What changed in this filing

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Item 1. Business

2024-03-28 compared with 2023-03-31 · 389 added, 373 removed, 927 unchanged (45% of the section changed)

SCYNEXIS, Inc.

is pioneering innovative medicines to potentially help millions of patients worldwide in need of new options to overcome and prevent difficult-to-treat and drug-resistant infections.

We are developing our lead product candidate, ibrexafungerp, as a broad-spectrum, intravenous (IV)/oral agent for multiple fungal indications in both the community and hospital settings.

In June 2021 and December 2022, we announced that the 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.

In October 2022, we announced that we were actively pursuing a U.S.

commercialization partner to out-license BREXAFEMME in order to refocus our resources on the further clinical development of ibrexafungerp for severe, hospital-based indications, while keeping BREXAFEMME on the market and available to patients, and have ceased actively promoting BREXAFEMME.

On March 30, 2023, we entered into a license agreement (the License Agreement) with GlaxoSmithKline Intellectual Property (No.

3) Limited (GSK).

Pursuant to the terms of the License Agreement, we granted GSK an exclusive (even as to us and our affiliates), royalty-bearing, sublicensable license for the development, manufacture, 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 (the GSK Territory).

If the existing licenses granted to or agreements with third parties are terminated with respect to any country, GSK will have an exclusive first right to negotiate with us to add those additional countries to the GSK Territory.

We retain rights to all other assets, with GSK receiving a right of first negotiation (ROFN) to any other enfumafungin-derived compounds or products that we may control.

Under the terms of the License Agreement, we are responsible for the execution and costs of the on-going clinical studies of ibrexafungerp for multiple indications, including the treatment of life-threatening invasive fungal infections caused primarily by Candida spp.

(including C.

auris ) and Aspergillus spp.

in hospitalized patients, and we have the potential to receive success-based milestones to offset those costs.

The consummation of the transactions under the License Agreement is subject to the satisfaction of customary closing conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the HSR Act);

provided, that either we or GSK may terminate the License Agreement if expiration or termination of the applicable waiting period under the HSR Act has not occurred within nine months of the signing of the License Agreement.

The parties expect the transactions contemplated by the License Agreement to close in the second quarter of 2023 (such closing, the GSK Closing).

Under the terms of the License Agreement, we will receive an upfront payment of $90 million.

We are also eligible to receive potential:

regulatory approval milestone payments of up to $70 million;

commercial milestone payments of up to $115 million based on first commercial sale in invasive candidiasis (U.S./EU);

and sales milestone payments of up to $242.5 million based on annual net sales, with a total of $77.5 million to be paid upon achievement of multiple thresholds up through $200 million;

a total of $65 million to be paid upon achievement of multiple thresholds between $300 million and $500 million;

and $50 million to be paid at each threshold of $750 million and $1 billion.

We will be responsible for the execution and costs of the ongoing clinical studies of ibrexafungerp but will have the potential to receive up to $75.5 million in success-based development milestones, which are comprised of up to $65 million for the achievement of three interim milestones associated with our continued performance of the ongoing MARIO Study and $10.5 million for the successful completion of the MARIO Study.

See further details of the License Agreement as described in “Collaborations and Licensing Agreements Associated with Our Core Drug Development Operations - GSK”

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 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 with additional assets from the “fungerp” family, including SCY-247, in preclinical stages of development.

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.

GSK License Agreement

On March 30, 2023, we entered into a license agreement (the GSK License Agreement) with GSK.

Pursuant to the terms of the GSK License Agreement, we granted GSK an exclusive (even as to us and our affiliates), royalty-bearing, sublicensable license for the development, manufacture, and commercialization of ibrexafungerp, including the approved product BREXAFEMME, for all indications, in all countries other than those in the Greater China region and certain other countries already licensed to third parties (the GSK Territory).

The parties closed the transactions contemplated by the GSK License Agreement in May 2023 and we received an upfront payment of $90.0 million.

In June 2023, we announced the achievement of a $25.0 million performance-based development milestone under the GSK License Agreement.

This milestone payment followed a development goal for the Phase 3 MARIO study for ibrexafungerp in IC as we continued executing ongoing ibrexafungerp trials.

On December 26, 2023, we and GSK entered into a binding memorandum of understanding (Binding MOU) for amendment to the GSK License Agreement.

The GSK License Agreement was amended in connection with the delay in the commercialization of BREXAFEMME (see "Product Recall and Clinical Hold" below) and further clinical development of ibrexafungerp associated with this event.

Under the terms of the updated GSK License Agreement, as amended by the Binding MOU, we are eligible to receive potential:

• regulatory approval milestone payments of up to $49 million (revised from up to $70 million as provided in the GSK License Agreement);

• commercial milestone payments of up to $57.5 million based on first commercial sale in invasive candidiasis (U.S./EU) (revised from up to $115 million as provided in the GSK License Agreement);

• and sales milestone payments of up to $179.5 / $169.75 / $145.5 million (depending on the date of GSK’s relaunch of BREXAFEMME in the U.S.) (revised from up to $242.5 million as provided in the GSK License Agreement).

These milestones are based on annual net sales in the GSK Territory, with a total of $64 / $54.25 / $46.5 million to be paid upon achievement of multiple sales thresholds up through $200 million;

a total of $45.5 / $45.5 / $39 million to be paid

upon achievement of multiple sales thresholds between $300 million and $500 million;

and $35 / $35 / $30 million to be paid at each sales threshold of $750 million and $1 billion.

We will continue to be responsible for the execution and costs of the ongoing clinical studies of ibrexafungerp but will have the potential to receive up to $72.35 million in development milestones (revised from up to $75.5 million as provided in the GSK License Agreement), which comprise:

$25 million already paid;

$10 million for the delivery to GSK of final clinical study reports for the completed FURI, CARES, and NATURE clinical studies;

up to $30 million for the achievement of two interim milestones associated with our resumption and continued performance of the MARIO Study after the clinical hold is lifted;

and $7.35 million for the successful completion of the MARIO Study.

In the case of each of the above milestones, such milestone events are defined in the GSK License Agreement, as amended by the Binding MOU.

GSK will also pay royalties based on cumulative annual sales to us in the mid-single digit to mid-teen range.

The royalty terms are not amended by the Binding MOU.

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 have 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.

Loan Agreement

We, Hercules Capital, Inc.

(Hercules Capital) and Silicon Valley Bridge Bank, N.A.

(SVB) are party to a Loan and Security Agreement dated as of May 13, 2021 (the Loan Agreement), pursuant to which Hercules Capital, SVB and each of the other lenders from time-to-time party to the Loan and Security Agreement (collectively, the Lenders) loaned to us $35 million.

In connection with the entering into of the License Agreement, we entered into a First Amendment and Consent to Loan and Security Agreement with the Lenders pursuant to which the Lenders consented to us entering into the License Agreement and we agreed to pay to the Lenders an amount equal to the sum of (i) all outstanding principal plus all accrued and unpaid interest with respect to the amounts loaned under the Loan Agreement (approximately $35.4 million), (ii) the prepayment fee payable under Loan Agreement ($262,500), (iii) the final payment payable under Loan Agreement ($1,382,500), and (iv) all other sums, if any, that shall have become due and payable with respect to loan advances under the Loan Agreement.

These payments by us will become due upon the earliest of (A) one business day following receipt by us of the $90 million upfront payment payable to us under the License Agreement, (B) June 1, 2023, or (C) the termination of the License Agreement.

Ibrexafungerp, the first representative of a novel class of antifungal agents called triterpenoids, is a structurally distinct glucan synthase inhibitor and has 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.

Candida and Aspergillus genera are the fungi responsible for approximately 85% of all invasive fungal infections in the United States (U.S.) and Europe.

To date, we have characterized the antifungal activity, pharmacokinetics, and safety profile of the oral and IV formulations of ibrexafungerp in multiple in vitro , in vivo , and clinical studies.

The European Medicines Agency has granted Orphan Medicinal Product designation to ibrexafungerp for IC and the Medicines and Healthcare Regulatory Agency has granted ibrexafungerp the Innovation Passport designation for the treatment of IC.

These designations may provide us (or GSK following the GSK Closing) with additional market exclusivity and/or expedited regulatory paths.

In June 2021, the FDA approved BREXAFEMME for use in patients with VVC.

This approval was based on positive results from two Phase 3, randomized, double-blind, placebo-controlled, multi-center studies (VANISH-303 and VANISH-306), in which oral ibrexafungerp demonstrated statistically superior efficacy compared to placebo and a favorable tolerability profile in women with VVC.

The FDA granted BREXAFEMME five years of exclusivity extension under the Generating Antibiotic Incentives Now (GAIN) Act, which is added to five years of new chemical entity (NCE) exclusivity, for a combined ten-year period of regulatory exclusivity.

BREXAFEMME also is protected by multiple patents, including a composition-of-matter patent covering the ibrexafungerp molecule.

With patent term extension, this patent is expected to expire in 2035, providing an expected 13 years of protection from generic competitors in the U.S.

In December 2022, we announced that the FDA approved a second indication for BREXAFEMME for the reduction in the incidence of RVVC.

This approval was based on positive results from the pivotal Phase 3 CANDLE study that evaluated the safety and efficacy of monthly dosing of ibrexafungerp to reduce the incidence of RVVC.

In October 2022, we announced that we were actively pursuing a U.S.

As a result, we wound down our promotional activities associated with BREXAFEMME and we concluded the partnership with our contracted commercial sales partner, Amplity Health (Amplity), on November 30, 2022.

On March 30, 2023, we entered into the License Agreement with GSK.

Our Platform of Indications

Ibrexafungerp Hospital and Community Clinical Programs

We continue to actively advance our clinical programs, leveraging the potential of ibrexafungerp to be a suitable treatment for multiple indications with significant unmet medical needs and considerable commercial opportunities.

The following illustration summarizes the status of the indications for ibrexafungerp currently being pursued in the hospital and community settings, as well as our current expectations regarding the time of reporting data and, if the data supports it, the potential filing of an NDA and FDA approval (or, following the GSK Closing, if consistent with GSK’s strategy, the potential filing of an NDA by GSK and, if GSK submits an NDA at such time, the potential FDA approval):

(as successor to Silicon Valley Bank) (SVBB) were parties to a Loan and Security Agreement dated as of May 13, 2021 (the Loan Agreement), pursuant to which Hercules Capital, SVBB and each of the other lenders from time-to-time party to the Loan Agreement (collectively, the Lenders) loaned to us $35 million.

In connection with the entering into of the GSK License Agreement, we entered into a First Amendment and Consent to Loan and Security Agreement (the First Amendment) with the Lenders pursuant to which the Lenders consented to us entering into the GSK License Agreement and we agreed to pay to the Lenders an amount equal to the sum of (i) all outstanding principal plus all accrued and unpaid interest with respect to the amounts loaned under the Loan Agreement (approximately $35.4 million), (ii) the prepayment fee payable under Loan Agreement ($262,500), (iii) the final payment payable under Loan Agreement ($1,382,500), and (iv) all other sums, if any, that shall have become due and payable with respect to loan advances under the Loan Agreement.

These payments became due upon the earliest of (A) one business day following receipt by us of the $90 million upfront payment payable to us under the GSK License Agreement, (B) June 1, 2023, or (C) the termination of the GSK License Agreement.

Following the closing of the transactions under the GSK License Agreement, in May 2023, we received an upfront payment pursuant to the terms of the GSK License Agreement, which triggered our obligation to repay the amounts due under the terms of the First Amendment.

In connection with the repayment of those amounts due, in May 2023, we and the Lenders

executed a payoff letter confirming the amounts due under the First Amendment, and our confirmation that the Loan Agreement, as amended by the First Amendment, was terminated.

Class Action Lawsuit

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.

We disagree with the allegations and intend to defend the litigation vigorously .

Preclinical Developments – SCY-247

SCY-247 is a second-generation antifungal compound, from a novel class of structurally-distinct glucan synthase inhibitors, triterpenoids (fungerps), that are under development as therapeutic options for systemic fungal diseases.

The triterpenoid class of antifungals represents the first new class of antifungal compounds since 2001.

These agents combine the well-established activity of glucan synthase inhibitors with the potential flexibility of having oral and IV formulations.

SCY-247 is in preclinical development stage and has demonstrated broad-spectrum antifungal activity, in vitro and in vivo .

We anticipate that the FDA may grant QIDP and Fast Track designations for the IV and oral formulations of SCY-247.

We continue to progress the development activities for SCY-247.

Some of these activities, including assessing the activity of the compound against Candida auris and Mucorales are being supported by NIH grants.

We anticipate initiating a Phase 1 study for SCY-247 in the second half of 2024.

Mucormycosis is a life-threatening fungal infection with an associated mortality that ranges from 46% to 96%, most commonly affecting immunocompromised patients including those with leukemia, patients undergoing bone marrow transplants, and patients affected by severe COVID or uncontrolled diabetes mellitus.

In a highly lethal mouse model of mucormycosis, SCY-247 showed very promising in vivo efficacy.

Orally administered SCY-247 resulted in 40% and 50% survival at 21 days post infection for the intermediate (32 mg/kg) and high doses (48 mg/kg), respectively, compared to 0% survival in the placebo group (p = 0.011 and 0.007, respectively).

This is comparable to the 40% survival observed in the control group treated with 10 mg/kg of intravenous standard of care of liposomal amphotericin B (LAMB) (p = 0.008 vs.

Even more encouraging was a 90% survival observed in the group receiving combination therapy of SCY-247 32 mg/kg plus LAMB 10 mg/kg (p < 0.0001 vs.

placebo and p < 0.05 vs.

monotherapy).

The positive survival data correlated with a statistically significant fungal burden reduction in both lung and brain tissue with SCY-247 32 mg/kg dose (p = 0.0288 and 0.0355 vs.

placebo, respectively) and 48 mg/kg dose (p = 0.0015 and 0.0052 vs.

placebo, respectively) as well as with the active control LAMB (p = 0.0005 vs.

placebo for both lung and brain tissues).

