What changed in this filing

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Item 1. Financial Statements

2022-08-12 compared with 2022-05-12 · 116 added, 91 removed, 435 unchanged (32% of the section changed)

3 unchanged sentences

Dollars and shares in thousands)

March 31, 2022

June 30, 2022

Current assets

31 unchanged sentences

Three Months Ended

Six Months Ended

Operating expenses:

3 unchanged sentences

Other (expense)/income

Unrealized foreign exchange loss

Foreign currency transaction gain/(loss)

Amortization expense

11 unchanged sentences

Dollars in thousands)

Three Months Ended

Six Months Ended

Cash flows (used in) provided by:

12 unchanged sentences

Financing activities:

Long-term debt

Debt discount

Capitalized deferred issuance costs

Issuance of shares, options exercise

Net cash provided by financing activities

Decrease in cash and cash equivalents

(Decrease)/increase in cash and cash equivalents

Cash and cash equivalents - Beginning of period

3 unchanged sentences

Condensed Consolidated Statements of Stockholders’ Equity

Three Months Ended March 31, 2022 and 2021

Three and Six Months Ended June 30, 2022, and 2021

dollars and shares in thousands)

6 unchanged sentences

Balance at March 31, 2022

Stock options issued to employees

Stock options issued to contractors

Stock option exercise

Restricted stock unit release

Balance at June 30, 2022

Comprehensive

4 unchanged sentences

Balance at March 31, 2021

Stock options issued to employees

Stock option exercise

Balance at June 30, 2021

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

10 unchanged sentences

GAAP”) that are applicable to a going concern, which contemplates that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business.

During the three months ended March 31, 2022, the Company incurred a loss from operations of $ 3,546 .

At March 31, 2022, the Company had an accumulated deficit of $ 183,182 and had experienced negative cash flows from operating activities during the three months ended March 31, 2022 in the amount of $ 2,856 .

On February 1, 2019, the Company’s wholly owned subsidiary Fennec Pharmaceuticals, Inc, entered into a Loan and Security Agreement (the “Bridge Bank Loan and Security Agreement”) with Bridge Bank, a division of Western Alliance Bank, an Arizona corporation (“Bridge Bank”), pursuant to which Bridge Bank agreed to loan $ 12,500 to Fennec Pharmaceuticals, Inc., to be made available upon New Drug Application (“NDA”) approval of PEDMARK TM by the U.S.

During the three and six months ended June 30, 2022, the Company incurred a loss from operations of $ 5,009 and $ 8,555 , respectively.

At June 30, 2022, the Company had an accumulated deficit of $ 188,254 and had experienced negative cash flows from operating activities during the three and six months ended June 30, 2022 in the amount of $ 3,390 and $ 6,246 , respectively.

On February 1, 2019, the Company’s wholly owned subsidiary Fennec Pharmaceuticals, Inc.

entered into a Loan and Security Agreement (the “Bridge Bank Loan and Security Agreement”) with Bridge Bank, a division of Western Alliance Bank, an Arizona corporation (“Bridge Bank”), pursuant to which Bridge Bank agreed to loan $ 12,500 to Fennec Pharmaceuticals, Inc., to be made available upon New Drug Application (“NDA”) approval of PEDMARK TM by the U.S.

Food and Drug Administration (“FDA”) no later than September 30, 2020.

13 unchanged sentences

This amendment redefines certain definitions in the agreement.

The term “Resubmission Event” is the resubmission by Fennec for final NDA approval from the U.S.

Food and Drug Administration for PEDMARK on or before March 31, 2022.

The term “Resubmission Event” is the resubmission by Fennec for final NDA approval from the FDA for PEDMARK on or before March 31, 2022.

Fennec did achieve the Resubmission Event on March 24, 2022.

5 unchanged sentences

dollars and shares in thousands, except per share information)

The Company believes current funds, 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 .

The Company believes current funds, along with the funds from the Bridge Bank Loan and Security Agreement or from the securities purchase agreement dated August 1, 2022 with Petrichor Opportunities Fund I LP (the “Petrichor Agreement”) (see Subsequent Events), 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 or if there was a materially adverse event which affected the Company’s solvency.

9 unchanged sentences

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

The results of operations for the three and six monthsended June 30.

2022 are not necessarily indicative of results to be expected for the full fiscal year.

Use of estimates

2 unchanged sentences

Actual results could differ from those estimates.

In the opinion of management, these unaudited interim condensed consolidated financial statements include all adjustments, which are normal and recurring in nature, necessary for the fair presentation of the Company’s financial position at March 31, 2022 and to state fairly the results for the periods presented.

