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Fennec Pharmaceuticals (FENC) Risk Analysis
Risk Overview Q3, 2024
Source: the company's latest filing for the period ended Sep 30, 2024, filed Nov 08, 2024
Risk Change Over Time
- Corporate Activity and Growth - Risk 1We have entered into, and may in the future enter into, strategic transactions for the research, development and commercialization of PEDMARK. If any of these transactions are not successful, then we may not be able to capitalize on the market potential of such product candidates. Further, we may not be able to enter into future transactions on acceptable terms, if at all, which could adversely affect our ability to develop and commercialize our potential future product candidates and former lead product candidate, impact our cash position, increase our expense, and present significant distractions to our management.
We have entered into, and may enter into in the future, strategic transactions, such as out-licensing of product candidates or technologies. For example, in March 2024, we entered into a collaboration and license agreement with Norgine. Our ability to generate revenue from any of our strategic transactions will depend on our partners' abilities to successfully perform the functions assigned to them in these transactions. We cannot predict the success of any of our strategic transactions. We also intend to evaluate and, if strategically attractive, seek to enter into additional collaborations in the future, including with biotechnology or biopharmaceutical companies or hospitals. The competition for partners is intense, and the negotiation process is time-consuming and complex. If we are not able to enter into strategic transactions, we may not have access to required liquidity or expertise to further develop our potential future product candidates or our discovery platform. Any existing or potential future collaboration or other strategic transaction may require us to incur non-recurring or other charges, increase our near- and long-term expenditures and pose significant integration or implementation challenges or disrupt our management or business. We may acquire additional technologies and assets, form strategic alliances or create joint ventures with third parties that we believe will complement or augment our existing business, but we may not be able to realize the benefit of such acquisitions or collaborations. In addition, any new collaboration that we enter into may be on terms that are not optimal for us. Our existing and future strategic transactions would entail numerous operational and financial risks, including: - exposure to unknown liabilities;- disruption of our business and diversion of our management's time and attention in order to manage a collaboration or develop acquired products, potential future product candidates or technologies;- incurrence of substantial debt or dilutive issuances of equity securities to pay transaction consideration or costs;- higher-than-expected collaboration, acquisition or integration costs, write-downs of assets or goodwill or impairment charges, increased amortization expenses;- collaborators have significant discretion in determining the efforts and resources they apply to these collaborations, and may not pursue development of any product candidates we may develop or may elect not to continue development programs based on preclinical study results, changes in the collaborator's strategic focus or other factors that may be beyond our control;- collaborators could independently develop, or develop with third parties, products that may compete directly or indirectly with our potential future product candidates if the collaborators believe that the competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours;- potential future product candidates discovered in collaboration with us may be viewed by our collaborators as competitive with their own product candidates or products, which may cause collaborators to cease to devote resources to the development or commercialization of our potential future product candidates;- difficulty and cost in facilitating the collaboration or combining the operations and personnel of any acquired business;- disputes may arise between a collaborator and us, including with respect to the ownership of any intellectual property developed pursuant to our collaborations, that cause the delay or termination of the research, development or commercialization of a potential future product candidate, or that result in costly litigation or arbitration that diverts management's attention and resources;- impairment of relationships with key suppliers, manufacturers or customers of any acquired business due to changes in management and ownership; and - the inability to retain key employees of any acquired business. Accordingly, although there can be no assurance that we will undertake or successfully complete any strategic transactions of the nature described above, any collaborations that we are currently engaged in or transactions we may complete in the future may be subject to the foregoing or other risks and our business could be materially harmed by such transactions. Conversely, any failure to enter any collaboration or other strategic transaction that would be beneficial to us could delay the development and potential commercialization of our potential future product candidates and have a negative impact on the competitiveness of any potential future product candidate that reaches market. In addition, to the extent that any of our existing or future partners were to terminate a collaboration agreement, we may be forced to independently develop our future product candidates, including funding preclinical studies or clinical trials, assuming marketing and distribution costs and maintaining, enforcing and defending intellectual property rights, or, in certain instances, abandon potential future product candidates altogether, any of which could result in a change to our business plan and materially harm our business, financial condition, results of operations and prospects.
Risk Highlights Q3, 2024
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 69
- Innovation / R&D - Risk 1Drug development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results.
