10-Q

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 1, 2023, there were 37,175,665 shares of the registrant’s Common Stock outstanding.

1. Description of Business and Basis of Preparation

Organization

SCYNEXIS, Inc. (“SCYNEXIS” or the “Company”) is a Delaware corporation formed on November 4, 1999. SCYNEXIS is a biotechnology company, headquartered in Jersey City, New Jersey, and is pioneering innovative medicines to overcome and prevent difficult-to-treat and drug-resistant infections. The Company is developing its proprietary class of enfumafungin-derived antifungal compounds (“fungerps") as broad-spectrum, systemic antifungal agents for multiple fungal indications. Ibrexafungerp is the first representative of this novel class of antifungals with additional assets from the “fungerp” family, including SCY-247, in pre-clinical stages of development. In June 2021, the U.S. Food and Drug Administration (“FDA”) approved BREXAFEMME® (ibrexafungerp tablets) for treatment of patients with vulvovaginal candidiasis (“VVC”), also known as vaginal yeast infection. In December 2022, the Company announced that the FDA approved a second indication for BREXAFEMME for the reduction in the incidence of recurrent vulvovaginal candidiasis ("RVVC").

In March 2023, the Company entered into a license agreement (the "License Agreement") with GlaxoSmithKline Intellectual Property (No. 3) Limited ("GSK") in which the Company granted GSK an exclusive (even as to the Company and its affiliates), royalty-bearing, sublicensable license for the development and commercialization of ibrexafungerp, including the approved product BREXAFEMME, for all indications, in all countries other than Greater China and certain other countries already licensed to third parties (See Note 12). The parties closed the transactions contemplated by the License Agreement in May 2023 and the Company received an upfront payment of $90.0 million.

The Company was party to a Loan and Security Agreement, dated May 13, 2021, with Hercules Capital, Inc. ("Hercules Capital") and Silicon Valley Bridge Bank, N.A. (now a division of First Citizens Bank, “SVB”) (the "Loan Agreement"), pursuant to which Hercules Capital, SVB and each of the other lenders from time-to-time party to the Loan Agreement (collectively, the “Lenders”) loaned to the Company $35.0 million as of March 31, 2023.

In connection with the entering into of the License Agreement, the Company entered into a First Amendment and Consent to Loan and Security Agreement with the Lenders pursuant to the Lenders consented to the Company entering into the License Agreement and the Company agreed to pay to the Lenders an amount equal to the sum of (i) all outstanding principal plus all accrued and unpaid interest with respect to the amounts loaned under the Loan Agreement, (ii) the prepayment fee payable under the Loan Agreement (approximately $0.3 million), (iii) the final payment payable under the Loan Agreement (approximately $1.4 million), and (iv) all other sums, if any, that shall have become due and payable with respect to loan advances under the Loan Agreement. Upon receipt by the Company of the $90.0 million upfront payment from GSK in May 2023, all amounts payable under the Loan Agreement were fully paid (see Note 7).

The Company had an accumulated deficit of $333.9 million at June 30, 2023. The Company's capital resources primarily comprised cash and cash equivalents and investments of $91.9 million at June 30, 2023. While the Company believes its capital resources are sufficient to fund the Company’s on-going operations for a period of at least 12 months subsequent to the issuance of the accompanying unaudited condensed consolidated financial statements, the Company's liquidity could be materially affected over this period by: (1) its ability to raise additional capital through equity offerings, debt financings, or other non-dilutive third-party funding; (2) costs associated with new or existing strategic alliances, or licensing and collaboration arrangements; (3) negative regulatory events or unanticipated costs related to its development of ibrexafungerp; (4) its ability to successfully achieve the development, regulatory, and commercial milestones under its License Agreement with GSK and; (5) any other unanticipated material negative events or costs. One or more of these events or costs could materially affect the Company’s liquidity. If the Company is unable to meet its obligations when they become due, the Company may have to delay expenditures, reduce the scope of its research and development programs, or make significant changes to its operating plan. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. Intercompany balances and transactions are eliminated in consolidation.

