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What changed in SCYNEXIS INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of SCYNEXIS INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+348 added−375 removedSource: 10-K (2024-03-28) vs 10-K (2023-03-31)

Top changes in SCYNEXIS INC's 2023 10-K

348 paragraphs added · 375 removed · 222 edited across 4 sections

Item 1. Business

Business — how the company describes what it does

68 edited+53 added−54 removed128 unchanged
Biggest changeWe are also eligible to receive potential: • regulatory approval milestone payments of up to $70 million; • commercial milestone payments of up to $115 million based on first commercial sale in invasive candidiasis (U.S./EU); • and sales milestone payments of up to $242.5 million based on annual net sales, with a total of $77.5 million to be paid upon achievement of multiple thresholds up through $200 million; a total of $65 million to be paid upon achievement of multiple thresholds between $300 million and $500 million; and $50 million to be paid at each threshold of $750 million and $1 billion.
Biggest changeUnder the terms of the updated GSK License Agreement, as amended by the Binding MOU, we are eligible to receive potential: • regulatory approval milestone payments of up to $49 million (revised from up to $70 million as provided in the GSK License Agreement); • commercial milestone payments of up to $57.5 million based on first commercial sale in invasive candidiasis (U.S./EU) (revised from up to $115 million as provided in the GSK License Agreement); and • 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).
Specifically, 90% of Candida auris isolates have been reported to be resistant to at least one antifungal agent and 30% isolates resistant to at least two antifungals.
Specifically, 90% of Candida auris isolates have been reported to be resistant to at least one antifungal agent and 30% of isolates resistant to at least two antifungals.
Collaborations and Licensing Agreements Associated with Our Core Drug Development Operations We have a number of licensing and collaboration agreements associated with our core drug development operations, including the following: GSK On March 30, 2023 we entered into a License Agreement with GSK.
Collaborations and Licensing Agreements Associated with Our Core Drug Development Operations We have a number of licensing and collaboration agreements associated with our core drug development operations, including the following: GSK On March 30, 2023, we entered into a license agreement (the GSK License Agreement) with GSK.
Hansoh In February 2021, we entered into an Exclusive License and Collaboration Agreement (the Agreement) with Hansoh (Shanghai) Health Technology Co., Ltd., and Jiangsu Hansoh Pharmaceutical Group Company Limited (collectively, Hansoh), pursuant to which we granted to Hansoh an exclusive license to research, develop and commercialize ibrexafungerp in the Greater China region, including mainland China, Hong Kong, Macau, and Taiwan.
Hansoh In February 2021, we entered into an Exclusive License and Collaboration Agreement (the Hansoh License Agreement) with Hansoh (Shanghai) Health Technology Co., Ltd., and Jiangsu Hansoh Pharmaceutical Group Company Limited (collectively, Hansoh), pursuant to which we granted to Hansoh an exclusive license to research, develop and commercialize ibrexafungerp in the Greater China region, including mainland China, Hong Kong, Macau, and Taiwan.
Moreover, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively, the Affordable Care Act, provides that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act; • the federal civil and criminal false claims laws, including the civil False Claims Act that can be enforced by private citizens through civil whistleblower or qui tam actions and civil monetary penalties laws, prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; • the Federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, prohibits, among other things, executing or attempting to execute a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; 18 • the federal Physician Payments Sunshine Act requires applicable manufacturers of covered drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to annually report to CMS information regarding payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals as well as information regarding ownership and investment interests held by physicians and their immediate family members; • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and their implementing regulations, also imposes obligations, including mandatory contractual terms, on “covered entities,” including certain healthcare providers, health plans, healthcare clearinghouses, and their respective “business associates,” that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity as well as their covered subcontractors, with respect to safeguarding the privacy, security and transmission of individually identifiable health information, as well as analogous state and foreign laws that govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts; and • analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non- governmental third-party payors, including private insurers.
Moreover, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively, the Affordable Care Act, provides that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act; • the federal civil and criminal false claims laws, including the civil False Claims Act that can be enforced by private citizens through civil whistleblower or qui tam actions and civil monetary penalties laws, prohibit individuals or entities from, among other things, knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; • the Federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, prohibits, among other things, executing or attempting to execute a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; • the federal Physician Payments Sunshine Act requires applicable manufacturers of covered drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to annually report to CMS information regarding payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals as well as information regarding ownership and investment interests held by physicians and their immediate family members; • HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and their implementing regulations, also imposes obligations, including mandatory contractual terms, on “covered entities,” including certain healthcare providers, health plans, healthcare clearinghouses, and their respective “business associates,” that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity as well as their covered subcontractors, with respect to safeguarding the privacy, security and transmission of individually identifiable health information, as well as analogous state and foreign laws that govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts; and 17 • analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non- governmental third-party payors, including private insurers.
In connection with the entering into of the License Agreement, we entered into a First Amendment and Consent to Loan and Security Agreement with the Lenders pursuant to which the Lenders consented to us entering into the License Agreement and we agreed to pay to the Lenders an amount equal to the sum of (i) all outstanding principal plus all accrued and unpaid interest with respect to the amounts loaned under the Loan Agreement (approximately $35.4 million), (ii) the prepayment fee payable under Loan Agreement ($262,500), (iii) the final payment payable under Loan Agreement ($1,382,500), and (iv) all other sums, if any, that shall have become due and payable with respect to loan advances under the Loan Agreement.
In connection with the entering into of the GSK License Agreement, we entered into a First Amendment and Consent to Loan and Security Agreement (the First Amendment) with the Lenders pursuant to which the Lenders consented to us entering into the GSK License Agreement and we agreed to pay to the Lenders an amount equal to the sum of (i) all outstanding principal plus all accrued and unpaid interest with respect to the amounts loaned under the Loan Agreement (approximately $35.4 million), (ii) the prepayment fee payable under Loan Agreement ($262,500), (iii) the final payment payable under Loan Agreement ($1,382,500), and (iv) all other sums, if any, that shall have become due and payable with respect to loan advances under the Loan Agreement.
Even if the FDA approves a product, it may limit the approved indications for use of the product, require that contraindications, warnings or precautions be included in the product labeling, including a boxed warning, require that post‑approval studies, including Phase 4 clinical trials, be conducted to further assess a drug’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution restrictions or other risk management mechanisms under a REMS, which can materially affect the potential market and profitability of the product.
Even if the FDA approves a product, it may limit the approved indications for use of the product, require that contraindications, warnings or precautions be included in the product labeling, including a boxed warning, require that post‑approval studies, including Phase 4 clinical trials, be conducted to further assess a drug’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution restrictions or other risk management mechanisms under a REMS, which can materially affect the potential market 15 and profitability of the product.
Human clinical trials are typically conducted in three sequential phases, which in some cases may overlap or be combined: 15 Phase 1: The drug is initially introduced into healthy human subjects or patients with the target disease or condition and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectiveness.
Human clinical trials are typically conducted in three sequential phases, which in some cases may overlap or be combined: Phase 1: The drug is initially introduced into healthy human subjects or patients with the target disease or condition and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectiveness.
In addition, the California Privacy Rights Act of 2020 (CPRA), effective January 1, 2023, expanded the CCPA by, among other things, giving California residents the ability to limit use of certain sensitive personal data, establishing restrictions on personal data retention, expanding the types of data breaches that are subject to the CCPA’s private right of action, and establishing a new California Privacy Protection Agency to implement and enforce the new law.
In addition, the California Privacy Rights Act of 2020 (CPRA), effective January 1, 2023, expanded the CCPA by, among other things, giving California residents the ability to limit use of certain sensitive personal data, establishing restrictions on personal data retention, expanding the types of data breaches that are 16 subject to the CCPA’s private right of action, and establishing a new California Privacy Protection Agency to implement and enforce the new law.
Under the terms of the Agreement, Hansoh shall be responsible for the development, regulatory approval and commercialization of ibrexafungerp in Greater China. We received a $10.0 million upfront payment and will also be eligible to receive up to $112.0 million in development and commercial milestones, plus low double-digit royalties on net product sales.
Under the terms of the Hansoh License Agreement, Hansoh shall be responsible for the development, regulatory approval and commercialization of ibrexafungerp in Greater China. We received a $10.0 million upfront payment and will also be eligible to receive up to $112.0 million in development and commercial milestones, plus low double-digit royalties on net product sales.
The obligation to pay royalties with respect to sales in a specified region will continue until the later of the date of expiration of all intellectual property and regulatory exclusivity for the product in the region and ten years from the first commercial sale, unless earlier terminated by Hansoh with advanced notice for convenience or under other specified circumstances.
The obligation to pay us royalties with respect to sales in a specified region will continue until the later of the date of expiration of all intellectual property and regulatory exclusivity for the product in the region and ten years from the first commercial sale, unless earlier terminated by Hansoh with advanced notice for convenience or under other specified circumstances.
Additionally, third-party payors may refuse to include a particular branded drug in their formularies when a competing generic product is available. Under Medicare, hospitals are reimbursed under an inpatient prospective payment system. This pricing methodology provides a single payment 19 amount to hospitals based on a given diagnosis-related group.
Additionally, third-party payors may refuse to include a particular branded drug in their formularies when a competing generic product is available. Under Medicare, hospitals are reimbursed under an inpatient prospective payment system. This pricing methodology provides a single payment amount to hospitals based on a given diagnosis-related group.
The amendment eliminates two cash milestone payments that we would have paid to Merck upon the first filing of a NDA, triggered by the FDA acceptance for filing of our NDA for ibrexafungerp for the treatment of VVC, and first marketing approval in the U.S. in June 2021 for our NDA for ibrexafungerp for the treatment of VVC.
The amendment eliminates two cash milestone payments that we would have paid to Merck upon the first filing of a NDA, triggered by the 12 FDA acceptance for filing of our NDA for ibrexafungerp for the treatment of VVC, and first marketing approval in the U.S. in June 2021 for our NDA for ibrexafungerp for the treatment of VVC.
However, we do not own or operate and do not intend to own or operate facilities for manufacturing, storage and distribution, or testing of drug substance or drug product. We have relied on third-party contract manufacturers for synthesis of our clinical compounds and manufacture of drug product.
We do not own or operate and do not intend to own or operate facilities for manufacturing, storage and distribution, or testing of drug substance or drug product. We have relied on third-party contract manufacturers for synthesis of our clinical compounds and manufacture of drug product.
Pursuant to the terms of the License Agreement, we granted GSK an exclusive (even as to us and our affiliates), royalty-bearing, sublicensable license for the development, manufacture, and commercialization of ibrexafungerp, including the approved product BREXAFEMME, for all indications, in all countries other than Greater China and certain other countries already licensed to third parties (the GSK Territory).
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).
In the future, we (or our licensee GSK following the GSK Closing) may also consider other indications for ibrexafungerp for which longer oral antifungal regimens are typically needed and would benefit from the broad-spectrum activity, favorable safety profile and low potential for drug-drug interactions, including for the treatment of chronic fungal infections and for prophylaxis.
In the future, we or our licensee GSK, may also consider other indications for ibrexafungerp for which longer oral antifungal regimens are typically needed and would benefit from the broad-spectrum activity, favorable safety profile and low potential for drug-drug interactions, including for the treatment of chronic fungal infections and for prophylaxis.
Several states within the United States have enacted or proposed data privacy and 17 security laws. For example, Virginia passed the Consumer Data Protection Act, and Colorado passed the Colorado Privacy Act.
Several states within the United States have enacted or proposed data privacy and security laws. For example, Virginia passed the Consumer Data Protection Act, and Colorado passed the Colorado Privacy Act.
These changes included aggregate reductions to Medicare payments to providers of 2% per fiscal year, effective April 1, 2013, which, due to subsequent legislative amendments, including the Infrastructure Investment and Jobs Act, will stay in effect until 2031 unless additional Congressional action is taken..
These changes included aggregate reductions to Medicare payments to providers of 2% per fiscal year, effective April 1, 2013, which, due to subsequent legislative amendments, including the Infrastructure Investment and Jobs Act, will stay in effect until 2032 unless additional Congressional action is taken.
Ibrexafungerp has unique attributes that define its potential to address significant unmet medical needs and provide considerable commercial opportunities, including: • oral bioavailability, unlike other glucan synthase inhibitors, allowing for convenient long-term outpatient use; • broad activity against Candida, Aspergillus, Pneumocystis, Coccidioides, Histoplasma and Blastomyces strains; • distinct chemical structure from other glucan synthase inhibitors, providing a unique spectrum of activity and pharmacokinetic profile; • 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; • generally well tolerated with over 1,600 subjects and patients exposed; and • 20-hour half-life with a low risk of drug-drug interactions.
Ibrexafungerp has unique attributes that define its potential to address significant unmet medical needs and provide considerable commercial opportunities, including: • oral bioavailability, unlike other glucan synthase inhibitors, allowing for convenient long-term outpatient use; • distinct chemical structure from other glucan synthase inhibitors, providing a unique spectrum of activity and pharmacokinetic profile; • 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; • generally well tolerated with over 1,600 subjects and patients exposed; and • 20-hour half-life with a low risk of drug-drug interactions.
Despite yeast infections being so common and prevalent, with millions of women suffering from it every year, it is still an under-appreciated, under-reported, and under-served women’s health condition. Treatments for VVC have historically included several topical azole antifungals and oral fluconazole.
Despite yeast 9 infections being so common and prevalent, with millions of women suffering from them every year, it is still an under-appreciated, under-reported, and under-served women’s health condition. Treatments for VVC have historically included several topical azole antifungals and oral fluconazole.
As a result, the coverage determination process is often a time-consuming and costly process that will require the Company to provide scientific and clinical support for the use of its products to each payor separately, with no assurance that coverage and adequate reimbursement will be obtained.
As a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of its products to each payor separately, with no assurance that coverage and adequate reimbursement will be obtained.
It is also unclear how such challenges and the healthcare reform measures of the Biden administration will impact the Affordable Care Act and the Company's business. Other legislative changes have been proposed and adopted in the United States since the Affordable Care Act was enacted.
It is also unclear how such challenges and the healthcare reform measures of the Biden administration will impact the Affordable Care Act and our business. Other legislative changes have been proposed and adopted in the United States since the Affordable Care Act was enacted.
