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Item 7. Management’s Discussion and Analysis

2024-03-29 compared with 2023-03-29 · 99 added, 92 removed, 177 unchanged (52% of the section changed)

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Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business, includes forward looking statements that involve risks and uncertainties.

As a result of many factors, including those factors set forth in the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” section of this Annual Report, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis.

As a result of many factors, including those factors set forth in the sections entitled “Cautionary Note Regarding Forward-Looking Statements” and “Item 1A - Risk Factors” of this Annual Report, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis.

We are a commercial-stage biopharmaceutical company focused on our only product candidate PEDMARK®.

On September 20, 2022, we received approval from the FDA for PEDMARK ® (sodium thiosulfate injection) to reduce the risk of ototoxicity associated with cisplatin in pediatric patients one month of age and older with localized, non-metastatic solid tumors.

This approval makes PEDMARK ® the first and only treatment approved by the FDA in this area of significant unmet medical need.

On October 17, 2022 we announced commercial availability of PEDMARK ® in the United States.

We sell our product through an experienced field force including Regional Pediatric Oncology Specialists and medical science liaisons who are helping to educate the medical communities and patients about cisplatin induced ototoxicity and our programs supporting patient access to PEDMARK ® .

This approval makes PEDMARK® the first and only treatment approved by the FDA in this area of unmet medical need.

On October 17, 2022, we announced commercial availability of PEDMARK® in the U.

In addition, in January 2023, PEDMARK® was included in the National Comprehensive Cancer Network (“NCCN”) clinical practice guidelines for Adolescent and Young Adult (“AYA”) Oncology with a category 2A recommendation.

In June 2023, we received European Commission Marketing Authorization for PEDMARQSI ® (known as PEDMARK ® in the U.S.) Further, the decision included the receipt of a PUMA in the EU with up to 8 years of data exclusivity plus 2 years of market protection.

In March 2024, the Company announced an exclusive licensing agreement with Norgine, which will commercialize PEDMARQSI ® in in Europe, Australia and New Zealand in 2024.

In the U.S., we sell our product through an experienced field force including Regional Pediatric Oncology Specialists and medical science liaisons who are helping to educate the medical communities and patients about cisplatin induced

ototoxicity and our programs supporting patient access to PEDMARK ® .

We have obtained applicable regulatory approval to sell PEDMARK ® in the U.S.

and authorization from the European Commission Marketing Authorization for PEDMARQSI ® in the EU.

Commercialization of PEDMARQSI ® in Europe, Australia and New Zealand will be undertaken by Norgine.

The Company recognizes there may still be a need to establish collaborations that provide us with up-front payments, licensing fees, milestone payments, royalties, or other revenue to further commercialize our product around the world.

Further, we have established Fennec HEARS ® , a comprehensive single source program designed to connect PEDMARK ® patients to both patient financial and product access support.

The program offers assistance and resources, regardless of insurance type, that can address co-pays or lack of coverage when certain eligibility requirements are met.

Fennec HEARS also provides access to care coordinators that can answer insurance questions about coverage for PEDMARK ® and provide tips and resources for managing treatment.

We currently have three patents listed for PEDMARK ® in the FDA’s Orange Book which are the “190”, “728” and “984” patents.

The “190” patent is exclusively in-licensed from Oregon Health & Science University (“OHSU”) and relates to a method of using our PEDMARK ® product.

The “190” expires in 2038 and the “728” and “984” patents expire in 2039, respectively, unless held invalid or unenforceable by a court or final jurisdiction.

Further, in January 2023, the USPTO issued Notices of Allowance to us for one additional patent applications that cover the PEDMARK ® pharmaceutical formulation.

We expect this additional U.S.

patent to issue in Q1 of 2023 or Q2 of 2023.

This patent will expire in 2039, unless held invalid or unenforceable by a court of final jurisdiction.

Fennec HEAR® also provides access to care coordinators that can answer insurance questions about coverage for PEDMARK® and provide tips and resources for managing treatment.

We received Orphan Drug Exclusivity for PEDMARK ® in January 2023, which provides seven years of market exclusivity from the date of its FDA approval on September 20, 2022 until September 20, 2029.

We currently have three patents listed for PEDMARK ® in the FDA’s Orange Book.

In September 2022, the USPTO issued the 728 patent, in December 2022, the USPTO issued the 984 patent and in April 2023, the USPTO issued the 793 patent, each that cover PEDMARK ® pharmaceutical formulation.

