What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-12 compared with 2024-03-28 · 341 added, 506 removed, 913 unchanged (48% of the section changed)

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is pioneering innovative medicines to overcome and prevent difficult-to-treat and drug-resistant infections.

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

Ibrexafungerp is the first representative of this novel class of antifungals with additional assets from the “fungerp” family, including SCY-247, in preclinical stages of development.

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 under development, including SCY-247 which is currently in clinical 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.

SCY-247, a second-generation antifungal compound from this novel class, is in clinical development and we initiated a Phase 1 study for SCY-247 in the fourth quarter 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.

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GSK License Agreement

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

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

3) Limited (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 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 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 and July 2024, we announced the achievement of a $25.0 million and a $10.0 million performance-based development milestone under the GSK License Agreement, respectively.

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 is being amended in connection with the delay in the commercialization of BREXAFEMME (see "Product Recall and Clinical Hold" section) and further clinical development of ibrexafungerp associated with this event.

The GSK License Agreement was amended in connection with the delay in the commercialization of BREXAFEMME (see "Product Recall and Clinical Hold" section) 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);

• commercial milestone payments of up to $57.5 million based on first commercial sale in IC (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).

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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:

We will continue to be responsible for the execution and costs of the ongoing clinical studies of ibrexafungerp, which at this stage is only the Phase 3 MARIO study, 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;

$10 million already paid for the delivery to GSK of the 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.

and $7.35 million for the successful completion of the Phase 3 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.

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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.

Following a review in 2023 by GSK of the manufacturing process and equipment at the vendor that manufactures the ibrexafungerp drug substance, we became aware that exetimibe, 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.

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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.

Nonetheless, out of an abundance of caution and in line with GSK’s recommendation, we recalled BREXAFEMME® (ibrexafungerp tablets) from the market and placed a temporary hold on clinical studies of ibrexafungerp, including the Phase 3 MARIO study.

We are in the process of destroying all of the patient-level and clinical drug product returned to date with the assistance of an experienced vendor and we are substantially complete with the product recall.

In September 2023, after we announced our voluntary clinical hold, the FDA concurred with our voluntary hold and placed a clinical hold.

We are working with the FDA to discuss paths for resolution of this issue.

The clinical hold and recall affected two ongoing clinical studies:

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

The clinical hold does not impact the recently completed FURI, CARES, VANQUISH and SCYNERGIA clinical studies, for which dosing is complete.

The NATURE study, which is an observational study in patients with IC treated with standard of care antifungals (not ibrexafungerp), is also not affected by this hold.

The FDA determined that the compassionate use program for ibrexafungerp, which provides ibrexafungerp to patients with limited or no other treatment options, can continue provided the patient’s treating physician concludes a favorable benefit-risk assessment and the patient is made aware of and consents to the risk.

This applies to patients currently in the program as well as for new patients, pending confirmation of available supply.

Our preclinical stage compound, SCY-247, is not affected by these developments.

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

Ibrexafungerp Update

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.

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

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.

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

The data from 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.

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.

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

We expect to provide topline data for the SCYNERGIA study to GSK in the first half of 2024.

We have completed the enrollment of the VANQUISH Phase 3b open-label trial evaluating the safety and efficacy of ibrexafungerp in 150 patients with complicated vulvovaginal candidiasis who failed to respond to treatment with fluconazole.

We expect to provide topline data for the VANQUISH study to GSK in the first half of 2024.

The clinical hold and recall affected the Phase 3 MARIO study.

Our clinical stage compound, SCY-247, was 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 produce new batches of ibrexafungerp which we believe will allow us to lift the clinical hold and restart the Phase 3 MARIO study.

We are working on the resolution of this issue and we anticipate the restart of the Phase 3 MARIO study, after the FDA's lifting of the clinical hold, in the second quarter of 2025.

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

SCY-247 is a broad-spectrum antifungal with a potential oral and IV systemic therapeutic option for multiple drug-resistant pathogens.

Some of these activities, including assessing the activity of the compound against multi-drug resistant pathogens such as Candida auris and Mucorales, are being supported by NIH grants.

We initiated a Phase 1 study for SCY-247 in the fourth quarter of 2024.

The Phase 1 study is a randomized, double-blind, placebo-controlled study of single and multiple ascending doses of oral SCY-247 in approximately 100 healthy subjects.

The primary endpoint is safety and tolerability, and the secondary endpoint is pharmacokinetics.

We expect to release the single ascending and multiple ascending dose data in the third quarter of 2025.

Loan Agreement

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In connection with the entering into of the GSK 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 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.

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 the upfront payment pursuant to the terms of the GSK License Agreement, which triggered the obligation of us to repay the amounts due under the terms of the First Amendment.

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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

We continue progressing development activities for SCY-247.

SCY-247 is a broad-spectrum antifungal with a potential oral and IV systemic therapeutic option for multiple drug-resistant pathogens.

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.

We have filed a motion to dismiss.

On May 1, 2024, and again on June 4, 2024, purported shareholder derivative complaints were filed in the United States District Court, District of New Jersey.

The complaints name our directors and certain of our officers and assert state and federal claims based on the same alleged misstatements as the securities class action complaint.

These cases were consolidated and are currently stayed.

We disagree with the allegations and we intend to defend these litigations vigorously.

We have operated as a public entity since we completed our initial public offering in May 2014, which we refer to as our IPO.

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As a result, we will need additional capital to fund our operations, which we may obtain through one or more of equity offerings, debt financings, other non-dilutive third-party funding (e.g., grants), strategic alliances and licensing or collaboration arrangements.

We may offer shares of our common stock pursuant to our effective shelf registration statements.

We may offer shares of our common stock pursuant to our effective shelf registration statements or our “at-the-market” offering program pursuant to the Sales Agreement.

Components of Operating Results

Revenue consists of license agreement revenue associated with GSK and Hansoh and product sales of BREXAFEMME.

Revenue consists of license agreement revenue associated with GSK and product sales of BREXAFEMME.

Our product revenue, net comprised of sales of BREXAFEMME that we sold as principal given we control BREXAFEMME product until delivery to our wholesalers at which point control is transferred.

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• salaries and personnel-related costs, including benefits and any stock-based compensation for personnel performing research and development functions;

• fees paid to clinical research organizations (CROs), vendors, consultants and other third parties who support our product candidate development and intellectual property protection;

• fees paid to clinical research organizations (CROs), vendors, consultants and other third parties who support our product candidate development;

• medical affairs related expense and salary that is incurred to discover, develop, or improve potential product candidates;

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This includes personnel in executive, accounting and finance, commercial, human resources, business development, and administrative support functions.

