SCYNEXIS, Inc. — 2018 Form 10-K
Reporting period: Fiscal year ended December 31, 2018. The filing reports annual results; it does not provide a clear standalone fourth-quarter income statement or cash-flow figure.
Business context
SCYNEXIS is a clinical-stage biotechnology company with no approved products and no product-sales revenue. Its lead candidate, ibrexafungerp, is being developed for vulvovaginal candidiasis (VVC), invasive aspergillosis, and difficult-to-treat invasive fungal infections. At year-end, the acute VVC Phase 3 program was enrolling; Phase 2 study SCYNERGIA and open-label FURI and CARES studies were also underway.
Key financial results
| Metric | FY 2018 | FY 2017 |
|---|---|---|
| Revenue | $0.257 million | $0.257 million |
| Research and development expense | $21.560 million | $18.326 million |
| Selling, general and administrative expense | $8.680 million | $8.251 million |
| Operating loss | $29.983 million | $26.320 million |
| Net loss | $12.468 million | $25.060 million |
| Net loss per share | $0.28 | $0.94 |
| Net cash used in operating activities | $28.323 million | $24.556 million |
All revenue came from amortization of the R-Pharm upfront payment; there were no product sales. No meaningful commercial margin is reported for this pre-revenue company. The lower net loss mainly reflected a $11.866 million non-cash gain from revaluing warrant liabilities and a $6.736 million income-tax benefit recognized for the New Jersey net-operating-loss sale. The company still recorded a $19.204 million loss before taxes.
At December 31, 2018, cash and cash equivalents were $11.439 million and short-term investments were $32.718 million, or $44.157 million combined. Total current assets were $51.463 million and current liabilities $5.877 million. Total assets were $53.170 million; stockholders’ equity was $31.225 million. The balance sheet reported a $15.082 million Solar loan payable expected to be refinanced. Cash, cash equivalents, and restricted cash totaled $11.767 million.
Changes versus prior year
- Revenue was unchanged at $0.257 million. R&D expense rose 17.6%, primarily from clinical development and manufacturing work; total operating expenses increased 13.8%.
- Net loss narrowed by about half, but operating loss widened. The improvement in net loss was substantially affected by warrant-liability remeasurement and the one-time NOL-sale tax benefit, not by revenue growth.
- Operating cash use increased by $3.767 million. Financing provided $29.424 million, principally from the March 2018 public offering; common shares outstanding rose from 28.972 million to 47.972 million during 2018.
Outlook, risks and unusual items
- Management expected year-end cash and short-term investments to fund operations past the anticipated acute VVC NDA submission in the second half of 2020, based on its existing plan. It also warned that estimates could prove wrong and that additional capital would be needed to complete development and support commercialization.
- Planned milestones included reporting acute VVC Phase 3 top-line data in the first half of 2020, an initial VVC NDA submission in the second half of 2020 if trials succeed, and initiating the recurrent-VVC Phase 3 trial in the first half of 2019, with a supplemental NDA targeted for 2021.
- Subsequent to year-end, SCYNEXIS received $6.7 million from the sale of state NOLs and issued $16 million of 6.0% convertible senior notes due 2025 in March 2019. Proceeds were used to repay the Solar term loan. The notes carry conversion and other potential dilution provisions.
- Key risks include clinical-trial failure or delay, regulatory uncertainty, the need for further financing, competition and reimbursement pressure, and reliance on third-party manufacturers and collaborators. Development of the IV formulation was delayed after tolerability findings during scale-up; an earlier cyclodextrin-based IV formulation had a clinical hold following infusion-site thrombotic events.
- The filing reported positive interim FURI outcomes in 17 of the first 20 patients, but the study is open-label and these preliminary results do not establish efficacy for approval. The financial statements received an unqualified audit opinion; management concluded disclosure controls and internal control over financial reporting were effective, though the auditor did not attest to internal-control effectiveness.
Important facts for investors to verify
- Whether the VVC Phase 3 trials meet their primary endpoints and whether timelines for data and NDA submissions remain achievable.
- How subsequent financing, clinical spending, and any new funding affect cash runway and dilution; the stated runway estimate was based on the existing operating plan.
- Progress and safety of the IV formulation, including whether manufacturing scale-up issues are resolved and FDA allows clinical testing to resume.
- The composition and potential variability of reported earnings, particularly warrant fair-value gains and tax benefits versus recurring operating cash use.
- Potential obligations to Merck, including milestones and sales royalties, and the terms and conversion-related dilution of the 2025 notes.