Intellectual Property 20 We strive to protect the proprietary technology that we believe is important to our business, including seeking and maintaining patents intended to cover our product candidates and compositions, and their methods of use and other inventions that are commercially important to the development of our business.
Intellectual Property 19 We strive to protect the proprietary technology that we believe is important to our business, including seeking and maintaining patents intended to cover our product candidates and compositions, and their methods of use and other inventions that are commercially important to the development of our business.
Noxafil® (posaconazole) marketed by Merck and Cresemba® (isavuconazole), approved in the U.S. and other global markets and marketed by Astellas in the U.S.; Diflucan® (fluconazole), Pfizer, off-patent with multiple generics, 11 Terazol (terconazole), Jannsen, off-patent with multiple generics, Gynazole (butoconazole), Perrigo, off patent with multiple generics; Echinocandins .
Noxafil® (posaconazole) marketed by Merck and Cresemba® (isavuconazole), approved in the U.S. and other global markets and marketed by Astellas in the U.S.; Diflucan® (fluconazole), Pfizer, off-patent with multiple generics, Terazol (terconazole), Jannsen, off-patent with multiple generics, Gynazole (butoconazole), Perrigo, off patent with multiple generics; 10 Echinocandins .
Additionally, ibrexafungerp has shown in vitro , in vivo and clinical activity against multidrug-resistant organisms such as Candida auris and synergistic/additive activity in combination with isavuconazole against Aspergillus strains and in 9 combination with amphotericin B against fungi causing mucormycosis.
Additionally, ibrexafungerp has shown in vitro , in vivo and clinical activity against multidrug-resistant organisms such as 8 Candida auris and synergistic/additive activity in combination with isavuconazole against Aspergillus strains and in combination with amphotericin B against fungi causing mucormycosis.
The information contained on, or that can be accessed through, our website is not part of this Annual Report, and the inclusion of our website address in this Annual Report is an inactive textual reference only. 21
The information contained on, or that can be accessed through, our website is not part of this Annual Report, and the inclusion of our website address in this Annual Report is an inactive textual reference only. 20
The processes for obtaining regulatory approvals in the United States and in foreign countries, along with subsequent compliance with applicable statutes and regulations, require the expenditure of substantial time and financial resources. 14 U.S. Drug Approval Process In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act (FDCA), and implementing regulations.
The processes for obtaining regulatory approvals in the United States and in foreign countries, along with subsequent compliance with applicable statutes and regulations, require the expenditure of substantial time and financial resources. U.S. Drug Approval Process In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act (FDCA), and implements regulations.
These laws may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on customers for the Company's drugs, if approved, and accordingly, the Company's financial operations.
These laws may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on customers for our drugs, if approved, and accordingly, our financial operations.
The Company may need to conduct expensive pharmaco-economic studies to demonstrate the medical necessity and cost effectiveness of its products.
We may need to conduct expensive pharmaco-economic studies to demonstrate the medical necessity and cost effectiveness of its products.
These payments by us will become due upon the earliest of (A) one business day following receipt by us of the $90 million upfront payment payable to us under the License Agreement, (B) June 1, 2023, or (C) the termination of the License Agreement.
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.
The primary third-party vendors with which we have agreements in place to support manufacturing and supply both for clinical development and commercial needs have the required capabilities with respect to facilities, equipment and technical expertise, quality systems that meet global regulatory and compliance requirements, satisfactory regulatory inspection history from relevant health authorities and proven track records in supplying drug substance and drug product for late-stage clinical and commercial use.
We believe the primary third-party vendors with which we have agreements in place to support manufacturing and supply for clinical development have the required capabilities with respect to facilities, equipment and technical expertise, quality systems that meet global regulatory and compliance requirements, satisfactory regulatory inspection history from relevant health authorities and proven track records in supplying drug substance and drug product.
As of March 1, 2023, we are the owner of more than ten issued U.S. patents and more than 125 issued non-U.S. patents with claims to novel compounds, compositions containing them, processes for their preparation, and their uses as pharmaceutical agents, with terms expiring between 2027 and 2038. Of these patents, six U.S. patents relate to ibrexafungerp.
As of March 1, 2024, we are the owner of more than ten issued U.S. patents and more than 125 issued non-U.S. patents with claims to novel compounds, compositions containing them, processes for their preparation, and their uses as pharmaceutical agents, with terms expiring between 2027 and 2038.
Except for BREXAFEMME, there are only azole class treatments available for women suffering from VVC with no other approved alternative class in the U.S. When a patient fails fluconazole therapy, patients typically are treated with more fluconazole or a topical azole.
Except for BREXAFEMME, there are only azole class treatments available for women suffering from VVC with no other approved alternative class in the U.S. When a patient fails fluconazole therapy, patients typically are treated with more fluconazole or a topical azole. Women with VVC could benefit from a non-azole, and preferably oral, treatment option.
In the case of each of the above milestones, such milestone events are defined in the License Agreement. GSK will also pay royalties based on cumulative annual sales to us in the mid-single digit to mid-teen range.
In the case of each of the above milestones, such milestone events are defined in the GSK License Agreement, as amended by the Binding MOU. GSK will also pay royalties based on cumulative annual sales to us in the mid-single digit to mid-teen range. The royalty terms are not amended by the Binding MOU.
Further, coverage policies and third-party reimbursement rates may change at any time. Public and private health care payors control costs and influence drug pricing through a variety of mechanisms, including through negotiating discounts with the manufacturers and through the use of tiered formularies and other mechanisms that provide preferential access to certain drugs over others within a therapeutic class.
Public and private health care payors control costs and influence drug pricing through a variety of mechanisms, including through negotiating discounts with the manufacturers and through the use of tiered formularies and other mechanisms that provide preferential access to certain drugs over others within a therapeutic class.
(SVB) are party to a Loan and Security Agreement dated as of May 13, 2021 (the Loan Agreement), pursuant to which Hercules Capital, SVB and each of the other lenders from time-to-time party to the Loan and Security Agreement (collectively, the Lenders) loaned to us $35 million.
(as successor to Silicon Valley Bank) (SVBB) were parties to a Loan and Security Agreement dated as of May 13, 2021 (the Loan Agreement), pursuant to which Hercules Capital, SVBB and each of the other lenders from time-to-time party to the Loan Agreement (collectively, the Lenders) loaned to us $35 million.
We are actively pursuing several U.S. patent applications and many non-U.S. patent applications in multiple jurisdictions worldwide. Ibrexafungerp is protected in the United States by an issued composition of matter patent (U.S.
Of these patents, six U.S. patents relate to ibrexafungerp, and one U.S. patent relates to SCY-247. We are actively pursuing several U.S. patent applications and many non-U.S. patent applications in multiple jurisdictions worldwide. Ibrexafungerp is protected in the United States by an issued composition of matter patent (U.S.
Women with VVC could benefit from a non-azole, and preferably oral, treatment option. 10 We believe BREXAFEMME has the potential to address vaginal yeast infections across a broad range of patients and could be an ideal treatment option for many patients for whom current treatment options are suboptimal.
We believe BREXAFEMME has the potential to address vaginal yeast infections across a broad range of patients and could be an ideal treatment option for many patients for whom current treatment options are suboptimal.
Pursuant to the terms of the License Agreement, we granted GSK an exclusive (even as to us and our affiliates), royalty-bearing, sublicensable license for the development, manufacture, and commercialization of ibrexafungerp, including the approved product BREXAFEMME, for all indications, in the GSK Territory.
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).
Phase 3: The drug is administered to an expanded patient population with the target disease, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk-benefit profile of the product, and to provide adequate information for the labeling of the product.
Phase 3: The drug is administered to an expanded patient population with the target disease, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overall risk-benefit profile of the product, and to provide adequate information for the labeling of the product. 14 Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and more frequently if serious adverse events occur.
The process required by the FDA before a drug may be marketed in the United States generally involves the following: • completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice (GLP) regulations; • submission to the FDA of an investigational new drug application (IND) which must become effective before human clinical trials may begin; • approval by an independent institutional review board, or IRB, at each clinical site before each trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with good clinical practice (GCP) to establish the safety and efficacy of the proposed drug for each indication, subject to on-going IRB review; • submission to the FDA of an NDA; • satisfactory completion of an FDA advisory committee review, if applicable; • satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with current Good manufacturing practice (cGMP) regulations and guidance, and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; and • FDA review and approval of the NDA.
Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval, may subject an applicant to a variety of administrative or judicial sanctions, such as the FDA’s refusal to approve pending NDAs, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters, product recall requests, product seizures, total or partial suspension of production or distribution, injunctions, refusals of government contracts, restitution, disgorgement or civil or criminal penalties. 13 The process required by the FDA before a drug may be marketed in the United States generally involves the following: • completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice (GLP) regulations; • submission to the FDA of an investigational new drug application (IND) which must become effective before human clinical trials may begin; • approval by an independent institutional review board, or IRB, at each clinical site before each trial may be initiated; • performance of adequate and well-controlled human clinical trials in accordance with good clinical practice (GCP) to establish the safety and efficacy of the proposed drug for each indication, subject to on-going IRB review; • submission to the FDA of an NDA; • satisfactory completion of an FDA advisory committee review, if applicable; • satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with current Good manufacturing practice (cGMP) regulations and guidance, and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; and • FDA review and approval of the NDA.
In June 2021 and December 2022, we announced that the FDA approved BREXAFEMME (ibrexafungerp tablets) for treatment of patients with vulvovaginal candidiasis (VVC), also known as vaginal yeast infection, and for the reduction in the incidence of recurrent vulvovaginal candidiasis (RVVC), respectively.
In 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.
On March 30, 2023, we entered into a license agreement (the License Agreement) with GlaxoSmithKline Intellectual Property (No. 3) Limited (GSK).
GSK License Agreement On March 30, 2023, we entered into a license agreement (the GSK License Agreement) with GSK.
In May 2013, Merck transferred to us all development and commercialization rights for ibrexafungerp (also known as MK-3118). This decision was made following a review and prioritization of Merck’s 13 infectious disease portfolio.
Merck We initially discovered and developed ibrexafungerp through a research collaboration with Merck Sharp & Dohme Corp. (Merck), a subsidiary of Merck & Co., Inc. In May 2013, Merck transferred to us all development and commercialization rights for ibrexafungerp (also known as MK-3118). This decision was made following a review and prioritization of Merck’s infectious disease portfolio.
Further, the IRA, among other things (i) directs HHS to negotiate the price of certain high-expenditure, single-source drugs and biologics covered under Medicare and (ii) imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation.
Further, the IRA, among other things (i) directs HHS to negotiate the price of certain high-expenditure, single-source drugs and biologics covered under Medicare and (ii) imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation. These provisions take effect progressively starting in fiscal year 2023, although they may be subject to legal challenges.
We received a non-refundable upfront payment of $1.5 million from R-Pharm in August 2013 which was recognized over a period of 70 months and is fully amortized.
We received a non-refundable upfront payment of $1.5 million from R-Pharm in August 2013 which was recognized over a period of 70 months and is fully amortized. This agreement is not material to our consolidated balance sheets, statements of operations, or statements of cash flows.
Furthermore, the FDA or the sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects are being exposed to an unacceptable health risk.
Phase 1, Phase 2 and Phase 3 clinical trials sometimes cannot be completed successfully within any specified period, or at all. Furthermore, the FDA or the sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects are being exposed to an unacceptable health risk.
The GAIN Act is intended to encourage development of new antibacterial and antifungal drugs for the treatment of serious or life-threatening infections by providing certain benefits to sponsors, including extended exclusivity periods, fast track and priority review. To be eligible for these benefits a product in development must seek and be awarded designation as a Qualified Infectious Disease Product (QIDP).
The Generating Antibiotic Incentives Now Act (GAIN Act) is intended to encourage development of new antibacterial and antifungal drugs for the treatment of serious or life-threatening infections by providing certain benefits to sponsors, including extended exclusivity periods, fast track and priority review.
Ibrexafungerp, the first representative of a novel class of antifungal agents called triterpenoids, is a structurally distinct glucan synthase inhibitor and has shown in vitro and in vivo activity against a broad range of human fungal pathogens such as Candida and Aspergillus genera, including multidrug-resistant strains, as well as Pneumocystis, Coccidioides, Histoplasma and Blastomyces genera.
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.
Additionally, Fast Track designation may be withdrawn by the FDA if the FDA believes that the designation is no longer supported by data emerging in the clinical trial process. 16 Post Approval Requirements Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion and reporting of adverse experiences with the product.
Post Approval Requirements Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion and reporting of adverse experiences with the product.
The European Medicines Agency has granted Orphan Medicinal Product designation to ibrexafungerp for IC and the Medicines and Healthcare Regulatory Agency has granted ibrexafungerp the Innovation Passport designation for the treatment of IC. These designations may provide us (or GSK following the GSK Closing) with additional market exclusivity and/or expedited regulatory paths.
The European Medicines Agency has granted Orphan Medicinal Product designation to ibrexafungerp for IC. We anticipate that the FDA may grant QIDP and Fast Track designations for the IV and oral formulations of SCY-247. These designations may provide us with additional market exclusivity and expedited regulatory paths.
Key Development Milestones We are seeking to achieve the following key milestones in the next 12 months: • close the transactions contemplated by the License Agreement with GSK in the second quarter of 2023; • continue to advance enrollment of the MARIO study, a global Phase 3 study to evaluate ibrexafungerp as an oral step-down treatment for IC in the hospital setting; • provide topline data for the FURI and CARES studies in first half of 2024; • should the GSK Closing not occur, initiate a Phase 2 study of the liposomal IV formulation of ibrexafungerp in 2023; and • provide topline data for the Phase 2 SCYNERGIA study in the first half of 2023.
Key Development Milestones We are seeking to achieve the following key milestones: • to lift the clinical hold placed on ibrexafungerp by the FDA to enable the resumption of enrollment in the MARIO study, a global Phase 3 study to evaluate ibrexafungerp as an oral step-down treatment for IC in the hospital setting; • to provide topline data for the FURI study to GSK in the first half of 2024; • to provide topline data for the Phase 2 SCYNERGIA study and the Phase 3b VANQUISH study to GSK in the first half of 2024; and • to initiate a Phase 1 study for SCY-247 in the second half of 2024.