Other expenses include facility-related costs not otherwise allocated to research and development expense, professional fees for accounting, auditing, tax and legal services, consulting costs for general and administrative purposes, information systems maintenance and marketing efforts.

Other expenses include facility-related costs not otherwise allocated to research and development expense, professional fees for accounting, auditing, tax and legal services, consulting costs for general and administrative purposes, patent application and legal fees, information systems maintenance and marketing efforts.

Other Expense (Income)

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• amortization of debt issuance costs and discount;

• other income associated with research and development tax credits;

• other income associated with research and development credits;

• interest income associated with our held-to-maturity investments and money market accounts.

Income Tax (Expense) Benefit

To date, we have not been required to pay U.S.

federal income taxes because of our current and accumulated net operating losses.

For the years ended December 31, 2023 and 2022, our income tax (expense) benefit recognized consists primarily of an income tax expense for state taxes and an income tax benefit associated with the sale of our NOLs and research and development credits, respectively.

Income Tax Expense

For the years ended December 31, 2024 and 2023, our income tax expense recognized consists primarily of income tax expense for U.S.

federal and state income taxes.

Results of Operations for the Years Ended December 31, 2024 and 2023

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Total operating expenses

Income (loss) from operations

(Loss) income from operations

Other expense (income):

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Derivative liabilities fair value adjustment

Total other expense (income)

Income (loss) before taxes

Income tax (expense) benefit

Net income (loss)

For the year ended December 31, 2023, revenue primarily consists of the $130.1 million recognized upon the transfer of the license associated with the GSK License Agreement in May 2023 and $4.4 million in license agreement revenue recognized as part of the Binding MOU.

For the year ended December 31, 2022, revenues primarily consists of product sales of BREXAFEMME.

Total other (income) expense

(Loss) income before taxes

Income tax (expense)

Net (loss) income

For the year ended December 31, 2024, revenue consists of the $3.7 million in license agreement revenue associated with the GSK License Agreement.

For the year ended December 31, 2023, revenue primarily consists of the $130.1 million recognized upon the transfer of the license associated with the GSK License Agreement in May 2023.

Cost of Product Revenues.

For the year ended December 31, 2023, cost of product revenue consists primarily of the $14.5 million in impairment expense recognized in the period in addition to distribution, freight, and royalty costs associated with BREXAFEMME.

For the year ended December 31, 2022, cost of product revenue consists primarily of distribution, freight, and royalty costs associated with BREXAFEMME.

For the year ended December 31, 2023, cost of product revenue consists primarily of the $14.5 million in impairment expense recognized in the period in addition to manufacturing, distribution, freight, and royalty costs associated with BREXAFEMME.

Research and Development.

For the year ended December 31, 2023, research and development expenses increased to $30.9 million from $27.3 million for the year ended December 31, 2022.

The increase of $3.7 million, or 13.5%, was primarily driven by an increase of $2.6 million in clinical development expense, an increase of $0.5 million in preclinical expense, an increase of $0.4 million in chemistry, manufacturing, and controls (CMC) expense, and an increase of $0.5 million in salary expense primarily associated with medical affairs.

The $2.6 million increase in clinical development expense for the year ended December 31, 2023, was primarily driven by an increase of $1.8 million in expense associated with the costs for the MARIO study, an increase of $1.1 million in expense associated with the closing activities of the FURI, CARES, and SCYNERGIA studies, and an increase of $0.6 million associated with a Phase 1 study of oral ibrexafungerp which was substantially complete in the second quarter of 2023 and is intended to support the potential NDA filing for the treatment of IC, offset in part by a $1.3 million decrease in expense associated with the CANDLE Phase 3 study which was substantially complete in the first quarter of 2022.

The $0.5 million increase in preclinical expense was primarily associated with the expense recognized for certain preclinical studies associated with SCY-247.

The $0.4 million increase in CMC expense for the year ended December 31, 2023, was primarily driven by increased costs associated with drug supply for SCY-247.

For the year ended December 31, 2024, research and development expenses decreased to $26.4 million from $30.9 million for the year ended December 31, 2023.

The decrease of $4.5 million, or 14.6%, was primarily driven by a decrease of $7.4 million in clinical expense, a decrease of $1.3 million in salary expense primarily associated with medical affairs, and a net decrease in other research and development expense of $0.4 million, offset in part by an increase of $3.9 million in chemistry, manufacturing, and controls (CMC) expense, and an increase of $0.7 million in preclinical expense.

The $7.4 million decrease in clinical expense was primarily due to a $4.4 million decrease in expense for the Phase 3 MARIO study as a result of the clinical hold on ibrexafungerp, a $1.6 million decrease in the expense associated with the FURI, CARES, and SCYNERGIA studies which were substantially complete by the second quarter of 2024, a $1.0 million decrease in expense associated with a Phase 1 study of oral ibrexafungerp that was substantially completed in the prior period and is intended to support the potential NDA filing for the treatment of IC, and a $1.0 million decrease in expense associated with the Phase 1 lactation study, offset in part by a $0.8 increase in expense recognized in the year ended December 31, 2024 for the Phase 1 study for SCY-247 which was initiated in the fourth quarter of 2024.

The $3.9 million increase in CMC expense is primarily associated with a $1.8 million expense for drug product purchased in the year ended December 31, 2024 and a $1.9 million increase in expense associated with the manufacturing of drug product for SCY-247 and ibrexafungerp.

The $0.7 million increase in preclinical expense was primarily associated with certain preclinical costs associated with the continued development of SCY-247.

Selling, General and Administrative .

For the year ended December 31, 2024, selling, general and administrative expenses decreased to $14.5 million from $20.9 million for the year ended December 31, 2023.

The decrease of $42.0 million, or 66.8%, was primarily driven by a decrease of $33.5 million in commercial expense due to the costs incurred in the prior comparable period associated with the active promotion of BREXAFEMME which ceased in the fourth quarter of 2022, a decrease of $5.2 million in salary related primarily driven by the workforce reduction in the fourth quarter of 2022 concentrated in the commercial and medical affairs functions, a $2.8 million decrease associated with other medical affairs related expense, a $1.6 million decrease in severance expense primarily driven by the workforce reduction in the fourth quarter of 2022, a $1.5 million decrease in information technology expense, offset in part by an increase in professional fees of $2.0 million.

The $2.0 million increase in professional fees is primarily due to a $3.1 million expense incurred during the current period for business development associated with the GSK License Agreement.

The decrease of $6.5 million, or 30.9%, was primarily driven by a decrease of $5.8 million in professional fees and a decrease of $0.9 million in commercial expense due to the costs incurred in the prior period associated with BREXAFEMME, offset by a net increase of $0.2 million in other selling, general, and administrative expense.

