Earnings Call Transcript - SCYX Q3 2021

Operator, Operator

Greetings, and welcome to the SCYNEXIS' Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Debbie Etchison, Executive Director of Communications. Thank you. You may begin.

Debbie Etchison, Executive Director of Communications

Hello everyone, and welcome to today's conference call to discuss our third quarter 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 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, November 10, 2021. 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 today on the call are, SCYNEXIS President and CEO, Dr. Marco Taglietti; Chief Commercial Officer, Christine Coyne; Chief Medical Officer, Dr. David Angulo; and Chief Financial Officer, Eric Francois. Following our prepared remarks, we'll open the call to your questions. Now, I will turn the call over to Dr. Marco Taglietti.

Marco Taglietti, CEO

Thank you, Debbie. Good morning, everyone, and thank you for joining us today for our third quarter 2021 earnings investor call. This is our inaugural earnings call with investors since the FDA approval in June and after the launch of BREXAFEMME. For all of you who have been following us in the last few years, you witnessed how we have been true to our word, commitments, and timelines, to turn our vision for ibrexafungerp into reality. Our vision for ibrexafungerp has always been to build a global antifungal franchise for both community and hospital infections by leveraging the versatility and potency of ibrexafungerp, and to extract the full value of this unique systemic antifungal agent for the benefit of patients, and for the reward of our shareholders. We have 14 years of exclusivity until 2035 to build a solid, long-lasting antifungal franchise, to create a stream of approvals over the years to continue to expand its use. Today, you will hear about the significant progress we have made so far in achieving our vision for ibrexafungerp. First, you will hear from Christine, our Chief Commercial Officer, who will provide an overview of the market, our commercial activities, and the promising early trends of the launch of BREXAFEMME for the treatment of vulvovaginal candidiasis. We are excited about bringing innovation from a new antifungal class to the millions of women suffering from this symptomatic condition, who have been underserved for so long. We are proud to bring to patients the first new antifungal class in more than 20 years. Then, you will hear from David, our Chief Medical Officer, about our significant progress in research and development. We are finishing the Phase 3 CANDLE study for the prevention of recurrent VVC which, assuming positive data, may result in a second approval for ibrexafungerp in the second half of next year. David will also give you an update about our liposomal intravenous formulation. We successfully completed the Phase 1 study, opening new avenues of development for hospital invasive fungal infections, on top of our ongoing hospital programs. Finally, all our commercial and R&D activities are built on a solid financial foundation. Eric, our Chief Financial Officer, will give you a brief financial update. Now, I would like to turn the call over to Christine Coyne. Christine?

