SCYNEXIS, Inc. (SCYX) Q3 2022 Earnings Report, Transcript and Summary

Good morning, and welcome to the SCYNEXIS Third Quarter 2022 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Debbie Etchison, Executive Director, Communications and Investor Relations.

Hello, everyone, and welcome to today's conference call to discuss our third quarter 2022 financial results and corporate update. Before we start, let me remind you that today's call will include forward-looking statements based on current expectations, including statements concerning our financial outlook for the future, leadership's expectations for our future financial and operational performance, as well as our business strategy because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Please refer to our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and quarterly report on Form 10-Q, including in each case under the caption Risk Factors and another documents subsequently filed with or furnished to the Securities and Exchange Commission. All forward-looking statements speak only as of today, November 9th, 2022. SCYNEXIS undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made. The information on today's call is not intended for promotional purposes and not sufficient for prescribing decisions. Joining us on today's call are SCYNEXIS' President and CEO, Marco Taglietti; Chief Medical Officer, Dr. David Angulo; and Chief Financial Officer, Ivor Macleod. Following our prepared remarks, we'll open the call to your questions. Now, I will turn the call over to Dr. Marco Taglietti, President and CEO.

Thank you, Debbie. Good morning, everyone. Bonjour [indiscernible]. Thank you for joining us today for our third quarter 2022 earnings investor call. I want to begin by drawing your attention to a recent report issued by the World Health Organization or WHO. This was the first ever list of priority deadly fungal pathogens that are becoming a growing, global public health manage. The list includes well-known vicious pathogens such as Candida auris, another Candida species, albicans, glabrata, parapsilosis, tropicalis and molds like Aspergillus fumigatus, histoplasma, Mucorales, all pathogens against, which Ibrexafungerp shows great activity, even in strains highly resistant to other antifungals. And the data from our Phase 3 studies FURI and CARES provides clinical hard evidence of the activity of Ibrexafungerp against severe, difficult-to-treat fungal infection even when they are refractory to currently available treatments. Moreover, these WHO's call for action is further validating our corporate strategy to refocus on life-threatening invasive fungal infections, while monetizing BREXAFEMME in vulvovaginal candidiasis. So we at SCYNEXIS are proud to be on the front lines with Ibrexafungerp to fight this never-ending warfare against antimicrobial resistant pathogens. We are prepared and we are ready. David will provide more details on our continuing efforts to stay in front of this steadily fungal pathogens. As we have recently announced, SCYNEXIS is transforming the company by refocusing our resources to the clinical development of the oral and intravenous liposomal formulation of ibrexafungerp for severe hospital-based indications, where higher long-term returns are expected. [This is] the right strategy at this time because of the growing threat of serious and potentially deadly fungal infections that I just mentioned, where we believe ibrexafungerp can play a significant role saving lives, while achieving its full market potential. At the same time, we are actively pursuing suitable commercialization partners for BREXAFEMME in the U.S. for vulvovaginal candidiasis and for ibrexafungerp outside of the U.S. And we are making good progress on this front. Stay tuned. Well, we are in the process of out-licensing BREXAFEMME in the U.S. for VVC, we will continue to keep this important product on the market in the U.S. and to make it available for the many patients, who can benefit from its proven efficacy. We will minimize the resources allocated to the active promotion of BREXAFEMME in order to redirect our cash to the development of more [origin] hospital indications. Our supplemental NDA filing for recurrent VVC is on track with a PDUFA decision date of November 30th, 2022. If approved for the second indication, BREXAFEMME will be the first and only therapy approved in the U.S. for both the treatment of VVC and the prevention of recurrent VVC. We believe that this anticipated second indication is extremely attractive to a commercialization partner and will help expand patients access to our innovative treatment. On the corporate side, we closed the third quarter 2022 with more than $96 million in cash. And with our new restructuring plan, we have extended our cash runway into the second quarter of 2024. This cash is expected to support our hospital programs to enable additional regulatory filings in 2024. Ivor Macleod, our new CFO, will provide more details on our expenses and cash balance; and then we will open the floor for a Q&A session. Now, let me turn BREXAFEMME -- to BREXAFEMME performance in vaginalis infections for this quarter. We continue to increase the number of BREXAFEMME prescribers. In Q3, almost 2,500 HCPs prescribed BREXAFEMME, representing an increase of 11% quarter-over-quarter and even a -- an higher increase over 30% of repeat prescribers, showing that when HCPs use BREXAFEMME for their patients, they are willing to prescribe it again. BREXAFEMME prescriptions continued to grow in the third quarter. We generated almost 5,800 prescription in the third quarter of 2022, representing 30% growth over the second quarter of 2022, continuing a trend of growth. However, we do expect some disruption to this trend in the fourth quarter, as a result of our decision to end the in-person promotion with [Amplity Health]. After signing our contract with a major national pharmacy benefit manager, PBM, in October, we successfully garnered BREXAFEMME coverage of 130 million commercially insured lives, representing 70% of the commercial universe. I will now turn the call over to Dr. David Angulo, our Chief Medical Officer; and future Chief Executive Officer. David?