The 728 patent, the 984 patent and the 793 patent will expire in 2039.

We are also pursuing additional patent applications in both the U.S.

and internationally for PEDMARK ® .

Hearing loss among children receiving platinum-based chemotherapy is frequent, permanent and often severely disabling.

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

In addition, adults undergoing chemotherapy for several common malignancies, including ovarian cancer, testicular cancer, and particularly head and neck cancer and brain cancer, often receive intensive platinum-based therapy and may experience severe, irreversible hearing loss, particularly in the high frequencies.

and Europe, it is estimated that, annually, over 10,000 children may receive platinum-based chemotherapy.

The incidence of ototoxicity depends upon the dose and duration of chemotherapy.

Other than PEDMARK ® , there is currently no established preventive agent for this hearing loss and only expensive, technically difficult and sub-optimal cochlear (inner ear) implants have been shown to provide some benefit.

and abroad for PEDMARK ® .

PEDMARK ® Product Overview

PEDMARK ® is the first and only therapy approved by the FDA indicated to reduce the risk of ototoxicity associated with cisplatin treatment in pediatric patients with localized, non-metastatic, solid tumors.

Further, PEDMARQSI ® , known as PEDMARK ® in the U.S.

was granted marketing authorization by the European Commission in June 2023.

PEDMARK ® is a unique formulation of sodium thiosulfate in single-dose, ready-to-use vials for intravenous use in pediatric patients.

PEDMARK ® is also the only therapeutic agent with proven efficacy and safety data with an established dosing paradigm, across two open-label, randomized Phase 3 clinical studies, the Clinical Oncology Group (“COG”) Protocol ACCL0431 and SIOPEL 6.

and Europe, it is estimated that more than 10,000 children annually may receive platinum-based chemotherapy.

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

There is currently no established preventive agent for this hearing loss and only expensive, technically difficult, and sub-optimal cochlear (inner ear) implants have been shown to provide some benefit.

Infants and young children that suffer ototoxicity at critical stages of development lack speech language development and literacy, and older children and adolescents lack social-emotional development and educational achievement.

In August 2018, the Pediatric Committee (“PDCO”) of the European Medicines Agency (“EMA”) accepted our pediatric investigation plan (“PIP”) for sodium thiosulfate with the trade name Pedmarqsi for the condition of the prevention of platinum-induced hearing loss.

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

The indication targeted by our PIP is for the prevention of platinum-

induced ototoxic hearing loss for standard risk hepatoblastoma (“SR-HB”).

Additional tumor types of the proposed indication will be subject to the Committee for Medicinal Products for Human Use (“CHMP”) assessment at the time of the MAA.

No deferred clinical studies were required in the positive opinion given by PDCO.

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

A PUMA is a dedicated marketing authorization covering the indication and appropriate formulation for medicines developed exclusively for use in the pediatric population and provides market protection up to 10 years.

Therefore, this decision allows us to proceed with the submission of a PUMA in the European Union (“EU”) with incentives of automatic access to the centralized procedure and up to 10 years of market protection.

In February 2020, we announced that we had submitted a MAA for the prevention of ototoxicity induced by cisplatin chemotherapy patients 1 month to < 18 years of age with localized, non-metastatic, solid tumors.

The EMA continues its review of our MAA.

PEDMARK ® has been studied by co-operative groups in two Phase 3 clinical studies of survival and reduction of ototoxicity, COG ACCL0431 and SIOPEL 6.

Both studies have been completed.

The COG ACCL0431 protocol enrolled pediatric patients with cancers typically treated with intensive cisplatin therapy for localized and disseminated disease, including newly diagnosed hepatoblastoma, germ cell tumor, osteosarcoma, neuroblastoma, medulloblastoma, and other solid tumors.

SIOPEL 6 enrolled only hepatoblastoma patients with localized tumors.

Cisplatin Induced Ototoxicity

Cisplatin and other platinum compounds are essential chemotherapeutic agents for the treatment of many pediatric malignancies.

Unfortunately, platinum-based therapies can cause ototoxicity, or hearing loss, which is permanent, irreversible, and particularly harmful to the survivors of pediatric cancer.

The incidence of ototoxicity depends upon the dose and duration of chemotherapy, and many of these children require lifelong hearing aids or cochlear implants, which can be helpful for some, but do not reverse the hearing loss and can be costly over time.

