Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2024 | Aug. 08, 2024 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2024 | |
Document Transition Report | false | |
Securities Act File Number | 001-32295 | |
Entity Registrant Name | FENNEC PHARMACEUTICALS INC. | |
Entity Incorporation, State or Country Code | CA | |
Entity Tax Identification Number | 20-0442384 | |
Entity Address, Address Line One | PO Box 13628, 68 TW Alexander Drive | |
Entity Address, City or Town | Research Triangle Park | |
Entity Address, State or Province | NC | |
Entity Address, Postal Zip Code | 27709 | |
City Area Code | 919 | |
Local Phone Number | 636-4530 | |
Title of 12(b) Security | Common Shares, no par value | |
Trading Symbol | FENCF | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 27,364,335 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001211583 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Current assets | ||
Cash and cash equivalents | $ 43,054 | $ 13,269 |
Accounts receivable, net | 12,312 | 8,814 |
Prepaid expenses | 4,379 | 2,575 |
Inventory | 2,144 | 2,156 |
Other current assets | 283 | 44 |
Total current assets | 62,172 | 26,858 |
Non-current assets | ||
Other non-current assets, net of amortization | 989 | 6 |
Total non-current assets | 989 | 6 |
Total assets | 63,161 | 26,864 |
Current liabilities: | ||
Accounts payable | 4,447 | 3,778 |
Accrued liabilities | 3,038 | 3,754 |
Operating lease liability - current | 12 | 21 |
Contract liability - Norgine | 252 | |
Total current liabilities | 7,749 | 7,553 |
Liabilities, Noncurrent [Abstract] | ||
Term loan | 30,000 | 30,000 |
PIK interest | 2,022 | 1,219 |
Debt discount | (247) | (288) |
Contract liability - long-term | 24,994 | 2 |
Total long term liabilities | 56,769 | 30,933 |
Total liabilities | 64,518 | 38,486 |
Stockholders' deficit: | ||
Common stock, no par value; unlimited shares authorized; 27,329 shares issued and outstanding (2023 27,027) | 145,281 | 144,307 |
Additional paid-in capital | 64,080 | 62,073 |
Accumulated deficit | (211,961) | (219,245) |
Accumulated other comprehensive income | 1,243 | 1,243 |
Total stockholders' deficit | (1,357) | (11,622) |
Total liabilities and stockholders' deficit | $ 63,161 | $ 26,864 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Condensed Consolidated Balance Sheets | ||
Common stock, no par value | $ 0 | $ 0 |
Common stock, shares issued | 27,329 | 27,027 |
Common stock, shares outstanding | 27,329 | 27,027 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Condensed Consolidated Statements of Operations | ||||
PEDMARK product sales, net | $ 7,262 | $ 3,325 | $ 14,681 | $ 5,002 |
Licensing revenue | 17,958 | |||
Total revenue | 7,262 | 3,325 | 32,639 | 5,002 |
Operating expenses: | ||||
Cost of product sales | 608 | 148 | 1,158 | 243 |
Research and development | 157 | 8 | 160 | 12 |
Selling and marketing | 4,672 | 2,340 | 9,881 | 4,871 |
General and administrative | 6,864 | 5,495 | 12,736 | 9,812 |
Total operating expenses | (12,301) | (7,991) | (23,935) | (14,938) |
Net (loss)/income from operations | (5,039) | (4,666) | 8,704 | (9,936) |
Other (expense)/income | ||||
Unrealized foreign exchange (loss)/gain | (17) | 5 | (55) | 14 |
Amortization expense | (23) | (73) | (43) | (145) |
Unrealized loss on securities | (11) | (30) | ||
Interest income | 570 | 115 | 767 | 224 |
Interest expense | (1,044) | (825) | (2,078) | (1,623) |
Total other expense | (514) | (778) | (1,420) | (1,560) |
Net (loss)/income from operations | $ (5,553) | $ (5,444) | $ 7,284 | $ (11,496) |
Basic net (loss)/income per common share | $ (0.20) | $ (0.21) | $ 0.27 | $ (0.43) |
Diluted net (loss)/income per common share | $ (0.20) | $ (0.21) | $ 0.24 | $ (0.43) |
Weighted-average number of common shares outstanding basic | 27,297 | 26,458 | 27,250 | 26,471 |
Weighted-average number of common shares outstanding diluted | 27,297 | 26,458 | 30,354 | 26,471 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Common Stock Employees | Common Stock | Additional Paid-in Capital Employees | Additional Paid-in Capital | Accumulated Deficit Employees | Accumulated Deficit | Accumulated Other Comprehensive Income Employees | Accumulated Other Comprehensive Income | Employees | Total |
Balance at Dec. 31, 2022 | $ 142,591 | $ 56,797 | $ (203,200) | $ 1,243 | $ (2,569) | |||||
Balance (in shares) at Dec. 31, 2022 | 26,361 | |||||||||
Stock-based compensation | $ 0 | $ 1,089 | $ 0 | $ 0 | $ 1,089 | |||||
Stock option exercise | $ 213 | 213 | ||||||||
Stock option exercise (in shares) | 49 | |||||||||
Restricted stock release | (20) | (20) | ||||||||
Restricted stock release (in shares) | 1 | |||||||||
Net income/(loss) | (6,052) | (6,052) | ||||||||
Balance at Mar. 31, 2023 | $ 142,804 | 57,866 | (209,252) | 1,243 | (7,339) | |||||
Balance (in shares) at Mar. 31, 2023 | 26,411 | |||||||||
Balance at Dec. 31, 2022 | $ 142,591 | 56,797 | (203,200) | 1,243 | (2,569) | |||||
Balance (in shares) at Dec. 31, 2022 | 26,361 | |||||||||
Net income/(loss) | (11,496) | |||||||||
Balance at Jun. 30, 2023 | $ 143,345 | 60,381 | (214,696) | 1,243 | (9,727) | |||||
Balance (in shares) at Jun. 30, 2023 | 26,509 | |||||||||
Balance at Mar. 31, 2023 | $ 142,804 | 57,866 | (209,252) | 1,243 | (7,339) | |||||
Balance (in shares) at Mar. 31, 2023 | 26,411 | |||||||||
Stock-based compensation | 2,543 | 2,543 | ||||||||
Stock option exercise | $ 541 | 541 | ||||||||
Stock option exercise (in shares) | 95 | |||||||||
Restricted stock release | (28) | (28) | ||||||||
Restricted stock release (in shares) | 3 | |||||||||
Net income/(loss) | (5,444) | (5,444) | ||||||||
Balance at Jun. 30, 2023 | $ 143,345 | 60,381 | (214,696) | 1,243 | (9,727) | |||||
Balance (in shares) at Jun. 30, 2023 | 26,509 | |||||||||
Balance at Dec. 31, 2023 | $ 144,307 | 62,073 | (219,245) | 1,243 | (11,622) | |||||
Balance (in shares) at Dec. 31, 2023 | 27,027 | |||||||||
Stock-based compensation | $ 0 | 1,191 | $ 0 | $ 0 | 1,191 | |||||
Stock option exercise | $ 627 | 627 | ||||||||
Stock option exercise (in shares) | 75 | |||||||||
Restricted stock release | (19) | (19) | ||||||||
Restricted stock release (in shares) | 3 | |||||||||
Net income/(loss) | 12,837 | 12,837 | ||||||||
Balance at Mar. 31, 2024 | $ 144,934 | 63,245 | (206,408) | 1,243 | 3,014 | |||||
Balance (in shares) at Mar. 31, 2024 | 27,105 | |||||||||
Balance at Dec. 31, 2023 | $ 144,307 | 62,073 | (219,245) | 1,243 | (11,622) | |||||
Balance (in shares) at Dec. 31, 2023 | 27,027 | |||||||||
Net income/(loss) | 7,284 | |||||||||
Balance at Jun. 30, 2024 | $ 145,281 | 64,080 | (211,961) | 1,243 | (1,357) | |||||
Balance (in shares) at Jun. 30, 2024 | 27,329 | |||||||||
Balance at Mar. 31, 2024 | $ 144,934 | 63,245 | (206,408) | 1,243 | 3,014 | |||||
Balance (in shares) at Mar. 31, 2024 | 27,105 | |||||||||
Stock-based compensation | $ 925 | $ 925 | ||||||||
Stock option exercise | $ 347 | 347 | ||||||||
Stock option exercise (in shares) | 147 | |||||||||
Restricted stock release | (90) | (90) | ||||||||
Restricted stock release (in shares) | 77 | |||||||||
Net income/(loss) | (5,553) | (5,553) | ||||||||
Balance at Jun. 30, 2024 | $ 145,281 | $ 64,080 | $ (211,961) | $ 1,243 | $ (1,357) | |||||
Balance (in shares) at Jun. 30, 2024 | 27,329 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2023 | |
Operating activities: | ||
Net income/(loss) | $ 7,284 | $ (11,496) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Amortization of Norgine asset | 749 | |
Amortization of debt discount | 43 | 32 |
Gain on securities | 11 | |
Amortization of debt access fees | 113 | |
Unrealized loss on securities | 30 | |
PIK interest | 803 | |
Stock-based compensation - employees | 2,116 | 3,632 |
Changes in operating assets and liabilities: | ||
Accounts receivables | (3,498) | (900) |
Prepaid expenses | (1,804) | 313 |
Inventory | 12 | (863) |
Other current assets | (255) | |
Accounts payable | 669 | 615 |
Accrued liabilities | (716) | (999) |
Contract liability - Norgine | 25,246 | |
Net cash provided by (used in) operating activities | 30,660 | (9,523) |
Financing activities: | ||
Issuance of shares, options exercise | 974 | 754 |
Cash paid for taxes on restricted share release | (109) | (47) |
Capitalized deferred issuance costs | (1,740) | |
Net cash (used in) provided by financing activities | (875) | 707 |
Increase/(decrease) in cash and cash equivalents | 29,785 | (8,816) |
Cash and cash equivalents - Beginning of period | 13,269 | 23,774 |
Cash and cash equivalents - End of period | $ 43,054 | $ 14,958 |
Nature of Business and Going Co
Nature of Business and Going Concern | 6 Months Ended |
Jun. 30, 2024 | |
Nature of Business and Going Concern | |
Nature of Business and Going Concern | 1. Nature of Business and Going Concern Fennec Pharmaceuticals Inc., a corporation existing under the laws of British Columbia (“Fennec,” the “Company,” “we,” “us,” or “our”), was originally formed under the name Adherex Technologies Inc. and subsequently changed its name on September 3, 2014. Fennec is a commercial stage specialty pharmaceutical company with one U.S. Food and Drug Administration (“FDA”) approved and European Commission approved product , PEDMARK ® These unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) that are applicable to a going concern which contemplates that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business. During the three and six-month period ended June 30, 2024, the Company earned a (loss)/income from operations of $(5,039) and $8,704, respectively. At June 30, 2024, it had an accumulated deficit of $211,961 and had experienced positive cash flows from operating activities during the six months ended June 30, 2024, in the amount of $30,660. On August 1, 2022, the Company entered into a Securities Purchase Agreement (the “SPA”) with Petrichor Opportunities Fund I LP (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 (the “Note Financing”). On August 19, 2022, the Company closed on the initial tranche of $5,000 (the “First Closing Note”) which has an Initial Conversion Price equal to $8.11 per share, which was calculated based on a 20% premium of the 5-day volume weighted average price of the Company’s common shares as traded on the Nasdaq Capital Market (the “VWAP”) immediately prior to the announcement of the SPA dated August 1, 2022. In connection with the first closing, the Company repaid in full its secured indebtedness with Bridge Bank in the amount of $5,000. On September 23, 2022, the Company closed on the second tranche of the Note Financing in the amount of $20,000 (the “Second Closing Note”), which has an Initial Conversion Price equal to $7.89 per share, which was calculated based on a 20% premium of the 5-day VWAP immediately prior to September 20, 2022, which was the date the Company obtained FDA approval of PEDMARK®. The SPA provided that subsequent to the funding of the Second Closing Note, and before December 31, 2023, the Company could 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”). The Subsequent Closing Notes will be convertible at a price per share equal to $7.89 per share, which price is calculated on the same basis as for the Second Closing Note. half half On December 4, 2023, the Company closed a third tranche under the SPA in the amount of $5,000,000 and issued the Investor a Note in the same amount (the “Third Closing Note”) and the Third Closing Note is convertible at a price equal to $7.89 per share, calculated as a 20% premium of the 5-day volume weighted average price of the Company’s common shares as traded on the Nasdaq Capital Market immediately prior to September 20, 2022, which was the date the Company obtained FDA approval of PEDMARK®. Also on December 4, 2023, the Company entered into a First Amendment to the Securities Purchase Agreement (the “SPA Amendment”) with the Investor, which, among other things, extends the period that the Company may draw the remaining $15,000,000 under the SPA from December 31, 2023, to December 31, 2024. Subsequent draws are subject to mutual agreement of the Company and the Investor and will be represented by Notes that will also be convertible at a price equal to $7.89 per share. On March 17, 2024, the Company announced it had entered into an exclusive licensing agreement with Norgine Pharma UK Limited (“Norgine”) to commercialize PEDMARQSI® (EU brand name for PEDMARK®) in Europe, New Zealand and Australia. The licensing agreement provided Fennec with approximately $43.2 million up front and may provide Fennec with up to approximately $230 million in milestone and royalty payments in the future. On July 26, 2024, Norgine and Fennec amended the exclusive licensing agreement. The amended agreement maintains all principal payment terms with the primary addition of Norgine assuming responsibility for packaging and labeling of PEDMARQSI. The Company believes current funds provide sufficient funding for the Company to carry out its planned activities, including the continuation of commercialization efforts of PEDMARK®, for at least the next twelve months. These financial statements do not reflect the potentially material adjustments in the carrying values of assets and liabilities, the reported expenses, and the balance sheet classifications used, that would be necessary if the going concern assumption were not appropriate. |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2024 | |
Significant Accounting Policies | |
Significant Accounting Policies | 2. Significant Accounting Policies Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with US GAAP and are the responsibility of the Company’s management. These unaudited interim condensed consolidated financial statements do not include all of the information and notes required by US GAAP for annual financial statements. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited condensed consolidated financial statements and notes filed with the Securities and Exchange Commission (“SEC”) in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The Company’s accounting policies are consistent with those presented in the audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2023. These unaudited interim condensed consolidated financial statements have been prepared in U.S. dollars. All amounts presented are in thousands except for per share amounts. Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that impact the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenue and expense during the reporting period. Significant estimates include revenue recognition, allowance against trade receivables, measurement of stock-based compensation and estimates of the Company’s capital requirements over the next twelve months from the date of issuance of the consolidated financial statements. Actual results could differ from those estimates.. Segment and Geographic Information Operating segments are defined as components of an enterprise engaging in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one operating segment. As of June 30, 2024, the Company had an operating lease in Ireland which is scheduled to terminate on January 31, 2025. This is the only asset currently located outside of the United States. Stock-Based Compensation Under the Company’s stock-based compensation programs, the Company periodically grants stock options and restricted stock to employees, directors and consultants. The Company also issues shares under an employee stock purchase plan. The fair value of each award is recognized in the Company’s statements of operations over the requisite service period for such award. The Company uses the Black-Scholes option pricing model to value stock option awards without market conditions, which requires the Company to make certain assumptions regarding the expected volatility of its common stock price, the expected term of the option grants, the risk-free interest rate and the dividend yield with respect to its common stock. The Company calculates volatility using its historical stock price data. Due to the lack of the Company’s own historical data, the Company elected to use the “simplified” method for “plain vanilla” options to estimate the expected term of the Company’s stock option grants. Under this approach, the weighted-average expected life is presumed to be the average of the vesting term and the contractual term of the option. The risk-free interest rate used for each grant is based on the United States Treasury yield curve in effect at the time of grant for instruments with a similar expected life. The Company utilizes a dividend yield of zero based on the fact that the Company has never paid cash dividends and, at present, has no intention to pay cash dividends. Inventory Inventories are valued under a standard costing methodology on a first-in, first-out basis and are stated at the lower of cost or net realizable value. The Company capitalizes inventory costs related to products to be sold in the ordinary course of business. The Company makes a determination of capitalizing inventory costs for a product based on, among other factors, status of regulatory approval, information regarding safety, efficacy and expectations relating to commercial sales and recoverability of costs. Capitalized costs of inventories mainly include third party manufacturing, logistics and distribution costs. The Company assesses recoverability of inventory each reporting period to determine any write down to net realizable value resulting from excess or obsolete inventories. The manufacturing costs for PEDMARK ® ® Revenue Recognition Under Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, the Company recognizes revenue when its customers obtain control of promised goods or services, in an amount that reflects the consideration which the Company determines it expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies its performance obligation(s). 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 our product. Such agreements may include the transfer of intellectual property rights in the form of licenses. 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 us 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). Costs to Obtain Contract As the majority of the Company's contracts are short-term in nature, sales commissions are generally expensed when incurred as the amortization period would have been less than one year. These costs are recorded within selling and marketing expenses in the condensed statements of operations. For contracts that extend beyond one year, the incremental expense recognition matches the recognition of related revenue. Net Product Revenue On September 20, 2022, the FDA approved PEDMARK® in the United States to reduce the risk of ototoxicity associated with cisplatin in pediatric patients one month of age and older with localized, non-metastatic solid tumors. PEDMARK® became commercially available on October 17, 2022. PEDMARK® is the Company’s first commercial product. Certain specialty distributors of the Company subsequently resell the Company’s products to health care providers and patients. In addition to distribution agreements with these customers, the Company enters into arrangements with health care providers and payors that provide for government-mandated and/or privately-negotiated rebates, chargebacks and discounts with respect to the purchase of the Company’s products. Revenues from product sales are recognized when the customer obtains control of the Company’s product, which occurs at a point in time, typically upon delivery to the customer. Product Sales Discounts and Allowances The Company records revenues from product sales at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established primarily from discounts, chargebacks, rebates, co-pay assistance, returns and other allowances that are offered within contracts between the Company and its customers, health care providers, payors and other indirect customers relating to the sales of its products. These reserves are based on the amounts to be claimed on the related sales and are classified as a contra-asset or a current liability. Where appropriate, these estimates take into consideration a range of possible outcomes that are probability-weighted for relevant factors such as current contractual and statutory requirements, specific known market events and trends, industry data, forecasted customer buying and payment patterns, and the Company’s historical experience that will develop over time as PEDMARK® and PEDMARQSI (European branded product name) is the Company’s first commercial product. Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of its contracts. The amount of variable consideration that is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results in the future vary from the Company’s estimates, the Company will adjust these estimates, which would affect net product revenues and earnings in the period such variances become known. Chargebacks: Discounts for Prompt Payment: Rebates: ® Co-payment Assistance: Other Customer Credits: Distribution and Other Fees: The following table summarizes net product revenues for PEDMARK ® Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, In thousands 2024 2023 2024 2023 Product revenues: Gross product revenues $ 9,466 $ 3,711 $ 19,022 $ 5,606 Discounts and allowances (2,204) (386) (4,341) (604) Net product revenues $ 7,262 $ 3,325 $ 14,681 $ 5,002 For the three and six months ended June 30, 2024 and 2023, the Company had three distributors that each represented more than 10% of net sales. The activities and ending allowance balances for each significant category of discounts and allowances for PEDMARK ® Chargebacks, Rebates, Returns, Customer Discounts for Fees/Credits Prompt pay and and Co-Pay In thousands Other allowances Assistance Totals Balance at December 31, 2023 $ 365 $ 430 $ 795 Provision related to sales made in: Current period 352 1,640 1,992 Prior periods — — — Payments and customer credits issued (497) (104) (601) Balance at March 31, 2024 $ 220 $ 1,966 $ 2,186 Provision related to sales made in: Current period 175 2,644 2,819 Prior periods — — — Payments and customer credits issued (66) (2,614) (2,680) Balance at June 30, 2024 $ 329 $ 1,996 $ 2,325 The allowances for chargebacks, fees due to customers, rebates and discounts for prompt payment are recorded as a contra-asset to accounts receivable, while Medicaid rebates and return allowances are in accrued liabilities in the accompanying condensed consolidated balance sheets. Trade Receivables The Company records gross trade distributors, based on aging category. The Company had a balance in allowance for credit losses of $2,991 as of June 30, 2024. Cost of Products Sold Cost of products sold is related to the Company's product revenues for PEDMARK ® ® ® ® ® ® Cash and Cash Equivalents Cash equivalents consist of highly liquid investments with original maturities at the date of purchase of three months or less. The Company places its cash and cash equivalents in investments held by highly rated financial institutions in accordance with its investment policy designed to protect the principal investment. At June 30, 2024, the Company had $43.0 million in cash, savings and money market accounts ($13.3 million at December 31, 2023). 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 $0.25 million amount insured by the FDIC and may lose value. Financial Instruments Financial instruments recognized on the balance sheets at June 30, 2024 and December 31, 2023 consist of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and term loans, the carrying values of which approximate fair value due to their relatively short time to maturity or interest rates that approximate market interest rates. The Company does not hold or issue financial instruments for trading. The Company’s investment policy is to manage investments to achieve, in the order of importance, the financial objectives of preservation of principal, liquidity and return on investment. Investments, when made, are made in U.S. or Canadian bank securities, commercial paper of U.S. or Canadian industrial companies, utilities, financial institutions and consumer loan companies, and securities of foreign banks provided the obligations are guaranteed or carry ratings appropriate to the policy. Securities must have a minimum Dun & Bradstreet rating of A for bonds or R1 low for commercial paper. The policy risks are primarily the opportunity cost of the conservative nature of the allowable investments. The Company has chosen to avoid investments of a trading or speculative nature to preserve cash. Common Shares and Warrants As of June 30, 2024, the Company has 0.2 million warrants with a weighted average strike price of $7.71 outstanding to purchase common shares that have a weighted average life of 3.55 years. Research and Development Costs and Investment Tax Credits Research costs, including employee compensation, laboratory fees, lab supplies, and research and testing performed under contract by third parties, are expensed as incurred. Development costs, including drug substance costs, clinical study expenses and regulatory expenses are expensed as incurred. Investment tax credits, which are earned as a result of qualifying research and development expenditures, are recognized when the expenditures are made and their realization is reasonably assured. They are applied to reduce related capital costs and research and development expenses in the year recognized. Concentrations of Credit Risk Financial instruments that potentially subject the Company to credit risk primarily consist of cash and cash equivalents, and accounts receivable. The Company maintains deposits in highly-rated, federally-insured financial institutions in excess of federally insured limits. The Company’s investment strategy is focused on capital preservation. The Company invests in instruments that meet the high credit quality standards outlined in the Company’s investment policy. This policy also limits the amount of credit exposure to any one issue or type of instrument. The Company’s trade receivables includes amounts billed to customers for product sales of PEDMARK®. In the U.S., the customers are a limited group of specialty distributors, and accordingly, the Company considers the risk of potential credit losses to be low. The Company also sells to a select group of global distributors. These global distributors are established companies and although the Company regards credit losses with these distributors to be remote, it does recognize the potential for credit losses with this group. Income Taxes The Company accounts for income taxes using the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts, using currently enacted tax rates. The Company has deferred tax assets, which are subject to periodic recoverability assessments. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that more likely than not will be realized. As of June 30, 2024, we maintained a full valuation allowance against our deferred tax assets. The provisions of the Financial Accounting Standards Board (“FASB”) ASC 740-10, Uncertainty in Income Taxes, address the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740-10, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. Foreign Currency Transactions The U.S. dollar is the functional currency for the Company’s consolidated operations. All gains and losses from currency transactions are included in results of operations. Net Income/(Loss) Per Share Basic net income/(loss) per share is computed by dividing net loss by the weighted average number of common shares outstanding during the year. Diluted net income/(loss) per share is computed using the same method, except the weighted average number of common shares outstanding includes convertible debentures, restricted stock units, stock options and warrants, if dilutive, as determined using the if-converted method and treasury methods. Accordingly, warrants to purchase 150 of our common shares, restricted share units to purchase 445 of our common shares and options to purchase 5,228 of our common shares at June 30, 2024, were not included in earnings per share. Such warrants, options and convertible notes would have an antidilutive effect. In 2023, warrants to purchase 150 of our common shares and options to purchase 4,887 common shares were excluded from the computation of loss per share as their inclusion would have been antidilutive. Recent Accounting Pronouncements 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. Early adoption is permitted. The Company is currently evaluating the effect the adoption of this ASU will have on its consolidated financial statements. In December 2023, the FASB issued Accounting Standards Update (ASU) 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 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 condensed consolidated financial statements. |
Income_(loss) per Share
Income/(loss) per Share | 6 Months Ended |
Jun. 30, 2024 | |
Income/(loss) per Share | |
Income/(loss) per Share | 3. Net Income/(Loss) Per Share Net income/(loss) per common share is presented under two formats: basic net income/(loss) per common share and diluted income/(loss) per common share. Basic net income/(loss) per common share is computed by dividing net income/(loss) attributable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted income/(loss) per common share is computed by dividing net income/(loss) by the weighted average number of common shares outstanding during the period, plus the potentially dilutive impact of common shares equivalents (e.g. convertible debt, stock options and warrants). Dilutive common share equivalents consist of the incremental common shares issuable upon exercise of convertible debt, restricted stock units, stock options and warrants. The following table sets forth the computation of basic and diluted net income/(loss) per share (in thousands except per share data): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Numerator: Net income/(loss) $ (5,553) $ (5,444) $ 7,284 $ (11,496) Denominator: Weighted-average common shares, basic 27,297 26,458 27,250 26,471 Dilutive effect of stock options — — 843 — Dilutive effect of restricted share units — — 445 — Dilutive effect of warrants — — 11 — Dilutive effect of convertible debt — — 253 — Incremental dilutive shares — — 1,552 — Weighted-average common shares, diluted 27,297 26,458 30,354 26,471 Net income/(loss) per share, basic and diluted $ (0.20) $ (0.21) $ 0.24 $ (0.43) The following common stock equivalents, outstanding convertible debt, options and warrants were excluded from the computation of diluted net income/(loss) per share for the periods presented because including them would have had an anti-dilutive effect: Diluted Earnings Per Share Six Months Ended June 30, 2024 2023 Options to purchase common shares 5,228 4,887 Convertible debt to purchase common shares — — Restricted share units to purchase common shares 445 — Warrants to purchase common shares 150 150 |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2024 | |
Stockholders' Equity | |
Stockholders' Equity | 4. Stockholders’ Equity Authorized Capital Stock The Company’s authorized capital stock consists of an unlimited number of common shares, no par value per share. Warrants to Purchase Common Stock During the three and six months ended June 30, 2024 and 2023, there were no warrants issued exercised Common Shares Issuable Upon Exercise of Outstanding Weighted-Average Investor Warrants Warrants Exercise Price Outstanding December 31, 2023 150 $ 7.71 Issued — — Outstanding March 31, 2024 150 $ 7.71 Issued — — Outstanding June 30, 2024 150 $ 7.71 Common Shares Issuable Upon Exercise of Outstanding Weighted-Average Investor Warrants Warrants Exercise Price Outstanding December 31, 2022 150 $ 7.71 Issued — — Outstanding March 31, 2023 150 7.71 Issued — — Outstanding June 30, 2023 150 $ 7.71 Equity Incentive Plan The Compensation Committee of the Board of Directors administers the Company’s equity incentive plan (the “Plan”). 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 number of issued and outstanding common shares. Based upon the current shares outstanding, a maximum of 6,825 shares of common stock are authorized for issuance pursuant to stock options or other equity awards granted under the Plan. For all options issued under the Plan, the exercise price is the fair value of the underlying shares on the date of grant. All options vest within three years or less and are exercisable for a period of ten years from the date of grant. The Plan allows the issuance of Canadian and U.S. dollar grants. The table below outlines recognized contractor and employee expense from equity awards for the three and six month periods ended June 30, 2024 and 2023. Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2024 2023 2023 2022 Employee options expense recognized $ 925 $ 2,543 $ 2,116 $ 3,632 Total option expense recognized $ 925 $ 2,543 $ 2,116 $ 3,632 Stock Option Activity The following is a summary of option activity for the three and six months ended June 30, 2024 and 2023. Number of Weighted-Average Options Options Exercise Price Outstanding at December 31, 2023 4,798 $ 6.27 Granted 45 7.29 Exercised (75) 5.81 Forfeited — — Outstanding at March 31, 2024 4,768 5.43 Granted 707 7.12 Exercised (147) 2.36 Forfeited (100) 8.00 Outstanding at June 30, 2024 5,228 $ 6.48 Number of Weighted-Average Options Options Exercise Price Outstanding at December 31, 2022 4,539 $ 5.13 Granted 580 8.12 Exercised (49) 4.36 Forfeited (38) 6.98 Outstanding at March 31, 2023 5,032 5.43 Granted 125 8.80 Exercised (95) 5.60 Forfeited (175) 7.51 Outstanding at June 30, 2023 4,887 $ 5.77 Of the 5,228 options granted and outstanding at June 30, 2024, 3,897 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. The expected volatility was determined using historical volatility of our stock based on the expected term of the award. Valuation Assumptions Black-Scholes Model Assumptions June 30, 2024 Expected dividend - % Risk free rate 4.40 - 5.01 % Expected volatility 45-65 % Expected life 1.5 - 6.0 years Restricted Share Units Activity The Plan allows for the issuance of restricted share units (“RSUs”). The following is a summary of RSU activity for the three and six months ended June 30, 2024 and 2023. During the three and six months ended June 30, 2024, there were 21 and 68 RSUs released from restriction, respectively. For the same period in 2023, there were 1 and 17 RSUs forfeited by departing employees. Vesting of RSUs vary from one Number of Restricted Share RSUs Current Periods Units Outstanding at December 31, 2023 218 Awarded 17 Released (21) Outstanding at March 31, 2024 214 Awarded 299 Released (68) Forfeited — Outstanding at June 30, 2024 445 Number of Restricted Share RSUs Past Periods Share Units Outstanding at December 31, 2022 35 Awarded 264 Released (1) Outstanding at March 31, 2023 298 Awarded 98 Released (3) Forfeited (17) Outstanding at June 30, 2023 376 The value of RSUs issued was estimated using the share price on the date of the award multiplied by the number of common shares granted. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2024 | |
Fair Value Measurements | |
Fair Value Measurements | 5. Fair Value Measurements The Company has adopted ASC 820, the Fair Value Measurements and Disclosure Topic of the FASB. This Topic applies to certain assets and liabilities that are being measured and reported on a fair value basis. The Fair Value Measurements Topic defines fair value, establishes a framework for measuring fair value in accordance with US GAAP, and expands disclosure about fair value measurements. This Topic enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The Topic requires that financial assets and liabilities carried at fair value be classified and disclosed in one of the following three categories: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3: Unobservable inputs that are not corroborated by market data. Fair Value Measurement at June 30, 2024 and December 31, 2023 (in thousands) Quoted Price in Active Market for Identical Significant Other Significant Instruments Observable Inputs Unobservable Inputs Level 1 Level 2 Level 3 Total 2024 2023 2024 2023 2024 2023 2024 2023 Assets Cash and cash equivalents $ 646 (1) $ 1,340 (1) $ 42,408 $ 11,929 $ — $ — $ 43,054 $ 13,269 Processa common shares $ 6 (2) $ 25 (2) $ — $ — $ — $ — $ 6 $ 25 (1) The Company held approximately $42.4 million in money market accounts as of June 30, 2024. As of December 31, 2023, the Company held approximately $11.9 million in money market accounts. (2) The Company holds 41 unrestricted common shares of Processa Pharmaceuticals, Inc. (NASDAQ:PCSA), which it received as part of a royalty arrangement in 2020. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2024 | |
Commitments and Contingencies | |
Commitments and Contingencies | 6. Commitments and Contingencies Oregon Health & Science University Agreement On February 20, 2013, Fennec entered into a new exclusive license agreement with OHSU for exclusive worldwide license rights to intellectual property directed to thiol-based compounds, including PEDMARK® and their use in oncology (the "OHSU Agreement"). OHSU will receive certain milestone payments, royalty on net sales for licensed products and a royalty on any consideration received from sublicensing of the licensed technology. On May 18, 2015, Fennec negotiated an amendment ("Amendment 1") to the OHSU Agreement, which expands Fennec's exclusive license to include the use of N-acetylcysteine as a standalone therapy and/or in combination with PEDMARK® for the prevention of ototoxicity induced by chemotherapeutic agents to treat cancers. Further, Amendment 1 adjusts select milestone payments entered in the OHSU Agreement including but not limited to the royalty rate on net sales for licensed products, royalty rate from sublicensing of the licensed technology and the fee payable upon the regulatory approval of a licensed product. Certain milestone payments are due upon FDA approval and achievement of sufficient positive EBITDA over a specified period. PEDMARK® received FDA approval in September 2022, however at this time, due to significant uncertainty surrounding timing and magnitude of certain milestones, the Company has only recorded a royalty liability associated with net revenue. The term of the OHSU Agreement as amended by Amendment 1 expires on the date of the last to expire claim(s) covered in the patents licensed to Fennec or 8 years, whichever is later. The Company now has a licensed product with regulatory approval that is covered by the Orphan Drug Designation, the parties amended the term of the agreement. PEDMARK® is currently protected by methods of use patents that the Company exclusively licensed from OHSU that expired in Europe in 2021 and that expire in the United States in 2038. The OHSU Agreement is terminable by either Fennec or OHSU in the event of