motion.

On December 16, 2021, the Magistrate Judge on the motion entered an order recommending that our motion to dismiss be compliant.

Plaintiffs filed objections to the Magistrate Judge’s recommendation on January 24, 2022, and Defendants filed their response on February 3, 2022.

The parties are currently awaiting a decision from the U.S.

District Court Judge as to whether it will accept the Magistrate Judge’s recommendation.

We believe that the suit is without merit and intend to defend it vigorously.

We cannot predict the outcome of this suit.

Failure by us to obtain a favorable resolution of the suit could have a material adverse effect on our business, results of operations and financial condition.

We have not recorded a liability as of December 31, 2021, because we believe a potential loss is not probable or reasonably estimable given the preliminary nature of the proceedings.

On February 9, 2022, plaintiff Jeffrey D.

Fisher filed a putative federal securities class action against the Company and its CEO and CFO in the United States District Court for the Middle District of North Carolina, captioned Fisher v.

Fennec Pharmaceuticals et al.

1:22-cv-115 (M.D.N.C.).

The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Exchange Act by making materially false and misleading statements or omissions regarding the status of its PEDMARK TM manufacturing facility, the facility’s compliance with cGMP, and the impact its status and compliance would have on regulatory approval for PEDMARK TM in the period leading up to the Company’s November 29, 2021 receipt of a Complete Response Letter for a subsequent NDA for PEDMARK TM .

The complaint seeks an unspecified amount of compensatory damages and other relief on behalf of persons who purchased the Company’s common stock from May 28, 2021 and November 26, 2021.

We believe that the suit is without merit and intend to defend it vigorously.

We cannot predict the outcome of this suit.

Failure by us to obtain a favorable resolution of the suit could have a material adverse effect on our business, results of operations and financial condition.

Hope Medical Enterprises, Inc.

As discussed above under the heading “Business – Overview – Product Candidate,”

On October 29, 2021, Hope Medical Enterprises, Inc.

(“Hope”) filed two petitions for inter partes review (“IPR”) with the Patent Trial and Appeal Board (“PTAB”) of the USPTO.

In its petitions, Hope seeks to invalidate our U.S.

10,596,190 (“US ‘190”), which is exclusively in-licensed from Oregon Health & Science University (“OHSU”) and relates to a method of using our PEDMARK™ product, and our U.S.

10,792,363 (“US ’363”), which relates to an anhydrous form of STS, which is the active pharmaceutical ingredient in our PEDMARK™ product.

US ‘190 was issued on March 24, 2020.

US ‘363 was issued on October 6, 2020.

We filed preliminary responses to the petitions in February 2022, and thereafter, the PTAB has three months to decide whether to institute IPR proceedings.

If the PTAB institutes one or both reviews, the final written decision(s) will be due about one year after the PTAB’s

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

decision to institute IPR proceedings, and following additional submissions by the parties.

Any appeals of a PTAB decision would delay any final outcome.

We plan to vigorously defend our intellectual property rights related to PEDMARK™.

However, we are unable to predict the outcome of these petitions, and an invalidation of one or both of these patents may have a material adverse effect on our ability to protect our rights in PEDMARK™ beyond periods of marketing exclusivity for PEDMARK TM possible in the United States under Orphan Drug Designation and in Europe under European Market Exclusivity for Pediatric Use (“PUMA”).

We obtained U.S.

Orphan Drug Designation for the use of PEDMARK TM in the prevention of platinum-induced ototoxicity in pediatric patients in 2004.

We plan to pursue PUMA upon approval of the MAA, which would allow for 10 years of market exclusivity upon PUMA approval.

On January 11, 2022, our licensor OHSU filed a Request for Supplemental Examination of US ‘190 requesting the consideration by the USPTO of certain prior art references, including references cited by Hope in its Petition for IPR that are relevant to the granted claim of the patent.

On January 28, 2022, the USPTO found that the cited references constitute a substantial new question of patentability and ordered an ex parte reexamination of the single US ‘190 claim of pursuant to 35 U.S.C.

We are unable to predict the outcome of the ex parte reexamination.