The most significant estimates utilized during the three months ended March 31, 2022 include estimates necessary to value grants of stock options to employees and various contractors, as disclosed in Note 4.

In the opinion of management, these unaudited interim condensed consolidated financial statements include all adjustments, which are normal and recurring in nature, necessary for the fair presentation of the Company’s financial position at June 30, 2022 and to state fairly the results for the periods presented.

The most significant estimates utilized during the three and six months ended June 30, 2022 include estimates necessary to value grants of various equity instruments to employees and contractors, as disclosed in Note 4.

New accounting pronouncements

The Company did not adopt any new accounting pronouncements during the quarter ended March 31, 2022.

The Company did not adopt any new accounting pronouncements during the quarter ended June 30, 2022.

Cash and cash equivalents

1 unchanged sentence

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

At March 31, 2022, the Company had $ 18,259 in cash, savings and money market accounts ($ 21,100 at December 31, 2021).

At March 31, 2022, the Company held $ 131 in cash of which $ 39 (as presented in U.S.

At June 30, 2022, the Company had $ 14,915 in cash, savings and money market accounts ($ 21,100 at December 31, 2021).

At June 30, 2022, the Company held $ 278 in cash of which $ 37 (as presented in U.S.

dollars) was in Canadian dollars ($ 34 at December 31, 2021 as presented in U.S.

At March 31, 2022, the Company held $ 18,128 in money market investments.

Money market investments typically have minimal risks.

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

At June 30, 2022, the Company held $ 14,637 in money market investments.

Fennec Pharmaceuticals Inc.

1 unchanged sentence

dollars and shares in thousands, except per share information)

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

investments typically have minimal risks.

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

Financial instruments

Financial instruments recognized on the balance sheets at March 31, 2022 and December 31, 2021 consist of cash and cash equivalents, accounts payable, accrued liabilities and current portion of long-term debt, the carrying values of which approximate fair value due to their relatively short time to maturity.

Financial instruments recognized on the balance sheets at June 30, 2022 and December 31, 2021 consist of cash and cash equivalents, shares of Processa Pharmaceuticals, Inc., accounts payable, accrued liabilities and current portion of 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.

36 unchanged sentences

The Company refers to this as the variable consideration constraint.

Due to the uncertainty associated with the occurrence of any 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 March 31, 2022, and therefore has not included such consideration in the transaction price for any of its revenue arrangements.

Due to the uncertainty associated with the occurrence of any 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 June 30, 2022, 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.

2 unchanged sentences

Contract assets

The Company did not have any contract assets as of March 31, 2022 or December 31, 2021.

The Company did not have any contract assets as of June 30, 2022 or December 31, 2021.

Contract liabilities

The Company did not have any contract liabilities as of March 31, 2022 or December 31, 2021.

The Company did not have any contract liabilities as of June 30, 2022 or December 31, 2021.

Revenue arrangements

In May 2016, the Company sold Eniluracil to Elion Oncology, LLC (“Elion”).

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

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

40 unchanged sentences

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

During the quarter ended March 31, 2022, the Company reported $ 91 in unrealized loss on the fair value of the underlying Processa shares.

Net loss over the life of the Processa shares was $ 17 at March 31, 2022.

During the quarter ended June 30, 2022, the Company reported $ 8 in unrealized loss on the fair value of the underlying Processa shares.

Net loss over the life of the Processa shares was $ 25 at June 30, 2022.

Loss per Share

10 unchanged sentences

The following table sets forth the computation of basic and diluted net loss per share:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Weighted-average common shares, basic

5 unchanged sentences

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:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Options to purchase common shares

4 unchanged sentences

Warrants to Purchase Common Stock

During the three months ended March 31, 2022 and 2021, there were no warrants issued or exercised.

Outstanding warrants have a weighted average life of 6.85 years on March 31, 2022.

The following tables detail the Company’s warrant activity for the three months ended March 31, 2022 and 2021, respectively:

During the three and six months ended June 30, 2022, there were no warrants issued or exercised.

Outstanding warrants have a weighted average life of 6.60 years on June 30, 2022.

The following tables detail the Company’s warrant activity for the three and six months ended June 30, 2022:

Common Shares

5 unchanged sentences

Outstanding December 31, 2021

Outstanding March 31, 2022

Outstanding June 30, 2022

Equity Incentive Plan

1 unchanged sentence

The Compensation Committee designates eligible participants to be included under the Plan and approves the number of equity instruments to be granted from time to time under the Plan.

Currently, the maximum number of equity instruments issuable under the Plan, together with the Company’s prior stock option plan, is twenty-five percent ( 25 %) of the total

Currently, the maximum number of equity instruments

Fennec Pharmaceuticals Inc.

