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SCYNEXIS (Nasdaq: SCYX $.73) has been identified as a potentially lucrative swing move. The upcoming catalyst is top-line data from SCYXs’ phase 3 trial, “FURI”, due in February 2019. The company’s lead candidate under investigation, SCY-078, now called Ibrexafungerp. is a novel class of glucan synthase inhibitors. In other words, it inhibits an essential reaction for fungi to be able to create various sugars and survive. In FURI Ibrexafungerp is being investigated in a single arm, open label study in adults with intolerant or refractory (rIFI) invasive and/or severe fungal disease after treatment with standard of care (SoC) anti-fungal medicine. Invasive Candidiasis and Mucocutaneous Candidiasis are two diseases in particular under investigation
These data come following multiple phase 2 clinical trials of Ibrexafungerp for vulvovaginal candidiasis (VVC), in which Ibrexafungerp demonstrated a superior efficacy profile compared to Fluconazole; the current SoC for VVC and a common treatment for other fungal infections discussed in this article. A very critical characteristic of treatment with Ibrexafungerp is markedly lowered disease recurrence rates compared to fluconazole. If commercialized, Ibrexafungerp has blockbuster potential. At the moment the price is right for a swing trade, with a caveat.
What I mean by that is on the one hand SCYX is trading near its 5-year low of $.39 compared to its 5-year high of $12.84 in January of 2015. It’s 52-week high is $2.15. On the other hand, SCYX has gained 85% in the past month from $.40 to $.74. So, as prudent investors we must ask how will share price behave before the data release and do we want to hold through the catalytic event? In the past 5 trading sessions SCYX has traded flat with 10-average volume of 401.6K shares.
We anticipate as we enter February 2019 SCYX will begin trending upward again. It appears that the latest gains were at least in part sparked by insider buying. On 12/31/2018 SCYX Chief Medical Officer Mr. David Gonzalez purchased 12,000 shares at $.4959 and bringing his total share count to 121,790 shares. SCYX Chief Executive Officer Mr. Marco Taglietti bought 25,000 shares at $.49 on 12/31/2018 and then another 25,000 shares on 01/10/2019 at $.69. He now owns 480,000 shares cumulatively. Moreover, several option packages were awarded to company directors.
There is A Big Market Opportunity
Fluconazole is the only oral treatment option for VVC. Acute VVC is the second most common cause of Vaginitis and affects 70%-75% of women at least once. Recurrent vulvovaginal candidiasis (rVVC) is less common and harder to effectively treat. Peak sales for Ibrexafungerp are conservatively projected at $500 million to $1.2 billion. Based on available clinical data we are very bullish on the outcome of the upcoming phase 3 results and thus feel comfortable holding through the binary event.
In the DOVE study, the company’s most recent study for VVC, at the 10 day test-of-cure (TOC) Ibrexafungerp 600 mg achieved a cure rate of 58% compared to 52% for Fluconazole (FLU). At the 25-day follow up TOC the cure rate differential between the treatments was much more distinct. 70% of patients in the Ibrexafungerp arm were clinically compared to the 50% in the FLUE arm. Furthermore, only 4% of patients treated with Ibrexafungerp needed rescue antifungal therapy vs. 29% in the FLU treated patients. Composite signs and symptoms [S&S] scores from baseline were 1.0 for Ibrexafungerp arm vs. 1.8 in the FLU arm at day 10 representing an 80% difference. At the 25 day follow up visit the scores were .4 and 2.6 respectfully meeting statistical significance (p<.01). In a phase 2 proof of concept study POC in VVC Ibrexafungerp demonstrated similar superiority to Fluconazole not only in efficacy but pharmacokinetics.
One concern regarding the potential NDA filing is the 10-day TOC. In Dove there was only a 6% difference between the two treatments at this time period. Because this is the new FDA primary endpoint it is critical that the difference meets statistical significance.
However, this is not an endpoint in the FURI study mitigating some risk. In FURI, the primary end-point is the global response (GR) rate after ~90 days of treatment with Ibrexafungerp. The global response rate is characterized as the proportion of patients with either a complete response (CR) or partial response (PR) at the end of treatment. The secondary end-points being observed are the recurrence rates of baseline infections and the proportion of surviving patients.
Our entry is today at $.72 and price target is $1.0-$1.50. The last data readout was the DOVE study in July 2018 and elicited ~25% spike price per share (PPS). Therefore, positive phase 3 data should have a similar to greater impact on PPS.
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