Transcript
Greetings, and welcome to the SCYNEXIS, Inc. Fourth Quarter and Full Year 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Debbie Etchison, Executive Director of Communications and Investor Relations. Please go ahead.
Hello everyone, and welcome to today's conference call to discuss our fourth quarter and full year 2021 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, included in each case under the caption, Risk Factors, and in other documents subsequently filed or furnished to the Securities and Exchange Commission. All forward-looking statements speak only as of today, March 29, 2022. SCYNEXIS undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made. The information on today's call is not intended for promotional purposes, and is not sufficient for prescribing decisions. Joining us on today's call are SCYNEXIS President and CEO, Dr. Marco Taglietti; Chief Commercial Officer, Christine Coyne; Chief Medical Officer, Dr. David Angulo; and Interim Chief Financial Officer, Larry Hoffman. Following our prepared remarks, we'll open the call to questions. Now, I will turn the call over to Dr. Marco Taglietti, President and CEO.
Thank you, Debbie. Good morning, everyone, and thank you for joining us today for our fourth quarter and full year 2021 earnings investor call. We are excited to share with you updates on the progress of the launch of BREXAFEMME and outline our vision for the future of the ibrexafungerp franchise. As we get ready for 2022, a pivotal year for SCYNEXIS, let me briefly summarize key accomplishments of 2021. On the R&D front, we obtained approval of ibrexafungerp for the treatment of vulvovaginal candidiasis (VVC), the first new antifungal class in over 20 years. Following the positive Phase 3 results of the CANDLE study announced in February, we plan to expand by the end of the year the labeling of BREXAFEMME to include the prevention of recurrent VVC. As a result of our agreements with the FDA, we are expanding the hospital program with the MARIO trial that may allow us an approval for invasive candidiasis in 2024. The launch of BREXAFEMME has marked a historic transformation for SCYNEXIS in 2021, becoming a fully integrated company. At the end of 2021, BREXAFEMME was covered by commercial insurance for more than 40% of lives in the U.S. We achieved approximately 4,600 prescriptions and $1.1 million in net revenues. On the corporate side, we closed 2021 with more than $100 million in cash and that gives us a runway into the second quarter of 2023. We continue to seek business development deals like the one we did with Hansoh for Greater China, among other non-dilutive ways to strengthen our cash balance. The most important point to emphasize today is that our vision to make ibrexafungerp a successful, sustainable, and profitable antifungal franchise is becoming a reality. With BREXAFEMME now approved for the treatment of VVC, we plan to expand its labeling by the end of this year to include the prevention of recurrent VVC, for which nothing is yet approved. Moreover, we expect to get ibrexafungerp approved for invasive candidiasis in 2024. Together, all these indications will create a franchise with the potential to generate $700 million to $800 million a year in net sales in the U.S. alone. What are our key goals for 2022? One is expanding the BREXAFEMME labeling and advancing the hospital program, which are key objectives for our earnings team. David will elaborate on these programs. The team will discuss how we plan to grow BREXAFEMME adoption and expand insurance coverage. Larry, our Interim Chief Financial Officer, will provide further details on our expenses and cash balance. We will then open the floor for a Q&A session. Now, I would like to turn the call over to our Chief Commercial Officer, Christine Coyne.
