SCYNEXIS, Inc. (SCYX) Earnings Call Transcript & Summary

Greetings, and welcome to the SCYNEXIS Corporate Update. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Debbie Etchison, Executive Director, Communications and Investor Relations for SCYNEXIS. Thank you. You may begin.

Hello, everyone, and welcome to today's conference call to discuss corporate strategy 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, October 20, 2022. SCYNEXIS undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they're made. The information on today's call is not intended for promotional purposes and not sufficient for prescribing decisions. 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 of SCYNEXIS.

Thank you very much, Debbie. Good morning, everyone. [Foreign Language]. Thank you for joining us today for some important and exciting updates about our corporate strategy. On this call, I plan to unpack, as they say, all the news of our press release, news that is the ultimate result of a significant amount of extensive corporate analysis, careful deliberation and internal discussions with our Board. First, I'm pleased to share the new strategic direction of SCYNEXIS. We will refocus our resources to the clinical development of ibrexafungerp for severe hospital-based indications in which higher long-term returns are expected. We have shared in the past the promising data generated in refractory fungal infections from the FURI and CARES studies, including infection due to Candida auris, one of the top CDC urgent threat. And also, we started the randomized Phase III program in invasive candidiasis, the so-called MARIO trial, with the anticipated first approval in the hospital setting in 2024. We believe, and I personally believe as an infectious disease specialist, that ibrexafungerp will save lives of patients with severe fungal infection. And it has an enormous market potential for the treatment of serious and often deadly invasive fungal infections. So we believe that it is a strategic imperative for SCYNEXIS to focus all our resources on the development of both the oral and liposomal intravenous formulation in this life-threatening indications. What about ibrexafungerp in vaginalis infections? BREXAFEMME, the trade name of ibrexafungerp in yeast infections, remains an important innovation in women's health for the treatment of the disease. No questions about it. We launched BREXAFEMME 1 year ago, and it continues to have an upward sales trajectory and positive feedback from health care providers and patients with a significant expansion of access, including recent coverage with a major national PBM for an additional 21 million commercially insured lives. However, we believe that there is more that can be done to reach BREXAFEMME's full market potential. We believe that achieving the significant market potential that we know is attainable with BREXAFEMME in VVC. It requires an organization with more resources, more women's health experience and a larger commercial footprint than our organization can provide. Therefore, as we continue the development of ibrexafungerp and we focused the development in hospital indication, we have made with difficult but appropriate decision to out-license the commercial U.S. rights of BREXAFEMME in VVC. And we are actively pursuing a commercialization partner with the breadth of capabilities, expertise and a synergistic portfolio of commercialized products to maximize the value of BREXAFEMME in the U.S. Also remember, our supplemental NDA filing for recurrent VVC, which is on track with the PDUFA decision date of November 30, 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 expect that this anticipated second indication would be extremely attractive to our commercialization partner and will help expand patients' access to our innovative treatment. While we are in the process of out-licensing BREXAFEMME, we will continue to keep this important product on the market in the U.S. and to make it available for many patients who can benefit from its proven efficacy. But we will minimize the resources allocated to the active promotion of BREXAFEMME in order to redirect our cash to the development of the hospital indications. As part of this change, SCYNEXIS will conclude the relationship with its contracted commercial partners, Amplity Health, as of November 30. Let me take also the opportunity to thank the Amplity team and its management for all their efforts and support during the launch of BREXAFEMME. In addition to terminate the Amplity agreement, we will also reduce our workforce to better fit our new strategy. These are always difficult decisions, as you know. But the restructured SCYNEXIS organization will be a nimbler, scientifically focused company, better suited to pursue our new strategy and our mission. Together, these changes will result in a significant reduction of our expenses, extending the runway of our current cash into the second quarter of 2024. And now let me share with you several changes to the SCYNEXIS executive leadership team. Ivor Macleod will join SCYNEXIS as a Chief Financial Officer, taking over the role from Larry Hoffman, who served as interim CFO since the last year. And let me take the opportunity to thank Larry for his valuable support and contributions to SCYNEXIS. Ivor Macleod is a senior pharmaceutical executive with over 30 years of experience in the life science industry, most recent at Athersys, Inc. Ivor has held multiple financial leadership roles, including CFO and Chief Compliance Officer of Eisai US, Merck, Hoffmann-La Roche, and Boehringer. Ivor's first day will be next Monday, October 24. As part of the shift in commercialization strategy, Christine Coyne, our Chief Commercial Officer, will transition from the company to pursue other opportunities. Christine has been a pivotal member of the team during the launch of BREXAFEMME, and I want to thank her for her contributions. We wish her all the best in our future endeavors. And finally, it is with some bittersweet feelings, that I'm announcing that after more than 7 years serving as President and CEO of SCYNEXIS, I have decided to retire and to leave my role as the CEO, President and Director at December 31. I'm proud of what we have achieved as a company in the last few years, bringing a new class of antifungals to the patients. More than an achievement, I feel it's a legacy. And I'm excited to let you know that Dr. David Angulo who has served SCYNEXIS as the Chief Medical Officer for the last 7 years, will become President and Chief Executive Officer and join the SCYNEXIS Board of Directors, effective January 1, 2023. David has demonstrated his remarkable scientific business and leadership skills over recent years. David is the perfect leader to guide the company to success in the coming years. This is great news for SCYNEXIS and the company's future growth. Before I turn the floor to David, please let me thank my colleagues and the Board for the support, the advice and the friendship in the last 7 years. Also, I want to thank all our investors, analysts and bankers for their support without whom I would have not been able to achieve our goals. Many of them actually are now in my own personal circle of friends. And I know that they will continue to support SCYNEXIS and David in his new role. Now I'm going to turn the floor over to Dr. David Angulo for a few comments. David?