Infants and young children that are affected by ototoxicity at critical stages of development lack speech and language development and literacy, and older children and adolescents often lack social-emotional development and educational achievement.

Now that we have obtained applicable regulatory approval to sell PEDMARK ® in the United States, we recognize there may still be a need to establish collaborations that provide us with up-front payments, licensing fees, milestone payments, royalties or other revenue.

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As of December 31, 2023, our accumulated deficit was approximately $219.2 million ($203.2 million at December 31, 2022).

We believe that our cash and cash equivalents as of December 31, 2022, which totaled $23.8 million, cash from product sales, plus the remaining Petrichor Financing of $20 million in convertible notes subject to mutual agreement between the Company and Petrichor (see Note 1 and Note 7 to consolidated financial statements contained elsewhere in this report), will be sufficient to meet our cash requirements through at least the next twelve months.

Our projections of our capital requirements are subject to substantial uncertainty, and more capital than we currently anticipate may be required thereafter.

To finance our continuing operations, we may need to raise substantial additional funds through either the sale of additional equity, the issuance of debt, the establishment of collaborations that provide us with funding, the out-license or sale of certain aspects of our intellectual property portfolio or from other sources.

We may not be able to raise the necessary capital, or such funding may not be available on financially acceptable terms if at all.

If we cannot obtain adequate funding in the future, we might be required to further delay, scale back or eliminate certain research and development studies, consider business combinations, or even shut down some, or all, of our operations.

We believe that our cash and cash equivalents as of December 31, 2023, which totaled $13.3 million, cash from product sales, plus the remaining Petrichor Financing of $15 million in convertible notes, which are subject to mutual agreement between us and Petrichor (see Note 1 and Note 8 to consolidated financial statements contained elsewhere in this Annual Report), along with the approximately $43 million we received in the Norgine licensing deal will be sufficient to meet our cash requirements through at least the next twelve months.

We anticipate the Norgine licensing deal will alleviate the need to find alternative sources of financing and help us to fund operations while we expand our markets to areas outside of U.S., Europe, Australia and New Zealand.

We continue to look to establish collaborations that will provide us with funding, for the out-license or sale of certain aspects of our intellectual property portfolio or from other sources.

Our operating expenses will depend on many factors, including the progress of our commercialization efforts and efficiency of our operations and current resources.

Our research and development expenses, which include expenses associated with our clinical trials, drug manufacturing to support clinical programs, consulting fees, sponsored research costs, toxicology studies, license fees, milestone payments, and other fees and costs related to the comercialization of our product, will depend on the availability of financial resources, the results of our clinical trials, and any directives from regulatory agencies, which are difficult to predict.

Our research and development expenses, which include expenses associated with our clinical trials, drug manufacturing to support clinical programs, consulting fees, sponsored research costs, toxicology studies, license fees, milestone payments, and other fees and costs related to the commercialization of our product, will depend on the availability of financial resources, the results of our clinical trials, and any directives from regulatory agencies, which are difficult to predict.

Our general and administration expenses include expenses associated with the compensation of employees, stock-based compensation, professional fees, consulting fees, insurance and other administrative matters associated in support primarily of our commercialization of PEDMARK ® .

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December 31, 2022

PEDMARK product sales, net

PEDMARK (R) product sales, net

Cost of product sales

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Interest expense

Unrealized foreign exchange loss

Unrealized foreign exchange gain/(loss)

Interest income

● Commercial launch of PEDMARK ® commenced in October 2022.

The Company recorded net product sales of $1.54 million in fiscal 2022.

The Company recorded discounts and allowances against sales in the amount of $0.2 million and cost of products sold of $0.1 million.

The Company recorded net product sales of $21.3 million in fiscal 2023 compared to $1.5 million in 2022.

The Company recorded discounts and allowances against sales in the amount of $2.5 million and cost of products sold of $1.3 million in 2023.

The Company had gross profit of $20.0 million for fiscal year ended 2023.

In fiscal 2021, the Company had no revenues.

In fiscal 2022, the Company had gross profit of $1.4 million.

● Research and development expense decreased by $3.5 million in fiscal 2023 as compared to fiscal 2022.

The Company reduced research and development costs when it received FDA approval of PEDMARK ® .

The majority of traditional research and development expenses associated with PEDMARK ® are now recorded as general and administrative expenses or capitalized into inventory and eventually recorded to costs of product sales.