Thank you, Marco, and good morning. Last quarter, I shared with you some of our prescribers' enthusiasm about BREXAFEMME. As you may recall, we reviewed our plans to target clinicians who treat a significant number of vaginal yeast infections. Since our early days of launch in August, we encountered exactly what we expected: a well-ingrained physician habit of continuing to use the same old azole products. Yet, following discussions with our representatives, healthcare providers confirmed a desire to treat patients with vaginal yeast infections using a new product beyond the commonly used azole. Our plan to ensure awareness and understanding of BREXAFEMME as a new improved tool for VVC remains our number one focus each day. BREXAFEMME is the first and only oral fungicidal therapy that treats vaginal yeast infections, providing symptom relief with complete resolution. It has activity against a wide range of Candida species, including those resistant to fluconazole. These key clinical benefits, coupled with the ease of a one-day oral dosing, are of great importance to healthcare providers and continue to motivate prescribing. In August, our sales team began meeting with their key healthcare provider customers. We have a wide range of OB-GYNs and other physicians who treat women with VVC. Our focus is on the top VVC prescribers. The sales team generates awareness of BREXAFEMME while helping physicians clearly understand the utility of a non-azole fungicidal treatment for vaginal yeast infections. Our intention is to grow the base of prescribers and continue to expand prescribing. In Quarter 4 2021 alone, more than 1,600 physicians prescribed BREXAFEMME. This progress is positive, and these are early indicators of BREXAFEMME adoption. Now, let's discuss the early results of our marketing and sales effort. First and foremost, it is important for me to convey to you that BREXAFEMME has been received positively by our healthcare provider customers. We have successfully educated prescribers on the benefits of BREXAFEMME. As with all launches, convincing decision-makers to do something different after a two-decade habit is a significant task. We have effectively begun the conversation with these prescribers and helped them identify appropriate patients to trial BREXAFEMME. We generated 3,674 prescriptions in Quarter 4 2021, representing solid growth over Quarter 3 2021. The majority of the growth in Q4 came from expanding our prescriber base and generating more trials of BREXAFEMME with new writers. In November, we conducted an Attitude Trial and Usage report, or ATU. We learned that prescribers are expecting to expand their usage of BREXAFEMME over the next three months. Our message that BREXAFEMME is an effective one-day treatment that kills yeast is both meaningful and motivating to them. Moreover, prescribers are witnessing good outcomes with their patients, and they are expanding their use. This is encouraging information. Moving forward into Quarter 1 2022, our field teams are continuing to engage with their healthcare providers, where possible, given some office closures due to COVID. At times, we have had to pivot like other companies to target healthcare providers who are more accessible. The inability to access certain offices has accounted for some softness in January. However, as things began to open back up in February, we expect our ability to access physicians and drive BREXAFEMME usage to improve. In parallel with building demand for BREXAFEMME, we are continuing our work with insurers and payers. Our national account directors, who have established long relationships with their payer customers, have secured important BREXAFEMME review meetings since early 2021. By the end of Quarter 4 2021, we successfully garnered coverage and access to BREXAFEMME for more than 81 million commercially insured lives, representing over 48% of commercial lives. This coverage is a testament to the efforts of our national account team and reflects payers recognizing the high unmet need and clinical value of the first non-azole therapy for Candida. This coverage is difficult to secure, and I am pleased to announce that we are tracking ahead of our expectations. Our launch to date has focused on generating awareness, trial, and usage with our healthcare provider customers while gaining access to BREXAFEMME with payers. It is working. As we know well, launches are a critical phase of a product's commercial life cycle, especially during a pandemic. I am pleased with the efforts of our field teams, despite external challenges. They have endured the pandemic's challenges, both personally and professionally, and remain motivated and enthusiastic about continuing to grow the brand. It is rewarding to bring such an important therapy as BREXAFEMME to healthcare providers and patients. The feedback from physicians has been highly encouraging, and their experiences with BREXAFEMME continue to fuel our efforts. Thank you. I will now turn the call over to Dr. David Angulo, our Chief Medical Officer.