Thank you, Marco. Marco, I want to start by thanking you for your leadership over the past 7-plus years. During these years, we progressed a first-in-class antifungal agent to its first indication, and we have Phase III programs ongoing to support a new wave of indications. You definitely should be proud of the accomplishments of the organization under your leadership. I'm really honored to have the opportunity to lead the organization with a focus of developing ibrexafungerp to maximize its potential as a remarkable innovation and a shareholder value-creation assets. When I joined the organization 7 years ago, what impressed me the most was the potential of ibrexafungerp to become a much-needed treatment option with multiple potential indications. I was immediately attracted by the possibility of being part of the journey of making ibrexafungerp a groundbreaking antifungal, addressing significant gaps in the antifungal armamentarium, such as the need for effective antifungal step-down options and drugs with activity against multidrug-resistant pathogens to mention some. I'm excited to execute upon the vision to maximize the value of ibrexafungerp. This new strategy focusing on progressing our hospital development programs also allow us to unlock the most value for the company and shareholders while taking advantage of significant strength at SCYNEXIS. Over the years, we have built a very solid scientific foundation, demonstrated efficient execution of our development programs and high-quality work. For example, we had our first U.S. approval on time with no quality issues, and I anticipate the second approval to be equally successful. We have significant work ahead of us but with clear path. The first approval for an invasive fungal disease, specifically invasive candidiasis is anticipated in 2024 and a salvage therapy indication anticipated around the same time. We are progressing the development of the intravenous formulation of ibrexafungerp, and we plan to initiate the Phase II clinical trial next year. The IV formulation, once approved, will enable physicians to use ibrexafungerp in patients that cannot receive oral medications or may be a concern for oral bioavailability, in essence, broadening the clinical usefulness of ibrexafungerp as a flexible and comprehensive antifungal option. With its broad antifungal activity, including against many multidrug-resistant fungal strains, extensive tissue distribution, favorable safety profile and low risk for drug-drug interactions, ibrexafungerp is perfectly suited to take advantage of its long global IP protection. And we can easily envision multiple other potential indications such as prophylaxis, using chronic fungal diseases and aspergillosis as example, providing for a very rich life cycle potential. Exciting work ahead of us. Let me now pass the call back to Dr. Taglietti.

Thank you, David. So I want to stress that this is an important transformational moment for SCYNEXIS. We are all very proud, as you can hear from our enthusiasm, from our energy, to be part of bringing a new antifungal agent to people in great need. Adjusting our focus at this moment in time will enable us to help address the significant unmet needs in the hospital setting while creating the most value for shareholders. Ibrexafungerp can stabilize. Patients are counting on us, and the brilliant team at SCYNEXIS is waiting for the challenge. Operator, please open the floor for questions.

[Operator Instructions] Our first question comes from the line of Louise Chen with Cantor Fitzgerald.

This is Carvey on for Louise from Cantor. We've a couple of questions here. First of all, where are you with the partner discussions for BREXAFEMME in VVC? And when do you think you will see something, some sort of update? And secondly, when did you decide that you're going to change your strategy?

So we go to your first question. As you can imagine, we've been having a number of discussions and interactions. But as you also know, we really -- we cannot provide the additional color or information until an agreement is actually executed. So just -- you can be assured that we are working very actively in pursuing the right partner for BREXAFEMME. And sorry, my second question was?

Yes. So we've been wondering when did you guys decide that you were going to change your strategy?