Thank you, Marco. Before I get towards the pipeline update, I would like to share with you a page out of the WHO report on the first ever list of priority fungal pathogens that Marco mentioned earlier. The intention of this report is to drive both research efforts and policy interventions to increase the global response to the fungi that represent the greatest threat to public health, as they become increasingly common and resistant to treatment. Ibrexafungerp has demonstrated activity against most of the pathogens in the critical, in high priority groups of this list, including Candida auris and all other clinically relevant Candida species mentioned here, albicans, glabrata, parapsilosis, tropicalis. It has also shown activity against Aspergillus fumigatos, histoplasma and Mucorales. Ibrexafungerp spectrum of activity is very well suited to address many of these critical needs and/or development programs [are] already evaluating ibrexafungerp in these areas. As you recall, the FURI study includes patients with infections caused by many of these pathogens that are not adequately treated with current treatment options. The CARES study focused on Candida auris. The SCYNERGIA study in Aspergillus. And the MARIO study in [candid] infections by all clinical relevant species. It has been very encouraging to see that WHO underscoring the need to further development on these areas and how well our development plan fits within their critical and high priority list. We stand ready at the right place and in the right time with a significantly derisked antifungal asset that has already received its first FDA approval for one indication and a rapidly advancing development program addressing critical needs in the antifungal space, including difficult-to-treat and resistant fungal infections, with an anticipated first approval in the hospital setting by late 2024. We believe that our hospital program can unlock significant value to both our patients and our shareholders. We are advancing our pipeline quickly towards hospital utilization. We have already reached our target enrollment of 200 subjects in the FURI study and we'll soon begin study closure activities to enable completion of the follow-up of all the cases by first half of next year. This will be followed by the final data review, committee review and reporting of final data, as guided early in 2024. The CARES study will follow a similar time line. As a reminder, the CARES and FURI study are evaluating ibrexafungerp in patients with Candida auris and other refractory fungal infections. The SCYNERGIA study in aspergillosis is closing enrollment as well. We are planning to close out the study and analyze the available data in the first half of 2023. The data from this Phase 2 study even in a smaller number of subjects that anticipated will guide potential next steps in this development path. Enrollment is active in the MARIO study, which is evaluating ibrexafungerp in patients with invasive candidiasis. We aim to open approximately 70 sites globally. As previously guided, we are anticipating completion of the study by end of next year with data in early 2024. As mentioned previously, the data from the MARIO study, along with the data from FURI and CARES studies are intended to be supportive of an NDA submission in 2024 with an anticipated first approval for an indication in the hospital setting later that year. We also plan to advance our IV formulation of ibrexafungerp into a Phase 2 trial in 2023, with results expected in 2024. The data from this study will inform the design of a Phase 3 study that is expected to enable us to make the intravenous formulation available in the market, broadening the clinical utility of ibrexafungerp, as a comprehensive antifungal solution to the current critical need. We are now weeks away from our November 30 PDUFA date for BREXAFEMME in recurrent VVC. And we remain on track and remain confident in the positive outcome for BREXAFEMME patients -- for BREXAFEMME and for patients. After this approval, we plan to communicate with prescribers regarding this new indication and key information in the updated level. Thank you. And I will now turn the call over to Ivor Macleod, our Chief Financial Officer.

