Fennec Pharmaceuticals (FENC) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01We have a history of significant losses and have had limited revenues to date through the sale of our product. If we do not generate significant revenues, we will not achieve profitability
2. 02PEDMARK® is currently our only product and there is no assurance that we will successfully develop PEDMARK® into a commercially viable product
3. 03Our 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
4. 04If we are unable to continue to successfully commercialize PEDMARK®, our business, results of operations and financial condition may be materially adversely affected
5. 05Our business is subject to substantial competition
6. 06We currently rely on scientific and research and development collaboration arrangements with academic institutions and other third-party collaborators, including an exclusive worldwide license from OHSU for PEDMARK®
7. 07Regulatory approval of our product is time-consuming, expensive and uncertain, and could result in unexpectedly high expenses and delay our ability to sell our product in the U.S. and abroad
8. 08third-party manufacturing facility that manufactures PEDMARK® on our behalf is a specific example of the risks associated with our third-party manufacturers
9. 09If our licenses to proprietary technology owned by others are terminated or expire, we may suffer increased development costs and delays, and we may not be able to successfully commercialize our product
10. 10If we are unable to adequately protect or maintain our patents and licenses related to our product, or if we infringe upon the intellectual property rights of others, we may not be able to successfully maintain commercial status of our product
11. 11If our third-party manufacturers breach or terminate their agreements with us, or if we are unable to secure arrangements with third party manufacturers on acceptable terms as needed in the future, we may suffer significant production delays and additional costs
12. 12We conduct our business internationally and are subject to laws and regulations of several countries which may affect our ability to access regulatory agencies and may affect the enforceability and value of our licenses
13. 13Our cash invested in money market funds might be subject to loss
14. 14With the clinical development process successfully completed in the United States, our ability to derive further revenues from the sale of PEDMARK® will depend upon our obtaining foreign regulatory approvals, which are subject to a number of unique risks and uncertainties
15. 15We have been in the past and may in the future be the target of securities litigation, which may be costly and time-consuming to defend
16. 16We 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
17. 17There are limitations on the liability of our directors, and we may have to indemnify our officers and directors in certain instances
18. 18Our business and operations could be adversely affected by the effects of health epidemics, like the recent COVID-19 pandemic
19. 19Natural disasters, epidemic or pandemic disease outbreaks, trade wars, political unrest or other events could disrupt our business or operations or those of our development partners, manufacturers, regulators or other third parties with whom we conduct business now or in the future
20. 20Because the target patient population for PEDMARK® is small, we must achieve significant market share and obtain relatively high per-patient prices for our product to achieve meaningful gross margins
21. 21We face a risk of product liability claims and may not be able to obtain adequate insurance
22. 22Business or economic disruptions or global health concerns could seriously harm our development efforts and increase our costs and expenses

Risks Related to the Clinical Development and Marketing Approval of Our Product outside the United States

1. 23The marketing approval processes of foreign authorities are lengthy, time-consuming and inherently unpredictable, and if we are ultimately unable to obtain marketing approval for our product abroad, our business will be substantially harmed
2. 24In the United States and some foreign jurisdictions, legislative and regulatory changes and proposed changes regarding the healthcare system could prevent or delay marketing approval of PEDMARK®, restrict or regulate post-approval activities and affect our ability to profitably sell PEDMARK®
3. 25If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on our business, financial condition or results of operations
4. 26Our employees, sales agents and consultants may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements

Risks Related to Commercialization of Our Product

1. 27After regulatory approvals in the United States, European Union and other territories, the commercial success of our product will depend on market awareness and acceptance of our product
2. 28If the market opportunities for our product are smaller than we believe they are, then our revenues may be adversely affected, and our business may suffer
3. 29Coverage and reimbursement may be limited or unavailable in certain market segments for our product, which could make it difficult for us to sell our product profitably
4. 30We face substantial competition, which may result in others discovering, developing or commercializing products more successfully, than we do
5. 31Should any of these events occur, our business, financial condition, results of operations, and prospects could be materially adversely affected. If we are not able to compete effectively against potential competitors, our business will not grow and our financial condition and operations will suffer
6. 32Price controls may be imposed in foreign markets, which may adversely affect our future profitability
7. 33Rapid technological change could make our product obsolete