1 unchanged sentence

dollars and shares in thousands, except per share information)

number of issued and outstanding common shares.

issuable under the Plan, together with the Company’s prior stock option plan, is twenty-five percent ( 25 %) of the total number of issued and outstanding common shares.

Based upon the current shares outstanding, a maximum of 6,517 shares of common stock are authorized for issuance pursuant to stock options or other equity awards granted under the Plan.

3 unchanged sentences

dollar grants.

The table below outlines recognized contractor and employee expense from equity awards for the three month period ended March 31, 2022 and 2021.

Three Months Ended March 31,

The table below outlines recognized contractor and employee expense from equity awards for the three and six month period ended June 30, 2022 and 2021.

Three Months Ended June 30,

Six Months Ended June 30,

Contractor options expense recognized

2 unchanged sentences

Stock Option Activity

The following is a summary of option activity for the three months ended March 31, 2022, and 2021 for stock options denominated in U.S.

The following is a summary of option activity for the three and six months ended June 30, 2022, for stock options denominated in U.S.

Since August of 2020, there have been no Canadian denominated options outstanding.

5 unchanged sentences

Outstanding at March 31, 2022

Outstanding at June 30, 2022

During the three and six month periods ended June 30, 2022, there were 305 and 505 options granted, respectively.

During the three and six month periods ended June 30, 2022, there were 26 and 45 exercises of options, respectively.

This resulted in a cash inflow of $ 46 and $ 61 , respectively.

Of the 4,337 U.S.

denominated options granted and outstanding at March 31, 2022, 2,769 are fully vested and exercisable.

denominated options granted and outstanding at June 30, 2022, 3,050 are fully vested and exercisable.

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

2 unchanged sentences

Black-Scholes Model Assumptions

March 31, 2022

June 30, 2022

Expected dividend

5 unchanged sentences

The Plan allows for the issuance of restricted share units (“RSU’s”).

The following is a summary of RSU activity for the three months ended March 31, 2022, for RSU’s denominated in U.S.

Prior to June 2021, there was no activity

The following is a summary of RSU activity for the three and six months ended June 30, 2022, for RSU’s denominated in U.S.

During the quarter ended June 30,

Fennec Pharmaceuticals Inc.

1 unchanged sentence

dollars and shares in thousands, except per share information)

involving RSU’s.

As of March 31, 2022, none of the awarded RSU’s are vested.

During the quarter ended March 31, 2022, there were no RSU’s awarded and 88 were forfeited by terminated employees.

2022, there were 8 RSU’s released from restriction.

During the six months ended June 30, 2022, there were 88 RSU’s forfeited by departing employees.

All RSU’s vest over one to three years .

4 unchanged sentences

Outstanding at March 31, 2022

Outstanding at June 30, 2022

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

9 unchanged sentences

Unobservable inputs that are not corroborated by market data.

Fair Value Measurement at March 31, 2022 and December 31, 2021

Fair Value Measurement at June 30, 2022 and December 31, 2021

(in thousands)

6 unchanged sentences

Processa common shares

The Company held approximately $ 131 in cash as of March 31, 2022, of which approximately $ 39 was in Canadian funds (translated into U.S.

The Company held approximately $ 278 in cash as of June 30, 2022, of which approximately $ 37 was in Canadian funds (translated into U.S.

As of December 31, 2021, the Company held approximately $ 82 in cash of which approximately $ 34 was in Canadian funds (translated into U.S.

The Company holds 41 unrestricted and 5 restricted common shares of Processa (NASDAQ:PCSA).

The restriction on the 5 shares will expire on October 20, 2022.

The Company expects to receive another 5 restricted common shares of Processa on October 20, 2022 and will become unrestricted one year after receipt.

The Company holds 46 unrestricted common shares of Processa (NASDAQ:PCSA).

The Company expects to receive another 5 restricted common shares of Processa on October 20, 2022 which will become unrestricted one year after receipt.

At October 30, 2020, Processa shares were trading at $ 4.11 per share.

The Company originally applied a 20 %, 30 % and 40 % liquidity discount to the shares and will mark to market at each balance sheet date.

The Company will also adjust the liquidity discounts being applied to the share valuation to appropriately reflect the passage of time.

Valuation of the shares at March 31, 2022 had a 0 %, 15 % and 25 % liquidity discount applied to the 41 , 5 and 5 share tranches, respectively.

The Company will also adjust the liquidity discounts being applied to the share valuation to appropriately reflect the passage of time and the existence of any restrictions on the shares.

Valuation of the shares at June 30, 2022 had a 0 %, 0 % and 20 % liquidity discount applied to the 41 , 5 and 5 share tranches, respectively.