Thank you, David. Good morning, everyone, and thank you for joining today's call. I'm Ivor Macleod, and it is my pleasure to speak to you for the first time as the new CFO of SCYNEXIS. Before I get to the financials, I have to say that I'm delighted to join a company with such a talented management team, as well as strong scientific acumen focused on addressing the ever-increasing threats of infectious disease. I very much look forward to working with Marco, David and the team, both during this period of transition, as well as over the coming years contributing to the future success of ibrexafungerp. Let me now turn to the financials. BREXAFEMME net product revenues in the third quarter of 2022 increased approximately 23% to $1.6 million over the $1.3 million that we realized in the second quarter. Research and development expenses for the third quarter of 2022 were $6.4 million compared to $4.4 million for the comparable period in 2021. The $2 million increase was primarily a result of the increased clinical development expenses for the MARIO and VANQUISH studies, as well as preclinical expenses associated with our IV liposomal formulation. Selling, general and administrative expenses for the third quarter of 2022 were $16.7 million versus $15.4 million in the third quarter of 2021. The $1.3 million increase or roughly 9% for the 3 months ended September 30th, 2022, were primarily driven by an increase in costs recognized to support the commercialization of BREXAFEMME. Total other expense was $7.8 million for the third quarter of 2022 versus total other income of $18.8 million for the third quarter of 2021. During the third quarter of 2022 and the third quarter of 2021, SCYNEXIS recognized a non-cash loss of $6.5 million and a non-cash gain of $18.8 million, respectively, on the fair value adjustment of our warrant liabilities. Our cash balance remains strong. The total of cash, cash equivalents and short-term investments at the end of the third quarter totaled $96.1 million compared to $100.1 million at September 30th, 2021, and compared to $104.5 million in cash and cash equivalents at December 31st, 2021. SCYNEXIS believes that its existing cash, cash equivalents and short-term investments will enable the company to fund its operating requirements into the second quarter of 2024. This assumption does not include any potential upside from ongoing business development activities associated with BREXAFEMME. I will now turn the call over to Dr. Marco Taglietti.

Thank you, Ivor. Before we close the call to the Q&A session, I want to reiterate a few key points. We are extremely proud to be at the forefront of a battle against deadly fungal pathogens with a unique asset, ibrexafungerp that can become a major player in the fight against these fungal infections. We have a PDUFA date in -- for recurrent of vulvovaginal candidiasis of November 30th about 3 weeks from now and everything is in line with our expectation to-date. We plan to provide updates of our progress in MARIO, which we believe can be leveraged to build a strong and differentiated hospital brand. We remain on track to have data in early 2024 and to file our NDA with FURI and CARES data in the year with a potential approval by end of 2024. Our [hospital] franchise not only has the potential to generate $300 million to $400 million a year in net sale in the U.S. alone, but also it will provide significant revenues until at least 2025. Finally, with our recent corporate action, we have over $96 million in cash, and we have extended our cash runway into second quarter 2024. This runway does not include any upside from ongoing potential business development deals. Operator, please open the floor for questions.

Thank you. [Operator Instructions] And our first question comes from Louise Chen with Cantor.

First question, I [had] for you is, when do you think we will see an out-licensing and/or partner for BREXAFEMME? And how do you think about valuing this opportunity? And is this year possible after your PDUFA? Or is 2023 more likely? And then second question, I had for you is, how will you succeed? Or how do you think about succeeding in the hospital setting when others have failed? And then I have one more question, but I'll let you answer these two first.