● The Company began incurring selling and marketing expenses when it expanded its payroll to include an internal salesforce.

Once FDA approval was obtained for PEDMARK ® , almost all research and development activities ceased.

● The Company began incurring selling and marketing expenses when it expanded its payroll to include an internal sales force.

Selling and marketing expenses include distribution costs, logistics, shipping and insurance, advertising, wages commissions and out-of-pocket expenses.

The Company recorded $2.8 million in selling and marketing expenses in fiscal 2022.

The Company recorded $12.1 million in selling and marketing expenses in fiscal 2023, compared to $2.8 million in fiscal year 2022.

The increase relates to increased headcount and marketing expenses associated with the launch of PEDMARK as well as distribution and other fees paid to certain distributors in connection with the sales of our products.

● There was a $2.9 million increase in general and administrative expenses in fiscal 2023 compared to fiscal 2022.

Non-cash expenses associated with equity remuneration increased by $1.3 million in fiscal year 2023 over 2022.

Payroll and benefits related expenses rose by $0.7 million in fiscal 2023 compared to fiscal 2022.

There was an increase in legal costs of $1.4 million in fiscal 2022 over fiscal 2021.

This net increase is comprised of an increase in $0.2 million in class action suit defense, a decrease in general legal expense of $0.2 million and an increase of $1.4 million in intellectual property litigation.

Pre-commercialization activities rose by $0.4 million in fiscal 2022 over fiscal 2021.

Non-cash expenses associated with equity remuneration increased by $0.2 million.

There was an increase in consulting and professional costs of $0.8 million in fiscal 2023 over fiscal 2022.

● The value of our Processa shares declined by $0.04 million for the year ended December 31, 2023.

For fiscal year ended December 31, 2021, there was a gain of $0.03 million.

For fiscal year ended December 31, 2022, there was a loss of $0.2 million.

We acquired the Processa shares on October 30, 2020.

The Processa shares are marked to market at each balance sheet date with the resulting change in value being booked as an unrealized gain or loss.

● Amortization expense was up $0.1 million in fiscal 2022, as we wrote off the entire capitalized amount associated with the Bridge Bank Loan and Security Agreement origination costs but replaced it with the Petrichor Opportunities Fund I LP Senior Secured Securities Notes.

The increase in amortization relates to the relative size of the deferred asset created by the capitalization of the loan origination and access fees.

● Other losses increased by $0.6 million, driven mainly by interest on long-term debt.

● Interest income increased in fiscal 2022 as compared to fiscal 2021 by $0.1 million, due to higher average balances and sharply increased rates on money market accounts for the comparable periods.

● Amortization expense increased $0.1 million in fiscal 2023.

● Interest expenses were up by $2.4 million in fiscal 2023 compared to fiscal 2022.

The increase was driven mainly by higher average debt balances and higher interest rates on long-term debt.

● Interest income increased in fiscal 2023 as compared to fiscal 2022 by $0.2 million, due to higher rates on money market accounts for the comparable periods.

Quarterly Information

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December 31, 2022

PEDMARK product sales, net

PEDMARK (R) product sales, net

Cost of product sales

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Other (loss), net

Revenues reported in the three months ended December 31, 2022, represent product sales of PEDMARK ® .

We announced product launch of PEDMARK ® on October 17, 2022.

Revenues reported for the three months ended December 31, 2023, were $9.7 million, which is an increase of $8.2 million over the same period in 2022.

Gross profit from sales of PEDMARK ® increased by $7.6 million for the three months ended December 31, 2023, over the same period in 2022.

We reported a loss from operations of $1.8 million for the three months ended December 31, 2023, compared to a loss from operations of $6.1 million for the same period in 2022.

Research and development expenses totaled $0.1 million for the three months ended December 31, 2022, down by $0.4 million over the same period in 2021.

The Company recorded selling and marketing expenses of $2.8 million in the quarter ended December 31, 2022.

Research and development expenses decreased by $0.09 for the three months ended December 31, 2023, over the same period in 2022.

The Company recorded selling and marketing expenses of $3.9 million in the quarter ended December 31, 2023, as compared to $2.8 million in the same period in 2022.

General and administrative expenses increased by $2.3 million in the three months ended December 31, 2023, as compared to the same period in 2022.

There was an increase of $795 related to product launch activities, $334 related to professional fees, $89 in payroll and benefits and an $87 increase in miscellaneous items.