Thank you, Christine. We continue to make significant progress in the development of ibrexafungerp for both community and hospital settings. As recently announced, we successfully completed our pivotal Phase 3 study CANDLE and reported positive results. This study evaluated the efficacy of ibrexafungerp in preventing recurrences of vulvovaginal candidiasis in patients with recurrent VVC. Ibrexafungerp was administered 300 milligrams BID one day a month for six months, compared against matching placebo. In the study, 65.4% of patients receiving ibrexafungerp achieved clinical success, defined as not having any recurrence at all, either culture-proven, presumed, or suspected, through week 24 compared to 53.1% of placebo-treated patients. This difference was statistically significant. The advantage of ibrexafungerp over placebo was sustained over the three-month follow-up period and remained statistically significant. With these results, we are now on target for a submission of a supplemental NDA in the United States in the second quarter of this year, and we anticipate receiving approval by the end of the year. These results reinforce the broad clinical utility of our novel antifungal in VVC and position ibrexafungerp as a much-needed treatment option for patients suffering from recurrent VVC. Additionally, the CANDLE study provided exciting news on the activity of the one-day ibrexafungerp treatment in patients who failed three days of fluconazole therapy. More than 70% of these fluconazole failure patients successfully achieved a significant reduction or elimination of signs and symptoms after the one-day course of ibrexafungerp. We also continue making progress in our development programs for invasive fungal diseases. The initiation of activities for our MARIO study, evaluating oral ibrexafungerp as a step down therapy in patients with invasive candidiasis, is on track, with plans to enroll the first patient in Q2. The innovative design of this study has generated significant interest from investigators, and we are currently evaluating a large pool of potential sites globally. We will be enrolling approximately 220 subjects, and we anticipate completion of this study in early 2024, with potential approval late that year. The significance of the unmet medical need in invasive candidiasis and ibrexafungerp's potential clinical benefits in this indication is highlighted by the Orphan Drug Designation that ibrexafungerp received last year from the European Medicines Agency. The same designation was previously granted by the U.S. FDA. We continue to enroll well in our FURI, CANDLE, and CARES studies. As you may recall, these studies focus on patients with severe fungal infections, including candidiasis, that are refractory to antifungal agents or in patients that cannot tolerate traditional antifungal treatments. We will share the latest interim data from these studies in Q2. Prior analyses of interim data from these studies have indicated the significant potential of ibrexafungerp as a salvage therapy option for very difficult-to-treat severe fungal infections. Our SCYNERGIA Phase 2 study, evaluating ibrexafungerp in combination with voriconazole for the treatment of invasive pulmonary aspergillosis, remains active. While enrollment was impacted by the COVID pandemic, we remain confident that enrollment will improve this year, allowing us to reach meaningful conclusions by year-end. The results from this study will guide decisions regarding potential next steps for development of ibrexafungerp for the treatment of invasive pulmonary aspergillosis. In Q4, the intravenous formulation of ibrexafungerp successfully completed single and multiple ascending doses in our Phase 1 study. We are very pleased to see that the liposomal formulation of ibrexafungerp was well tolerated and that target exposure was reached. We are currently scaling up manufacturing to enable subsequent clinical phases of development. Previously, we completed our registration trial for the recurrent VVC indication and are on track to file next quarter. Approval of the recurrent VVC indication will result in a broad VVC label, with the opportunity to help patients across a wider spectrum of the disease, including those suffering from incidental VVC episodes to those experiencing recurrent VVC that significantly affects their lives. I want to highlight that last year, we had a significant preclinical discovery when we reported that ibrexafungerp showed activity and synergistic efficacy with amphotericin B in a mouse model of mucormycosis. Alternative treatment options for this devastating disease with high mortality rates are desperately needed, and this early but significant development guides us toward evaluating the potential clinical activity of ibrexafungerp in this condition, which we aim to do within our FURI study. I will now turn the call over to Larry Hoffman, our Interim Chief Financial Officer.
