Scynexis, which has straddled the drug business as both a drug developer and a services provider for other pharmaceutical companies, is now exclusively focused on developing its own drugs.
The Durham, NC, company announced Thursday that it has sold its contract research business to Avista Pharma Solutions for an undisclosed price. Scynexis (NASDAQ: SCYX) will relocate to Jersey City, NJ, on Aug. 1. With the sale of the contract research business, Yves Ribeill has stepped down as president of Scynexis, a company that he founded and led as CEO until April, when he was replaced by former Forest Laboratories Chief Medical Officer Marco Taglietti.
Scynexis’ lead drug is SCY-078, an antifungal drug developed to treat Candida and Aspergillus fungal infections, including infections caused by drug-resistant strains of the fungi. Scynexis has pegged the market opportunity to treat such infections at $3.6 billion. The Scynexis drug is part of a class of antifungal agents called glucan synthase inhibitors, which work by blocking an enzyme in fungi. While these drugs have been effective in hospitals, they are currently only available in intravenous form. Scynexis is developing its drug as a pill intended for immune-compromised patients, such as transplant recipients. SCY-078 is currently in a Phase 2 clinical trial in Candida infection; Scynexis expects to report full data from the study in the first half of 2016. The FDA has granted “fast track status” for the drug, a designation that speeds review of treatments with the potential for addressing unmet medical needs.
Scynexis formed in 2000, spun out of Aventis as a contract services company in chemistry and animal health. Though Scynexis has pursued development of its own drugs in recent years, the company has spent most of its history as a provider of outsourced drug discovery and development services to larger pharmaceutical companies, such as such as Merck (NYSE: MRK), Sanofi (NYSE: SNY), and Roche. The Scynexis drug SCY-078 emerged from the company’s 2002 license and research agreement with Merck. Merck took the antifungal as far as early-stage clinical trials, but decided in 2013 that it would no longer pursue its development. Merck then licensed its rights to the drug to Scynexis.
Scynexis went public last year, raising $54.6 million. In May, the company completed a $37.7 million follow-on stock offering, which it said would finance mid-stage clinical trials of the pill version of its antifungal, as well as start a study that includes both the pill and an intravenous form of the drug. Scynexis has yet to win FDA approval on any drugs, drawing the vast majority of its revenue from its contract research business. Most of that revenue came from contracts in animal health. Scynexis has never been profitable—in 2014, the company reported $19 million in revenue but a $4.2 million loss.
The sale of Scynexis’s contract research side is not a complete surprise. In March, the company disclosed that its board of directors asked management to explore “strategic alternatives” for the contract research business that would allow the new CEO, Taglietti, to focus on the antifungal drug, according to securities filings. The company hired a third-party firm to evaluate a sale, spin off, management buyout, or shut down of the services business. In May, the board directed Scynexis management to sell that business.
Avista said that it will take over Scynexis’s former research and manufacturing operations in Durham, hiring the Scynexis workers in contract research. As of March, Scynexis employed 87 full-time workers, according to filings. The Scynexis contract research business marks Avista’s second acquisition in the last two months. In June, Avista acquired the chemistry, manufacturing, and controls business of Boulder, CO-based Array BioPharma.
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