Conducting clinical trials is a lengthy, time-consuming and expensive process. Before obtaining regulatory approvals for the commercial sale of any products, we, or our potential partners, must demonstrate through preclinical testing and clinical trials that our product candidates are safe and effective for their intended uses in humans. We have incurred and may continue to incur substantial expense and devote a significant amount of time to preclinical testing and clinical trials. The outcome of clinical testing is inherently uncertain. Failure can occur at any time during the clinical trial process. The results of preclinical studies and early clinical trials of product candidates may not be predictive of the results of later-stage clinical trials. In addition, regulations are not static, and regulatory agencies, including the FDA, alter their staff, interpretations and practices and may in the future impose more stringent requirements than are currently in effect, which may adversely affect our planned drug development and/or our commercialization efforts. Satisfying regulatory requirements typically takes a significant number of years and can vary substantially based on the type, complexity and novelty of the product candidate. Our business, results of operations and financial condition may be materially adversely affected by any delays in, or termination of, our clinical trials. Factors that could impede our ability to generate commercially viable products through the conduct of clinical trials include: - insufficient funds to conduct clinical trials;- the inability to find partners, if necessary, for support, including research, development, manufacturing or clinical needs;- the failure of clinical trials to demonstrate the safety and efficacy of our product to the extent necessary to obtain regulatory approvals;- the failure by us or third-party investigators, CROs, or other third parties involved in the research to adhere to regulatory requirements applicable to the conduct of clinical trials;- the failure of preclinical testing and early clinical trials to predict results of later clinical trials;- any delay in completion of clinical trials caused by a regional disturbance where we or our collaborative partners are enrolling patients in clinical studies, such as pandemic, terrorist activities, or war, or political unrest, a natural disaster or any other reason or event, resulting in increased costs;- any delay in obtaining advice from the FDA or similar regulatory authorities; and - the inability to obtain regulatory approval of our product candidate following completion of clinical trials, or delays in obtaining such approvals. There can be no assurance that if our clinical trials are successfully initiated and completed, we will be able to obtain approval by regulatory authorities elsewhere in the world in a timely manner, if at all. For example, as described elsewhere, we received a CRL from the FDA in August 2020 and November 2021, regarding our NDA for PEDMARK, stating that it was unable to approve the application in its current form based on deficiencies identified by the FDA after completion of a pre-approval inspection of the manufacturing facility of our third-party drug product manufacturer. Although we are successful in resolving the matters raised by the FDA in the CRL, there is no guarantee we will receive regulatory approval elsewhere in the world for PEDMARK on a timely basis or at all. If we fail to successfully develop and commercialize PEDMARK outside of the United States, we may be unable to generate sufficient revenues to attain profitability, and our reputation in the industry and in the investment community would likely be damaged, each of which would cause our stock price to decrease.
- Innovation / R&D - Risk 2If we are unable to continue to successfully commercialize PEDMARK, our business, results of operations and financial condition may be materially adversely affected.
Our strategy is to successfully commercialize PEDMARK in the United States and abroad. There are risks involved both with maintaining our own sales and marketing capabilities, and with entering into arrangements with third parties to perform these services. For example, any efforts to maintain a direct sales and marketing organization are subject to numerous risks, including: - the expense and time required to recruit, retain, and motivate members of the sales force;- our inability to recruit, retain or motivate adequate numbers of effective marketing personnel and partner marketing agencies;- the inability to provide adequate training to sales and marketing personnel;- the expense and time required to monitor regulatory compliance;- the inability of sales personnel to obtain access to physicians or convince adequate numbers of physicians to prescribe any product; and - unforeseen costs and expenses associated with creating an independent sales and marketing organization. Similarly, as we enter into arrangements with third parties to perform sales, marketing and distribution services, our product revenue or the profitability associated with any product revenue may be lower than if we were to market and sell any product that we develop ourselves. In addition, we may not be successful in entering into arrangements with third parties to sell and market our products or may be unable to do so on terms that are favorable to us. We may have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our product effectively. Moreover, we may be negatively impacted by other factors outside of our control relating to such third parties, including, but not limited to, their inability to comply with regulatory requirements. If we do not establish sales, marketing and distribution capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our product. Finally, because we are using a very small group of exclusive specialty pharmacies to distribute our product, if the organizations that we work with to deliver our drug do not perform in a lawful manner or have issues unrelated to our business, our business could be adversely affected.
- Innovation / R&D - Risk 3Our success depends on our ability to successfully commercialize PEDMARK. We are a single product company with only limited commercial experience, which makes it difficult to evaluate our current business, predict our future prospects, and forecast our financial performance and growth.