Thank you, David. For the fourth quarter of 2021, BREXAFEMME generated $600,000 in net revenues, the first full quarter of sales for BREXAFEMME since its approval by the FDA in June 2021. As a reminder, we record revenue upon the sale of inventory to the wholesaler. The net revenue amount represents sales after discounts to insurers and includes any discounts from patient assistance programs like our copay card. We expect our net selling price to improve over the course of the year. Our cost of product revenue was $200,000 for the fourth quarter of 2021. R&D expense for the fourth quarter of 2021 decreased to $7.7 million from $10.2 million versus the comparable prior-year quarter. SG&A expense for the fourth quarter of 2021 increased to $15 million from $5.2 million versus the fourth quarter of 2020. The increase of $9.8 million was driven by a $7.2 million increase in commercial expenses related to the ongoing commercialization of BREXAFEMME. Total other expense was $6.9 million for the fourth quarter of 2021 compared to total other expense of $27.4 million for the fourth quarter of 2020. During the fourth quarters of 2021 and 2020, SCYNEXIS recognized non-cash losses of $5 million and $21.3 million, respectively, on the fair value adjustment of warrant liabilities and net cash losses of $600,000 and $4.4 million, respectively, on the fair value adjustment of derivative liabilities. The net loss for the fourth quarter of 2021 was $29.2 million or $1.05 per share, compared to a net loss of $42.7 million or $3.43 per share for the comparable prior-year quarter. Our full year 2021 financial results are as follows: BREXAFEMME generated net product revenue of $1.1 million for 2021. Earlier in 2021, we recognized $12.1 million in licensing revenue from Hansoh Pharma pursuant to our exclusive license agreement for ibrexafungerp in the Greater China region. Our cost of product revenue was $300,000 for 2021. R&D expense for 2021 decreased to $23.8 million from $36.5 million compared to the prior year. The decrease of $12.7 million or 34.9% was driven by decreases of $5.5 million in CMC costs, $5.2 million in clinical development expense, $900,000 in preclinical expense, $500,000 in regulatory, and $500,000 in other R&D-related programs. SG&A expense for 2021 increased to $49.9 million from $14.6 million compared to the prior period. This increase was driven by increases in commercial expense to support the ongoing commercialization of BREXAFEMME, as well as business development expense associated with the licensing agreement with Hansoh, which we entered into in February of 2021. Total other income was $24.9 million in 2021 versus total other expense of $7.2 million for the prior year. During 2021 and 2020, SCYNEXIS recognized a non-cash gain of $30.4 million and a non-cash loss of $5.2 million, respectively, on the fair value adjustment of its warrant liabilities and non-cash gains of $1.2 million and $2.3 million, respectively, on the fair value adjustment of its derivative liabilities. The net loss for 2021 was $32.9 million or $1.25 per share compared to a net loss of $55.2 million or $5.15 per share for the comparable prior year. As Marco mentioned at the start of the call, we have a strong cash runway into the second quarter of 2023. We have cash and cash equivalents of $104.5 million as of December 31, 2021, with an additional $9.7 million raised in Q1 2022 from the sale of New Jersey net operating losses for $4.7 million and the drawdown of $5 million from the Hercules SPV debt facility. Our partnership with Hansoh provides us with the potential for $112 million in future long-term development and commercial milestones. The strength of our patent protection and our ongoing business development efforts provides us with additional opportunities internationally. Thank you. Before we begin the Q&A, I will turn the call back over to Marco.
Thank you, Larry. Before we close the call for Q&A, I want to iterate a few key points. First, BREXAFEMME is an innovative product for the treatment of VVC, and we are making great strides with healthcare providers and patients. Moreover, we anticipate expanding the labeling to include prevention of recurrent VVC by the end of this year. Second, our R&D pipeline for hospital indications is extremely robust, and we expect to enroll the first patients in our MARIO trial in the second quarter. The objective of the MARIO trial is to obtain the indication of invasive candidiasis for ibrexafungerp. Third, we are in a very strong financial position with a cash balance of over $100 million and a runway into the second quarter of 2023. Operator, please open the floor for questions.
Thank you. At this time, we will be conducting a question-and-answer session. Our first question today is from Carvey Leung of Cantor. Please proceed with your question.
