SCYNEXIS INC 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Operating results for the three months ended March 31, 2026, are not necessarily indicative of results that may occur in future interim periods or future fiscal years. Some of the statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are forward-looking statements. These forward-looking statements are based on management’s beliefs and assumptions and on information currently available to our management and involve significant elements of subjective judgment and analysis. Words such as “expects,” “will,” “anticipates,” “targets,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “potential,” “should,” “could,” variations of such words, and similar expressions are intended to identify forward-looking statements. Our actual results and the timing of events may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such a difference include those discussed under the heading “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 4, 2026, and in Part II, Item 1A of this Quarterly Report on Form 10-Q. These and many other factors could affect our future financial and operating results. We undertake no obligation to update any forward-looking statement to reflect events after the date of this Quarterly Report on Form 10-Q. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into or review of, all relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely on these statements. Overview SCYNEXIS, Inc. is a clinical-stage biotech company dedicated to advancing innovative solutions for severe rare diseases. We have acquired SCY-770, a novel, highly selective, direct AMP-activated protein kinase (AMPK) activator, for the treatment of Autosomal Dominant Polycystic Kidney Disease (ADPKD), a progressive inherited kidney disorder characterized by the development and enlargement of fluid-filled renal cysts, progressive loss of kidney function and an increased risk of end-stage kidney disease. SCY-770 has been granted Orphan Drug Designation by the U.S. Food and Drug Administration (FDA) and is designed to address many of the underlying drivers of ADPKD by reducing cyst growth and disease progression. Our proprietary antifungal platform “fungerps” includes BREXAFEMME® (ibrexafungerp tablets), the first approved representative of this novel class, which was licensed to GlaxoSmithKline Intellectual Property (No. 3) Limited (GSK) in May 2023, and SCY-247, currently in clinical stages of development. Ibrexafungerp was approved by the FDA as BREXAFEMME for the treatment of patients with vulvovaginal candidiasis in 2021 and for the reduction in the incidence of recurrent vulvovaginal candidiasis in 2022. We own 100% of the rights to SCY-247, as well as additional fungerp compounds in preclinical and discovery stage of development. The FDA has granted Qualified Infectious Disease Product status, Fast Track, and Orphan Drug designations for the oral formulation of SCY-247. Asset Purchase Agreement On March 30, 2026 (the Effective Date), we entered into an asset purchase agreement (the Asset Purchase Agreement) with Poxel SA, a French corporation (Poxel), pursuant to which we (i) acquired all of Poxel’s right, title and interest in Poxel’s direct AMP kinase activator research and development program assets, including all patents, know-how, regulatory filings, inventory, records, assumed contracts and other assets specifically related to compounds that directly activate AMP kinase, including the compound known as PXL-770 (collectively, the Assets); and (ii) assumed liabilities from Poxel related to the Assets arising after the effective date of the Asset Purchase Agreement (the Transaction). Pursuant to the Asset Purchase Agreement, we are obligated to pay Poxel a one-time upfront payment of $8.0 million within thirty days after the Effective Date of the execution of the Asset Purchase Agreement. We recognized the $8.0 million upfront payment as an acquired in-process research and development (IPR&D) expense in research and development in the three months ended March 31, 2026 and as an Asset Purchase Agreement payable as of March 31, 2026. We paid the $8.0 million upfront payment to Poxel in April 2026. In addition, we are obligated to pay Poxel milestone payments upon the first achievement of certain development and commercial milestone events related to products containing an acquired compound, for up to a total of $8.0 million in aggregate development milestone payments including a $2.0 million development milestone due on the initiation of the first phase 2 clinical trial, and up to $180.0 million in commercial milestones, of which $125.0 million is triggered by annual net sales at or above $1.0 billion. SCY-770 for Autosomal Dominant Polycystic Kidney Disease SCY-770 is an oral small-molecule therapy that has been evaluated in eight clinical trials to date, including multiple Phase 1 trials and one Phase 2a study in patients with nonalcoholic fatty liver disease (NAFLD). Across these studies, SCY-770 has demonstrated a favorable safety and pharmacokinetic profile. 15 Table of Contents We intend to develop SCY-770 as a potential disease-modifying therapy for ADPKD. We anticipate completing a Phase 1 confirmatory study assessing food effect and exposure in the third quarter of 2026 and initiating a Phase 2 proof-of-concept study in ADPKD patients in the fourth quarter of 2026, with an anticipated early efficacy readout in the second half of 2027. We believe that prior clinical experience with SCY‑770, together with compelling preclinical pharmacology data demonstrating inhibition of cyst growth and improvements in disease‑relevant biomarkers in established in vitro and in vivo models of ADPKD, may support an efficient development path. In addition, we believe the regulatory pathway in ADPKD may be streamlined, with the potential, subject to FDA agreement, for a single pivotal Phase 3 trial that could support Accelerated Approval based on an imaging‑based surrogate endpoint tied to kidney volume (TKV/htTKV), with confirmatory evidence of clinical benefit on kidney function (e.g., eGFR) required for full approval. Our development goal for SCY-770 is to limit cyst growth, delay disease progression and improve patient quality of life. Autosomal Dominant Polycystic Kidney Disease Overview, Treatment Landscape & Market Opportunity ADPKD is among the most common monogenic disorders and a leading genetic cause of kidney failure. ADPKD is caused by mutations of the PKD1 or PKD2 genes, which encode polycystin-1 (PC1) or polycystin-2 (PC2) proteins, respectively, that are important for normal tubular epithelial cell function. In patients with ADPKD, fluid-filled cysts develop and progressively enlarge in the kidneys, and to a lesser extent, in other organs, leading to kidney enlargement and associated clinical manifestations including pain, hypertension, hematuria and progressive decline in renal function. ADPKD affects approximately 140,000–160,000 diagnosed individuals in the United States and is estimated to have a global prevalence of approximately 4–7 million people, although the condition is believed to be significantly underdiagnosed. More than 50% of patients are reported to progress to end-stage kidney disease by 60 years of age, at which point renal replacement therapy, including dialysis or kidney transplantation, is required. We believe these disease characteristics, together with the chronic and progressive nature of ADPKD, underscore a substantial unmet need and potentially meaningful market opportunity for additional therapies capable of slowing disease progression while offering improved tolerability relative to currently available treatment options. The competitive landscape for ADPKD is evolving but remains limited. Tolvaptan, marketed in the United States as JYNARQUE, is currently the only therapy approved that can slow progression of ADPKD. Its use is limited to patients at risk of rapid progression due to tolerability issues, prescribing restrictions, and requirements associated with a risk evaluation and mitigation strategies (REMS) program. In 2025, the FDA approved Lupin’s generic formulation of tolvaptan for the treatment of ADPKD, providing a lower‑cost alternative to JYNARQUE; however, the generic product is subject to the same REMS requirements and safety considerations as the branded product and does not address the tolerability‑related limitations that have constrained broader adoption of tolvaptan‑based therapy. In addition, several companies are advancing product candidates in clinical development for ADPKD. Novartis, following its acquisition of Regulus Therapeutics, is developing farabursen, a kidney-targeted oligonucleotide designed to inhibit microRNA-17; farabursen has completed Phase 1b clinical trial in ADPKD patients and is expected to advance into later-stage clinical development. Vertex Pharmaceuticals is developing VX-407, a small molecule corrector currently in Phase 2a clinical development for a genetically defined subset of ADPKD patients with certain PKD1 variants, which Vertex has disclosed may represent approximately 10% of the overall patient population. AbbVie, in collaboration with Calico Life Sciences, is developing ABBV‑CLS‑628, an investigational anti–pregnancy‑associated plasma protein‑A (PAPP‑A) monoclonal antibody; ABBV‑CLS‑628 has completed a Phase 1 study and is currently being evaluated in a Phase 2 clinical trial. XORTX Therapeutics is developing XRx-008, an oxypurinol formulation intended for progressing kidney disease due to ADPKD, which the company has indicated is being positioned for Phase 3 development. While these programs reflect increasing interest in ADPKD, the number of therapies in advanced clinical stages remains limited, and there continues to be a significant unmet need for well‑tolerated treatments applicable to a broad ADPKD patient population. We believe SCY‑770 may be differentiated by its direct activation of AMP‑activated protein kinase (AMPK), a central regulator of cellular energy homeostasis that has been implicated in multiple pathways relevant to cyst growth and disease progression in ADPKD. Unlike approaches that target a single genetic subset or downstream consequence of the disease, SCY‑770’s mechanism has the potential to address core drivers of disease biology and therefore may be applicable across a broader segment of the ADPKD patient population. As a result, if successfully developed, SCY‑770 could offer a differentiated therapeutic profile with the potential for broader use relative to certain existing or emerging treatments; however, these potential advantages have not been clinically established. 