Fennec Pharmaceuticals Inc.

29 unchanged sentences

On March 30, 2022, plaintiff filed a motion for post judgment relief, seeking leave to file a second amended complaint.

In his proposed second amended complaint, plaintiff seeks to add allegations stemming from the receipt of a second CRL following our resubmission of our NDA for PEDMARK TM , which we received on November 29, 2021, among other things.

Defendants filed an opposition to plaintiff’s motion for post judgment relief on April 20, 2022.

Plaintiff submitted a reply in support of his motion in early May 2022.

Fennec Pharmaceuticals Inc.

1 unchanged sentence

dollars and shares in thousands, except per share information)

Defendants filed an opposition to plaintiff’s motion for post judgment relief on April 20, 2022.

On May 4, 2022, lead plaintiff submitted a reply in support of his motion.

We believe that this lawsuit is without merit and intend to defend it vigorously.

1 unchanged sentence

Failure by us to obtain a favorable resolution of the lawsuit could have a material adverse effect on our business, results of operations, and financial condition.

We have not recorded a liability as of March 31, 2022, because we believe a potential loss is not probable or reasonably estimable given the nature of the proceedings and our success so far by obtaining a dismissal with prejudice of the amended complaint.

We have not recorded a liability as of June 30, 2022, because we believe a potential loss is not probable or reasonably estimable given the nature of the proceedings and our success so far by obtaining a dismissal with prejudice of the amended complaint.

Fennec Pharmaceuticals Inc.

6 unchanged sentences

On April 11, 2022, plaintiff Jeffrey D.

Fisher filed a motion to be appointed lead plaintiff and represent the putative class.

In early May 2022, the Court appointed Fisher as lead plaintiff.

Fisher filed a motion to be appointed lead plaintiff and represent the putative class and on May 9, 2022, the court appointed him as lead plaintiff.

On June 23, 2022, the lead plaintiff filed an amended complaint.

The amended complaint asserts the same putative class period from May 28, 2021 through November 28, 2021, is brought against the same defendants, makes allegations similar to those in the original complaint.

On August 7, 2022, defendants filed a motion to dismiss the amended complaint.

We believe that the lawsuit is without merit and intend to defend it vigorously.

5 unchanged sentences

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.

10,596,190 (“US ‘190”), which is exclusively in-licensed from 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.

1 unchanged sentence

US ‘363 was issued on October 6, 2020.

On January 11, 2022, our licensor OHSU filed a Request for Supplemental Examination of US ‘190 requesting the consideration by the Central Re-examination Unit (“CRU”) of 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 11, 2022, OHSU filed a Request for Supplemental Examination of US ‘190 requesting the consideration by the Central Re-examination Unit (“CRU”) of 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 CRU 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.

3 unchanged sentences

We expect a decision in the ‘190 IPR in May 2023, which can be appealed by the losing party.

Separately, the PTAB has until mid-May 2022 to decide whether to institute the ‘363 IPR.

Further, in May 2022, the PTAB granted Hope Medical’s Petition to Institute the IPR against the ‘363 patent.

We expect a decision in the ‘363 IPR in May 2023, which can be appealed by the losing party.

Fennec Pharmaceuticals Inc.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

dollars and shares in thousands, except per share information)

In February and April 2022, the USPTO issued Notices of Allowance to Fennec for two additional patents that cover the PEDMARK TM pharmaceutical formulation.

We expect these two additional U.S.

patents to issue in mid-2022 and will be listed in the FDA’s Orange Book on approval of PEDMARK TM .

patents to issue in the second half of 2022 and will be listed in the FDA’s Orange Book if our ending NDA for PEDMARK TM is approved.

These patents will expire in 2039, unless held invalid or unenforceable by a court or final jurisdiction.

We plan to vigorously defend our intellectual property rights related to PEDMARK™.

Fennec Pharmaceuticals Inc.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

dollars and shares in thousands, except per share information)

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”).

However, we are unable to predict the outcome of Hope’s IPR petitions, or the Supplemental Examination, and an invalidation of one or both of the ‘190 and ‘363 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.

3 unchanged sentences

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 ($ 458 as of March 31, 2022).

Raykov a one-time severance payment equal to twelve months of salary ($ 458 as of June 30, 2022).

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 ($ 166 as of March 31, 2022).

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 ($ 192 ).

Goel tendered her resignation in January of 2022.

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

Andrade a one-time severance payment equal to six months of salary ($ 166 as of June 30, 2022).

We have an operating lease in Research Triangle Park, North Carolina utilizing small space within a commercial building.

