Will a Durham company get the last laugh in a deal that failed?

Scynexis originally partnered with drug giant Merck in 2002 to develop and commercialize a compound called SCY-078. Merck chose to return it to Scynexis last year.

Now, Scynexis sees the compound as key to helping it pull off a public offering of stock.

On Thursday, Scynexis filed paperwork for an IPO with the SEC. 

The company hopes to raise $55 million, according to the filing.

If the IPO is successful, Scynexis would join a growing number of Triangle firms – especially biotechs – that have gone public in the last year. (Check out WRALTechWire’s IPO Watch report.)

Its shares would trade on the Nasdaq under the symbol “SCYX.”

Potential Blockbuster?

In its SEC filing, Scynexis makes clear the compound, which is still in clinical trials, is crucial with a market opportunity of $3.6 billion.

At the time of the agreement with Merck, the compound was called MK-3118. The compound is a semi-synthetic derivative of the natural product enfumafungin. It’s in a class of antifungal agents called glucan synthase inhibitors that work by blocking an enzyme in fungi. While glucan synthase inhibitors have been effective in hospitals, they are currently available only as intravenous drugs. Merck and Scynexis had been developing the drug candidate as a pill and took it as far as phase I clinical trials.

The filing reads in part:

“SCYNEXIS is a pharmaceutical company committed to the discovery, development and commercialization of novel anti-infectives to address significant unmet therapeutic needs. We are developing our lead product candidate, SCY-078, as a novel oral and intravenous (IV) drug for the treatment of serious and life-threatening invasive fungal infections in humans.

“SCY-078 has been shown to be effective in vitro and in vivo in animal studies against a broad range of Candida and Aspergillus fungal species, including drug resistant strains.

“These important pathogens account for approximately 85% of invasive fungal infections in the United States and Europe. SCY-078 was shown to be sufficiently safe and well-tolerated in multiple Phase 1 studies to support progression to Phase 2 studies.

“We anticipate that the first patient will be enrolled in the second half of 2014 in a Phase 2 study with an oral formulation of SCY-078 for the treatment of invasive Candida infection, a common and often fatal invasive fungal infection, and anticipate beginning studies with an IV formulation of SCY-078 in 2015.

“We estimate that the annual worldwide market for systemic anti-fungal therapeutics, where we will target SCY-078, is approximately $3.6 billion.

“Each year there are estimated to be over 600,000 confirmed cases of invasive fungal infections caused by various species of Candida and Aspergillus, two of the most serious fungal pathogens in the United States and Europe.

“The rapid progression of the disease and the high mortality rates associated with invasive fungal infections often result in treatments being administered in unconfirmed cases or as a preventative measure.”

“For example we estimate that the total number of patients treated for invasive Candida infections to be approximately three to four times the number of confirmed cases. Also, there is increasing use of drugs that suppress the immune system, such as chemotherapies or drugs for auto-immune disease and transplantation, which has led to an increased rate of invasive fungal infections.

“Furthermore, the limited number of anti-fungal drug classes, consisting of azoles, echinocandins and polyenes, and their widespread use, has led to increased numbers of, and infections with, drug-resistant strains. The resulting pattern of infection, followed by treatment, followed by the development of resistance, followed by more infections is familiar to the medical community, as it has faced these same issues with multi-drug resistant bacterial infections such as methicillin-resistant Staphylococcus aureus, commonly known as MRSA.

“SCY-078 represents a new chemical class of drugs designed to block an established target in infectious fungi. We have conducted studies of SCY-078 using animal models that were used in the development of previously approved anti-fungal drugs where these models were proven to be predictive of efficacy in humans. Using these well-established animal models, SCY-078 was shown to be highly active against Candida and Aspergillus.

“SCY-078 has shown potent in vitro activity against a large collection of medically relevant strains of Candida and Aspergillus, including multi-drug resistant strains that have been isolated from infected patients. Across seven Phase 1 studies, which included over 100 healthy human volunteers, SCY-078 achieved sustained blood concentrations at levels believed to be clinically relevant (those predicted to have a therapeutic effect) and was sufficiently safe and well tolerated to support progression to hase 2 studies.

“We are developing both an IV and oral formulation of SCY-078 because patients are typically prescribed IV treatment in hospitals, and then are switched, or “stepped down,” to oral formulations when the patient shows sufficient improvement of symptoms. The availability of SCY-078 in both oral and IV formulations would allow patients to remain within the same drug class and potentially be discharged from the hospital sooner.”

Recent Partner

Last September, Scynexis found a new partner to develop and commercialize an antifungal compound whose rights Merck (NYSE:MRK) returned to the Durham company earlier this year.

The deal with Russia-based R-Pharm gives the company rights to SCY-078 in Russia. Privately-held Scynexis will receive an upfront payment and is entitled to receive payments on development and commercialization milestones, plus royalties. No additional financial details were disclosed.

Following a review of its drug portfolio, Merck said that it didn’t want to pursue development of the compound and would return the rights to Scynexis.But R-Pharm apparently sees potential in SCY-078 as an alternative to intravenous dosing.

“As the first oral glucan synthase inhibitor, SCY-078 could prove very useful in markets where intravenous dosing options have resulted in undertreatment or treatment limitations,” R-Pharm President and Chairman Alexey Repik said in a statement.

Besides rights to the Russian market, R-Pharm gains development and commercialization rights to SCY-078 for The Commonwealth of Independent States and Turkey. Scynexis retains rights to the compound in the Americas, Europe and Asia.