Healthcare Reform In the United States and some foreign jurisdictions there have been, and continue to be, several legislative and regulatory changes and proposed reforms of the healthcare system to contain costs, improve quality, and expand access to care.
Drug compendia are publications that summarize the available medical evidence for particular drug products and identify which uses of a drug are supported or not supported by the available evidence, whether or not such uses have been approved by the FDA. 18 Healthcare Reform In the United States and some foreign jurisdictions there have been, and continue to be, several legislative and regulatory changes and proposed reforms of the healthcare system to contain costs, improve quality, and expand access to care.
Aspergillus spp., we are conducting a Phase 2 study (SCYNERGIA study) of oral ibrexafungerp in combination with voriconazole in patients with IA. 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.
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 anticipate providing topline data for the SCYNERGIA study to GSK in the first half of 2024.
The primary objective of the study is to determine whether treatment of IC with IV echinocandins followed by oral ibrexafungerp is as effective as treatment with IV echinocandins followed by oral fluconazole (or BAT), the current standard of care. The primary end point of the study will be all-cause mortality at 30 days after initiation of antifungal therapy.
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 7 care.
The following illustration summarizes the status of the indications for ibrexafungerp currently being pursued in the hospital and community settings, as well as our current expectations regarding the time of reporting data and, if the data supports it, the potential filing of an NDA and FDA approval (or, following the GSK Closing, if consistent with GSK’s strategy, the potential filing of an NDA by GSK and, if GSK submits an NDA at such time, the potential FDA approval): Invasive Candidiasis and/or Candidemia Enrollment is continuing in our prospective, randomized, double-blind, global Phase 3 study to evaluate the efficacy, safety and tolerability of oral ibrexafungerp as a step-down therapy for patients with IC including candidemia following IV echinocandin therapy in the hospital compared to currently available therapies (the MARIO study).
Invasive Candidiasis and/or Candidemia 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).
The VANQUISH study will enroll approximately 150 complicated VVC patients who will receive 600 mg of oral ibrexafungerp for one, three or seven consecutive days determined by their underlying complicating condition, including immunocompromised state.
The VANQUISH study enrolled 150 complicated VVC patients who received 600 mg of oral ibrexafungerp for one, three or seven consecutive days determined by their underlying complicating condition, including immunocompromised state. Complicated patients include patients with recurrent VVC, those with VVC caused by non-albicans Candida species and those with diabetes, immunocompromising conditions (e.g., HIV), or immunosuppressive therapy (e.g., corticosteroids).
We will be responsible for the execution and costs of the ongoing clinical studies of ibrexafungerp but will have the potential to receive up to $75.5 million in success-based development milestones, which are comprised of up to $65 million for the achievement of three interim milestones associated with our continued performance of the ongoing MARIO Study and $10.5 million for the successful completion of the MARIO Study.
We will continue to be responsible for the execution and costs of the ongoing clinical studies of ibrexafungerp but will have the potential to receive up to $72.35 million in development milestones (revised from up to $75.5 million as provided in the GSK License Agreement), which comprise: $25 million already paid; $10 million for the delivery to GSK of final clinical study reports for the completed FURI, CARES, and NATURE clinical studies; up to $30 million for the achievement of two interim milestones associated with our resumption and continued performance of the MARIO Study after the clinical hold is lifted; and $7.35 million for the successful completion of the MARIO Study.
Treatment of VVC In the second quarter of 2022, enrollment began in a new Phase 3b, open-label, multicenter study (VANQUISH) to evaluate the efficacy, safety and tolerability of oral ibrexafungerp as a treatment for complicated VVC in patients who have failed treatment with fluconazole, based on mycological and clinical outcomes.
Treatment of VVC We have completed the enrollment of the VANQUISH Phase 3b open-label trial (VANQUISH study) evaluating the safety and efficacy of ibrexafungerp in patients with complicated vulvovaginal candidiasis who failed to respond to treatment with fluconazole.
We are also eligible to receive potential: • regulatory approval milestone payments of up to $70 million; 5 • commercial milestone payments of up to $115 million based on first commercial sale in invasive candidiasis (U.S./EU); • and sales milestone payments of up to $242.5 million based on annual net sales, with a total of $77.5 million to be paid upon achievement of multiple thresholds up through $200 million; a total of $65 million to be paid upon achievement of multiple thresholds between $300 million and $500 million; and $50 million to be paid at each threshold of $750 million and $1 billion.
These milestones are based on annual net sales in the GSK Territory, with a total of $64 / $54.25 / $46.5 million to be paid upon achievement of multiple sales thresholds up through $200 million; a total of $45.5 / $45.5 / $39 million to be paid 5 upon achievement of multiple sales thresholds between $300 million and $500 million; and $35 / $35 / $30 million to be paid at each sales threshold of $750 million and $1 billion.
Our Strategy Key elements of our strategy include: • to close the transactions contemplated by the License Agreement with GSK in the second quarter of 2023; • to further develop ibrexafungerp and obtain regulatory approval in major commercial markets for our key indications: invasive candidiasis, refractory invasive fungal infections, and invasive aspergillosis; • should the GSK Closing not occur, to contract with commercial partners to develop and commercialize ibrexafungerp outside of the U.S.; • to leverage our strong scientific team to pursue the development of other internal proprietary compounds; and • to assess external opportunities for in-licensing to expand our development pipeline and add products for commercialization.
Our Strategy Key elements of our strategy include: • to leverage our strong scientific team to pursue the development of other internal proprietary compounds, including SCY-247; • to maximize ibrexafungerp’s value, in line with the GSK License Agreement, by delivering the results of completed and ongoing clinical trials under our responsibility enabling further expansion of indications including invasive fungal infections; and • to assess external opportunities for in-licensing to expand our development pipeline and add products for commercialization.
We believe we have a team that is capable of managing these activities until GSK assumes responsibility for them pursuant to the License Agreement.
A drug manufacturing program subject to extensive governmental regulations requires robust quality assurance systems and experienced personnel with the relevant technical and regulatory expertise as well as strong project management skills. We believe we have a team that is capable of managing these activities until GSK assumes responsibility for them pursuant to the GSK License Agreement.
We anticipate study completion activities for both studies in the first half of 2023 follow by a Data Review Committee review and topline data in the first half of 2024.
We anticipate providing topline data for the VANQUISH study to GSK in the first half of 2024.
The parties expect the transactions contemplated by the License Agreement to close in the second quarter of 2023 (such closing, the GSK Closing). Under the terms of the License Agreement, we will receive an upfront payment of $90 million.
The parties closed the transactions contemplated by the GSK License Agreement in May 2023 and we received an upfront payment of $90.0 million. In June 2023, we announced the achievement of a $25.0 million performance-based development milestone under the GSK License Agreement.
The synthetic process does not require any specialized equipment and uses readily sourced intermediates. At commercial scale, we expect cost of goods for ibrexafungerp to be similar to that of other small molecule drugs.
Manufacturing and Supply of Ibrexafungerp and SCY-247 Ibrexafungerp is a semi-synthetic compound that involves fermentation and synthetic chemical steps in its manufacturing process. The synthetic process does not require any specialized equipment and uses readily sourced intermediates.
Refractory Invasive Fungal Infections (rIFI) We achieved a target enrollment of 200 patients in our Phase 3 FURI study as well as the target enrollment of 30 patients in our Phase 3 CARES study.
Refractory Invasive Fungal Infections (rIFI) 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.
See further details of the License Agreement as described in “Collaborations and Licensing Agreements Associated with Our Core Drug Development Operations - GSK” below. We, Hercules Capital, Inc. (Hercules Capital) and Silicon Valley Bridge Bank, N.A.
Loan Agreement We, Hercules Capital, Inc. (Hercules Capital) and Silicon Valley Bridge Bank, N.A.
ITEM 1. BUSINESS Overview SCYNEXIS, Inc. is pioneering innovative medicines to potentially help millions of patients worldwide in need of new options to overcome and prevent difficult-to-treat and drug-resistant infections. We are developing our lead product candidate, ibrexafungerp, as a broad-spectrum, intravenous (IV)/oral agent for multiple fungal indications in both the community and hospital settings.
ITEM 1. BUSINESS Overview SCYNEXIS, Inc. is pioneering innovative medicines to overcome and prevent difficult-to-treat and drug-resistant infections.
Removed
In October 2022, we announced that we were actively pursuing a U.S. commercialization partner to out-license BREXAFEMME in order to refocus our resources on the further clinical development of ibrexafungerp for severe, hospital-based indications, while keeping BREXAFEMME on the market and available to patients, and have ceased actively promoting BREXAFEMME.
Added
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.
Removed
If the existing licenses granted to or agreements with third parties are terminated with respect to any country, GSK will have an exclusive first right to negotiate with us to add those additional countries to the GSK Territory.
Added
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.
Removed
We retain rights to all other assets, with GSK receiving a right of first negotiation (ROFN) to any other enfumafungin-derived compounds or products that we may control.
Added
This milestone payment followed a development goal for the Phase 3 MARIO study for ibrexafungerp in IC as we continued executing ongoing ibrexafungerp trials. On December 26, 2023, we and GSK entered into a binding memorandum of understanding (Binding MOU) for amendment to the GSK License Agreement.
Removed
Under the terms of the License Agreement, we are responsible for the execution and costs of the on-going clinical studies of ibrexafungerp for multiple indications, including the treatment of life-threatening invasive fungal infections caused primarily by Candida spp.
Added
The GSK License Agreement was amended in connection with the delay in the commercialization of BREXAFEMME (see "Product Recall and Clinical Hold" below) and further clinical development of ibrexafungerp associated with this event.
Removed
(including C. auris ) and Aspergillus spp. in hospitalized patients, and we have the potential to receive success-based milestones to offset those costs.
Added
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.
Removed
The consummation of the transactions under the License Agreement is subject to the satisfaction of customary closing conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the HSR Act); provided, that either we or GSK may terminate the License Agreement if expiration or termination of the applicable waiting period under the HSR Act has not occurred within nine months of the signing of the License Agreement.
Added
Current FDA draft guidance recommends segregating the manufacture of non-antibacterial beta-lactam compounds from other compounds since beta-lactam compounds have the potential to act as sensitizing agents that may trigger hypersensitivity or an allergic reaction in some people. In the absence of the recommended segregation, there is a risk of cross contamination.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

87 edited+32 added−41 removed287 unchanged
Biggest changeWe and the third parties upon which we rely are subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, earthquakes, fires, floods, and other similar threats.
Biggest changeDuring times of war and other major conflicts, we and the third parties upon which we rely may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our services. 41 We and the third parties upon which we rely are subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through deep fakes, which may be increasingly more difficult to identify as fake, and phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks, credential stuffing attacks, credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, attacks enhanced or facilitated by AI, telecommunications failures, earthquakes, fires, floods, and other similar threats.
Our operating activities may be restricted as a result of covenants related to the indebtedness under our senior convertible notes and loan payable and we may be required to repay the notes and our loan payable in an event of default, which could have a materially adverse effect on our business.
Our operating activities may be restricted as a result of covenants related to the indebtedness under our senior convertible notes and we may be required to repay the notes and our loan payable in an event of default, which could have a materially adverse effect on our business.
In the U.S., federal, state, and local governments have enacted numerous privacy and data security laws and regulations,including data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), and other similar laws (e.g., wiretapping laws).
In the U.S., federal, state, and local governments have enacted numerous data privacy and security laws and regulations, including data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), and other similar laws (e.g., wiretapping laws).
Our business could be adversely affected by the continuation of the exposure to COVID-19, in regions where we or third parties on which we rely have significant concentrations of clinical trial sites, manufacturing facilities, or other business operations.
Our business could be adversely affected by the continuation of the exposure to COVID-19, in regions where we or third parties on which we rely have significant concentrations of clinical trial sites, manufacturing facilities, or other business operations.
The commencement, enrollment and completion of clinical trials can be delayed for a variety of reasons, including: • inability to reach agreements on acceptable terms with prospective clinical research organizations, or CROs, and trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • difficulty identifying and engaging qualified clinical investigators; • regulatory objections to commencing a clinical trial or proceeding to the next phase of investigation, including inability to reach agreement with the FDA or non-U.S. regulators regarding the scope or design of our clinical trials or for other reasons such as safety concerns that might be identified during preclinical development or early stage clinical trials; • inability to identify and maintain a sufficient number of eligible trial sites, many of which may already be engaged in other clinical trial programs, including some that may be for the same indication as our product candidates; • withdrawal of clinical trial sites from our clinical trials as a result of changing standards of care; • inability to obtain institutional review board (or ethics review committee) approval to conduct a clinical trial at prospective sites; • difficulty identifying, recruiting and enrolling eligible patients to participate in clinical trials for a variety of reasons, including meeting the enrollment criteria for our study and competition from other clinical trial programs for the same indication as product candidates we seek to commercialize; • inability to retain patients in clinical trials due to the treatment protocol, personal issues, side effects from the therapy or lack of efficacy; • inability to produce and/or obtain in a timely manner sufficient quantity of our products to satisfy the requirements of the clinical trials; • inability to enroll patients, or slow down in the rate of enrolling patients, in clinical trials due to unforeseen natural disasters, public health crises, political crises and other catastrophic events or other events outside of our control, such as COVID-19, which may cause participants to not want to participate in these trials or otherwise have any unnecessary contact with the medical community; and • inability to obtain sufficient funding to commence a clinical trial.
