SCYNEXIS, Inc. — Q3 2021 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2021. SCYNEXIS is a biotechnology company developing ibrexafungerp. The FDA approved oral BREXAFEMME for vulvovaginal candidiasis (VVC) in June 2021, and U.S. commercialization began during the quarter.
Key financial metrics
| Metric | Q3 2021 | 9M 2021 |
|---|---|---|
| Revenue | $0.516 million, all product sales | $12.566 million, including $12.050 million license revenue |
| Operating expenses | $19.957 million | $51.107 million |
| Operating loss | $19.441 million | $38.541 million |
| Net loss | $0.605 million | $3.623 million |
| Operating cash flow | Not separately presented for the quarter | -$29.040 million |
- At September 30, cash and cash equivalents were $100.109 million; current assets were $103.933 million and current liabilities $13.220 million. Accumulated deficit was $330.236 million.
- Recorded loan payable was $28.579 million, and convertible debt and derivative liability totaled $10.805 million. The term loan’s funded principal was $30 million; up to another $30 million was potentially available subject to conditions.
- Cash, cash equivalents and restricted cash increased $7.013 million in the first nine months, primarily reflecting $36.642 million of financing cash flow, including loan proceeds, offset by operating cash use.
Changes versus prior comparable periods
- Q3 revenue rose from zero in 2020 with the launch of BREXAFEMME; nine-month revenue also included the Hansoh license transaction, unlike 2020.
- Q3 R&D expense fell 45% to $4.401 million; nine-month R&D fell 39% to $16.083 million, mainly as the VANISH Phase 3 program concluded and CANDLE enrollment completed.
- Q3 SG&A increased to $15.411 million from $3.481 million; nine-month SG&A increased to $34.879 million from $9.448 million, largely from commercial launch and related support costs.
- Q3 net results shifted from $0.909 million income to a $0.605 million loss. Nine-month net loss narrowed from $12.474 million to $3.623 million, helped substantially by noncash gains from changes in warrant and derivative fair values and by tax benefits.
- Warrant-liability fair-value gains were $18.810 million in Q3 and $35.378 million in 9M 2021. These noncash gains materially affected reported results and are not operating cash generation.
Outlook, management commentary and risks
- Management said existing resources, New Jersey tax-credit proceeds and anticipated BREXAFEMME sales were expected to fund operating requirements into 2023; it also cautioned that assumptions may prove wrong and additional capital may be needed. The company expects continued losses.
- Management expected R&D expense to decrease as certain studies wind down, while SG&A would rise to support commercialization. Q3 product revenue was $0.516 million; management reported 1,006 prescriptions in Q3 and 1,100 in October, with commercial insurance coverage representing more than 30% of commercially covered lives.
- For recurrent VVC prevention, management expected CANDLE top-line data early in Q2 2022 and a potential supplemental NDA filing in Q2 2022. SCYNERGIA enrollment was slower than projected amid COVID-19-related hospital constraints; management expected top-line results in H2 2022. Enrollment continued in the FURI and CARES invasive fungal infection studies.
- The Hansoh Greater China license generated $12.050 million of recognized revenue in 9M, including a $10 million upfront payment. Potential development and commercial milestones, royalties and manufacturing-related payments remain contingent.
- The Hercules/SVB loan carries a variable annual rate of at least 9.05%, includes a product-revenue covenant beginning June 2022 subject to a cash-based waiver, and has interest-only payments through November 2023, with extensions subject to conditions.
- Key risks include sustained operating cash burn, uncertain commercial uptake and payer access, clinical and regulatory outcomes, potential financing needs and shareholder dilution, debt covenant compliance, and COVID-19-related trial delays. The CFO notified the company of his planned resignation effective after the reporting transition; an interim CFO was to serve.
Investor facts to verify
- Whether BREXAFEMME prescriptions, payer coverage and net revenue grow sufficiently to support commercialization and debt covenant requirements.
- Cash runway assumptions, ongoing operating cash burn, and the availability and terms of additional financing or undrawn loan tranches.
- Timing and results for CANDLE, SCYNERGIA, FURI and CARES, including whether COVID-19 continues to affect enrollment.
- How much reported earnings depend on noncash warrant and derivative fair-value changes, and how those liabilities may fluctuate.
- Potential royalty and milestone obligations, commercial launch costs deferred to Amplity, and dilution from equity, warrants or convertible securities.