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Summary

  • SCYX, a biotech firm developing anti-fungal medications, plans to raise $55.0 million in its upcoming IPO.
  • SCYX plans to offer 4.2 million shares at an expected price range of $12-$14 per share.
  • We do not recommend buying shares of SCYX at this time, due to uncertainty over FDA approval for lead products, and massive competition.

SCYNEXIS Inc (NASDAQ:SCYX), a biotech firm developing anti-fungal medications, plans to raise $55.0 million in its upcoming IPO.

The Durham, North Carolina-based firm will offer 4.2 million shares at an expected price range of $12-$14 per share. If the IPO can find the midpoint of that range at $13 per share, SCYX will command a market value of $210 million.

SCYX filed on February 27, 2014.
Lead Underwriters: Canaccord Genuity Inc, RBC Capital Markets LLC
Underwriter: JMP Securities LLC

Overview of SCYNEXIS Inc.

SCYX is a biotech firm, focused on the development and commercialization of novel anti-infectives. The firm's lead product candidate is SCY-078, which is being developed as an oral and intravenous drug to treat serious fungal infections in humans.

SCY-078 has already proven effective against Candida and Aspergillus fungal species in animal studies; Candida and Aspergillus are estimated to cause upwards of 600,000 invasive fungal infections in Europe and the US annually and are associated with high mortality rates, often leading to preventative administration of treatment in unconfirmed cases. SCY-078 would represent a new chemical class of drugs to combat infectious fungi, and could therefore prove to be an important tool in fighting infections that have become increasingly resistant to current treatments. SCYX anticipates that Phase 2 studies for oral and IV formulations of the drug will begin in the second half of 2014 and 2015, respectively.

Valuation
SCYX offers the following figures in its S-1 balance sheet for the year ended December 31, 2013:

Revenue: $16,857,000.00
Net Loss: ($30,461,000.00)
Total Assets: $12,387,000.00
Total Liabilities: $33,339,000.00
Stockholders' Equity: ($108,109,000.00)

New to Drug Development
It should be noted that SCYX formed as a spin out from Aventis in 2000, and initially operated as a chemistry and animal health services company. The firm has only recently begun to develop its own drug candidates, having previously performed preclinical research services for other firms, although it has hired a staff of experienced scientists and a new Chief Medical Officer, Carole Sable, MD. SCYX hopes to ultimately develop a greater anti-fungal portfolio based on its current work.

If approved, SCY-078 will compete with currently available anti-fungal drugs, many of which are marketed by pharmaceutical and biotech firms with far greater financial and technical capacities than SCYX. These firms include the likes of Pfizer, Inc (NYSE:PFE), Merck & Co Inc (NYSE:MRK), and Gilead Sciences Inc (NASDAQ:GILD). Several other firms also have product candidates in late stage development that could potentially compete with SCY-078, including Viamet, Methylgene, and Astellas.

Experienced Management
Yves J. Ribeill, Ph.D. has served as SCYX's President and CEO since 1999. He previously held various positions with Aventis Pharma S.A. over approximately two decades, including Discovery Chemistry Group Leader for Anti-Viral Research and Director of Chemistry for the Anti-Infective Group. Dr. Ribeill has authored 24 scientific publications and 15 patents. He holds a Ph.D. in Chemistry from the University of Montpellier in France.

Should Investors Bet On SCYX At This Time?

We are neutral on the SCYX IPO.

As a new chemical class of drug that could overcome strains of fungus resistant to current treatments, SCY-078 represents a potential jackpot for SCYX.

However, the firm is bleeding huge amounts of money and is a long way from gaining FDA approval for SCY-078, let alone overcoming the massive pharmaceutical competitors that SCY-078 would face in the event of approval.

We recommend holding off purchasing SCYX shares initially.

Source: SCYNEXIS Should Treat Its Own Fungus Pre-IPO