There was an increase of $1.8 million related to commercial spending and consulting, $0.3 million related to increased payroll and benefits and $0.1 million in legal fees.

These increases were offset by a decrease in non-cash equity expenses of $318.

There was an unrealized loss of $0.06 million on the Processa shares for quarter ended December 31, 2022.

The Processa shares will be marked to market at each balance sheet date.

Interest income was up $0.14 million for the quarter ended December 31, 2022 compared to the same period a year prior.

This was driven by higher daily balances and higher interest rates.

Amortization and interest expenses were up

$0.74 million for the quarter ended December 31, 2022 over the same period in 2021.

There was an unrealized loss of $0.004 million on the Processa shares for the quarter ended December 31, 2023.

Interest income increased $0.04 million for the quarter ended December 31, 2023, compared to the same period a year prior.

Amortization and interest expenses were up $0.17 million for the quarter ended December 31, 2023 over the same period in 2022.

The vast majority of this is interest and is driven by larger debt load and higher interest rates.

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Liquidity and Capital Resources

● There was a $2.7 million increase in cash and cash equivalents between December 31, 2022 and December 31, 2021.

The net increase was the result of cash operating expenses, offset by the net $20.0 million received from the Petrichor note and $0.9 million received from the exercise of 273 options.

During the period ended December 31, 2022, cash for operations was used mainly on the pre-commercialization activities of PEDMARK ® prior to FDA approval and then commercialization activities post NDA approval.

● The increase in other current assets of $1.7 million between December 31, 2021 and December 31, 2022 primarily relates to an increase of $2.1 million in inventory and accounts receivable offset by $0.4 million decrease in the value of Processa shares and prepaid assets.

● There was a $10.5 million net decrease in cash and cash equivalents between December 31, 2023, and December 31, 2022.

The net decrease was the result of cash operating expenses, offset by the collection of accounts receivable in the amount of $7.8 million, net $5.0 million received from the Petrichor note and $1.7 million received from the exercise of 2,058 options.

During the period ended December 31, 2023, cash for

operations was used mainly on the pre-commercialization activities of PEDMARK ® prior to FDA approval and then commercialization activities post NDA approval.

● The increase in other current assets of $10.6 million between December 31, 2022, and December 31, 2023, primarily relates to an increase of $7.3 million in accounts receivable, an increase of $1.6 million in inventory and an increase of $1.8 million in pre-paid expenses and the value of Processa shares.

● Current liabilities at December 31, 2023 increased $2.9 million compared to December 31, 2022.

Accounts payable was up $1.6 million over prior year highlighting our post commercialization activity.

Accrued expenses were up $1.4 million over prior year primarily due to a $1.3 million increase in anticipated bonus payments and employee paid time off.

● Working capital increased by $1.4 million between December 31, 2022 and December 31, 2021.

The increase was a result of cash used in operations offset by net inflow of cash of $20.0 million received from the Petrichor Note, and $0.9 million received from stock option exercises and interest income.

Accounts payable was up $1.4 million over prior year highlighting EU commercialization activity.

Accrued expenses were up $1.5 million over prior year primarily due to a $0.7 million increase in sales and inventory related items and $0.5 million increase in anticipated bonus payments and employee paid time off.

● Working capital decreased by $2.8 million between December 31, 2023, and December 31, 2022.

The decrease was a result of cash used in operations offset by net inflow of cash from collections of accounts receivable of $7.8 million, $5.0 million received from the Petrichor Note, and $1.7 million received from stock option exercises and interest income.

Selected Cash Flow Data

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The net cash flow used in operating activities for the year ended December 31, 2023 was approximately $17.1 million as compared to $18.1 million in 2022.

There was an increase in net loss of $6.4 million in fiscal 2022 compared to fiscal 2021.

In 2022 non-cash items added back to net loss increased by $0.5 million over 2021 and net changes in balance sheet accounts added back another $0.2 million over 2021.

Net financing activities in 2022 provided approximately $20.7 million from funding of the Petrichor Note, net of fees, and approximately $0.9 million arising from various option exercises.

There was a decrease in net loss of $7.7 million in fiscal 2023 compared to fiscal 2022.

In 2023, non-cash items added back to net loss increased by $1.1 million over 2022 and net changes in balance sheet accounts subtracted $6.8 million in 2023.

Net financing activities in 2023 provided approximately $14.1 million less than in 2022.

This was mainly from the funding of the Petrichor Note, net of fees, and approximately $0.8 million arising from various option exercises.

We continue to pursue various strategic alternatives including collaborations with other pharmaceutical and biotechnology companies.

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

unfavorable toxicology in our clinical programs, our drug substance requirements to support clinical

unfavorable toxicology in our clinical programs, our drug substance requirements to support clinical programs;

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

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We had cash and cash equivalents of approximately $13.3 million as of December 31, 2023.

We currently anticipate that our available capital resources, including our existing cash and cash equivalents, accounts receivable balances and the remaining $20 million available under the SPA by mutual agreement between the Company and Petrichor, will be sufficient to meet our expected working capital and capital expenditure requirements as our business is currently conducted for at least the next 12 months.

We currently anticipate that our available capital resources, including our existing cash and cash equivalents, accounts receivable balances and the remaining $15 million available under the SPA and subject to mutual agreement between the Company and Petrichor, will be sufficient to meet our expected working capital and capital expenditure requirements as our business is currently conducted for at least the next 12 months.

In March of 2024, we announced a licensing deal with Norgine.

The deal with Norgine provided the Company with approximately $43 million cash with approximately another $229 million in the future from milestone payments and royalties.

Financial Instruments

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At December 31, 2023, we had approximately $1.4 million in our cash accounts and $11.9 million in savings and money market accounts.

While we have never experienced any loss or write down of our money market investments since our inception, the amounts we hold in money market accounts are substantially above the $250,000 amount insured by the FDIC and may lose value.

While we have never

experienced any loss or write down of our money market investments since our inception, the amounts we hold in money market accounts are substantially above the $250,000 amount insured by the FDIC and may lose value.

Our investment policy is to manage investments to achieve, in the order of importance, the financial objectives of preservation of principal, liquidity and return on investment.

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Contractual Obligations and Commitments

None, other than the OHSU Agreement and lease agreements described in notes to our consolidated financial statements contained elsewhere in this Annual Report, and the severance amounts as disclosed in the Annual Report.

Critical Accounting Policies and Estimates

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Expected life

1.50 - 6 years

Common shares and warrants

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Newly Adopted and Recent Accounting Pronouncements

I n May 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-04, Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40).

This ASU provides measurement guidance for a modification or an exchange of a freestanding equity classified written call option that is not within the scope of another Topic.

The Company adopted the ASU as of January 1, 2022 and its adoption did

not have a significant impact on the Company's consolidated financial statements.

The Company will apply the amendments prospectively to modifications or exchanges occurring on or after January 1, 2022.

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-13, Financial Instruments – Credit Losses (Topic 326) and subsequently related amendments (ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10, ASU 2019-11 and ASU 2022-02).

This guidance replaces the existing incurred loss impairment guidance and establishes a single allowance framework for financial assets carried at amortized cost based on expected credit losses.

The estimate of expected credit losses requires the incorporation of historical information, current conditions, and reasonable and supportable forecasts.

This ASU will be effective for the year ended December 31, 2023.

The Company is currently evaluating the effect the adoption of this ASU will have on the consolidated financial statements.

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40).

In August 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40).

The new standard eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity's own equity.

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This ASU will be effective for the year ended December 31, 2024.

The Company is currently evaluating the effect the adoption of this ASU will have on the consolidated financial statements.

In June 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022-03, Fair Value Measurement (Topic 820):

The Company adopted this ASU in Q1 of 2023.

In June 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022-03, Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which (1) clarifies the guidance in Topic 820 on the fair value measurement of an equity security that is subject to contractual restrictions that prohibit the sale of an equity security and (2) requires specific disclosures related to such an equity security.

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The Company is currently evaluating the effect the adoption of this ASU will have on the consolidated financial statements.

In June 2022, the FASB issued Accounting Standards Update ("ASU") 2022-03, Fair Value Measurement (Topic 820):

sale of an equity security and (2) requires specific disclosures related to such an equity security.

This ASU will be effective for the year ended December 31, 2024.

The Company adopted this ASU in 2023.

In December 2023 , the Financial Accounting Standards Board issued Accounting Standards Update No.

2023-09 , “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures,” which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction.

This guidance will be effective for the annual periods beginning the year ended December 31, 2025.

The Company is currently evaluating the effect the adoption of this ASU will have on the consolidated financial statements.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis