What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-26 compared with 2024-03-29 · 134 added, 147 removed, 129 unchanged (69% of the section changed)

7 unchanged sentences

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.

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

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 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.

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

The licensing agreement provided us with approximately $43,200 up front and may provide us with up to approximately $230,000 in milestone and royalty payments in the future.

Norgine announced the launch of Germany and the U.K.

in early 2025.

In the U.S., we sell PEDMARK ® through an experienced field force 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 received Orphan Drug Exclusivity for PEDMARK ® in January 2023, which provides seven years of market exclusivity from its FDA approval on September 20, 2022, until September 20, 2029.

We currently have six patents listed for PEDMARK ® in the FDA Orange Book.

In September 2022, the USPTO issued Patent No.

11,291,728 (the “US ‘728 Patent”), in December 2022, the USPTO issued Patent No.

11,510,984 (“US ‘984 Patent”) and in April 2023, the USPTO issued Patent No.

11,671,793 (“US ‘793 Patent”) that covers PEDMARK ® pharmaceutical formulation.

Further, additional issued patents included US 11,964,018 Patent (the “’US ‘018 Patent) and US 11,992,530 Patent (the “US ’530 Patent”) and US 11,998,604 Patent (the “US ’604 Patent”) covering methods of using our PEDMARK ® product to reduce ototoxicity in a patient receiving a platinum based chemotherapeutic for the treatment of a cancer.

The US ‘728, US ‘984 US ‘793, US ‘018, US’530 and US ’604 patents will expire in 2039.

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

and abroad for PEDMARK ® .

and internationally 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.

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.

The COG ACCL0431 protocol enrolled childhood cancer patients 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.

In the United States, PEDMARK® is the first and only therapy approved to mitigate the risk of ototoxicity associated with cisplatin in pediatric patients aged one month and older with localized, non-metastatic solid tumors.

Further, the National Comprehensive Cancer Network (NCCN) recommend the use of PEDMARK ® to reduce the risk of cisplatin-induced ototoxicity in patients with localized, non-metastatic solid tumors (category 2A) for Adolescent and Young Adult (AYA) Oncology.

As of January 2025, all medical compendia have incorporated Fennec’s clinical updates, and AHFS, the largest online platform for pharmacists, has updated its content to reflect and differentiate PEDMARK ® in accordance with its labeling.

PEDMARK ® is the first and only FDA- and EMA-approved agent designed to reduce the risk of cisplatin-induced hearing loss (CIO) in children with localized solid tumors.

The strategic imperatives driving the execution of PEDMARK ® ’s strategy include increasing awareness of unmet patient needs and emphasizing the importance of preventing CIO among oncologists.

A key goal is to establish PEDMARK ® as the standard of care (SOC) for all CIO prevention.

Additionally, efforts focus on expanding adoption beyond oncologists by ensuring healthcare providers (HCPs) gain confidence in and have positive experiences with PEDMARK ® .

Ensuring seamless access for advocacy groups, payers, and providers is also a priority, along with activating patients and caregivers through disease education to drive demand for PEDMARK ® .

Key activities supporting these objectives include an expanded sales team with a strong track record in both academic and community settings, partnerships with group purchasing organizations, and specialty pharmacy offerings such as home infusions, white bag delivery, and direct billing.

Furthermore, digital materials, a digital speaker bureau to engage pediatric oncologists, audiologists, nurses, and pharmacists, along with a patient access services hub and ongoing support from advocacy groups, are all integral components of the strategy.

and Europe, it is estimated that more than 10,000 pediatric may receive platinum-based chemotherapy on an annual basis.

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

PEDMARK® is the first and only therapy approved to mitigate the risk of ototoxicity associated with cisplatin, a form of platinum based chemotherapy, in pediatric patients aged one month and older with localized, non-metastatic solid tumors.

Beyond the use of PEDMARK, only expensive, technically difficult, and sub-optimal cochlear (inner ear) implants have been shown to provide some benefit.

pediatric oncology landscape includes approximately 200 targeted pediatric hospital centers, such as those within the Children's Oncology Group (COG), National Cancer Institute (NCI), and National Comprehensive Cancer Network (NCCN) institutions.

Around 80% of pediatric cancer patients receive treatment at these key centers.

The Adolescent and Young Adult (AYA) oncology patient is defined as an individual between the ages of 15 and 39 at the time of initial cancer diagnosis.

In the U.S., Fennec estimates that approximately 20,000 cisplatin chemotherapy patients are treated annually with the primary tumor types of thyroid cancer, breast cancer, germ cell cancer and testicular cancer.

Adolescent and Young Adult (AYA) oncology landscape is shaped by a combination of academic and community centers across the nation.

Academic institutions play a critical role in establishing the treatment framework, with 72 NCI-designated academic centers treating approximately 20% of AYA oncology patients.

In contrast, around 80% of patients are treated at 3,750 community centers throughout the country.

Cisplatin Induced Ototoxicity (“CIO”)

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

The incidence of ototoxicity depends upon the dose and duration of chemotherapy, and many of these patients 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.

We generated a net loss of approximately $16.05 million for the fiscal year ended December 31, 2023, and a net loss of $23.71 million for the fiscal year ended December 31, 2022.

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, 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 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 ® .

It is estimated that greater than 50% of pediatric patients may suffer permanent hearing loss as a result of CIO and approximately 40-80% of adult patients may suffer permanent hearing loss as a result of CIO.

European Commission Marketing Authorization

PEDMARQSI ® (PEDMARK ® brand name in Europe.) received European Commission Marketing Authorization in June 2023 and received U.K.

approval in October 2023.

As previously noted, in March 2024, we entered into an agreement with Norgine, a leading European specialist pharmaceutical company.

This is an exclusive licensing agreement under which Norgine will commercialize PEDMARQSI ® in Europe, Australia and New Zealand.

PEDMARQSI ® is the first and only approved therapy in the EU and U.K.

for the prevention of ototoxicity (hearing loss) induced by cisplatin chemotherapy in patients 1 month to < 18 years of age with localized, non-metastatic solid tumors.

Under the terms of the licensing agreement, Fennec received approximately $43 million in upfront consideration and may receive up to approximately $230 million in additional commercial and regulatory milestone payments and double-digit tiered royalties on net sales of PEDMARQSI ® in the licensed territories up to the mid-twenties.

Norgine will be responsible for all commercialization activities in the licensed territories and will hold all marketing authorizations in the licensed territories.

Most recently, in December 2024, PEDMARQSI received positive final draft guidance from the National Institute for Health and Care Excellence (NICE).

Further, in early 2025, Norgine announced the launch of PEDMARQSI in Germany.

Results of Operations

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December 31, 2023

PEDMARK (R) product sales, net

Cost of product sales

Product sales, net

Licensing revenue

Total revenue

Operating expenses:

Cost of product sales

Research and development

2 unchanged sentences

Total operating expense

Loss from operations

Income / (loss) from operations

Unrealized loss on securities

1 unchanged sentence

Interest expense

Unrealized foreign exchange gain/(loss)

Unrealized foreign exchange (loss)/gain

Interest income

● Commercial launch of PEDMARK ® commenced in October 2022.

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 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 ® .

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.

Loss before income tax

● The Company recorded net product sales of $29.6 million in fiscal 2024 compared to $21.3 million in 2023 as the Company increased market penetration and access for PEDMARK as the Company expanded its focus to the adolescent and young adult (AYA) population.

Further, the Company recorded $18.0 million in licensing revenue related to the Norgine transaction.

The Company recorded discounts and allowances against sales in the amount of $9.3 million and cost of products sold of approximately $3.2 million in 2024.

● Research and development expense increased by $0.3 million in fiscal 2024 as compared to fiscal 2023.

Our research and development activities for this period consisted of costs associated with investigator initiated clinical trials.

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

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 consulting and professional costs of $0.8 million in fiscal 2023 over fiscal 2022.

We recorded $18.4 million in selling and marketing expenses for 2024, compared to $12.1 million for 2023.

The increase is largely related to increased payroll and additional marketing expenses in the comparable period as we focused on expanding our outreach to community oncology centers and AYA population.

● There was a $2.8 million increase in general and administrative expenses 2024 compared to 2023.

There was an increase in consulting and professional costs compared to same period in 2023 which is largely attributable to increased European pre-commercialization related expenses and expenses associated with the Norgine transaction and intellectual property expenses related to ongoing litigation.

● The value of our Processa shares declined by $0.01 million for the year ended December 31, 2024.

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 increased $0.1 million in fiscal 2023.

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

For year ended December 31, 2023, there was a loss of $0.04 million.

● Amortization expense decreased $0.2 million in fiscal 2024.

● Interest expense increased by $0.7 million in fiscal 2024 compared to fiscal 2023.

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

The following table presents selected consolidated financial data for each of the last eight quarters through December 31, 2023, as prepared under generally accepted accounting principles within the United States, or U.S.

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

Net (Loss)/Income for the

Basic Net (Loss)/Income per

Diluted Net (Loss)/Income per

March 31, 2022

June 30, 2022

September 30, 2022

December 31, 2022

March 31, 2023

June 30, 2023

September 30, 2023

December 31, 2023

Quarter ended December 31, 2023 versus 2022

Quarter Ended

In thousands of U.S.

December 31, 2023

December 31, 2022

PEDMARK (R) product sales, net

Cost of product sales

Operating expenses:

Research and development

Selling and marketing

General and administration

Total operating expense

Loss from operations

Unrealized (loss)/gain on securities

Interest income

Amortization expense

Interest expense

Other (loss), net

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 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 $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 $0.004 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.

Prospective interest expense is expected to decline as a result of the Company’s debt paydown of $13 million in December 2024.

● Interest income increased in fiscal 2024 as compared to fiscal 2023 by $1.2 million, due to higher cash balances and higher rates on money market accounts for the comparable periods.

● Income tax expense increased due to the Company’s income inclusion from Norgine licensing transaction in March 2024.

Selected Asset and Liability Data (thousands):

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Accumulated deficit

Shareholders’ (deficit) equity

Shareholders’ deficit

Liquidity and Capital Resources

● 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 $1.4 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.

● There was a $13.4 million net increase in cash and cash equivalents between December 31, 2024, and December 31, 2023.

The net increase was primarily the result of cash inflows of $43.2 million from the Norgine licensing transaction, cash collections on product sales and proceeds from the exercise of options which were offset by $13.0 million paid off on the Petrichor Financing note and cash operating expenses.

● The increase in other current assets of $3.8 million between December 31, 2023, and December 31, 2024, primarily relates to an increase of $4.1 million in accounts receivable, an decrease of $1.1 million in inventory and an increase of $0.5 million in prepaid expenses.

● Current liabilities at December 31, 2024 decreased $0.6 million compared to December 31, 2023.

● Working capital increased by $17.8 million between December 31, 2024, and December 31, 2023.

The increase was primarily as a result of cash inflows from the Norgine licensing transaction and cash collections on product sales offset by cash used in operations for the commercialization of PEDMARK and the paydown of the Petrichor notes.

Selected Cash Flow Data

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December 31, 2023

Net cash used in operating activities

Net cash provided by / (used in) operating activities

Net cash provided by investing activities

Net cash provided by financing activities

Net cash (used in) / provided by financing activities

Net cash flow

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.

The net cash flow from operating activities for the year ended December 31, 2024 was approximately $27.0 million as compared to $17.1 million net cash used from operating activities in 2023.

There was a decrease in net loss of $15.6 million in fiscal 2024 compared to fiscal 2023.

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.

In 2024, non-cash items added back to net loss increased by $4.7 million over fiscal 2023 and net changes in balance sheet accounts added $23.4 million in fiscal 2024.

Net financing activities in fiscal 2024 provided approximately $20.3 million less than in fiscal 2023.

This was mainly from $5 million being borrowed in 2023 and $13 million being paid back in 2024 on the Petrichor notes, net of fees, and approximately $0.5 million less arising from various option exercises in 2024 versus 2023.

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

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We had cash and cash equivalents of approximately $26.6 million as of December 31, 2024.

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.

We currently anticipate that our available capital resources, including our existing cash and cash equivalents and the accounts receivable balances will be sufficient to meet our expected working capital and capital expenditure requirements as our business is currently conducted for at least the next 12 months.

Financial Instruments

1 unchanged sentence

At December 31, 2024, we had approximately $26.6 million in our cash accounts and $24.6 million in savings and money market accounts.

While we have never

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

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 $0.25 million 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.

13 unchanged sentences

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.

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

Critical Accounting Policies and Estimates

5 unchanged sentences

The following description of critical accounting policies, judgments and estimates should be read in conjunction with our December 31, 2024 consolidated financial statements.

Credit Losses

The Company estimates and records a provision for its expected credit losses related to its trade receivables.

The Company considers historical collection rates, the current financial status of its customers, macroeconomic factors, and other industry-specific factors when evaluating for current expected credit losses.

Forward-looking information is also considered in the evaluation of current expected credit losses.