Yes. So first of all, let me say we are very active pursuing potential partners, and well, we will just continue to keep all of you updated just to let you know that we are in very active conversations with potential partners and so stay tuned. We also, of course, on these type of things, which is we cannot really provide yet a specific commitment. Certainly, we expect to be, as I mentioned, the approval of recurrent VVC, which we expect it to arrive at the end of this month. So in 3 weeks from now. As you well know, Louise, we expect this to continue to create interest in potential partners. And well, we expect that this product will be valued by potential partners because, as we mentioned before, we are looking for partners, whether the greater footprint when we can afford, whether the expertise in women health care and, most importantly, they may have other products in the bank of their reps, synergistic products that will really help to make the most out of BREXAFEMME. So, we expect that the value that BREXAFEMME can achieve in the market is going to be recognized. And the third one is for the hospital -- hospital, the hospital setting, we truly appreciate that it's also -- it can be a challenging one. But with a unique product belonging to a new class, we expect this to be certainly a product that will create interest as we have seen just on the way that we have been able to enroll patients. David, I would like to add something about how this has been received from our KOLs, the use of ibrexafungerp for serious invasive fungal infections.

Sure, Marco. Luis, we believe that really the product ibrexafungerp is well differentiated to really being able to address very significant unmet needs. As you can see here, this is being recognized again and again what ibrexafungerp potential can be achieved. And so, we believe that with the right development program that we have said, focusing in the indications that are very substantial in life-threatening conditions that we have focused on and with an efficient development program being able to get a favorable label in that regard, we believe that we will be very well positioned to really have a predominant place in the market and predominant place in the treatment [indiscernible] for these patients that have very limited treatment options. We must also remember that the antifungal space is slightly unique because of the fact that there are not so many players. There are not so many treatment options. There are not so many groups of drugs. And once the patients become resistant to 1 or 2 or intolerant to 1 or 2, their options are extraordinarily limited. So this is providing us a unique opportunity in our opinion to really maximize the potential value of ibrexafungerp in the commercial market in the hospital setting. I hope that, that addresses your question.

It does. And if I could just squeeze in one more modeling question here. I think if I heard you correctly, it sounded like the fourth quarter sales will be down versus the third quarter because of some disruption. And then, I wanted to ask you about the OpEx under your new business strategy as you want things down, how should we think about OpEx in fourth quarter and then in 2023?

So, as you have seen this actually, we have seen always positive trend in the last few quarters. And what we are saying is that at this point, we tend to be conservative. And given the fact that we are stopping active promotion in the field with the termination of our Amplity partnership. At this point, we don't expect probably future growth. So -- and we will see, as you may know, if you look at our sales through the IQVIA database on others, we continue actually right now to continue to have sales of the product, and we will continue to make the product available with regards to the patients because we want to make sure that patients who need an alternative to fluconazole, which has been the only product approved and was approved almost 30 years ago, have access to the product. In addition, as I mentioned before, we have some new coverage of a new BPM, adding another $30 million. So, the fact that we may be stopping promotion, may be active promotion, may be balanced by the fact that there are more patients in balance. So, we will see at the end of the quarter really how we have been doing. With regard to our OpEx, operational expenses, we have not really provided the guidance. But since we are refocusing our efforts on R&D on the development of the product in invasive fungal infection. I think that as a guideline or a sense of what our OpEx will be, probably you may want to look back at our expenses in 2019, 2020, where we were, let's say, pre-commercial, and this is maybe the type of operational expenses in the range where we expect to be with a new SCYNEXIS refocused on R&D development. Does it address your question?

Yes.

Next question comes from Michael Higgins with Ladenburg Thalmann.

I appreciate you taking the questions and welcome aboard, Ivor, to SCYNEXIS. David and Marco, first question for you guys. Does the inclusion of ibrexafungerp onto -- prior to pathogen list improve the chances for nondilutive funding or global partnerships? Anything you can mention in regards there?