16 Table of Contents SCY-247 for the Treatment and Prevention of Invasive Fungal Infections (IFI) SCY-247, the second agent in a novel antifungal class, acts through the inhibition of the glucan synthase complex, an established target in antifungal therapeutics. SCY-247 is being developed as oral and intravenous 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, SCY-247 has shown in vitro , and in vivo activity against multidrug-resistant organisms such as Candida auris and synergistic/additive activity in combination with amphotericin B against fungi causing mucormycosis. SCY-247 has unique attributes that define its potential to address significant unmet medical needs and provide considerable commercial opportunities, including: • oral bioavailability, allowing for convenient long-term outpatient use; • activity against azole-resistant and most echinocandin-resistant Candida strains, including Candida auris and multidrug-resistant strains; • activity against azole-resistant Aspergillus strains; • fungicidal (i.e., killing the fungi) capabilities against the Candida genus compared to azoles, which are fungistatic (i.e., only inhibiting the growth of fungi); • high tissue penetration, allowing high concentrations in the organs commonly affected by fungal infections; and • half-life adequate for once a day oral dosing with a low risk of drug-drug interactions. We believe that SCY-247, if approved, has the potential to address significant gaps with commercially available therapies in IC (including resistant infections) and the prevention of IFI in patients at high risk. SCY-247 is currently in a Phase 1 trial of the intravenous (IV) formulation, with data expected in the third quarter of 2026. SCY-247 has received QIDP, Fast Track and Orphan Drug designation from the FDA. We will continue to pursue non-dilutive funding opportunities to further support its development. Nasdaq Minimum Bid Price Notification On June 20, 2025, we received a letter from the Listing Qualifications Department staff of the Nasdaq (Nasdaq) notifying us that, for the last 30 consecutive business days, the closing bid price for our common stock was below the $1.00 per share minimum required for continued listing on the Nasdaq Global Market as set forth in Nasdaq Listing Rule 5450(a)(1). The letter from Nasdaq had no immediate effect on the listing of our common stock on the Nasdaq Global Market. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we had 180 calendar days from June 20, 2025, or until December 17, 2025 (the Compliance Date), to regain compliance with the minimum bid price rule. In December 2025, we announced that we had received an additional 180-calendar-day extension from the Nasdaq to regain compliance with the minimum bid price requirement, as outlined in Nasdaq Listing Rule 5550(a)(2). We now have until June 15, 2026, to meet the requirement for our shares of common stock to maintain a closing bid price of at least $1.00 per share for a minimum of ten consecutive business days, subject to Nasdaq's discretion to require up to twenty consecutive business days. Nasdaq granted the extension after determining that we continue to meet all other continued listing criteria for the Nasdaq Capital Market, including the market value of publicly held shares, and we have provided written notice of our intention to cure the deficiency within the extension period, if necessary, through a reverse stock split. Securities Purchase Agreement In March 2026, we entered into a securities purchase agreement with certain investors to issue and sell in a private placement (the March 2026 Private Placement) an aggregate of (i) 34,750,000 shares of our common stock, par value $0.001 per share, (ii) pre-funded warrants to purchase up to 8,750,000 shares of our common stock (Pre-Funded Warrants) and (iii) accompanying warrants to purchase up to 43,500,000 shares of our common stock (Common Warrants). Each Pre-Funded Warrant is exercisable for one share of our common stock at an exercise price of $0.0001 per share, and is exercisable immediately and will expire once exercised in full. Each Common Warrant is exercisable for one share of common stock (or Pre-Funded Warrant in lieu thereof) at an exercise price of $1.20 per share, and will be exercisable beginning on the effective date of the stockholder approval relating to the proposed increase of our authorized shares of common stock and will expire on 5:00 p.m. (New York City time) on the earlier of (i) April 1, 2031 or (ii) the 30th day after we publicly release topline data at Week 48 from our Phase 2 proof-of-concept clinical study evaluating SCY-770 in patients with ADPKD. The March 2026 Private Placement closed on April 1, 2026. The aggregate gross proceeds to us from the March 2026 Private Placement were $40.0 million, before deducting fees and expenses or any exercise of the Pre-Funded Warrants or Common Warrants. See Note 12 to the unaudited condensed 17 Table of Contents consolidated financial statements for further information regarding the March 2026 Private Placement. Pursuant to the registration rights agreement that we entered into with the investors in connection with the March 2026 Private Placement, we filed a registration statement on Form S-3 (File No. 333-295493) (the Registration Statement), which was declared effective by the SEC on May 8, 2026, covering the resale of the Registrable Securities (as defined in the registration rights agreement). The Registration Statement covers the