However, because of the short time to the expected receipt of accounts receivable, the Company believes that the carrying value, net of excepted losses, approximates fair value and therefore, relies more on historical and current analysis of its trade receivables.

To determine the provision for credit losses for accounts receivable, the Company has disaggregated its accounts receivable by class of customer, as the Company determined that risk profile of its customers is consistent based on the life sciences industry.

Each class of customer component is analyzed for estimated credit losses individually.

In doing so, the Company establishes a customer profile, based on the previous collections of accounts receivable by the age of such receivables, and evaluates the current and forecasted financial position of its customers, as available.

Further, the Company considers macroeconomic factors and the status of the life sciences industry to estimate if there are current expected credit losses within its trade receivables based on the trends and the Company’s expectation of the future status of such economic and industry-specific factors.

Also, specific allowance amounts are established based on review of outstanding invoices to record the appropriate provision for customers that have a higher probability of default.

Revenue Recognition

3 unchanged sentences

As part of the accounting for these arrangements, the Company must make significant judgments, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each performance obligation.

License Agreements

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

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

Payments made by the customers may include non-refundable upfront fees, payments based upon the achievement of defined milestones, and royalties on sales of product.

If a license to the Company's intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes the transaction price allocated to the license as revenue upon transfer of control of the license.

All other promised goods or services in the agreement are evaluated to determine if they are distinct.

If they are not distinct, they are combined with other promised goods or services to create a bundle of promised goods or services that is distinct.

Optional future services where any additional consideration paid to the Company reflects their standalone selling prices do not provide the customer with a material right and, therefore, are not considered performance obligations.

If optional future services are priced in a manner which provides the customer with a significant or incremental discount, they are material rights, and are accounted for as separate performance obligations.

Contingent milestones at contract inception are estimated at the amount which is not probable of a material reversal and included in the transaction price using the most likely amount method.

Milestone payments that are not within the Company's control, such as regulatory approvals, are not considered probable of being achieved until those approvals are received and therefore the variable consideration is constrained.

The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied.

At the end of each reporting period, the Company re-evaluates the probability of achieving development or sales-based milestone payments that may not be subject to a material reversal and, if necessary, adjust the estimate of the overall transaction price.

Any such adjustments are recorded on a cumulative catch-up basis, which would affect license and other revenue, as well as earnings, in the period of adjustment.

For arrangements that include sales-based royalties, including sales-based milestone payments, and a license of intellectual property that is deemed to be the predominant item to which the royalties relate, revenue is recognized at the later of when the related sales occur or when the performance obligation to which some or all of the royalties have been allocated has been satisfied (or partially satisfied).

Stock-based Compensation

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1.5 - 6.0 years

Common shares and warrants

7 unchanged sentences

Newly Adopted and Recent Accounting Pronouncements

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.

The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity's own equity.

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

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.

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 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.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued amended guidance for improvements to reportable segment disclosures (ASU) No.

2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures,” that requires a public entity disclose significant segment expenses regularly reviewed by the chief operating decision maker (CODM), including public entities with a single reportable segment.

The amended guidance is effective for fiscal years beginning January 1, 2024, and interim periods beginning January 1, 2025 and should be applied on a retrospective basis.

The Company adopted the annual and interim disclosure requirements of ASU 2023-07 effective December 31, 2024 (refer to Note 11.

Segment Reporting ).

The adoption of this ASU only affects the Company’s disclosures, with no impact to its financial condition and results of operations .

In December 2023, the FASB issued Accounting Standards Update (ASU) No.

2023-09, “Income Taxes (Topic 740):

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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.

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

On March 21, 2024, the FASB issued Accounting Standards Update (ASU) 2024-01, Compensation-Stock Compensation (Topic 718):

Scope Application of Profits Interest and Similar Awards, which provides illustrative guidance to help entities determine whether profits interest and similar awards should be accounted for as share-based payment arrangements within the scope of FASB Accounting Standards Codification (FASB ASC) 718, Compensation-Stock Compensation.

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

The Company believes that ASU 2024-01 will not have a material impact on the Company’s consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses,” which requires disclosure of additional disaggregated information about significant expenses within relevant income statement captions, such as purchases of inventory, employee compensation, depreciation, amortization and depletion.

The new guidance is effective for annual periods beginning after December 15, 2026, and interim periods within annual periods beginning after December 15, 2027.

We are currently evaluating the impact of this standard on our consolidated financial statements.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis