Earnings Call Transcript - FENC Q1 2026

Operator, Operator

Good morning, ladies and gentlemen, and welcome to the Fennec Pharmaceuticals' First Quarter 2026 Earnings and Corporate Update Conference Call. (Operator Instructions.) As a reminder, today's conference call is being recorded. I would now like to turn the conference over to Fennec's Chief Financial Officer, Robert Andrade. Please begin.

Robert Andrade, CFO

Thank you, operator, and good morning, everyone. Thank you for joining us. We are pleased to host Fennec Pharmaceuticals' first quarter 2026 earnings conference call today, during which we will review our financial results as well as provide a general business update. Joining me from Fennec this morning is our Chief Executive Officer and Board member, Jeff Hackman. I am also pleased to welcome our Chief Commercial Officer, Terry Evans, who is joining our earnings call for the first time. Terry is a seasoned commercial and operations leader with a proven track record for delivering significant revenue growth and leading high-performing teams. Terry's industry experience spans all facets of commercial operations, including sales, sales management, operations, market access, trade, specialty pharmacy and data analytics. He has more than 25 years of commercial leadership experience with companies, including Currax Pharmaceuticals, Horizon Therapeutics and Medisys. Since joining Fennec in the fourth quarter of 2024, Terry has played a pivotal role in reshaping and strengthening our commercial organization. He has helped to sharpen our execution, enhance our field presence and position the team to capitalize on the opportunities ahead. Later in the call, Terry will speak to how recent efforts will support Fennec's next phase of growth. Additionally, our Chief Medical Officer, Dr. Pierre Sayad, will join us for the Q&A portion of today's call. Before we begin, I would like to remind you that during this call, the company will be making forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ from the results discussed in the forward-looking statements. References to these risks and uncertainties are made in today's press release and disclosed in the company's periodic and current event filings with the United States Securities and Exchange Commission. In addition, any forward-looking statements made on this call represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligation to update or revise any forward-looking statements. This conference call is being recorded for audio rebroadcast on Fennec's website, www.fennecpharma.com, where it will be available for the next 30 days. I will now turn the call over to Jeff Hackman.

Jeff Hackman, CEO

Thank you, Robert, and good morning, everyone. Thanks for joining the call here today. We are encouraged by our strong start to the year and believe 2026 is a defining period for Fennec. Our conviction is rooted in the progress across many fronts. We've made important strategic enhancements to our business for 2026 that are strengthening our execution across the organization and position us to continue to build momentum as the year unfolds. On the commercial front, we're seeing encouraging early indicators, including positive experiences through our full-service patient support program, Fennec HEARS, as well as trends that support our confidence in the opportunity ahead, and Terry will provide more color on those dynamics shortly. Beyond commercial execution, we continue to be encouraged by growing clinical interest in PEDMARK and its broader potential. We are pleased to have recently announced a third investigator-initiated study with the University of Arizona Cancer Center to evaluate PEDMARK in adolescent and young adults or AYA and adult patients in head and neck and testicular cancers receiving cisplatin. The news follows recent initiations of two other institution-led clinical studies with Tampa General Hospital Cancer Institute and City of Hope. We believe that the data insights generated through these studies and others to come will help support broader clinical adoption of PEDMARK to prevent ototoxicity in AYA and adult cancer patients receiving cisplatin-based treatments. Additionally, four abstracts from key opinion leaders evaluating the utility of PEDMARK in preventing cisplatin-induced ototoxicity or permitted hearing loss were accepted for presentation at this year's ASCO Annual Meeting. Collectively, these studies are continuing the momentum and the growing body of evidence supporting potential use of PEDMARK in new patient populations and tumor types. As a reminder, PEDMARK is currently approved for pediatric patients one month of age and older with localized non-metastatic solid tumors and is also recognized by the National Comprehensive Cancer Network with a 2A recommendation for use in AYA patients. With regards to Japan, we had a positive informal PMDA meeting earlier this quarter. We continue to be in conversations and to explore partnering opportunities in that region. So in summary, we're making meaningful progress across the drivers that matter most to our long-term success: expanding clinical momentum, strengthening commercial execution and maintaining a solid financial foundation. Taken together with what we are observing early in Q2, we believe we are well positioned to deliver sustained growth throughout this year. With that, I will turn it over to Terry for a detailed commercial update.

Terry Evans, Chief Commercial Officer

Thank you, Jeff. As Jeff just noted, we're encouraged by the momentum we're seeing in the business and believe our first quarter performance reflects the benefits of the key strategic enhancements we've made across the commercial organization. In late Q4 2025, we launched an initiative called Project Ignite. This was a strategic decision based on successful cross-functional initiatives put in place at the start of 2025. Building on the shared insights and strong commercial execution, we used data to evaluate opportunities to optimize both reach and frequency. Our Q1 investment in 14 new territories and four frontline managers expanded our ability to engage health care professionals, support adoption and drive sustained momentum across priority markets. Much of the quarter involved the foundational work required to bring those investments fully online: recruiting and onboarding new talent, completing training and integrating these team members into our commercial model. The recruitment and onboarding process concluded at our national meeting in early March. This was an important milestone to align the expanded organization around our strategy, sharpen execution and ensure the team entered the field equipped and ready to execute. There is a natural ramp period with any field force expansion and we view much of Q1 as laying that groundwork. The expansion of our customer-facing team has allowed us to reach with greater frequency a larger prescriber target base, increasing from 1,300 to now over 5,000 targets. We know the AYA market is promotionally sensitive and effectively communicating the unmet need around CIO is our number one priority. This creates a pathway for practices to help change the standard of care for all appropriate patients receiving cisplatin. We believe we're executing in Q2 with a strengthened commercial footprint that is now positioned to drive greater impact through increased reach, frequency and account penetration. Importantly, we're already seeing encouraging signs from these investments through our HCP targeting efforts. To bring our cross-functional model to life, one recent example illustrates how coordinated engagement can translate into adoption over time. About a year ago, our medical team initiated engagement with a key opinion leader from a leading academic center who was familiar with CIO, but not aware of PEDMARK as a preventive treatment option. Through multiple scientific exchanges and participation in a sponsored program at ASCO GU alongside the Testicular Cancer Awareness Foundation, awareness evolved into meaningful engagement. More recently, that relationship was transitioned from medical to field sales. A newly deployed territory manager with our Key Account Director introduced Fennec HEARS, which facilitated this KOL's identification and treatment of his first testicular cancer patient for home infusion. Since then, the engagement is actively expanding across the institution with multiple physicians across tumor types now positioned to prescribe and treat more than 20 patients with PEDMARK. Now in parallel, we're working collaboratively on order sets and EMR integration. This example highlights a key principle. Durable growth stems from persistent cross-functional engagement across medical, sales, market access and patient support services. Another example of significant progress is through our market access initiatives, specifically in terms of engaging with GPOs. One of the fastest-growing oncology aggregators in the U.S. has partnered with us to integrate PEDMARK throughout their network with order sets and site activations. We have ongoing efforts with other organizations to replicate this model that supports a top-down adoption approach, complementing the expansion of our sales force focused on bottom-up activities. At the macro level, we continue to see a healthy mix of both new and existing prescribers. Many established accounts are becoming more comfortable with PEDMARK, contributing to deeper utilization and increased vials per account. We view that continued adoption and growing depth of use as an important marker of durable demand. In fact, demand in the first quarter was driven by prescribing in three core tumor types: testicular, cervical and head and neck cancers, and these remain foundational to our commercial opportunity. Another area we would highlight is cross-functional collaboration across all parts of our organization to convert prescription demand into completed therapy. This collaboration comes together through Fennec HEARS, our full-service hub designed to simplify access and support continuity of care by guiding patients and providers through coverage, reimbursement, nurse-led administration and at-home infusion services. This white-glove support and education continue to be a meaningful differentiator as we change the standard of care. That coordinated approach is reflected in the operational metrics we're seeing. We continue to see strength in infusion volume and vial utilization. This is reflected in a 48% quarter-over-quarter increase in completed infusions through Fennec HEARS and reinforces our ability to translate prescription demand into completed therapy. From a site of care perspective, we're maintaining a productive mix of approximately 50% from both in-office and at-home infusions, which supports access and flexibility for patients and providers. Fennec HEARS continues to be an important contributor to momentum in the quarter. Through ongoing operational refinements, we're seeing more patients enter the funnel. Specifically, a higher share of patients are progressing to therapy as reflected in encouraging conversion rates, which are hitting our benchmark of 80% for the first time. Once on treatment, we continue to see strong adherence trends of approximately 80%, which is a huge improvement from where we were one year ago today. With our larger sales footprint, we're able to make substantially more sales calls each day versus previous quarters. As I mentioned before, this is a promotionally sensitive market where reach and frequency make an impact on our business. Early indicators of this success include HEARS patient record monthly enrollments in April. Demand through Fennec HEARS in April alone is more than 50% of the total Fennec HEARS demand for all of Q1. As a result, demand in Q2 is tracking to surpass Q1. Additionally, conversion rates remain above our target of 80% and key community and academic relationships are opening up to our message of CIO prevention. We remain focused on disciplined execution as we build on this momentum throughout the year. And with that, I will now turn the call over to Robert for our financial review.

Robert Andrade, CFO

Thank you, Terry. Our press release contains details of our financial results for the first quarter of 2026, which can be viewed on the Investors and Media section of our website. Rather than read through all of those details, my comments today will focus on some key financial results. For the first quarter of 2026, the company recorded net product sales of $15.1 million compared to $8.8 million in the first quarter of 2025, representing an increase of approximately 73% year-over-year compared with the first quarter of 2025. The first quarter demonstrated continued momentum in delivering PEDMARK to patients with net product sales up for the sixth consecutive quarter since new commercial leadership took over. We saw record new patient enrollments in the March quarter and April was our highest demand month ever. On the OpEx side, which we define as R&D and SG&A, excluding stock-based compensation, it was approximately $14 million for the quarter, with a year-over-year increase of approximately $6 million. The increase was in SG&A with expanded marketing investment and increased commercial headcount supporting PEDMARK growth. Important to note, we expect approximately $50 million in cash OpEx in 2026, with over 60% of those expenses expected in the first half of 2026. Cash and cash equivalents were $40.1 million as of March 31, 2026. For the quarter, there was an increase of $3.3 million in cash and cash equivalents. The net increase in cash consisted of $2.3 million in operating cash flow and approximately $1 million in proceeds from option exercises. With regard to anticipated milestone payments from our partner, Norgine, we do not anticipate receiving the German milestone payment. We look forward to Norgine's expansion efforts in 2026 as they launch in multiple markets and the potential for the next milestone achievement by the end of 2026. Importantly, we generated positive cash flow in the first quarter of 2026. As we grow the business, we anticipate select quarterly swings in the cash position based on collection cycles with customers and as such, expect the second quarter ending cash to be lower than the first quarter. However, we expect the third quarter cash to be positive and to grow the cash the remainder of the year in the second half of 2026. We have tremendous leverage in the business with a predominantly fixed cost base. And as our revenue growth continues, we anticipate operating income to grow meaningfully in the quarters to come. Lastly, as stated in our press release, we anticipate that our cash, cash equivalents and investment securities as of March 31, 2026, combined with projected revenues from PEDMARK will be sufficient to fund our business based on our current operating plan. Operator, with that, we are now ready to open the call for questions.

Operator, Operator

(Operator Instructions.) And our first question will be coming from the line of Madison El-Saadi of B. Riley Securities.

Madison Wynne El-Saadi, Analyst

Congrats on the quarter. It seems you gave some additional color this quarter on KPIs and performance. Maybe just help us break down really what drove the upside here, if this was predominantly new account adds in Q1, if it was deepening utilization of your base accounts or maybe just productivity from sales force expansion that weren't fully onboarded as of March? And then afterwards, a follow-up.

Jeff Hackman, CEO

Sure. This is Jeff. Thanks for the question. I appreciate it. And I'll let Terry comment on it a little bit. We talked about execution early on when I even first got here 1.5 years or so ago and going on. And we're starting to see it now. One of the things that we saw with Project Ignite was the ability for us to be able to not only expand our reach but expand our frequency. That's what we're seeing and one of the reasons why you're seeing such significant uptake, especially in a month like April. So we can go into a little bit more detail. Fennec HEARS is something that drives a lot of the growth here. And we see demand all throughout Q1 growing through Fennec HEARS. So that's also exciting for us. But I'll let Terry comment a little bit more on some of the growth.

Terry Evans, Chief Commercial Officer

Yes, for sure. Thank you for the question. What we're seeing is new starts in Q2 are balanced really between both academic and community. In that balanced approach, utilizing the additional folks that we have, our increased reach and frequency that Jeff mentioned, we're seeing that really present itself in academic and large community and small community practices. We're seeing a nice growth in both AYA and pediatrics. So yes, we're encouraged by the balance of the year.

Madison Wynne El-Saadi, Analyst

Yes, please. So it seems like you've had multiple inbound interests regarding these investigator-initiated trials. I'm just wondering why you decided to go with the ISTs and the tumor types you did. If we focus just on, say, the AYA adult testicular, what can this practically mean for the company? Is it more of a means of entrenching PEDMARK, increasing awareness? Or is it more in the context of TAM expansion? And I'm just curious if you can comment if you've seen any revenue come out of these IST institutions. It seems that would be a tremendous leading indicator of awareness.

Jeff Hackman, CEO

Yes. Great question, and I'll touch on it first, and then I'll kick it over to Pierre, who's sitting here with us today. ISTs are important for a couple of reasons. Number one is it establishes our position in the space. One of the pushbacks you'll get from AYA physicians is, let me see the data. Let me see some of the data that was generated in this population. As you know, the trials that got PEDMARK approved were trials that were done with the Children's Oncology Group or in the pediatric space. So that's one of the reasons why we're excited about the testicular data that we're generating, as well as some of the adult data down the road that are going to come from these. The second part is, as you—and I'll let Pierre talk a little bit more about how this happens inside the institutions—not only the physicians who are participating in these studies are using the product, but also physicians that are surrounding those physicians. So we're seeing that expansion throughout the institution. Pierre, maybe you can comment a little bit on that.

Pierre Sayad, Chief Medical Officer

Sure. Thanks for the question. As the medical team has the conversations around our two Phase III clinical trials—as Jeff alluded—those were obviously in the pediatric setting, and there's a very natural conversation that happens with our physicians where they say, okay, now that I'm really understanding how cisplatin is causing this damage in the cochlea and how PEDMARK can potentially prevent that, they're coming to us with these new and very creative ISTs to test this out in AYA and adult patients. As you know from previous press releases, at least on the three ISTs that have already been announced, these are across tumor types, AYA setting, adult setting, localized tumors, metastatic tumors, and all these ideas are coming directly from the KOLs. So we're very excited about all this interest. In terms of what we do with this data, as the data matures and our dataset expands, we're certainly thinking about potential regulatory conversations, NCCN guideline submissions, and so on. And the third point, to cover what Jeff said, we absolutely see a very interesting trend: once an IST is activated in a given academic institution, there's so much training and conversation that needs to happen that pharmacists, nurses and other oncologists all become on board with PEDMARK. So we begin to see an uptick in commercial use in those institutions.

Operator, Operator

And our next question will be coming from the line of Chase Knickerbocker of Craig-Hallum.

Chase Knickerbocker, Analyst

Congrats on the nice quarter here. Could you maybe just share what percentage of your volume or some underlying demand metric was driven by the new rep hires over the last couple of quarters? And then how is that productivity trending in Q2? Really just trying to get to the extent of to what magnitude those new hires are playing a role in this sequential growth and when they can be fully productive.

Jeff Hackman, CEO

Yes. I'll give this over to Terry, but Chase, thanks for the question. It's a good one. The things we're seeing early in April are new patients coming from new territories, which is exciting. So we see a healthy mix both coming from new and existing prescribers. These are established accounts becoming more comfortable with PEDMARK, but also we're seeing execution in new accounts, which is exciting in places where we've never seen patients before. We knew that once we expanded our reach and expanded the frequency of the PEDMARK message, we were going to see continued adoption. Terry, maybe you can comment a little bit.

Terry Evans, Chief Commercial Officer

A couple of things. Jeff is exactly right. A significant number of our new territories had prescriptions or patients that have come through between the time that our national meeting occurred through the end of April. To the point you made, Chase, we actually began the decision for Project Ignite in Q4, and that process continued through Q1. We trained everybody the first week of March and concluded at our national meeting. The effectiveness of the new salespeople really began around March 9. As you know, there is a ramp period of productivity for our sales team. We've talked about the second half of the year as we get these folks more up and running and productive. Early signs are good. There's a good balance between new accounts and existing accounts and growing patients and prescriptions inside both. So we're encouraged that with the strengthened commercial footprint we're going to drive reach and frequency, and we're excited that we've been able to deliver six consecutive quarters of strong performance.

Chase Knickerbocker, Analyst

Helpful. And maybe just a couple of smaller details. Can you speak to the stability of the pediatric revenue, just trying to get a sense for underlying sequential AYA growth? And then can you remind us what percentage of your business, either from a demand or revenue perspective, is flowing through Fennec HEARS?

Jeff Hackman, CEO

We see the business growing and we're enthusiastic about how it's growing. Fennec HEARS is, in April alone, about 50% of our business and demand is going through Fennec HEARS. That's increasing as we improve implementation and as physicians add more patients. Our pediatric business is growing, though not at the pace of AYA, as we've said before. The pediatric business grows because we're getting into institutions and places where we didn't have access before. When a pharmacist, for example, becomes comfortable in an academic institution with the product in the AYA space, we're seeing uptake in the pediatric space as well because of that comfort with the product. Whether we enter through AYA or pediatric, the important point for me is access to these patients.

Terry Evans, Chief Commercial Officer

Jeff is right. We're growing in both pediatrics and AYA. Fennec HEARS, as Jeff mentioned, is roughly about 50%. It's important to note that PEDMARK is weight-based. AYA represents a larger number of patients who take high-dose cisplatin and therefore AYA would be expected to outpace pediatrics even though the pediatric space is growing. We're taking a balanced approach, which has contributed to six quarters of strong growth.

Operator, Operator

And our next question will come from the line of David Amsellem of Piper Sandler & Company.

Alexandra von Riesemann, Analyst

This is Alex von Riesemann on for David. My first question is how are you thinking about life cycle management for PEDMARK? And secondly, what is your appetite for acquiring another asset?

Jeff Hackman, CEO

Great question. On life cycle management, you're starting to see that come into play with the ISTs. We talk about three groups of patients for our business: pediatric, AYA and adult. Cisplatin is used across these areas and in both localized and metastatic settings. You're starting to see us grow the opportunity to develop data and expand from a life cycle management standpoint into other populations, including the metastatic population and adult patients in head and neck cancers. Pierre can provide more color on that. Regarding acquisitions or adding other products, we continue to be open to opportunities. We've expanded our commercial team and organizational resources, which may allow us to layer in additional products. We're continuing to evaluate that.

Pierre Sayad, Chief Medical Officer

That's exactly right. As I mentioned earlier, ISTs are beginning to mature and we're seeing data come through. That will open doors into metastatic indications. We've seen tremendous interest from multiple academic institutions proposing creative new ISTs in the head and neck space. We also have strong interest in cervical cancer. As the data matures, it will define our strategy to expand, whether through regulatory-enabling conversations or NCCN guideline updates.

Jeff Hackman, CEO

Yes. And on the point of potential acquisitions or additional products, we remain open and are evaluating opportunities to leverage our expanded commercial capabilities.

Operator, Operator

And our next question will be coming from the line of Ram Selvaraju of H.C. Wainwright.