shares of common stock underlying the Common Warrants; however, the Common Warrants are not exercisable until the effective date of the stockholder approval relating to the proposed increase in our authorized shares of common stock, as more fully described in the Registration Statement. We have agreed to use reasonable best efforts to keep the Registration Statement effective until the earlier of the date on which all Registrable Securities covered thereby have been sold or may be resold pursuant to Rule 144 under the Securities Act without restriction. Components of Operating Results Revenue Revenue consists of license agreement revenue associated with the GSK license agreement. Research and Development Expense Research and development expense consists of expenses incurred while performing research and development activities to discover, develop, or improve potential product candidates we seek to develop. This includes conducting preclinical studies and clinical trials, manufacturing and other development efforts, and activities related to regulatory filings for product candidates. We recognize research and development expenses as they are incurred. Our research and development expense primarily consists of: • costs related to executing preclinical and clinical trials, drug formulation, manufacturing and other development; • salaries and personnel-related costs, including benefits and any stock-based compensation, for personnel in research and development functions; • medical affairs related expense and salary that is incurred to discover, develop, or improve potential product candidates; • other costs in seeking regulatory approval of our products; • acquired IPR&D with no alternative future use; and • allocated overhead. SCY-247 and ibrexafungerp as part of the MARIO Phase 3 study were the only key research and development projects during the periods presented. We expect to continue to incur significant research and development expense for the foreseeable future as we continue our effort to develop SCY-770 and SCY-247, and to potentially develop our other product candidates, subject to the availability of additional funding. The successful development of product candidates is highly uncertain. At this time, we cannot reasonably estimate the nature, timing or costs required to complete the remaining development of any product candidates. This is due to the numerous risks and uncertainties associated with the development of product candidates. Selling, General and Administrative Expense Selling, general and administrative expense consists primarily of salaries and personnel-related costs, including employee benefits and any stock-based compensation. This includes personnel in executive, finance, human resources, business development, medical affairs, marketing and commercial, and administrative support functions. Other expenses include facility-related costs not otherwise allocated to research and development expense, professional fees for accounting, auditing, tax and legal services, consulting costs for general and administrative purposes, patent application and legal fees, information systems and marketing efforts. Other Expense (Income) All of our other expense (income) recognized in the three months ended March 31, 2026 and 2025, consists of amortization of debt issuance costs and discount, interest income, interest expense, other income, and the warrant liabilities fair value adjustment. 18 Table of Contents Results of Operations for the Three Months Ended March 31, 2026 and 2025 The following table summarizes our results of operations for the three months ended March 31, 2026 and 2025, together with the changes in those items in dollars and percentage (dollars in thousands): Three Months Ended March 31, 2026 2025 Period-to-Period Change License agreement revenue $ — $ 257 $ (257 ) (100.0 ) % Operating expenses: Research and development 12,351 5,141 7,210 140.2 % Selling, general and administrative 4,588 3,726 862 23.1 % Total operating expenses 16,939 8,867 8,072 91.0 % Loss from operations (16,939 ) (8,610 ) (8,329 ) 96.7 % Other (income) expense: Amortization of debt issuance costs and discount — 312 (312 ) (100.0 ) % Interest income (535 ) (776 ) 241 (31.1 ) % Interest expense — 173 (173 ) (100.0 ) % Other income (354 ) — (354 ) — Warrant liabilities fair value adjustment 5,249 (2,928 ) 8,177 (279.3 ) % Total other expense (income) 4,360 (3,219 ) 7,579 (235.4 ) % Net loss $ (21,299 ) $ (5,391 ) $ (15,908 ) 295.1 % Revenue. For the three months ended March 31, 2025, revenue consists of $0.3 million in license agreement revenue associated with the GSK license agreement. Research and Development. For the three months ended March 31, 2026, research and development expenses increased to $12.4 million compared to $5.1 million for the three months ended March 31, 2025. The increase of $7.2 million, or 140%, for the three months ended March 31, 2026, was primarily driven by the $8.0 million IPR&D expense recognized for the acquisition of SCY-770 in the three months ended March 31, 2026 and an increase of $0.3 million in clinical expense, offset in part by a decrease of $0.7 million in preclinical expense, and a decrease of $0.4 million in salary expense. The $0.3 million increase in clinical expense was primarily associated with a $0.3 million increase in expense for the Phase 1 studies for SCY-247. The $0.7 million