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

Ladies and gentlemen, thank you for standing by, and welcome to the Fennec Pharmaceuticals' corporate update conference call. [Operator Instructions] I will now turn the call over to Lindsay Rocco of Elixir Health Public Relations. Please go ahead.

Good morning, everyone, and thank you for joining Fennec's conference call to discuss the status of the new drug application for PEDMARK and the complete response letter received from the U.S. Food and Drug Administration. Fennec issued a press release earlier this morning regarding the FDA's decision, and it is available on the company's corporate website. Joining me from Fennec this morning are Rosti Raykov, Chief Executive Officer; Robert Andrade, Chief Financial Officer; and Shubh Goel, Chief Commercial Officer. 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. Reference to these risks and uncertainties are made in today's press release and disclosed in detail in the company's periodic and current event filings with the U.S. Securities and Exchange Commission. I will now turn the call over to Rosti Raykov.

Thanks, Lindsay. As we announced earlier this morning, the U.S. Food and Drug Administration had issued a complete response letter, or CRL, related to Fennec's new drug application for PEDMARK for the prevention of ototoxicity associated with cisplatin chemotherapy in pediatric patients 1 month to 18 years of age with localized, nonmetastatic, solid tumors. On today's call, we will address the CRL that we received late yesterday from the FDA and also discuss Fennec's pathway forward. The completion review of our regulatory submission to the FDA is what will bring us one step closer to making PEDMARK available to help pediatric patients receiving cisplatin, who currently lack an approved treatment for this profoundly serious condition. As part of the regulatory review process, we received a complete response letter from the FDA relating to deficiencies identified during a preapproval inspection of the facilities of the drug product manufacturer. These deficiencies resulted in a Form 483, which is a list of conditions or practices that are required to be resolved prior to the approval of PEDMARK. It is important to note that the deficiencies outlined in the Form 483 are not related to our drug product PEDMARK. Furthermore, the FDA did not identify any clinical safety or efficacy issues, and there is no requirement for further clinical studies prior to the approval of PEDMARK. We'll be working closely with the drug product manufacturer and the FDA to address these findings. And while the manufacturing observations outlined in the CRL represent a temporary hurdle, we remain very confident in the quality and integrity of the robust PEDMARK data submitted within the NDA package. As a background, permanent hearing loss can be seen in about 60% of children treated with cisplatin and [ can be of size ] 90%. Advances in chemotherapy-based treatment approaches for pediatric patients with localized solid tumors have improved in recent years, resulting in an almost 80% 5-year survival rate for these patients. Unfortunately, the use of platinum-based chemotherapy frequently causes permanent and irreversible hearing loss affecting both ears. Young children are especially vulnerable to the ototoxic effects of cisplatin because their ears are still developing. The impact of ototoxicity may be permanent, severe and profound with the potential to significantly impair cognitive performance and the development of social and language skills. There are currently no established or FDA approved agents available to reduce the risk of hearing loss associated with cisplatin. Previously, management strategies, such as hearing aids and cochlear implants have been employed after hearing loss is detected and do not completely return normal hearing. In February of this year, we announced the completion of a rolling submission of our NDA to the FDA for PEDMARK for IV use for the prevention of ototoxicity induced by cisplatin chemotherapy in patients 1 month to 18 years of age with localized, nonmetastatic, solid tumors. The application was based upon the positive clinical results from the 2 pivotal Phase III studies of survival and reduction of ototoxicity. The Children (sic) [ Clinical ] Oncology Group Protocol ACCL0431 and SIOPEL 6. Both trials compared PEDMARK plus cisplatin to cisplatin alone for the reduction of cisplatin-induced hearing loss in pediatric patients with localized, solid tumors, demonstrated favorable safety, efficacy and tolerability. In both studies, the incidence of hearing loss was lower in the PEDMARK plus cisplatin arms compared to the cisplatin alone arms. PEDMARK has demonstrated the potential to preserve hearing in pediatric cancer patients without reducing the effectiveness of their cisplatin treatment and patients deserve an FDA-approved treatment option that can improve long-term outcomes. We remain steadfast in our commitment to advancing PEDMARK for the prevention of life-long hearing loss for children receiving cisplatin chemotherapy. We look forward to providing updates on our progress as we move to address and resolve these manufacturing issues and we submit the NDA for PEDMARK as swiftly as possible. And with that, I will now turn the call over to our CFO, Robert Andrade. Robert?

Thank you, Rosti. I would like to provide a brief overview of our financial position. We have a solid balance sheet with $38.7 million in cash and no debt as of June 30, 2020. As a reminder, our operating cash burn for the first 6 months of 2020 was approximately $7 million. And for the entire fiscal year of 2019, our operating cash burn was approximately $9 million. We have historically managed Fennec in a very efficient manner, and we plan to continue such disciplined financial stewardship going forward. And operator, with that, we are ready for questions.