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses

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during the reporting period. Actual results could differ from those estimates. Significant estimates and judgments include: revenue recognition including gross to net estimates and the identification of performance obligations in licensing arrangements; estimates for the relative standalone selling price and measure of progress under the input method for the License Agreement; the determination of the fair value of stock-based compensation grants; the estimate of services and effort expended by third-party research and development service providers used to recognize research and development expense; and the estimates and assumptions utilized in measuring the fair values of the warrant and derivative liabilities each reporting period.

Unaudited Condensed Consolidated Financial Information

The accompanying unaudited condensed consolidated financial statements and notes have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”), as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (the “Codification” or “ASC”) for interim financial information. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, and cash flows. The results of operations for the three and six months ended June 30, 2023, are not necessarily indicative of the results for the full year or the results for any future periods. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes set forth in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 31, 2023.

2. Summary of Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements and notes follow the same significant accounting policies as those described in the notes to the audited consolidated financial statements of the Company for the year ended December 31, 2022, except as described below.

Allowance for Credit Losses

The Company reviews its held-to-maturity investments for credit losses on a collective basis by major security type and in line with the Company's investment policy. As of June 30, 2023, the Company's held-to-maturity investments were in securities that are issued by the U.S. government and in corporate bonds, are highly rated, and have a history of zero credit losses. The Company reviews the credit quality of its accounts receivables by monitoring the aging of its accounts receivable, the history of write offs for uncollectible accounts, and the credit quality of its significant customers, the current economic environment/macroeconomic trends, supportable forecasts, and other relevant factors. The Company's accounts receivable are with customers that do not have a history of uncollectibility nor a history of significantly aged accounts receivables. As of June 30, 2023, the Company did not recognize a credit loss allowance for its investments or accounts receivable.

Basic and Diluted Net Income (Loss) per Share of Common Stock

The Company calculates net income (loss) per common share in accordance with ASC 260, Earnings Per Share. Basic net income (loss) per common share for the three and six months ended June 30, 2023 and 2022 was determined by dividing net income (loss) applicable to common stockholders by the weighted average number of common shares outstanding during the period. Per ASC 260, Earnings Per Share, the weighted average number of common shares outstanding utilized for determining the basic net income (loss) per common share for the three and six months ended June 30, 2023 includes the outstanding pre-funded warrants to purchase 7,516,267 and 3,200,000 shares of common stock issued in the April 2022 public offering and December 2020 public offering, respectively. The outstanding pre-funded warrants to purchase 11,666,667 and 3,200,000 shares of common stock issued in the April 2022 public offering and December 2020 public offering were included in the three and six months ended June 30, 2022, respectively. Diluted net income (loss) per common share for the three and six months ended June 30, 2023 and 2022 was determined as follows (in thousands, except share and per share amounts):


	Three Months Ended June 30,					Six Months Ended June 30,
	2023		2022			2023		2022
Net income (loss)	$	122,260	$	(13,345	)	$	88,384	$	(18,796	)
Dilutive effect of convertible debt		433		—			1,047		—
Net income (loss) allocated to common shares	$	122,693	$	(13,345	)	$	89,431	$	(18,796	)

Weighted average common shares outstanding – basic		47,837,393		43,285,232			47,797,731		37,647,535
Dilutive effect of convertible debt		1,138,200		—			1,138,200		—
Dilutive effect of restricted stock units		947,768		—			230,320		—
Weighted average common shares outstanding – diluted		49,923,361		43,285,232			49,166,251		37,647,535

Net income (loss) per share – diluted	$	2.46	$	(0.31	)	$	1.82	$	(0.50	)

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The following potentially dilutive shares of common stock and common shares that contain certain performance contingencies have not been included in the computation of diluted net income (loss) per share for the three and six months ended June 30, 2023 and 2022, as the result would be anti-dilutive:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Outstanding stock options		1,970,536		2,129,002		1,970,536		2,129,002
Outstanding restricted stock units		400,000		1,024,929		400,000		1,024,929
Warrants to purchase common stock associated with March 2018 public offering – Series 2		—		798,810		—		798,810
Warrants to purchase common stock associated with December 2020 public offering - Series 2		6,800,000		6,800,000		6,800,000


Delaware		56-2181648
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1 Evertrust Plaza, 13th Floor Jersey City, New Jersey		07302-6548
(Address of principal executive offices)		(Zip Code)


Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share	SCYX	Nasdaq Global Market


		Page

PART I FINANCIAL INFORMATION		1

Item 1.	Financial Statements	1
	Unaudited Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022	1
	Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022	4
	Notes to the Condensed Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30

PART II OTHER INFORMATION		30

Item 1A.	Risk Factors	30
Item 6.	Exhibits	31

Signatures		32


	June 30, 2023			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	57,905		$	45,814
Short-term investments		27,637			27,689
Prepaid expenses and other current assets		2,669			2,503
License agreement receivable		25,000			—
License agreement contract asset		19,249			—
Accounts receivable, net		2,345			2,101
Inventory, net		10,290			899
Restricted cash		435			55
Total current assets		145,530			79,061
Investments		6,336			—
Other assets		64			5,511
Deferred offering costs		73			73
Restricted cash		163			163
Intangible assets, net		206			408
Operating lease right-of-use asset (See Note 8)		2,484			2,594
Total assets	$	154,856		$	87,810
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	3,416		$	5,937
Accrued expenses		7,190			5,628
Deferred revenue, current portion		3,229			—
Other liabilities, current portion (See Note 7)		—			5,771
Operating lease liability, current portion (See Note 8)		310			282
Warrant liabilities		2,013			—
Total current liabilities		16,158			17,618
Deferred revenue		1,140			—
Warrant liabilities		30,090			18,644
Convertible debt and derivative liability (See Note 7)		11,630			11,001
Loan payable		—			34,393
Operating lease liability (See Note 8)		2,760			2,921
Total liabilities		61,778			84,577
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value, authorized 5,000,000 shares as of June 30, 2023 and December 31, 2022; 0 shares issued and outstanding as of June 30, 2023 and December 31, 2022		—			—
Common stock, $0.001 par value, 150,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 37,175,665 and 32,682,342 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively		40			36
Additional paid-in capital		426,942			425,485
Accumulated deficit		(333,904	)		(422,288	)
Total stockholders’ equity		93,078			3,233
Total liabilities and stockholders’ equity	$	154,856		$	87,810


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Revenue:
Product revenue, net	$	468		$	1,323		$	1,598		$	2,010
License agreement revenue		130,986			—			130,986			—
Total revenue		131,454			1,323			132,584			2,010
Operating expenses:
Cost of product revenue		426			144			562			243
Research and development		7,040			7,131			13,875			12,980
Selling, general and administrative		7,474			15,786			12,314			30,262
Total operating expenses		14,940			23,061			26,751			43,485
Income (loss) from operations		116,514			(21,738	)		105,833			(41,475	)
Other (income) expense:
Amortization of debt issuance costs and discount		1,998			421			2,256			799
Interest income		(737	)		(181	)		(1,325	)		(193	)
Interest expense		1,249			1,231			2,695			2,291
Other income		—			—			—			(2	)
Warrant liabilities fair value adjustment		(8,214	)		(9,682	)		13,459			(19,712	)
Derivative liabilities fair value adjustment		(42	)		(182	)		364			(1,162	)
Total other (income) expense		(5,746	)		(8,393	)		17,449			(17,979	)
Income (loss) before taxes		122,260			(13,345	)		88,384			(23,496	)
Income tax benefit		—			—			—			(4,700	)
Net income (loss)	$	122,260		$	(13,345	)	$	88,384		$	(18,796	)
Net income (loss) per share attributable to common stockholders – basic
Net income (loss) per share – basic	$	2.56		$	(0.31	)	$	1.85		$	(0.50	)
Net income (loss) per share attributable to common stockholders – diluted
Net income (loss) per share – diluted	$	2.46		$	(0.31	)	$	1.82		$	(0.50	)
Weighted average common shares outstanding – basic and diluted
Basic		47,837,393			43,285,232			47,797,731			37,647,535
Diluted		49,923,361			43,285,232			49,166,251			37,647,535