decrease in preclinical expense was primarily associated with certain preclinical costs associated with the development of SCY-247 in the three months ended March 31, 2025. The decrease of $0.4 million in salary expense is due to the decrease in the number of employees in the three months ended March 31, 2026. Selling, General & Administrative . For the three months ended March 31, 2026 and 2025, selling, general and administrative expenses increased to $4.6 million compared to $3.7 million for the three months ended March 31, 2025. The increase of $0.9 million, or 23%, was primarily due to the recognition of $0.8 million in offering costs for the March 2026 Private Placement warrant issuance in the three months ended March 31, 2026. Amortization of Debt Issuance Costs and Discount . For the three months ended March 31, 2025, we recognized $0.3 million in amortization of debt issuance costs and discount. The debt issuance costs and discount for our March 2019 convertible notes, which were fully paid at maturity in March 2025, primarily consisted of an allocated portion of advisory fees and other issuance costs and the initial fair value of the derivative liability. Interest Income . For the three months ended March 31, 2026 and 2025, we recognized $0.5 million and $0.8 million, respectively, in interest income on our money market funds and investments. Interest Expense . For the three months ended March 31, 2025, we recognized $0.2 million in interest expense on our March 2019 convertible notes which were fully paid at maturity in March 2025. Other Income . For the three months ended March 31, 2026, we recognized $0.4 million in other income associated with certain research and development tax credits. Warrant Liabilities Fair Value Adjustment . For the three months ended March 31, 2026 and 2025, we recognized a loss of $5.2 million and a gain of $2.9 million, respectively, in the fair value adjustment related to the warrant liabilities primarily due to the increase and decrease in our stock price during the respective periods. Liquidity and Capital Resources 19 Table of Contents Sources of Liquidity As of March 31, 2026, we had cash and cash equivalents and investments of $72.4 million, compared to cash and cash equivalents and short-term investments of $56.3 million as of December 31, 2025. We believe our capital resources are sufficient to fund our on-going operations for a period of at least 12 months subsequent to the issuance of the accompanying unaudited condensed consolidated financial statements. As of March 31, 2026, our accumulated deficit was $406.4 million. Consistent with our operating plan, we expect to incur significant research and development expenses and selling, general and administrative expenses. As a result of our continued significant expenses, we 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 or our “at-the-market” offering program pursuant to the Controlled Equity Offering SM Sales Agreement with Cantor Fitzgerald & Co. Cash Flows The following table sets forth the significant sources and uses of cash for the three months ended March 31, 2026 and 2025 (in thousands): Three Months Ended March 31, 2026 2025 Cash, cash equivalents, and restricted cash, January 1 $ 21,448 $ 16,595 Net cash used in operating activities (8,101 ) (7,465 ) Net cash (used in) provided by investing activities (525 ) 12,440 Net cash provided by (used in) financing activities 24,038 (14,084 ) Net increase (decrease) in cash, cash equivalents, and restricted cash 15,412 (9,109 ) Cash, cash equivalents, and restricted cash, March 31 $ 36,860 $ 7,486 Operating Activities The $0.6 million increase in net cash used in operating activities for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025 was primarily due to the continued development costs associated with SCY-247 in the three months ended March 31, 2026. Net cash used in operating activities of $8.1 million for the three months ended March 31, 2026, primarily consisted of the $21.3 million net loss adjusted for non-cash charges that included the loss on change in fair value of the warrant liability of $5.2 million, $0.8 million in offering costs for the March 2026 Private Placement warrant issuance, and stock-based compensation expense of $0.6 million, partially offset by a net favorable change in operating assets and liabilities of $6.6 million. The net favorable change in operating assets and liabilities of $6.6 million is due to a net favorable change of $7.4 million due to the increase in operating liabilities offset by a net unfavorable change of $0.8 million due to the increase in operating assets. The net $7.4 million increase in operating liabilities is primarily due to the recognition of the $8.0 million Asset Purchase Agreement payable and a $0.9 million increase in accounts payable offset in part by a decrease of $1.4 million in accrued expenses. The $1.4 million decrease in accrued expenses is primarily due to the $1.1 million decrease in accrued bonus which was paid in the three months ended March 31, 2026. The $0.8 million increase in prepaid expenses, other current assets, deferred costs, and other was primarily due to the $0.5 million increase in other current assets for certain tax credit receivables recognized in the three months ended March 31, 2026. Net cash used in operating activities of $7.5 million for the three months ended March 