When? Well, we are actually -- this is -- the process is starting now. As I mentioned, what we are going to do is really to revisit right now our efforts in BREXAFEMME. The first step, as we mentioned, is to -- we are terminating our agreement with Amplity, and then we are restructuring our organization. All these will release cash that we are planning to redeploy on the product. And why we did this is because we have seen that BREXAFEMME has been a good product with a great feedback from practitioner, from prescribers, from patients. We have seen a steady growth every single quarter. As you will see, we have been growing. However, the trajectory, it's not the trajectory that we expected. And most important is we know that more can be done with BREXAFEMME to achieve its full potential. And we believe that in the hands of the right partner, this will -- right partner with expertise with a footprint with probably synergistic products in their bag, we'll actually get the most out of BREXAFEMME. And at this point, that will allows us to focus on the hospital where we think there is the most value to unlock for the product.

Our next question comes from the line of Kemp Dolliver with Brookline Capital.

Great. First question is, does the cash runway guidance include any proceeds from a partnering arrangement?

That's a very good question, and the answer is no. So right now, our guidance for second quarter 2024 does not include any kind of consideration. And this will be all additional in the near future when we expect to do -- to complete the deals. So thank you very much for the question.

Great. And then thinking ahead with your focus on the hospital setting versus the outpatient setting, will the commercial challenges be any different for a company with a single product versus a company with more products, more salespeople, et cetera?

Very good question. Let's say, we -- as we have shown right now, that is we are open always to many different options, and we're always assessing our options. The antimicrobial market is a very complex market, as you know. And we will continue to look at it also because, as you may know, there are legislations that have been proposed that may actually become -- may happening in the near future, like, for example, the DISARM Act or the PASTEUR Act, that certainly can change dramatically the dynamics of the anti-infective field. So we continue to look at all our options. We continue to look at the dynamics of the market. And we'll continue to provide you update where we stand with all -- with the organization. David, do you want to add anything about...

Thank you, Marco. Thank you for the question. Absolutely. So we will remain really vigilant to the dynamics within the market or capabilities and certainly focus in ensuring that we are developing the product to really get to the indication and make the right decisions with information when it's in time, but you can rest assure that we are looking at all these options and how the dynamics of the market and regulations are moving in order to enable us to really make the right decision. We are open for all possibilities that can be adequately suited for us.

Great. And my last question is, and I apologize if I missed this, but what are your plans with regard to the SCYNERGIA study with the results expected this quarter and whether you will advance this indication?

Yes. Thank you. This is David again. So yes, we will have the results that -- and we are wrapping up that particular study. So once we have the results, once we analyze that information is -- when we will be in a position to really discuss with the regulatory agency, what could be the next steps really for that particular path of development. And I think that we've mentioned in the past that really the enrollment in that particular study has been much more challenging than we were expecting. It's a small Phase II study, and we put limited resources into that but we certainly are wrapping up the study and aiming to have the results available. And the decision regarding the next stages really are going to be informed, but whatever we see from that particular study, and we will inform you on time once we made that decision.

[Operator Instructions] Our next question comes from the line of Steve Brozak with WBB Securities.

So Marco and David, I would look at SCYNEXIS as one of those companies that has achieved a significant recognition and your competency to go out there and prosecute drug programs through the regulatory process and testing. Would you look at the future SCYNEXIS as something that, in addition to looking to continually prosecuting ibrexafungerp would also look to -- as you had mentioned earlier in your statements, Marco, other antimicrobials, especially in this challenged environment where you've proven your track record there. Would you look to expound on that? And I've got 1 follow-up after that, please.

Steve, this is David. So number one, thank you. Thank you for the vote of confidence and your initial comments. Certainly, we have -- that's an area that we do believe and we are very proud about the expertise and the efficiencies that we have been able to develop over the years in order to do adequate and very -- drug development and SaaS on time, et cetera. So thank you for that. Right now, our plan is to focus our resources on the development of the oral ibrexafungerp and IV formulations of ibrexafungerp. At this point, there has been the focus, that said, we remain opportunistic with respect to synergistic programs, both within and outside our IP. You know that we have other potential fungerps that we could consider. So we could leverage certain [ a new ] organization and scientific competencies on that sense. So we remain opportunistic at looking at options. But at this point, really our focus and our plan is really dedicate the resources to ensure successful and as expedite as possible development for oral and intravenous formulations.

And just on the press release, you did mention the really problematic pathogen Candida auris. I would assume that you would also -- the follow-up is that you would also remain opportunistic in looking at these unfortunate potential targets of opportunity for ibrexafungerp in terms of dealing with them into the future. Is that -- is that a good assessment? And however you want to answer it, and I'll hop back in the queue.

Thanks again, Steve. Absolutely. So Candida auris is one of the pathogens that we consider ibrexafungerp and one of the pieces that we consider ibrexafungerp would be a real game changer in terms of the potential for the treatment of these patients. And we are addressing Candida auris, sorry, in basic Candida auris programs within MARIO because we can enroll patients with candidates in that program. But also we are addressing, as you know, with -- specifically with the CARES program. And that information, along with the information coming from our MARIO study, FURI study and CARES is what we believe is going to give us a very strong potential first indication package for the hospital wave of indications that certainly, we are very optimistic that Candida auris could have a predominant mention into that particular initial indication. So yes, we are keeping our eye and our efforts in developing more and more data about this pathogen that is very unfortunate that has very high mortality but we do believe that ibrexa can really be one of the agents that can be significant difference in the life of these patients.

David and Marco, and congratulations on the next steps.

Thanks.

Thank you. Thank you, Steve.

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Taglietti for any -- I'm sorry, we do have -- one moment, please. There is another [Audio Gap]

Yes, operator. Are there questions?

Yes. I'm sorry, yes. We do have another question from Michael Higgins with Ladenburg Thalmann. Please proceed with your question.

Congrats on the transition, Marco. Can you hear me okay?

Yes, yes, we can hear you. Yes, Michael.

I apologize for any difficulty there in getting me in here. Marco truly sad to see you leaving the company here at year-end. You've done a terrific job of running this program and getting us to the point that it's at. I guess kind of a financial question, as I listen to the Q&A is, is there any onetime cost coming here in the fourth quarter? You've given us some cash guidance, which is helpful, but anything that's going to hit the operations and cash balance here in this quarter.

The short answer is yes, but there are some onetime expenses with the headcount reductions. We are still finalizing it. So please stay tuned. What we plan is having Ivor, our new CFO coming on board. He will make all the assessments and will be part of the -- our update on our third quarter 2022 earnings as you may expect, will be around mid-November. So in a few weeks from now, and we will provide an update. But overall, all these changes are really freeing up significant amount of cash because as you know, commercializing the product is very expensive. So having a sales force and the supporting infrastructure that we had here, the commercial supportive infrastructure, all these expenses will, of course, go away, including all the sales and marketing promotions, promotional activities. We will keep the product on the market. So we expect to continue to have a product available to patients. But given the fact that this is a product very promotional sensitive, we don't expect really any significant growth. But what we expect is that once we have finalized the agreement with a partner that will really allow the product to start its trajectory. As I mentioned in another question, Michael, we -- when our current cash runway into the second quarter 2024 doesn't assume any revenues. So all the revenues that will come from the agreement as a milestones or royalties will be all accretive. And still, without this right now on our model, still we have been able to extend our cash runway into the second quarter of 2024. So stay tuned for -- with regards to the third quarter of 2022 when we will have Ivor with his first call with investors and will be able to provide a detailed update also about all the onetime expenses. And finally, let me say, don't be sad,as I said to many people, well, I'm not dead or dying. I will be around. And Michael, as I was mentioning before, over time, many of the investors, analysts, bankers have been interacting. We have become part of my circle of friends. And certainly, I consider you to be one of them. So don't worry, you will hear my Italian accent again, and hopefully very soon. So thank you and thank you very much, Michael, for all your support with you very -- always very thoughtful analysis. Thank you.

Thank you for those comments. That's great. We're getting late in the cycle here. So I'll just ask one more. If you could revisit the IV program, what the next steps are there, I guess, in kind of bringing it all in full cycle here, but this one has been I think years or so that we've been talking about this program. I just want to know the next steps on that one again?

Sure. Yes. We anticipate that the next step in that particular program will be to conduct a Phase II study. So we have already identified what is the target -- what are the doses that reaches to target exposure in healthy volunteers. The normal next step is to identify that in patients that have the intended disease, and expanded a little bit more the sample size of the people who has been exposed to that particular dose, who reach the same target exposures. So that is going to be the next step. We are in the process of discussing with the regulatory agencies as well, what we are going to propose could be an abbreviated development program for the IV formulation in order to be able to take advantage of all the information that we have already generated with oral ibrexafungerp, so that we can be -- that all that information can be synergistic and supportive of each other. We have not determined what that development program is going to be because we are in the process of having that discussion. However, the next step we can tell you that is very likely a Phase II study.

Thank you, ladies and gentlemen. Mr. Taglietti, let me pass the call back to you for any final comments.

Yes. Thank you very much. So first of all, we appreciate all of you listening to this phone call. This is an important moment in the history of SCYNEXIS, it's another of this important transition and transformations. We believe that these decision will help us to create more value for our shareholders and at the same time, to bring an important product to the patients. So thank you very much to everyone, and looking forward to talk with you in the future. Thank you.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.