# Scynexis Inc: Form 10-Q for the period ended Mar 31, 2024

- Company: [Scynexis Inc](/companies/scyx.md) (CIK 1178253)
- Form: 10-Q
- Filed: 2024-05-08
- Accepted by EDGAR: May 8, 2024, 16:01 ET
- Period: 2024-03-31
- Accession: 0000950170-24-055590
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1178253/000095017024055590/scyx-20240331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1178253/000095017024055590/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-01-01 to 2024-03-31 | $1.4m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Research and development | 3 months, 2024-01-01 to 2024-03-31 | $7.2m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2024-01-01 to 2024-03-31 | $3.7m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-01-01 to 2024-03-31 | −$9.5m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2024-01-01 to 2024-03-31 | $205.0k | us-gaap:InterestExpense |
| Income tax | 3 months, 2024-01-01 to 2024-03-31 | $531.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | $411.0k | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | $0.01 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | $0.01 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 48,565,051 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | −$4.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2024-03-31 | $35.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-03-31 | $101.7m | us-gaap:AssetsCurrent |
| Total assets | at 2024-03-31 | $118.3m | us-gaap:Assets |
| Current liabilities | at 2024-03-31 | $27.3m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-03-31 | $44.1m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-03-31 | $74.1m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 32,731 characters.

*Operating results for the three months ended March 31, 2024, are not necessarily indicative of results that may occur in future interim periods or future fiscal years. Some of the statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are forward-looking statements. These forward-looking statements are based on management’s beliefs and assumptions and on information currently available to our management and involve significant elements of subjective judgment and analysis. Words such as “expects,” “will,” “anticipate,” “target,” “goal,” “intend,” “plan,” “seek,” “estimate,” “potential,” “should,” “could,” variations of such words, and similar expressions are intended to identify forward-looking statements. Our actual results and the timing of events may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such a difference include those discussed under the heading “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 28, 2024, and in Part II, Item 1A of this Quarterly Report on Form 10-Q. These and many other factors could affect our future financial and operating results. We undertake no obligation to update any forward-looking statement to reflect events after the date of this Quarterly Report on Form 10-Q. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into or review of, all relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely on these statements.*

### Overview

SCYNEXIS, Inc. is pioneering innovative medicines to overcome and prevent difficult-to-treat and drug-resistant infections. We are developing our proprietary antifungal platform “fungerps”, a novel class of antifungal agents called triterpenoids, that are a structurally distinct glucan synthase inhibitors and have generally shown *in vitro* and *in vivo* activity against a broad range of human fungal pathogens such as *Candida* and *Aspergillus* genera, including multidrug-resistant strains, as well as *Pneumocystis, Coccidioides, Histoplasma* and *Blastomyces* genera and most common mucorales species.

Ibrexafungerp is the first representative of this novel class of antifungals. In June 2021 and December 2022, we announced that the United States (U.S.) Food and Drug Administration (FDA) approved BREXAFEMME (ibrexafungerp tablets) for treatment of patients with vulvovaginal candidiasis (VVC), also known as vaginal yeast infection, and for the reduction in the incidence of recurrent vulvovaginal candidiasis (RVVC), respectively. Oral ibrexafungerp is also under development for other systemic fungal diseases. SCY-247, a second-generation antifungal compound from this novel class, is in preclinical development stage. We anticipate initiating a Phase 1 study for SCY-247 in the second half of 2024.

The FDA has granted Qualified Infectious Disease Product (QIDP) and Fast Track designations to ibrexafungerp for the indications of VVC (including the prevention of recurrent VVC), invasive candidiasis (IC) (including candidemia), and invasive aspergillosis (IA), and has granted Orphan Drug designations for the IC and IA indications. The European Medicines Agency has granted Orphan Medicinal Product designation to ibrexafungerp for IC. We anticipate that the FDA may grant QIDP and Fast Track designations for the IV and oral formulations of SCY-247. These designations may provide us with additional market exclusivity and expedited regulatory paths.

In March 2023, we entered into a license agreement (the GSK License Agreement) with GlaxoSmithKline Intellectual Property (No. 3) Limited (GSK) in which we granted GSK an exclusive (even as to us and our affiliates), royalty-bearing, sublicensable license for the development and commercialization of ibrexafungerp, including the approved product BREXAFEMME, for all indications, in all countries other than Greater China and certain other countries already licensed to third parties.

### Product Recall and Clinical Hold

Following a review by GSK of the manufacturing process and equipment at the vendor that manufactures the ibrexafungerp drug substance, we became aware that a non-antibacterial beta-lactam drug substance was manufactured using equipment common to the manufacturing process for ibrexafungerp. Current FDA draft guidance recommends segregating the manufacture of non-antibacterial beta-lactam compounds from other compounds since beta-lactam compounds have the potential to act as sensitizing agents that may trigger hypersensitivity or an allergic reaction in some people. In the absence of the recommended segregation, there is a risk of cross contamination. It is not known whether any ibrexafungerp has been contaminated with a beta-lactam compound and we have not received any reports of adverse events due to the possible beta-lactam cross contamination. Nonetheless, out of an abundance of caution and in line with GSK’s recommendation, we have recalled BREXAFEMME (ibrexafungerp tablets) from the market and placed a temporary hold on clinical studies of ibrexafungerp, including the Phase 3 MARIO study.

The patient-level and clinical product recall has been initiated and we are working with an experienced vendor to manage the process. In September 2023, after we announced our voluntary clinical hold, the FDA concurred with our voluntary hold and placed a clinical hold. We are working with the FDA to discuss paths for resolution of this issue. The clinical hold and recall affected two ongoing clinical studies: the Phase 3 MARIO study and a Phase 1 lactation study. The clinical hold does not impact the recently completed FURI, CARES, VANQUISH and SCYNERGIA clinical studies, for which dosing is complete. The NATURE study, which is an observational study in patients with IC treated with standard of care antifungals (not ibrexafungerp), is also not affected by this hold. The FDA determined that the compassionate use program for ibrexafungerp, which provides ibrexafungerp to patients with limited or no other treatment options, can continue provided the patient’s treating physician concludes a favorable benefit-risk assessment and the patient is made aware of and consents to the risk. This applies to patients currently in the program as well as for new patients, pending confirmation of available supply. Our preclinical stage compound, SCY-247, is not affected by these developments.

In response to the hold on clinical studies of ibrexafungerp by the FDA due to possible beta-lactam cross contamination, we have entered into certain new manufacturing agreements with third-party contract manufacturers to begin producing new batches of ibrexafungerp which we believe will allow us to lift the clinical hold and restart our impacted clinical studies, the Phase 3 MARIO study and a Phase 1 lactation study.

### Legal Proceedings

On November 7, 2023, a securities class action was filed by Brian Feldman against us and certain of our executives in the United States District Court, District of New Jersey, alleging that, during the period from March 31, 2023 to September 22, 2023, we made materially false and/or misleading statements, as well as failed to disclose material adverse facts about our business, operations, and prospects, alleging specifically that we failed to disclose to investors: (1) that the equipment used to manufacture ibrexafungerp was also used to manufacture a non-antibacterial beta-lactam drug substance, presenting a risk of cross-contamination; (2) that we did not have effective internal controls and procedures, as well as adequate internal oversight policies to ensure that its vendor complied with current Good Manufacturing Practices (cGMP); (3) that, due to the substantial risk of cross-contamination, we were reasonably likely to recall its ibrexafungerp tablets and halt its clinical studies; and (4) as a result of the foregoing, our statements about our business, operations, and prospects were materially misleading and/or lacked a reasonable basis. The complaint seeks unspecified damages, interest, fees and costs on behalf of all persons and entities who purchased and/or acquired shares of our common stock between March 31, 2023 to September 22, 2023. On May 1, 2024, a purported shareholder derivative complaint was filed in the United States District Court, District of New Jersey. The complaint names the Company’s directors and certain of its officers and asserts state and federal claims based on the same alleged misstatements as the securities class action complaint. We disagree with the allegations and intend to defend these litigations vigorously.

### Liquidity

We have operated as a public entity since we completed our initial public offering in May 2014, which we refer to as our IPO. We also completed a follow-on public offering of our common stock in April 2015 and public offerings of our common stock and warrants in June 2016, March 2018, December 2019, December 2020, and April 2022. Our principal source of liquidity is cash, cash equivalents, and investments which totaled $94.2 million as of March 31, 2024.

As of March 31, 2024, our accumulated deficit was $354.8 million. We expect we will continue to incur significant research and development expense as we continue to execute our research and drug development strategy. Consistent with our operating plan, we also expect that we will continue to incur significant selling, general and administrative expenses to support our public reporting company operations and ongoing operations. As a result, we will need additional capital to fund our operations, which we may obtain through one or more of equity offerings, debt financings, other non-dilutive third-party funding (e.g., grants), strategic alliances and licensing or collaboration arrangements. We may offer shares of our common stock pursuant to our effective shelf registration statements.

### Collaborations and Licensing Agreements

We are party to a number of licensing and collaboration agreements with partners in human health, including: (1) GSK, a pharmaceutical company, which we exclusively (even as to us and our affiliates) provide a, royalty-bearing, sublicensable license for the development, manufacture, and commercialization of ibrexafungerp, including the approved product BREXAFEMME, for all indications, in the GSK Territory; (2) Merck, a pharmaceutical company, under which we exclusively licensed the rights to ibrexafungerp in the field of human health, and agreed to pay Merck milestones upon the occurrence of specified events as well as tiered royalties based on worldwide sales of ibrexafungerp when and if it is approved (in 2014, Merck assigned to us the patents related to ibrexafungerp that it had exclusively licensed to us and, as contemplated by the agreement, we will continue to pay milestones and royalties); (3) Hansoh, a pharmaceutical company, which we exclusively provide a license from us to research, develop and commercialize ibrexafungerp in the Greater China region, including mainland China, Hong Kong, Macau, and Taiwan, under which we are entitled to receive development and commercial milestones and royalties (4) R-Pharm, CJSC, or "R-Pharm," a leading supplier of hospital drugs in Russia, granting it exclusive rights in the field of human health to develop and commercialize ibrexafungerp in Russia and several non-core markets, under which we are entitled to receive potential milestones and royalties and reimbursement for certain development costs incurred by us (this agreement is not material to our unaudited condensed consolidated balance sheets, statements of operations, or statements of cash flows); (5) Waterstone, an international pharmaceutical business, granting Waterstone exclusive worldwide rights to development and commercialization of SCY-635 for the treatment of viral diseases in humans, under which we are entitled to receive potential milestones and royalties; and (6) Cypralis Limited, or "Cypralis," a life sciences company, transferring to it certain cyclophilin inhibitor assets of ours, under which we are eligible to receive milestone payments upon the successful progression of certain Cypralis clinical candidates into later stage clinical studies and royalties payable upon product commercialization.

### Components of Operating Results

#### Revenue

Revenue consists of license agreement revenue associated with GSK and product sales of BREXAFEMME. For the three months ended March 31, 2023, our product revenue, net comprised of sales of BREXAFEMME that we sold as principal given we control BREXAFEMME product until delivery to our wholesalers at which point control is transferred.

#### Cost of Product Revenue

Cost of product revenue consists primarily of distribution, freight expenses, royalties due to Merck, and other manufacturing costs associated with BREXAFEMME.

#### Research and Development Expense

Research and development expense consists of expenses incurred while performing research and development activities to discover, develop, or improve potential product candidates we seek to develop. This includes conducting preclinical studies and clinical trials, manufacturing and other development efforts, and activities related to regulatory filings for product candidates. We recognize research and development expenses as they are incurred. Our research and development expense primarily consists of:

- costs related to executing preclinical and clinical trials, including development milestones, drug formulation, manufacturing and other development;
- salaries and personnel-related costs, including benefits and any stock-based compensation, for personnel in research and development functions;
- fees paid to consultants and other third parties who support our product candidate development and intellectual property protection;
- medical affairs related expense and salary that is incurred to discover, develop, or improve potential product candidates;
- other costs in seeking regulatory approval of our products; and
- allocated overhead.

Ibrexafungerp and SCY-247 were the only key research and development project during the periods presented. We expect to continue to incur significant research and development expense for the foreseeable future as we continue our effort to develop ibrexafungerp and SCY-247, and to potentially develop our other product candidates, subject to the availability of additional funding.

The successful development of product candidates is highly uncertain. At this time, we cannot reasonably estimate the nature, timing or costs required to complete the remaining development of any product candidates. This is due to the numerous risks and uncertainties associated with the development of product candidates.

#### Selling, General and Administrative Expense

Selling, general and administrative expense consists primarily of salaries and personnel-related costs, including employee benefits and any stock-based compensation. This includes personnel in executive, finance, human resources, business development, medical affairs, marketing and commercial, and administrative support functions. Other expenses include facility-related costs not otherwise allocated to research and development expense, professional fees for accounting, auditing, tax and legal services, consulting costs for general and administrative purposes, information systems and marketing efforts.

#### Other Expense (Income)

All of our other income recognized in the three months ended March 31, 2024 and 2023, consists of amortization of debt issuance costs and discount, interest income, interest expense, the warrant liabilities fair value adjustment, and the derivative liabilities fair value adjustment.

#### Income Tax Expense

For the three months ended March 31, 2024, our income tax expense recognized consists primarily of an expense for U.S. federal income tax.

### Results of Operations for the Three Months Ended March 31, 2024 and 2023

The following table summarizes our results of operations for the three months ended March 31, 2024 and 2023, together with the changes in those items in dollars and percentage (dollars in thousands):

| Revenue: | Three Months Ended March 31, 2024 | 2023 | Period-to-Period Change |  |
| --- | ---: | ---: | ---: | ---: |
| Product revenue, net | $— | $1,130 | $(1,130) | (100.0)% |
| License agreement revenue | 1,373 | — | 1,373 | —% |
| Total revenue | 1,373 | 1,130 | 243 | 21.5% |
| Operating expenses: |  |  |  |  |
| Cost of product revenue | — | 137 | (137) | (100.0)% |
| Research and development | 7,212 | 6,835 | 377 | 5.5% |
| Selling, general and administrative | 3,669 | 4,840 | (1,171) | (24.2)% |
| Total operating expenses | 10,881 | 11,812 | (931) | (7.9)% |
| Loss from operations | (9,508) | (10,682) | 1,174 | (11.0)% |
| Other (income) expense: |  |  |  |  |
| Amortization of debt issuance costs and discount | 401 | 255 | 146 | 57.3% |
| Interest income | (1,280) | (587) | (693) | 118.1% |
| Interest expense | 205 | 1,447 | (1,242) | (85.8)% |
| Warrant liabilities fair value adjustment | (9,608) | 21,673 | (31,281) | (144.3)% |
| Derivative liabilities fair value adjustment | (168) | 406 | (574) | (141.4)% |
| Total other (income) expense | (10,450) | 23,194 | (33,644) | (145.1)% |
| **Income (loss) before taxes** | 942 | (33,876) | 34,818 | (102.8)% |
| Income tax expense | (531) | — | (531) | —% |
| **Net income (loss)** | $411 | $(33,876) | $34,287 | (101.2)% |

*Revenue.* For the three months ended March 31, 2024, revenue consists of the $1.4 million in license agreement revenue associated with the License Agreement with GSK. For the three months ended March 31, 2023, revenues consists of product sales of BREXAFEMME.

*Cost of Product Revenue.* Cost of product revenue for the three months ended March 31, 2023 consists primarily of distribution, freight, and royalty costs associated with BREXAFEMME.

*Research and Development.* For the three months ended March 31, 2024, research and development expenses increased to $7.2 million compared to $6.8 million for the three months ended March 31, 2023. The increase of $0.4 million, or 6%, for the three months ended March 31, 2024, was primarily driven by an increase of $1.6 million in chemistry, manufacturing, and controls (CMC) expense and a $0.3 million increase in preclinical expense, offset in part by a $0.8 million decrease in clinical expense and a decrease of $0.5 million in salaries primarily associated with medical affairs.

The $1.6 million increase in CMC expense is primarily associated with a $1.1 million expense for drug product purchased in the current period. The $0.3 million increase in preclinical expense for the three months ended March 31, 2024 was primarily associated with certain preclinical costs associated with SCY-247. The $0.8 million decrease in clinical expense was primarily due to a $0.7 million decrease associated with a Phase 1 study of oral ibrexafungerp that was substantially completed in the prior period and is intended to support the potential NDA filing for the treatment of IC and a $0.4 million decrease in in clinical expense for the MARIO study, off set in part by an increase of $0.3 million in other clinical expense.

*Selling, General & Administrative*. For the three months ended March 31, 2024, selling, general and administrative expenses decreased to $3.7 million from $4.8 million for the three months ended March 31, 2023. The decrease of $1.2 million, or 24%, for the three months ended March 31, 2024, was primarily driven by a decrease of $0.8 million in professional fees and a decrease of $0.4 million in commercial expense due to the costs incurred in the prior comparable period associated with BREXAFEMME. The $0.8 million decrease in professional fees was primarily due to a $0.5 million expense recognized in the prior period to write off a deferred asset for certain commitment fees and a $0.2 million decrease in legal expenses as a result of legal costs incurred in the prior period associated with the GSK License Agreement.

*Amortization of Debt Issuance Costs and Discount*. For the three months ended March 31, 2024 and 2023, we recognized $0.4 million and $0.3 million in amortization of debt issuance costs and discount. The debt issuance costs and discount for our March 2019 convertible notes primarily consisted of an allocated portion of advisory fees and other issuance costs and the initial fair value of the derivative liability.

*Interest Income*. For the three months ended March 31, 2024 and 2023, we recognized $1.3 million and $0.6 million, respectively, in interest income; the increase was primarily due to the increase in the interest rates on our money market funds and investments.

*Interest Expense*. For the three months ended March 31, 2024 and 2023, we recognized $0.2 million and $1.4 million, respectively. The decrease in interest expense was primarily due to the repayment of the loan agreement in May 2023.

*Warrant Liabilities Fair Value Adjustment*. For the three months ended March 31, 2024 and 2023, we recognized a gain of $9.6 million and a loss of $21.7 million, respectively, in the fair value adjustment related to the warrant liabilities primarily due to the decrease and increase in our stock price during the periods, respectively.

*Derivative Liabilities Fair Value Adjustment.* For the three months ended March 31, 2024 and 2023, we recognized a gain of $0.2 million and a loss of $0.4 million, respectively, in the fair value adjustment related to the derivative liabilities primarily due to the decrease and increase in our stock price during the periods, respectively.

*Income Tax Expense.* For the three months ended March 31, 2024, our income tax expense recognized consists primarily of an expense for U.S. federal income tax.

### Liquidity and Capital Resources

#### Sources of Liquidity

As of March 31, 2024, we had cash and cash equivalents and investments of $94.2 million, compared to cash and cash equivalents and short-term investments of $98.0 million as of December 31, 2023. We believe our capital resources are sufficient to fund our on-going operations for a period of at least 12 months subsequent to the issuance of the accompanying unaudited condensed consolidated financial statements. As of March 31, 2024, our accumulated deficit was $354.8 million.

Consistent with our operating plan, we expect to incur significant research and development expenses and selling, general and administrative expenses. As a result of our continued significant expenses, we may need additional capital to fund our operations, which we may obtain through one or more of equity offerings, debt financings, or other non-dilutive third-party funding, strategic alliances and licensing or collaboration arrangements.

#### Cash Flows

The following table sets forth the significant sources and uses of cash for the three months ended March 31, 2024 and 2023 (in thousands):

|  | Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Cash, cash equivalents, and restricted cash, January 1 | $34,593 | $46,032 |
| Net cash used in operating activities | (4,007) | (18,923) |
| Net cash provided by investing activities | 5,454 | — |
| Net cash (used in) provided by financing activities | (15) | 22 |
| Net increase (decrease) in cash, cash equivalents, and restricted cash | 1,432 | (18,901) |
| Cash, cash equivalents, and restricted cash, March 31 | $36,025 | $27,131 |

22

#### Operating Activities

The $14.9 million decrease in net cash used in operating activities for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to the continued development costs associated with ibrexafungerp and SCY-247, offset in part by the collection of the $2.5 million license agreement receivable and the $4.4 million unbilled receivable from GSK in the current period.

Net cash used in operating activities of $4.0 million for the three months ended March 31, 2024, primarily consisted of the $0.4 million net income adjusted for non-cash charges that included the gain on change in fair value of the warrant liabilities of $9.6 million, stock-based compensation expense of $0.7 million, and amortization of debt issuance costs and discount of $0.4 million, partially offset by a net favorable change in operating assets and liabilities of $4.4 million. The net favorable change in operating assets and liabilities was due to a net decrease in operating liabilities of $1.9 million and by a net decrease of $6.3 million in operating assets. The net $6.3 million decrease in operating assets is primarily due to a $2.5 million decrease in the license agreement receivable associated with the License Agreement with GSK which was collected in the current period and a $4.0 million decrease in prepaid expenses, other assets, deferred costs, and other. The $4.0 million decrease in prepaid expenses, other assets, deferred costs, and other was primarily due to the collection of a $4.4 million unbilled receivable in the current period from GSK.