a material breach of the agreement by either party after 45 days prior written notice. Fennec also has the right to terminate the OHSU Agreement at any time upon 60 days prior written notice and payment of all fees due to OHSU under the OHSU Agreement. The Company had accrued approximately $162 in royalty expense to OHSU for the six-month period ended June 30, 2024. Total amount accrued in royalty expense to OHSU as of June 30, 2024 was $399. Litigation Hope Medical Enterprises, Inc. Inter Partes Review (IPR) Challenges On October 29, 2021, Hope Medical Enterprises, Inc. (“Hope”) filed a Petition for inter partes review (IPR2022-00123) with the Patent Trial and Appeal Board (“PTAB”) of the USPTO to invalidate U.S. Patent No. 10,596,190 (the “‘190 Patent”), which is exclusively in-licensed from Oregon Health & Science University (“OHSU”) and relates to a method of using PEDMARK®. The ‘190 Patent was issued on March 24, 2020. On April 18, 2023, the PTAB invalidated the only claim of the‘190 Patent. The final written decision became effective June 20, 2023. The ‘190 Patent was previously listed in the United States Approved Drug Products with Therapeutic Equivalence Evaluations (also known as the “Orange Book”). In light of PTAB’s final written decision on the invalidity of the ‘190 Patent, we requested that the FDA remove the ’190 Patent from the Orange Book. Two United States patent applications claiming priority through the ‘190 Patent remain pending at the United States Patent and Trademark Office (“USPTO”). On October 29, 2021, Hope Medical Enterprises, Inc. (“Hope”) filed a Petition for inter partes review (IPR2022-00125) to invalidate our wholly owned U.S. Patent No. 10,792,363 (the “’363 Patent”), which relates to an anhydrous form of STS and its method of manufacture, which is the active pharmaceutical ingredient in the PEDMARK® product. The ‘363 Patent was issued October 6, 2020. During the ‘363 IPR, we disclaimed the patent claims directed to the anhydrous morphic form of STS and continued with claims directed to its method of manufacture. Because the remaining claims in the ‘363 patent are directed to a method of manufacture, the ‘363 patent is not eligible for listing in the Orange Book. In September 2023, the PTAB issued a Final Written Decision in favor of Fennec and upholding the amended claim. The USPTO has now granted four additional U.S. patents that cover the PEDMARK® formulation and its use, each of which have been, or are in the process of being, listed in the U.S. FDA’s “Orange Book” (U.S. Patent No. 11,291,728 (issued April 5, 2022), U.S. Patent No. 11,510,984 (issued November 29, 2022), U.S. Patent No. 11,617,793 (issued April 4, 2023), and U.S. Patent No. 11,964,018 (issued April 23, 2024)). The USPO has also recently allowed two additional patent applications (U.S. Patent Application Nos. 17/992,703 and 17/992,707) that cover the use of the PEDMARK® formulation. Five additional United States patent applications from this family are pending at the USPTO covering various sodium thiosulfate formulations and uses. We plan to vigorously defend our intellectual property rights to PEDMARK® if challenged. An invalidation of our patents covering PEDMARK® could have a material adverse effect on our ability to protect our rights in PEDMARK® beyond periods of marketing exclusivity for PEDMARK® in the United States under Orphan Drug Designation. CIPLA Litigation On December 1, 2022, we received a letter dated November 30, 2022, notifying us that CIPLA Ltd. and CIPLA USA (“CIPLA”) submitted to the FDA an ANDA (ANDA No. 218028) for a generic version of PEDMARK® (sodium thiosulfate solution) that contains Paragraph IV Certifications on two of our patents covering PEDMARK®: the OHSU licensed’‘190 Patent, expiration date January 2038; and our US 11,291,728 Patent (the “’728 Patent”), expiration date July 2039. On January 6, 2023, we received a letter dated January 5, 2023, notifying us that CIPLA submitted to the FDA a Paragraph IV Certification on our newly issued US 11,510,984 Patent (the “’984 Patent”). These patents are listed in FDA’s list of Approved Drug Products with Therapeutic Equivalence Evaluations, commonly referred to as the Orange Book, for PEDMARK®. The certifications allege these patents are invalid or will not be infringed by the manufacture, use, or sale of CIPLA’s sodium thiosulfate solution. Under the Food and Drug Cosmetic Act, as amended by the Drug Price Competition and Patent Term Restoration Act of 1984, as amended, after receipt of a valid Paragraph IV notice, the Company may bring a patent infringement suit in a federal district court against CIPLA within 45 days from the receipt of the Notice Letter and if such a suit is commenced within the 45 -day period, the Company is entitled to a 30 month stay on the FDA’s ability to give final approval to any proposed products that reference PEDMARK®. In addition to the 30 -month stay, because we have received Orphan Drug Exclusivity, the FDA may not approve CIPLA’s ANDA for at least 7 years from PEDMARK®’s FDA approval date of September 20, 2022. On January 10, 2023, we filed suit against the CIPLA entities in the United States District Court for the District of New Jersey (Case No. 2:23-cv-00123), for infringement of the ’190 Patent, the ’728 Patent, and the ’984 Patent. On April 20, 2023, we filed an Amended Complaint to assert infringement of the ’728 Patent and the ’984 Patent. On April 4, 2023, we were granted US 11,617,793 Patent (the “’793 Patent”) covering the formulation of the PEDMARK® product, which was listed in the Orange Book on or around April 17, 2023, and has an expiration date of July 2039. On May 11, 2023, we received written notice of CIPLA’s Paragraph IV Certification as to the ’793 Patent, which was dated May 10, 2023, along with an enclosed statement of alleged factual and legal bases for stating that the ’793 Patent is invalid, unenforceable, and/or will not be infringed by CIPLA’s ANDA Product. On July 27, 2023, we filed a Second Amended Complaint to assert the ‘793 Patent. CIPLA filed an Answer to the Second Amended Complaint on August 31, 2023. On April 23, 2024, we were granted US 11,964,018 Patent (the “’018 Patent) covering a method of using our PEDMARK® product to reduce ototoxicity in a patient receiving a platinum based chemotherapeutic for the treatment of a cancer, which was listed in the Orange Book on or around May 8, 2024, and has an expiration date of July 2039. On May 28, 2024, we were granted US 11,992,530 Patent (the “’530 Patent”) covering a method of using our PEDMARK® product to reduce ototoxicity in a patient receiving a platinum based chemotherapeutic for the treatment of a cancer, which was listed in the Orange Book on or around June 19, 2024, and has an expiration date of July 2039. On June 4, 2024, we were granted US 11,998,604 Patent (the “’604 Patent”) covering a method of using our PEDMARK® product to reduce ototoxicity in a patient receiving a platinum based chemotherapeutic for the treatment of a cancer, which was listed in the Orange Book on or around June 21, 2024, and has an expiration date of July 2039. On June 13, 2024, we filed a Motion for Leave to File a Third Amended Complaint to focus the ANDA litigation against CIPLA on the ’018 Patent and the ‘793 Patent only. The non-asserted patents remain listed in the Orange Book. On July 22, 2024, CIPLA filed a response indicating that they do not oppose our Motion for Leave to File a Third Amended Complaint. On July 30, 2024, the court granted us leave to file the Third Amended Complaint. On August 1, 2024, we received written notice of CIPLA’s Paragraph IV Certification on the ’530 Patent and ’604 Patent. The suit is ongoing. PEDMARQSI® (EU Brand name for PEDMARK®) received European Commission approval in June 2023 and was granted 10 years of market exclusivity in Europe under Pediatric Use (“PUMA”). Executive Severance In the event of termination of Mr. Raykov's (Chief Executive Officer) employment with the Company other than for cause, the Company will be obligated to pay him a one -time severance payment equal to twelve months of salary (currently $608 ). In the event of termination of Mr. Andrade’s (Chief Financial Officer) employment with the Company other than for cause, the Company will be obligated to pay him a one -time severance payment equal to six months of salary (currently $220 ). Leases The Company has an operating lease in Research Triangle Park, North Carolina utilizing a small space within a commercial building. The operating lease has payments of $0.4 per month with no scheduled increases. This operating lease is terminable with 30 days’ notice and has no penalties or contingent payments due. On January 23, 2020, the Company entered into an Office Service Agreement (the “Office Service Agreement”) with Regus to lease office space in Hoboken, New Jersey. Per the terms of the Office Service Agreement, the monthly rent payments are $1. The Company was required to pay a security deposit of $2, which is the equivalent to two months of rent. The Office Service Agreement commenced on January 27, 2020, and terminated on July 31, 2020, thereafter the lease has been continuing on a month-to-month basis with either party being able to terminate the agreement by providing one months’ advance written notice of termination. On August 1, 2023, the Company entered into a second Office Service Agreement (the “Second Office Service Agreement”) with Regus to lease office space in Dublin, Ireland. Per the terms of the Second Office Service Agreement, the monthly rent payments are $2. The Company was required to pay a security deposit of $5, which is the equivalent of two months’ rent. This lease will terminate on January 31, 2025. The Second Office Service Agreement commenced on August 1, 2023 and terminates on January 31, 2025, thereafter the lease may continue on a month-to-month basis with either party being able to terminate the agreement by providing one months’ advance written notice of termination. The Second Office Service Agreement does not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring the operating lease liability. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease within a particular currency environment. The Company uses an incremental borrowing rate consisting of the current prime rate plus 150 June 30, 2024 Remaining lease terms (in months) 7 Discount rate 10 % Maturities of lease liabilities as of December 31, 2023 were as follows (in thousands): Year Ending December 31, 2024 $ 10 2025 2 12 Less imputed interest 2 Total lease liabilities $ 10 Current operating lease liabilities $ 12 Non-current operating lease liabilities - Total lease liabilities $ 12 Employee Benefit Plan In May 2021, the Company established the Fennec Pharmaceuticals, Inc. 401(k) Plan (the “401(k) Plan”) for its employees, which is designed to be qualified under Section 401(k) of the Internal Revenue Code of 1986. Eligible employees are permitted to contribute to the 401(k) Plan within statutory and 401(k) Plan limits. As of June 30, 2024, the Company does not offer matching contributions. |
Term Loans
Term Loans | 6 Months Ended |
Jun. 30, 2024 | |
Term Loans | |
