Fennec Pharmaceuticals Inc. (FENC) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to this Annual and Special Meeting of the Shareholders of Fennec Pharmaceuticals Inc. I'm Khalid Islam, the Chairman of the Board of the company. I'll be the chairman of this meeting, which is now called to order. We'll begin with the formal legal business of the meeting. After the formal business has been concluded, Mr. Rostislav Raykov, the Chief Executive Officer, will provide a presentation of the company's business progress. Following the presentation, we'll hold a Q&A session where you will have an opportunity to ask questions of managing [ the business ]. As Chairman, I appoint Robert Andrade to act as secretary; and Garett Sleichter of Rutan & Tucker as scrutineer for this meeting. The notice calling this meeting, together with the related management information circular dated May 7, 2020, and formal proxy, were made to shareholders as required by statute. I have received the statutory declaration from Broadridge attesting to the mailing, and I direct the secretary to the [ fast ] declaration to the minutes of this meeting. Additional copies of the notice and the circular are also available at this meeting, accordingly are dispensed with the reading of the notice. The secretary has placed before this meeting copies of the notice, the management information circular and the formal proxy. I've been advised by the scrutineer that a quorum is present, and the scrutineer's preliminary report on the attendance of this meeting has now been received. I therefore declare this meeting to be properly constituted for the transaction of business. I direct that the scrutineer's report on attendance be attached to the minutes of the meeting. I would like to remind everyone that only registered shareholders or proxy holders can vote or second motions, ask questions, make comments or vote. In view of the proxies received, in proceeding with the business of the meeting, unless a poll is demanded on any motion, we will, in accordance with the British Columbia Business Corporations Act, proceed to conduct such votes by show of hands. For those of you participating online, to vote or submit questions, please log in as a stockholder by entering the 16-digit control number you received with the proxy materials. Please note that if you have voted your shares prior to the start of the meeting, your vote has been received by the scrutineer and there is no need to vote those shares during the meeting, unless you wish to revoke or change your vote. The first item of business is the presentation of the financial statements of the company for the year ended December 31, 2019 and the auditor's report thereon. A copy of the company's 2019 annual report, which includes the annual financial statement, management's discussion and analysis of operating results and the auditor's report, has been mailed to shareholders, and I don't propose to read it. Extra copies of that material are available today if any shareholder here in person today wishes one. The next item of business is the election of directors. 6 directors are to be elected, and information regarding the nominees proposed by management is set out in the management information circular, which accompany the notice of meeting sent to shareholders. The nominees are as follows: Mr. Rostislav Raykov; Mr. Adrian Haigh; Mr. Chris Rallis; Dr. Marco Brughera; Dr. Jodi Cook; and I, Khalid Islam. I now ask for a motion to nominate these individuals for election as directors of the company to hold office until the next annual meeting of shareholders or until their successors are fully elected or appointed.

Mr. Chairman, I so move.

Thank you. Anybody seconding the motion?

Mr. Chairman, I'd like to second this motion.

Are there any further nominations? As there are no further nominations, which will -- as you've already moved the motion, I declare the nominations closed and request a motion to elect those nominees as directors of Fennec. Would somebody move the motion?

Mr. Chairman, I so move.

Thank you. Would someone second the motion?

Mr. Chairman, I'd like to second this motion.

Thank you. As the motion has been made and seconded to elect those nominated directors, is there any discussion? All those in favor, please raise your hand. [Voting]

Contrary, if any? [Voting]

The motion is carried and those nominated to be duly elected as directors of Fennec to hold office until the next Annual Meeting of the Shareholders or until their successors have been duly elected or appointed subject to the provisions of Fennec's articles. We'll now proceed with the appointment of auditors. May I have a motion that Haskell & White be appointed as auditors of the company and that their directors are authorized to fix their remuneration?

Mr. Chairman, I so move.

Thank you. Would someone second the motion?

Mr. Chairman, I'd like to second this motion.

You've heard the motion. Is there any discussion? All those in favor, please raise your hand. [Voting]

Contrary, if any? [Voting]

The motion is duly carried. Our next item of business is the approval of the compensation of the company's named executive officers as disclosed in the management information circular, which accompany the notice of meeting sent to the shareholders. This vote is advisory and therefore not binding on the company, the Board or the Compensation Committee. Shareholders are being asked to consider an ordinary solution that the compensation paid to the company's named executive officers as disclosed in the circular, pursuant to Item 402 of Regulation S-K, including the compensation discussion analysis, the compensation tables and narrative be approved. I'll now ask for a motion to approve this ordinary resolution.

Mr. Chairman, I so move.

Thank you. Would someone second the motion?

Mr. Chairman, I'd like to second this motion.

You have heard the motion. Is there any discussion? All those in favor, please raise your hand. [Voting]

Contrary, if any? [Voting]

I declare the motion carried. The next item of business is the approval of the 2020 equity incentive plan. Shareholders are being asked to consider an ordinary resolution to approve the company's 2020 executive -- equity incentive plan. The text of this ordinary resolution is found on Page 16 of the circular. The secretary has copies of the resolution if anyone here in person would like to refer to. This ordinary resolution must be approved by at least a majority of the votes cast by the shareholders. I'll now ask for a motion to approve this ordinary resolution.

Mr. Chairman, I so move.

Thank you. Would someone second the motion?

Mr. Chairman, I'd like to second this motion.

A motion has been made and seconded to approve the 2020 equity incentive plan. Is there any discussion? All those in favor, please raise your right hand. [Voting]

Contrary, if any? [Voting]

I declare the motion carried. All of the business for which this annual and special meeting was called has been completed. Is there any other business? Since there is no further business to be conducted, I'll ask for a motion to terminate the meeting.

Mr. Chairman, I so move.

Thank you. Would someone second the motion?

Mr. Chairman, I'd like to second this motion.

May I have a vote on the matter by show of hands? All in favor? [Voting]

Contrary, if any? [Voting]

The motion is carried and the formal portion of the meeting terminated. Before we begin the informal part of our meeting today, I'd like to remind you that our remarks and answers to your questions may contain forward-looking information about future events or the company's future performance. This information, by its nature, is subject to risks and uncertainties. Further information on these risks and uncertainties is available in the company's relevant filings, which are available on SEDAR and EDGAR. With that, I'll hand over to Mr. Rostislav Raykov. Thank you.

Thank you, Mr. Chairman. And good afternoon, everyone. A bit of background to any new investors that may be listening to this call. Cisplatin and other platinum compounds are essential chemotherapeutic agents for many pediatric malignancies, achieving significant disease control and survival rates. Unfortunately, platinum-based therapies cause ototoxicity or hearing loss, which is permanent, irreversible and particularly harmful to the survivors of pediatric cancer. In the U.S. and Europe, it is estimated that, annually, over 10,000 children may receive platinum-based chemotherapy. The incidence of ototoxicity depends upon the dose and duration of chemotherapy, and many of these children require lifelong hearing aids. There is currently no established preventive agent for this hearing loss, and only expensive, technically difficult suboptimal cochlear inner ear implants have been shown to provide some benefit. Infants and young children that suffer from ototoxicity at critical stages of development lack speech, language development and literacy, while older children and adolescents lack social, emotional development and educational achievement. Our investigational drug, PEDMARK, a novel formulation of sodium thiosulfate, has been studied by 2 cooperative groups in 2 Phase III clinical studies: the Children's Oncology Group protocol, ACCL0431; and SIOPEL 6. Both studies have been completed, published and met their respective end points. The COG ACCL0431 protocol enrolled 1 of 5 childhood cancers typically treated with intensive cisplatin therapy for localized and disseminated disease, including newly diagnosed hepatoblastoma, germ cell tumor, osteosarcoma, neuroblastoma and medulloblastoma, while the SIOPEL 6 study enrolled only hepatoblastoma patients with localized tumors. Our targeted indication is newly diagnosed children from 1 month to 18 years of age, receiving cisplatin infusion of up to 6 hours, presenting with localized non-metastatic solid tumors. These children typically have very high survival rates, and quality of life is paramount. PEDMARK has already received Orphan Drug Designation, Breakthrough Therapy and Fast Track Designation by the FDA. Importantly, in March this year, we were granted a patent by USPTO entitled, "Method for Reducing Ototoxicity in Pediatric Patients Receiving Platinum-Based Chemotherapy." As suggested by this title, the patent captures the use of PEDMARK to reduce the ototoxic effect of cisplatin in pediatric patients, particularly in the most vulnerable age group of 5 years or younger. This U.S. patent is FDA Orange Book-eligible and reflects our strategy to expand and diversify its intellectual property portfolio to obtain protection for PEDMARK beyond the Orphan Drug Designation exclusivity. Also, in the first quarter of this year, the FDA accepted the filing of our new drug application for PEDMARK and granted priority review. The FDA has set a PDUFA target action date of August 10 this year. We continue to work with the agency during this review process. The marketing authorization application, MAA, for PEDMARK [ Z ], which is our tradename in Europe, has been validated and is also currently under evaluation by the European Medicines Agency, EMA. EMA standard time lines would take approval by the end of the first quarter next year. This time line, of course, does not account for any additional time they can review in responses to questions. In Europe, we have confirmed Pediatric Use Marketing Authorization eligibility, and upon approval, we will have 10 years of exclusivity. In addition, the pediatric committee of EMA has accepted our pediatric investigation plan, which is an important prerequisite. Last year, Dr. Jodi Cook joined our Board as a director and has brought extensive scientific regulatory and executive experience. Her background in audiology and entrepreneurship have been quite helpful to our team. Also, last year, we appointed Shubh Goel as our Chief Commercial Officer. Under Shubh's leadership, we have made key hires in various commercial areas as we prepare for launch. Shubh has a proven track record of developing and executing commercialization plans in oncology. We are underway with commercialization readiness activities to support the potential launch of PEDMARK and our transition to becoming a commercial stage organization. Additionally, amid the global COVID pandemic, we have been able to strengthen our balance sheet. We successfully raised $34 million from existing and new investors. Combined with cash on hand and the undrawn facility from Bridge Bank, we have never been in a stronger financial position. As I draw this presentation to a close, I'd like to reflect on the incredible journey and effort that our small team has been able to achieve over the past decade. Without the support of participating patients, parents, pediatric oncologists and their staff conducting the studies, many dedicated consultants, employees, our experienced Board and the belief of our existing and new investors, none of this would have been possible. I'd like to take a moment to sincerely thank everyone. So with that, my presentation is complete. And I'd like to turn the call over to Robert for any questions online.

Hi, Rosti. At this time, there's -- there are no questions.

In that case, I would propose that we call the meeting to an end. Thank you, everybody, for joining, and thank you all for the support that you've given the company during the course of the years. And we look forward to your future support. Thank you so much.

Thank you.

This now concludes the meeting. Thank you for joining, and have a pleasant day.