Christine Coyne, Chief Commercial Officer

Thank you, Marco, and good morning. We have several exciting commercial updates to share with you today. Following the FDA approval of BREXAFEMME in June, our team hastened the launch efforts to bring this truly innovative product to market, and to the millions of women who suffer daily in the U.S. Vaginal yeast infections are extremely common, with about three out of four women experiencing them at least once in their lifetime. Despite the high prevalence of VVC, there have been limited advancements in this area of women's health for decades, until now. BREXAFEMME is a truly novel first-in-class antifungal with a mechanism of action designed to eliminate the yeast causing the infection, including azole-resistant strains. It brings long-awaited innovation to the market, and physician feedback has been excellent. Healthcare providers confirm that BREXAFEMME is meaningfully different from the outdated tools they have been using for the last two decades. Physicians are excited about the novel mechanism of BREXAFEMME and its fungicidal properties. They are delighted that BREXAFEMME is a non-azole oral one-day dosing alternative for patients. Physicians aren't just expressing great things; they are changing their long-held habits and prescribing BREXAFEMME for their patients. From the beginning of launch, we have closely monitored physicians' motivation to prescribe. These early indicators of motivation have converted to action. These indicators are quite strong and encouraging. Now, let me provide more details on the progress we've made since our launch this summer. First, we established the foundational building blocks that set the stage for commercial success. Together with Amplity Health, our contract commercial partner, we have rapidly hired, trained, and deployed high-performing sales representatives and regional sales leaders post-approval. The SCYNEXIS and Amplity collaborative partnership has allowed us to efficiently leverage Amplity's deep expertise and experience to achieve our strategic vision for BREXAFEMME. Amplity is a great partner; they realize the importance of this launch, and what it means to SCYNEXIS, physicians, and patients. At this time, we are continuing to execute our launch plan, which includes our sales teams consistently promoting BREXAFEMME to their physician targets. As we discussed previously, the U.S. VVC prescription market is nicely concentrated, making for a strategic and executable approach, especially early in the launch. Effectiveness of our efforts is key at this juncture. My expectation is that we continue expanding our prescriber base in both breadth and depth, and the team is focused on just that. All indicators confirm that our efforts are working. To remind everyone on the call about the history of our launch process, by August, the product had been manufactured, packaged, and distributed to pharmacies. By then, our sales force had been hired and trained, and the commercial launch was formally announced in September. Sales started to come in as soon as the drug was available in pharmacies in August, which highlights the pent-up demand for an alternative to azoles like BREXAFEMME. We started achieving real significant traction in September, and we continue to see an upward trajectory into October. According to IQVIA data, there were 1,006 total prescriptions for BREXAFEMME in the first partial quarter of the launch, which aligns with our expectations. As physician awareness and experience increases, so does their adoption of BREXAFEMME. We see a consistent week-over-week growth rate of prescriptions, from early August to the end of September, with nearly 700 prescriptions in September alone. There is a similar trajectory of growing positive momentum continuing into the fourth quarter, with IQVIA showing 1,100 BREXAFEMME prescriptions in October alone, which is very encouraging indeed. Prescriber feedback remains aligned with what we learned in our pre-launch research, having a new non-azole option with a novel mechanism of action that has shown activity against resistant strains of Candida while rapidly eliminating signs and symptoms of the infection continues to be important to physicians and patients. Additionally, the ability to provide a one-day therapy is also extremely compelling. Healthcare providers are motivated to prescribe BREXAFEMME, and we are starting to see repeat prescribing as physicians broaden their practical experience. As our sales teams continue to generate awareness and utilization of BREXAFEMME, our national account directors are busy continuing their work with commercial payers. We have presented to numerous payers, discussed contracts, and are in the midst of negotiating agreements with key payers. As of today, coverage of BREXAFEMME has grown to over 30% of commercial lives and it’s still growing. We are actively engaged in ongoing contract negotiations with additional payers representing the majority of commercial patients. Progress with payers has yielded not only Scheduled P and T pharmacy and therapeutic reviews, but also contract discussions and negotiations. I'm delighted with the efforts and results of the payer national account teams. They have strong customer relationships and deep tenure in this space. Based on all of this, we are on pace to meet our goal of Tier 3 coverage for non-preferred status. We will begin educating and activating patients early next year. Pre-launch research showed high patient motivation based on the strong attributes of BREXAFEMME. Similar to the positive physician reception we have been experiencing, we expect consistent response from patients. The marketing team is working hard to deliver compelling patient education materials in 2022. It's incredibly fulfilling to bring a new product to market that addresses an unmet need, where there has not been a new development in a long time, and where there has been high frustration about the lack of scientific advancement in this area until now. The response we are receiving from the medical community is encouraging and extremely satisfying. I look forward to reporting on the team's continued progress in 2022. Thank you. And I will now turn the call over to Dr. David Angulo, our Chief Medical Officer. David?