The commencement, enrollment and completion of clinical trials can be delayed for a variety of reasons, including: 23 • inability to reach agreements on acceptable terms with prospective clinical research organizations, or CROs, and trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • difficulty identifying and engaging qualified clinical investigators; • regulatory objections to commencing a clinical trial or proceeding to the next phase of investigation, including inability to reach agreement with the FDA or non-U.S. regulators regarding the scope or design of our clinical trials or for other reasons such as safety concerns that might be identified during preclinical development or early stage clinical trials; • inability to identify and maintain a sufficient number of eligible trial sites, many of which may already be engaged in other clinical trial programs, including some that may be for the same indication as our product candidates; • withdrawal of clinical trial sites from our clinical trials as a result of changing standards of care; • inability to obtain institutional review board (or ethics review committee) approval to conduct a clinical trial at prospective sites; • difficulty identifying, recruiting and enrolling eligible patients to participate in clinical trials for a variety of reasons, including meeting the enrollment criteria for our study and competition from other clinical trial programs for the same indication as product candidates we seek to commercialize; • inability to retain patients in clinical trials due to the treatment protocol, personal issues, side effects from the therapy or lack of efficacy; • inability to produce and/or obtain in a timely manner sufficient quantity of our products to satisfy the requirements of the clinical trials; • inability to enroll patients, or slow down in the rate of enrolling patients, in clinical trials due to unforeseen natural disasters, public health crises, political crises and other catastrophic events or other events outside of our control, such as COVID-19, which may cause participants to not want to participate in these trials or otherwise have any unnecessary contact with the medical community; and • inability to obtain sufficient funding to commence a clinical trial.
The potential sanctions include significant administrative, civil and criminal penalties, including 34 monetary fines, exclusion from participation in federal health care programs, integrity oversight and reporting obligations to resolve allegations of non-compliance with these laws, disgorgement, criminal fines, imprisonment, contractual damage, reputational harm, diminished profits and future earnings, and curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
The potential sanctions include significant administrative, civil and criminal penalties, including monetary fines, exclusion from participation in federal health care programs, integrity oversight and reporting obligations to resolve allegations of non-compliance with these laws, disgorgement, criminal fines, imprisonment, contractual damage, reputational harm, diminished profits and future earnings, and curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
Because some patent applications in the United States may be maintained in secrecy until the patents are issued, because patent applications in the United States and many foreign jurisdictions are typically not published until eighteen months after filing, because searches and examinations of patent applications by the USPTO and other patent offices may not be 39 comprehensive, and because publications in the scientific literature often lag behind actual discoveries, we cannot be certain that others have not filed patent applications for technology covered by our patents or pending applications.
Because some patent applications in the United States may be maintained in secrecy until the patents are issued, because patent applications in the United States and many foreign jurisdictions are typically not published until eighteen months after filing, because searches and examinations of patent applications by the USPTO and other patent offices may not be comprehensive, and because publications in the scientific literature often lag behind actual discoveries, we cannot be certain that others have not filed patent applications for technology covered by our patents or pending applications.
For example, the Tax Cuts and Jobs Act of 2017 included a provision repealing, effective 31 January 1, 2019, the tax-based shared responsibility payment imposed by the Affordable Care Act on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate”.
For example, the Tax Cuts and Jobs Act of 2017 included a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the Affordable Care Act on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate”.
Any threatened or actual government enforcement action could also generate adverse publicity and require that we devote substantial resources that could otherwise be used in other aspects of our business. Regulations, guidelines and recommendations published by various government agencies and organizations may affect the use of ibrexafungerp and any future product candidates we may seek to develop.
Any threatened or actual government enforcement action could also generate adverse publicity and require that we devote substantial resources that could otherwise be used in other aspects of our business. 32 Regulations, guidelines and recommendations published by various government agencies and organizations may affect the use of ibrexafungerp and any future product candidates we may seek to develop.
Compared to us, many of our competitors in the antifungal market have, and potential competitors for any future product candidates we may seek to develop may have, substantially greater: • resources, including capital, personnel and technology; • research and development capability; • clinical trial expertise; • regulatory expertise; • intellectual property portfolios; • expertise in prosecution of intellectual property rights; 30 • manufacturing and distribution expertise; and • sales and marketing expertise.
Compared to us, many of our competitors in the antifungal market have, and potential competitors for any future product candidates we may seek to develop may have, substantially greater: • resources, including capital, personnel and technology; • research and development capability; • clinical trial expertise; • regulatory expertise; • intellectual property portfolios; • expertise in prosecution of intellectual property rights; • manufacturing and distribution expertise; and • sales and marketing expertise.
Litigation, interference, or derivation proceedings may fail, 38 resulting in harm to our business, and, even if successful, may result in substantial costs and distract our management and other employees. We also rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect.
Litigation, interference, or derivation proceedings may fail, resulting in harm to our business, and, even if successful, may result in substantial costs and distract our management and other employees. We also rely on trade secrets to protect our technology, especially where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect.
The risks described below with respect to ibrexafungerp will continue to be risks for us as they may impede our ability to receive some or all of the development, regulatory, commercial and sales milestones, and royalties, contemplated by the License Agreement, which would materially and adversely affect our business and operating results.
The risks described below with respect to ibrexafungerp will continue to be risks for us as they may impede our ability to receive some or all of the development, regulatory, commercial and sales milestones, and royalties, contemplated by the GSK License Agreement, which would materially and adversely affect our business and operating results.
If we are unable to reach agreements with suitable collaborators for product candidates, we could face increased costs, we may be forced to limit the number of product candidates we can commercially develop or the territories in which we commercialize them and we might fail to commercialize products or programs for which a suitable collaborator cannot be found.
If we are unable to reach agreements with suitable collaborators for product candidates, we could face increased costs, we may be forced to limit the number of product candidates we can commercially develop or the territories in which we commercialize them and we might fail to commercialize products or 34 programs for which a suitable collaborator cannot be found.
These events have resulted in the withdrawal of drug products, revisions to drug labeling that further limit use of the drug products and establishment of risk evaluation and 27 mitigation strategies that may, for instance, restrict distribution of drug products. The increased attention to drug safety issues may result in a more cautious approach by the FDA to clinical trials.
These events have resulted in the withdrawal of drug products, revisions to drug labeling that further limit use of the drug products and establishment of risk evaluation and mitigation strategies that may, for instance, restrict distribution of drug products. The increased attention to drug safety issues may result in a more cautious approach by the FDA to clinical trials.
Promotional communications with respect to prescription drugs are subject to a variety of legal and regulatory restrictions and must be consistent with the information in the product’s approved label. As such, we may not promote products for indications or uses for which they do not have approval.
Promotional communications with respect to prescription drugs are subject to a variety of legal and regulatory restrictions and must be consistent with the information in the product’s approved label. As such, we may not 30 promote products for indications or uses for which they do not have approval.
We are relying on Hansoh to commercialize ibrexafungerp in the Greater China area, including mainland China, Hong Kong, Macau, and Taiwan, and if Hansoh is not able to commercialize ibrexafungerp in those 35 countries, or determines not to pursue commercialization of ibrexafungerp in those countries, we will not receive any milestone or royalty payments under the agreement.
We are relying on Hansoh to commercialize ibrexafungerp in the Greater China area, including mainland China, Hong Kong, Macau, and Taiwan, and if Hansoh is not able to commercialize ibrexafungerp in those countries, or determines not to pursue commercialization of ibrexafungerp in those countries, we will not receive any milestone or royalty payments under the agreement.
If we or any of our partners experience delays in the completion of, or 26 if we or our partners terminate, clinical trials, the commercial prospects for ibrexafungerp and any future product candidates we may seek to develop will be harmed, and our ability to generate revenue from sales of these product candidates will be prevented or delayed.
If we or any of our partners experience delays in the completion of, or if we or our partners terminate, clinical trials, the commercial prospects for ibrexafungerp and any future product candidates we may seek to develop will be harmed, and our ability to generate revenue from sales of these product candidates will be prevented or delayed.
One or more strains of fungal pathogens may develop resistance to ibrexafungerp more rapidly than we currently expect, either because our hypothesis of the mechanism of action is incorrect or because a strain of fungi undergoes some unforeseen genetic mutation that permits it to survive.
One or more strains of fungal pathogens may develop resistance to ibrexafungerp more rapidly than we currently expect, either because our hypothesis 26 of the mechanism of action is incorrect or because a strain of fungi undergoes some unforeseen genetic mutation that permits it to survive.
There are many foreign and domestic pharmaceutical companies, biotechnology companies, public and private universities, government agencies and research organizations actively engaged in research and development of products that may target the same markets as ibrexafungerp and any future product candidates we may seek to develop.
There are many foreign and domestic pharmaceutical companies, biotechnology companies, public and private universities, government agencies and research organizations actively engaged in research and development of 27 products that may target the same markets as ibrexafungerp and any future product candidates we may seek to develop.
All third-party payors, whether governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs, including mechanisms to encourage the use of generic drugs. Congress has also considered policies to lower the reimbursement formulas in federal and state healthcare programs.
All third-party payors, whether governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs, including mechanisms to encourage the use of generic drugs. Congress has also considered 28 policies to lower the reimbursement formulas in federal and state healthcare programs.
The federal Health Insurance Portability and Accountability Act of 1996. or HIPAA, which prohibits, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, regardless of the payor (e.g., public or private).
The federal Health Insurance Portability and Accountability Act of 1996. or HIPAA, which prohibits, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, regardless of 31 the payor (e.g., public or private).
Consequently, if these practices and standards are not adhered to by these providers, the development and commercialization of ibrexafungerp and any future product candidates we may seek to develop could be delayed, which could severely harm our business and financial condition.
Consequently, if these practices and standards are not adhered to by 35 these providers, the development and commercialization of ibrexafungerp and any future product candidates we may seek to develop could be delayed, which could severely harm our business and financial condition.
The pharmaceutical and biotechnology industries have produced a proliferation of patents, and it is not always clear to industry participants, including us, which patents cover various types of products or methods of use. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform.
The pharmaceutical and biotechnology industries have produced a proliferation of patents, and it is not always clear to industry participants, including us, which patents cover various types of products or methods of use. The coverage of patents is 37 subject to interpretation by the courts, and the interpretation is not always uniform.
In all cases, we expect to be able to terminate the agreements with notice and be responsible for the supplier’s previously incurred costs. 36 Because we rely on third parties, our internal capacity to perform these functions is limited.
In all cases, we expect to be able to terminate the agreements with notice and be responsible for the supplier’s previously incurred costs. Because we rely on third parties, our internal capacity to perform these functions is limited.
Method of use patents protect the use of a product for the method recited in the claims. This type of patent does not prevent a competitor from making and marketing a product that is identical to our product for an indication that is outside the scope of the patented method.
Method of use patents protect the use of a product for the method recited in 36 the claims. This type of patent does not prevent a competitor from making and marketing a product that is identical to our product for an indication that is outside the scope of the patented method.
In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of a product candidate. Clinical failure can occur at any stage of clinical development.
In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of a product candidate. 24 Clinical failure can occur at any stage of clinical development.
We do not know whether our current clinical trials of ibrexafungerp will be completed on schedule or at all, or whether any future clinical trials of ibrexafungerp or any future product candidates we may seek to develop will be allowed to 25 commence or, if commenced, will be completed on schedule or at all.
We do not know whether our current clinical trials of ibrexafungerp will be completed on schedule or at all, or whether any future clinical trials of ibrexafungerp or any future product candidates we may seek to develop will be allowed to commence or, if commenced, will be completed on schedule or at all.
Under our agreement with Merck, Merck was responsible for establishing the intellectual property rights to ibrexafungerp. As we were not responsible for the establishment of our intellectual property rights to ibrexafungerp, we have 37 less visibility into the strength of our intellectual property rights to ibrexafungerp than if we had been responsible for the establishment of these rights.
Under our agreement with Merck, Merck was responsible for establishing the intellectual property rights to ibrexafungerp. As we were not responsible for the establishment of our intellectual property rights to ibrexafungerp, we have less visibility into the strength of our intellectual property rights to ibrexafungerp than if we had been responsible for the establishment of these rights.
Additionally, future or past business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected 43 by vulnerabilities present in acquired or integrated entities’ systems and technologies.
Additionally, future or past business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.
The following factors, in addition to other factors described in this “Risk Factors” section and elsewhere in this report, may have a significant impact on the market price of our common stock: • the level of sales of BREXAFEMME; • the results of our preclinical testing or clinical trials; • the ability to obtain additional funding; • any delay in submitting an NDA or similar foreign applications for ibrexafungerp for the treatment of indications other than VVC, RVVC, and any future product candidate we may seek to develop or any adverse development or perceived adverse development with respect to the FDA’s review of that NDA or a foreign regulator’s review of a similar applications; • maintenance of our existing collaborations or ability to enter into new collaborations, including our ability to close the transactions contemplated by the License Agreement with GSK; • our collaboration partners’ election to develop or commercialize product candidates under our collaboration agreements or the termination of any programs under our collaboration agreements; • any intellectual property infringement actions in which we or our licensors and collaboration partners may become involved; • our ability to successfully develop and commercialize future product candidates; • changes in laws or regulations applicable to future products; • adverse regulatory decisions; • introduction of new products, services or technologies by our competitors; • achievement of financial projections we may provide to the public; • achievement of the estimates and projections of the investment community; • the perception of the pharmaceutical industry by the public, legislatures, regulators and the investment community; • changes in the structure of healthcare payment systems; • announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us, our collaboration partners or our competitors; • disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; • legislation or regulation that mandates or encourages the use of generic products; • additions or departures of key scientific or management personnel; • significant lawsuits, including patent or stockholder litigation; • changes in the market valuations of similar companies; • general economic and market conditions and overall fluctuations in the U.S. equity markets; • sales of our common stock by us, our executive officers and directors or our stockholders in the future; and • trading volume of our common stock.
The following factors, in addition to other factors described in this “Risk Factors” section and elsewhere in this report, may have a significant impact on the market price of our common stock: • the level of sales of BREXAFEMME; • the results of our preclinical testing or clinical trials; • the ability to obtain additional funding; • any delay in submitting an NDA or similar foreign applications for ibrexafungerp for the treatment of indications other than VVC, RVVC, and any future product candidate we may seek to develop or any adverse development or perceived adverse development with respect to the FDA’s review of that NDA or a foreign regulator’s review of a similar applications; • maintenance of our existing collaborations or ability to enter into new collaborations; • our collaboration partners’ election to develop or commercialize product candidates under our collaboration agreements or the termination of any programs under our collaboration agreements; • any intellectual property infringement actions in which we or our licensors and collaboration partners may become involved; • our ability to successfully develop and commercialize future product candidates; • changes in laws or regulations applicable to future products; • adverse regulatory decisions; • introduction of new products, services or technologies by our competitors; • achievement of financial projections we may provide to the public; • achievement of the estimates and projections of the investment community; • the perception of the pharmaceutical industry by the public, legislatures, regulators and the investment community; • changes in the structure of healthcare payment systems; • announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us, our collaboration partners or our competitors; • disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; • legislation or regulation that mandates or encourages the use of generic products; • additions or departures of key scientific or management personnel; • significant lawsuits, including patent or stockholder litigation; • changes in the market valuations of similar companies; 43 • general economic and market conditions and overall fluctuations in the U.S. equity markets; • sales of our common stock by us, our executive officers and directors or our stockholders in the future; and • trading volume of our common stock.
If we (or a third party upon whom we rely) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing confidential, proprietary, and sensitive data (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; interruptions in our operations (including availability of data); financial loss; and other similar harms.
If we (or a third party upon whom we rely) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing confidential, proprietary, and sensitive data (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; diversion of management’s attention; interruptions in our operations (including availability of data); financial loss; and other similar harms.
Further, as we advance ibrexafungerp through preclinical studies, clinical trials and commercialization for other indications, we will need to increase our product development, scientific, marketing, sales and administrative headcount to manage these efforts. Our management, personnel and systems currently in place may not be adequate to support this future growth.
Further, as we advance ibrexafungerp and SCY-247 through preclinical studies, clinical trials and commercialization for other indications, we will need to increase our product development, scientific, marketing, sales and administrative headcount to manage these efforts. Our management, personnel and systems currently in place may not be adequate to support this future growth.
Security incidents and attendant consequences may cause customers to stop using our services, deter new customers from using our services, and negatively impact our ability to grow and operate our business.
Security 42 incidents and attendant consequences may cause customers to stop using our services, deter new customers from using our services, and negatively impact our ability to grow and operate our business.
These changes included aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, effective April 1, 2013, which, due to subsequent legislative amendments, including the Infrastructure Investment and Jobs Act, will stay in effect until 2031 unless additional Congressional action is taken.
These changes included aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, effective April 1, 2013, which, due to subsequent legislative amendments, including the Infrastructure Investment and Jobs Act, will stay in effect until 2032 unless additional Congressional action is taken.
During our Phase 1 IV program in healthy volunteers, aimed to expand the safety margin that would allow greater flexibility of dosing options in patients, we observed three mild-to-moderate thrombotic events in healthy volunteers receiving the IV formulation of ibrexafungerp at the highest doses and highest concentrations in a Phase 1 study.
During our Phase 1 IV program in healthy volunteers, aimed to expand the safety margin that would allow greater flexibility of dosing options in patients, we observed three mild-to-moderate thrombotic events in healthy volunteers receiving the IV formulation of ibrexafungerp at the highest doses and highest concentrations.
Further, following the GSK Closing, GSK has prosecution and enforcement rights for this IP and, if GSK does not determine to pursue prosecution and enforcement of intellectual property, the value of this intellectual property may diminish or be lost. It is difficult and costly to protect our proprietary rights, and we may not be able to ensure their protection.
Further, GSK has prosecution and enforcement rights for this IP and, if GSK does not determine to pursue prosecution and enforcement of intellectual property, the value of this intellectual property may diminish or be lost. It is difficult and costly to protect our proprietary rights, and we may not be able to ensure their protection.
If we 40 cannot successfully defend ourselves against any such claims, we would incur substantial liabilities.
If we cannot successfully defend ourselves against any such claims, we would incur substantial liabilities.
We will continue to require substantial additional capital, and if we are unable to raise capital when needed we would be forced to delay, reduce or eliminate our development program for ibrexafungerp. Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is expensive.
We will continue to require substantial additional capital, and if we are unable to raise capital when needed we would be forced to delay, reduce or eliminate our development program for ibrexafungerp and our planned development for SCY-247. Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is expensive.
Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured product candidates ourselves, including: • the possible breach of the manufacturing agreements or violation of regulatory standards by the third parties because of factors beyond our control; • the possibility of termination or nonrenewal of the agreements by the third parties because of our breach of the manufacturing agreement or based on their own business priorities; and • the possibility of unforeseen natural disasters, public health crises, political crises and other catastrophic events or other events outside of our control impacting our third parties, such as the recent emergence and spread of COVID-19, a coronavirus, which may cause delays in the ability of our suppliers to provide us with supplies on a timely basis.
Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured product candidates ourselves, including: • the possible breach of the manufacturing agreements or violation of regulatory standards by the third parties because of factors beyond our control; • the possibility of termination or nonrenewal of the agreements by the third parties because of our breach of the manufacturing agreement or based on their own business priorities; and • the possibility of unforeseen natural disasters, public health crises, political crises and other catastrophic events or other events outside of our control impacting our third parties, such as COVID-19 and its variants, which may cause delays in the ability of our suppliers to provide us with supplies on a timely basis.
The following factors relating to our business, as well as factors described elsewhere in this report, may contribute to these fluctuations: • the costs associated with completing the ongoing clinical studies for ibrexafungerp, which are difficult for us to predict; • any delays in regulatory review and approval of ibrexafungerp; • delays in the timing of submission of any new drug application, or NDA, or supplement thereto, as well as commencement, enrollment and the timing of clinical testing, of any product candidates we may seek to develop; • our ability to close the transactions contemplated by the License Agreement with GSK; • market acceptance of BREXAFEMME and any future product candidates for which we obtain FDA approval; • changes in regulations and regulatory policies; • competition from existing products or new products that may emerge; • the ability of patients or healthcare providers to obtain coverage of, or sufficient reimbursement for, any products we are able to develop; • our ability to establish or maintain collaborations, licensing or other arrangements; • costs related to, and outcomes of, potential litigation; • potential product liability claims; and • potential liabilities associated with hazardous materials.
The following factors relating to our business, as well as factors described elsewhere in this report, may contribute to these fluctuations: • the costs associated with completing the ongoing clinical studies for ibrexafungerp, which are difficult for us to predict; • any delays in regulatory review and approval of ibrexafungerp; • delays in the timing of submission of any new drug application, or NDA, or supplement thereto, as well as commencement, enrollment and the timing of clinical testing, of any product candidates we may seek to develop; • market acceptance of BREXAFEMME and any future product candidates for which we obtain FDA approval; • changes in regulations and regulatory policies; • competition from existing products or new products that may emerge; 21 • the ability of patients or healthcare providers to obtain coverage of, or sufficient reimbursement for, any products we are able to develop; • our ability to establish or maintain collaborations, licensing or other arrangements; • costs related to, and outcomes of, potential litigation; • potential product liability claims; and • potential liabilities associated with hazardous materials.
Our ability to generate additional significant revenue related to sales of ibrexafungerp by us, or by GSK following the GSK Closing, will depend on the successful development and regulatory approval of ibrexafungerp for indications in addition to the treatment of VVC and RVVC.
Our ability to generate additional significant revenue related to sales of ibrexafungerp by GSK, will depend on the successful development and regulatory approval of ibrexafungerp for indications in addition to the treatment of VVC and RVVC.
If we are unable to retain our current executive officers and key employees our ability to implement our business strategy successfully could be seriously harmed. We may need to expand our operations and increase the size of our company, and we may experience difficulties in managing growth. As of March 1, 2023, we had 36 employees.
If we are unable to retain our current executive officers and key employees our ability to implement our business strategy successfully could be seriously harmed. We may need to expand our operations and increase the size of our company, and we may experience difficulties in managing growth. As of March 1, 2024, we had 29 full time employees.
If the manufacturing or marketing of products fail to comply with applicable regulatory requirements, a regulatory agency may: • issue warning letters; • mandate modifications to promotional materials or require us to provide corrective information to healthcare practitioners; • require us or our partners to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs, required due dates for specific actions and penalties for noncompliance; • impose other civil or criminal penalties; • suspend regulatory approval; • suspend any ongoing clinical trials; • refuse to approve pending applications or supplements to approved applications filed by us, our partners or our potential future partners; • impose restrictions on operations, including costly new manufacturing requirements; or • seize or detain products or require a product recall. 33 Non-compliance may also open a company to potential whistleblower lawsuits and the potential for liability under the False Claims Act.
If the manufacturing or marketing of products fail to comply with applicable regulatory requirements, a regulatory agency may: • issue warning letters; • mandate modifications to promotional materials or require us to provide corrective information to healthcare practitioners; • require us or our partners to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs, required due dates for specific actions and penalties for noncompliance; • impose other civil or criminal penalties; • suspend regulatory approval; • suspend any ongoing clinical trials; • refuse to approve pending applications or supplements to approved applications filed by us, our partners or our potential future partners; • impose restrictions on operations, including costly new manufacturing requirements; or • seize or detain products or require a product recall.
U.S. and global market and economic conditions have been, and continue to be, disrupted and volatile due to many factors, including component shortages and related supply chain challenges, geopolitical developments such as COVID-19 and the conflict between Ukraine and Russia and related sanctions, bank failures, and increasing inflation rates and the responses by central banking authorities to control such inflation, among others.
U.S. and global market and economic 22 conditions have been, and continue to be, disrupted and volatile due to many factors, including component shortages and related supply chain challenges, geopolitical developments such as pandemics and conflicts and related sanctions, bank failures, and increasing inflation rates and the responses by central banking authorities to control such inflation, among others.
Our need to effectively manage our operations, growth and various projects requires that we: • successfully attract and recruit new employees with the expertise and experience we will require; • manage our clinical programs effectively, which we anticipate being conducted at numerous clinical sites; • develop a marketing and sales infrastructure; and • continue to develop our operational, financial and management controls, reporting systems and procedures.
Our need to effectively manage our operations, growth and various projects requires that we: • successfully attract and recruit new employees with the expertise and experience we will require; • manage our clinical programs effectively, which we anticipate being conducted at numerous clinical sites; • develop a marketing and sales infrastructure; and • continue to develop our operational, financial and management controls, reporting systems and procedures. 38 If we are unable to successfully manage this growth, our business may be adversely affected.
In addition, the California Consumer Privacy Act of 2018 (CCPA) applies to personal data of consumers, business representatives, and employees, and requires businesses to provide specific disclosures in privacy notices and honor requests of California residents to exercise certain privacy rights.
For example, the California Consumer Privacy Act of 2018 (CCPA), as amended by the California Privacy Rights Act of 2020, applies to personal data of consumers, business representatives, and employees, and requires businesses to provide specific disclosures in privacy notices and honor requests of California residents to exercise certain privacy rights.
Diagnostic tools recently approved by the FDA, or currently under development, for the rapid diagnosis of invasive fungal infections may significantly diminish the need to treat patients in advance of diagnosis of 28 invasive fungal infections, which will reduce the potential market for ibrexafungerp in the event that we are able to obtain FDA approval of ibrexafungerp.
Diagnostic tools recently approved by the FDA, or currently under development, for the rapid diagnosis of invasive fungal infections may significantly diminish the need to treat patients in advance of diagnosis of invasive fungal infections, which will reduce the potential market for ibrexafungerp.
Data from preclinical studies and clinical trials may receive greater scrutiny with respect to safety, which may make the FDA or other regulatory authorities more likely to terminate clinical trials before completion, or require longer or additional clinical trials that may result in substantial additional expense, a delay or failure in obtaining approval or approval for a more limited indication or conditions of use than originally sought.
Data from preclinical studies and clinical trials may receive greater scrutiny with respect to safety, which may make the FDA or other regulatory authorities more likely to terminate clinical trials before completion, or require longer or additional clinical trials that may result in substantial additional expense, a delay or failure in obtaining approval or approval for a more limited indication or conditions of use than originally sought. 25 In addition, data obtained from preclinical studies and clinical trials are subject to different interpretations, which could delay, limit or prevent regulatory review or approval of product candidates.
If we are unable to successfully manage this growth, our business may be adversely affected. Other Risks Relating to Our Business We may face potential product liability exposure, and if successful claims are brought against us, we may incur substantial liability for a product candidate and may have to limit its commercialization.
Other Risks Relating to Our Business We may face potential product liability exposure, and if successful claims are brought against us, we may incur substantial liability for a product candidate and may have to limit its commercialization.
In addition to experiencing a security incident, third parties may gather, collect, or infer sensitive information about us from public sources, data brokers, or other means that reveals competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position. 44 Risks Relating to Owning Our Common Stock The market price of our common stock may be highly volatile.
In addition to experiencing a security incident, third parties may gather, collect, or infer sensitive information about us from public sources, data brokers, or other means that reveals competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position.
Further, the IRA, among other things (i) directs HHS to negotiate the price of certain high-expenditure, single-source drugs and biologics covered under Medicare and (ii) imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation.
Further, the IRA, among other things (i) directs HHS to negotiate the price of certain high-expenditure, single-source drugs and biologics covered under Medicare and (ii) imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation. These provisions take effect progressively starting in fiscal year 2023.
The results of our clinical trials may show that ibrexafungerp and any future product candidates we may seek to develop cause undesirable or unacceptable side effects, which could interrupt, delay or halt clinical trials, resulting in delay of, or failure to obtain, marketing approval from the FDA and other regulatory authorities, or may lead us to abandon their development altogether. 29 We or others may subsequently identify undesirable or unacceptable side effects caused by BREXAFEMME or any future product candidate we may seek to develop, in which case: • regulatory authorities may require the addition of labeling statements, specific warnings, precautions, contraindications or field alerts to physicians and pharmacies; • we or GSK may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product; • there may be limitations on how the product can be promoted; • sales of the product may decrease significantly; • regulatory authorities may require us or GSK to take our approved product off the market; • we may be subject to litigation or product liability claims; and • our reputation may suffer.
We or others may subsequently identify undesirable or unacceptable side effects caused by BREXAFEMME or any future product candidate we may seek to develop, in which case: • regulatory authorities may require the addition of labeling statements, specific warnings, precautions, contraindications or field alerts to physicians and pharmacies; • we or GSK may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product; • there may be limitations on how the product can be promoted; • sales of the product may decrease significantly; • regulatory authorities may require us or GSK to take our approved product off the market; • we may be subject to litigation or product liability claims; and • our reputation may suffer.
In addition, companies trading in the stock market in general, and the Nasdaq Global Market in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies.
In addition, companies trading in the stock market in general, and the Nasdaq Global Market in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance.
As described above, such effects include the risks that: • ibrexafungerp and any future product candidates we may seek to develop may not generate preclinical or clinical data that are deemed sufficient by regulators in a given jurisdiction; • ibrexafungerp may not be approved for all indications requested, or any indications at all, in a given jurisdiction which could limit the uses of ibrexafungerp and any future product candidates we may seek to develop and have an adverse effect on product sales and potential royalties; and • such approval in a given jurisdiction may be subject to limitations on the indicated uses for which the product may be marketed or require costly post-marketing follow-up studies. 32 Foreign countries may have requirements for marketing authorization holders or distributors to have a legal or physical presence in that country, and consideration of and compliance with these requirements may result in additional time and expense before we can pursue or obtain marketing authorization in foreign jurisdictions.
As described above, such effects include the risks that: • ibrexafungerp and any future product candidates we may seek to develop may not generate preclinical or clinical data that are deemed sufficient by regulators in a given jurisdiction; • ibrexafungerp may not be approved for all indications requested, or any indications at all, in a given jurisdiction which could limit the uses of ibrexafungerp and any future product candidates we may seek to develop and have an adverse effect on product sales and potential royalties; and • such approval in a given jurisdiction may be subject to limitations on the indicated uses for which the product may be marketed or require costly post-marketing follow-up studies.
Additionally, these obligations may be subject to differing applications and interpretations, which may be inconsistent or conflict among jurisdictions. Preparing for and complying with these obligations requires us to devote significant resources and may necessitate changes to our services, information technologies, systems, and practices and to those of any third parties that process personal data on our behalf.
Preparing for and complying with these obligations requires us to devote significant resources and may necessitate changes to our services, information technologies, systems, and practices and to those of any third parties that process personal data on our behalf.
Any significant uninsured liability may require us to pay substantial amounts, which would adversely affect our cash position and results of operations. Our research and development activities could be affected or delayed as a result of possible restrictions on animal testing. Certain laws and regulations require us to test our product candidates on animals before initiating clinical trials involving humans.
Any significant uninsured liability may require us to pay substantial amounts, which would adversely affect our cash position and results of operations. 39 Our research and development activities could be affected or delayed as a result of possible restrictions on animal testing.
If we are unable to raise additional capital when required or on acceptable terms, we may be required to: • significantly delay, scale back or discontinue the development or commercialization of and any product candidates we may seek to develop; • seek strategic alliances for research and development programs at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available; or • relinquish or license on unfavorable terms our rights to any product candidates that we otherwise would seek to develop or commercialize ourselves. 23 If we are required to conduct additional fundraising activities and we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we will be prevented from pursuing development and commercialization efforts, which will have a material adverse effect on our business, operating results and prospects.
If we are unable to raise additional capital when required or on acceptable terms, we may be required to: • significantly delay, scale back or discontinue the development or commercialization of and any product candidates we may seek to develop; • seek strategic alliances for research and development programs at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available; or • relinquish or license on unfavorable terms our rights to any product candidates that we otherwise would seek to develop or commercialize ourselves.
Other states, such as Virginia and Colorado, have also passed comprehensive data privacy and security laws, and similar laws are being considered in several other states, as well as at the federal and local levels. These developments may further complicate compliance efforts, and increase legal risk and compliance costs for us and the third parties upon whom we rely.
Similar laws are being considered in several other states, as well as at the federal and local levels, and we expect more states to pass similar laws in the future. These developments may further complicate compliance efforts, and increase legal risk and compliance costs for us and the third parties upon whom we rely.
Food and Drug Administration, or the FDA, to perform studies in addition to, or that are larger than, those that we currently expect. 22 As a result of the foregoing, we expect to experience net losses and negative cash flows from operations for the foreseeable future, and we are unable to predict when, or if, we will be able to achieve profitability.
As a result of the foregoing, we expect to experience net losses and negative cash flows from operations for the foreseeable future, and we are unable to predict when, or if, we will be able to achieve profitability.
We cannot predict what healthcare reform initiatives may be adopted in the future, particularly in light of the new presidential administration. Further federal, state and foreign legislative and regulatory developments are likely, and we expect ongoing initiatives to increase pressure on drug pricing, which could have a negative impact on our sales of any future approved products.
Further federal, state and foreign legislative and regulatory developments are likely, and we expect ongoing initiatives to increase pressure on drug pricing, which could have a negative impact on our sales of any future approved products.
Even if the License Agreement with GSK closes, we may not be able to realize the benefits we expect under the License Agreement if we are not able to develop ibrexafungerp. Even if the License Agreement with GSK closes, our ability to generate revenues under the License Agreement is dependent upon our ability to further develop ibrexafungerp.
Risks Relating to Our Financial Condition and Need for Additional Capital We may not be able to realize the benefits we expect under the GSK License Agreement if we are not able to develop ibrexafungerp. Our ability to generate revenues under the GSK License Agreement is dependent upon our ability to further develop ibrexafungerp.
Under the License Agreement with GSK, who will pay us milestone payments upon the achievement of specified regulatory, commercial and sales milestone events, as well as royalties on sales of ibrexafungerp in those countries in its territory, or determines not to pursue commercialization of ibrexafungerp in those countries, we will not receive any commercial or sales milestone or royalty payments under the License Agreement.
Under the GSK License Agreement, GSK is to pay us milestone payments upon our achievement of specified regulatory, commercial and sales milestone events, as well as royalties on sales of ibrexafungerp in those countries in its territory.
We have never been profitable, we have only one product approved for commercial sale, and to date we have generated limited revenue from product sales. As a result, our ability to curtail our losses and reach profitability is unproven, and we may never achieve or sustain profitability.
We have a limited history of profitability, we have only one product approved for commercial sale that is licensed to GSK and is subject to a product recall, and to date we have generated limited revenue from product sales. As a result, our ability to curtail our losses and sustain profitability is unproven.
We expect to continue to incur significant expenses and operating losses for the foreseeable future. The net losses we incur may fluctuate significantly from quarter to quarter.
We have suffered substantial losses from operations since inception and will require additional financing. We expect to continue to incur significant expenses and operating losses for the foreseeable future. The net losses we incur may fluctuate significantly from quarter to quarter.
If these policies, materials or statements are found to be deficient, lacking in transparency, deceptive, unfair, or misrepresentative of our practices, we may be subject to investigation, enforcement actions by regulators, or other adverse consequences. Obligations related to data privacy and security are quickly changing, becoming increasingly stringent, and creating regulatory uncertainty.
We publish privacy policies, marketing materials, and other statements, such as compliance with certain certifications or self-regulatory principles, regarding data privacy and security. If these policies, materials or statements are found to be deficient, lacking in transparency, deceptive, unfair, or misrepresentative of our practices, we may be subject to investigation, enforcement actions by regulators, or other adverse consequences.
Our business, financial condition and results of operations could be materially adversely affected as a result of any of these events.
Our business, financial condition and results of operations could be materially adversely affected as a result of any of these events. Unfavorable U.S. and global economic conditions could adversely affect our ability to access capital .
The trading price of our common stock may be volatile.
Risks Relating to Owning Our Common Stock The market price of our common stock may be highly volatile. The trading price of our common stock may be volatile.
When we are required to secure additional financing, the additional fundraising efforts may divert our management from our day-to-day activities, which may adversely affect our ability to develop and commercialize ibrexafungerp and any product candidates we may seek to develop.
When we are required to secure additional financing, the additional fundraising efforts may divert our management from our day-to-day activities, which may adversely affect our ability to develop ibrexafungerp and any product candidates we may seek to develop. In addition, we cannot guarantee that financing will be available in sufficient amounts or on terms acceptable to us, if at all.
We may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. These sales may also result in new investors gaining rights superior to our existing stockholders. For example, in March 2019, we issued and sold $16 million of 6.0% convertible senior notes.
To the extent we raise additional capital by issuing equity securities, our stockholders may experience substantial dilution. We may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. These sales may also result in new investors gaining rights superior to our existing stockholders.
Animal testing activities have been the subject of controversy and adverse publicity. Animal rights groups and other organizations and individuals have attempted to stop animal testing activities by pressing for legislation and regulation in these areas and by disrupting these activities through protests and other means.
Animal rights groups and other organizations and individuals have attempted to stop animal testing activities by pressing for legislation and regulation in these areas and by disrupting these activities through protests and other means. To the extent the activities of these groups are successful, our research and development activities may be interrupted, delayed or become more expensive.
Although there are currently various mechanisms that may be used to transfer personal data from the EEA and UK to the United States in compliance with law, such as the EEA and UK’s standard contractual clauses, these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal data to the United States.
Although there are 40 currently various mechanisms that may be used to transfer personal data from the EEA and UK to the United States in compliance with law, such as the EEA standard contractual clauses, the UK’s International Data Transfer Agreement / Addendum, and the EU-U.S.
Some European regulators have ordered certain companies to suspend or permanently cease certain transfers of personal data out of Europe for allegedly violating the EU GDPR’s cross-border data transfer limitations. 42 In addition to data privacy and security laws, we are or may become contractually subject to industry standards adopted by industry groups and may become subject to such obligations in the future.
Some European regulators have ordered certain companies to suspend or permanently cease certain transfers of personal data out of Europe for allegedly violating the EU GDPR’s cross-border data transfer limitations.
Department of Health and Human Services and other regulatory bodies. Violations of any of such laws and regulations could result in significant penalties being assessed against us.
We are subject to regulation by other regional, national, state and local agencies, including the Department of Justice, the Office of Inspector General of the U.S. Department of Health and Human Services and other regulatory bodies. Violations of any of such laws and regulations could result in significant penalties being assessed against us.
Holders who convert may also be entitled to receive, under certain circumstances, an interest make-whole payment payable in shares of common stock.
Upon conversion of the convertible notes by a holder, the holder will receive shares of our common stock, together, if applicable, with cash in lieu of any fractional share. Holders who convert may also be entitled to receive, under certain circumstances, an interest make-whole payment payable in shares of common stock.
On a prospective basis, our strategic focus, along with the commitment of our financial resources, will be directed towards the development of ibrexafungerp. We had cash, cash equivalents, and short-term investments of $73.5 million as of December 31, 2022. We have suffered substantial losses from operations since inception and will require additional financing.
As of December 31, 2023, we had an accumulated deficit of approximately $355.2 million. On a prospective basis, our strategic focus, along with the commitment of our financial resources, will be directed towards the development of ibrexafungerp. We had cash, cash equivalents, and investments of $98.0 million as of December 31, 2023.
We have obtained limited product liability insurance coverage for our clinical trials domestically and in selected foreign countries where we are conducting clinical trials.
We have obtained limited product liability insurance coverage for our clinical trials domestically and in selected foreign countries where we are conducting clinical trials as required by local country regulations, in addition to limited product liability coverage for BREXAFEMME. Our coverage is currently limited to $25.0 million per occurrence and $25.0 million in the aggregate per year.
To the extent the activities of these groups are successful, our research and development activities may be interrupted, delayed or become more expensive. 41 We are subject to stringent and evolving U.S. and foreign laws, regulations, rules, contractual obligations, policies and other obligations related to data privacy and security.
We are subject to stringent and evolving U.S. and foreign laws, regulations, rules, contractual obligations, policies and other obligations related to data privacy and security.
Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance. 45 Future sales and issuances of our common stock or rights to purchase common stock could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall.
Future sales and issuances of our common stock or rights to purchase common stock could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall. We expect that significant additional capital will be needed in the future to continue our planned operations.
Under current legislation the actual reduction in Medicare payments will vary from 1% in 2022 to up to 4% in the final fiscal year of this sequester. Further, there has been heightened governmental scrutiny in the United States of pharmaceutical pricing practices in light of the rising cost of prescription drugs.
Further, there has been heightened governmental scrutiny in the United States of pharmaceutical pricing practices in light of the rising cost of prescription drugs.
We are also bound by other contractual obligations related to data privacy and security, and our efforts to comply with such obligations may not be successful. We publish privacy policies, marketing materials, and other statements, such as compliance with certain certifications or self-regulatory principles, regarding data privacy and security.
In addition to data privacy and security laws, we are or may become contractually subject to industry standards adopted by industry groups and may become subject to such obligations in the future. We are also bound by other contractual obligations related to data privacy and security, and our efforts to comply with such obligations may not be successful.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeMARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on the Nasdaq Global Market under the symbol “SCYX.” Stockholders As of March 1, 2023, there were approximately 50 stockholders of record of our common stock, which excludes stockholders whose shares were held in nominee or street name by brokers.
Biggest changeMARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on the Nasdaq Global Market under the symbol “SCYX.” Stockholders As of March 1, 2024, there were approximately 43 stockholders of record of our common stock, which excludes stockholders whose shares were held in nominee or street name by brokers.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers We did not purchase any of our securities during the fourth quarter of 2022. ITEM 6. [RESE RVED] 48
Purchases of Equity Securities by the Issuer and Affiliated Purchasers We did not purchase any of our securities during the fourth quarter of 2023. ITEM 6. [RESE RVED] 47
Removed
Further, we are restricted from paying cash dividends under the terms of our Loan Agreement with Hercules and Silicon Valley Bank.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

65 edited+41 added−57 removed46 unchanged
Biggest changeResults of Operations for the Years Ended December 31, 2022 and 2021 The following table summarizes our results of operations for the years ended December 31, 2022 and 2021, and period-to-period percentage change (dollars in thousands): Years Ended December 31, 2022 2021 Period-to-Period Change Revenue: Product revenue, net $ 4,988 $ 1,113 3,875 348.2 % License agreement revenue 103 12,050 (11,947 ) (99.1 )% Total revenue 5,091 13,163 (8,072 ) (61.3 )% Operating expenses: Cost of product revenue 628 312 316 101.3 % Research and development 27,259 23,773 3,486 14.7 % Selling, general and administrative 62,961 49,916 13,045 26.1 % Total operating expenses 90,848 74,001 16,847 22.8 % Loss from operations (85,757 ) (60,838 ) (24,919 ) 41.0 % Other (income) expense: Loss on extinguishment of debt — 2,725 (2,725 ) (100.0 )% Amortization of debt issuance costs and discount 1,589 1,303 286 21.9 % Interest income (1,415 ) (24 ) (1,391 ) 5795.8 % Interest expense 5,198 2,660 2,538 95.4 % Other income (3 ) (13 ) 10 (76.9 )% Warrant liabilities fair value adjustment (22,301 ) (30,365 ) 8,064 (26.6 )% Derivative liabilities fair value adjustment (1,316 ) (1,170 ) (146 ) 12.5 % Total other income (18,248 ) (24,884 ) 6,636 (26.7 )% Loss before taxes (67,509 ) (35,954 ) (31,555 ) 87.8 % Income tax benefit 4,700 3,088 1,612 52.2 % Net Loss $ (62,809 ) $ (32,866 ) $ (29,943 ) 91.1 % Revenue.