If the USPTO does not uphold the ‘190 claim as granted or in amended form, our ability to protect our PEDMARK TM product beyond periods of marketing exclusivity for PEDMARK TM possible in the United States under Orphan Drug Designation and in Europe under European Market Exclusivity for Pediatric Use (“PUMA”) may be adversely affected.

Executive Severance

In the event of his termination with us

other than for cause, we will be obligated to pay Mr.

Raykov a one-time severance payment equal to twelve months of salary

(currently $430,000).

In the event of his termination with us other than for cause, we will be obligated to pay Mr.

a one-time severance payment equal to six months of salary (currently $155,875).

In the event of her termination with us other

than for cause, we will be obligated to pay Ms.

Goel a one-time severance payment equal to three months of salary (currently

Raykov a one-time severance payment equal to twelve months of salary (currently $ 458 ).

In the event of his termination with us other than for cause, we will be obligated to pay Mr.

Andrade a one-time severance payment equal to six months of salary (currently $ 166 ).

In the event of her termination with us other than for cause, we would have been obligated to pay Ms.

Goel a one-time severance payment equal to six months of salary (currently $ 192 ).

Goel tendered her resignation in January 2022.

On June 24, 2021, the Company announced it had negotiated a second amendment to the Bridge Bank Loan and Security Agreement with Bridge Bank.

This amendment provides Fennec with a $ 20,000 debt facility comprised of three term loans.

Term Loan A consists of $ 5,000 , which was funded upon closing.

Term Loan B consists of $ 7,500 to be funded upon NDA approval of PEDMARKTM in the U.S.

Term Loan C consists of $ 7,500 million to be funded upon the occurrence the Company achieving consolidated trailing six-month revenues of $ 11,000 on or before December 31, 2022.

The interest-only period for the facility has the ability to be extended from 18 months to 24 months from the funding of Term Loan B, provided that Term Loan C is funded, and certain conditions are met.

The Company intends to use the proceeds from the loans to provide working capital for commercial readiness activities prior to NDA approval as well as commercialization activities for PEDMARKTM, if approved by the FDA.

On June 24, 2021, the Company drew $ 5,000 from Term Loan A.

Term Loan A matures on July 1, 2025.

Payments are for interest only through February 1, 2023.

The Company shall make equal monthly payments of principal, together with applicable interest, following the interest only period until the maturity date.

Interest shall accrue on the outstanding balance at a rate of 1 % above prime as published by the Wall Street Journal on the first day of each month.

The Company is obligated to maintain a cash balance greater or equal to three times its monthly cash burn as calculated on the last date of the immediately preceding month.

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

Aggregate annual payments due on Term Loan A as of December 31, 2021 are as follows (in thousands):

Years Ending December 31,

Total future payments

unamortized debt discount

Total term loan, net of debt discount

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

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

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

Debt issuance costs amounting to $ 55 securing access to Term Loans A, B and C were paid in cash to Bridge Bank on June 24, 2021.

This amount was capitalized and is being amortized over the access period of the Term Loans.

Upon drawing Term Loan A, the Company recorded a debt discount of $ 14 , reducing the capitalized amount by the same amount.

The debt discount is being amortized over the life of Term Loan A.

Subsequent Events

Management has evaluated subsequent events through March 29,

2021, the date the financial statements were available to be issued and has concluded there are no additional events that would

require adjustment to our disclosure in the statements.

Officer Resignation

On January 31, 2022, our Chief Commercial Officer, Ms.

Goel resigned.

Her resignation was voluntary and no severance was paid.

The Company has added to its commercial team since the resignation of Ms.

Bridge Bank Loan Facility

On January 27, 2022, the Company entered into a third amendment to the Bridge Bank Loan and Security Agreement extending the outside date to receive NDA approval of PEDMARK TM to September 30, 2022.

Please refer to Note 1, for a more complete discussion of this amendment.

Class Action Suit

On February 9, 2022, plaintiff Jeffrey D.

Fisher filed a putative federal securities class action against the Company and its CEO and CFO in the United States District Court for the Middle District of North Carolina, captioned Fisher v.