David Angulo, Chief Medical Officer

Thank you, Christine. After hearing these positive trends regarding BREXAFEMME commercialization activities, I will be sharing with you some updates on development programs. Please keep in mind that the programs I will be covering in this section are evaluating indications that are not for the approval of BREXAFEMME labeling but potential indications for BREXAFEMME and their clinical development. With a vision to maximize the potential for our novel agent to become a blockbuster antifungal, addressing multiple unmet needs in the market, we have made significant progress on several development programs for BREXAFEMME. First, let me start with a quick update on our vulvovaginal candidiasis or VVC program. After securing the approval of BREXAFEMME for the treatment of VVC, with our two pivotal trials, we continue progressing our VVC development activities with our ongoing CANDLE Phase 3 trial. CANDLE is intended to support an indication for the prevention of recurrence in patients with recurrent VVC. As you may recall, we announced the completion of the study enrollment, and I'm happy to report that we are on target for top line results to be available in the second quarter of next year, followed by a supplemental NDA submission shortly after, with potential FDA approval of a new indication by the end of 2022, after an anticipated six months expedited review by the FDA. Moving into the hospital-based indications, we are quite busy, and we have some great news to share. The first exciting update relates to the intravenous formulation of ibrexafungerp. From a strategic drug development standpoint, anti-infective treatments benefit from having both an IV and an oral formulation for initial inpatient hospital IV treatment, followed by a shift to oral once the patient is discharged from the hospital to continue therapy at home. We completed dosing in our Phase 1 study that included multiple dose panels with up to seven days of dosing. The tolerability of this new liposomal formulation was substantially better than previous formulations tested. There were no serious adverse events, and the most common adverse events were mild redness, swelling, and/or pain at the site of infusion. The pharmacokinetic analysis is ongoing, and we are in the process of outlining the subsequent stages of our development plans for the intravenous formulation. We believe that these study results could be game-changing for our company, as an IV formulation may significantly expand the potential opportunity for ibrexafungerp and increase strategic interest in the product. Our FURI and CARES programs aim to provide treatment options for fungal infections where there are limited or no other treatment options and have continued to progress well. These studies will continue operating during the next year, gathering additional information about the potential clinical utility of ibrexafungerp in difficult-to-treat invasive fungal infections. Previous interim looks at the data have supported the potential of ibrexafungerp to be a much-needed salvage treatment alternative for invasive fungal diseases. As we expand our data and experience with the use of ibrexafungerp in the hospital setting, we continue to advance our discussions with regulatory agencies regarding the optimal regulatory path and data needed to support a salvage therapy indication. Our SCYNERGIA study evaluating oral ibrexafungerp in combination with voriconazole for the treatment of invasive pulmonary aspergillosis has not enrolled as rapidly as initially projected. The prioritization of hospital resources toward addressing the COVID-19 pandemic has impacted many institutions' ability to focus on screening and enrolling patients into clinical trials, including SCYNERGIA. Our investigators are telling us that now, with a decrease in the number of COVID-19 hospitalizations in some regions, they anticipate having a better opportunity to focus on enrolling patients for the study. We have made a decision to extend the enrollment timelines into 2022. Lastly, I want to share with you an exciting preclinical development for ibrexafungerp. Mucormycosis is a devastating fungal infection with very high mortality rates, over 50% in some cases, even with the best currently available antifungal therapy. Mucormycosis can become a public health threat under the right conditions. As an example, over 47,000 cases of this infection have been associated with the COVID-19 pandemic in India. In an NIH-sponsored preclinical study conducted by Dr. Ashraf Ibrahim, a well-known expert in the field, substantial improvement in survival was observed in a mouse model of mucormycosis when ibrexafungerp was administered in combination with liposomal amphotericin B, one of the key standard-of-care options for this infection. These findings suggest that co-administration of these drugs may be synergistic for treating this infection. This is a very encouraging development. Aiming to better elucidate the significance of this potential clinical benefit, we now allow combination therapy with ibrexafungerp as a treatment option for mucormycosis in our FURI study. Finally, we will be hosting a hospital pipeline update investor call on December 6 to provide more details about our development progress and plans for the hospital indications, please mark your calendars. And now let me turn the call over to Eric Francois, Chief Financial Officer.