Term Loans | 7. Term Loans On August 1, 2022, the Company entered into the SPA with the Investor in connection with the issuance of up to $45,000 of Notes, issuable in multiple tranches (see Note 1). On August 19, 2022, the Company closed on the initial tranche of $5,000, which has an Initial Conversion Price equal to $8.11 per share, which was calculated based on a 20% premium of the 5-day VWAP immediately prior to the announcement of the SPA. In connection with the first closing, the Company repaid in full its secured indebtedness with Bridge Bank in the amount of $5,000. The Notes become due on the maturity date, which is August 19, 2027. On September 23, 2022, the Company closed on the second tranche of the Note Financing in the amount of $20,000, which has an Initial Conversion Price equal to $7.89 per share, which was calculated based on a 20% premium of the 5-day VWAP immediately prior to the date the Company obtained FDA approval for PEDMARK®. 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”). The Subsequent Closing Notes will be convertible at a price per share equal to $7.89 per share, which price is calculated on the same basis as for the Second Closing Note. A commitment fee of 2.0% of the Notes was payable under the SPA, which was paid by the Company issuing the Investor warrants to purchase 110,996 of the Company’s common shares (one half half On December 4, 2023, the Company closed a third tranche under the SPA in the amount of $5,000,000 and issued the Investor a Note in the same amount (the “Third Closing Note”) and the Third Closing Note is convertible at a price equal to $7.89 per share, which price was calculated on the same basis as the Second Closing Note. Also on December 4, 2023, the Company entered into the SPA Amendment, which, among other things, extends the period that the Company may draw the remaining $15,000,000 under the SPA from December 31, 2023, to December 31, 2024. Subsequent draws are subject to mutual agreement of the Company and the Investor and will be represented by Notes that will also be convertible at a price equal to $7.89 per share. Cash interest on outstanding principal shall accrue at a rate of prime, plus 4.5% per annum, from the date of funding (13% at June 30, 2024 and 13% as of December 31, 2023). Cash interest is due on the first business day of each calendar quarter (“Interest Date”). Payment-inkind (“PIK”) interest will commence on funding date and accrue at a rate of 3.5% per annum. PIK interest will stop accruing on August 24, 2024. Any accrued PIK interest shall remain outstanding and be payable on each Interest Date and be added to the outstanding principal amount. The Company has accrued $1.6 million in PIK interest and has classified the PIK interest in long-term liabilities. The Notes are convertible into fully paid, non-assessable shares of the Company’s common shares at any point after their issuance dates and before the maturity date. Any amount of the Notes may be converted into common shares so long as it does not create partial shares. The conversion rate is determined by dividing the conversion amount by the conversion price. Provisions of the SPA create legal, valid and enforceable liens on, and security interests in, all of the Company’s and each of its subsidiaries’ assets. Aggregate annual payments due on the SPA as of June 30, 2024 are as follows (in thousands): Years Ending December 31, Amount 2024 $ — 2025 — 2026 — 2027 30,000 Payment in kind interest 2,022 Total future payments 32,022 Less: unamortized debt discount (247) Total term loan, net of debt discount $ 31,775 In the event of default or change of control, all unpaid principal and all accrued and unpaid interest amounts (if any) become immediately due and payable. Events of default include, but are not limited to, a payment default, a material adverse change, and insolvency. The SPA facility is secured by all of the Company’s assets, including all capital stock held by the Company. Debt issuance costs of $175 were paid in cash for legal fees and to the Investor in 2022 and warrants valued at $441 were granted to the Investor to secure access to the SPA. These amounts were capitalized and are being amortized over the access period of the SPA. Upon drawing tranche 1 through 3, the Company recorded a debt discount of $314, which was based on a pro-rata allocation of the issue costs to secure the SPA, reducing the capitalized amount by the same amount. The debt discount is being amortized over the life of the SPA. |
License Agreement
License Agreement | 6 Months Ended |
Jun. 30, 2024 | |
License Agreement | |
License Agreement | 8. License Agreement License Agreement with Norgine Pharma UK Limited On March 17, 2024, the Company announced that, through its wholly-owned subsidiary, Fennec Pharmaceuticals, Inc. entered into a License and Supply Agreement (the “Agreement”) with Norgine Pharma UK Limited (“Norgine”), pursuant to which Norgine is granted an exclusive license to commercialize the Company’s product PEDMARQSI® (known as PEDMARK® in the United States) for all human indications in the European Economic Area, Switzerland, the United Kingdom, Australia and New Zealand (collectively, the “Territory”). On July 26, 2024, Norgine and Fennec amended the exclusive licensing agreement. The amended agreement maintains all principal payment terms with the primary addition of Norgine assuming responsibility for packaging and labeling of PEDMARQSI. Pursuant to the terms of the Agreement, Fennec shall receive the following payments from Norgine: (i) an upfront payment in the amount of €40 million or approximately $43.2 million, which was paid to Fennec on March 15, 2024, (ii) up to €210 million (or approximately $230 million) upon the achievement of certain regulatory and commercial milestones, and (iii) tiered royalty payments based on net sales of PEDMARQSI® in the Territory, which royalty payment range from mid-teen percent to mid-twenty percent based on the aggregate net sales of PEDMARQSI® in the Territory. The tiered royalty payments are subject to material reduction if an alternative or generic version of PEDMARQSI® becomes available in any respective country or jurisdiction within the Territory. Subject to customary rights of each party to earlier terminate the Agreement, the term of the Agreement continues for the longer of: (i) March 15, 2034, or (ii) with respect to any particular country in the Territory, (a) the expiration of regulatory market exclusivity for PEDMARQSI® in such country, or (b) the last-to-expire of all patents for PEDMARQSI® in such country. The term of the Agreement shall be automatically renewed for additional three-year periods unless either party provides the other party written notice of its intent not to renew the Agreement at least one year prior to the applicable termination date of the Agreement. The Company evaluated the Agreement under ASC 606 and concluded that Norgine represents a customer in the transaction. There were two performance obligations: a license of functional IP and a material right for future supply. The Company will allocate the transaction price, including currently unrecognized variable consideration, to the two performance obligations based on estimated standalone selling price, which was estimated using projected cash flows. The initial transaction price consisted of the non-refundable upfront payment, a portion of which was allocated to and recognized as License Revenue in the first quarter of 2024 as the requirements for revenue recognition under ASC 606 were met. The portion of the transaction price associated with the material right is deferred and reflected as deferred revenue in the condensed consolidated balance sheets. Deferred revenue associated with the material right is recognized as contract liabilities under the supply arrangement are made. The remaining forms of consideration are variable because they are dependent on the achievement of sales-based or other milestones. The Company evaluated the constraint on variable consideration and concluded that the milestone payments are dependent on regulatory approvals and actions of third parties, and thus are highly susceptible to factors outside the Company’s influence. Therefore, at contract inception, the milestones are not included in the transaction price as it is not probable that a significant reversal of revenue would not occur. Sales-based milestones will be recognized as revenue or deferred as part of the material right in the period when the related sales threshold is met. All other milestones will be recognized as revenue or deferred as part of the material right immediately in the period the underlying milestone is achieved. Any consideration related to sales-based royalties will be recognized as revenue or deferred as part of the material right when the related sales occur. For the six months ended June 30, 2024, the Company did not recognize any milestone or royalty revenue payments from Norgine sales of PEDMARQSI ® In conjunction with entering into the Agreement, the Company paid approximately $1.7 million in incremental costs, which were capitalized and recorded within other non-current assets. The Company amortizes the asset over the period of expected benefit using a systematic basis that reflects the pattern of transfer to the customer. A portion that represents the license was recognized immediately and is recorded within selling and marketing expense in the condensed consolidated statements of operations. As of June 30, 2024, $0.97 million in incremental cost was capitalized. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2024 | |
Subsequent Events | |
Subsequent Events | 9. Subsequent Events On July 26, 2024, the Agreement with Norgine was amended and restated, pursuant to which Norgine assumed responsibility for packaging and labeling of PEDMARQSI for the Territory. On August 5, 2024, the Company announced the appointment of Mr. Jeff Hackman as its Chief Executive Officer (CEO) and a member of the Board of Directors, effective on or about August 16, 2024. Jeff will guide Fennec’s strategic direction for operational success in the expansion of PEDMARK® use in community oncology and the adolescent and young adult (AYA) population. Mr. Raykov will remain on Fennec’s Board of Directors and will no longer serve as CEO upon Jeff Hackman’s appointment. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2024 | |
Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with US GAAP and are the responsibility of the Company’s management. These unaudited interim condensed consolidated financial statements do not include all of the information and notes required by US GAAP for annual financial statements. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited condensed consolidated financial statements and notes filed with the Securities and Exchange Commission (“SEC”) in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The Company’s accounting policies are consistent with those presented in the audited consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2023. These unaudited interim condensed consolidated financial statements have been prepared in U.S. dollars. All amounts presented are in thousands except for per share amounts. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that impact the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenue and expense during the reporting period. Significant estimates include revenue recognition, allowance against trade receivables, measurement of stock-based compensation and estimates of the Company’s capital requirements over the next twelve months from the date of issuance of the consolidated financial statements. Actual results could differ from those estimates.. |
Segment and Geographic Information | Segment and Geographic Information Operating segments are defined as components of an enterprise engaging in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one operating segment. As of June 30, 2024, the Company had an operating lease in Ireland which is scheduled to terminate on January 31, 2025. This is the only asset currently located outside of the United States. |
Stock-Based Compensation | Stock-Based Compensation Under the Company’s stock-based compensation programs, the Company periodically grants stock options and restricted stock to employees, directors and consultants. The Company also issues shares under an employee stock purchase plan. The fair value of each award is recognized in the Company’s statements of operations over the requisite service period for such award. The Company uses the Black-Scholes option pricing model to value stock option awards without market conditions, which requires the Company to make certain assumptions regarding the expected volatility of its common stock price, the expected term of the option grants, the risk-free interest rate and the dividend yield with respect to its common stock. The Company calculates volatility using its historical stock price data. Due to the lack of the Company’s own historical data, the Company elected to use the “simplified” method for “plain vanilla” options to estimate the expected term of the Company’s stock option grants. Under this approach, the weighted-average expected life is presumed to be the average of the vesting term and the contractual term of the option. The risk-free interest rate used for each grant is based on the United States Treasury yield curve in effect at the time of grant for instruments with a similar expected life. The Company utilizes a dividend yield of zero based on the fact that the Company has never paid cash dividends and, at present, has no intention to pay cash dividends. |
Inventory | Inventory Inventories are valued under a standard costing methodology on a first-in, first-out basis and are stated at the lower of cost or net realizable value. The Company capitalizes inventory costs related to products to be sold in the ordinary course of business. The Company makes a determination of capitalizing inventory costs for a product based on, among other factors, status of regulatory approval, information regarding safety, efficacy and expectations relating to commercial sales and recoverability of costs. Capitalized costs of inventories mainly include third party manufacturing, logistics and distribution costs. The Company assesses recoverability of inventory each reporting period to determine any write down to net realizable value resulting from excess or obsolete inventories. The manufacturing costs for PEDMARK ® ® |