Net cash used in operating activities of $18.9 million for the three months ended March 31, 2023, primarily consisted of the $33.9 million net loss adjusted for non-cash charges that included the loss on change in fair value of the warrant liabilities of $21.7 million, the loss on change in fair value of the derivative liabilities of $0.4 million, stock-based compensation expense of $0.7 million, and amortization of debt issuance costs and discount of $0.3 million, partially offset by a net unfavorable change in operating assets and liabilities of $8.6 million. The net unfavorable change in operating assets and liabilities was due to a decrease in accounts payable, accrued expenses, other liabilities and other of $6.7 million and by an increase in prepaid expenses, accounts receivable, inventory, and other of $1.9 million. The $6.7 million decrease in accounts payable, accrued expenses, other liabilities, and other was primarily due to the decrease of $5.8 million in other liabilities associated with the deferred fees due to Amplity that were fully paid as of February 2023 and a $0.9 million decrease in accrued expenses primary due to the bonus and separation payments made during the current period for 2022. The increase in prepaid expenses, accounts receivable, inventory, and other of $1.9 million was primarily due to a $2.1 million increase in inventory for raw material purchased in the current period.

#### Investing Activities

Net cash provided by investing activities of $5.5 million for the three months ended March 31, 2024 consisted of purchases and maturities of investments of $2.5 million and $8.0 million, respectively.

#### Financing Activities

Net cash used in financing activities of $15,000 for the three months ended March 31, 2024, consisted primarily of deferred financing costs of $40,000.

Net cash provided by financing activities of $22,000 for the three months ended March 31, 2023, consisted primarily of the proceeds for the repurchase of shares to satisfy tax withholdings and the proceeds from the employee stock purchase plan.

#### Future Funding Requirements

We expect to incur expenses in connection with our efforts to further development activities, particularly as we continue the research, development and clinical trials of, and seek regulatory approval for, product candidates. We anticipate that we will need substantial additional funding in connection with our continuing future operations.

We are continually evaluating our operating plan and assessing the optimal cash utilization for our SCY-247 and ibrexafungerp development strategy. We have based our estimates on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with the development and commercialization of product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenses necessary to complete the development of product candidates.

Our future capital requirements will depend on many factors, including:

- our ability to successfully achieve the development, regulatory, and commercial milestones under our License Agreement with GSK;
- the progress, and costs, of the clinical development of SCY-247 and ibrexafungerp;
- the outcome, costs and timing of seeking and obtaining FDA and any other regulatory approvals;
- the ability of product candidates to progress through clinical development successfully;
- our need to expand our research and development activities;
- the costs associated with securing, establishing and maintaining commercialization and manufacturing capabilities;
- our ability to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights;
- our need and ability to hire additional management and scientific and medical personnel;
- our need to implement additional, as well as to enhance existing, internal systems and infrastructure, including financial and reporting processes and systems and the associated compliance costs; and
- the economic and other terms, timing and success of our existing licensing arrangements and any collaboration, licensing or other arrangements into which we may enter in the future.

Until such time, if ever, as we can generate substantial revenue from product sales, we expect to finance our cash needs through a combination of net proceeds from equity offerings, debt financings, or other non-dilutive third-party funding (e.g., grants), strategic alliances and licensing arrangements, in particular the License Agreement with GSK. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our common stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, similar to our Loan Agreement or the convertible senior notes we sold in March 2019 and April 2020, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through sales of assets, other third-party funding, strategic alliances and licensing or collaboration arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us.

### Significant Estimates and Judgments

Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States, or GAAP. The preparation of our condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of our condensed consolidated financial statements, as well as the reported revenues and expenses during the reported periods. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Our critical estimates and judgments are described within Item 7 to our Annual Report on Form 10-K for the year ended December 31, 2023.

## Controls and procedures

As filed, 1,807 characters.

#### Management’s Evaluation of our Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the "Exchange Act") is (1) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

As of March 31, 2024, our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our principal executive officer and principal financial officer have concluded based upon the evaluation described above that, as of March 31, 2024, our disclosure controls and procedures were effective at the reasonable assurance level.

#### Changes in Internal Control Over Financial Reporting

During the quarter ended March 31, 2024, there have been no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 217 characters.

Our operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2023.

Filed May 8, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-055590. Last ingested by Listed: Oct 24, 2026, 15:06 ET. No prices; not investment advice.