Earnings Call Transcript - SCYX Q3 2022

Operator, Operator

Good morning, and welcome to the SCYNEXIS Third Quarter 2022 Earnings Conference Call. 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.

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 other 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.

Dr. Marco Taglietti, President and CEO

Thank you, Debbie. Good morning, everyone. 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 concern. 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. 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 infections even when they are refractory to currently available treatments. Moreover, WHO's call for action further validates our corporate strategy to refocus on life-threatening invasive fungal infections while monetizing BREXAFEMME in vulvovaginal candidiasis. At SCYNEXIS, we 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 these 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 in 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. While 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 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 patient access to our innovative treatment. On the corporate side, we closed the third quarter 2022 with more than $96 million in cash. 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 to BREXAFEMME performance in vaginal 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 higher increase of 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 prescriptions 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 due to our decision to end the in-person promotion. After signing our contract with a major national pharmacy benefit manager, PBM, in October, we successfully garnered BREXAFEMME coverage for 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?

Dr. David Angulo, Chief Medical Officer

Thank you, Marco. Before I get to 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, 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 fumigatus, histoplasma and Mucorales. Ibrexafungerp's spectrum of activity is very well-suited to address many of these critical needs and our 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 clinically relevant species. It has been very encouraging to see WHO underscoring the need for further development in these areas and how well our development plan fits within their critical and high-priority list. We stand ready at the right place and at 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 for 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 will soon begin study closure activities to enable completion of the follow-up of all the cases by the 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 timeline. 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 than 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 expected in early 2024. As noted 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. We remain on track and confident in the positive outcome for BREXAFEMME and for patients. After this approval, we plan to communicate with prescribers regarding this new indication and key information in the updated label. Thank you. I will now turn the call over to Ivor Macleod, our Chief Financial Officer.

Ivor Macleod, 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 three months ended September 30th, 2022, was 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 back to Dr. Marco Taglietti.

Dr. Marco Taglietti, President and CEO

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 the 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 for recurrent vulvovaginal candidiasis of November 30th, about three weeks from now and everything is in line with our expectations to date. We plan to provide updates on 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 sales in the U.S. alone, but it will also provide significant revenues until at least 2025. Finally, with our recent corporate actions, we have over $96 million in cash, and we have extended our cash runway into the second quarter of 2024. This runway does not include any upside from ongoing potential business development deals. Operator, please open the floor for questions.

Operator, Operator

Thank you. Our first question comes from Louise Chen with Cantor.

Louise Chen, Analyst

First question, I have for you is, when do you think we will see an out-licensing and/or partnership 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 have 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.

Dr. Marco Taglietti, President and CEO

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

Dr. David Angulo, Chief Medical Officer

Sure, Marco. Louise, we believe that the product Ibrexafungerp is well differentiated to be able to address very significant unmet needs. As you can see here, this is being recognized again and again for what Ibrexafungerp's potential can achieve. So, we believe that with the right development program that we have set up, focusing on 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 we will be very well positioned to have a predominant place in the market and treatment for these patients that have very limited treatment options. We must also remember that the antifungal space is unique because there are not many players. There are not many treatment options available. Once patients become resistant to one or two treatments or are intolerant to one or two, their options are extraordinarily limited. This provides us with a unique opportunity to really maximize the potential value of Ibrexafungerp in the commercial market in the hospital setting. I hope that addresses your question.

Louise Chen, Analyst

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 wind things down, how should we think about OpEx in the fourth quarter and then in 2023?

Ivor Macleod, Chief Financial Officer

As you have seen, we have always had a positive trend in the last few quarters. What we are saying is that at this point, we tend to be conservative. Given the fact that we are stopping active promotion in the field with the termination of our Amplity partnership, we don’t expect significant future growth. However, we are continuing to have sales of the product, and we will continue to make the product available to patients because we want to ensure that patients who need an alternative to fluconazole, which has been the only product approved almost 30 years ago, have access to it. In addition, we have secured new coverage from a new PBM, adding another 30 million commercially insured lives. So, while we may be stopping active promotion, this may be balanced by the fact that there are more patients available. We will see at the end of the quarter how we performed. Regarding our OpEx, we have not provided specific guidance, but since we are refocusing our efforts on R&D for the development of the product in invasive fungal infections, you may want to look back at our expenses in 2019 or 2020 when we were pre-commercial; this may indicate the type of operational expenses we expect with the new SCYNEXIS refocused on R&D development. Does that address your question?

Louise Chen, Analyst

Yes.

Operator, Operator

Next question comes from Michael Higgins with Ladenburg Thalmann.

