SCYNEXIS, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. SCYNEXIS is a biotechnology company commercializing BREXAFEMME (ibrexafungerp) for vulvovaginal candidiasis (VVC) and developing ibrexafungerp for additional fungal indications.
Financial results and liquidity
| Metric | Q1 2022 | Q1 2021 / prior period |
|---|---|---|
| Total revenue | $0.687 million | $12.050 million |
| Operating expenses | $20.425 million | $13.644 million |
| Operating loss | $19.738 million | $1.594 million |
| Net loss | $5.451 million | $4.676 million |
| Net cash used in operations | $15.988 million | $0.759 million |
- Q1 2022 revenue was BREXAFEMME product revenue; Q1 2021 revenue was primarily a one-time Hansoh license payment. Product revenue was $0.687 million, with $0.099 million cost of product revenue, implying an approximately 86% product gross margin before other expenses.
- Research and development expense declined 17% to $5.735 million. Selling, general and administrative expense rose 118% to $14.591 million, largely from commercial launch costs.
- Net loss included a $10.030 million noncash gain from warrant remeasurement, a $0.980 million derivative-liability fair-value gain, and a $4.700 million tax benefit from selling New Jersey tax attributes. These items materially affect comparison of reported net loss with operating performance.
- Cash and cash equivalents were $95.210 million at March 31, down from $104.484 million at year-end. Including restricted cash, quarter-end cash was $95.428 million. Current assets were $101.906 million versus current liabilities of $12.944 million.
- Debt included a $35 million principal term loan, carried at $33.713 million net of discount and issuance costs, and convertible debt and related derivative liability totaling $10.817 million. The term loan bears interest at the greater of 9.05% or prime plus 5.80%, with principal payments scheduled to begin after the interest-only period. Loan maturity is March 2025, potentially extendable to May 2025.
- Accumulated deficit was $364.930 million. Q1 financing provided $6.723 million, including $5 million drawn under the term loan and proceeds from stock sales.
Material changes and operating developments
- Revenue fell 94% year over year because the prior-year quarter included Hansoh license revenue, while Q1 2022 reflected early BREXAFEMME sales.
- Management reported approximately 4,000 BREXAFEMME prescriptions in Q1 2022 and insurance coverage for more than 93 million commercially insured lives, about 55% of insured patients. Prescriptions and repeat prescribers increased through the quarter.
- The April 2022 public offering, completed after quarter-end, generated approximately $41.9 million of net proceeds. It included common shares, pre-funded warrants and warrants, creating potential dilution. As of March 31, the company also reported remaining capacity under its ATM and Aspire agreements, subject to their terms.
Outlook, risks and contingencies
- Management expected cash, cash equivalents, April offering proceeds and anticipated BREXAFEMME sales to fund operations into the first quarter of 2024. The company cautioned that actual cash use could exceed estimates and said further capital may be needed.
- Management expected continued losses and significant R&D and commercialization expenses. Potential future funding sources include equity or debt financing, grants, tax-credit sales, and collaborations; equity financing could dilute shareholders.
- The CANDLE Phase 3 study for recurrent VVC was completed in April 2022. The company anticipated filing a supplemental NDA in Q2 2022 and potential approval in late 2022.
- The MARIO Phase 3 study for invasive candidiasis was expected to enroll its first patient by the end of Q2 2022. SCYNERGIA enrollment had been slower than expected, partly because of COVID-19-related hospital-resource constraints; top-line results were anticipated in the second half of 2022.
- The term loan includes a product-revenue covenant beginning June 30, 2022, subject to a cash-based waiver condition. Up to a further $25 million of loan proceeds was available only if specified conditions were met.
- Amplity deferred commercial-service fees accrue interest at 12.75% and are repayable beginning in 2023. Merck is entitled to mid- to high-single-digit royalties on worldwide ibrexafungerp sales and may receive remaining milestones.
- Management said disclosure controls and procedures were effective at the reasonable-assurance level and reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether BREXAFEMME prescription growth, payer access and net product revenue develop sufficiently to support the commercial launch and loan covenant.
- Whether the recurrent-VVC supplemental NDA was filed and the FDA decision timeline and outcome.
- Enrollment and clinical results for MARIO and SCYNERGIA, and regulatory progress for other ibrexafungerp indications.
- Cash burn and runway against management’s first-quarter 2024 estimate, including the effect of the April offering and potential additional financing.
- Potential dilution from outstanding warrants, pre-funded warrants, equity facilities and convertible notes, and the terms and financial covenants of the term loan.
- How much reported earnings depend on noncash fair-value changes and tax-attribute sales rather than recurring product revenue.