The combination treatment of SCY-247 plus LAMB demonstrated the greatest reduction in fungal burden and was highly statistically significant in both lung and brain tissue (both p < 0.0001 vs.

Ibrexafungerp Indications

The ibrexafungerp indications below summarize the status of the indications for ibrexafungerp being developed in the hospital and community settings by us under the GSK License Agreement.

We will continue to be responsible for the execution and costs of these clinical studies of ibrexafungerp.

Invasive Candidiasis and/or Candidemia

Enrollment is continuing in our prospective, randomized, double-blind, global Phase 3 study to evaluate the efficacy, safety and tolerability of oral ibrexafungerp as a step-down therapy for patients with IC including candidemia following IV echinocandin therapy in the hospital compared to currently available therapies (the MARIO study).

Enrollment is on clinical hold in our prospective, randomized, double-blind, global Phase 3 study to evaluate the efficacy, safety and tolerability of oral ibrexafungerp as a step-down therapy for patients with IC including candidemia following IV echinocandin therapy in the hospital compared to currently available therapies (the MARIO study).

Eligible patients with IC will receive treatment with IV echinocandin and will then be switched to either oral ibrexafungerp or a standard of care option, either oral fluconazole or best available therapy (BAT) for subjects with infections caused by fluconazole non-susceptible strains, once step-down criteria are met.

Approximately 220 patients will be enrolled and randomized in the study, and we expect topline results in the first half of 2024 and a potential approval by the end of 2024.

The primary objective of the study is to determine whether treatment of IC with IV echinocandins followed by oral ibrexafungerp is as effective as treatment with IV echinocandins followed by oral fluconazole (or BAT), the current standard of care.

If enrollment resumes, approximately 220 patients will be enrolled and randomized in the study.

The primary end point of the study will be all-cause mortality at 30 days after initiation of antifungal therapy.

The data from the MARIO study is intended to be supportive of an NDA submission for ibrexafungerp as step-down therapy in patients with IC.

Such submission would be made by GSK and any resulting approval would be held by GSK.

Refractory Invasive Fungal Infections (rIFI)

We achieved a target enrollment of 200 patients in our Phase 3 FURI study as well as the target enrollment of 30 patients in our Phase 3 CARES study.

We anticipate study completion activities for both studies in the first half of 2023 follow by a Data Review Committee review and topline data in the first half of 2024.

The data from the MARIO study along with data from FURI and CARES studies are intended to be supportive of an NDA submission in 2024 with an anticipated first approval for an indication in the hospital setting later in 2024.

The FURI study is evaluating oral ibrexafungerp as a salvage treatment in patients with a variety of difficult-to-treat mucocutaneous and invasive fungal infections that are refractory to or intolerant of current standards of care, or require a non-azole oral step-down therapy for treatment of azole-resistant species.

The CARES study is focused on hospitalized patients with invasive candidiasis caused by the multidrug-resistant Candida auris organism, which is associated with high mortality, and the

interim analysis was the first clinical trial data of an investigational treatment against infections caused by Candida auris .

Candida auris has been recently declared an “Urgent Threat”

to public health by the Centers for Disease Control and Prevention (CDC) in its report, Antibiotic Resistance Threats in the United States, 2019, as it can be multidrug-resistant, has resulted in high mortality rates (up to 60%), and can be spread from patients (and surfaces) to patients, resulting in hospital outbreaks.

The CARES study is intended to provide rapid access to oral ibrexafungerp for patients suffering from this life-threatening infection.

The open-label designs of the FURI and CARES studies permit evaluation of the data on an interim basis to further inform subsequent regulatory steps of the development program.

We believe that compelling data from the FURI and/or CARES studies could allow ibrexafungerp to become eligible for the regulatory LPAD, potentially enabling an NDA submission (which would be by GSK following the GSK Closing) based on streamlined development.

The LPAD was established under the 21st Century Cures Act of 2016, and FDA draft guidance issued in June 2019 suggests smaller, shorter or fewer clinical trials may be appropriate to support approval to treat a serious or life-threatening infection in a limited population with unmet needs.

Positive clinical findings from these the FURI and CARES studies have so far reinforced the potential role of oral ibrexafungerp as a novel therapy to combat severe and difficult-to-treat fungal infections, including multidrug-resistant Candida auris .

We enrolled 233 patients in our Phase 3 FURI study investigating the potential of ibrexafungerp as a treatment for fungal infections that are refractory or intolerant to other antifungals and we anticipate providing topline data to GSK in the first half of 2024.

We also achieved a target enrollment of 30 patients in our Phase 3 CARES study, focused on patients with infections caused by C.

Topline data from the CARES study is positive and consistent with previously disclosed results from interim analyses.

It is anticipated that the data will be presented at a future scientific meeting.

The data from these studies is intended to be supportive of an NDA submission for ibrexafungerp as salvage therapy in patients with certain refractory invasive fungal diseases.

Such NDA submission would be made by GSK and any resulting approval would be held by GSK.

Invasive Aspergillosis

Based on promising pre-clinical data from combination use of ibrexafungerp with voriconazole, the current standard of care, vs.

Aspergillus spp., we are conducting a Phase 2 study (SCYNERGIA study) of oral ibrexafungerp in combination with voriconazole in patients with IA.

Based on promising preclinical data from combination use of ibrexafungerp with voriconazole, the current standard of care, vs.

Aspergillus spp., a Phase 2 study (SCYNERGIA study) of oral ibrexafungerp in combination with voriconazole in patients with IA was conducted.

This study is a randomized, double-blind trial with the objective of assessing the safety and efficacy of oral ibrexafungerp in combination with voriconazole, compared to voriconazole alone.

We believe that ibrexafungerp’s broad activity against Aspergillus spp., including azole-resistant strains, along with its minimal drug-drug interactions, high tissue penetration into the lungs, and oral formulation allowing for long-term administration, may make it an ideal candidate for use as combination therapy to provide improved outcomes vs.

standard of care.

We have completed the enrollment of SCYNERGIA, although the number of patients is smaller than initially projected.

The prioritization of hospital resources toward addressing COVID-19 has impacted the ability of many institutions to focus on screening and enrolling patients into some clinical trials, including SCYNERGIA.

We expect to provide topline data for SCYNERGIA in the first half of 2023.

IV Ibrexafungerp Development Program

We have completed a Phase 1 randomized, double-blind, placebo-controlled single and multiple ascending dose study evaluating the safety, tolerability, and pharmacokinetics of the liposomal IV formulation of ibrexafungerp in 64 healthy subjects with treatment durations of up to seven days.

The liposomal IV formulation of ibrexafungerp was designed to optimize tolerability and address dose-limiting infusion site irritation adverse events observed with previous formulations.

The study was conducted in South Africa and dosing began in March 2021 and the last cohort was completed in October 2021.

The liposomal IV formulation of ibrexafungerp was generally well tolerated with no serious adverse events reported.

The most common adverse events were mostly mild (a few moderate) reactions at the infusion site.

The dosing was successfully progressed until the target exposure was achieved (i.e., exposure associated with efficacy from animal models).

Should the GSK Closing not occur, we are planning to begin a Phase 2 study of the liposomal IV formulation in 2023.

We completed enrollment with 22 patients included and the data analysis is ongoing.

We anticipate providing topline data for the SCYNERGIA study to GSK in the first half of 2024.

Treatment of VVC

In the second quarter of 2022, enrollment began in a new Phase 3b, open-label, multicenter study (VANQUISH) to evaluate the efficacy, safety and tolerability of oral ibrexafungerp as a treatment for complicated VVC in patients who have failed treatment with fluconazole, based on mycological and clinical outcomes.

The VANQUISH study will enroll approximately 150 complicated VVC patients who will receive 600 mg of oral ibrexafungerp for one, three or seven consecutive days determined by their underlying complicating condition, including immunocompromised state.

We have completed the enrollment of the VANQUISH Phase 3b open-label trial (VANQUISH study) evaluating the safety and efficacy of ibrexafungerp in patients with complicated vulvovaginal candidiasis who failed to respond to treatment with fluconazole.

The VANQUISH study enrolled 150 complicated VVC patients who received 600 mg of oral ibrexafungerp for one, three or seven consecutive days determined by their underlying complicating condition, including immunocompromised state.

Complicated patients include patients with recurrent VVC, those with VVC caused by non-albicans Candida species and those with diabetes, immunocompromising conditions (e.g., HIV), or immunosuppressive therapy (e.g., corticosteroids).

The VANQUISH study will be conducted in approximately 25 centers in the U.S.

and we are targeting to have data from this study in the first half of 2024.

Preclinical Developments

In the fourth quarter of 2022, we announced that a $3.0 million National Institutes of Health (NIH) grant was awarded to Case Western Reserve University researchers to study our second generation fungerp (SCY-247).

SCY-247 is a broad-spectrum, antifungal under development by us and has as a potential oral and IV systemic therapeutic option for multiple drug-resistant pathogens.

The grant is intended the further characterize the potential of SCY-247 to fight Candida auris , a multidrug-resistant pathogen named as an “urgent threat”

by the Centers for Disease Control (CDC) and included in the “critical priority group”

on the World Health Organization (WHO) fungal priority pathogens list (FPPL).

Previous preclinical investigations

with SCY-247 have reported potent antifungal activity in in vitro studies, favorable pharmacokinetic profile and promising efficacy in mice models of invasive candidiasis.

We plan to continue progressing the development of SCY-247 as a next generation fungerp in the fight against life-threatening fungal diseases.

We anticipate providing topline data for the VANQUISH study to GSK in the first half of 2024.

Key Development Milestones

We are seeking to achieve the following key milestones in the next 12 months:

close the transactions contemplated by the License Agreement with GSK in the second quarter of 2023;

continue to advance enrollment of the MARIO study, a global Phase 3 study to evaluate ibrexafungerp as an oral step-down treatment for IC in the hospital setting;

provide topline data for the FURI and CARES studies in first half of 2024;

should the GSK Closing not occur, initiate a Phase 2 study of the liposomal IV formulation of ibrexafungerp in 2023;

provide topline data for the Phase 2 SCYNERGIA study in the first half of 2023.

We are seeking to achieve the following key milestones:

• to lift the clinical hold placed on ibrexafungerp by the FDA to enable the resumption of enrollment in the MARIO study, a global Phase 3 study to evaluate ibrexafungerp as an oral step-down treatment for IC in the hospital setting;

• to provide topline data for the FURI study to GSK in the first half of 2024;

• to provide topline data for the Phase 2 SCYNERGIA study and the Phase 3b VANQUISH study to GSK in the first half of 2024;

• to initiate a Phase 1 study for SCY-247 in the second half of 2024.

Key elements of our strategy include:

to close the transactions contemplated by the License Agreement with GSK in the second quarter of 2023;

to further develop ibrexafungerp and obtain regulatory approval in major commercial markets for our key indications:

invasive candidiasis, refractory invasive fungal infections, and invasive aspergillosis;

should the GSK Closing not occur, to contract with commercial partners to develop and commercialize ibrexafungerp outside of the U.S.;

to leverage our strong scientific team to pursue the development of other internal proprietary compounds;

• to leverage our strong scientific team to pursue the development of other internal proprietary compounds, including SCY-247;

• to maximize ibrexafungerp’s value, in line with the GSK License Agreement, by delivering the results of completed and ongoing clinical trials under our responsibility enabling further expansion of indications including invasive fungal infections;

• to assess external opportunities for in-licensing to expand our development pipeline and add products for commercialization.

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Ibrexafungerp is being developed as oral and IV formulations and has demonstrated potent activity against a large collection of medically relevant strains of Candida and Aspergillus genera, including multidrug-resistant strains, as well as Pneumocystis, Coccidioides, Histoplasma and Blastomyces genera.

Additionally, ibrexafungerp has shown in vitro , in vivo and clinical activity against multidrug-resistant organisms such as Candida auris and synergistic/additive activity in combination with isavuconazole against Aspergillus strains and in

combination with amphotericin B against fungi causing mucormycosis.

Additionally, ibrexafungerp has shown in vitro , in vivo and clinical activity against multidrug-resistant organisms such as

Candida auris and synergistic/additive activity in combination with isavuconazole against Aspergillus strains and in combination with amphotericin B against fungi causing mucormycosis.

Ibrexafungerp has unique attributes that define its potential to address significant unmet medical needs and provide considerable commercial opportunities, including:

• oral bioavailability, unlike other glucan synthase inhibitors, allowing for convenient long-term outpatient use;

broad activity against Candida, Aspergillus, Pneumocystis, Coccidioides, Histoplasma and Blastomyces strains;

• distinct chemical structure from other glucan synthase inhibitors, providing a unique spectrum of activity and pharmacokinetic profile;

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• refractory invasive fungal infections.

In the future, we (or our licensee GSK following the GSK Closing) may also consider other indications for ibrexafungerp for which longer oral antifungal regimens are typically needed and would benefit from the broad-spectrum activity, favorable safety profile and low potential for drug-drug interactions, including for the treatment of chronic fungal infections and for prophylaxis.

In the future, we or our licensee GSK, may also consider other indications for ibrexafungerp for which longer oral antifungal regimens are typically needed and would benefit from the broad-spectrum activity, favorable safety profile and low potential for drug-drug interactions, including for the treatment of chronic fungal infections and for prophylaxis.

For the treatment of invasive fungal infections, we expect that prescribing physicians will be located at major medical centers, where physicians specializing in critical care, infectious disease specialists, and physicians treating immune compromised or immuno-suppressed patients, such as oncologists and those performing solid organ transplants and stem cell transplants, are likely to be found.

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We believe BREXAFEMME has the potential to address vaginal yeast infections across a broad range of patients and could be an ideal treatment option for many patients for whom current treatment options are suboptimal.

Despite yeast infections being so common and prevalent, with millions of women suffering from it every year, it is still an under-appreciated, under-reported, and under-served women’s health condition.

Despite yeast

infections being so common and prevalent, with millions of women suffering from them every year, it is still an under-appreciated, under-reported, and under-served women’s health condition.