This is David, Michael. So, I just want to clarify, certainly the WHO list identifies what are the priorities, the fungal diseases that they are really asking policymakers and also asking research and development organizations to focus on because they consider extraordinarily important and can have a very significant impact in public health. I didn't mentally imply that ibrexafungerp is, part of that lessor is mentioning within that WHO's leave to -- what we're showing here to you is that we have almost a perfect fit in regards to our focus or efforts of our development program versus what they have considered are the priority focus that should drive innovation in the future. That obviously is the reinforcement of our vision that we have been putting together since 2 years ago in focusing in this very difficult-to-treat and unmet medical needs in the fungal space. How will this impact our ability to continue being successful in attractive people to our story and really investigators to our clinical trials, et cetera, we think that is important. We think that is important because the recognition of the WHO, along with the recognition -- past recognition from CDC and other organizations that these fungal pathogens represent a substantial unmet medical need and there is very welcome innovation in those areas. We believe that will potentially eventually translate into policymaking favorable conditions towards commercializing a product like us that offer that broader spectrum of activity is addressing needs not only mentioned by the company, but needs that are extraordinarily well validated by organizations worldwide. So, we see that definitely as a positive outcome, and we see definitely as a positive signal that we are in the right path.

And if I can add, for example, talking about the nondilutive funding, if you think about the way BARDA has been providing grants in the field of anti-infectives, their focus has been really on antibacterial. Now, with WHO really making a very strong case that fungal infection are critical, are actually a global threat as much as bacterial infections that can change their approach. And the other is really the recognition that fungal infection are a major global, again, again, a major global threat that can help to introduce new legislations, like the PASTEUR Act, for example, or the DISARM Act because let me just say probably, Michael, I told you in the past, I was down in Washington a couple of times talking with legislators. And they still think that fungal inflation at the end of the day is a fleet foot. And of course, that is not the case. At least we are talking here about infection -- invasive infection of the bloom stream, internal organs in very sick patients, where the outcome, as we mentioned many times, the mortality can still be 25% to 40%, I mean, extremely high mortality. And I think, with the WHO report, really puts the right focus, the right emphasis on how critical these infections are.

That's very helpful, guys. Appreciate it. If I can turn our attention to MARIO, a design in a study that makes a lot of sense for this asset. Can you give us an update on the number of sites. I think you were going to 75%. Just want to clarify if that's where you're going to, if that's increased and how the enrollment is going so far?

Yes. Certainly, yes, the number of sites that we have planned has not changed. So we are in the process of the start-up of the study, as I mentioned. You know that we typically don't guide on enrollment in an ongoing basis. However, I can tell you that the trajectory of the study in terms of site initiations, approvals in different countries, et cetera, is as we have been expecting. So, everything seems to be on track for us really being able to complete the study -- to complete the enrollment of the study as we are estimating right now by end of next year. So, at this point, yes, very, very intense activities happening. Really what happens at this stage is that you go out to all regulatory agencies, different countries when we are opening centers, et cetera, and we have been receiving positive response from that point of view. So, approvals are coming, and we are just in the process of really setting up all the sites and we'll get them ready. And we have already several sites already open, as you know.

Great clarification. Okay. Appreciate that. One last one, if I could. Any feedback for us on your conversations with the FDA ahead of the November 30 PDUFA?

We don't -- actually we didn't -- this particular supplemental NDA did not requires a late cycle or any type of conversation with the FDA. They didn't consider that an additional conversation was needed. And we are just in the normal stages of this particular process, which is the really understanding what is their comments, et cetera, within our label. Those are the stages that we are currently at. And all the signs are currently positive towards the -- all expectations of an approval are at the PDUFA date.

Appreciate all the feedback.

Next question comes from Shubhendu Sen Roy with Brookline Capital Markets.

So, does the increased enrollment in the [indiscernible], does that impact your funds in any way going to the added costs? And I was just wondering how do you plan to use the extra patients that are enrolling?