Eric Francois, Chief Financial Officer

Thank you, David. Let me first start my presentation by highlighting a few numbers on the revenue side. This is our first quarter ever to report product sales. We are very proud of the progress and excited about it. As you heard from Christine, the launch is proceeding well. This was a partial quarter for us, and we ended the quarter strong, already seeing indications of a strong positive trajectory of sales in the fourth quarter. For the third quarter of 2021, our first quarter post-launch, BREXAFEMME generated $516,000 in net sales. As a reminder, we are recording sales as soon as we sell inventory to wholesalers. At launch, we worked with wholesalers to stock more units at relevant pharmacy networks to ensure drug availability. We expect to have approximately three weeks of inventory on hand at the wholesalers over time. The net sales number we will be reporting represents sales net of all discounts to insurers, and also includes any impact from patient assistance programs like our co-pay card, which is the main impact on Q3 net sales given the early commercial launch. Please refer to our press release issued today for detailed breakouts of expense line items. Lastly, cash and cash equivalents totaled $100.1 million on September 30, 2021, compared to $93 million in cash and cash equivalents on December 31, 2020. Based upon our existing operating plan, we believe that our existing cash and cash equivalents, the sale of our New Jersey NOLs, and the anticipated sales of BREXAFEMME will enable us to fund our operating requirements into 2023. We did not draw down additional debt from our remaining $30 million Hercules and SVB term loan facility in the third quarter, but we'll have access to additional capital in 2022 pending positive Phase 3 data in our CANDLE study for recurrent VVC and achieving key thresholds. As we are still early in the commercial launch, we are not providing revenue or expense guidance. I will turn the call back over to Marco.

Marco Taglietti, CEO

Thank you, Eric. Before we begin the Q&A, I want to reiterate a few key points. First, our vision for ibrexafungerp is becoming a reality. Second, following approval in June, we have been aggressively executing our commercial launch plans with very positive trends, as you have heard. Third, our R&D pipeline is extremely robust, with the hospital programs moving to the forefront now. Stay tuned on December 6, at 10:00 AM Eastern Time when we will provide our plans and timelines for the hospital program. Fourth, we are in a very strong financial position, with a cash runway into 2023. Lastly, I want to take a moment to thank Eric Francois, our Chief Financial Officer, for his service over the last six years. As we announced, he is leaving the company to pursue a career opportunity in banking. Eric played a key role in transforming SCYNEXIS into a fully integrated commercial stage company, and he leaves us well-positioned for success. We wish him the best in his next endeavor. Thank you, Eric. An interim CFO is in place, Larry Hoffman of Danforth Advisors, for a smooth transition, and you will meet him soon. We are actively recruiting for a new CFO. Operator, please open the floor for questions.

Operator, Operator

Thank you. We will now be conducting a question-and-answer session. Our first question comes from the line of Louise Chen with Cantor Fitzgerald. Please proceed with your question.

Unidentified Analyst, Analyst

Hi, this is Wayne Lou Alford, and congrats on all the progress. Thank you for taking our questions. We have two, if we may. The first is on your partnership with Hansoh Pharma in China. Could you provide us some updates on the progress? What is your plan on commercializing BREXAFEMME in other regions of the world? Our second question is about VVC; as VVC can be viewed as the first step for SCYNEXIS, and now you're commercialized, what are the major catalysts we should be looking out for in the next 12 to 18 months? Thank you.

Marco Taglietti, CEO

Thank you for the questions. Let me start, first of all, with the partnership with Hansoh. It has been a great partnership. As you know, Hansoh is one of the top five largest public biotech companies in China. We licensed our product at the beginning of the year. They filed the IND for vulvovaginal candidiasis in China, and they are moving very aggressively with the development of the product to ensure approval of the product in China. We expect Hansoh to continue to progress rapidly in the VVC indication but also to continue progressing with the hospital indication. As you all know, we have worldwide rights for the product. It is our plan to monetize this product and to have ibrexafungerp commercialized outside of the U.S. Following approval in June of the product and the validation of its value outside of the U.S. with the partnership with Hansoh, our conversations with potential partners outside of the U.S. have intensified. At this point, we cannot provide any additional information other than to say that we are moving forward to ensure that ibrexafungerp becomes available to all patients globally. Regarding VVC, it is indeed the first step, the first indication that we see for the product. This product has great versatility; it can be used for community-type infections that are difficult to treat, like VVC, but it can also be used for hospital indications where there are infections of the bloodstream or internal organs with high mortality rates. We are progressing all these indications in parallel. Future catalysts, next year, we expect a second approval for the prevention of recurrence of VVC for ibrexafungerp, which will allow us to bring an additional indication to our current group of targeted doctors. We also expect to move forward with the hospital indication. As mentioned, stay tuned on December 6 at 10:00 AM Eastern Time; we will have a teleconference to share our plans and timelines for the hospital indications. Thank you.