Risks Related to Government Regulation

1. 34PEDMARK® is subject to ongoing regulatory review. If we fail to comply with continuing United States and applicable foreign regulations, we could lose those approvals, and our business would be severely harmed
2. 35Enacted and future legislation or judicial action may increase the difficulty and cost for us to commercialize PEDMARK®
3. 36If we fail to obtain or subsequently maintain orphan drug exclusivity or regulatory exclusivity for PEDMARK®, our competitors may sell products to treat the same conditions at greatly reduced prices, and our revenues would be significantly adversely affected
4. 37There can be no assurance whether the exclusivity provisions in the Orphan Drug Act may be changed in the future and the impact of such changes, if made on us

Risks Related to Third Parties

1. 38We rely on third-party suppliers and other third parties for production of our product and our dependence on these third parties may impair the advancement of our research and development programs and the development of our product
2. 39We plan to rely on third parties to conduct clinical trials for our product. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may be unable to obtain marketing approval for or commercialize our product outside of the United States
3. 40Our reliance on global distributors exposes us to risks related to nonperformance of key services, uncertainty of cash flow timing, and nonpayment for delivered goods

Risks Related to Our Intellectual Property

1. 41Our commercial success will rely upon the strength of our patents to exclude competition
2. 42Our success will depend significantly on our ability to operate without infringing the patents and other proprietary rights of third parties
3. 43We may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights
4. 44Our proprietary rights may not adequately protect our technologies and product
5. 45We may not be able to protect our intellectual property rights throughout the world
6. 46The patent protection for our product may expire before we are able to maximize their commercial value, which may subject us to increased competition and reduce or eliminate our opportunity to generate product revenue
7. 47Obtaining and maintaining our patent protection depends on compliance with various procedural, documentary, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements
8. 48We may become involved in lawsuits to protect our patents or other intellectual property rights, which could be expensive, time-consuming and ultimately unsuccessful
9. 49Third-party claims of intellectual property infringement or misappropriation may adversely affect our business and could impede our ability to profitably commercialize our product
10. 50Ultimately, we could be prevented from commercializing our product, or be forced to cease some aspect of our business operations, if, as a result of actual or threatened patent infringement claims, we are unable to enter into licenses on acceptable terms
11. 51Changes in United States patent law could diminish the value of patents in general, thereby impairing our ability to protect our product
12. 52Intellectual property rights do not address all potential threats to our competitive advantage
13. 53Confidentiality agreements with employees, consultants and others may not adequately prevent disclosure of trade secrets and protect other proprietary information
14. 54We may need to license certain intellectual property from third parties, and such licenses may not be available or may not be available on commercially reasonable terms
15. 55We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties
16. 56Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated or disclosed

Risks Related to Our Industry

1. 57Drug 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
2. 58We use hazardous materials and chemicals in our research and development, and our failure to comply with laws related to hazardous materials could materially harm us
3. 59Efforts to reduce product pricing and health care reimbursement and changes to government policies could negatively affect the profitability of our product

Risks Related to Owning Our Common Shares

1. 60We may be unable to maintain the listing of our common shares on the Nasdaq Capital Market or the TSX and that would make it more difficult for shareholders to dispose of our common shares
2. 61The market price of our common shares is highly volatile and could cause the value of your investment to significantly decline
3. 62Our existing principal shareholders hold a substantial number of our common shares and may be able to exercise influence in matters requiring approval of our shareholders
4. 63There are a large number of our common shares underlying outstanding options, and reserved for issuance under our stock option plan, that may be sold in the market, which could depress the market price of our shares and result in substantial dilution to the holders of our common shares
5. 64We may need to raise additional funds in the future to continue our operations. Any equity offering could result in significant dilution to the ownership interests of shareholders and may result in dilution of the value of such interests and any debt offering will increase financial risk
6. 65Our management has significant flexibility in using the current available cash
7. 66We may be a passive foreign investment company, or “PFIC,” which could result in adverse United States federal income tax consequences to U.S. investors
8. 67Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have an adverse effect on our business

Risks Related to Information Technology

1. 68In the ordinary course of our business, we and the third parties upon which we rely, process proprietary, confidential, and sensitive data, including personal data (such as health-related data), intellectual property, trade secrets and any other sensitive data
2. 69Remote work has become more common and has increased risks to our information technology systems and data, as more of our employees utilize network connections, computers and devices outside our premises or network, including working at home, while in transit and in public locations
3. 70Applicable data privacy and security obligations may require us to notify relevant stakeholders of security incidents, including affected individuals, customers, regulators, and investors. Such disclosures are costly, and the disclosure or the failure to comply with such requirements could lead to adverse consequences
4. 71Increasing use of social media could give rise to liability, breaches of data security, or reputational damage