[Operator Instructions] Our first question comes from the line of Charles Duncan of Cantor Fitzgerald.

This is Pete Stavropoulos on for Charles. I was just wondering if you can provide any additional color on the nature of the 483 and what additional analytical work needs to be conducted.

Sure. Thank you, Pete, for the question. So what's really important right upfront is for everyone to understand that this is not specifically related to the drug product. Our drug product is fine, our drug substance is fine. It has to do -- also just to give a little background, too, on the facility. Facilities have been inspected by the FDA. It's a large commercial facility that has been inspected by the FDA in 2018 and currently produces several marketed products. In a very recent preapproval inspection, the FDA identified facility deficiencies that needs to be resolved prior to the submission of PEDMARK for approval. We obviously will be working very closely with the third-party manufacturer because it's their facility, not ours, and the FDA to address the issues. We're confident these issues can be resolved.

Okay. And the possible timing of the Type A meeting and response to the FDA?

Well, unfortunately, we cannot give a time line at the moment as we just received the CRL last night. We obviously were going to plan for a Type A meeting, hopefully, in the next month or 2, from that time perspective. But again, we'll be working very closely with the FDA and the manufacturer to resolve these issues. Again, these issues, we believe, can be resolved.

Your next question comes from the line of David Nierengarten of Wedbush.

This is Jeff on for David. Did you receive any indication around how broad or narrow the label for PEDMARK would have been, in other words, kind of tumor-agnostic -- solid tumor-agnostic, broad cisplatin-induced hearing loss label or kind of only the tumors that you studied in the pivotal trial?

Yes. So in regards to the label, what's really important, again, to really reiterate, is that there's no clinical or safety issues identified from a data perspective with both of our studies that we submitted. And so the label has not been an issue at all at this point.

[Operator Instructions] Our next question comes from the line of Ram Selvaraju of H.C. Wainwright.

This is Yi on for Ram. Just to clarify, you mentioned that the deficiencies are in the facility, which manufactures several marketed products in the past specifically related to PEDMARK. Is that correct?

That is correct.

Okay. And how long do you expect the manufacturer to resolve these issues?

Well, I know that this is #1 priority for them. As you could imagine, Fennec, is now their most important customer given the small size of our batches, so I think they have a real incentive to address these issues as quickly as possible.

Okay. So Fennec, at this point, would not consider a switch to a different manufacturer, right?

No, not at this time.

Okay. So what kind of resubmission could this be categorized as? Is it going to be Class I or Class II resubmission? And what would be the review period in each case?

I don't know the answer to that, whether it will be Class I or Class II, we can get back to you on that.

Okay. And what is likely to happen with the debt facility with Bridge Bank now that you -- the approval is not going to occur in the very near term?

Maybe I can turn it over to Robert since he's been dealing with Bridge Bank. Robert?

Sure, Yi. Thanks for the question. So as you know, we've had a very strong relationship with Bridge Bank over the last 1.5 years and very constructive, and we'd hope to continue this as we go through the resubmission process.

Okay. Does Fennec really need the Bridge Bank debt facility in order to fund the operations through potential approval of PEDMARK the U.S.?

I'll just reiterate, I think it's a very good question, a very valid question, Yi. We have a solid balance sheet with just under $39 million in cash as of June 30. And as I exclaimed in our historical operating burn of $7 million for the first 6 months, we don't anticipate changing from our disciplined financial going forward.

Got it. My last question is, how would the delay in U.S. approval affect the potential approval in Europe?

Yes. I'll take that. This is Rosti. So the EMA process is obviously a separate process. However, the manufacturing of our drug comes from the same facility that will be sold in the United States. Upon approval, actually, it will be sold in Europe. So it is very important that we get through these manufacturing issues with the manufacturer first. And that would give us the -- obviously, the confidence that we can say that the application will be approved in Europe as well because Europe is not going to take this application if the FDA is not okay with the facility.

Ladies and gentlemen, we have reached the allotted time for questions and answers. I will now turn the call to Rosti Raykov for any closing comments.

Well, thank you for your questions. Our primary focus is to work closely with the FDA and the manufacturer of our drug product towards a final resolution in order to make PEDMARK available to pediatric patients receiving cisplatin who currently lack an FDA-approved treatment for the prevention of ototoxicity. We're optimistic and confident that PEDMARK will be approved. In closing, I would like to thank the Fennec team for their passion, effort and dedication. And I would like to also express my gratitude to our shareholders for their continued support and patience for Fennec and its mission. Thank you again.

Thank you for participating in the Fennec Pharmaceuticals' corporate update conference call. You may now disconnect your lines, and have a wonderful day.