Unidentified Analyst, Analyst

Thank you.

Michael Higgins, Analyst

Thanks guys. Appreciate the opportunity to take some questions. And let me say, Eric, thank you. You'll be missed around here. A couple of questions on the launch, if I could, with Christine. How is the commercial coverage coming along versus internal expectations? What do you see happening in the next few months? I've got a handful of them here; I'll try to keep this tight so we can talk later maybe. So, on a related note, how is Medicaid coverage tracking along? Also, are you targeting nurses and pharmacists, and if so, in what ways? Thanks.

Christine Coyne, Chief Commercial Officer

Thank you for the questions, Michael. Commercial coverage is progressing well. I think our national account directors are doing a great job in getting to the payer customers and having the necessary conversations. They’ve gained some great traction throughout 2021. We're currently tracking over 30% of commercial covered lives, and I expect that trend to continue. Important coverage should come by the end of 2021, and we’ll pick up further coverage in 2022. As for Medicaid, we’re participating in ongoing state Medicaid reviews, with some states reaching out proactively to us. Our national account directors and medical science liaisons are taking those meetings and we will continue monitoring that progress. Regarding nurses and pharmacists, yes, we are targeting them as part of a total office call, which includes the pharmacy staff. Our representatives have had great success with not only physicians but their nursing staff, while also connecting back to pharmacies to ensure both the physician and patient have the best experience with BREXAFEMME possible.

Michael Higgins, Analyst

That's great. Just one quick follow-up on that, and I'll jump back in the queue. I've got some other ones on the IV and the other studies. But just one here on the launch—any feedback on the GI, the nausea—how is it being managed with food? What are you hearing from your reps? Thanks.

Christine Coyne, Chief Commercial Officer

Yes, the reaction from the physicians is exactly what we saw in our research. They're excited to have this alternative to azole. The reception on the fungicidal ability, the fact that it can kill the yeast infection in one day with a different mechanism of action, has resulted in very strong reception from our physician targets.

Marco Taglietti, CEO

As you may remember, Michael, in our clinical trials, the adverse events were mild and short-lasting. We don’t see this reflected in the type of experience that patients have.

Michael Higgins, Analyst

Okay, so feedback is minimal on the GI then?

Marco Taglietti, CEO

That's correct.

Kumaraguru Raja, Analyst

Thanks for taking my questions, and congratulations on the first quarter of product sales. First, with regard to the pent-up demand, how much of that has been satisfied? Regarding the physicians that are being targeted, what percentage has been targeted, and where are these prescriptions coming from? What percentage of physicians is it coming from, and what are you seeing in terms of some physicians prescribing more than others?

Christine Coyne, Chief Commercial Officer

Yes, the pent-up demand has been satisfied to a significant degree. We stocked pharmacies around our target physicians, so once they started prescribing BREXAFEMME, their patients could get the product. Some organic sales occurred before the reps actively reached out to physicians. We are targeting doctors who represent around 90% of the VVC prescription market. As we are seeing prescribers broadening their clinical experience—using BREXAFEMME for more patients—it reflects both the effectiveness of our outreach and the positive experiences of our prescribers. This brings us significant confidence in the trajectory of our sales.

Kumaraguru Raja, Analyst

Thanks so much.