Revenue Recognition | Revenue Recognition Under Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, the Company recognizes revenue when its customers obtain control of promised goods or services, in an amount that reflects the consideration which the Company determines it expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) the Company satisfies its performance obligation(s). 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 | License Agreements The Company generates revenue from license or similar agreements with pharmaceutical companies for the commercialization of our product. Such agreements may include the transfer of intellectual property rights in the form of licenses. 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 us 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). |
Cost to Obtain Contract | Costs to Obtain Contract As the majority of the Company's contracts are short-term in nature, sales commissions are generally expensed when incurred as the amortization period would have been less than one year. These costs are recorded within selling and marketing expenses in the condensed statements of operations. For contracts that extend beyond one year, the incremental expense recognition matches the recognition of related revenue. |
Net Product Revenue | Net Product Revenue On September 20, 2022, the FDA approved PEDMARK® in the United States to reduce the risk of ototoxicity associated with cisplatin in pediatric patients one month of age and older with localized, non-metastatic solid tumors. PEDMARK® became commercially available on October 17, 2022. PEDMARK® is the Company’s first commercial product. Certain specialty distributors of the Company subsequently resell the Company’s products to health care providers and patients. In addition to distribution agreements with these customers, the Company enters into arrangements with health care providers and payors that provide for government-mandated and/or privately-negotiated rebates, chargebacks and discounts with respect to the purchase of the Company’s products. Revenues from product sales are recognized when the customer obtains control of the Company’s product, which occurs at a point in time, typically upon delivery to the customer. |
Product Sales Discounts and Allowances | Product Sales Discounts and Allowances The Company records revenues from product sales at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established primarily from discounts, chargebacks, rebates, co-pay assistance, returns and other allowances that are offered within contracts between the Company and its customers, health care providers, payors and other indirect customers relating to the sales of its products. These reserves are based on the amounts to be claimed on the related sales and are classified as a contra-asset or a current liability. Where appropriate, these estimates take into consideration a range of possible outcomes that are probability-weighted for relevant factors such as current contractual and statutory requirements, specific known market events and trends, industry data, forecasted customer buying and payment patterns, and the Company’s historical experience that will develop over time as PEDMARK® and PEDMARQSI (European branded product name) is the Company’s first commercial product. Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of its contracts. The amount of variable consideration that is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results in the future vary from the Company’s estimates, the Company will adjust these estimates, which would affect net product revenues and earnings in the period such variances become known. Chargebacks: Discounts for Prompt Payment: Rebates: ® Co-payment Assistance: Other Customer Credits: Distribution and Other Fees: The following table summarizes net product revenues for PEDMARK ® Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, In thousands 2024 2023 2024 2023 Product revenues: Gross product revenues $ 9,466 $ 3,711 $ 19,022 $ 5,606 Discounts and allowances (2,204) (386) (4,341) (604) Net product revenues $ 7,262 $ 3,325 $ 14,681 $ 5,002 For the three and six months ended June 30, 2024 and 2023, the Company had three distributors that each represented more than 10% of net sales. The activities and ending allowance balances for each significant category of discounts and allowances for PEDMARK ® Chargebacks, Rebates, Returns, Customer Discounts for Fees/Credits Prompt pay and and Co-Pay In thousands Other allowances Assistance Totals Balance at December 31, 2023 $ 365 $ 430 $ 795 Provision related to sales made in: Current period 352 1,640 1,992 Prior periods — — — Payments and customer credits issued (497) (104) (601) Balance at March 31, 2024 $ 220 $ 1,966 $ 2,186 Provision related to sales made in: Current period 175 2,644 2,819 Prior periods — — — Payments and customer credits issued (66) (2,614) (2,680) Balance at June 30, 2024 $ 329 $ 1,996 $ 2,325 The allowances for chargebacks, fees due to customers, rebates and discounts for prompt payment are recorded as a contra-asset to accounts receivable, while Medicaid rebates and return allowances are in accrued liabilities in the accompanying condensed consolidated balance sheets. |
Trade Receivables | Trade Receivables The Company records gross trade distributors, based on aging category. The Company had a balance in allowance for credit losses of $2,991 as of June 30, 2024. |
Cost of Products Sold | Cost of Products Sold Cost of products sold is related to the Company's product revenues for PEDMARK ® ® ® ® ® ® |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash equivalents consist of highly liquid investments with original maturities at the date of purchase of three months or less. The Company places its cash and cash equivalents in investments held by highly rated financial institutions in accordance with its investment policy designed to protect the principal investment. At June 30, 2024, the Company had $43.0 million in cash, savings and money market accounts ($13.3 million at December 31, 2023). 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 $0.25 million amount insured by the FDIC and may lose value. |
Financial Instruments | Financial Instruments Financial instruments recognized on the balance sheets at June 30, 2024 and December 31, 2023 consist of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and term loans, the carrying values of which approximate fair value due to their relatively short time to maturity or interest rates that approximate market interest rates. The Company does not hold or issue financial instruments for trading. The Company’s investment policy is to manage investments to achieve, in the order of importance, the financial objectives of preservation of principal, liquidity and return on investment. Investments, when made, are made in U.S. or Canadian bank securities, commercial paper of U.S. or Canadian industrial companies, utilities, financial institutions and consumer loan companies, and securities of foreign banks provided the obligations are guaranteed or carry ratings appropriate to the policy. Securities must have a minimum Dun & Bradstreet rating of A for bonds or R1 low for commercial paper. The policy risks are primarily the opportunity cost of the conservative nature of the allowable investments. The Company has chosen to avoid investments of a trading or speculative nature to preserve cash. |
Common Shares and Warrants | Common Shares and Warrants As of June 30, 2024, the Company has 0.2 million warrants with a weighted average strike price of $7.71 outstanding to purchase common shares that have a weighted average life of 3.55 years. |
Research and Development Costs and Investment Tax Credits | Research and Development Costs and Investment Tax Credits Research costs, including employee compensation, laboratory fees, lab supplies, and research and testing performed under contract by third parties, are expensed as incurred. Development costs, including drug substance costs, clinical study expenses and regulatory expenses are expensed as incurred. Investment tax credits, which are earned as a result of qualifying research and development expenditures, are recognized when the expenditures are made and their realization is reasonably assured. They are applied to reduce related capital costs and research and development expenses in the year recognized. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject the Company to credit risk primarily consist of cash and cash equivalents, and accounts receivable. The Company maintains deposits in highly-rated, federally-insured financial institutions in excess of federally insured limits. The Company’s investment strategy is focused on capital preservation. The Company invests in instruments that meet the high credit quality standards outlined in the Company’s investment policy. This policy also limits the amount of credit exposure to any one issue or type of instrument. The Company’s trade receivables includes amounts billed to customers for product sales of PEDMARK®. In the U.S., the customers are a limited group of specialty distributors, and accordingly, the Company considers the risk of potential credit losses to be low. The Company also sells to a select group of global distributors. These global distributors are established companies and although the Company regards credit losses with these distributors to be remote, it does recognize the potential for credit losses with this group. |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts, using currently enacted tax rates. The Company has deferred tax assets, which are subject to periodic recoverability assessments. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that more likely than not will be realized. As of June 30, 2024, we maintained a full valuation allowance against our deferred tax assets. The provisions of the Financial Accounting Standards Board (“FASB”) ASC 740-10, Uncertainty in Income Taxes, address the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC 740-10, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. |
Foreign Currency Translation | Foreign Currency Transactions The U.S. dollar is the functional currency for the Company’s consolidated operations. All gains and losses from currency transactions are included in results of operations. |
Net Income/(Loss) Per Share | Net Income/(Loss) Per Share Basic net income/(loss) per share is computed by dividing net loss by the weighted average number of common shares outstanding during the year. Diluted net income/(loss) per share is computed using the same method, except the weighted average number of common shares outstanding includes convertible debentures, restricted stock units, stock options and warrants, if dilutive, as determined using the if-converted method and treasury methods. Accordingly, warrants to purchase 150 of our common shares, restricted share units to purchase 445 of our common shares and options to purchase 5,228 of our common shares at June 30, 2024, were not included in earnings per share. Such warrants, options and convertible notes would have an antidilutive effect. In 2023, warrants to purchase 150 of our common shares and options to purchase 4,887 common shares were excluded from the computation of loss per share as their inclusion would have been antidilutive. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Significant Accounting Policies | |
Schedule of PEDMARK Revenues, Net | Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, In thousands 2024 2023 2024 2023 Product revenues: Gross product revenues $ 9,466 $ 3,711 $ 19,022 $ 5,606 Discounts and allowances (2,204) (386) (4,341) (604) Net product revenues $ 7,262 $ 3,325 $ 14,681 $ 5,002 |
Schedule of PEDMARK Revenues, Discounts and Allowances | Chargebacks, Rebates, Returns, Customer Discounts for Fees/Credits Prompt pay and and Co-Pay In thousands Other allowances Assistance Totals Balance at December 31, 2023 $ 365 $ 430 $ 795 Provision related to sales made in: Current period 352 1,640 1,992 Prior periods — — — Payments and customer credits issued (497) (104) (601) Balance at March 31, 2024 $ 220 $ 1,966 $ 2,186 Provision related to sales made in: Current period 175 2,644 2,819 Prior periods — — — Payments and customer credits issued (66) (2,614) (2,680) Balance at June 30, 2024 $ 329 $ 1,996 $ 2,325 |
Income_(Loss) per Share (Tables
Income/(Loss) per Share (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Income/(loss) per Share | |
Schedule of Antidilutive Securities Excluded from Net Loss Per Share | Diluted Earnings Per Share Six Months Ended June 30, 2024 2023 Options to purchase common shares 5,228 4,887 Convertible debt to purchase common shares — — Restricted share units to purchase common shares 445 — Warrants to purchase common shares 150 150 |
Schedule of Earnings Per Share, Basic and Diluted | Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Numerator: Net income/(loss) $ (5,553) $ (5,444) $ 7,284 $ (11,496) Denominator: Weighted-average common shares, basic 27,297 26,458 27,250 26,471 Dilutive effect of stock options — — 843 — Dilutive effect of restricted share units — — 445 — Dilutive effect of warrants — — 11 — Dilutive effect of convertible debt — — 253 — Incremental dilutive shares — — 1,552 — Weighted-average common shares, diluted 27,297 26,458 30,354 26,471 Net income/(loss) per share, basic and diluted $ (0.20) $ (0.21) $ 0.24 $ (0.43) |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Stockholders' Equity | |