Michael Higgins, Analyst

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 on the priority pathogen list improve the chances for nondilutive funding or global partnerships? Anything you can mention in regards there?

Dr. David Angulo, Chief Medical Officer

This is David, Michael. I want to clarify, certainly the WHO list identifies the priorities, the fungal diseases that they are really asking policymakers and research and development organizations to focus on because they consider them extraordinarily important and can have a very significant impact on public health. What we're showing here to you is that we have almost a perfect fit regarding our development program's focus versus what they have considered to be the priority. This reinforces the vision that we have been implementing for the last two years in focusing on difficult-to-treat and unmet medical needs in the fungal space. We believe this recognition will translate into favorable conditions towards commercializing a product like ours that offers a broader spectrum of activity while addressing globally validated needs. We see this as a positive signal that we are on the right path.

Ivor Macleod, Chief Financial Officer

To add to that, regarding nondilutive funding, if you consider how BARDA has been providing grants in the field of anti-infectives, their focus has primarily been on antibacterial products. However, with the WHO making a strong case that fungal infections are critical and are a global threat just as much as bacterial infections, that could change their approach. This recognition could also introduce new legislations like the PASTEUR Act or the DISARM Act, because many legislators, despite my discussions in Washington regarding the serious nature of fungal infections, still think they are a minor threat. However, we are talking about invasive infections leading to significantly high mortality rates, and the WHO report emphasizes how critical these infections are.

Michael Higgins, Analyst

That's very helpful, guys. Appreciate it. If I can turn our attention to the MARIO study, 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 and if that's increased and how enrollment is going so far?

Dr. David Angulo, Chief Medical Officer

Yes, certainly. The number of sites that we have planned has not changed. We are in the process of starting the study. As you know, we typically don’t provide updates 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, etc., is as we have been expecting. Everything seems to be on track for us really being able to complete the study enrollment as we estimate right now by the end of next year. So, at this point, yes, we have very intense activities happening. What happens at this stage is that you go out to all regulatory agencies, open centers, and we have been receiving positive responses from that perspective. So, approvals are coming in, and we are in the process of really setting up all the sites, with several sites already open.

Michael Higgins, Analyst

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?

Dr. David Angulo, Chief Medical Officer

We didn't require any late cycle or specific conversation with the FDA for this particular supplemental NDA as they did not consider it necessary. We are just in the normal stages of this process, receiving their comments, etc., within our label. All the signs are currently positive, and we fully expect an approval on the PDUFA date.

Operator, Operator

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

Shubhendu Sen Roy, Analyst

Does the increased enrollment in the FURI study 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?

Dr. Marco Taglietti, President and CEO

Thank you for the question. Certainly, as you can imagine, with a program that has been running for several years, you need to notify the investigators with sufficient advance notice when you're planning to stop enrollment in one of your trials. This trial has been well received, and I can tell you the majority of our investigators are very disappointed that we're stopping enrollment, as many of them see the potential of Ibrexafungerp as providing an option when other products have failed. While we had anticipated completing the study towards the end of this year, we communicated with investigators to maintain engagement and keep motivation. The incremental cost is minimal because the costs associated with a clinical trial are more related to infrastructure that needs to be in place. We felt it was the right decision to enable continued involvement from the investigators. Regarding your second question, the data from these patients will be included in our final analysis along with CARES subjects, supporting our NDA submission.

Dr. David Angulo, Chief Medical Officer

Regarding the FURI study, the protocol allows for treatment of mold infections and provides options for difficult-to-treat conditions. Our expectation is that the majority of patients enrolled will have experience with Candida infections, representing a significant opportunity for Ibrexafungerp. Once we have final results from the study, we intend to present all relevant data, which will be extremely valuable as alternatives for physicians facing difficult infections.

Shubhendu Sen Roy, Analyst

That's very helpful. Finally, I may have missed it, but what is the timeline for the SCYNERGIA study?

Dr. David Angulo, Chief Medical Officer

We are planning to close enrollment for the SCYNERGIA study within this year and anticipate reporting data by the first half of next year.

Operator, Operator

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.

Dr. Marco Taglietti, President and CEO

Thank you very much, operator. I would like to make three simple points. First, we are proud to have an asset like Ibrexafungerp that will make a significant difference for patients with invasive fungal infections. Second, we have the expertise and resources to achieve our goals. Third, we believe we are on a path that will make SCYNEXIS successful and be able to not only help patients but also reward our shareholders. Thank you very much for your attention and looking forward to continuing to work with all of you. Thank you. Operator, you can close the conference call.

Operator, Operator

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