No IPO yet for Scynexis, which alters offering after reverse stock split, debt deal

Will persistence pay off for Scynexis?

Perhaps – but under different terms than planned.

The IPO market has soured in the last couple of months – just in time to foul up the plans of Scynexis to become the latest Triangle firm to go public.

But the company is still trying, and an updated SEC filing shows steps management has taken to try to get buyers on Wall Street interested in a company that has no products on the market.

However, Thursday passed with no SCYX shares emerging for trade on the Nasdaq.

Scynexis still could finally go public this week after several delays and at a higher stock price. Yet the IPO will occur only after Scynexis executed a reverse stock split, slashed the options price on some shares, and struck a new credit deal with investor Sanofi.

In an SEC filing on Wednesday, the Durham-based drug firm disclosed it wanted to offer 6.2 million shares at a price of $10. Proceeds will be used primarily to develop the lead product for Scynexis, an anti-fungal treatment.

If the IPO is successful, shares will trade on the Nasdaq under the symbol “SCYX.”

However, in the SEC filing, Scynexis noted three changes from previous filings:

The reverse stock split of 1-for-5.1 shares
A substantially lower exercise price on some stock options to “an amount equal to the initial public offering price”
A deal with drug giant Sanofi, which had already indicated interest in buying some Scynexis shares

The deal with Sanofi was altered from one struck in March under which Scynexis said some proceeds fron Sanofi’s investment would be used to pay down an existing debt in a multi-million dollar credit facility.

The lower option price cuts the original exercise price from $20.40 to $61.20, with an average of $54.87.

In reviewing the revised IPO filing, Renaissance Capital noted that the reverse stock split would lower the Scynexis market cap to $85 million, a 60 percent drop from what the company originally planned as it mapped out the IPO strategy.

Wording in the Filing

The SEC filing regarding these points reads as follows:

“On April 25, 2014, the Company amended its amended and restated certificate of incorporation effecting an additional 1-for-5.1 reverse stock split of its common stock. The reverse stock split did not cause an adjustment to the par value or the authorized shares of the common stock. As a result of the reverse stock split, the Company also adjusted the share amounts under its employee incentive plan and common stock warrant agreements with third parties. All disclosure of common shares and per common share data in the accompanying financial statements and related notes have been adjusted to reflect the reverse stock split for all periods presented. On April 29, 2014, the Company lowered the exercise price per share of options to purchase 53,404 shares of common stock to an amount equal to the initial public offering price per share in the IPO. The original exercise prices of such options ranged from $20.40 to $61.20 per share, with a weighted average exercise price of $54.87 per share.

“Addendum to Guarantee Agreement

“On April 29, 2014, the Company entered into another addendum to the agreement with the related party guarantor. Under this addendum and conditioned upon the closing of the IPO, the parties agreed to terminate the Company’s obligations made under the addendum dated March 17, 2014. Under this addendum, the Company agreed that to the extent the related party guarantor invests in the IPO, the amount to be invested by the related party guarantor will be used to pay down the outstanding balance under the 2013 Credit Facility.”

The entire filing can be read online.

Growing IPO List

Should Scynexis pull off the IPO, it would join a lengthening list of Triangle and North Carolina tech/biotech IPOs over the past year. Other firms that have gone public include: