SCYNEXIS, Inc. — 2017 Form 10-K Summary
Business context and reporting period
This filing covers the fiscal year ended December 31, 2017; it is an annual report, not a quarterly filing. SCYNEXIS is a clinical-stage biotechnology company with no approved products and no product-sales revenue. Its lead candidate, SCY-078, is an oral and intravenous antifungal in development for vulvovaginal candidiasis (VVC), invasive candidiasis, invasive aspergillosis and refractory fungal infections.
Financial results and liquidity
| Metric | 2017 | 2016 |
|---|---|---|
| Revenue | $0.257 million | $0.257 million |
| Research and development expense, net | $18.326 million | $20.076 million |
| Selling, general and administrative expense | $8.251 million | $7.998 million |
| Operating loss | $26.320 million | $27.817 million |
| Net loss | $25.060 million | $29.989 million |
| Net loss per share | $0.94 | $1.58 |
| Net cash used in operating activities | $24.556 million | $29.353 million |
All revenue was amortization of the upfront payment from R-Pharm; the company reported no product-sales revenue. At year-end, cash and cash equivalents were $11.469 million and short-term investments were $32.424 million, totaling $43.893 million. Current assets were $44.960 million versus current liabilities of $10.144 million. The company reported $15.0 million of loan principal outstanding, plus a $0.750 million final fee; the balance sheet carried $4.349 million as current loan payable and $10.303 million as long-term loan payable. The loan bears interest at LIBOR plus 8.49% and principal amortization was scheduled to begin in April 2018, subject to stated extension conditions.
Changes versus the prior year
- Net loss narrowed by $4.929 million, while operating loss improved by $1.497 million. The net-loss improvement was also affected by a $2.729 million noncash gain from revaluing warrant liabilities, compared with a $1.906 million expense in 2016.
- R&D expense fell 8.7%, mainly due to lower clinical-development and manufacturing costs; lower prior-period studies were partly offset by 2017 DOVE and FURI activity.
- Cash and short-term investments declined from $58.6 million at the end of 2016 to $43.9 million at the end of 2017. Financing included approximately $10.0 million net proceeds from stock issuance during 2017.
- Common shares outstanding increased from 24.6 million to 29.0 million during 2017. In March 2018, the company subsequently raised approximately $27.8 million net through an offering of 17.75 million shares and warrants to purchase up to 21.30 million additional shares.
Outlook, commentary and significant risks
- Management expected 2018 top-line results from the Phase 2b DOVE VVC study in midyear and planned a Phase 3 VVC start in Q4 2018, subject to results and FDA discussions. The stated target was an NDA for acute VVC in 2020.
- Following thrombotic events at infusion sites in the earlier cyclodextrin-based IV program, the FDA had required a hold on initiating new studies with that formulation. SCYNEXIS planned to test a liposomal IV formulation, with a Phase 1 study targeted for Q3 2018 and a Phase 2b invasive-candidiasis study potentially in Q4, contingent on success and FDA review.
- The company planned a Phase 2 oral SCY-078 study in combination with standard therapy for invasive aspergillosis in Q3 2018. FURI and CARES, open-label studies for refractory infections and Candida auris, respectively, were enrolling; preliminary data review was planned for Q4 2018.
- Management estimated that year-end 2017 cash and investments, together with the March 2018 offering proceeds, would fund anticipated operations into 2020. This is an estimate dependent on development costs, timing and other assumptions; management anticipated ongoing losses and a need for additional capital.
- SCY-078 remained investigational; clinical efficacy and safety, regulatory approval, commercialization, reimbursement and market acceptance were uncertain. Reported oral adverse events were commonly gastrointestinal; the earlier IV formulation was associated with three thrombotic events at infusion sites. The filing states that four serious adverse events were considered potentially related by investigators, including those three IV events and one resolved liver-function-test elevation.
- A putative securities class action filed in 2017 remained pending. The company disputed the claims and had not recorded a liability; it said potential loss could not be estimated.
- Other material risks include continued financing needs, potential dilution, loan covenants and default remedies, reliance on contract manufacturers and clinical vendors, competition (including generics), patent protection, and concentration of cash at one bank above FDIC insurance limits.
Important facts for investors to verify
- Whether DOVE results and subsequent FDA discussions supported the proposed VVC development path and timeline.
- Whether FDA review permitted the liposomal IV program to proceed, and whether safety findings differ from the earlier formulation.
- Current cash runway and cash consumption compared with management’s estimate, including the effect of the March 2018 financing and warrant dilution.
- Loan repayment terms, covenant compliance and any subsequent debt changes.
- Subsequent developments in the securities litigation, and any changes in the company’s assessment or disclosure of potential exposure.
- The 10-K provides annual results only; it does not provide a clear standalone fourth-quarter 2017 financial value.