Hi. Good morning everyone. This is Carvey on for Louise. Thank you for taking our questions. So, you pointed out that you're at 40% of commercial insurance lives. We're interested in hearing more about the strategy for increasing the coverage. Also, what is your goal for coverage by the end of this year? Second question is also on commercial. It appears that the number of scripts per healthcare provider is more than 2.3 scripts for each HCP on average for Q4. We took the 3,700 divided by 1,600. How does this compare to other antifungal treatments in the start of the product life cycle? What would be the typical rate in VVC? And how do you expect the script activity to improve over time? Thank you so much again.
That's a lot of questions. Let's start with the coverage first. First of all, we are very pleased with what we achieved. Christine, any comments on our strategy to continue to get more coverage?
We will continue doing what we've been doing. We have had a lot of success there, Marco, as you know. The national account team knows their customers well. They work with the medical science liaisons to bring clinical data to the payers. The payers themselves have seen the need for another option, a non-azole option, and that is important to our payers. We'll continue to conduct pharmacy and therapeutic committee review meetings. We will keep going through the clinical data. Some of these payers are looking at their own claims data to see what's happening in their patient membership when they don't have an option beyond azole. This has become an important consideration because the payers need alternatives when azole doesn't work. So, I hope that helps.
Regarding your second question, this is something Christine can elaborate on, but I want to remind you that there hasn't been much previous experience because the last time something was approved for VVC was more than 25 years ago. So, there is not much for us to compare to. We are entering a field where we need to break some habits, as Christine mentioned. Christine, please.
Absolutely. It takes time, right? In any category, you can't just call on physicians once. You have to engage with them multiple times. It takes effort to change a habit and to remind them of what BREXAFEMME is. Looking at the rate of 2.6 or 2.7 TRx at this moment in time, that is a good indication because it suggests that we have effectively conveyed that BREXAFEMME is a treatment for these prescribers. They are starting to try it and finding other patients as well. So, it is a straight math game, but this is a rate we will monitor.
Thank you. Next question.
Thank you so much. Congrats on the quarter.
The next question is from Michael Higgins of Ladenburg Thalmann. Please proceed with your question.
Thanks. Congrats guys on the successes in 2021, really a transformational year for you. Just a couple of questions on the marketing approaches. You touched upon some of these in your comments and your Q&A so far as well. But any potential changes to the marketing strategy? And when you look at the prescribers in the back half of 2021, it seems that early adopters are targeting. Is that just some folks who understood and had some patient interactions that got them going? I'm trying to understand the efficiency of targeting so far. Thanks.
Hi, Michael. It's Christine. Thank you for the question. Yes, we have reviewed our targeting. The targeting is really strong. Early adopters are part of the criteria we looked at for these call targets. That was definitely the right approach. Yes, in January, some of those more productive offices were closed, so you see some softening, but as those offices open back up, our representatives can access them again. We expect to see a bounce back. There’s no change in our approach. We aim to hit our high-value call targets because they matter, and we are experiencing continued prescribing as they have good outcomes with their patients.
And if I can add regarding strategy, what Christine mentioned previously about the importance of the fungicidal activity of BREXAFEMME is significant. That attribute is critical for VVC, as it hasn't been available unfortunately in many previous treatments. This was confirmed by the feedback we received from the field.
Thanks, Marco. I appreciate that. One follow-up for you, Marco. How are discussions going with potentially European partners? What stage would you say your outreach and discussions are at this stage? Thanks.
As I’ve mentioned recently, after last year’s approval, we are in a better position from a regulatory aspect and have intensified our conversations and interactions in various regions. Our focus is on Europe, Japan, and Latin America. Discussions are ongoing, and we expect to have significant updates soon. The perception that this product has considerable value is growing, as we recently established a partnership with Hansoh for Greater China, which reflects this potential. Stay tuned.
Our next question is from Oren Livnat of H.C. Wainwright. Please proceed with your question.