The $5.8 million decrease in professional fees was primarily due to a $3.1 million expense incurred during the prior period for business development associated with the GSK License Agreement, a $0.8 million nonrecurring legal expense incurred in the prior period, a $0.7 million decrease in legal costs associated with the GSK License Agreement, and a $0.5 million expense recognized in the prior period to write off a deferred asset for certain commitment fees associated with the Loan Agreement.

Amortization of Debt Issuance Costs and Discount.

For the years ended December 31, 2023 and 2022, we recognized $3.0 million and $1.6 million in amortization of debt issuance costs and discount.

The increase of $1.4 million, or 88%, was primarily driven by the recognition of $1.9 million in amortization during the year ended December 31, 2023 for the remaining debt issuance costs and discount associated with the loan payable with Hercules and SVBB which was fully paid in May 2023.

The 2023 and 2022 debt issuance costs and discount for our March 2019 convertible notes primarily consisted of an allocated portion of advisory fees and other issuance costs and the initial fair value of the derivative liability.

For the years ended December 31, 2024 and 2023, we recognized $1.7 million and $3.0 million in amortization of debt issuance costs and discount, respectively.

The decrease of $1.3 million, or 42%, was primarily driven by the recognition, in the prior period, of $1.9 million in amortization for the remaining debt issuance costs and discount associated with the Loan Agreement which was fully paid in May 2023.

The debt issuance costs and discount for our March 2019 convertible notes primarily consisted of an allocated portion of advisory fees and other issuance costs and the initial fair value of the derivative liability.

Interest Income.

For the years ended December 31, 2024 and 2023, we recognized $4.3 million and $4.0 million, respectively, in interest income associated with our money market accounts and investments.

The increase in interest income was primarily due to the increase in the interest rates on our money market accounts and investments.

The increase was primarily due to the interest income being earned on our money market funds and investments for the full period in 2024.

Interest Expense.

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Other Income.

For the years ended December 31, 2023 and 2022, we recognized zero and $3,000 in other income associated with certain research and development tax credits.

For the year ended December 31, 2024, we recognized $0.2 million in other income associated with certain research and development tax credits.

Warrant Liabilities Fair Value Adjustment .

For the years ended December 31, 2023 and 2022, we recognized a loss of $3.2 million and a gain of $22.3 million, respectively, for the fair value adjustment for warrant liabilities primarily due to the increase and decrease in our stock price during the periods, respectively.

For the years ended December 31, 2024 and 2023, we recognized a gain of $13.8 million and a loss of $3.2 million, respectively, for the fair value adjustment for warrant liabilities primarily due to the decrease and increase in our stock price during the periods, respectively.

Derivative Liabilities Fair Value Adjustment.

For the years ended December 31, 2023 and 2022, we recognized a loss of $0.2 million and a gain of $1.3 million, respectively, in the fair value adjustment related to the derivative liability primarily due to the increase and decrease in our stock price during the periods, respectively.

Income Tax Expense (Benefit).

For the year ended December 31, 2023, we recognized $0.1 million in income tax expense primarily for state income taxes.

For the year ended December 31, 2022, we recognized a $4.7 million income tax benefit associated with the sale of a portion of our NOLs and research and development credits.

For the years ended December 31, 2024 and 2023, we recognized a gain of $0.2 million and a loss of $0.2 million, respectively, in the fair value adjustment related to the derivative liability primarily due to the decrease and increase in our stock price during the periods, respectively.

Income Tax Expense.

For the year ended December 31, 2024, we recognized $0.2 million in income tax expense primarily for U.S.

federal income tax.

Liquidity and Capital Resources

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As of December 31, 2024, we had cash, cash equivalents, and investments of approximately $75.1 million, compared to cash, cash equivalents, and investments of $98.0 million as of December 31, 2023.

The increase in our cash and cash equivalents and investments was primarily due to the $90.0 million upfront receipt from the closing of the GSK License Agreement and the receipt of a $25.0 million performance-based development milestone under the GSK License Agreement, offset in part by the $37.0 million repayment in full of our Loan Agreement, the continued development costs associated with ibrexafungerp and SCY-247, and the payment of the deferred fees associated with Amplity, Inc.

We believe our capital resources are sufficient to fund our on-going operations for a period of at least 12 months subsequent to the issuance of the accompanying consolidated financial statements.

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We anticipate that we will continue to incur losses for at least the next several years.

As a result, we will need additional capital to fund our operations, which we may obtain through one or more of equity offerings, debt financings, or other non-dilutive third-party funding (e.g., grants), strategic alliances and licensing or collaboration arrangements.

Consistent with our operating plan, we expect to incur significant research and development expenses and selling, general and administrative expenses.

As a result of our continued significant expenses, we may need additional capital to fund our operations, which we may obtain through one or more of equity offerings, debt financings, or other non-dilutive third-party funding, strategic alliances and licensing or collaboration arrangements.

The following table sets forth the significant sources and uses of cash for the years ended December 31, 2024 and 2023 (dollars in thousands):

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Cash, cash equivalents, and restricted cash, January 1

Net cash provided by (used in) operating activities

Net cash used in investing activities

Net cash (used in) provided by financing activities

Net cash (used in) provided by operating activities

Net cash provided by (used in) investing activities

Net cash used in financing activities

Net decrease in cash, cash equivalents, and restricted cash

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Operating Activities

The $140.0 million increase in net cash provided by operating activities for the year ended December 31, 2023, as compared to the year ended December 31, 2022, was primarily due to the $90.0 million upfront receipt upon the closing of the GSK License Agreement and the receipt of a $25.0 million performance-based development milestone under the GSK License Agreement, offset by the continued development costs associated with ibrexafungerp and SCY-247.

The $84.2 million decrease in net cash (used in) provided by operating activities for the year ended December 31, 2024, as compared to the year ended December 31, 2023, was primarily due to the $115.0 million in upfront and development milestones received under the GSK License Agreement in the prior period and the continued development costs associated with SCY-247 and ibrexafungerp in the year ended December 31, 2024, offset in part by the $10.0 million development milestone received under the GSK License Agreement in the year ended December 31, 2024.

Net cash used in operating activities of $24.0 million for the year ended December 31, 2024, primarily consisted of the $21.3 million net loss adjusted for non-cash charges that included the gain on change in fair value of the warrant liabilities of $13.8 million, stock-based compensation expense of $3.3 million, accretion of investment discount of $1.3 million, and the amortization of debt issuance costs and discount of $1.7 million, plus a net favorable change in operating assets and liabilities of $7.3 million.

The net favorable change in operating assets and liabilities of $7.3 million is due to a favorable change of $15.0 million due to the decrease in operating assets, offset by an unfavorable change of $7.7 million due to the decrease in operating liabilities The net $15.0 million decrease in operating assets is primarily due to a decrease of $9.9 million in the license agreement contract asset given the receipt of the $10.0 million development milestone associated with the GSK License Agreement in the year ended December 31, 2024, a $1.7 million decrease in the license agreement receivable associated with the GSK License Agreement which was collected in the year ended December 31, 2024, and a $3.4 million decrease in prepaid expenses, other assets, deferred costs, and other.

The $3.4 million decrease in prepaid expenses, other assets, deferred costs, and other was primarily due to the collection of a $4.4 million unbilled receivable in the year ended December 31, 2024 from GSK.

The net unfavorable change of $7.7 million in operating liabilities is primarily due to the $2.7 million decrease in accounts payable and a $3.7 million decrease in accrued expenses primarily due to the $2.1 million decrease in accrued research and development expenses and a $1.4 million decrease in accrued product recall.

Net cash provided by operating activities of $60.2 million for the year ended December 31, 2023, primarily consisted of the $67.0 million net income adjusted for non-cash charges that included the loss on change in fair value of the warrant liabilities of $3.2 million, stock-based compensation expense of $2.6 million, accretion of investment discount of $1.3 million, the loss on change in fair value of the derivative liability of $0.2 million, and the amortization of debt issuance costs and discount of $3.0 million, plus a net unfavorable change in operating assets and liabilities of $30.6 million.

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The $0.3 million decrease in accrued expenses, deferred revenue, other liabilities, and other of $0.3 million was primarily due to the increase of deferred revenue of $3.9 million associated with GSK License Agreement and an increase of $1.8 million in accrued expenses primarily due to the $1.9 million increase for product recall, offset in part by a decrease of other liabilities of $5.8 million due to the Amplity deferred fees paid in February 2023.

Net cash used in operating activities of $79.9 million for the year ended December 31, 2022, primarily consisted of the $62.8 million net loss adjusted for non-cash charges that included the gain on change in fair value of the warrant liabilities of $22.3 million and stock-based compensation expense of $3.7 million, the gain on change in fair value of the derivative liabilities of $1.3 million, and the amortization of debt issuance costs and discount of $1.6 million, plus a net favorable change in operating assets and liabilities of $0.8 million.

The net favorable change in operating assets and liabilities consisted primarily of an increase in accrued expenses, other liabilities and other of $2.3 million due to the increase of $2.4 million in other liabilities associated with the long term deferred fees due to Amplity, a decrease in prepaid expenses, other assets deferred costs and other of $1.6 million primarily due to a $1.1 million decrease in prepaid inventory, offset in part due to a decrease in accounts payable of $1.5 million and an increase in accounts receivable of $1.2 million.

Investing Activities

Net cash provided by investing activities of $6.2 million for the year ended December 31, 2024, consisted of purchases of $36.4 million and maturities of $42.6 million in investments.

Net cash used in investing activities of $34.9 million for the year ended December 31, 2023, consisted of purchases of $85.5 million and maturities of $50.6 million in investments.

Net cash used in investing activities of $27.4 million for the year ended December 31, 2022, consisted of purchases of short-term investments.

Financing Activities

Net cash used in financing activities of $0.1 million for the year ended December 31, 2024, consisted primarily of the $0.2 million in payments of offering costs in the year ended December 31, 2024.

Net cash used in financing activities of $36.7 million for the year ended December 31, 2023, consisted primarily of the full repayment of the Loan Agreement with Hercules and SVBB in May 2023.

Net cash provided by financing activities of $48.6 million for the year ended December 31, 2022, consisted primarily of the gross proceeds of $45.0 million from the April 2022 public offering, the $2.2 million in gross proceeds from common stock issued under our ATM and common stock purchase agreement, and the $5.0 million received from the Loan Agreement, offset in part by payments of offering costs and underwriting discounts and commissions of $3.6 million.

Future Cash Needs and Funding Requirements

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We anticipate that we will need substantial additional funding in connection with our continuing future operations.

We are continually evaluating our operating plan and assessing the optimal cash utilization for our ibrexafungerp development strategy.

We are continually evaluating our operating plan and assessing the optimal cash utilization for our SCY-247 and ibrexafungerp development strategy.

We have based our estimates on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect.

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To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our common stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders.

Debt financing, similar to our Loan Agreement or the convertible senior notes we sold in March 2019 and April 2020, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

If we raise additional funds through sales of assets, other third-party funding, strategic alliances and licensing or collaboration arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us.

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Revenue Recognition

Product Revenue, Net

We account for revenue in accordance with Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers (Topic 606).

Under ASC Topic 606, an entity recognizes revenue when its customer obtains control of goods and services, in an amount that reflects the consideration that the entity expects to be entitled in exchange for those goods and services.

We perform the following five steps to recognize revenue under ASC Topic 606:

(i) identify the contract(s) with a customer;

(ii) identify the performance obligations in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the performance obligations in the contract;

and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

We only recognize revenue when it is probable that we will collect the consideration to which we are entitled in exchange for the goods or services that will be transferred to the customer.

The transaction price for product sales is reduced by variable consideration related to certain gross to net (GTN) adjustments, including chargebacks, rebates, discounts, incentives, and returns, and we will estimate the amount of this variable consideration that should be included in the transaction price using the expected value method.

Information from external sources is used to estimate GTN adjustments.

Our estimate of inventory at the wholesalers is based on the projected prescription demand-based sales for our products, as well as our analysis of third-party information, including written and oral information obtained from certain wholesalers with respect to their inventory levels and sell-through to customers and third-party market research data, and our internal information.

The inventory information received from wholesalers is a product of their recordkeeping process and excludes inventory held by intermediaries to whom they sell, such as retailers.

We also use information from external sources to identify prescription trends, patient demand and average selling prices.

Our estimates are subject to inherent limitations of estimates that rely on third-party information, as certain third-party information was itself in the form of estimates, and reflect other limitations including lags between the date as of which third-party information is generated and the date on which we receive third-party information.

Our significant GTN adjustments are further described below:

• Voluntary Patient Assistance Programs – Through vendors, we offer copay assistance to provide financial assistance to patients for the portion of their prescription cost that is not covered by payors.

The reduction in product revenue due to the copay programs is based on an estimate of claims and costs per claim that we expect to receive associated with product revenue that have been recognized.

This includes potential product revenue that remains in the distribution channel at the end of a reporting period.

