SCYNEXIS, Inc. — 2019 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2019. This annual filing was signed March 11, 2020; it is not a standalone fourth-quarter report. SCYNEXIS is a clinical-stage biotechnology company developing ibrexafungerp, an oral and intravenous antifungal candidate. It had no approved products and no product-sale revenue.
Financial performance and liquidity
| Metric | 2019 | 2018 |
|---|---|---|
| Revenue | $0.121 million | $0.257 million |
| Research and development expense | $38.394 million | $21.560 million |
| Selling, general and administrative expense | $10.648 million | $8.680 million |
| Operating loss | $48.921 million | $29.983 million |
| Net loss | $53.710 million | $12.468 million |
| Net loss per share, basic and diluted | $0.96 | $0.28 |
| Net cash used in operating activities | $38.119 million | $28.323 million |
- Revenue was entirely amortization of an upfront payment under the R-Pharm collaboration; SCYNEXIS reported no product-sale revenue.
- At year-end, cash and cash equivalents were $41.920 million and short-term investments were $6.494 million, or $48.414 million combined. Cash, cash equivalents and restricted cash totaled $42.193 million.
- Total assets were $57.153 million; current assets were $52.402 million and current liabilities were $11.014 million. Stockholders’ equity was $12.895 million, down from $31.225 million.
- The company reported $11.522 million of convertible debt and derivative liability on its balance sheet, including $8.3 million of convertible debt net of issuance costs and a $3.2 million derivative liability. The notes’ remaining principal after a $2 million conversion was $14 million; they bear 6% interest and mature in 2025. The prior Solar term loan was repaid in March 2019.
- Warrant liabilities were $18.396 million at year-end. Their fair-value remeasurement generated a $4.497 million expense in 2019, compared with an $11.866 million gain in 2018.
Material changes versus 2018
- Net loss increased by $41.242 million. R&D expense rose 78.1%, primarily due to Phase 3 VVC trials, related clinical studies and a Merck milestone payment following initiation of the Phase 3 program.
- Operating cash use increased by $9.796 million as development spending expanded. Financing cash flow included public equity and warrant proceeds and convertible notes; investing cash flow mainly reflected maturities and purchases of short-term investments.
- The 2018 results included a $6.736 million income-tax benefit from a New Jersey net operating loss sale; no tax benefit was recorded in 2019. The 2019 loss also included debt-extinguishment costs and unfavorable warrant remeasurement, partly offset by a derivative-liability fair-value gain.
- Shares outstanding increased from 47.972 million at December 31, 2018 to 97.414 million at December 31, 2019. The December 2019 offering sold 38.889 million shares at $0.90 per share with warrants; outstanding warrants and convertible notes create further potential dilution.
Pipeline, outlook and material risks
- VVC treatment: SCYNEXIS reported positive top-line results from VANISH-303, a 376-patient Phase 3 trial. In the modified-intent-to-treat population, clinical cure was 50.5% and mycological eradication was 49.5%; both were statistically superior to placebo (p=0.001 and p<0.001, respectively). The company described the single-day oral regimen as generally well tolerated; gastrointestinal events were most common.
- Management’s stated plans at filing: VANISH-306 top-line results were expected early in Q2 2020, with an NDA for VVC treatment planned for the second half of 2020 and a potential FDA decision around mid-2021. These were forward-looking expectations, not completed outcomes in this filing.
- Recurrent VVC: Enrollment was ongoing in the Phase 3 CANDLE prevention study, designed under an FDA Special Protocol Assessment. Top-line data and a potential supplemental NDA were anticipated in the second half of 2021, contingent on successful results.
- Refractory invasive fungal infections: Interim FURI analyses covered 41 treated patients; 34 showed clinical benefit, including complete or partial response in 23 and stable disease in 11. FURI and CARES were ongoing open-label Phase 3 studies; management believed their data might support a streamlined regulatory pathway, but approval was not assured.
- Other development: The Phase 2 SCYNERGIA study was testing oral ibrexafungerp with voriconazole for invasive aspergillosis; results were expected in the first half of 2021. The IV formulation remained in development, with prior infusion-site thrombotic events and formulation tolerability issues presenting risks.
- Funding: Management expected year-end resources, together with proceeds from a planned New Jersey tax-credit/NOL sale, to fund operations past a potential mid-2021 VVC PDUFA date. The filing also states that the company would require additional capital and that changing conditions could accelerate cash use. A January 2020 agreement to sell a portion of unused New Jersey NOLs and R&D credits was expected to provide approximately $3.1 million.
- Key risks: SCYNEXIS had never been profitable, had an accumulated deficit of $271.4 million, depended on future financing, and relied on third parties for clinical trials and manufacturing. Other material risks include clinical or regulatory setbacks, safety findings, competition and reimbursement pressure, potential dilution, and supply-chain disruption. The filing specifically identified COVID-19 as a possible source of clinical-trial and supplier delays.
- The independent auditor issued unqualified opinions on the financial statements and internal control over financial reporting; management and the auditor reported effective internal controls as of December 31, 2019. The company disclosed no material legal proceedings.
Important facts for investors to verify
- Whether VANISH-306 results supported the planned VVC NDA, and the actual submission, FDA review and decision dates.
- Cash burn, available cash and investments, and the timing and terms of any subsequent financing or tax-credit/NOL proceeds.
- Remaining convertible-note principal, covenants and repayment terms, plus the potential dilution from warrants, notes and equity awards.
- Progress and results in CANDLE, FURI, CARES and SCYNERGIA, including any safety or regulatory developments affecting oral or IV ibrexafungerp.
- Manufacturing readiness, third-party supply arrangements, commercial partnerships and the company’s ability to fund development through commercialization.