We have invested a significant portion of our efforts and financial resources to date into the development and commercialization of our only product, PEDMARK. Our success depends on our ability to effectively commercialize PEDMARK, and we expect that all of our product revenues in the foreseeable future will be from sales of PEDMARK. Continued commercialization of PEDMARK is subject to many risks. Until we launched PEDMARK, we had never launched or commercialized a product, and there is no guarantee that we will be able to achieve profitability and cash flow positive based on our sales of PEDMARK. There are numerous examples of unsuccessful product launches and failures to meet high expectations of market growth potential, including by pharmaceutical companies with more resources and experience than we have. The long term commercial success of PEDMARK depends on the extent to which patients and physicians accept and adopt PEDMARK For example, if the expected patient population is smaller than we estimate or if physicians are unwilling to prescribe or patients are unwilling to take PEDMARK, or if patients discontinue from use of the medication at rates that are higher than we expect, or if payers decide not to reimburse for our product, the commercial potential of PEDMARK will be limited. Thus, significant uncertainty remains regarding the ultimate commercial potential of PEDMARK. Moreover, our ability to effectively generate significant product revenue from PEDMARK will depend on our ability to, among other things: - educate patients and physicians successfully about efficacy expectations, side effects expectations, and how to successfully dose and titrate the medication to optimal patient benefit in order to minimize discontinuation due to perceived lack of efficacy or side effects;- educate pediatric cancer patients who will have cisplatin administration, and the physicians who treat them, as to the benefits to such patients of treatment using PEDMARK (in addition to the treatments they are receiving for their cancer);- achieve and maintain compliance with regulatory requirements, including those related to our required post-approval studies, promotion and advertising requirements;- increase awareness for and achieve market acceptance of PEDMARK through our sales and marketing activities and other arrangements established for the promotion of PEDMARK;- train, deploy, support, and retain a qualified field sales and marketing force;- secure continued formulary approvals for PEDMARK with a substantial number of targeted payors;- ensure that our third-party manufacturers manufacture PEDMARK in sufficient quantities, in compliance with requirements of the FDA and at acceptable quality and pricing levels, in order to meet commercial demand;- ensure that our third-party manufacturers develop, validate and maintain commercially viable manufacturing processes that are compliant with cGMP regulations;- implement and maintain agreements with wholesalers, distributors and group purchasing organizations on commercially reasonable terms;- ensure that our entire supply chain efficiently and consistently delivers PEDMARK to our customers;- provide co-pay assistance to help qualified patients with out-of-pocket costs associated with their PEDMARK prescription, and/or other programs to ensure patient access to our product, educate physicians and patients about the benefits, administration and use of PEDMARK, and obtain acceptance of PEDMARK as safe and effective by patients and the medical community;- receive adequate levels of coverage and reimbursement for PEDMARK from commercial health plans and governmental health programs;- generate positive experience with our Fennec HEARS program in helping patients obtain access to PEDMARK at an acceptable patient out-of-pocket cost;- maintain quality relationships with patient advocacy groups;- influence the nature of publicity related to our product relative to the publicity related to our competitors' products; and - obtain regulatory approvals for additional indications for the use of PEDMARK in treating other patient populations. Any disruption in our ability to generate product revenue from the sale of PEDMARK will have a material and adverse impact on our results of operations.
- Innovation / R&D - Risk 4PEDMARK is currently our only product and there is no assurance that we will successfully develop PEDMARK into a commercially viable product.
Since our formation in September 1996, we have engaged in research and development programs. We have recently begun to generate revenue from product sales in the United States after regulatory approval of PEDMARK in late 2022. PEDMARK is currently our only product. There can be no assurance that the research we fund and manage will lead PEDMARK or any future product candidate to become a commercially viable product. We have completed two-Phase 3 studies for PEDMARK. We anticipate substantial regulatory review prior to the commercialization of PEDMARK outside of the United States.
- Innovation / R&D - Risk 5We have only recently transitioned from a development stage biopharmaceutical company to a commercial stage biopharmaceutical company, which may make it difficult for you to evaluate the success of our business to date and to assess our future viability.
Other than the FDA approval for PEDMARK received in the United States in September 2022 and in the European Commission in June 2023 of PEDMARQSI, we have no other product candidates in the development stage. We have only recently demonstrated our ability, or our ability to arrange for a third party, to manufacture a commercial scale medicine and conduct the sales and marketing activities necessary to commercialize a product. Consequently, any predictions you make about our future success or viability may not be as accurate as they could be if we had more experience commercializing PEDMARK. In addition, as a relatively new commercial stage business, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors. To be profitable, we will need to continue to successfully transition from a company with a research and development focus to a company capable of supporting commercial activities. Ultimately, we may not be successful in such a transition.
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