Treatments for VVC have historically included several topical azole antifungals and oral fluconazole.

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BREXAFEMME is the first and only approved oral, non-azole treatment for vaginal yeast infections.

We believe that BREXAFEMME’s unique combination of features, including being from a novel class with a different mechanism of action, single-day oral dosing, broad spectrum, and fungicidal activity in all Candida species ( albicans and non- albicans ) including fluconazole-resistant strains, differentiates it from competing products.

Invasive Candidiasis / rIFI

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The phenomenon of multi-drug resistance is also reported among isolates of different species of Candida , making the management of patients suffering from these infections extraordinarily challenging, considering the very limited treatment options available.

Specifically, 90% of Candida auris isolates have been reported to be resistant to at least one antifungal agent and 30% isolates resistant to at least two antifungals.

Specifically, 90% of Candida auris isolates have been reported to be resistant to at least one antifungal agent and 30% of isolates resistant to at least two antifungals.

There is a clear need for new antifungal treatment options for patients with invasive candidiasis that are refractory or intolerant to available therapies as well as for those who would benefit from oral therapy.

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and other global markets and marketed by Astellas in the U.S.;

Diflucan® (fluconazole), Pfizer, off-patent with multiple generics,

Terazol (terconazole), Jannsen, off-patent with multiple generics, Gynazole (butoconazole), Perrigo, off patent with multiple generics;

Diflucan® (fluconazole), Pfizer, off-patent with multiple generics, Terazol (terconazole), Jannsen, off-patent with multiple generics, Gynazole (butoconazole), Perrigo, off patent with multiple generics;

Echinocandins .

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The key competitive factors affecting the success of ibrexafungerp, if approved, are likely to be its efficacy, safety, convenience, use in outpatient settings, the level of generic competition and the availability of reimbursement from government and other third-party payors.

If approved, we believe that ibrexafungerp’s unique features, including being from a novel antifungal class, broad-spectrum of activity including resistant strains, IV and oral formulations, fungicidal activity versus Candida , high tissue penetration, and favorable safety profile, will differentiate it from competing products and allow premium pricing to generics and other competing products.

The commercial opportunity for ibrexafungerp could be reduced or eliminated if competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than products that we or GSK may develop.

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If approved, we believe ibrexafungerp will be capable of delivering value supportive of premium pricing over competitive generic products.

Manufacturing and Supply of Ibrexafungerp

We have agreements with external vendors that are capable of supplying drug substance and of producing drug product to support ongoing and planned clinical trials, as well as for commercial product.

However, we do not own or operate and do not intend to own or operate facilities for manufacturing, storage and distribution, or testing of drug substance or drug product.

We have relied on third-party contract manufacturers for synthesis of our clinical compounds and manufacture of drug product.

We expect to continue to rely on either existing or alternative third-party manufacturers to supply ibrexafungerp for our performance of clinical trials and for supplying GSK needs for clinical and commercial product until it obtains its own source of supply.

Ibrexafungerp is a semi-synthetic compound.

Thus, the manufacturing process for ibrexafungerp involves fermentation and synthetic chemical steps.

Manufacturing and Supply of Ibrexafungerp and SCY-247

Ibrexafungerp is a semi-synthetic compound that involves fermentation and synthetic chemical steps in its manufacturing process.

The synthetic process does not require any specialized equipment and uses readily sourced intermediates.

At commercial scale, we expect cost of goods for ibrexafungerp to be similar to that of other small molecule drugs.

We have negotiated agreements with our primary contract manufacturers to produce both drug product and drug substance for our current clinical trials and for GSK’s clinical and commercial needs.

We estimate our supplies on hand as well as those we plan to produce for the oral formulation of ibrexafungerp are sufficient to supply our ongoing clinical trials as well as to support GSK’s clinical and commercial needs.

Additional batches of both oral and IV ibrexafungerp drug product will be manufactured as needed to support the subsequent stages of clinical development plan and commercial supply requirements.

We do not own or operate and do not intend to own or operate facilities for manufacturing, storage and distribution, or testing of drug substance or drug product.

We have relied on third-party contract manufacturers for synthesis of our clinical compounds and manufacture of drug product.

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.

We have begun engaging with the FDA and during a meeting in September 2023, the FDA concurred with our voluntary hold and placed a clinical hold.

We are working to provide additional information to the FDA and discuss potential paths for resolution of this issue.

The clinical hold and recall affect our two ongoing clinical studies:

the Phase 3 MARIO study and a Phase 1 lactation study.

The hold does not impact the recently completed FURI, CARES, VANQUISH and SCYNERGIA

clinical studies, for which dosing is complete.

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.

A drug manufacturing program subject to extensive governmental regulations requires robust quality assurance systems and experienced personnel with the relevant technical and regulatory expertise as well as strong project management skills.

We believe we have a team that is capable of managing these activities until GSK assumes responsibility for them pursuant to the License Agreement.

The primary third-party vendors with which we have agreements in place to support manufacturing and supply both for clinical development and commercial needs have the required capabilities with respect to facilities, equipment and technical expertise, quality systems that meet global regulatory and compliance requirements, satisfactory regulatory inspection history from relevant health authorities and proven track records in supplying drug substance and drug product for late-stage clinical and commercial use.

We believe we have a team that is capable of managing these activities until GSK assumes responsibility for them pursuant to the GSK License Agreement.

We believe the primary third-party vendors with which we have agreements in place to support manufacturing and supply for clinical development have the required capabilities with respect to facilities, equipment and technical expertise, quality systems that meet global regulatory and compliance requirements, satisfactory regulatory inspection history from relevant health authorities and proven track records in supplying drug substance and drug product.

Collaborations and Licensing Agreements Associated with Our Core Drug Development Operations

We have a number of licensing and collaboration agreements associated with our core drug development operations, including the following:

On March 30, 2023 we entered into a License Agreement with GSK.

We retain rights to all other assets, with GSK receiving a ROFN to any other enfumafungin-derived compounds or products that we may control.

Under the terms of the License Agreement, we will receive an upfront payment of $90 million.

We are also eligible to receive potential:

regulatory approval milestone payments of up to $70 million;

commercial milestone payments of up to $115 million based on first commercial sale in invasive candidiasis (U.S./EU);

and sales milestone payments of up to $242.5 million based on annual net sales, with a total of $77.5 million to be paid upon achievement of multiple thresholds up through $200 million;

a total of $65 million to be paid upon achievement of multiple thresholds between $300 million and $500 million;

and $50 million to be paid at each threshold of $750 million and $1 billion.

In the case of each of the above milestones, such milestone events are defined in the License Agreement.

GSK will also pay royalties based on cumulative annual sales to us in the mid-single digit to mid-teen range.

These royalty rates are subject to reduction, including in the event of third-party licenses, entry of a generic product, or the expiration of licensed patents.

A joint development committee will be established between GSK and us to coordinate and review ongoing development activities of ibrexafungerp.

Unless earlier terminated, the License Agreement will expire on a product-by-product and country-by-country basis at the end of the royalty term for such product in such country.

We have the right to terminate the License Agreement upon an uncured material breach by, or bankruptcy of, GSK.

GSK has the right to terminate the License Agreement at any time for convenience in its entirety or on a product-by-product and country-by-country basis, upon an uncured material breach by, or bankruptcy of, us, or for safety reasons.

The parties expect the transactions contemplated by the License Agreement to close in the second quarter of 2023.

On March 30, 2023, we entered into a license agreement (the GSK License Agreement) with GSK.

The parties closed the transactions contemplated by the GSK License Agreement in May 2023 and we received an upfront payment of $90.0 million.

In June 2023, we announced the achievement of a $25.0 million performance-based development milestone under the GSK License Agreement.

This milestone payment followed a development goal for the Phase 3 MARIO study for ibrexafungerp in IC as we continued executing ongoing ibrexafungerp trials.

The GSK License Agreement was amended in connection with the delay in the commercialization of BREXAFEMME and further clinical development of ibrexafungerp associated with this event.

We initially discovered and developed ibrexafungerp through a research collaboration with Merck Sharp & Dohme Corp.

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In May 2013, Merck transferred to us all development and commercialization rights for ibrexafungerp (also known as MK-3118).

This decision was made following a review and prioritization of Merck’s

infectious disease portfolio.

This decision was made following a review and prioritization of Merck’s infectious disease portfolio.

Under the terms of the agreement, we received all human health rights to ibrexafungerp, including all related technical documents, preclinical data, data from the seven Phase 1 trials conducted by Merck, and drug product and drug substance.

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On December 2, 2020, we entered into a fourth amendment to the license agreement with Merck.

The amendment eliminates two cash milestone payments that we would have paid to Merck upon the first filing of a NDA, triggered by the FDA acceptance for filing of our NDA for ibrexafungerp for the treatment of VVC, and first marketing approval in the U.S.

The amendment eliminates two cash milestone payments that we would have paid to Merck upon the first filing of a NDA, triggered by the

FDA acceptance for filing of our NDA for ibrexafungerp for the treatment of VVC, and first marketing approval in the U.S.

in June 2021 for our NDA for ibrexafungerp for the treatment of VVC.

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All other key terms of the license agreement are unchanged.

In February 2021, we entered into an Exclusive License and Collaboration Agreement (the Agreement) with Hansoh (Shanghai) Health Technology Co., Ltd., and Jiangsu Hansoh Pharmaceutical Group Company Limited (collectively, Hansoh), pursuant to which we granted to Hansoh an exclusive license to research, develop and commercialize ibrexafungerp in the Greater China region, including mainland China, Hong Kong, Macau, and Taiwan.

Under the terms of the Agreement, Hansoh shall be responsible for the development, regulatory approval and commercialization of ibrexafungerp in Greater China.

In February 2021, we entered into an Exclusive License and Collaboration Agreement (the Hansoh License Agreement) with Hansoh (Shanghai) Health Technology Co., Ltd., and Jiangsu Hansoh Pharmaceutical Group Company Limited (collectively, Hansoh), pursuant to which we granted to Hansoh an exclusive license to research, develop and commercialize ibrexafungerp in the Greater China region, including mainland China, Hong Kong, Macau, and Taiwan.

Under the terms of the Hansoh License Agreement, Hansoh shall be responsible for the development, regulatory approval and commercialization of ibrexafungerp in Greater China.

We received a $10.0 million upfront payment and will also be eligible to receive up to $112.0 million in development and commercial milestones, plus low double-digit royalties on net product sales.

The obligation to pay royalties with respect to sales in a specified region will continue until the later of the date of expiration of all intellectual property and regulatory exclusivity for the product in the region and ten years from the first commercial sale, unless earlier terminated by Hansoh with advanced notice for convenience or under other specified circumstances.

The obligation to pay us royalties with respect to sales in a specified region will continue until the later of the date of expiration of all intellectual property and regulatory exclusivity for the product in the region and ten years from the first commercial sale, unless earlier terminated by Hansoh with advanced notice for convenience or under other specified circumstances.

In August 2013, we entered into an agreement with R-Pharm, CJSC (R-Pharm), a leading supplier of hospital drugs in Russia, granting them exclusive rights to develop and commercialize ibrexafungerp in the field of human health in Russia, Turkey, and certain Balkan, Central Asian, Middle Eastern and North African countries.

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We received a non-refundable upfront payment of $1.5 million from R-Pharm in August 2013 which was recognized over a period of 70 months and is fully amortized.

This agreement is not material to our consolidated balance sheets, statements of operations, or statements of cash flows.

Government Regulation

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Drug Approval Process

In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act (FDCA), and implementing regulations.

In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act (FDCA), and implements regulations.

The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations requires the expenditure of substantial time and financial resources.

Failure to comply with the applicable U.S.

requirements at any time during the product development process, approval process or after approval, may subject an applicant to a variety of administrative or judicial sanctions, such as the FDA’s refusal to approve pending NDAs, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters, product recall requests, product seizures, total or partial suspension of production or distribution, injunctions, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.

The process required by the FDA before a drug may be marketed in the United States generally involves the following:

completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice (GLP) regulations;

• completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice (GLP) regulations;

• submission to the FDA of an investigational new drug application (IND) which must become effective before human clinical trials may begin;

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• satisfactory completion of an FDA advisory committee review, if applicable;

satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with current Good manufacturing practice (cGMP) regulations and guidance, and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity;

• satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with current Good manufacturing practice (cGMP) regulations and guidance, and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity;

• FDA review and approval of the NDA.

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Furthermore, the FDA or the sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects are being exposed to an unacceptable health risk.

Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients.

In some cases, the FDA may condition approval of an NDA for a product candidate on the sponsor’s agreement to conduct additional clinical trials to further assess the drug’s safety and effectiveness after NDA approval.

Such post-approval trials are typically referred to as Phase 4 studies.

In some circumstances, the FDA may also order a sponsor to conduct post-approval clinical trials if new safety information arises raising questions about the drug’s risk-benefit profile.

Those clinical trials are typically referred to as Post-Marketing Requirements (PMRs).

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The purpose of these programs is to provide important new drugs to patients earlier than under standard FDA review procedures.

The GAIN Act is intended to encourage development of new antibacterial and antifungal drugs for the treatment of serious or life-threatening infections by providing certain benefits to sponsors, including extended exclusivity periods, fast track and priority review.

To be eligible for these benefits a product in development must seek and be awarded designation as a Qualified Infectious Disease Product (QIDP).

The Generating Antibiotic Incentives Now Act (GAIN Act) is intended to encourage development of new antibacterial and antifungal drugs for the treatment of serious or life-threatening infections by providing certain benefits to sponsors, including extended exclusivity periods, fast track and priority review.

To be eligible for these benefits a product in development must seek and be awarded designation as a QIDP.

To qualify as a QIDP according to the criteria established in the GAIN Act, a product must be an antibacterial or antifungal drug for human use intended to treat serious or life-threatening infections, including, those:

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There also are continuing annual user fee requirements for any marketed products and the establishments at which such products are manufactured, as well as application fees for supplemental applications with clinical data.

Even if the FDA approves a product, it may limit the approved indications for use of the product, require that contraindications, warnings or precautions be included in the product labeling, including a boxed warning, require that post‑approval studies, including Phase 4 clinical trials, be conducted to further assess a drug’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution restrictions or other risk management mechanisms under a REMS, which can materially affect the potential market and profitability of the product.

The FDA may prevent or limit further marketing of a product based on the results of post‑marketing studies or surveillance programs.

and profitability of the product.

The FDA may prevent or limit further marketing of a product based on the results of post‑marketing studies or surveillance programs.

In addition, drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and state agencies, and are subject to periodic unannounced inspections by the FDA and these state agencies for compliance with cGMP requirements.

Changes to the manufacturing process are strictly regulated and often require prior FDA approval before being implemented.

FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements upon the sponsor and any third‑party manufacturers that the sponsor may decide to use.

Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain cGMP compliance.

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However, pharmaceutical companies may share truthful and not misleading information that is otherwise consistent with the labeling.

The FDA and other agencies actively enforce the laws and regulations prohibiting their promotion of off‑label uses, and a company that is found to have improperly promoted off‑label uses may be subject to significant civil, criminal and administrative liability.

In addition, the distribution of prescription pharmaceutical products is subject to the Prescription Drug Marketing Act, or PDMA, which regulates the distribution of drugs and drug samples at the federal level, and sets minimum standards for the registration and regulation of drug distributors by the states.

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Pediatric exclusivity is another type of non-patent marketing exclusivity in the United States and, if granted, provides for the attachment of an additional six months of regulatory protection to the term of any existing exclusivity, including the non-patent exclusivity periods described above, and to the regulatory term of any patent that has been submitted to FDA for the approved drug product.

This six-month exclusivity may be granted based on the voluntary completion of a pediatric study or studies in accordance with an FDA-issued “Written Request”

for such a study or studies.

This six-month exclusivity may be granted based on the voluntary completion of a pediatric study or studies in accordance with an FDA-issued “Written Request” for such a study or studies.

Qualified Infectious Disease Product Exclusivity

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Accordingly, we are, or may become, subject to numerous data privacy and security obligations, including federal, state, local, and foreign laws, regulations, guidance, and industry standards related to data privacy and security.

Such obligations may include, without limitation, the Federal Trade Commission Act, the California Consumer Privacy Act of 2018 (CCPA), the Canadian Personal Information Protection and Electronic Documents Act, Canada’s Anti-Spam Legislation, the European Union’s General Data Protection Regulation 2016/679 (EU GDPR), the EU GDPR as it forms part of United Kingdom (UK) law by virtue of section 3 of the European Union (Withdrawal) Act 2018 (UK GDPR), and the Payment Card Industry Data Security Standard (PCI DSS).

Several states within the United States have enacted or proposed data privacy and

security laws.

Several states within the United States have enacted or proposed data privacy and security laws.

For example, Virginia passed the Consumer Data Protection Act, and Colorado passed the Colorado Privacy Act.

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The CCPA and EU GDPR are examples of the increasingly stringent and evolving regulatory frameworks related to personal data processing that may increase our compliance obligations and exposure for any noncompliance.

For example, the CCPA imposes obligations on covered businesses to provide specific disclosures related to a business’s collection, use, and disclosure of personal data and to respond to certain requests from California residents related to their personal data (for example, requests to know of the business’s personal data processing activities, to delete the individual’s personal data, and to opt out of certain personal data disclosures).

Also, the CCPA provides for civil penalties and a private right of action for data breaches which may include an award of statutory damages.

In addition, the California Privacy Rights Act of 2020 (CPRA), effective January 1, 2023, expanded the CCPA by, among other things, giving California residents the ability to limit use of certain sensitive personal data, establishing restrictions on personal data retention, expanding the types of data breaches that are subject to the CCPA’s private right of action, and establishing a new California Privacy Protection Agency to implement and enforce the new law.

subject to the CCPA’s private right of action, and establishing a new California Privacy Protection Agency to implement and enforce the new law.

Foreign data privacy and security laws (including but not limited to the EU GDPR and UK GDPR) impose significant and complex compliance obligations on entities that are subject to those laws.

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and mandating the appointment of representatives in the UK and/or the EU in certain circumstances.

See the section titled “Risk Factors”

for additional information about the laws and regulations to which we may become subject and about the risks to our business associated with such laws and regulations.

See the section titled “Risk Factors” for additional information about the laws and regulations to which we may become subject and about the risks to our business associated with such laws and regulations.

Healthcare Laws and Compliance Requirements

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• the Federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, prohibits, among other things, executing or attempting to execute a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

the federal Physician Payments Sunshine Act requires applicable manufacturers of covered drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to annually report to CMS information regarding payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals as well as information regarding ownership and investment interests held by physicians and their immediate family members;

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and their implementing regulations, also imposes obligations, including mandatory contractual terms, on “covered entities,”

including certain healthcare providers, health plans, healthcare clearinghouses, and their respective “business associates,”

that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity as well as their covered subcontractors, with respect to safeguarding the privacy, security and transmission of individually identifiable health information, as well as analogous state and foreign laws that govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts;

• the federal Physician Payments Sunshine Act requires applicable manufacturers of covered drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to annually report to CMS information regarding payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals as well as information regarding ownership and investment interests held by physicians and their immediate family members;

• HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and their implementing regulations, also imposes obligations, including mandatory contractual terms, on “covered entities,” including certain healthcare providers, health plans, healthcare clearinghouses, and their respective “business associates,” that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity as well as their covered subcontractors, with respect to safeguarding the privacy, security and transmission of individually identifiable health information, as well as analogous state and foreign laws that govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts;

• analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non- governmental third-party payors, including private insurers.

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In the United States, no uniform policy of coverage and reimbursement for drug products exists among third-party payors.

One third-party payor’s determination to provide coverage for a product candidate does not assure that other payors will also provide coverage for the product candidate.

As a result, the coverage determination process is often time-consuming and costly.

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Third party payors may limit coverage to specific products on an approved list, known as a formulary, which might not include all FDA-approved drugs for a particular indication.

The Company may need to conduct expensive pharmaco-economic studies to demonstrate the medical necessity and cost effectiveness of its products.

As a result, the coverage determination process is often a time-consuming and costly process that will require the Company to provide scientific and clinical support for the use of its products to each payor separately, with no assurance that coverage and adequate reimbursement will be obtained.

We may need to conduct expensive pharmaco-economic studies to demonstrate the medical necessity and cost effectiveness of its products.

As a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of its products to each payor separately, with no assurance that coverage and adequate reimbursement will be obtained.

Additionally, third-party payors may refuse to include a particular branded drug in their formularies when a competing generic product is available.

Under Medicare, hospitals are reimbursed under an inpatient prospective payment system.

This pricing methodology provides a single payment

amount to hospitals based on a given diagnosis-related group.

This pricing methodology provides a single payment amount to hospitals based on a given diagnosis-related group.

As a result, with respect to Medicare reimbursement for services in the hospital inpatient setting, hospitals could have a financial incentive to use the least expensive drugs for the treatment of invasive fungal infections, particularly the IV formulations of these drugs, as they are typically administered in the hospital.

Further, coverage policies and third-party reimbursement rates may change at any time.

Even if favorable coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.

Public and private health care payors control costs and influence drug pricing through a variety of mechanisms, including through negotiating discounts with the manufacturers and through the use of tiered formularies and other mechanisms that provide preferential access to certain drugs over others within a therapeutic class.

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For example, on June 17, 2021 the U.S.

Supreme Court dismissed a challenge on procedural grounds that argued the Affordable Care Act is unconstitutional in its entirety because the “individual mandate”

was repealed by Congress.

Supreme Court dismissed a challenge on procedural grounds that argued the Affordable Care Act is unconstitutional in its entirety because the “individual mandate” was repealed by Congress.

On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022, or IRA, into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in Affordable Care Act marketplaces through plan year 2025.

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It is possible that the Affordable Care Act will be subject to judicial or Congressional challenges in the future.

It is also unclear how such challenges and the healthcare reform measures of the Biden administration will impact the Affordable Care Act and the Company's business.

It is also unclear how such challenges and the healthcare reform measures of the Biden administration will impact the Affordable Care Act and our business.

Other legislative changes have been proposed and adopted in the United States since the Affordable Care Act was enacted.

These changes included aggregate reductions to Medicare payments to providers of 2% per fiscal year, effective April 1, 2013, which, due to subsequent legislative amendments, including the Infrastructure Investment and Jobs Act, will stay in effect until 2032 unless additional Congressional action is taken.

Under current legislation the actual reduction in Medicare payments will vary from 1% in 2022 to up to 4% in the final fiscal year of this sequester.

In January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, reduced Medicare payments to several providers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

These laws may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on customers for the Company's drugs, if approved, and accordingly, the Company's financial operations.

These laws may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on customers for our drugs, if approved, and accordingly, our financial operations.

There also has been increasing legislative and enforcement interest in the United States with respect to drug pricing practices, which has resulted in several Congressional inquiries, Presidential executive orders and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products.

in July 2021, the Biden administration released an executive order, “Promoting Competition in the American Economy,”

with multiple provisions aimed at prescription drugs.

In response to Biden’s executive order, on September 9, 2021, HHS released a Comprehensive Plan for Addressing High Drug Prices that outlines principles for drug pricing reform and sets out a variety of potential legislative policies that Congress could pursue as well as potential administrative actions HHS can take to advance these principles.

For example, in July 2021, the Biden administration released an executive order, “Promoting Competition in the American Economy,” with multiple provisions aimed at prescription drugs.

Further, the IRA, among other things (i) directs HHS to negotiate the price of certain high-expenditure, single-source drugs and biologics covered under Medicare and (ii) imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation.

These provisions will take effect progressively starting in fiscal year 2023, although they may be subject to legal challenges.

Additionally, the Biden administration released an additional executive order on October 14, 2022, directing HHS to report on how the Center for Medicare and Medicaid Innovation can be further leveraged to test new models for lowering drug costs for Medicare and Medicaid beneficiaries.

These provisions take effect progressively starting in fiscal year 2023, although they may be subject to legal challenges.

On August 29, 2023, HHS announced the list of the first ten drugs that will be subject to price negotiations, although the Medicare drug price negotiation program is currently subject to legal challenges.

It is currently unclear how the IRA will be implemented but is likely to have a significant impact on the pharmaceutical industry, although they may be subject to legal challenges.

In response to the Biden administration’s October 2022 executive order, on February 14, 2023, HHS released a report outlining three new models for testing by the CMS Innovation Center which will be evaluated on their ability to lower the cost of drugs, promote accessibility, and improve quality of care.

It is unclear whether the models will be utilized in any health reform measures in the future.

Further, on December 7, 2023, the Biden administration announced an initiative to control the price of prescription drugs through the use of march-in rights under the Bayh-Dole Act.

On December 8, 2023, the National Institute of Standards and Technology published for comment a Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights which for the first time includes the price of a product as one factor an agency can use when deciding to exercise march-in rights.

While march-in rights have not previously been exercised, it is uncertain if that will continue under the new framework.

At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

For example, on January 5, 2024, the FDA approved Florida’s Section 804 Importation Program, or SIP, proposal to import certain drugs from Canada for specific state healthcare programs.

It is unclear how this program will be implemented, including which drugs will be chosen, and whether it will be subject to legal challenges in the United States or Canada.

Other states have also submitted SIP proposals that are pending review by the FDA.

Any such approved importation plans, when implemented, may result in lower drug prices for products covered by those programs.

Intellectual Property

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Of these patents, six U.S.

patents relate to ibrexafungerp.

patents relate to ibrexafungerp, and one U.S.

patent relates to SCY-247.

We are actively pursuing several U.S.

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and two patents covering uses of ibrexafungerp in treatment or prevention of fungal infections.

The ‘085 patent is currently set to expire in 2030.

We have applied for patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984 (the Hatch-Waxman Act) and believe that the term of the ‘085 patent will be extended into 2035.

The ‘085 patent is currently set to expire in 2030.

The three patents covering the citrate salt of ibrexafungerp expire in 2035.

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The ibrexafungerp composition of matter is covered by a patent in more than 60 jurisdictions worldwide, with several more patent applications pending.

Additional patent applications related to ibrexafungerp’s formulations and use as an antifungal agent have been filed and are currently pending.

If granted, the new patent families could extend the patent protection for certain ibrexafungerp formulations or uses up to 2040.

For this and more comprehensive risks related to our proprietary technology and processes, please see the section on “Risk Factors-Risks Relating to Our Intellectual Property.”

SCY-247 is protected in the United States by an issued composition of matter patent (U.S.

The ‘465 patent is currently set to expire in 2029.

The SCY-247 composition of matter is covered by a patent in several other jurisdictions worldwide, including Europe, Japan, and China.

As of March 1, 2024, we had 29 employees, all of whom were employed on a full-time basis.

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Additional risks and uncertainties not presently known to us, or that we currently see as immaterial, may also harm our business.

Further, the risks below are with respect to our company at the current time, and some of the risks described below may change if/when the transaction contemplated by the License Agreement with GSK closes.

Risks Relating to Our Financial Condition and Need for Additional Capital

We have entered into a License Agreement with GSK, which is subject to closing conditions, including expiration or termination of the HSR waiting period, and if we are not able to close the transaction contemplated by the License Agreement we will not be able to receive the benefits expected from the License Agreement, which would materially and adversely affect our prospects for generating revenue from BREXAFEMME and ibrexafungerp.

In March 2023, we entered into a License Agreement with GSK, and the consummation of the transactions under the License Agreement is subject to the satisfaction of customary closing conditions, including the expiration or termination of the applicable waiting period under the HSR Act.

If the closing conditions are not met, then absent a waiver from GSK we will not be able to close the transaction contemplated by the License Agreement.

If this were to occur, then we would not be able to realize the benefits we expect from the License Agreement, including the potential to receive the development, regulatory, commercial and sales milestones, and royalties, contemplated by the License Agreement, and we would have expended significant time, money and effort in the development and commercialization of BREXAFEMME, which has been on the market since September 2021, and may not be able to realize a return on that investment.

Even if the License Agreement with GSK closes, we may not be able to realize the benefits we expect under the License Agreement if we are not able to develop ibrexafungerp.

Even if the License Agreement with GSK closes, our ability to generate revenues under the License Agreement is dependent upon our ability to further develop ibrexafungerp.

The risks described below with respect to ibrexafungerp will continue to be risks for us as they may impede our ability to receive some or all of the development, regulatory, commercial and sales milestones, and royalties, contemplated by the License Agreement, which would materially and adversely affect our business and operating results.

We have never been profitable, we have only one product approved for commercial sale, and to date we have generated limited revenue from product sales.

As a result, our ability to curtail our losses and reach profitability is unproven, and we may never achieve or sustain profitability.

We are not profitable and do not expect to be profitable in the foreseeable future.

We have incurred net losses in each year since our inception, including a net loss of $62.8 million for the year ended December 31, 2022.

We may not be able to realize the benefits we expect under the GSK License Agreement if we are not able to develop ibrexafungerp.

Our ability to generate revenues under the GSK License Agreement is dependent upon our ability to further develop ibrexafungerp.

The risks described below with respect to ibrexafungerp will continue to be risks for us as they may impede our ability to receive some or all of the development, regulatory, commercial and sales milestones, and royalties, contemplated by the GSK License Agreement, which would materially and adversely affect our business and operating results.

We have a limited history of profitability, we have only one product approved for commercial sale that is licensed to GSK and is subject to a product recall, and to date we have generated limited revenue from product sales.

As a result, our ability to curtail our losses and sustain profitability is unproven.

We do not expect to be profitable in the foreseeable future.

We incurred net losses in each year since our inception except for net income of $67.0 million for the year ended December 31, 2023, primarily due to the $90.0 million upfront payment received under the GSK License Agreement.

As of December 31, 2023, we had an accumulated deficit of approximately $355.2 million.

As discussed in Note 1 to the financial statements included in this Annual Report on Form 10-K, we have incurred significant losses and negative cash flows from operations and have limited capital resources to fund ongoing operations which raises substantial doubt about our ability to continue as a going concern.

On a prospective basis, our strategic focus, along with the commitment of our financial resources, will be directed towards the development of ibrexafungerp.

We had cash, cash equivalents, and short-term investments of $73.5 million as of December 31, 2022.

We had cash, cash equivalents, and investments of $98.0 million as of December 31, 2023.

We have suffered substantial losses from operations since inception and will require additional financing.

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As a result of the foregoing, we expect to experience net losses and negative cash flows from operations for the foreseeable future, and we are unable to predict when, or if, we will be able to achieve profitability.

Our losses and negative cash flows have had, and will continue to have a material adverse effect on our stockholders’

equity, financial position and statement of operations.

Our losses and negative cash flows have had, and will continue to have a material adverse effect on our stockholders’ equity, financial position and statement of operations.

We expect a number of factors to cause our operating results to fluctuate on a quarterly and annual basis, which may make it difficult to predict our future performance.

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• delays in the timing of submission of any new drug application, or NDA, or supplement thereto, as well as commencement, enrollment and the timing of clinical testing, of any product candidates we may seek to develop;

our ability to close the transactions contemplated by the License Agreement with GSK;

• market acceptance of BREXAFEMME and any future product candidates for which we obtain FDA approval;

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Further, any financial projections we make are made as of the date we make them are subject to these risks and uncertainties, and these financial projections may not be realized.

We will continue to require substantial additional capital, and if we are unable to raise capital when needed we would be forced to delay, reduce or eliminate our development program for ibrexafungerp.

Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is expensive.

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In any event, we will require additional capital to complete development of, to seek regulatory approval for and, if approval is obtained, to commercialize and any product candidates we may seek to develop.

When we are required to secure additional financing, the additional fundraising efforts may divert our management from our day-to-day activities, which may adversely affect our ability to develop and commercialize ibrexafungerp and any product candidates we may seek to develop.

When we are required to secure additional financing, the additional fundraising efforts may divert our management from our day-to-day activities, which may adversely affect our ability to develop ibrexafungerp and any product candidates we may seek to develop.

In addition, we cannot guarantee that financing will be available in sufficient amounts or on terms acceptable to us, if at all.

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If we are required to conduct additional fundraising activities and we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we will be prevented from pursuing development and commercialization efforts, which will have a material adverse effect on our business, operating results and prospects.

Our operating activities may be restricted as a result of covenants related to the indebtedness under our senior convertible notes and loan payable and we may be required to repay the notes and our loan payable in an event of default, which could have a materially adverse effect on our business.

Our operating activities may be restricted as a result of covenants related to the indebtedness under our senior convertible notes and we may be required to repay the notes and our loan payable in an event of default, which could have a materially adverse effect on our business.

On March 7, 2019, we entered into a senior convertible note purchase agreement with Puissance Life Science Opportunities Fund VI (Puissance), pursuant to which we issued and sold to Puissance $16 million of our 6.0% senior convertible notes due 2025.

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Our business, financial condition and results of operations could be materially adversely affected as a result of any of these events.

On May 13, 2021, we entered into a loan payable with Hercules, as administrative agent and collateral agent (in such capacity, the Agent) and a lender, and SVB, as a lender (SVB, and collectively with Hercules in such capacity, the Lenders) for an aggregate principal amount of up to $60.0 million.

Until we have repaid such indebtedness, the loan payable and security agreement subjects us to various customary covenants, including requirements as to financial reporting and insurance, and restrictions on our ability to dispose of our business or property, to change our line of business, to liquidate or dissolve, to merge or consolidate with any other entity or to acquire all or substantially all the capital stock or property of another entity, to incur additional indebtedness, to incur liens on our property, to pay any dividends or other distributions on capital stock other than dividends payable solely in capital stock, to redeem capital stock, to enter into licensing agreements, to engage in transactions with affiliates, or to encumber our intellectual property.

Unfavorable U.S.

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and global financial markets and adverse geopolitical and macroeconomic developments.

and global market and economic conditions have been, and continue to be, disrupted and volatile due to many factors, including component shortages and related supply chain challenges, geopolitical developments such as COVID-19 and the conflict between Ukraine and Russia and related sanctions, bank failures, and increasing inflation rates and the responses by central banking authorities to control such inflation, among others.

and global market and economic

conditions have been, and continue to be, disrupted and volatile due to many factors, including component shortages and related supply chain challenges, geopolitical developments such as pandemics and conflicts and related sanctions, bank failures, and increasing inflation rates and the responses by central banking authorities to control such inflation, among others.

General business and economic conditions that could affect our ability to access capital include fluctuations in economic growth, debt and equity capital markets, liquidity of the global financial markets, access to our liquidity within the U.S.

banking system, the availability and cost of credit, investor and consumer confidence, and the strength of the economies in which we, our manufacturers and our suppliers operate.

For example, on March 10, 2023, we had a banking relationship with SVB, as described above.

As of the closure of SVB on March 10, 2023, we held approximately $0.3 million in cash on deposit and approximately $7.0 million in a money market account with SVB who was administering the account as our agent.

Our remaining cash, cash equivalents and short-term investments are primarily held in a money market account and in U.S.

treasury securities that are unaffiliated with SVB and held with another financial institution acting as custodian, but which SVB administers on our behalf.

We were able to access all cash, cash equivalents and short-term investments held at or through SVB and at our financial institution custodians.

SVB was closed on March 10, 2023 by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver.

On March 12, 2023, the U.S.

Treasury, Federal Reserve, and FDIC announced that SVB depositors would have access to all of their money starting March 13, 2023.

While we have not experienced any losses in such accounts, the recent failure of SVB exposed us to significant credit risk prior to the completion by the FDIC of the resolution of SVB in a manner

that fully protected all depositors.

Our access to funding sources and other credit arrangements in amounts adequate to finance or capitalize our current and projected future business operations could be significantly impaired by factors that affect us, the financial institutions with which we have arrangements directly, or the financial services industry or economy in general.

These factors could include, among others, events such as liquidity constraints or failures, the ability to perform obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or concerns or negative expectations about the prospects for companies in the financial services industry.

These factors could involve financial institutions or financial services industry companies with which we have financial or business relationships, but could also include factors involving financial markets or the financial services industry generally.

Risks Relating to the Development, Regulatory Approval and Commercialization of Our Product Candidates For Human Use

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Regulatory approval is a lengthy, expensive and uncertain process and there is no guarantee that ibrexafungerp will be approved by the FDA for the additional indications we are pursuing.

Our ability to generate additional significant revenue related to sales of ibrexafungerp by us, or by GSK following the GSK Closing, will depend on the successful development and regulatory approval of ibrexafungerp for indications in addition to the treatment of VVC and RVVC.

Our ability to generate additional significant revenue related to sales of ibrexafungerp by GSK, will depend on the successful development and regulatory approval of ibrexafungerp for indications in addition to the treatment of VVC and RVVC.

We currently have one product approved for sale, BREXAFEMME, which is approved for the treatment of VVC and for the reduction in the incidence of RVVC, and we cannot guarantee that we will obtain more marketable products.

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Obtaining approval of an NDA is a lengthy, expensive and uncertain process.

An NDA must include extensive preclinical and clinical data and supporting information to establish the product candidate’s safety and effectiveness for each indication.

The approval application must also include significant information regarding the chemistry, manufacturing and controls for the product.

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Delays in the commencement, enrollment and completion of clinical trials could result in increased costs to us and delay or limit our ability to obtain regulatory approval for ibrexafungerp or any future product candidates.

We do not know whether our current clinical trials of ibrexafungerp will be completed on schedule or at all, or whether any future clinical trials of ibrexafungerp or any future product candidates we may seek to develop will be allowed to

commence or, if commenced, will be completed on schedule or at all.

The commencement, enrollment and completion of clinical trials can be delayed for a variety of reasons, including:

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Amendments may require us or any of our partners to resubmit clinical trial protocols to independent review boards for re-examination, which may impact the costs, timing or successful completion of a clinical trial.

If we or any of our partners experience delays in the completion of, or

if we or our partners terminate, clinical trials, the commercial prospects for ibrexafungerp and any future product candidates we may seek to develop will be harmed, and our ability to generate revenue from sales of these product candidates will be prevented or delayed.

If we or any of our partners experience delays in the completion of, or if we or our partners terminate, clinical trials, the commercial prospects for ibrexafungerp and any future product candidates we may seek to develop will be harmed, and our ability to generate revenue from sales of these product candidates will be prevented or delayed.

In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of a product candidate.

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We have only submitted one NDA and one supplemental NDA before, and we may be unable to do so for ibrexafungerp in additional indications or any future product candidate we may seek to develop.

Merck completed seven Phase 1 clinical trials of ibrexafungerp and we have completed 17 Phase 1 clinical trials, four Phase 2 trials, and have initiated six Phase 3 trials, three of which have been completed and three of which are ongoing.

The conduct of successful Phase 2 and Phase 3 clinical trials is essential in obtaining regulatory approval, and the submission of a successful NDA is a complicated process.

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Moreover, in light of widely publicized events concerning the safety risks of certain drug products, regulatory authorities, members of Congress, the Government Accountability Office, medical professionals and the general public have raised concerns about potential drug safety issues.

These events have resulted in the withdrawal of drug products, revisions to drug labeling that further limit use of the drug products and establishment of risk evaluation and

mitigation strategies that may, for instance, restrict distribution of drug products.

These events have resulted in the withdrawal of drug products, revisions to drug labeling that further limit use of the drug products and establishment of risk evaluation and mitigation strategies that may, for instance, restrict distribution of drug products.

The increased attention to drug safety issues may result in a more cautious approach by the FDA to clinical trials.

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We believe that a large portion of the treatments using antifungal drugs are administered when symptoms of invasive fungal infections are present but a diagnosis of the infection has not yet been made, due to the rapid and potentially fatal progression of invasive fungal infections.

Diagnostic tools recently approved by the FDA, or currently under development, for the rapid diagnosis of invasive fungal infections may significantly diminish the need to treat patients in advance of diagnosis of

invasive fungal infections, which will reduce the potential market for ibrexafungerp in the event that we are able to obtain FDA approval of ibrexafungerp.

Moreover, if a rapid and accurate test of the susceptibility of a fungal infection to generically available treatments is developed and widely adopted, the market for ibrexafungerp may suffer.

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We recognize that, over time, resistance develops against every antibacterial and antifungal drug.

One or more strains of fungal pathogens may develop resistance to ibrexafungerp more rapidly than we currently expect, either because our hypothesis of the mechanism of action is incorrect or because a strain of fungi undergoes some unforeseen genetic mutation that permits it to survive.

One or more strains of fungal pathogens may develop resistance to ibrexafungerp more rapidly than we currently expect, either because our hypothesis

of the mechanism of action is incorrect or because a strain of fungi undergoes some unforeseen genetic mutation that permits it to survive.

Since we expect lower resistance relative to other antifungal drug classes to be a major factor in the commercialization of ibrexafungerp, rapid development of such resistance or development of cross resistance with echinocandins would have a major adverse impact on the acceptability and sales of ibrexafungerp.

If regulatory approval of the IV formulation of ibrexafungerp is not obtained, ibrexafungerp may not achieve broad market acceptance and sales will be limited.

On March 2, 2017, we announced that the FDA had placed a clinical hold on our IV formulation, instructing us to hold the initiation of any new clinical studies with our IV formulation until the FDA completes a review of all available pre-clinical and clinical data of the IV formulation of ibrexafungerp.

In January 2018, we announced encouraging pre-clinical results for the prototype liposomal IV formulation of ibrexafungerp, showing improved local tolerability profile at the infusion site in head-to-head pre-clinical evaluations with the cyclodextrin-based IV formulation.

In August 2018, we announced that as part of our development plans, the process for the liposomal formulation was transferred for scale-up purposes at a manufacturing site intended to provide clinical supplies.

Additional preclinical evaluations were performed with the scaled-up formulation, which unexpectedly revealed differences in tolerability at the injection site, delaying advancement of the IV product into human trials.

As it is generally recognized that changes to manufacturing processes and/or scale-up can impact the characteristics of drug products, particularly for more technically complex formulations such as liposomal products, we are currently working with our vendors and CMC experts to enable us to resume the pre-IND pre-clinical activities for the IV formulation of ibrexafungerp in the U.S.

If the FDA does not permit us to initiate new clinical studies with our IV formulation, or following the GSK Closing GSK determines not to pursue the IV formulation, we will not be able to develop and commercialize an IV formulation of ibrexafungerp, which would harm our business prospects or our ability to receive payments with respect to the IV formulation under the License Agreement with GSK.

Our approved product and product candidates may have undesirable side effects that may delay or prevent marketing approval, or, if approval is received, require them to be taken off the market or otherwise limit their sales.

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The most commonly reported adverse events after IV administration of ibrexafungerp have been local reactions at the site of infusion.

During our Phase 1 IV program in healthy volunteers, aimed to expand the safety margin that would allow greater flexibility of dosing options in patients, we observed three mild-to-moderate thrombotic events in healthy volunteers receiving the IV formulation of ibrexafungerp at the highest doses and highest concentrations in a Phase 1 study.

These events were reported to FDA as 15-day alert reports because they were unexpected and required anticoagulant therapy.

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Any of these events could prevent us or our current or potential future partners from achieving or maintaining market acceptance of the affected product or could substantially increase commercialization costs and expenses, which in turn could delay or prevent us from generating significant revenue from the sale of products.

If we are unable to establish an effective marketing infrastructure, we may not be able to successfully commercialize ibrexafungerp and any future product candidates we may seek to develop.

In the event that we are able to obtain regulatory approval to commercialize our product candidates and determine to develop sales, distribution and marketing capabilities, this would require substantial resources and would be time consuming.

The costs incurred in the development of these capabilities, either internally or through a third-party contract sales organization, would be incurred in advance of any approval of a product candidate.

In addition, we may not be able to hire a sales force in the United States that is sufficient in size or has adequate expertise in the medical markets that we intend to target.

If we are unable to establish our sales force and marketing capability, our operating results may be adversely affected.

We currently have a development license and supply agreement with R-Pharm, a leading supplier of hospital drugs in Russia, pursuant to which we license to R-Pharm rights to develop and commercialize ibrexafungerp in the field of human health in Russia and certain smaller non-core markets.

We plan to enter into additional sales and marketing or licensing arrangements with third parties for international sales of any approved products.

If we are unable to enter into or maintain any such arrangements on acceptable terms, or at all, or these entities fail to perform as we intend under these agreements, we may be unable to market and sell ibrexafungerp or any future product candidates we may seek to develop in these markets.

We expect that BREXAFEMME, ibrexafungerp for the treatment of other indications, and any future product candidates we may seek to develop will face competition, and most of our competitors have significantly greater resources than we do.

The pharmaceutical industry is highly competitive, with a number of established, large pharmaceutical companies, as well as many smaller companies.

There are many foreign and domestic pharmaceutical companies, biotechnology companies, public and private universities, government agencies and research organizations actively engaged in research and development of products that may target the same markets as ibrexafungerp and any future product candidates we may seek to develop.

products that may target the same markets as ibrexafungerp and any future product candidates we may seek to develop.

We expect any products we develop to compete on the basis of, among other things, product efficacy, lack of significant adverse side effects and convenience and ease of treatment.

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As a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our products to each payor separately, with no assurance that coverage and adequate reimbursement will be obtained.

Furthermore, the market for our product candidates may depend on access to third-party payors’

drug formularies, or lists of medications for which third-party payors provide coverage and reimbursement.

Furthermore, the market for our product candidates may depend on access to third-party payors’ drug formularies, or lists of medications for which third-party payors provide coverage and reimbursement.

Industry competition to be included in such formularies results in downward pricing pressures on pharmaceutical companies.

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All third-party payors, whether governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs, including mechanisms to encourage the use of generic drugs.

Congress has also considered policies to lower the reimbursement formulas in federal and state healthcare programs.

Congress has also considered

policies to lower the reimbursement formulas in federal and state healthcare programs.

Furthermore, coverage of, and reimbursement for, drugs can differ significantly from payor to payor and may require significant time and resources to obtain.

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The law included provisions to, among other things, tie Medicare provider reimbursement to healthcare quality and incentives, mandatory compliance programs, enhanced transparency disclosure requirements, increased funding and initiatives to address fraud and abuse, and incentives to state Medicaid programs to expand their coverage and services.

It also imposed an annual tax on pharmaceutical manufacturers or importers who sell “branded prescription drugs.”

There have been executive, judicial and Congressional challenges to certain aspects of the Affordable Care Act.

For example, the Tax Cuts and Jobs Act of 2017 included a provision repealing, effective

January 1, 2019, the tax-based shared responsibility payment imposed by the Affordable Care Act on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate”.

It also imposed an annual tax on pharmaceutical manufacturers or importers who sell “branded prescription drugs.” There have been executive, judicial and Congressional challenges to certain aspects of the Affordable Care Act.

For example, the Tax Cuts and Jobs Act of 2017 included a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the Affordable Care Act on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate”.

On June 17, 2021 the U.S.

Supreme Court dismissed a challenge on procedural grounds that argued the Affordable Care Act is unconstitutional in its entirety because the “individual mandate”

was repealed by Congress.

Supreme Court dismissed a challenge on procedural grounds that argued the Affordable Care Act is unconstitutional in its entirety because the “individual mandate” was repealed by Congress.

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These changes included aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, effective April 1, 2013, which, due to subsequent legislative amendments, including the Infrastructure Investment and Jobs Act, will stay in effect until 2032 unless additional Congressional action is taken.

Under current legislation the actual reduction in Medicare payments will vary from 1% in 2022 to up to 4% in the final fiscal year of this sequester.

Further, there has been heightened governmental scrutiny in the United States of pharmaceutical pricing practices in light of the rising cost of prescription drugs.

Such scrutiny has resulted in several recent congressional inquiries, Presidential executive orders, and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for products.

For example, in July 2021, the Biden administration released an executive order, “Promoting Competition in the American Economy,”

with multiple provisions aimed at prescription drugs.

In response to Biden’s executive order, on September 9, 2021, the U.S.

For example, in July 2021, the Biden administration released an executive order, “Promoting Competition in the American Economy,” with multiple provisions aimed at prescription drugs.

In response to Biden’s executive order, on September 9, 2021, the U.S.

Department of Health and Human Services, or HHS, released a Comprehensive Plan for Addressing High Drug Prices that outlines principles for drug pricing reform and sets out a variety of potential legislative policies that Congress could pursue as well as potential administrative actions HHS can take to advance these principles.

These provisions will take effect progressively starting in fiscal year 2023, although they may be subject to legal challenges.

It is currently unclear how the IRA will be implemented but is likely to have a significant impact on the pharmaceutical industry.

These provisions take effect progressively starting in fiscal year 2023.

It is unclear how the IRA will be implemented but is likely to have a significant impact on the pharmaceutical industry.

It is unclear whether the models will be utilized in any health reform measures in the future.

Further, on December 7, 2023, the Biden administration announced an initiative to control the price of prescription drugs through the use of march-in rights under the Bayh-Dole Act.

While march-in rights have not previously been exercised, it is uncertain if that will continue under the new framework.

We cannot predict what healthcare reform initiatives may be adopted in the future, particularly in light of the new presidential administration.

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BREXAFEMME, ibrexafungerp, or any other future product candidates we may seek to develop, may still face future development and regulatory difficulties.

For BREXAFEMME, ibrexafungerp, or any other future product candidates we may seek to develop, regulatory authorities may still impose significant restrictions on a product’s indicated uses or marketing or impose ongoing requirements for potentially costly post-approval studies.

Given the number of high profile adverse events with certain drug products, regulatory authorities may require, as a condition of approval, costly risk evaluation and mitigation strategies, which may include safety surveillance, restricted distribution and use, patient education, enhanced labeling, expedited reporting of certain adverse events, pre-approval of promotional materials and restrictions on direct-to-consumer advertising.

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BREXAFEMME, ibrexafungerp, and any other future product candidates we may seek to develop will also be subject to ongoing regulatory requirements for the packaging, storage, advertising, promotion, record-keeping and submission of safety and other post-market information on the drug.

In addition, approved products, manufacturers and manufacturers’

facilities are required to comply with extensive FDA requirements, including ensuring that quality control and manufacturing procedures conform to current Good Manufacturing Practices (cGMP).

In addition, approved products, manufacturers and manufacturers’ facilities are required to comply with extensive FDA requirements, including ensuring that quality control and manufacturing procedures conform to current Good Manufacturing Practices (cGMP).

As such, we and our contract manufacturers, which we will be responsible for overseeing and monitoring for compliance, are subject to continual review and periodic inspections to assess compliance with cGMP.

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We will also be required to engage in pharmacovigilance activities and report certain adverse reactions and production problems, if any, to the FDA and to comply with certain requirements concerning advertising and promotion for products.

Promotional communications with respect to prescription drugs are subject to a variety of legal and regulatory restrictions and must be consistent with the information in the product’s approved label.

As such, we may not promote products for indications or uses for which they do not have approval.

As such, we may not

promote products for indications or uses for which they do not have approval.

Failure to comply with FDA advertising and promotion standards, which are often subject to interpretation by regulators, may result in a wide range of exposure and liability for us.

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Many pharmaceutical and other healthcare companies have been investigated and have reached substantial financial settlements with the federal government under these laws for a variety of alleged marketing activities, including providing free product to customers with the expectation that the customers would bill federal programs for the product;

providing consulting fees, grants, free travel, and other benefits to physicians to induce them to prescribe the company’s products;

and inflating prices reported to private price publication services, which are used to set drug payment rates under government healthcare programs.

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The federal Health Insurance Portability and Accountability Act of 1996.

or HIPAA, which prohibits, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, regardless of the payor (e.g., public or private).

or HIPAA, which prohibits, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, regardless of

the payor (e.g., public or private).

Similar to the federal Anti-Kickback Statute, a person or entity need not have actual knowledge the statute or specific intent to violate it, in order to have committed a violation.

such as certain healthcare providers, health plans, and healthcare clearinghouses and their respective “business associates,”

as well as their covered subcontractors, that perform services for them, which involve the creation, receipt, use, maintenance, transmission or disclosure of, individually identifiable health information for or on behalf of a covered entity.

The Physician Payments Sunshine Act, created under the Affordable Care Act, which require certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the Centers for Medicare and Medicaid Services information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and their implementing regulations, which impose certain obligations with respect to safeguarding the privacy, security and transmission of individually identifiable health information on “covered entities,” such as certain healthcare providers, health plans, and healthcare clearinghouses and their respective “business associates,” as well as their covered subcontractors, that perform services for them, which involve the creation, receipt, use, maintenance, transmission or disclosure of, individually identifiable health information for or on behalf of a covered entity.

The majority of states also have statutes or regulations similar to these laws, which apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor.

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Compliance with various federal and state laws is difficult and time consuming, and companies that violate them may face substantial penalties.

The potential sanctions include significant administrative, civil and criminal penalties, including

monetary fines, exclusion from participation in federal health care programs, integrity oversight and reporting obligations to resolve allegations of non-compliance with these laws, disgorgement, criminal fines, imprisonment, contractual damage, reputational harm, diminished profits and future earnings, and curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

The potential sanctions include significant administrative, civil and criminal penalties, including monetary fines, exclusion from participation in federal health care programs, integrity oversight and reporting obligations to resolve allegations of non-compliance with these laws, disgorgement, criminal fines, imprisonment, contractual damage, reputational harm, diminished profits and future earnings, and curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

Because of the breadth of these laws and the lack of extensive legal guidance in the form of regulations or court decisions, it is possible that some of our business activities or those of our commercial partners could be subject to challenge under one or more of these laws.

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The number and complexity of both federal and state laws continues to increase, and additional governmental resources are being added to enforce these laws and to prosecute companies and individuals who are believed to be violating them.

In particular, the Affordable Care Act includes a number of provisions aimed at strengthening the government’s ability to pursue federal Anti-Kickback Statute and federal False Claims Act cases against pharmaceutical manufacturers and other healthcare entities, including substantially increased funding for healthcare fraud enforcement activities, enhanced investigative powers, and amendments to the federal civil False Claims Act that make it easier for the government and whistleblowers to pursue cases for alleged kickback and false claim violations.

Responding to a government investigation or enforcement action would be expensive and time-consuming and could have a material adverse effect on our business and financial condition and growth prospects.

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Changes to these recommendations or other guidelines advocating alternative therapies could result in decreased use of ibrexafungerp and any future product candidates we may seek to develop, which may adversely affect our results of operations.

Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.

Under current law, federal net operating losses incurred in tax years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal net operating loss carryforwards in a taxable year is limited to 80% of taxable income in such year.

Portions of our state and federal net operating loss carryforwards began to expire in 2019.

In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change” (generally defined as a greater than 50 percentage point change (by value) in the equity ownership of certain stockholders over a rolling three-year period), the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income and taxes may be limited.

We have determined that ownership changes have occurred and as a result, a portion of our NOL carryforwards are limited.

We may also experience ownership changes in the future as a result of subsequent issuances of our common stock or other shifts in our stock ownership some of which may be outside of our control.

In addition, at the state level, there may be periods during which the use of net operating loss carryforwards is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.

As a result, we may be unable to use all or a material portion of our net operating loss carryforwards and other tax attributes, which could adversely affect our future cash flows.

Uncertainties in the interpretation and application of existing, new and proposed tax laws and regulations could materially affect our tax obligations and effective tax rate.

The tax regimes to which we are subject or under which we operate are unsettled and may be subject to significant change.