• Wholesaler Fees and Trade Discounts – We offer discounts and pays certain distributor service fees primarily at contracted rates.

These are recorded as a reduction in product revenue based on distributors’ purchases and the applicable discount rate.

• Chargebacks – For certain entities, pricing on BREXAFEMME is extended below wholesaler list price.

Entities that purchase BREXAFEMME from wholesalers at the lower program price then remit us the difference between their acquisition cost and the lower program price, resulting in a reduction of product revenue.

Accounts receivable is reduced for the estimated amount of unprocessed chargeback claims attributable to sale.

• Commercial Rebates – We contract with commercial payors such as insurers and PBMs and offer rebates for utilization and formulary status.

These reserves are recorded in the same period in which the related revenue is recognized, resulting in a reduction of product revenue.

License Agreement Revenue

We have entered into arrangements involving the sale or license of intellectual property and the provision of other services.

When entering into any arrangement involving the sale or license of intellectual property rights and other services, we determine whether the arrangement is subject to accounting guidance in ASC 606, Revenue from Contracts with Customers, as well as ASC 808, Collaborative Arrangements (Topic 808).

If we determine that an arrangement includes goods or services that are central to our business operations for consideration, we will then identify the performance obligations in the contract using the unit-of-account guidance in Topic 606.

For a distinct unit-of-account that is within the scope of Topic 606, we will apply all of the accounting requirements in Topic 606 to that unit-of-account, including the recognition, measurement, presentation and disclosure requirements.

For a distinct unit-of-account that is not within the scope of Topic 606, we will recognize and

measure the distinct unit-of-account based on other authoritative ASC Topics or on a reasonable, rational, and consistently applied policy election.

When entering into any arrangement involving the sale or license of intellectual property rights and other services, we determine whether the arrangement is subject to accounting guidance in Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers (ASC 606), as well as ASC 808, Collaborative Arrangements .

For a distinct unit-of-account that is within the scope of ASC 606, we will apply all of the accounting requirements in ASC 606 to that unit-of-account, including the recognition, measurement, presentation and disclosure requirements.

For a distinct unit-of-account that is not within the scope of ASC 606, we will recognize and measure the distinct unit-of-account based on other authoritative ASC topics or on a reasonable, rational, and consistently applied policy election.

Analyzing the arrangement to identify performance obligations requires the use of judgment.

In arrangements that include the sale or license of intellectual property and other promised services, we first identify if the licenses are distinct from the other promises in the arrangement.

In arrangements that include the sale or license of intellectual property and other promised services, we first identify if the licenses are distinct from the

other promises in the arrangement.

If the license is not distinct, the license is combined with other services into a single performance obligation.

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We establish reserves for product recalls on a product-specific basis when circumstances giving rise to the recall become known.

We estimate product returns from consumers and customers across distribution channels, utilizing third-party data and other assumptions, and these are recorded within gross-to-net expenses on our consolidated statement of operations.

We estimate product recall from consumers and customers across distribution channels, utilizing third-party data and other assumptions, and these are recorded within gross-to-net expenses on our consolidated statement of operations.

Additionally, we estimate costs for any additional fees, including but not limited to freight and destruction charges for returned products and costs incurred by third party vendors.

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We have not experienced any significant adjustments to our estimates to date.

Stock-Based Compensation

We record the fair value of stock options issued as of the grant date as compensation expense.

We recognize compensation expense over the requisite service period, which is equal to the vesting period.

Stock-based compensation expense has been reported in our statements of operations as follows (dollars in thousands):

Years Ended December 31,

Research and development

Selling, general and administrative

On December 31, 2023, the aggregate intrinsic value of outstanding options to purchase shares of our common stock was $0.2 million, based upon the $2.23 closing sales price per share of our common stock as reported on the Nasdaq Global Market on that date.

Determination of the Fair Value of Stock-based Compensation Grants

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Weighted average expected volatility

We record the fair value of stock options issued as of the grant date as compensation expense.

We recognize compensation expense over the requisite service period, which is equal to the vesting period.

Stock-based compensation expense has been reported in our statements of operations as follows (dollars in thousands):

Years Ended December 31,

Research and development

Selling, general and administrative

On December 31, 2024, the aggregate intrinsic value of outstanding options to purchase shares of our common stock was zero, based upon the $1.21 closing sales price per share of our common stock as reported on the Nasdaq Global Market on that date.

Warrant Liabilities

We account for the outstanding warrants associated with the March 2018, December 2020, and April 2022 public offerings as liabilities measured at fair value.

We account for the outstanding warrants associated with the December 2020 and April 2022 public offerings as liabilities measured at fair value.

The fair values of these warrants have been determined using the Black-Scholes valuation model.

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We estimate expected volatility using the historical volatility of our common stock given we have sufficient history to support the expected terms of the warrants and implied volatility.

See Note 2 to our consolidated financial statements on this Annual Report for further details.

Convertible Debt and Derivative Liability

For the convertible note, we account for the bifurcated embedded conversion option, inclusive of the interest make-whole provision and make-whole fundamental change provision, as a long-term derivative liability in our consolidated balance sheet.

The derivative liability is remeasured at each reporting period using the binomial lattice model with changes in fair value recorded in the consolidated statements of operations in other (income) expense.

We used the binomial lattice valuation model to value the derivative liability at inception and on subsequent valuation dates.

This model incorporates transaction details such

as stock price, contractual terms, dividend yield, risk-free rate, adjusted equity volatility, credit rating, market credit spread, and estimated yield.

At December 31, 2024, the Level 3 volatility utilized in the Black-Scholes model to fair value the April 2022 public offering warrants was 83.4%.

See Note 2 to our consolidated financial statements on this Annual Report for further details.

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Notes to the Consolidated Financial Statements

REPORT OF INDEPENDENT REGI STERED PUBLIC ACCOUNTING FIRM

REPORT OF INDEPENDENT R EGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of SCYNEXIS, Inc.

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We believe that our audits provide a reasonable basis for our opinion

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

License Agreement Revenue — Refer to Notes 1, 2 and 11 to the financial statements

Critical Audit Matter Description

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

3) Limited ("GSK").

Pursuant to the terms of the GSK License Agreement, the Company granted GSK an exclusive, 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 Company is also responsible for the execution and costs of the ongoing clinical studies of ibrexafungerp.

For the year ended December 31, 2023, the Company recognized $139.1 million of license agreement revenue related to the GSK License Agreement.

The Company is accounting for the GSK License Agreement in accordance with ASC 606, Revenue from Contracts with Customers, or ASC 606.

In their accounting analysis, the Company identified distinct performance obligations, and therefore was required to estimate the transaction price upon the closing of the arrangement and allocate such amount to the respective distinct performance obligations based on their respective estimated standalone selling prices.

Amounts allocated to the licenses were recognized at a point in time upon the transfer of such licenses and amounts allocated to the research and development activities were recognized over time using an input method as such services are performed.

We identified the initial accounting for the GSK License Agreement, as a critical audit matter, given the complexity involved with the identification of performance obligations and in the evaluation of whether the identified performance obligations were distinct.

Auditing these conclusions involved especially subjective judgment and audit effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the accounting for license revenue recorded for the GSK License Agreement included the following, among others:

• We evaluated management's significant accounting policies related to revenue recognition for the GSK License Agreement for reasonableness.

• We obtained and read the contracts and other documents related to the GSK License Agreement.

• With the assistance of professionals in our firm having expertise in the accounting treatment for revenue arrangements, we evaluated the Company's assessment of the accounting treatment for the GSK License Agreement, including the identification of distinct performance obligations.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the estimated standalone selling prices of each of the performance obligations by:

• We evaluated the appropriateness of the valuation methodology used by management to estimate the standalone selling prices and tested the mathematical accuracy of the calculations.

• We developed a range of independent estimates for discount rates and compared to those selected by management.

• We assessed the reasonableness of management's forecasted future cash flows related to the license by inspecting evidence supporting the underlying assumptions and comparing to external market data and studies.

• We assessed the reasonableness of management’s forecasted research and development activities by inspecting evidence supporting the internal cost estimates.

Critical Audit Matters

Critical audit matters are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

/s/ Deloitte & Touche LLP

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License agreement contract asset

Accounts receivable, net

Inventory, net

Restricted cash

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Restricted cash

Intangible assets, net

Operating lease right-of-use asset (Note 7)

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Deferred revenue, current portion

Other liabilities, current portion (See Note 8)

Operating lease liability, current portion (Note 7)

Warrant liabilities

Convertible debt and derivative liability (Note 6)

Total current liabilities

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Convertible debt and derivative liability (Note 6)

Loan payable (Note 8)

Operating lease liability (Note 7)

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Total operating expenses

Income (loss) from operations

(Loss) income from operations

Other expense (income):

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Derivative liability fair value adjustment

Total other expense (income)

Income (loss) before taxes

Income tax (expense) benefit

Net income (loss)

Net income (loss) per share attributable to common stockholders – basic

Net income (loss) per share – basic

Net income (loss) per share attributable to common stockholders – diluted

Net income (loss) per share – diluted

Total other (income) expense

(Loss) income before taxes

Income tax (expense)

Net (loss) income

Net (loss) income per share attributable to common stockholders – basic

Net (loss) income per share – basic

Net (loss) income per share attributable to common stockholders – diluted

Net (loss) income per share – diluted

Weighted average common shares outstanding – basic and diluted

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Stock-based compensation expense

Common stock issued through employee stock purchase and stock option plans

Common stock issued through employee stock purchase plan

Common stock issued, net of expenses

Common stock issued for vested restricted stock units

Vested Loan Agreement warrants

Balances as of December 31, 2023

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Common stock issued through employee stock purchase plan

Common stock issued, net of expenses

Common stock issued for vested restricted stock units

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Cash flows from operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Net (loss) income

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

Depreciation and amortization

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Other liabilities and other

Net cash provided by (used in) operating activities

Net cash (used in) provided by operating activities

Cash flows from investing activities:

Purchase of intangible assets

Purchase of investments

Maturity of investments

Net cash used in investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Proceeds from common stock issued

Payments of offering costs and underwriting discounts and commissions

Proceeds from loan payable

Payments of loan payable issuance costs

Payments of offering costs

Payments of loan payable

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Repurchase of shares to satisfy tax withholdings

Net cash (used in) provided by financing activities

Net cash used in financing activities

Net decrease in cash, cash equivalents, and restricted cash

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Deferred offering costs reclassified to additional paid-in capital

Reclass of warrant liability to additional paid in capital

Reclass of deferred asset associated with issuance of loan payable to debt discount

The accompanying notes are an integral part of the financial statements.

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The Company is developing its proprietary class of enfumafungin-derived antifungal compounds (“fungerps") as broad-spectrum, systemic antifungal agents for multiple fungal indications.

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, the 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.

In December 2022, the Company announced that the FDA approved a second indication for BREXAFEMME for the reduction in the incidence of recurrent vulvovaginal candidiasis ("RVVC").

In March 2023, the Company entered into a license agreement (the "GSK License Agreement") with GlaxoSmithKline Intellectual Property (No.

3) Limited ("GSK") in which the Company granted GSK an exclusive (even as to the Company and its affiliates), royalty-bearing, sublicensable license for the development and commercialization of ibrexafungerp, including the approved product BREXAFEMME, for all indications, in all countries other than Greater China and certain other countries already licensed to third parties (See Note 11).

The parties closed the transactions contemplated by the GSK License Agreement in May 2023 and the Company received an upfront payment of $ 90.0 million (See Note 11).

The Company was party to a Loan and Security Agreement, dated May 13, 2021, with Hercules Capital, Inc.

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

(as successor to Silicon Valley Bank) (“SVBB”) (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 the Company $ 35.0 million as of March 31, 2023.

Upon receipt by the Company of the $ 90.0 million upfront payment from GSK in May 2023, all amounts payable under the Loan Agreement were fully paid (see Note 8).

Following a recent review by GSK of the manufacturing process and equipment at the vendor that manufactures the ibrexafungerp drug substance, the Company became aware that a non-antibacterial beta-lactam drug substance was manufactured using equipment common to the manufacturing process for ibrexafungerp.

Food and Drug Administration (“FDA”) approved BREXAFEMME (ibrexafungerp tablets) for treatment of patients with vulvovaginal candidiasis (“VVC”), also known as vaginal yeast infection, and in December 2022, the Company announced that the FDA approved a second indication for BREXAFEMME for the reduction in the incidence of recurrent vulvovaginal candidiasis ("RVVC").

In March 2023, the Company entered into a license agreement (as amended in December 2023, the "GSK License Agreement") with GlaxoSmithKline Intellectual Property (No.

See Note 9 for further details.

Following a review in 2023 by GSK of the manufacturing process and equipment at the vendor that manufactures the ibrexafungerp drug substance, the Company became aware that exetimibe, a non-antibacterial beta-lactam drug substance, was manufactured using equipment common to the manufacturing process for ibrexafungerp.

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It is not known whether any ibrexafungerp has been contaminated with a beta-lactam compound and the Company has not received reports of any adverse events due to the possible beta-lactam cross contamination.