Schedule of Warrants to Purchase Common Stock | Common Shares Issuable Upon Exercise of Outstanding Weighted-Average Investor Warrants Warrants Exercise Price Outstanding December 31, 2023 150 $ 7.71 Issued — — Outstanding March 31, 2024 150 $ 7.71 Issued — — Outstanding June 30, 2024 150 $ 7.71 Common Shares Issuable Upon Exercise of Outstanding Weighted-Average Investor Warrants Warrants Exercise Price Outstanding December 31, 2022 150 $ 7.71 Issued — — Outstanding March 31, 2023 150 7.71 Issued — — Outstanding June 30, 2023 150 $ 7.71 |
Schedule of Recognized Expense Related to Employee Option Exercises | Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2024 2023 2023 2022 Employee options expense recognized $ 925 $ 2,543 $ 2,116 $ 3,632 Total option expense recognized $ 925 $ 2,543 $ 2,116 $ 3,632 |
Schedule of Share-Based Compensation, Stock Option Activity | Number of Weighted-Average Options Options Exercise Price Outstanding at December 31, 2023 4,798 $ 6.27 Granted 45 7.29 Exercised (75) 5.81 Forfeited — — Outstanding at March 31, 2024 4,768 5.43 Granted 707 7.12 Exercised (147) 2.36 Forfeited (100) 8.00 Outstanding at June 30, 2024 5,228 $ 6.48 Number of Weighted-Average Options Options Exercise Price Outstanding at December 31, 2022 4,539 $ 5.13 Granted 580 8.12 Exercised (49) 4.36 Forfeited (38) 6.98 Outstanding at March 31, 2023 5,032 5.43 Granted 125 8.80 Exercised (95) 5.60 Forfeited (175) 7.51 Outstanding at June 30, 2023 4,887 $ 5.77 |
Schedule of Share-Based Compensation, Stock Option Volatility Measurements | Valuation Assumptions Black-Scholes Model Assumptions June 30, 2024 Expected dividend - % Risk free rate 4.40 - 5.01 % Expected volatility 45-65 % Expected life 1.5 - 6.0 years |
Schedule of Restricted Share Unit Activity | Number of Restricted Share RSUs Current Periods Units Outstanding at December 31, 2023 218 Awarded 17 Released (21) Outstanding at March 31, 2024 214 Awarded 299 Released (68) Forfeited — Outstanding at June 30, 2024 445 Number of Restricted Share RSUs Past Periods Share Units Outstanding at December 31, 2022 35 Awarded 264 Released (1) Outstanding at March 31, 2023 298 Awarded 98 Released (3) Forfeited (17) Outstanding at June 30, 2023 376 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Fair Value Measurements | |
Schedule of Assets/Liabilities Measured at Fair Value on Recurring Basis | Fair Value Measurement at June 30, 2024 and December 31, 2023 (in thousands) Quoted Price in Active Market for Identical Significant Other Significant Instruments Observable Inputs Unobservable Inputs Level 1 Level 2 Level 3 Total 2024 2023 2024 2023 2024 2023 2024 2023 Assets Cash and cash equivalents $ 646 (1) $ 1,340 (1) $ 42,408 $ 11,929 $ — $ — $ 43,054 $ 13,269 Processa common shares $ 6 (2) $ 25 (2) $ — $ — $ — $ — $ 6 $ 25 (1) The Company held approximately $42.4 million in money market accounts as of June 30, 2024. As of December 31, 2023, the Company held approximately $11.9 million in money market accounts. (2) The Company holds 41 unrestricted common shares of Processa Pharmaceuticals, Inc. (NASDAQ:PCSA), which it received as part of a royalty arrangement in 2020. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Commitments and Contingencies | |
Schedule of components of operating lease liability | June 30, 2024 Remaining lease terms (in months) 7 Discount rate 10 % Maturities of lease liabilities as of December 31, 2023 were as follows (in thousands): Year Ending December 31, 2024 $ 10 2025 2 12 Less imputed interest 2 Total lease liabilities $ 10 Current operating lease liabilities $ 12 Non-current operating lease liabilities - Total lease liabilities $ 12 |
Term Loans (Tables)
Term Loans (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Term Loans | |
Schedule of Aggregate Annual Term-Loan Payments | Years Ending December 31, Amount 2024 $ — 2025 — 2026 — 2027 30,000 Payment in kind interest 2,022 Total future payments 32,022 Less: unamortized debt discount (247) Total term loan, net of debt discount $ 31,775 |
Nature of Business and Going _2
Nature of Business and Going Concern (Details) $ / shares in Units, € in Millions | 3 Months Ended | 6 Months Ended | |||||||||
Dec. 04, 2023 USD ($) $ / shares | Sep. 23, 2022 USD ($) $ / shares | Aug. 19, 2022 USD ($) $ / shares | Jun. 30, 2024 USD ($) | Jun. 30, 2023 USD ($) | Jun. 30, 2024 USD ($) $ / shares shares | Jun. 30, 2023 USD ($) | Mar. 15, 2024 USD ($) | Mar. 15, 2024 EUR (€) | Dec. 31, 2023 USD ($) | Aug. 01, 2022 USD ($) | |
Nature of Business and Going Concern [Line Items] | |||||||||||
Net (loss)/income from operations | $ (5,039,000) | $ (4,666,000) | $ 8,704,000 | $ (9,936,000) | |||||||
Accumulated deficit | $ (211,961,000) | (211,961,000) | $ (219,245,000) | ||||||||
Cash flows from operating activities | $ 30,660,000 | $ (9,523,000) | |||||||||
Petrichor Financing | Securities Purchase Agreements | Secured Convertible Debt | |||||||||||
Nature of Business and Going Concern [Line Items] | |||||||||||
Maximum borrowing capacity | $ 45,000,000 | ||||||||||
Commitment fee percentage | 2% | ||||||||||
Common shares available through issuance of warrants | shares | 110,996 | ||||||||||
Exercise price of warrants issued | $ / shares | $ 8.11 | ||||||||||
Exercise term of warrants | 5 years | ||||||||||
Petrichor Financing | Securities Purchase Agreements | First Closing Note | |||||||||||
Nature of Business and Going Concern [Line Items] | |||||||||||
Borrowings, face amount | $ 5,000,000 | ||||||||||
Initial conversion price | $ / shares | $ 8.11 | ||||||||||
Premium over 5-day VWAP | 20% | ||||||||||
VWAP term | 5 days | ||||||||||
Petrichor Financing | Securities Purchase Agreements | Second Closing Note | |||||||||||
Nature of Business and Going Concern [Line Items] | |||||||||||
Borrowings, face amount | $ 20,000,000 | ||||||||||
Initial conversion price | $ / shares | $ 7.89 | ||||||||||
Premium over 5-day VWAP | 20% | ||||||||||
VWAP term | 5 days | ||||||||||
Petrichor Financing | Securities Purchase Agreements | Third Closing Note | |||||||||||
Nature of Business and Going Concern [Line Items] | |||||||||||
Borrowings, face amount | $ 5,000,000 | ||||||||||
Initial conversion price | $ / shares | $ 7.89 | ||||||||||
Premium over 5-day VWAP | 20% | ||||||||||
VWAP term | 5 days | ||||||||||
Petrichor Financing | Securities Purchase Agreements | Subsequent Closing Notes | |||||||||||
Nature of Business and Going Concern [Line Items] | |||||||||||
Remaining borrowing capacity | $ 20,000,000 | ||||||||||
Initial conversion price | $ / shares | $ 7.89 | ||||||||||
Petrichor Financing | Securities Purchase Agreements | Subsequent Closing Notes | Minimum | |||||||||||
Nature of Business and Going Concern [Line Items] | |||||||||||
Number of loan tranches for remaining borrowing capacity | 1 | ||||||||||
Petrichor Financing | Securities Purchase Agreements | Subsequent Closing Notes | Maximum | |||||||||||
Nature of Business and Going Concern [Line Items] | |||||||||||
Maximum borrowing capacity | $ 10,000,000 | ||||||||||
Borrowings, face amount | $ 10,000,000 | ||||||||||
Petrichor Financing | Securities Purchase Agreements | First Closing Warrant | |||||||||||
Nature of Business and Going Concern [Line Items] | |||||||||||
Commitment fees payable in cash or warrants | 50% | ||||||||||
Petrichor Financing | Securities Purchase Agreements | Second Closing Warrant | |||||||||||
Nature of Business and Going Concern [Line Items] | |||||||||||
Commitment fees payable in cash or warrants | 50% | ||||||||||
Petrichor Financing | SPA First Amendment | Subsequent Closing Notes | |||||||||||
Nature of Business and Going Concern [Line Items] | |||||||||||
Remaining borrowing capacity | $ 15,000,000 | ||||||||||
Initial conversion price | $ / shares | $ 7.89 | ||||||||||
Bridge Bank | Bridge Bank Term Loan | |||||||||||
Nature of Business and Going Concern [Line Items] | |||||||||||
Repayment of term loan | $ 5,000,000 | ||||||||||
Licensing Agreement | Norgine Ltd. | |||||||||||
Nature of Business and Going Concern [Line Items] | |||||||||||
License agreement funding received | $ 43,200,000 | € 40 | |||||||||
License agreement funding, potential milestone payments | 230,000,000 | € 210 | |||||||||
Licensing Agreement | Norgine Ltd. | Maximum | |||||||||||
Nature of Business and Going Concern [Line Items] | |||||||||||
License agreement funding, potential milestone payments | $ 230,000,000 |
Significant Accounting Polici_4
Significant Accounting Policies - Additional Information (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 6 Months Ended | 12 Months Ended | ||||
Jun. 30, 2024 USD ($) $ / shares shares | Jun. 30, 2023 $ / shares shares | Dec. 31, 2023 USD ($) $ / shares shares | Mar. 31, 2024 $ / shares shares | Mar. 31, 2023 $ / shares shares | Dec. 31, 2022 $ / shares shares | |
Summary Of Significant Accounting Policies [Line Items] | ||||||
Number of Operating Segments | 1 | |||||
Allowance for doubtful accounts | $ | $ 2,991 | |||||
Percentage of prompt payment discounts expected to pay out | 100% | |||||
FDIC insured amount | $ | $ 250 | |||||
Money Market Funds | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Cash | $ | $ 43,000 | $ 13,300 | ||||
Warrants to Purchase Common Shares | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Antidilutive securities excluded from EPS | 150 | 150 | 150 | |||
Restricted Stock | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Antidilutive securities excluded from EPS | 445 | |||||
Options to Purchase Common Shares | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Antidilutive securities excluded from EPS | 5,228 | 4,887 | 4,887 | |||
Warrants to Purchase Common Shares | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Warrants outstanding | 150 | 150 | 150 | 150 | 150 | 150 |
Warrants exercise price | $ / shares | $ 7.71 | $ 7.71 | $ 7.71 | $ 7.71 | $ 7.71 | $ 7.71 |
Exercise term of warrants | 3 years 6 months 18 days |
Significant Accounting Polici_5
Significant Accounting Policies - Revenue recognition (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
Revenues | $ 7,262 | $ 3,325 | $ 32,639 | $ 5,002 |
PEDMARK | ||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
Revenues | $ 7,262 | $ 3,325 | $ 14,681 | $ 5,002 |
Processa Pharmaceuticals, Inc | ||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||
Shares to be issued under agreement | 41 |
Significant Accounting Polici_6
Significant Accounting Policies - Product Sales Discounts and Allowances (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Disaggregation of Revenue [Line Items] | ||||
Net product revenues | $ 7,262 | $ 3,325 | $ 32,639 | $ 5,002 |
PEDMARK | ||||
Disaggregation of Revenue [Line Items] | ||||
Gross product revenue | 9,466 | 3,711 | 19,022 | 5,606 |
Discounts and allowances | (2,204) | (386) | (4,341) | (604) |
Net product revenues | $ 7,262 | $ 3,325 | $ 14,681 | $ 5,002 |
Significant Accounting Polici_7
Significant Accounting Policies - Product Sales Discounts and Allowances Continued (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2024 | Mar. 31, 2024 | |
Provision for discounts and allowances, beginning balance | $ 2,186 | $ 795 |
Current period | 2,819 | 1,992 |
Payments and customer credits issued | (2,680) | (601) |
Provision for discounts and allowances, ending balance | 2,325 | 2,186 |
Chargebacks, Discounts for Prompt pay and Other allowances | ||
Provision for discounts and allowances, beginning balance | 220 | 365 |
Current period | 175 | 352 |
Payments and customer credits issued | (66) | (497) |
Provision for discounts and allowances, ending balance | 329 | 220 |
Rebates, Customer Fees/Credits and Co-pay Assistance | ||
Provision for discounts and allowances, beginning balance | 1,966 | 430 |
Current period | 2,644 | 1,640 |
Payments and customer credits issued | (2,614) | (104) |
Provision for discounts and allowances, ending balance | $ 1,996 | $ 1,966 |
Significant Accounting Polici_8
Significant Accounting Policies - Cost of Products Sold (Details) - PEDMARK $ in Millions | Jun. 30, 2024 USD ($) |
Manufacturing costs capitalized to inventory | $ 2.3 |
Manufacturing costs capitalized to inventory, raw materials | 0.4 |
Manufacturing costs capitalized to inventory, work-in-process | 0.5 |
Manufacturing costs capitalized to inventory, finished goods | 1.3 |
Manufacturing costs capitalized to inventory, cost of products sold | $ 1.2 |
Income_(Loss) per Share - Compu
Income/(Loss) per Share - Computation of Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2024 | Mar. 31, 2024 | Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Numerator: | ||||||
Net income/(loss) | $ (5,553) | $ 12,837 | $ (5,444) | $ (6,052) | $ 7,284 | $ (11,496) |