The issuance of additional guidance related to existing or future tax laws, or changes to tax laws, tax treaties or regulations proposed or implemented by the current or a future U.S.

presidential administration, Congress, or taxing authorities in other jurisdictions, including jurisdictions outside of the United States, could materially affect our tax obligations and effective tax rate.

To the extent that such changes have a negative impact on us, including as a result of related uncertainty, these changes may adversely impact our business, financial condition, results of operations, and cash flows.

The amount of taxes we pay in different jurisdictions depends on the application of the tax laws of various jurisdictions, including the United States, to our international business activities, the relative amounts of income before taxes in the various jurisdictions in which we operate, new or revised tax laws, or interpretations of tax laws and policies, the outcome of current and future tax audits, examinations or administrative appeals, our ability to realize our deferred tax assets, and our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements.

The taxing authorities of the jurisdictions in which we operate may challenge our methodologies for pricing intercompany transactions pursuant to our intercompany arrangements or disagree with our determinations as to the income and expenses attributable to specific jurisdictions.

If such a challenge or disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest, and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows, and lower overall profitability of our operations.

Our financial statements could fail to reflect adequate reserves to cover such a contingency.

Similarly, a taxing authority could assert that we are subject to tax in a jurisdiction where we believe we have not established a taxable connection, often referred to as a “permanent establishment” under international tax treaties, and such an assertion, if successful, could increase our expected tax liability in one or more jurisdictions.

For tax years beginning after December 31, 2021, legislation commonly referred to as the “Tax Cuts and Jobs Act” requires taxpayers to capitalize and amortize certain research and development expenditures over five years if incurred in the United States and fifteen years if incurred in foreign jurisdictions, rather than deducting them currently.

Although there have been legislative proposals to repeal or defer the capitalization requirement to later years, there can be no assurance that the provision will be repealed or otherwise modified.

Risks Related to Our Dependence on Third Parties

We are dependent on our license agreement with GSK to commercialize ibrexafungerp other than in the Greater China region and in the Russian Federation and certain other countries, and if GSK is not successful in commercializing ibrexafungerp in these areas, we will lose a significant source of potential revenue.

Under the License Agreement with GSK, who will pay us milestone payments upon the achievement of specified regulatory, commercial and sales milestone events, as well as royalties on sales of ibrexafungerp in those countries in its territory, or determines not to pursue commercialization of ibrexafungerp in those countries, we will not receive any commercial or sales milestone or royalty payments under the License Agreement.

Under the GSK License Agreement, GSK is to pay us milestone payments upon our achievement of specified regulatory, commercial and sales milestone events, as well as royalties on sales of ibrexafungerp in those countries in its territory.

determines not to pursue commercialization of ibrexafungerp in those countries, we will not receive any commercial or sales milestone or royalty payments under the GSK License Agreement.

We are dependent on our existing third-party collaboration with Hansoh to commercialize ibrexafungerp in the Greater China region, and if Hansoh is not successful in commercializing ibrexafungerp in these areas, we will lose a significant source of potential revenue.

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In addition, Hansoh will pay us royalties upon sales of ibrexafungerp by Hansoh.

countries, or determines not to pursue commercialization of ibrexafungerp in those countries, we will not receive any milestone or royalty payments under the agreement.

We are relying on Hansoh to commercialize ibrexafungerp in the Greater China area, including mainland China, Hong Kong, Macau, and Taiwan, and if Hansoh is not able to commercialize ibrexafungerp in those countries, or determines not to pursue commercialization of ibrexafungerp in those countries, we will not receive any milestone or royalty payments under the agreement.

We are dependent on our existing third-party collaboration with R-Pharm to commercialize ibrexafungerp in the Russian Federation and certain other countries, and if R-Pharm is not successful in commercializing ibrexafungerp in those countries, we will lose a significant source of potential revenue.

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In some cases, we may be responsible for continuing preclinical and initial clinical development of a partnered product candidate or research program, and the payment we receive from our collaboration partner may be insufficient to cover the cost of this development.

If we are unable to reach agreements with suitable collaborators for product candidates, we could face increased costs, we may be forced to limit the number of product candidates we can commercially develop or the territories in which we commercialize them and we might fail to commercialize products or programs for which a suitable collaborator cannot be found.

programs for which a suitable collaborator cannot be found.

If we fail to achieve successful collaborations, our operating results and financial condition will be materially and adversely affected.

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Our agreements with third-party service providers and CROs are and will be on a study-by-study basis and typically short-term.

In all cases, we expect to be able to terminate the agreements with notice and be responsible for the supplier’s previously incurred costs.

Because we rely on third parties, our internal capacity to perform these functions is limited.

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• the possibility of termination or nonrenewal of the agreements by the third parties because of our breach of the manufacturing agreement or based on their own business priorities;

the possibility of unforeseen natural disasters, public health crises, political crises and other catastrophic events or other events outside of our control impacting our third parties, such as the recent emergence and spread of COVID-19, a coronavirus, which may cause delays in the ability of our suppliers to provide us with supplies on a timely basis.

• the possibility of unforeseen natural disasters, public health crises, political crises and other catastrophic events or other events outside of our control impacting our third parties, such as COVID-19 and its variants, which may cause delays in the ability of our suppliers to provide us with supplies on a timely basis.

Any of these factors could result in delays or higher costs in connection with our clinical trials, regulatory submissions, required approvals or commercialization of ibrexafungerp and any future product candidates we may seek to develop.

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Even if we locate an alternative provider, it is likely that this provider will need additional time to respond to our needs and may not provide the same type or level of services as the original provider.

In addition, any contract research organization that we retain will be subject to the FDA’s regulatory requirements and similar foreign standards and we do not have control over compliance with these regulations by these providers.

Consequently, if these practices and standards are not adhered to by these providers, the development and commercialization of ibrexafungerp and any future product candidates we may seek to develop could be delayed, which could severely harm our business and financial condition.

Consequently, if these practices and standards are not adhered to by

these providers, the development and commercialization of ibrexafungerp and any future product candidates we may seek to develop could be delayed, which could severely harm our business and financial condition.

Risks Relating to Our Intellectual Property

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Under our agreement with Merck, Merck was responsible for establishing the intellectual property rights to ibrexafungerp.

As we were not responsible for the establishment of our intellectual property rights to ibrexafungerp, we have

less visibility into the strength of our intellectual property rights to ibrexafungerp than if we had been responsible for the establishment of these rights.

As we were not responsible for the establishment of our intellectual property rights to ibrexafungerp, we have less visibility into the strength of our intellectual property rights to ibrexafungerp than if we had been responsible for the establishment of these rights.

If Merck did not establish those rights such that they are of sufficient scope to protect ibrexafungerp, then we may not be able to prevent others from using or commercializing ibrexafungerp, and others may be able to assert intellectual property rights in ibrexafungerp and prevent us from further pursuing the development and commercialization of ibrexafungerp.

Further, following the GSK Closing, GSK has prosecution and enforcement rights for this IP and, if GSK does not determine to pursue prosecution and enforcement of intellectual property, the value of this intellectual property may diminish or be lost.

Further, GSK has prosecution and enforcement rights for this IP and, if GSK does not determine to pursue prosecution and enforcement of intellectual property, the value of this intellectual property may diminish or be lost.

It is difficult and costly to protect our proprietary rights, and we may not be able to ensure their protection.

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Patent and Trademark Office (USPTO) courts in the United States or by the patent offices and courts in foreign countries.

Method of use patents protect the use of a product for the method recited in the claims.

Method of use patents protect the use of a product for the method recited in

This type of patent does not prevent a competitor from making and marketing a product that is identical to our product for an indication that is outside the scope of the patented method.

Moreover, even if competitors do not actively promote their product for our targeted indications, physicians may prescribe these products “off-label.”

Although off-label prescriptions may infringe or contribute to or induce the infringement of method of use patents, the practice is common and such infringement is difficult to prevent or prosecute.

Moreover, even if competitors do not actively promote their product for our targeted indications, physicians may prescribe these products “off-label.” Although off-label prescriptions may infringe or contribute to or induce the infringement of method of use patents, the practice is common and such infringement is difficult to prevent or prosecute.

Interference or derivation proceedings provoked by third parties or brought by the USPTO may be necessary to determine the priority of inventions with respect to our patents or patent applications or those of our collaborators or licensors.

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Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms.

Litigation, interference, or derivation proceedings may fail,

resulting in harm to our business, and, even if successful, may result in substantial costs and distract our management and other employees.

Litigation, interference, or derivation proceedings may fail, resulting in harm to our business, and, even if successful, may result in substantial costs and distract our management and other employees.

We also rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or obtainable.

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In addition, there is a risk that the court will decide that such patents are not valid or that we do not have the right to enforce them.

There is also the risk that, even if the validity of such patents is upheld, the court will refuse to stop the other party on the grounds that such other party’s activities do not infringe such patents.

In addition, the United States Court of Appeals for the Federal Circuit and the Supreme Court of the United States continue to address issues under the United States patent laws, and the decisions of those and other courts could adversely affect our ability to sustain the validity of our issued or licensed patents and obtain new patents.

Furthermore, a third party may claim that we or our manufacturing or commercialization partners or customers are using inventions covered by the third party’s patent rights and may go to court to stop us or our partners and/or customers from engaging in our operations and activities, including making or selling ibrexafungerp and any future product candidates we may seek to develop.

These lawsuits are costly and could affect our results of operations and divert the attention of managerial and scientific personnel.

There is a risk that a court would decide that we or our commercialization partners or customers are infringing the third party’s patents and would order us or our partners or customers to stop the activities covered by the patents.

In that event, we or our commercialization partners or customers may not have a viable way around the patent and may need to halt commercialization or use of the relevant product.

In addition, there is a risk that a court will order us or our partners or customers to pay the other party damages for having violated the other party’s patents or obtain one or more licenses from third parties, which may be impossible or require substantial time and expense.

We cannot predict whether any license would be available at all or whether it would be available on commercially reasonable terms.

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The pharmaceutical and biotechnology industries have produced a proliferation of patents, and it is not always clear to industry participants, including us, which patents cover various types of products or methods of use.

The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform.

The coverage of patents is

subject to interpretation by the courts, and the interpretation is not always uniform.

If we are sued for patent infringement, we would need to demonstrate that our products or methods either do not infringe the patent claims of the relevant patent or that the patent claims are invalid or unenforceable, and we may not be able to do this.

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For example, in the United States, proving invalidity requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents.

comprehensive, and because publications in the scientific literature often lag behind actual discoveries, we cannot be certain that others have not filed patent applications for technology covered by our patents or pending applications.

Because some patent applications in the United States may be maintained in secrecy until the patents are issued, because patent applications in the United States and many foreign jurisdictions are typically not published until eighteen months after filing, because searches and examinations of patent applications by the USPTO and other patent offices may not be comprehensive, and because publications in the scientific literature often lag behind actual discoveries, we cannot be certain that others have not filed patent applications for technology covered by our patents or pending applications.

Our competitors may have filed, and may in the future file, patent applications and may have obtained patents covering technology similar to ours.

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In addition, we employ individuals who were previously employed at other biotechnology or pharmaceutical companies.

We may be subject to claims that we or our employees, consultants or independent contractors have improperly used or disclosed confidential information of these third parties or our employees’

former employers.

We may be subject to claims that we or our employees, consultants or independent contractors have improperly used or disclosed confidential information of these third parties or our employees’ former employers.

Litigation may be necessary to defend against these claims.

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We may need to expand our operations and increase the size of our company, and we may experience difficulties in managing growth.

As of March 1, 2023, we had 36 employees.

Further, as we advance ibrexafungerp through preclinical studies, clinical trials and commercialization for other indications, we will need to increase our product development, scientific, marketing, sales and administrative headcount to manage these efforts.

As of March 1, 2024, we had 29 full time employees.

Further, as we advance ibrexafungerp and SCY-247 through preclinical studies, clinical trials and commercialization for other indications, we will need to increase our product development, scientific, marketing, sales and administrative headcount to manage these efforts.

Our management, personnel and systems currently in place may not be adequate to support this future growth.

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Product liability claims may be brought against us or our partners by participants enrolled in our clinical trials, patients, healthcare providers or others using, administering or selling products.

cannot successfully defend ourselves against any such claims, we would incur substantial liabilities.

If we cannot successfully defend ourselves against any such claims, we would incur substantial liabilities.

Regardless of merit or eventual outcome, product liability claims may result in:

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• the inability to commercialize product candidates.

We have obtained limited product liability insurance coverage for our clinical trials domestically and in selected foreign countries where we are conducting clinical trials.

Our coverage is currently limited to $10.0 million per occurrence and $10.0 million in the aggregate per year, as well as additional local country product liability coverage for trials conducted outside of the United States as required by the local country regulations.

We have obtained limited product liability insurance coverage for our clinical trials domestically and in selected foreign countries where we are conducting clinical trials as required by local country regulations, in addition to limited product liability coverage for BREXAFEMME.

Our coverage is currently limited to $25.0 million per occurrence and $25.0 million in the aggregate per year.

As such, our insurance coverage may not reimburse us or may not be sufficient to reimburse us for any expenses or losses we may suffer.

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Despite the implementation of security measures, our internal computer systems and those of our contract research organizations and other contractors and consultants are vulnerable to damage, data leakage and security breaches from computer viruses, unauthorized access, social engineering, the acts or omissions of our workforce or others with authorized access, natural disasters, terrorism, war and telecommunication and electrical failures.

operations, it could result in a material disruption of our product candidate development programs.

While we are not aware of the occurrence of any such system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our or other contractors or consultants’ operations, it could result in a material disruption of our product candidate development programs.

For example, the loss of clinical study data from completed or ongoing clinical studies for a product candidate could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data.

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We do not carry insurance for all categories of risk that our business may encounter.

Some of the policies we currently maintain include general liability, employment practices liability, property, auto, workers’

compensation, products liability and directors’

and officers’

Some of the policies we currently maintain include general liability, employment practices liability, property, auto, workers’ compensation, products liability and directors’ and officers’ insurance.

We do not know, however, if we will be able to maintain existing insurance with adequate levels of coverage.

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Our data processing activities may subject us to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contractual requirements, and other obligations relating to data privacy and security.

In the U.S., federal, state, and local governments have enacted numerous privacy and data security laws and regulations,including data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), and other similar laws (e.g., wiretapping laws).

such as certain healthcare providers, health plans, and healthcare clearinghouses and their respective “business associates”

that perform services for them.

In addition, the California Consumer Privacy Act of 2018 (CCPA) applies to personal data of consumers, business representatives, and employees, and requires businesses to provide specific disclosures in privacy notices and honor requests of California residents to exercise certain privacy rights.

In the U.S., federal, state, and local governments have enacted numerous data privacy and security laws and regulations, including data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), and other similar laws (e.g., wiretapping laws).

For example, HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and its implementing regulations, impose certain obligations with respect to safeguarding the privacy, security and transmission of individually identifiable health information on “covered entities,” such as certain healthcare providers, health plans, and healthcare clearinghouses and their respective “business associates” that perform services for them.

In addition, in the past few years, numerous U.S.

states—including California, Virginia, Colorado, Connecticut, and Utah—have enacted comprehensive data privacy and security laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents with certain rights concerning their personal data.

As applicable, such rights may include the right to access, correct, or delete certain personal data, and to opt-out of certain data processing activities, such as targeted advertising, profiling, and automated decision-making.

The exercise of these rights may impact our business and ability to provide our products and services.

Certain states also impose stricter requirements for processing certain personal data, including sensitive information, such as conducting data privacy impact assessments.

These state laws allow for statutory fines for noncompliance.

For example, the California Consumer Privacy Act of 2018 (CCPA), as amended by the California Privacy Rights Act of 2020, applies to personal data of consumers, business representatives, and employees, and requires businesses to provide specific disclosures in privacy notices and honor requests of California residents to exercise certain privacy rights.

The CCPA provides for civil penalties for violations of up to $7,500 per violation, as well as a private right of action for individuals impacted by certain data breaches.

Although the CCPA includes exemptions for certain clinical trials data and data collected pursuant to HIPAA, the law may increase our compliance costs and potential liability with respect to other personal data we collect about California residents.

Furthermore, the California Privacy Rights Act of 2020 expands the CCPA’s requirements, including by adding a new right for individuals to correct their personal data and establishing a new regulatory agency to implement and enforce the law.

Other states, such as Virginia and Colorado, have also passed comprehensive data privacy and security laws, and similar laws are being considered in several other states, as well as at the federal and local levels.

The CCPA and other comprehensive state data privacy and security laws exempt some data processed in the context of clinical trials, but these developments may further complicate compliance efforts, and increase legal risk and compliance costs for us, the third parties upon whom we rely.

Similar laws are being considered in several other states, as well as at the federal and local levels, and we expect more states to pass similar laws in the future.

These developments may further complicate compliance efforts, and increase legal risk and compliance costs for us and the third parties upon whom we rely.

Outside the U.S., an increasing number of laws, regulations, and industry standards may govern data privacy and security, including information that we collect about patients in connection with clinical trials and our other operations abroad.

For example, the EU’s General Data Protection Regulation (EU GDPR) and the United Kingdom’s GDPR (UK GDPR) impose strict requirements for processing personal data, including health-related information.

For example, under the EU GDPR, companies may face temporary or definitive bans on data processing and other corrective actions;

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Other jurisdictions may adopt similarly stringent interpretations of their data localization and cross-border data transfer laws.

Although there are currently various mechanisms that may be used to transfer personal data from the EEA and UK to the United States in compliance with law, such as the EEA and UK’s standard contractual clauses, these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal data to the United States.

Although there are

currently various mechanisms that may be used to transfer personal data from the EEA and UK to the United States in compliance with law, such as the EEA standard contractual clauses, the UK’s International Data Transfer Agreement / Addendum, and the EU-U.S.

Data Privacy Framework and the UK extension thereto (which allows for transfers to relevant U.S.-based organizations who self-certify compliance and participate in the Framework), these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal data to the United States.

If there is no lawful manner for us to transfer personal data from the EEA, the UK, or other jurisdictions to the United States, or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our business or data processing activities to other jurisdictions at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against our processing or transferring of personal data necessary to operate our business.

Additionally, companies that transfer personal data out of the EEA and UK to other jurisdictions, particularly to the United States, are subject to increased scrutiny from regulators, individual litigants, and activities groups.

Some European regulators have ordered certain companies to suspend or permanently cease certain transfers of personal data out of Europe for allegedly violating the EU GDPR’s cross-border data transfer limitations.

In addition to data privacy and security laws, we are or may become contractually subject to industry standards adopted by industry groups and may become subject to such obligations in the future.

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Cyber-attacks, malicious internet-based activity, online and offline fraud, and other similar activities threaten the confidentiality, integrity, and availability of our confidential, proprietary, and sensitive data and information technology systems, and those of the third parties upon which we rely.

Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including traditional computer “hackers,”

threat actors, “hacktivists,”

organized criminal threat actors, personnel (such as through theft or misuse), sophisticated nation states, and nation-state-supported actors.

Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, personnel (such as through theft or misuse), sophisticated nation states, and nation-state-supported actors.

Some actors now engage and are expected to continue to engage in cyber-attacks, including without limitation nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities.

During times of war and other major conflicts, we and the third parties upon which we rely may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our services.

We and the third parties upon which we rely are subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, earthquakes, fires, floods, and other similar threats.

We and the third parties upon which we rely are subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through deep fakes, which may be increasingly more difficult to identify as fake, and phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks, credential stuffing attacks, credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, attacks enhanced or facilitated by AI, telecommunications failures, earthquakes, fires, floods, and other similar threats.

In particular, severe ransomware attacks are becoming increasingly prevalent and can lead to significant interruptions in our operations, loss of confidential, proprietary, and sensitive data and income, reputational harm, and diversion of funds.

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Remote work has become more common and has increased risks to our information technology systems and data, as more of our employees utilize network connections, computers, and devices outside our premises or network, including working at home, while in transit and in public locations.

by vulnerabilities present in acquired or integrated entities’

systems and technologies.

Additionally, future or past business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.

Furthermore, we may discover security issues that were not found during due diligence of such acquired or integrated entities, and it may be difficult to integrate companies into our information technology environment and security program.

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We also rely on third-party service providers to provide other products, services, parts, or otherwise to operate our business.

Our ability to monitor these third parties’

information security practices is limited, and these third parties may not have adequate information security measures in place.

Our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place.

If our third-party service providers experience a security incident or other interruption, we could experience adverse consequences.

While we may be entitled to damages if our third-party service providers fail to satisfy their privacy or security-related obligations to us, any award may be insufficient to cover our damages, or we may be unable to recover such award.

In addition, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties’

infrastructure in our supply chain or our third-party partners’

supply chains have not been compromised.

In addition, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties’ infrastructure in our supply chain or our third-party partners’ supply chains have not been compromised.

Any of the previously identified or similar threats could cause a security incident or other interruption that could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to our confidential, proprietary, and sensitive data or our information technology systems, or those of the third parties upon whom we rely.

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While we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective.

We take steps to detect and remediate vulnerabilities, but we may not be able to detect and remediate all vulnerabilities because the threats and techniques used to exploit the vulnerability change frequently and are often sophisticated in nature.

Therefore, such vulnerabilities could be exploited but may not be detected until after a security incident has occurred.

These vulnerabilities pose material risks to our business.

Further, we may experience delays in developing and deploying remedial measures designed to address any such identified vulnerabilities.

We take steps to detect and remediate vulnerabilities, in our information systems (such as our hardware and/or software, including that of third parties upon which we rely).

We may not detect and remediate all such vulnerabilities including in a timely manner.

Further, we may experience delays in developing and deploying remedial measures and patches designed to address identified vulnerabilities.

Vulnerabilities could be exploited and result in a security incident.

Applicable data privacy and security obligations may require us to notify relevant stakeholders, such as governmental authorities, partners, and affected individuals, of security incidents.

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monetary fund diversions;

diversion of management’s attention;

interruptions in our operations (including availability of data);

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and other similar harms.

Security incidents and attendant consequences may cause customers to stop using our services, deter new customers from using our services, and negatively impact our ability to grow and operate our business.

incidents and attendant consequences may cause customers to stop using our services, deter new customers from using our services, and negatively impact our ability to grow and operate our business.

Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and security obligations.

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The trading price of our common stock may be volatile.

The following factors, in addition to other factors described in this “Risk Factors”

section and elsewhere in this report, may have a significant impact on the market price of our common stock:

The following factors, in addition to other factors described in this “Risk Factors” section and elsewhere in this report, may have a significant impact on the market price of our common stock:

• the level of sales of BREXAFEMME;

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• the ability to obtain additional funding;

any delay in submitting an NDA or similar foreign applications for ibrexafungerp for the treatment of indications other than VVC, RVVC, and any future product candidate we may seek to develop or any adverse development or perceived adverse development with respect to the FDA’s review of that NDA or a foreign regulator’s review of a similar applications;

maintenance of our existing collaborations or ability to enter into new collaborations, including our ability to close the transactions contemplated by the License Agreement with GSK;

our collaboration partners’

election to develop or commercialize product candidates under our collaboration agreements or the termination of any programs under our collaboration agreements;

• any delay in submitting an NDA or similar foreign applications for ibrexafungerp for the treatment of indications other than VVC, RVVC, and any future product candidate we may seek to develop or any adverse development or perceived adverse development with respect to the FDA’s review of that NDA or a foreign regulator’s review of a similar applications;

• maintenance of our existing collaborations or ability to enter into new collaborations;

• our collaboration partners’ election to develop or commercialize product candidates under our collaboration agreements or the termination of any programs under our collaboration agreements;

• any intellectual property infringement actions in which we or our licensors and collaboration partners may become involved;

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UNRESOLV ED STAFF COMMENTS

CYBE RSECURITY

Risk Management and Strategy

We have implemented and maintain various information security processes designed to identify, assess and manage material risks from cybersecurity threats to our critical computer networks, third party hosted services, and our critical data, including intellectual property, confidential information that is proprietary, strategic or competitive in nature such as data about our research and clinical trials (“Information Systems and Data”).

Our information security function, which includes our information technology Managed Service Provider (MSP), helps identify, assess and manage the Company’s cybersecurity threats and risks.

We identify and assess risks from cybersecurity threats by monitoring and evaluating our threat environment using various methods including:

manual and automated tools;

subscribing to and analyzing reports and services that identify cybersecurity threats;

evaluating threats reported to us;

and conducting vulnerability assessments.

Depending on the environment, systems, and data, we implement and maintain various technical, physical, and organizational measures, processes, standards and policies designed to manage and mitigate material risks from cybersecurity threats to our Information Systems and Data, including, for example:

an incident response process;

disaster recovery/business continuity plans;

encrypting certain data;

using network security controls;

maintaining access controls;

managing assets;

and maintaining cybersecurity insurance.

Our assessment and management of material risks from cybersecurity threats are integrated into the Company’s overall risk management processes.

For example, (1) cybersecurity risk is addressed as a component of the Company’s enterprise risk management program;

(2) we prioritize our risk management processes to include mitigation of risks from cybersecurity threats that are more likely to lead to a material impact to our business;

(3) management evaluates material risks from cybersecurity threats against our overall business objectives and reports to the Audit Committee, which evaluates our overall enterprise risk.

We use third-party service providers to assist us from time to time to identify, assess, and manage material risks from cybersecurity threats, including for example our information technology MSP.

We use third-party service providers to perform a variety of functions throughout our business, such as distributors and supply chain resources and contract research organizations (CRO) and contract manufacturing organizations (CMO).

We have certain vendor management processes to manage cybersecurity risks associated with our use of certain providers, depending on the nature of the services provided, the sensitivity of the Information Systems and Data at issue, and the identity of the provider.

These processes may include information security questionnaires, assessments, and imposition of contractual obligations relating to cybersecurity.

We have not identified any cybersecurity incidents or threats that have materially affected us or are reasonably likely to materially affect us.

For a description of the risks from cybersecurity threats that may materially affect the Company and how they may do so, see our risk factors under Part I.

Risk Factors in this Annual Report on Form 10-K, including “If our information technology systems or data, or those of third parties upon which we rely, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions;

fines and penalties;

disruptions of our business operations;

reputational harm;

loss of revenue or profits;

and other adverse consequences.”

Our board of directors, through its Audit Committee, is responsible for overseeing Company’s cybersecurity risk management processes, including oversight of mitigation of risks from cybersecurity threats.

Our cybersecurity risk assessment and management processes are implemented and maintained by certain Company management, including our Vice President, Human Resources & IT, who has over 22 years of human resources experience in various industries including in executive roles and has led our IT function since joining the Company.

Management is responsible for budgeting, hiring appropriate cybersecurity personnel, and helping to integrate cybersecurity risk considerations into the Company’s overall risk management strategy.

Our cybersecurity incident response process is designed to escalate certain cybersecurity incidents to members of management depending on the circumstances, including our Chief Executive Officer, Chief Financial Officer, Chief Legal Officer, and Vice President, Human Resources & IT, who help the Company mitigate and remediate cybersecurity incidents of which they are notified.

In addition, the Company’s incident response process includes reporting to the Audit Committee for certain cybersecurity incidents.

The Audit Committee receives periodic reports from company management, including our Chief Legal Officer, concerning the Company’s significant cybersecurity threats and risk and the processes the Company has implemented to

address them.

The Audit Committee also has access to various reports, summaries or presentations related to cybersecurity threats, risk and mitigation.

On March 1, 2018, we entered into a long-term lease agreement for approximately 19,275 square feet of office space in Jersey City, New Jersey.

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We believe that our facilities under this lease are adequate for our purposes for the foreseeable future.

LEGAL PROCEEDINGS

We are not party to any legal proceedings for which disclosure is required under this item.

MINE SAF ETY DISCLOSURES

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business