Mr. Rosty Raykov reports

FENNEC PHARMACEUTICALS REPORTS FULL YEAR AND FOURTH QUARTER 2022 FINANCIAL RESULTS

Fennec Pharmaceuticals Inc. has released its financial results for the fiscal year ended Dec. 31, 2022, and provided a business update.

"It was an outstanding year for Fennec as we achieved FDA (United States Food and Drug Administration) approval of Pedmark in the fourth quarter and evolved into a commercial-stage pharmaceutical company. For 2023, we are focused on building upon our early commercial launch momentum by continuing to execute on our strategic plans, expand our prescriber base, and increase the utilization of Pedmark," said Rosty Raykov, chief executive officer of Fennec Pharmaceuticals. "We are very proud of Fennec's patient-centric approach and the performance across the entire organization, and we continue to be motivated by the positive responses that we are receiving from the pediatric cancer patient community, health care providers and payors. Fennec remains dedicated to growing its revenues both in the U.S. and worldwide as we seek to expand Pedmark's presence and availability to patients globally."

Recent developments and highlights:

• Received U.S. Food and Drug Administration (FDA) approval of the Pedmark new drug application (NDA) on Sept. 20, 2022. Pedmark is the first and only FDA-approved therapy indicated to reduce the risk of ototoxicity associated with cisplatin in pediatric patients one month of age and older with localized, non-metastatic solid tumours.
• Initiated U.S. commercial launch of Pedmark on Oct. 17, 2022. The Fennec Hears program offers comprehensive patient services, including access to care co-ordinators, and financial and prescription drug support.
• The National Comprehensive Cancer Network (NCCN) updated its clinical practice guidelines for adolescent and young adult (AYA) oncology to include Pedmark (sodium thiosulfate injection) in January, 2023.
• The FDA granted orphan drug exclusivity to Pedmark (sodium thiosulfate injection) in January, 2023. The FDA's orphan drug designation program is designed to advance the development of drugs that treat a condition affecting 200,000 or fewer U.S. patients annually. The seven-year market exclusivity for Pedmark began on Sept. 20, 2022, the date of its FDA approval, and continues until Sept. 20, 2029. Additionally, in the approved prescribing label, the FDA has explicitly directed that Pedmark is not substitutable with other sodium thiosulfate products.

Financial results for the fourth quarter and fiscal year ended Dec. 31, 2022:

• Cash position -- There was a $2.7-million increase in cash and cash equivalents between Dec. 31, 2022, and Dec. 31, 2021. The net increase was the result of cash operating expenses, offset by the net $20-million received from the Petrichor note and $900,000 received from the exercise of 273,000 options. During the period ended Dec. 31, 2022, cash for operations was used mainly on the precommercialization activities of Pedmark prior to FDA approval and then commercialization activities after NDA approval.
• Commercial launch of Pedmark commenced in October, 2022. The company recorded net product sales of $1.54-million in fiscal 2022. The company recorded discounts and allowances against sales in the amount of $200,000 and cost of products sold of $100,000. The company had gross profit of $1.4-million for the fiscal year ended 2022. In fiscal 2021, the company had no revenues.
• Research and development (R&D) expenses -- R&D expense decreased by $1.5-million in fiscal 2022 as compared with fiscal 2021. The company reduced research and development costs when it received FDA approval of Pedmark. The majority of traditional research and development expenses associated with Pedmark are now recorded as general and administrative expenses or capitalized into inventory, and eventually recorded to costs of product sales.
• Selling and marketing (S&M) expenses -- The company began recording selling and marketing expenses when it expanded its payroll to include an internal salesforce. Selling and marketing expenses include distribution costs, logistics, shipping and insurance, advertising, wages commissions, and out-of-pocket expenses. The company recorded $2.8-million in selling and marketing expenses in fiscal 2022.
• General and administrative (G&A) expenses -- There was a $5.5-million increase of general and administrative expenses in fiscal 2022 compared with fiscal 2021. Payroll and benefits-related expenses rose by $4-million in fiscal 2022 compared with fiscal 2021, as the company's headcount increased from 10 to 36 over the course of fiscal 2022. There was an increase in legal costs of $1.4-million in fiscal 2022 over fiscal 2021. This net increase is composed of an increase in $200,000 in class action suit defense, a decrease in general legal expense of $200,000 and an increase of $1.4-million in intellectual property litigation. Precommercialization activities rose by $200,000 in fiscal 2022 over fiscal 2021. Non-cash expenses associated with equity remuneration increased by $200,000.
• Net loss -- Net losses for the fourth quarter and year ended Dec. 31, 2022, of $6.9-million (26 cents per share) and $23.7-million (90 cents per share), respectively, compared with $4.4-million (18 cents per share) and $17.3-million (67 cents per share), respectively, for the same periods in 2021.
• Financial guidance -- The company believes its cash and cash equivalents on hand as of Dec. 31, 2022, will be sufficient to finance the company's planned commercial activities for 2023.

Financial update

The selected financial data presented below are derived from the company's audited, condensed, consolidated financial statements, which were prepared in accordance with U.S. generally accepted accounting principles. The complete audited, condensed, consolidated financial statements for the period ended Dec. 31, 2022, and management's discussion and analysis of financial condition and results of operations, will be available at the SEC website and at SEDAR.

About Fennec Pharmaceuticals Inc.

Fennec Pharmaceuticals is a specialty pharmaceutical company focused on the development and commercialization of Pedmark to reduce the risk of platinum-induced ototoxicity in pediatric patients. Further, Pedmark received FDA approval in September, 2022, and has received orphan drug exclusivity in the U.S. Fennec has a licence agreement with Oregon Health and Science University (OHSU) for exclusive worldwide licence rights to intellectual property directed to sodium thiosulfate and its use for chemoprotection, including the reduction of risk of ototoxicity induced by platinum chemotherapy, in humans.

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