Denominator: | ||||||
Weighted-average common shares, basic | 27,297 | 26,458 | 27,250 | 26,471 | ||
Dilutive effect of stock options | 843 | |||||
Dilutive effect of restricted share units | 445 | |||||
Dilutive effect of warrants | 11 | |||||
Dilutive effect of convertible debt | 253 | |||||
Incremental dilutive shares | 1,552 | |||||
Weighted-average common shares, dilutive | 27,297 | 26,458 | 30,354 | 26,471 | ||
Basic net (loss)/income per common share | $ (0.20) | $ (0.21) | $ 0.27 | $ (0.43) | ||
Diluted net (loss)/income per common share | $ (0.20) | $ (0.21) | $ 0.24 | $ (0.43) |
Income_(Loss) per Share - Outst
Income/(Loss) per Share - Outstanding Options and Warrants (Details) - shares shares in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | |
Options to Purchase Common Shares | |||
Antidilutive securities excluded from EPS | 5,228 | 4,887 | 4,887 |
Convertible Debt to Purchase Common Shares | |||
Antidilutive securities excluded from EPS | 0 | ||
Restricted Share Units to Purchase Common Shares | |||
Antidilutive securities excluded from EPS | 445 | ||
Warrants to Purchase Common Shares | |||
Antidilutive securities excluded from EPS | 150 | 150 | 150 |
Stockholders' Equity - Warrants
Stockholders' Equity - Warrants to Purchase Common Stock (Details) - $ / shares | 6 Months Ended | 18 Months Ended | |||
Jun. 30, 2024 | Jun. 30, 2024 | Mar. 31, 2024 | Jun. 30, 2023 | Mar. 31, 2023 | |
Class of Warrant or Right [Line Items] | |||||
Exercised warrants during period | 0 | ||||
Issued warrants during period | 0 | ||||
Warrants to Purchase Common Shares | |||||
Class of Warrant or Right [Line Items] | |||||
Common shares issuable upon exercise of outstanding warrants, beginning balance | 150,000 | 150,000 | |||
Warrants outstanding | 150,000 | 150,000 | 150,000 | 150,000 | 150,000 |
Weighted Average Remaining Life (years) | 3 years 6 months 18 days | ||||
Common shares issuable upon exercise of outstanding warrants, ending balance | 150,000 | 150,000 | |||
Weighted-average exercise price, beginning of period | $ 7.71 | $ 7.71 | |||
Weighted-average exercise price, end of period | $ 7.71 | $ 7.71 |
Stockholders' Equity - Recogniz
Stockholders' Equity - Recognized Contractor and Employee Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Recognized Employee Expense [Line Items] | ||||
Total option expense recognized | $ 925 | $ 2,543 | $ 2,116 | $ 3,632 |
Employee Options | ||||
Recognized Employee Expense [Line Items] | ||||
Total option expense recognized | $ 925 | $ 2,543 | $ 2,116 | $ 3,632 |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Option Activity (Details) - Options to Purchase Common Shares - $ / shares shares in Thousands | 3 Months Ended | |||
Jun. 30, 2024 | Mar. 31, 2024 | Jun. 30, 2023 | Mar. 31, 2023 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Number of Options Outstanding at Beginning | 4,768 | 4,798 | 5,032 | 4,539 |
Number of Options Granted | 707 | 45 | 125 | 580 |
Number of Options Exercised | (147) | (75) | (95) | (49) |
Number of Options Forfeited | (100) | (175) | (38) | |
Number of Options Outstanding at Ending | 5,228 | 4,768 | 4,887 | 5,032 |
Weighted-average Exercise Price outstanding at Beginning | $ 5.43 | $ 6.27 | $ 5.43 | $ 5.13 |
Weighted-average Exercise Price Granted | 7.12 | 7.29 | 8.80 | 8.12 |
Weighted-average Exercise Price Exercised | 2.36 | 5.81 | 5.60 | 4.36 |
Weighted-average Exercise Price Forfeited | 8 | 7.51 | 6.98 | |
Weighted-average Exercise Price Outstanding at Ending | $ 6.48 | $ 5.43 | $ 5.77 | $ 5.43 |
Number of options fully vested and exercisable | 3,897 |
Stockholders' Equity - Black Sc
Stockholders' Equity - Black Scholes Option Pricing Model (Details) | 6 Months Ended |
Jun. 30, 2024 | |
Minimum | |
Risk free rate | 4.40% |
Expected volatility | 45% |
Expected life | 1 year 6 months |
Maximum | |
Risk free rate | 5.01% |
Expected volatility | 65% |
Expected life | 6 years |
Stockholders Equity - Restricte
Stockholders Equity - Restricted Share Units Activity (Details) - Equity Incentive Plan - shares shares in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2024 | Mar. 31, 2024 | Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2024 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Vesting period | 3 years | ||||
Restricted Stock Units (RSUs) | |||||
US Denominated RSU's | |||||
Unvested RSUs, beginning of period | 214 | 218 | 298 | 35 | 218 |
RSU's awarded | 299 | (17) | 98 | 264 | |
RSU's released | (68) | (21) | (3) | (1) | |
RSU's forfeited | (17) | (1) | |||
Unvested RSUs, end of period | 445 | 214 | 376 | 298 | 445 |
Restricted Stock Units (RSUs) | Minimum | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Vesting period | 1 year | ||||
Restricted Stock Units (RSUs) | Maximum | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||
Vesting period | 3 years |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | |
Stockholders Equity Note [Line Items] | |||
Common stock, no par value | $ 0 | $ 0 | |
Proceeds from issuance of stock options | $ 974 | $ 754 | |
Equity Incentive Plan | |||
Stockholders Equity Note [Line Items] | |||
Shares issuable under Stock Option Plan, as percent of shares outstanding | 25% | ||
Shares issuable under Stock Option Plan | 6,825 | ||
Vesting period | 3 years | ||
Expiration term | 10 years | ||
Maximum [Member] | Restricted Stock Units (RSUs) [Member] | Equity Incentive Plan | |||
Stockholders Equity Note [Line Items] | |||
Vesting period | 3 years | ||
Minimum [Member] | Restricted Stock Units (RSUs) [Member] | Equity Incentive Plan | |||
Stockholders Equity Note [Line Items] | |||
Vesting period | 1 year |
Fair Value Measurements - Asset
Fair Value Measurements - Assets/Liabilities Measured at Fair Value (Details) - USD ($) shares in Thousands, $ in Thousands | 6 Months Ended | |
Jun. 30, 2024 | Dec. 31, 2023 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Cash and cash equivalents | $ 43,054 | $ 13,269 |
Processa common shares | 6 | 25 |
Quoted Price in Active Markets for Identical Instruments Level 1 | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Cash and cash equivalents | 646 | 1,340 |
Processa common shares | 6 | 25 |
Significant Other Observable Inputs Level 2 | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Cash and cash equivalents | $ 42,408 | $ 11,929 |
Processa Pharmaceuticals, Inc | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Shares to be issued under agreement | 41 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) - USD ($) $ in Millions | Jun. 30, 2024 | Dec. 31, 2023 |
Money Market Accounts | ||
Fair Value Assets and Liabilities Measured On Recurring Basis [Line Items] | ||
Cash | $ 42.4 | $ 11.9 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) | 6 Months Ended | 109 Months Ended | ||
Jun. 30, 2024 USD ($) | Jun. 30, 2024 USD ($) | Aug. 01, 2023 USD ($) | Jan. 23, 2020 USD ($) | |
Oregon Health & Science University Agreement | ||||
Licensing term OHSU agreement | 8 years | |||
Days notice required to terminate OHSU agreement | 45 days | |||
Days notice required by Fennec to terminate OHSU agreement | 60 days | |||
Accrued royalty expenses | $ 162,000 | $ 399,000 | ||
Lease Contingencies | Triangle Park, North Carolina | ||||
Monthly lease expense | $ 400,000 | |||
Operating lease, days notice required to terminate agreement | 30 days | |||
Operating lease, penalties and contingent payments payable | $ 0 | |||
Lease Contingencies | Hoboken, New Jersey | Office Service Agreement | ||||
Monthly lease expense | 1,000 | |||
Security deposit | $ 2,000 | |||
Lease Contingencies | Dublin, Ireland | Second Office Service Agreement | ||||
Monthly lease expense | $ 2,000 | |||
Security deposit | $ 5,000 | |||
Variable rate over prime | 1.50% | |||
CIPLA ANDA Litigation | ||||
Days following receipt of Notice Letter to file patent infringement suit | 45 days | |||
Duration of FDA's ability to give final approval to proposed products that reference PEDMARK | 30 months | |||
PEDMARK's Orphan Drug Exclusivity period | 7 years | |||
PEDMARK's exclusivity period under PUMA | 10 years | |||
Executive Severance | Rostislav Raykov, CEO | ||||
Severance payments due | $ 608,000 | $ 608,000 | ||
Number of severance payments | 1 | 1 | ||
Severance payment term | 12 months | |||
Executive Severance | Robert Andrade | ||||
Severance payments due | $ 220,000 | $ 220,000 | ||
Number of severance payments | 1 | 1 | ||
Severance payment term | 6 months |
Commitments and Contingencies -
Commitments and Contingencies - Lease Agreements (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Current operating lease liabilities | $ 12 | $ 21 |
Lease Contingencies | Office Service Agreement | Dublin, Ireland | ||
Remaining lease terms (in months) | 7 months | |
Discount rate | 10% | |
2024 | $ 10 | |
2025 | 2 | |
lease liabilities to be paid before imputed interest | 12 | |
lease liabilities imputed interest | 2 | |
Total lease liabilities | 10 | |
Current operating lease liabilities | 12 | |
Total lease liabilities | $ 12 |
Term Loans (Details)
Term Loans (Details) - USD ($) | 6 Months Ended | |||||
Dec. 04, 2023 | Sep. 23, 2022 | Aug. 19, 2022 | Jun. 30, 2024 | Dec. 31, 2023 | Aug. 01, 2022 | |
Debt Instrument [Line Items] | ||||||
Debt discount | $ (247,000) | $ (288,000) | ||||
Petrichor Financing | Securities Purchase Agreements | Secured Convertible Debt | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 45,000,000 | |||||
Commitment fee percentage | 2% | |||||
Common shares available through issuance of warrants | 110,996 | |||||
Exercise price of warrants issued | $ 8.11 | |||||
Exercise term of warrants | 5 years | |||||
Debt issuance costs | $ 175,000 | |||||
Debt discount | (314,000) | |||||
Fair value warrants | $ 441,000 | |||||
Cash interest accrual rate over Prime | 4.50% | |||||
Cash interest accrual rate | 13% | 13% | ||||
Accrual rate, PIK interest | 3.50% | |||||
Accrued Paid-in-Kind Interest | $ 1,600,000 | |||||
Petrichor Financing | Securities Purchase Agreements | First Closing Note | ||||||
Debt Instrument [Line Items] | ||||||
Borrowings, face amount | $ 5,000,000 | |||||
Initial conversion price | $ 8.11 | |||||
Premium over 5-day VWAP | 20% | |||||
VWAP term | 5 days | |||||
Petrichor Financing | Securities Purchase Agreements | Second Closing Note | ||||||
Debt Instrument [Line Items] | ||||||
Borrowings, face amount | $ 20,000,000 | |||||
Initial conversion price | $ 7.89 | |||||
Premium over 5-day VWAP | 20% | |||||
VWAP term | 5 days | |||||
Petrichor Financing | Securities Purchase Agreements | Third Closing Note | ||||||
Debt Instrument [Line Items] | ||||||
Borrowings, face amount | $ 5,000,000 | |||||
Initial conversion price | $ 7.89 | |||||
Premium over 5-day VWAP | 20% | |||||
VWAP term | 5 days | |||||
Petrichor Financing | Securities Purchase Agreements | Subsequent Closing Notes | ||||||
Debt Instrument [Line Items] | ||||||
Remaining borrowing capacity | $ 20,000,000 | |||||
Initial conversion price | $ 7.89 | |||||
Petrichor Financing | Securities Purchase Agreements | Subsequent Closing Notes | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Number of loan tranches for remaining borrowing capacity | 1 | |||||
Petrichor Financing | Securities Purchase Agreements | Subsequent Closing Notes | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Maximum borrowing capacity | $ 10,000,000 | |||||
Borrowings, face amount | $ 10,000,000 | |||||
Petrichor Financing | Securities Purchase Agreements | First Closing Warrant | ||||||
Debt Instrument [Line Items] | ||||||
Commitment fees payable in cash or warrants | 50% | |||||
Petrichor Financing | Securities Purchase Agreements | Second Closing Warrant | ||||||
Debt Instrument [Line Items] | ||||||
Commitment fees payable in cash or warrants | 50% | |||||
Petrichor Financing | SPA First Amendment | Subsequent Closing Notes | ||||||
Debt Instrument [Line Items] | ||||||
Remaining borrowing capacity | $ 15,000,000 | |||||
Initial conversion price | $ 7.89 | |||||
Bridge Bank | Bridge Bank Term Loan | ||||||
Debt Instrument [Line Items] | ||||||
Repayment of term loan | $ 5,000,000 |
Term Loans - Aggregate annual p
Term Loans - Aggregate annual payments due on Term Loan (Details) - USD ($) $ in Thousands | Jun. 30, 2024 | Dec. 31, 2023 |
Long-Term Debt, Fiscal Year Maturity [Abstract] | ||
2027 | $ 30,000 | |
Payment in kind interest | 2,022 | |
Total future payments | 32,022 | |
Less: unamortized debt discount | (247) | $ (288) |
Total term loan, net of discount | $ 31,775 |
License Agreement (Details)
License Agreement (Details) - Licensing Agreement - Norgine Ltd. $ in Thousands, € in Millions | 6 Months Ended | ||
Jun. 30, 2024 USD ($) | Mar. 15, 2024 USD ($) | Mar. 15, 2024 EUR (€) | |
License agreement funding received | $ 43,200 | € 40 | |
License agreement funding, potential milestone payments | $ 230,000 | € 210 | |
Incremental costs paid | $ 1,700 | ||
Incremental costs capitalized to other non-current assets | $ 970 |