Thanks guys. I have a couple of follow-ups. If I could just maybe follow up on the first question about prescriptions per writer. Are you seeing certain practices or multiple practices where they are writing a much higher volume, perhaps for a meaningful percentage of their VVC patients already? What factors are driving that? Is it experience, access, or something else? And how are you leveraging that?
Thank you, Oren. It's Christine. Yes, we absolutely have prescribers who are writing well above the 2.5 TRx per prescriber. We see physicians who have some information and knowledge from medical publications prior to our launch, and our promotion works well. When our reps show up consistently with convincing arguments that BREXAFEMME is a new tool that should be used for patients, we see reciprocal collaboration from prescribers. We will share best practices among our team and incorporate this feedback into speaker programs so everyone can benefit.
As you can imagine, when we launch, the low-hanging fruit tends to be those patients who have experienced past VVC and may not have been fully satisfied with fluconazole. These patients are very likely to benefit from a new mechanism of action, such as ibrexafungerp.
We focus on the non-azole characteristics and the complete resolution of signs and symptoms when discussing with doctors. This approach drives equitable patient outcomes, which helps prescribers see the value of using BREXAFEMME.
We have some exciting programs planned for early 2022 focused on patients, including extensive marketing campaigns to generate interest.
Thank you.
Thank you, Oren.
The next question comes from Steve Brozak of WBB. Please proceed with your question.
Good morning. Have you received any direct feedback from clinicians regarding patients who have experienced a complete change in terms of their signs and symptoms? How do you incorporate that feedback into future messaging and what do you expect going forward?
Thank you, Steve, for the question. It's important to state that recurrent VVC is not an approved indication. Therefore, we do not promote or support commercialization in that indication. Moreover, we have seen promising results in our CANDLE study, where patients who received three doses of fluconazole and still had unresolved symptoms saw greater than 70% improvement after one day of treatment with BREXAFEMME. This information suggests potential benefits for patients receiving multiple VVC treatments.
Thank you for that. How do you perceive the competitive landscape for ibrexafungerp in terms of potential publications and data review, especially regarding Candida glabrata?
Certainly, one of ibrexafungerp's key attributes is its activity against non-albicans Candida, including Candida glabrata. We expect more information to emerge as we expand the use of ibrexafungerp and evaluate response rates, particularly against these resistant species. Ongoing investigations will continue to highlight ibrexafungerp as a viable treatment option for patients not responding to traditional therapies.
Additionally, keep in mind that Candida glabrata and Candida krusei are significant not only for VVC but also for hospital infections. Our aim is to show that ibrexafungerp has the potential to address various severe fungal infections. Our goal remains to develop ibrexafungerp as a critical treatment in multiple indications.
Thanks, guys. I have a couple more. Regarding the iv formulation and timeline, can you share your thoughts?
For the IV formulation, we are pleased with the success of the new formulations, which have addressed previous tolerability concerns. We aim to progress this development with an abbreviated bridging strategy. While we haven't determined specific timelines, we are optimistic about the ongoing discussions with regulatory agencies to facilitate rapid progression into Phase 2 or accelerated Phase 2/3 clinical studies.
And regarding the SCYNERGIA study, do you foresee data release in the back half of 2022?
We remain confident about releasing data from the SCYNERGIA study in the second half of this year. Although we faced challenges previously, recent shifts in research focus at participating centers have allowed for better enrollment. We believe we will soon be in a position to share meaningful outcomes.
Thank you, guys.
Operator, we will take one more question.
Regarding the CANDLE study, can we expect further insights on efficacy, especially concerning recurrence rates over the six-month follow-up?
You will see further data in summer medical meetings, not on this call. We will announce additional efficacy data from the CANDLE study during these medical meetings, as we aim to share as much information as possible with you in a timely manner.
Thank you.
Thank you, Steve. I appreciate the questions. Operator, we are concluding today’s call. Thank you all for your continued interest and support.
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.