Katherine Degen, Analyst

This is Katie on for Ram. What is the typical profile of a high-volume prescriber for PEDMARK at this point? Are those high-volume prescribers predominantly NCI cancer centers or more community oncologists? And how many of those physicians are there in the U.S.?

Jeff Hackman, CEO

We are targeting about 5,400 health care professionals with our expanded team, up from just over 1,000 previously. Uptake is concentrated in both academic and community settings, and our strategy is designed to engage both. We're seeing a good balance between the two.

Terry Evans, Chief Commercial Officer

With our greater reach and frequency, we're seeing new starts from both academic and community settings. PEDMARK adoption is often a longer process that requires medical, sales, market access and patient support services working together. The needs in academic centers differ slightly from community practices, but we're activating both and taking a balanced approach.

Katherine Degen, Analyst

If I could sneak in one more question: do you have an idea of how many additional investigator-initiated trials you're going to have starting this year? Could any of those outcomes give you evidence to support label expansion?

Jeff Hackman, CEO

As soon as we announced the initial ISTs, interest increased. There is strong demand, but there are limits to how many we will pursue. We are being selective in our approach. Pierre can comment more specifically.

Pierre Sayad, Chief Medical Officer

We're very encouraged by the interest from top academic institutions. In terms of how many more ISTs we'll see, I can't provide a specific number, but there will likely be more announcements. We are selective about which studies we approve. Ultimately, there will be efforts to combine data and perform pooled analyses with specific regulatory purposes in mind.

Operator, Operator

Next question will be coming from the line of Sudan Loganathan of Stephens.

Sudan Loganathan, Analyst

We appreciate the updates and the great progress. My first question: what does your internal pipeline look like to target new patient populations also treated with platinum-based chemotherapies such as ovarian cancer, bladder cancer, colorectal cancer and even non-small cell or small cell lung cancers? I'm curious which of those you view as the next low-hanging fruit. Secondly, could you give more details on how the PEDMARQSI launches are going? What are the primary sticking points and when do you anticipate revenues from there to start moving the needle for the business?

Jeff Hackman, CEO

We go where cisplatin is given. Testicular cancer is a clear target because cisplatin is the gold standard there and the impact of CIO is significant. We're also seeing interest in cervical and head and neck cancers and other places where cisplatin is commonly used. Pierre can comment on the other tumor types and how PEDMARK could apply across them.

Pierre Sayad, Chief Medical Officer

We have a strong foothold of interest in head and neck, testicular and cervical cancers. We're also having conversations about bladder and lung. The mechanism by which cisplatin damages cochlear hair cells is the same across tumor types; wherever cisplatin is used, PEDMARK has strong potential to help those patients. So head and neck, cervical, testicular, lung and bladder are all important targets for PEDMARK.

Sudan Loganathan, Analyst

Great. And secondly, could we get more details on how the PEDMARQSI launches are going? What are the primary sticking points and when do you anticipate revenues from there to start moving the needle for the business?

Jeff Hackman, CEO

We're enthusiastic about Norgine's efforts. This is the year we'll see significant growth in the markets they're launching. We're starting to see activity in many countries and we expect the ramp to continue through 2026.

Robert Andrade, CFO

PEDMARQSI will be launched in multiple markets in 2026, nearly double-digit markets. This is the year where the foundation for their launches gets laid. Important points include both our royalties, which start in the mid-teens as their sales grow, and the milestones. Of the over $200 million in milestones, at least half are tied purely to achieving certain sales. We look forward to giving updates, but 2026 is the year where we see the ramp starting.

Sudan Loganathan, Analyst

And congrats. Great quarter.

Operator, Operator

I would now like to turn the call back to Jeff for closing remarks.

Jeff Hackman, CEO

Perfect. Thanks, and great questions, and I really appreciate everybody attending today. In closing, we believe our first quarter performance reflects meaningful momentum across the business and reinforces our confidence in 2026 as an important year for Fennec. With strong execution underway in Q2 and multiple catalysts ahead, we remain focused on delivering sustained value. So thank you all again for your continued interest and support. We appreciate it. Take care.

Operator, Operator

This concludes today's conference. Thank you for your participation. You may now disconnect.