14 unchanged sentences

Term Loan B consists of $ 7,500 to be funded upon NDA approval of PEDMARK TM 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.

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,

Fennec Pharmaceuticals Inc.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

dollars and shares in thousands, except per share information)

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 PEDMARK TM , if approved by the FDA.

2 unchanged sentences

Payments are for interest only through December 31, 2022.

The Company shall make equal monthly payments of principal, together

Fennec Pharmaceuticals Inc.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

dollars and shares in thousands, except per share information)

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 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 (5.75% at June 30, 2022).

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.

If Company fails to maintain the aforementioned cash balance, the bank can call the full amount of loan outstanding.

Collateral for Term Loan A, B and C shall not include any copyrights, patents, trademarks, servicemarks and applications

therefor, now owned or hereafter acquired, or any claims for damages by way of any past, present, and future infringement

of any of the foregoing (collectively, the “Intellectual Property”);

Collateral for Term Loan A, B and C shall not include any copyrights, patents, trademarks, servicemarks and applications therefor, now owned or hereafter acquired, or any claims for damages by way of any past, present, and future infringement of any of the foregoing (collectively, the “Intellectual Property”);

provided, however, that the Collateral shall include all accounts and general intangibles that consist of rights to payment and proceeds from the sale, licensing or disposition of all or any part, or rights in the foregoing (the “Rights to Payment”).

Notwithstanding the foregoing, if a judicial authority

(including a U.S.

Bankruptcy Court) holds that a security interest in the underlying Intellectual Property is necessary to have a security interest in the Rights to Payment, then the Collateral shall automatically, and effective as of the Effective Date, include the Intellectual Property to the extent necessary to permit perfection of Bank’s security interest in the Rights to Payment.

Aggregate annual payments due on Term Loan A as of March 31, 2022 are as follows (in thousands):

Notwithstanding the foregoing, if a judicial authority (including a U.S.

Bankruptcy Court) holds that a security interest in the underlying Intellectual Property is necessary to have a security interest in the Rights to Payment, then the Collateral shall automatically, and effective as of the Effective Date, include the Intellectual Property to the extent necessary to permit perfection of Bridge Bank’s security interest in the Rights to Payment.

Aggregate annual payments due on Term Loan A as of June 30, 2022 are as follows (in thousands):

Years Ending December 31,

7 unchanged sentences

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.

Upon drawing Term Loan A, the Company recorded a debt discount of $ 14 , which was based on a pro-rata allocation of the issue costs to Loan A, reducing the capitalized amount by the same amount.

The debt discount is being amortized over the life of Term Loan A.

Subsequent Events

Prescription Drug User Fee Act (“PDUFA”) Date Announced

On April 27, 2022, Fennec announced the FDA had set a PDUFA date of September 23, 2022.

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

Upon certain closing conditions being satisfied, an initial tranche of $ 5,000 (the “First Closing Note”) will be issued and convertible at a price per share equal to the Initial Conversion Price equal to $ 8.11 per share, a 20 %

Fennec Pharmaceuticals Inc.

Notes to the Unaudited Interim Condensed Consolidated Financial Statements

dollars and shares in thousands, except per share information)

premium of the 5 -day volume weighted average price (the “VWAP”) of the Company’s common shares as traded on the Nasdaq Capital Market immediately prior announcement of the SPA.

A second tranche (the “Second Closing Notes”) of $ 20,000 is to be funded upon the approval of the United States Food and Drug Administration of the Company’s PEDMARK and satisfaction of other closing conditions.

Subsequent to the funding of the Second Closing Note, and before December 31, 2023, the Company may draw up to $ 20,000 of additional financing under the SPA, in one or more tranches of $ 10,000 upon mutual agreement of the Company and the Investor (the “Subsequent Closing Notes”).

Each of the Second and Subsequent Closing Notes will be convertible at a price per share equal to a 20 % premium to the 5 -day VWAP of the Company’s common shares as traded on the Nasdaq Capital Market immediately prior to the date on which the Company obtains FDA approval of PEDMARK (the “Second Closing Trigger”), provided, however, that the Second Closing Note and Subsequent Closing Notes Conversion Price shall be no more than one hundred and fifty percent ( 150 %) of the Initial Conversion Price.

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

Half of such fee will be paid by the issuance on the first closing of warrants to purchase 55,498 Fennec common shares and half is payable in cash or warrants, at our election, on the second closing.

The warrants will be exercisable at a price per share of $ 8.11 and will have a term of five years from the date of the grant.The initial $ 5 million tranche will be used to pay off the outstanding balance of the Bridge Bank Loan Security Agreement (Note 7).

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

What changed 10-Q

Item 1. Financial Statements