Sorry, the first question regarding the increase in the enrollment that is increasing our cost. Yes, I'm going to address that first. Thank you for the question first. Certainly, as you can imagine, with this is program that has been running for several years so far, you really need to notify the investigators with sufficient advance notice when you're planning to really stop enrollment in 1 of your trials. And this trial has been -- the FURI study has been extraordinarily well received. And I can tell you that the majority of our investigators are very disappointed that we're stopping enrollment, because this trial has giving them the opportunity to offer ibrexafungerp when other products have entirely failed. So, they really saw this protocol as something that they really wanted to really continue running for multiple years. However, as you know, we said, listen, our target enrollment is 200. We have anticipated that we were going to be completing the study towards the end of this year based on the trajectory that we saw at the beginning of the year. We had communicated that to the investigators kind of preparing them for the process. And we decided to really try to maintain the same communication to maintain the same trust with investigators and really to keep the subject enrolling until the end of this year. The incremental cost is minimal, to be honest, because the reality is that you do have -- although the cost of a clinical trial are mostly associated with all the infrastructure that needs to be in place. There is some costs associated with the specific number of subjects enrolled, but that's not the main driver. And in our opinion, that was the right decision to enable the investigators to maintain, engage with us, which many of them are the same investigators that we're using for FURI and at the same time, to really maintain the type of communication that we have been maintaining with them and keep them, as I mentioned, motivated from that point of view. And your second question, can you remind me of that?

Yes. I was just wondering how you saw the extra patients that are coming in, how do you plan to use that?

The data from these patients that are coming in?

Yes. I mean, yes, like the data now, are you going to look at some extra parameters or just would they be part of the usual trial and they will be just included in?

So let me see if I understood this right. So, how are we -- for the patients that are coming in, what are we planning? So, the next step for this particular study is that, as we mentioned before, once we have the last subject last visit that we complete all the follow-up for all the patients, all patients will be analyzed via data review committee. They will be part -- all of them will be part of the same package of analysis. And along with the CARES subjects coming from CARES, and this, as you know, are open-label studies. So, we are planning to contrast the response and outcomes rate from these groups from the patients coming from FURI and CARES with external controls. And we do have right now access to good external data sets that we consider are going to be extraordinarily relevant for providing that comparison against external controls. And that is the way that we're planning really to first report the outcome of all the patients from FURI and CARES and then report later on to really being able to compare against the external controls. These 2 pieces are what we are expecting will be supportive of a salvage therapy indication. So, we are expecting that the FURI and CARES data, along with the comparison with external controls, will be supportive of a salvage therapy indication. That's -- I'm not sure if I'm addressing your question, but that's the way that we are planning to use the data from these patients.

Yes. Great. It does. And a follow-up for FURI study, like it includes a basket of indications in the trial, and you've shared some preliminary data as well. So, do you see one or few of the indications responding better than the others?

So, we know that glucan synthase inhibitors are gold standard for the treatment of Candida infections, gist specifically, if I understand here the question right. So, yes, what we do expect that really gist infections, which are glucan synthase inhibitors are cited for gist infections. That's really their kind of a wow factor for this mechanism of action. So, reality is that our expectation is that future -- the majority of the patients in the FURI study, et cetera, have been enrolled with Candida infections. And that is what we -- when we believe that is potentially the greatest opportunity for ibrexafungerp in gist infections. Having said that, the protocol also allows the treatment of mold infections when they are failing and/or the use of ibrexa in combination therapy to treat very difficult-to-treat mold infections like mucormycosis or aspergilosis. So with that, we are allowing all these different strategies of treatment that once we have the final results, we believe that all of them will be extraordinarily valuable as an additional alternative options for physicians when they are facing with these very difficult-to-treat infections.

Yes. That's very helpful. And finally, I may have missed it, but what is the time line for [synergia] study?

We are planning to report data. We're closing -- we're planning to really close enrollment within this year as well, and we've been able to report data in the first half of next year.

[Operator Instructions] This concludes our question-and-answer session. I would like to turn the conference back over to Marco Taglietti, President and CEO, for any closing remarks. Please go ahead.

Thank you very much, operator. I would like just to make 3 simple points. The first one, we are very proud to have an asset like ibrexafungerp that will make a significant difference to patients within basic fungal infections. The second is that we have expertise and the resources to achieve our goals. And the third that we believe that we are on a path that will make SCYNEXIS successful, and we'll be able not only to help patients, but also to reward our shareholders. And thank you very much for your attention and looking forward to continue to work with all of you. Thank you. Operator, you can close the conference call.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.