SCYNEXIS, Inc. — 2022 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2022. The filing was signed in March 2023. The company develops antifungal medicines; BREXAFEMME (ibrexafungerp) was its only marketed product, approved for vulvovaginal candidiasis (VVC) and, in December 2022, recurrent VVC (RVVC).
Financial performance and liquidity
| Metric | 2022 | 2021 |
|---|---|---|
| Product revenue, net | $5.0 million | $1.1 million |
| License agreement revenue | $0.1 million | $12.1 million |
| Total revenue | $5.1 million | $13.2 million |
| Research and development expense | $27.3 million | $23.8 million |
| Selling, general and administrative expense | $63.0 million | $49.9 million |
| Net loss | $62.8 million | $32.9 million |
| Net cash used in operating activities | $79.9 million | $54.6 million |
- Product revenue increased 348%, reflecting the first full year of BREXAFEMME sales. Total revenue fell 61%, principally because 2021 included the $10 million Hansoh upfront payment and associated license revenue.
- Product gross margin was approximately 87% (net product revenue less cost of product revenue of $0.6 million); this is not the company’s overall operating margin.
- Operating expenses rose 23%; SG&A growth reflected BREXAFEMME commercialization and severance, while R&D increased with clinical development spending, including the MARIO and VANQUISH studies.
- Net loss increased 91%. Results included noncash gains from fair-value changes in warrant liabilities ($22.3 million) and derivative liabilities ($1.3 million), which reduced reported loss. A $4.7 million income tax benefit primarily related to selling New Jersey tax attributes.
- Year-end cash, cash equivalents and short-term investments totaled $73.5 million, versus $104.5 million in cash and cash equivalents at year-end 2021. Cash, cash equivalents and restricted cash on the cash flow statement were $46.0 million; the difference primarily reflects $27.7 million of short-term investments.
- At year-end, the balance sheet reported a $34.4 million loan payable and $11.0 million of convertible debt and derivative liability. The company also reported $18.6 million in warrant liabilities. The loan’s stated principal outstanding was $35 million; the separate March 2019 convertible notes mature in 2025.
- The auditor issued an unqualified opinion but highlighted substantial doubt about the company’s ability to continue as a going concern. Management’s analysis did not count the proposed GSK upfront payment because closing conditions remained outstanding.
Material changes and outlook
- In October 2022, SCYNEXIS shifted resources toward hospital-based ibrexafungerp development, wound down BREXAFEMME promotion and ended its commercial sales arrangement with Amplity on November 30. It also reduced commercial headcount.
- On March 30, 2023, after the fiscal year-end, SCYNEXIS signed an exclusive, royalty-bearing GSK license for ibrexafungerp, including BREXAFEMME, in most territories. The agreement provides for a $90 million upfront payment, subject to customary closing conditions including HSR clearance. Additional potential payments include up to $70 million in regulatory milestones, $115 million in commercial milestones, $242.5 million in sales milestones, and up to $75.5 million in development milestones; royalties are in the mid-single-digit to mid-teen range. These contingent payments are not assured.
- SCYNEXIS remains responsible for costs of ongoing clinical studies and may earn development milestones. A related loan amendment requires repayment of approximately $35.4 million in principal and accrued interest, plus a $262,500 prepayment fee and $1.38 million final payment, at the earliest of one business day after receipt of the GSK upfront payment, June 1, 2023, or termination of the GSK agreement.
- Management expected the GSK transaction to close in the second quarter of 2023. If it did not close, management warned it might need other financing or strategic alternatives; the filing gives no assured funding runway.
- Clinical outlook in the filing: MARIO Phase 3 topline results expected in the first half of 2024; FURI and CARES topline data also expected in the first half of 2024; SCYNERGIA Phase 2 data expected in the first half of 2023; and VANQUISH data expected in the first half of 2024. The company anticipated a possible first hospital-indication approval in late 2024, dependent on study results, regulatory review and, if the GSK deal closes, GSK’s decisions.
Risks, contingencies and unusual items
- Key risks include clinical-trial failure or delay, regulatory uncertainty, limited capital and possible financing dilution, inability to close or realize benefits from the GSK agreement, and dependence on third parties for manufacturing, development and commercialization.
- The term loan includes financial covenants and security over substantially all personal property other than intellectual property. If cash or revenue covenant requirements are not met, lenders may pursue remedies; management said it could not assure a waiver or refinancing.
- SCYNEXIS disclosed prior IV formulation infusion-site reactions and thrombotic events with an earlier formulation. The newer liposomal IV formulation Phase 1 study was described as generally well tolerated, with no serious adverse events reported and mostly mild infusion-site reactions.
- SCYNERGIA enrollment was below the original projection, with hospital-resource prioritization during COVID-19 affecting recruitment. Revenue also depends heavily on a small number of wholesalers: three accounted for 94% of gross revenue in 2022.
- SCYNEXIS reported that it accessed all funds held at or through SVB after the bank’s March 2023 closure; it disclosed approximately $0.3 million in deposits and $7.0 million in an SVB-administered money market account at the time of closure.
Important facts for investors to verify
- Whether the GSK license closed, whether the $90 million upfront payment was received, and whether the scheduled loan repayment was completed.
- Current cash and investment balances, operating cash burn, covenant compliance and the company’s updated going-concern assessment.
- Progress, enrollment, results and regulatory plans for MARIO, FURI, CARES, SCYNERGIA and VANQUISH, including which party controls each program after any GSK closing.
- BREXAFEMME sales trends and gross-to-net deductions; the filing identifies rebates, chargebacks, discounts and returns as material estimates.
- Potential dilution: 32.7 million common shares were outstanding at year-end 2022, alongside substantial warrants, options and other potential share issuances.