Fennec Pharmaceuticals et al.

1:22-cv-115 (M.D.N.C.).

The Company operates in both U.S.

and Canadian tax jurisdictions.

income is subject to varying rates of tax and losses incurred in one jurisdiction cannot be used to offset income taxes payable

A reconciliation of the combined Canadian federal and provincial income tax rate with the Company’s effective

tax rate is as follows (in thousands except for percentage rates):

Its income is subject to varying rates of tax and losses incurred in one jurisdiction cannot be used to offset income taxes payable in another.

A reconciliation of the

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

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

Domestic (loss)/gain

9 unchanged sentences

Provision for income taxes

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial

dollars and shares in thousands,

except per share information)

The Canadian statutory come tax rate of 26.0 percent is

comprised of federal income tax at approximately 15.0 percent and provincial income tax at approximately 11.0 percent.

The primary temporary differences which gave rise to future

income taxes (recovery) at December 31, 2020 and December 31, 2019:

The Canadian statutory come tax rate of 26.0 percent is comprised of federal income tax at approximately 15.0 percent and provincial income tax at approximately 11.0 percent.

The primary temporary differences which gave rise to future income taxes (recovery) at December 31, 2021 and December 31, 2020:

Future tax assets:

7 unchanged sentences

Net future tax assets

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial

dollars and shares in thousands,

except per share information)

Tax Cuts and Jobs Act

On December 22, 2017,

the then President of the United States signed into law an Act to provide for reconciliation pursuant to titles II and V of the

concurrent resolution on the budget for fiscal year 2018 (commonly known as “the Tax Cuts and Jobs Act or the “TCJA”),

which introduced a comprehensive set of tax reforms.

On December 22, 2017, the then President of the United States signed into law an Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018 (commonly known as “the Tax Cuts and Jobs Act” (“TCJA”), which introduced a comprehensive set of tax reforms.

The Tax Cuts and Jobs Act significantly revises U.S.

tax law by, among

other provisions, lowering the Company’s corporate tax rate from 34% to 21% and eliminating or reducing certain income tax

In December 2017,

in accordance with the SEC Staff Accounting Bulletin (“SAB”) 118–Income Tax Accounting Implications of the TCJA,

the Company recorded tax effects on a provisional basis based on a reasonable estimate.

The TCJA did not have a material impact

on the Company's financial statements because its deferred temporary differences are fully offset by a valuation allowance and

the Company does not have any offshore earnings from which to record the mandatory transition tax.

During 2018, the Company completed

its analysis under SAB 118 and no additional tax effects due to rate-remeasurement were required to be recorded.

On March 27, 2020

the US government enacted the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) which includes numerous modifications

to income tax provisions, including a limitation on business interest expense and net operating loss provisions and the acceleration

of alternative minimum tax credits.

Given the Company’s history of losses, the CARES Act did not have a material impact on

its tax provision.

There are no current income taxes owed,

nor are any income taxes expected to be owed in the near term.

At December 31, 2020 the Company has unclaimed Scientific Research

and Experimental Development ("SR&ED") expenditures, income tax loss carry-forwards and non-refundable investment

tax law by, among other provisions, lowering the Company’s corporate tax rate from 34 % to 21 % and eliminating or reducing certain income tax deductions.

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

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

Fennec Pharmaceuticals Inc.

Notes to the Consolidated Financial Statements

dollars and shares in thousands, except per share information)

mandatory transition tax.

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

On March 27, 2020 the US government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) which includes numerous modifications to income tax provisions, including a limitation on business interest expense and net operating loss provisions and the acceleration of alternative minimum tax credits.

Given the Company’s history of losses, the CARES Act did not have a material impact on its tax provision.

There are no current income taxes owed, nor are any income taxes expected to be owed in the near term.

At December 31, 2021 the Company has unclaimed Scientific Research and Experimental Development ("SR&ED") expenditures, income tax loss carry-forwards and non-refundable investment tax credits.

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

4 unchanged sentences

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What changed 10-K

Item 9A. Controls and Procedures