31, 2025, primarily consisted of the $5.4 million net loss adjusted for non-cash charges that included the gain on change in fair value of the warrant liability of $2.9 million, stock-based compensation expense of $0.8 million, and amortization of debt issuance costs and discount of $0.3 million, partially offset by a net unfavorable change in operating assets and liabilities of $0.2 million. The net unfavorable change in operating assets and liabilities of $0.2 million is due to a favorable change of $1.3 million due to the decrease in operating assets, offset by an unfavorable change of $1.5 million due to the decrease in operating liabilities The net $1.3 million decrease in operating assets is primarily due to a $0.5 million decrease in the license agreement receivable associated with the GSK License Agreement which was collected in the three months ended March 31, 2025, and a $0.7 million decrease in prepaid expenses, other assets, deferred costs, and other. The $0.7 million decrease in prepaid expenses, other assets, deferred costs, and other was primarily due to the $0.4 million decrease in prepaid research and development services that were recognized in the three months ended March 31, 2025 and a $0.4 million decrease in other current assets. The net unfavorable change of $1.5 million in operating liabilities is primarily due to the $1.2 million decrease in accrued expenses primarily due to the $1.3 million decrease in accrued bonus which was paid in the three months ended March 31, 2025. Investing Activities 20 Table of Contents Net cash used in investing activities of $0.5 million for the three months ended March 31, 2026 consisted of purchases and maturities of investments of $3.3 million and $2.8 million, respectively. Net cash provided by investing activities for the three months ended March 31, 2025 consisted of the maturities of investments of $12.4 million. Financing Activities Net cash provided by financing activities of $24.0 million for the three months ended March 31, 2026, consisted primarily of the $24.0 million in proceeds received for the March 2026 Private Placement. Net cash used in financing activities of $14.1 million for the three months ended March 31, 2025, consisted primarily of the $14.0 million repayment of the convertible debt in March 2025. Future Funding Requirements We expect to incur expenses in connection with our efforts to further development activities, particularly as we continue the research, development and clinical trials of, and seek regulatory approval for, product candidates. We anticipate that we will need substantial additional funding in connection with our continuing future operations. We are continually evaluating our operating plan and assessing the optimal cash utilization for our SCY-770 and SCY-247 development strategy. We have based our estimates on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with the development and commercialization of product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenses necessary to complete the development of product candidates. Our future capital requirements will depend on many factors, including: • the progress, and costs, of the clinical development of SCY-770 and SCY-247; • the outcome, costs and timing of seeking and obtaining FDA and any other regulatory approvals; • the ability of product candidates to progress through clinical development successfully; • our need to expand our research and development activities; • the costs associated with securing, establishing and maintaining manufacturing capabilities; • our ability to successfully achieve the regulatory and commercial milestones under our GSK license agreement; • our ability to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights; • our need and ability to hire additional management and scientific and medical personnel; • our need to implement additional, as well as to enhance existing, internal systems and infrastructure, including financial and reporting processes and systems and the associated compliance costs; and • the economic and other terms, timing and success of our existing licensing arrangements and any collaboration, licensing or other arrangements into which we may enter in the future. Until such time, if ever, as we can generate substantial revenue from product sales, we expect to finance our cash needs through a combination of net proceeds from equity offerings, debt financings, or other non-dilutive third-party funding (e.g., grants), strategic alliances and licensing arrangements. 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, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through sales of assets, other third-party funding, strategic alliances and licensing or collaboration arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. Significant Estimates and Judgments Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States, or GAAP. The preparation of our condensed consolidated financial statements requires us to make estimates and 21 Table of Contents assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of our condensed consolidated financial statements, as well as the reported revenues and expenses during the reported periods. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Our critical estimates and judgments are described within Item 7 to our Annual Report on Form 10-K for the year ended December 31, 2025.