Nathan Weinstein, Analyst

Hey, good morning, Marco and Eric, thanks for taking my question, and a big thank you to Eric for being a great CFO and a great person to work with. Could you speak to the role that patients themselves can play in advocating for BREXAFEMME via word of mouth marketing? Are there any big communities online where patients tend to congregate and share information?

Christine Coyne, Chief Commercial Officer

Yes, thank you for the question. Patients are big advocates for their own health. The most important thing in the early stages of launch is to get the prescriber—the one who has the prescribing ability—to understand that BREXAFEMME exists, such that when a patient walks in asking for it, the doctor recognizes the product. We do see patients having conversations with their physicians. The marketing team is working to educate patients properly for 2022, to create productive situations for patients going into doctors’ offices. This can elevate the effectiveness of patient advocacy.

Michael Higgins, Analyst

Thanks, guys, for taking the second round here. Eric, are there any inventory numbers in the Q3 results? What should we expect as the delta on the Q4 pull-through?

Eric Francois, Chief Financial Officer

Yes, we had a higher number at launch to ensure that all relevant pharmacy networks had drug availability over time. We expect to keep about three weeks of inventory on hand. As we learn more and gather historical data, we will adjust accordingly.

Michael Higgins, Analyst

Of the 50,000 or 60,000 U.S. pharmacies, how many are you stocked in with at least one bottle?

Eric Francois, Chief Financial Officer

We stocked almost 50% of them early in the launch, and we’re seeing reordering happening now.

Michael Higgins, Analyst

Sounds good. On the IV, can you provide any updates on injection site assessments given a history here with developing an IV ibrexafungerp?

David Angulo, Chief Medical Officer

During this study, we carefully addressed and assessed the tolerability of the intravenous formulation. The tolerability of this liposomal formulation was substantially better than previous formulations tested. We did not observe adverse events preventing dosing from continuing, which is extraordinarily encouraging.

Michael Higgins, Analyst

Are you planning to run another Phase 1 possibly?

David Angulo, Chief Medical Officer

At this point, we are finalizing the analysis of our pharmacokinetic data. We are aiming to provide a detailed outline of the next stages of our development program for this product in December. Phase 2 is likely the next stage, but we would like to confirm it then.

Michael Higgins, Analyst

When do you expect positive data from CANDLE? What impact do you think it will have on sales?

Marco Taglietti, CEO

We expect a second approval for the prevention of recurrence of VVC for ibrexafungerp next year, which means an opportunity for us to target a new group of patients. We anticipate this will contribute slightly to our bottom line; additional 10-15% is what we have been expecting, as the innovation here is really bringing a product that can clear the infection effectively.

Michael Higgins, Analyst

That’s super helpful. Do you have any plans to adjust SCYNERGIA enrollment criteria due to the increasing prevalence of aspergillosis among COVID patients?

David Angulo, Chief Medical Officer

The COVID-19 pandemic has impacted institutions' ability to focus on research and has affected our SCYNERGIA trial. However, our protocol allows the inclusion of these patients. We must be cautious, as we need to analyze outcomes carefully to assess treatment effects versus underlying condition outcomes.

Michael Higgins, Analyst

Is there any potential for updates on FURI before Q1 given the likely increased pace of enrollment?

David Angulo, Chief Medical Officer

We are excited about the data from these studies. We haven’t decided when we will announce the next round of results from this study, but we will update you when that decision is made.

Michael Higgins, Analyst

Any plans to adjust the FURI protocol given the mucormycosis preclinical evidence?

Marco Taglietti, CEO

The FURI protocol allows enrollment of patients with various fungal infections, including mucormycosis. We will notify investigators that this is a consideration now based on the new preclinical evidence.

Michael Higgins, Analyst

Interesting. Very helpful. Thanks, guys.

Marco Taglietti, CEO

Thank you to everyone for joining our conference. We are excited to bring a new treatment for VVC to patients. The role of ibrexafungerp for treating fungal infections will become increasingly relevant as we gain new indications. At SCYNEXIS, we have the expertise, tools, and resources to make ibrexafungerp a success. Thank you for listening.

Operator, Operator

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.