Nonetheless, out of an abundance of caution and in line with GSK’s recommendation, the Company has recalled BREXAFEMME® (ibrexafungerp tablets) from the market and placed a temporary hold on clinical studies of ibrexafungerp, including the Phase 3 MARIO study, until a mitigation strategy is determined.

The patient-level and clinical product recall has been initiated and the Company is working with an experienced vendor to manage the process.

Nonetheless, out of an abundance of caution and in line with GSK’s recommendation, the Company recalled BREXAFEMME® (ibrexafungerp tablets) from the market and placed a temporary hold on clinical studies of ibrexafungerp, including the Phase 3 MARIO study.

The clinical hold and recall affected the Company's Phase 3 MARIO study.

The hold did not impact the completed FURI, CARES, VANQUISH and SCYNERGIA clinical studies.

The Company's clinical stage compound, SCY-247, is not affected by these developments.

The Company is in the process of destroying all of the patient-level and clinical drug product returned to date with the assistance of an experienced vendor and the Company is substantially complete with the product recall.

In September 2023, after the Company announced its voluntary clinical hold, the FDA concurred with the Company's voluntary hold and placed a clinical hold.

The Company is working with the FDA to discuss paths for resolution of this issue.

The clinical hold and recall affect the Company's 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.

The Company's preclinical stage compound, SCY-247, is not affected by these developments.

On December 26, 2023, the Company 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 and further clinical development of ibrexafungerp.

See Note 11 for further details.

The Company is working on the resolution of this issue and it anticipates the restart of the Phase 3 MARIO study, after the FDA's lifting of the clinical hold, in the second quarter of 2025.

The Company had an accumulated deficit of $ 376.5 million at December 31, 2024.

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(1) its ability to raise additional capital through equity offerings, debt financings, or other non-dilutive third-party funding;

(2) costs associated with new or existing strategic alliances, or licensing and collaboration

arrangements;

(3) negative regulatory events or unanticipated costs related to its development of ibrexafungerp;

(2) costs associated with new or existing strategic alliances, or licensing and collaboration arrangements;

(3) negative regulatory events or unanticipated costs related to its development of ibrexafungerp and SCY-247;

(4) its ability to successfully achieve the development, regulatory, and commercial milestones under its GSK License Agreement;

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Significant estimates and judgments include:

revenue recognition including gross to net estimates and the identification of performance obligations in licensing arrangements;

revenue recognition including the identification of performance obligations in licensing arrangements;

estimates for the relative standalone selling price and measure of progress under the input method for the GSK License Agreement;

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the estimate of services and effort expended by third-party research and development service providers used to recognize research and development expense;

and the estimates and assumptions utilized in measuring the fair values of the warrant and derivative liabilities each reporting period.

and the estimates and assumptions utilized in measuring the fair value of the outstanding warrants each reporting period.

Summary of Significant Accounting Policies

Concentration of Credit Risk

Financial instruments, which potentially expose the Company to concentrations of credit risk, consist principally of cash on deposit, cash equivalents, investments, and accounts receivable.

Financial instruments, which potentially expose the Company to concentrations of credit risk, consist principally of cash on deposit, cash equivalents, investments, license agreement receivable, and the license agreement contract asset.

The Company's money market accounts (recognized as cash and cash equivalents) and investments are with what the Company believes to be high quality issuers.

The Company has not experienced any significant losses in such accounts.

See Note 11 for concentrations of credit risk associated with the Company’s accounts receivable and revenue with customers.

Cash and Cash Equivalents

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The Company reported cash, cash equivalents, and restricted cash of $ 16.6 million and $ 34.6 million as of December 31, 2024 and 2023, respectively.

See Note 9 for further details on the nature of the restricted cash.

The Company's held-to-maturity investments in corporate and agency bonds are carried at amortized cost and any premiums or discounts are amortized or accreted through the maturity date of the investment.

Any impairment that is not deemed to be temporary is recognized in the period identified.

Accounts Receivable, Net

Accounts receivable are reported on the accompanying consolidated balance sheet at outstanding amounts due from customers for product sales net of discounts, chargebacks, and wholesaler distribution fees.

The Company evaluates the collectability of accounts receivable on a regular basis, by reviewing the financial condition and payment history of its customers, an overall review of collections experience on other accounts, and economic factors or events expected to affect future collections experience.

An allowance for doubtful accounts is recorded when a receivable is deemed to be uncollectible.

The Company did no t record an allowance for doubtful accounts as of December 31, 2023 and 2022.

Allowance for Credit Losses

The Company reviews its held-to-maturity investments for credit losses on a collective basis by major security type and in line with the Company's investment policy.

As of December 31, 2023, the Company's held-to-maturity investments were in corporate bonds, agency bonds, and U.S.

government securities

, are highly rated, and the Company does not have a history of credit losses in these investments.

The Company reviews the credit quality of its accounts receivables by monitoring the aging of its accounts receivable, the history of write offs for uncollectible accounts, and the credit quality of its significant customers, the current economic environment/macroeconomic trends, supportable forecasts, and other relevant factors.

The Company's accounts receivable are with customers that do not have a history of uncollectability nor a history of significantly aged accounts receivables.

As of December 31, 2023, the Company did no t recognize a credit loss allowance for its investments or accounts receivable.

Inventory, Net

Inventory is stated at the lower of cost or net realizable value.

Inventory on the accompanying balance sheet includes costs related to the raw material, third party manufacturing, and packaging for BREXAFEMME.

Raw material inventory includes the costs associated with the manufacture of ibrexafungerp, the active product ingredient in BREXAFEMME.

Work in process inventory includes the costs necessary to package ibrexafungerp into BREXAFEMME, at which point the inventory is then released for commercial use and considered a finished good that is available to be sold.

Inventory that is not expected to be sold within one year of the reporting period is classified as long term in other assets on the consolidated balance sheet.

Prior to the regulatory approval of an investigational drug, the Company recognizes as research and development expense costs related to the manufacture of an investigational drug when incurred.

Upon regulatory approval, the Company begins capitalizing such production and manufacturing expenses as inventory.

For BREXAFEMME, capitalization of costs as inventory began upon regulatory approval on June 1, 2021.

Inventory that is deemed to not be recoverable or is obsolete is written off as an impairment expense to its net realizable value in cost of product revenues in the accompanying consolidated statement of operations.

As of December 31, 2024, the Company's held-to-maturity investments were in corporate bonds and agency bonds, are highly rated, and the Company does not have a history of credit losses in these investments.

