SCYNEXIS, Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. Financial statements are unaudited. SCYNEXIS is a biotechnology company commercializing BREXAFEMME for vulvovaginal candidiasis (VVC) and developing ibrexafungerp for additional fungal indications.
Financial performance and position
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Total revenue | $1.323 million | $0 | $2.010 million | $12.050 million |
| Operating expenses | $23.061 million | $17.508 million | $43.485 million | $31.150 million |
| Operating loss | $21.738 million | $17.508 million | $41.475 million | $19.100 million |
| Net income (loss) | $(13.345) million | $1.658 million | $(18.796) million | $(3.018) million |
| Operating cash flow | Not provided for quarter | Not provided for quarter | $(34.569) million | $(12.454) million |
- Q2 revenue was BREXAFEMME product sales; product cost was $0.144 million, implying a derived product gross margin of approximately 89% before other operating expenses.
- Q2 R&D expense rose 51% to $7.131 million, primarily reflecting the MARIO study and manufacturing costs. SG&A rose 24% to $15.786 million, principally supporting commercialization.
- Six-month SG&A increased 55% to $30.262 million. The prior-year comparison included $12.050 million of Hansoh license revenue; no license revenue was recognized in the first half of 2022.
- Cash and cash equivalents were $118.691 million at June 30, up from $104.484 million at year-end. Cash, cash equivalents and restricted cash totaled $118.909 million. Stockholders’ equity was $45.480 million; accumulated deficit was $378.275 million.
- Six-month financing cash flow was $48.785 million, driven mainly by $41.8 million net proceeds from the April offering and additional loan proceeds. Investing cash outflow was $0.009 million.
- Debt and related obligations included a $35 million term-loan principal balance, $10.817 million of convertible debt and derivative liability, and $5.518 million of Amplity deferred fees and current portion. The term loan bears interest at the greater of 9.05% or prime plus 5.80%; principal payments are scheduled for 2024–2025.
Material changes versus prior period
- Net loss increased to $13.345 million for Q2, compared with $1.658 million of net income a year earlier. The prior-year quarter included a $4.138 million tax benefit, while Q2 2022 had none; Q2 2022 also recorded a smaller warrant fair-value gain than Q2 2021.
- For the first half, net loss widened to $18.796 million from $3.018 million. The change reflects lower total revenue, higher commercialization and development spending, and increased interest expense, partly offset by larger warrant and derivative fair-value gains and a $4.7 million tax benefit from selling New Jersey tax attributes.
- Operating cash use rose to $34.569 million from $12.454 million. The prior-year period benefited from a $10 million Hansoh cash receipt.
- The April 2022 public offering raised $41.8 million net and included common shares, 11.667 million pre-funded warrants and warrants for up to 15 million shares. Common shares outstanding at June 30 were 32.596 million; the filing reports 32.652 million outstanding as of August 1.
Outlook, commentary and risks
- Management said existing cash and anticipated BREXAFEMME sales were expected to fund operations into the first quarter of 2024, based on its operating plan. It cautioned that assumptions may be wrong and cash could be used sooner. The filing also states capital resources are expected to cover at least 12 months after issuance of the statements.
- Management expects continued losses, significant R&D spending and elevated SG&A. Additional financing may be needed through equity, debt, grants, tax-credit sales or collaborations; equity financing would dilute shareholders.
- BREXAFEMME had approximately 5,141 prescriptions in Q2, up 29% from Q1, and coverage representing more than 109 million commercially insured lives. Three wholesalers accounted for 45%, 32% and 18% of first-half gross revenue, respectively.
- The FDA accepted the supplemental application for BREXAFEMME to prevent recurrent VVC and granted Priority Review; the target decision date was November 30, 2022. This update was reported in August, after quarter-end. The filing cited peak combined U.S. sales potential above $400 million if the additional indication is approved; this is an estimate, not guidance.
- Clinical plans included MARIO topline results in 2024, FURI and CARES study reporting in early 2024, and a potential hospital-setting approval later in 2024. SCYNERGIA enrollment was slower than planned, partly because of COVID-19-related pressure on hospital trial resources; available data analysis was planned by year-end 2022. VANQUISH data were targeted for the second half of 2024.
- Liquidity depends on commercialization, clinical and regulatory outcomes, financing access, and other costs. The loan agreement includes a revenue covenant, subject to a cash-based waiver condition. Amplity deferred fees accrue interest at 12.75% and are scheduled for repayment during 2023–2025.
- Reported earnings include substantial noncash fair-value movements: first-half gains of $19.712 million on warrant liabilities and $1.162 million on derivative liabilities. These gains do not represent operating cash inflows. The filing identifies the related fair values as Level 3 estimates.
Important facts for investors to verify
- BREXAFEMME prescription growth, payer access, net revenue and gross-to-net deductions; revenue was concentrated among three wholesalers.
- The FDA decision on the recurrent-VVC application and whether commercial adoption supports management’s cash-runway assumptions.
- Actual cash burn versus the first-quarter 2024 runway estimate, and the availability and terms of additional financing.
- Clinical trial progress and timing, especially MARIO, FURI, CARES, VANQUISH and the delayed SCYNERGIA study.
- Debt covenant compliance, scheduled term-loan and Amplity repayments, and dilution from outstanding warrants and other potential share issuances. The filing lists 42.169 million shares reserved for future issuance.
- The effect of warrant and derivative fair-value changes on reported earnings; management reported disclosure controls effective as of June 30, 2022.