The Company reviews the credit quality of its license agreement receivable and license agreement contract asset by monitoring the aging of its accounts receivable, the history of write offs for uncollectible accounts, and the credit quality of its significant customers, the current economic environment/macroeconomic trends, supportable forecasts, and other relevant factors.

The Company's license agreement receivable and license agreement contract asset are with a customer that does not have a history of uncollectability nor a history of significantly aged accounts receivables.

As of December 31, 2024 and 2023, the Company did no t recognize a credit loss allowance for its investments, license agreement receivable, or license agreement contract asset.

Revenue Recognition

The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“Topic 606”).

The Company performs the following five steps to recognize revenue under ASC Topic 606:

The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”).

Under ASC 606, an entity recognizes revenue when its customer obtains control of goods and services, in an amount that reflects the consideration that the entity expects to be entitled in exchange for those goods and services.

The Company performs the following five steps to recognize revenue under ASC 606:

(i) identify the contract(s) with a customer;

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The Company only recognizes revenue when it is probable that it will collect the consideration to which it is entitled in exchange for the goods or services that will be transferred to the customer.

License Agreement Revenue

The Company has entered into arrangements involving the sale or license of intellectual property and the provision of other services.

When entering into any arrangement involving the sale or license of intellectual property rights and other services, the Company determines whether the arrangement is subject to accounting guidance in ASC 606 as well as ASC 808, Collaborative Arrangements .

If the Company determines that an arrangement includes goods or services that are central to the Company’s business operations for consideration, the Company will then identify the performance obligations in the contract using the unit of account guidance in ASC 606.

For a distinct unit of account that is within the scope of ASC 606, the Company applies all of the accounting requirements in ASC 606 to that unit of account, including the recognition,

measurement, presentation and disclosure requirements.

For a distinct unit of account that is not within the scope of ASC 606, the Company will recognize and measure the distinct unit of account based on other authoritative ASC topics or on a reasonable, rational, and consistently applied policy election.

Analyzing the license arrangements to identify performance obligations requires the use of judgment.

In arrangements that include the sale or license of intellectual property and other promised services, the Company first identifies if the licenses are distinct from the other promises in the arrangement.

For the license of intellectual property that is distinct, the Company recognizes revenue from consideration allocated to the license when the license is transferred and the customer is able to benefit from the license.

If the license is not distinct, the license is combined with other services into a single performance obligation.

Factors that are considered in evaluating whether a license is distinct from other promised services include, for example, whether the counterparty can benefit from the license without the promised service on its own or with other readily available resources and whether the promised service is expected to significantly modify or customize the intellectual property.

At the inception of each arrangement that includes milestone payments, the Company evaluates whether the milestones are considered probable of being reached.

If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price.

At the end of each reporting period, the Company re-evaluates the probability of achievement of milestones and any related constraint, and, if necessary, adjusts its estimate of the overall transaction price.

Any such adjustments are recorded on a cumulative catch-up basis, which will affect revenue in the period of adjustment.

In an arrangement with multiple performance obligations, the Company develops estimates and assumptions that require judgment to determine the underlying standalone selling price for each performance obligation, which determines how the transaction price is allocated among the performance obligations.

The estimation of the standalone selling price(s) include estimates regarding forecasted cash flows, discount rates, and estimates of costs to be incurred to fulfill its obligations associated with the performance of the research and development activities.

The Company evaluates each performance obligation to determine if it can be satisfied at a point in time or over time.

Any change made to estimated progress towards completion of a performance obligation and, therefore, license agreement revenue recognized will be recorded as a change in estimate.

In addition, variable consideration must be evaluated to determine if it is constrained and, therefore, excluded from the transaction price.

The Company constrains variable consideration to the extent that it is probable that it will not result in a significant revenue reversal when the uncertainty associated with the variable consideration is subsequently resolved.

The Company will recognize consideration related to sales-based milestone and royalties when the subsequent sales occur pursuant to the royalty exception under ASC 606 because the license is the predominant item to which the royalties or sales-based milestone relate.

Product Revenue, Net

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The transaction price for product sales is reduced by variable consideration related to certain gross to net (“GTN”) adjustments, including chargebacks, rebates, discounts, incentives, and returns, and the Company will estimate the amount of this variable consideration that should be included in the transaction price using the expected value method.

Specific considerations around the Company’s product revenue gross to net GTN adjustments are as follows:

Specific considerations around the Company’s product revenue GTN adjustments are as follows:

• Voluntary Patient Assistance Programs – Through vendors, the Company offers copay assistance to provide financial assistance to patients for the portion of their prescription cost that is not covered by payors.

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• Product Returns – Generally, the Company's customers have the right to return products during the 18-month period beginning six months prior to the labeled expiration date and ending twelve months after the labeled expiration date.

Since the Company has a limited history of BREXAFEMME returns, the Company estimated returns based on specific lot expiration dates and industry data for comparable products in the market.

Since the Company has a limited history of BREXAFEMME returns, the Company estimated returns based on specific

lot expiration dates and industry data for comparable products in the market.

BREXAFEMME has a thirty-month shelf life.

• Chargebacks – For certain entities, pricing on BREXAFEMME is extended below wholesaler list price.

Entities that purchase BREXAFEMME from wholesalers at the lower program price then remit the Company the difference between

their acquisition cost and the lower program price, resulting in a reduction of product revenue.

Entities that purchase BREXAFEMME from wholesalers at the lower program price then remit the Company the difference between their acquisition cost and the lower program price, resulting in a reduction of product revenue.

Accounts receivable is reduced for the estimated amount of unprocessed chargeback claims attributable to sale.

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The Company determined that performance obligations are satisfied and product revenue is recognized when a customer takes control of the Company’s product, which occurs at a point in time.

This occurs upon delivery of the BREXAFEMME to customers, at which point the Company recognizes revenue.

This occurs upon delivery of BREXAFEMME to customers, at which point the Company recognizes revenue.

Payment is typically received 70 to 90 days after satisfaction of the Company’s performance obligations.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products to a customer (“transaction price”).

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products to a customer.

The transaction price for product sales is reduced by variable consideration related to chargebacks, rebates, discounts, incentives, and returns.

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Sales commissions and other incremental costs of obtaining customer contracts are expensed as incurred as the amortization periods would be less than one year .

License Agreement Revenue

The Company has entered into arrangements involving the sale or license of intellectual property and the provision of other services.

For a distinct unit of account that is within the scope of Topic 606, the Company applies all of the accounting requirements in Topic 606 to that unit of account, including the recognition, measurement, presentation and disclosure requirements.

For a distinct unit of account that is not within the scope of Topic 606, the Company will recognize and measure the distinct unit of account based on other authoritative ASC Topics or on a reasonable, rational, and consistently applied policy election.