Biggest changeResults of Operations for the Years Ended December 31, 2023 and 2022 The following table summarizes our results of operations for the years ended December 31, 2023 and 2022, and period-to-period percentage change (dollars in thousands): Years Ended December 31, 2023 2022 Period-to-Period Change Revenue: Product revenue, net $ 1,044 $ 4,988 (3,944 ) (79.1 )% License agreement revenue 139,097 103 138,994 134,945.6 % Total revenue 140,141 5,091 135,050 2,652.7 % Operating expenses: Cost of product revenue 15,624 628 14,996 2,387.9 % Research and development 30,928 27,259 3,669 13.5 % Selling, general and administrative 20,920 62,961 (42,041 ) (66.8 )% Total operating expenses 67,472 90,848 (23,376 ) (25.7 )% Income (loss) from operations 72,669 (85,757 ) 158,426 (184.7 )% Other expense (income): Amortization of debt issuance costs and discount 2,994 1,589 1,405 88.4 % Interest income (3,954 ) (1,415 ) (2,539 ) 179.4 % Interest expense 3,130 5,198 (2,068 ) (39.8 )% Other income — (3 ) 3 (100.0 )% Warrant liabilities fair value adjustment 3,166 (22,301 ) 25,467 (114.2 )% Derivative liabilities fair value adjustment 154 (1,316 ) 1,470 (111.7 )% Total other expense (income) 5,490 (18,248 ) 23,738 (130.1 )% Income (loss) before taxes 67,179 (67,509 ) 134,688 (199.5 )% Income tax (expense) benefit (138 ) 4,700 (4,838 ) (102.9 )% Net income (loss) $ 67,041 $ (62,809 ) $ 129,850 (206.7 )% Revenue.
In connection with the entering into of the License Agreement, we entered into a First Amendment and Consent to Loan and Security Agreement with the Lenders pursuant to which the Lenders consented to us entering into the License Agreement and we agreed to pay to the Lenders an amount equal to the sum of (i) all outstanding principal plus all accrued and unpaid interest with respect to the amounts loaned under the Loan Agreement (approximately $35.4 million), (ii) the prepayment fee payable under Loan Agreement ($262,500), (iii) the final payment payable under Loan Agreement ($1,382,500), and (iv) all other sums, if any, that shall have become due and payable with respect to loan advances under the Loan Agreement.
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.
The inventory information received from 57 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.
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.
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. See Note 2 to our consolidated financial statements on this Annual Report for further details.
This model incorporates transaction details such 58 as stock price, contractual terms, dividend yield, risk-free rate, adjusted equity volatility, credit rating, market credit spread, and estimated yield. See Note 2 to our consolidated financial statements on this Annual Report for further details.
We estimate expected volatility using the historical volatility of our 59 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.
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.
Other expenses include facility-related 52 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, information systems maintenance and marketing efforts.
Pursuant to the terms of the License Agreement, we granted GSK an exclusive (even as to us and our affiliates), royalty-bearing, sublicensable license for the development, manufacture, and commercialization of ibrexafungerp, including the approved product BREXAFEMME, for all indications, in all countries other than Greater China and certain other countries already licensed to third parties (the GSK Territory).
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).
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 for subjects with infections caused by fluconazole non-susceptible strains, once 50 step-down criteria are met.
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.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Operating results for the year ended December 31, 2022, are not necessarily indicative of results that may occur in 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.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Operating results for the year ended December 31, 2023, are not necessarily indicative of results that may occur in 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.
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, including under our ATM.
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.
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, accounting and finance, commercial, human resources, business development, medical affairs, and administrative support functions.
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, accounting and finance, commercial, human resources, business development, and administrative support functions.
Ibrexafungerp Update Enrollment is continuing in our prospective, randomized, double-blind, global Phase 3 study to evaluate the efficacy, safety and tolerability of oral ibrexafungerp as a step-down therapy for patients with IC including candidemia following IV echinocandin therapy in the hospital compared to currently available therapies (the MARIO study).
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).
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.
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.
The derivative liabilities are 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 liabilities at inception and on subsequent valuation dates.
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.
Our future capital requirements will depend on many factors, including: • our ability to close the transactions contemplated by the License Agreement with GSK; • the progress, costs, and the clinical research and development of ibrexafungerp; • the outcome, costs and timing of seeking and obtaining FDA and any other regulatory approvals; • the ability of our product candidates to progress through clinical development successfully; 56 • our need to expand our research and development activities; • the costs associated with securing, establishing and maintaining commercialization and manufacturing capabilities; • our ability to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights; • our need and ability to hire additional management and scientific and medical personnel; • our need to implement additional, as well as to enhance existing, internal systems and infrastructure, including financial and reporting processes and systems; and • the 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.
Our future capital requirements will depend on many factors, including: • our ability to successfully achieve the development, regulatory, and commercial milestones under our GSK License Agreement; • the progress, costs, and the clinical and preclinical research and development of ibrexafungerp and SCY-247; • the outcome, costs and timing of seeking and obtaining FDA and any other regulatory approvals; • the ability of our product candidates to progress through clinical development successfully; • our need to expand our research and development activities; • the costs associated with securing, establishing and maintaining commercialization and manufacturing capabilities; • our ability to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights; • our need and ability to hire additional management and scientific and medical personnel; • our need to implement additional, as well as to enhance existing, internal systems and infrastructure, including financial and reporting processes and systems; and • the 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.
These payments by us will become due upon the earliest of (A) one business day following receipt by us of the $90 million upfront payment payable to us under the License Agreement, (B) June 1, 2023, or (C) the termination of the License Agreement.
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.
For the years ended December 31, 2022 and 2021, we recognized $3,000 and $13,000 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 zero and $3,000 in other income associated with certain research and development tax credits. Warrant Liabilities Fair Value Adjustment .
Convertible Debt and Derivative Liabilities For the convertible notes, we account for the bifurcated embedded conversion option, inclusive of the interest make-whole provision and make-whole fundamental change provision, as long-term derivative liabilities in our consolidated balance sheet.
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.
In addition, we expect to incur expenses in connection with our ongoing development activities, particularly as we continue the research, development and clinical trials of, and seek regulatory approval for, our product candidates. We anticipate that we will need substantial additional funding in connection with our continuing future operations.
Future Cash Needs and 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.
Other Expense (Income) Substantially all of our other expense (income) during the periods reported consists of costs associated with: • fair value adjustments to our warrant and derivative liabilities; • interest expense; • amortization of debt issuance costs and discount; • other income associated with research and development tax credits; • interest income associated with our held-to-maturity short-term investments and money market account; and • the expense recognized for the extinguishment of debt.
Other Expense (Income) 51 Substantially all of our other expense (income) during the periods reported consists of costs associated with: • fair value adjustments to our warrant and derivative liabilities; • interest expense; • amortization of debt issuance costs and discount; • other income associated with research and development tax credits; and • interest income associated with our held-to-maturity investments and money market accounts.
Our research and development expense primarily consists of: • costs related to executing preclinical studies and clinical trials, including development milestones, drug formulation, manufacturing and other development; • salaries and personnel-related costs, including benefits and any stock-based compensation for personnel 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; • other costs in seeking regulatory approval of our products; and • allocated overhead.
Our research and development expense primarily consists of: • costs related to executing preclinical studies and clinical trials, including development milestones, drug formulation, manufacturing and other development; • salaries and personnel-related costs, including benefits and any stock-based compensation for personnel 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; • medical affairs related expense and salary that is incurred to discover, develop, or improve potential product candidates; • other costs in seeking regulatory approval of our products; and • allocated overhead.
Financing Activities 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.
Financing Activities 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. 54 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.
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. We may offer shares of our common stock pursuant to our Form S-3 shelf registration statements.
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.
Ibrexafungerp was the only key research and development project during the periods presented. We expect to continue to incur significant research and development expense for the foreseeable future as we continue our effort to develop ibrexafungerp, and to potentially develop our other product candidates, subject to the availability of additional funding. The successful development of product candidates is highly uncertain.
Ibrexafungerp and SCY-247 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 ibrexafungerp and SCY-247, and to potentially develop our other product candidates, subject to the availability of additional funding.
While our significant accounting policies are more fully described in Note 2 to our consolidated financial statements for the year ended December 31, 2022, included in this Annual Report, we believe that the following accounting policies are critical to the process of making significant judgments and estimates in the preparation of our consolidated financial statements and understanding and evaluating our reported financial results.
Actual results may differ from these estimates under different assumptions or conditions. 55 While our significant accounting policies are more fully described in Note 2 to our consolidated financial statements for the year ended December 31, 2023, included in this Annual Report, we believe that the following accounting policies are critical to the process of making significant judgments and estimates in the preparation of our consolidated financial statements and understanding and evaluating our reported financial results.
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.
For a distinct unit-of-account that is not within the scope of Topic 606, we will recognize and 56 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.
For the years ended December 31, 2022 and 2021, we recognized gains of $22.3 million and $30.4 million, respectively, for the fair value adjustment for warrant liabilities primarily due to the decrease in our stock price during the periods. Derivative 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. Derivative Liabilities Fair Value Adjustment.
For the years ended December 31, 2022 and 2021, we recognized gains of $1.3 million and $1.2 million, respectively, in the fair value adjustment related to the derivative liabilities primarily due to the decrease in our stock price during the periods. Income Tax Benefit.
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, 2022, selling, general and administrative expenses increased to $63.0 million from $49.9 million for the year ended December 31, 2021.
For the year ended December 31, 2023, selling, general and administrative expenses decreased to $20.9 million from $63.0 million for the year ended December 31, 2022.
The assumptions used in the Black-Scholes option-pricing model for the years ended December 31, 2022 and 2021 are set forth below: Employee Stock Options Years Ended December 31, 2022 2021 Weighted average risk-free interest rate 2.45 % 0.64 % Weighted average expected term (in years) 6.04 5.15 Weighted average expected volatility 73.80 % 62.10 % Non-Employee Stock Options Years Ended December 31, 2022 2021 Weighted average risk-free interest rate 3.18 % 0.74 % Weighted average expected term (in years) 5.63 5.79 Weighted average expected volatility 74.20 % 69.56 % Warrant Liabilities We account for the outstanding warrants associated with the March 2018, December 2019, December 2020, and April 2022 public offerings as well as the Loan Agreement warrants associated with the remaining unfunded tranches as liabilities measured at fair value.
The assumptions used in the Black-Scholes option-pricing model for the years ended December 31, 2023 and 2022 are set forth below: Employee Stock Options Years Ended December 31, 2023 2022 Weighted average risk-free interest rate 3.98 % 2.45 % Weighted average expected term (in years) 6.04 6.04 Weighted average expected volatility 74.77 % 73.80 % Non-Employee Stock Options Years Ended December 31, 2023 2022 Weighted average risk-free interest rate 3.89 % 3.18 % Weighted average expected term (in years) 5.50 5.63 Weighted average expected volatility 80.12 % 74.20 % 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.
For the years ended December 31, 2022 and 2021, we recognized $1.4 million and $24,000, respectively, in interest income associated with our money market account and short-term investments. The increase in interest income was primarily due to the increase in the interest rate on our money market account. Interest Expense.
For the years ended December 31, 2023 and 2022, we recognized $4.0 million and $1.4 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. Interest Expense.
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 develop1ent credits.
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.
(SVB) are party to a Loan and Security Agreement dated as of May 13, 2021 (the Loan Agreement), pursuant to which Hercules Capital, SVB and each of the other lenders from time-to-time party to the Loan and Security Agreement (collectively, the Lenders) loaned to us $35 million.
(Hercules Capital) and Silicon Valley Bridge Bank, N.A. (as successor to Silicon Valley Bank) (SVBB) were parties to a Loan and Security Agreement dated as of May 13, 2021 (the Loan Agreement), pursuant to which Hercules Capital, SVBB and each of the other lenders from time-to-time party to the Loan Agreement (collectively, the Lenders) loaned to us $35 million.
Stock-based compensation expense has been reported in our statements of operations as follows (dollars in thousands): Years Ended December 31, 2022 2021 Research and development $ 1,076 $ 631 Selling, general and administrative 2,436 1,457 Total $ 3,512 $ 2,088 On December 31, 2022, the aggregate intrinsic value of outstanding options to purchase shares of our common stock was zero, based upon the $1.56 closing sales price per share of our common stock as reported on the Nasdaq Global Market on that date.
We recognize compensation expense over the requisite service period, which is equal to the vesting period. 57 Stock-based compensation expense has been reported in our statements of operations as follows (dollars in thousands): Years Ended December 31, 2023 2022 Research and development $ 873 $ 1,076 Selling, general and administrative 1,751 2,436 Total $ 2,624 $ 3,512 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.
Net cash used in operating activities of $54.6 million for the year ended December 31, 2021, primarily consisted of the $32.9 million net loss adjusted for non-cash charges that included the gain on change in fair value of the warrant liabilities of $30.4 million and stock-based compensation expense of $2.1 million, the gain on change in fair value of the derivative liabilities of $1.2 million, the loss on extinguishment of debt of $2.7 million, and the amortization of debt issuance costs and discount of $1.3 million, plus a net favorable change in operating assets and liabilities of $3.1 million.
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.
The European Medicines Agency has granted Orphan Medicinal Product designation to ibrexafungerp for IC. These designations may provide us with additional market exclusivity and expedited regulatory paths.
The European Medicines Agency has granted Orphan Medicinal Product designation to ibrexafungerp for IC. We anticipate that the FDA may grant QIDP and Fast Track designations for the IV and oral formulations of SCY-247. These designations may provide us with additional market exclusivity and expedited regulatory paths.
For the years ended December 31, 2022 and 2021, we recognized $5.2 million and $2.7 million, respectively, in interest expense associated with our Loan Agreement and convertible debt. The increase in interest expense was primarily driven by the increase in the interest rate associated with the Loan Agreement entered into in May 2021. Other Income.
For the years ended December 31, 2023 and 2022, we recognized $3.1 million and $5.2 million, respectively, in interest expense associated with our Loan Agreement and convertible debt. The decrease in interest expense was primarily due to the repayment of the Loan Agreement in May 2023. Other Income.
Ibrexafungerp, the first representative of a novel class of antifungal agents called triterpenoids, is a structurally distinct glucan synthase inhibitor and has shown in vitro and in vivo activity against a broad range of human fungal pathogens such as Candida and Aspergillus genera, including multidrug-resistant strains, as well as Pneumocystis , Coccidioides , Histoplasma and Blastomyces genera.
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.
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.
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.
For the years ended December 31, 2022 and 2021, we recognized $1.6 million and $1.3 million in amortization of debt issuance costs and discount. The 2022 and 2021 debt issuance costs and discount for our March 2019 convertible notes primarily consisted of an allocated portion of advisory fees, issuance costs, and the initial fair value of the derivative liability.
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. Interest Income.
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 We record the fair value of stock options issued as of the grant date as compensation expense.
Cash Flows The following table sets forth the significant sources and uses of cash for the years ended December 31, 2022 and 2021 (dollars in thousands): Years Ended December 31, 2022 2021 Cash, cash equivalents, and restricted cash, January 1 $ 104,702 $ 93,314 Net cash used in operating activities (79,883 ) (54,560 ) Net cash used in investing activities (27,389 ) (1,172 ) Net cash provided by financing activities 48,602 67,120 Net (decrease) increase in cash, cash equivalents, and restricted cash (58,670 ) 11,388 Cash, cash equivalents, and restricted cash, December 31 $ 46,032 $ 104,702 Operating Activities The $25.3 million increase in net cash used in operating activities for the year ended December 31, 2022, as compared to the year ended December 31, 2021, was primarily due to the increase in selling, general and administrative expenses to support the commercial launch of BREXAFEMME and the continued development costs associated with ibrexafungerp.
Cash Flows The following table sets forth the significant sources and uses of cash for the years ended December 31, 2023 and 2022 (dollars in thousands): Years Ended December 31, 2023 2022 Cash, cash equivalents, and restricted cash, January 1 $ 46,032 $ 104,702 Net cash provided by (used in) operating activities 60,159 (79,883 ) Net cash used in investing activities (34,877 ) (27,389 ) Net cash (used in) provided by financing activities (36,721 ) 48,602 Net (decrease) in cash, cash equivalents, and restricted cash (11,439 ) (58,670 ) Cash, cash equivalents, and restricted cash, December 31 $ 34,593 $ 46,032 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.
We make estimates of our accrued expenses as of each balance sheet date within our consolidated financial 58 statements based on the facts and circumstances known to us at that time.
During the course of a clinical trial or preclinical study or development project, we adjust our rate of trial or project expense recognition if actual results differ from our estimates. We make estimates of our accrued expenses as of each balance sheet date within our consolidated financial statements based on the facts and circumstances known to us at that time.
Liquidity We have operated as a public entity since we completed our initial public offering in May 2014, which we refer to as our IPO. We also completed a follow-on public offering of our common stock in April 2015 and public offerings of our common stock and warrants in June 2016, March 2018, December 2019, December 2020, and April 2022.
We also completed a follow-on public offering of our common stock in April 2015 and public offerings of our common stock and warrants in June 2016, March 2018, December 2019, December 2020, and April 2022. Our principal source of liquidity is cash, cash equivalents, and investments which totaled $98.0 million as of December 31, 2023.
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.
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.
Income Tax 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 year ended December 31, 2022, our income tax benefit recognized consists primarily of an income tax benefit associated with the sale of our NOLs and research and development credits.
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.
We achieved a target enrollment of 200 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, including infections caused by Candida auris ( C. auris ), and anticipate study completion activities in the first half of 2023 with a Data Review Committee review and topline data in the first half of 2024.
Such submission would be made by GSK and any resulting approval would be held by GSK. 49 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 will be responsible for the execution and costs of the ongoing clinical studies of ibrexafungerp but will have the potential to receive up to $75.5 million in success-based development milestones, which are comprised of up to $65 million for the achievement of three interim milestones associated with our continued performance of the ongoing MARIO Study and $10.5 million for the successful completion of the MARIO Study.
We will continue to be responsible for the execution and costs of the ongoing clinical studies of ibrexafungerp but will have the potential to receive up to $72.35 million in development milestones (revised from up to $75.5 million as provided in the GSK License Agreement), which comprise: $25 million already paid; $10 million for the delivery to GSK of final clinical study reports for the completed FURI, CARES, and NATURE clinical studies; up to $30 million for the achievement of two interim milestones associated with our resumption and continued performance of the MARIO Study after the clinical hold is lifted; and $7.35 million for the successful completion of the MARIO Study.
The $3.0 million increase in clinical development expense for the year ended December 31, 2022, was primarily driven by an increase of $5.3 million in expense associated with the costs for the MARIO study which was initiated in the fourth quarter of 2021, an increase of $1.3 million in expense associated with the VANQUISH study, offset in part by a $3.4 million decrease in expense associated with the CANDLE Phase 3 study which was substantially complete in the first quarter of 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. 52 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.
Additionally, we concluded the partnership with our contracted commercial sales partner, Amplity Health (Amplity), on November 30, 2022, and we completed a workforce reduction primarily in the commercial function. On March 30, 2023, we entered into a license agreement (the License Agreement) with GlaxoSmithKline Intellectual Property (No. 3) Limited (GSK).
GSK License Agreement On March 30, 2023, we entered into a license agreement (the GSK License Agreement) with GlaxoSmithKline Intellectual Property (No. 3) Limited (GSK).
Prior to the regulatory approval of BREXAFEMME on June 1, 2021, we expensed as research and development the costs associated with the third-party manufacture of BREXAFEMME. Research and Development Expense Research and development expense consists of expenses incurred while performing research and development activities to discover, develop, or improve potential product candidates we seek to develop.
Cost of Product Revenue Cost of product revenue consists primarily of inventory impairment expense, distribution, freight expenses, royalties due to Merck, and other manufacturing costs associated with BREXAFEMME. Research and Development Expense Research and development expense consists of expenses incurred while performing research and development activities to discover, develop, or improve potential product candidates we seek to develop.
Investing Activities Net cash used in investing activities of $27.4 million for the year ended December 31, 2022, consisted of purchases of short-term investments. Net cash used in investing activities of $1.2 million for the year ended December 31, 2021, consisted solely of purchases of intangible assets associated with implementation costs for internal use software.
Investing Activities 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.
For the year ended December 31, 2022, cost of product revenue consists primarily of distribution, freight, and royalty costs associated with BREXAFEMME. Prior to the regulatory approval of BREXAFEMME on June 1, 2021, we expensed $3.4 million as research and development expense the costs associated with the third-party manufacture of BREXAFEMME which was recognized primarily in 2020.
For the year ended December 31, 2022, cost of product revenue consists primarily of 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 $7.7 million increase in accounts payable and accrued expenses was primarily due to the increase in accounts payable of $2.6 million as of December 31, 2021 and an increase of $3.4 million for other liabilities associated with the long term deferred fees due to Amplity.
The $0.9 million increase in operating liabilities was primarily due to an increase of $1.2 million in accounts payable and a decrease in accrued expenses, deferred revenue, other liabilities, and other of $0.3 million.
The increase of $13.0 million, or 26.1%, was primarily driven by a $8.6 million increase in commercial related expense, an increase of $1.6 million in salary and payroll related costs, and an increase of $1.5 million in professional fees, all primarily due to the costs recognized to support the commercialization of BREXAFEMME, an increase of $1.0 million in stock compensation expense, and an increase of $1.9 million primarily in severance expense associated with our reduction in workforce, offset in part by a decrease of $0.9 million in medical affairs expense and a $0.7 million decrease in business development expense due to the Hansoh license agreement entered into in 2021.
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.
We also achieved a target enrollment of 30 patients in our Phase 3 CARES study, focused on patients with infections caused by C. auris which will follow similar completion and reporting timing to the Phase 3 FURI study.
We also achieved a target enrollment of 30 patients in our Phase 3 CARES study, focused on patients with infections caused by C. auris . 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.
We are also eligible to receive potential: • regulatory approval milestone payments of up to $70 million; • commercial milestone payments of up to $115 million based on first commercial sale in invasive candidiasis (U.S./EU); • and sales milestone payments of up to $242.5 million based on annual net sales, with a total of $77.5 million to be paid upon achievement of multiple thresholds up through $200 million; a total of $65 million to be paid upon achievement of multiple thresholds between $300 million and $500 million; and $50 million to be paid at each threshold of $750 million and $1 billion.
These milestones are based on annual net sales in the GSK Territory, with a total of $64 / $54.25 / $46.5 million to be paid upon achievement of multiple sales thresholds up through $200 million; a total of $45.5 / $45.5 / $39 million to be paid upon achievement of multiple sales thresholds between $300 million and $500 million; and $35 / $35 / $30 million to be paid at each sales threshold of $750 million and $1 billion.
The $4.6 million increase in prepaid expenses, other assets, and deferred costs, accounts receivable, and inventory is primarily due to an increase in inventory of $5.3 million, and an increase in accounts receivable of $0.9 million, offset in part by a decrease of $2.9 million in other assets for a receivable that was fully collected in February 2021.
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.
The $1.3 million decrease in CMC expense for the year ended December 31, 2022, was primarily driven by a $0.9 million decrease in expense for third-party drug product manufacturing in the current period. Selling, General and Administrative .
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. Selling, General and Administrative .
We expect we will continue to incur significant research and development expense as we continue to execute our research and drug development strategy.
As of December 31, 2023, our accumulated deficit was $355.2 million. We expect we will continue to incur significant research and development expense as we continue to execute our research and drug development strategy. We also expect that we will continue to incur significant selling, general and administrative expenses to support our public reporting company operations and ongoing operations.
We have incurred net losses since our inception, including the year ended December 31, 2022. As of December 31, 2022, our accumulated deficit was $422.3 million. We anticipate that we will continue to incur losses for at least the next several years.
(Amplity). 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. 53 As of December 31, 2023, our accumulated deficit was $355.2 million. We anticipate that we will continue to incur losses for at least the next several years.
In the second quarter of 2022, enrollment began in a new Phase 3b, open-label, multicenter study (VANQUISH) to evaluate the efficacy, safety and tolerability of oral ibrexafungerp as a treatment for complicated VVC in patients who have failed treatment with fluconazole, based on mycological and clinical outcomes.
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. Loan Agreement We, Hercules Capital, Inc.
For the year ended December 31, 2021, we recognized a $4.1 million income tax benefit associated with the sale of a portion of our NOLs and research and development credits and $1.1 million of tax withholding expense primarily associated with the upfront payment received from Hansoh. 54 Liquidity and Capital Resources Sources of Liquidity As of December 31, 2022, we had cash, cash equivalents, and short-term investments of approximately $73.5 million, compared to cash and cash equivalents of $104.5 million as of December 31, 2021.
Liquidity and Capital Resources Sources of Liquidity As of December 31, 2023, we had cash, cash equivalents, and investments of approximately $98.0 million, compared to cash, cash equivalents, and investments of $73.5 million as of December 31, 2022.
For the year ended December 31, 2022, revenue consists primarily of product sales of BREXAFEMME, for which we began commercialization in the second half of 2021. For the year ended December 31, 2021, revenues consists primarily of a non-refundable upfront payment received under our license agreement with Hansoh. Cost of Product Revenues.
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.
Pursuant to the terms of the License Agreement, we granted GSK an exclusive (even as to us and our affiliates), royalty-bearing, sublicensable license for the development, manufacture, and commercialization of ibrexafungerp, including the approved product BREXAFEMME, for all indications, in the GSK Territory.
We assessed the terms of the GSK License Agreement and identified the following performance obligations which include: (1) the license for the development, manufacture, and commercialization of ibrexafungerp, including the approved product BREXAFEMME, in the GSK Territory, (2) the research and development activities for the MARIO study, and (3) performance obligations for the remaining research and development activities for the ongoing clinical and preclinical studies of ibrexafungerp.
Removed
We are developing our lead product candidate, ibrexafungerp, as a broad-spectrum, intravenous (IV)/oral agent for severe, hospital-based indications. In June 2021 and December 2022, we announced that the U.S.
Added
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.
Removed
In October 2022, we announced that were actively pursuing a U.S. commercialization partner to out-license BREXAFEMME in order to refocus our resources on the clinical development of ibrexafungerp for severe, hospital-based indications, while keeping BREXAFEMME on the market and available to patients, and we have ceased actively promoting BREXAFEMME.
Added
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.
Removed
Candida and Aspergillus genera are the fungi responsible for approximately 85% of all invasive fungal infections in the United States (U.S.) and Europe. To date, we have characterized the antifungal activity, pharmacokinetics, and safety profile of the oral and IV formulations of ibrexafungerp in multiple in vitro, in vivo, and clinical studies.
Added
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.
Removed
Corporate Strategy Update In October 2022, we announced a new corporate strategic direction by refocusing our resources on the further clinical development of ibrexafungerp for severe, hospital-based indications with both the oral and liposomal IV formulations, as multiple ongoing Phase 3 studies are progressing for a potential first approval in hospital indications in 2024 and a Phase 2 study of the IV formulation of ibrexafungerp is planned for 2023.
Added
This milestone payment followed a development goal for the Phase 3 MARIO study for ibrexafungerp in IC as we continued executing ongoing ibrexafungerp trials. On December 26, 2023, we and GSK entered into a binding memorandum of understanding (Binding MOU) for amendment to the GSK License Agreement.
Removed
If the existing licenses granted to or agreements with third parties are terminated with respect to any country, GSK will have an exclusive first right to negotiate with us to add those additional countries to the GSK Territory.
Added
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.
Removed
We retain rights to all other assets, with GSK receiving a right of first negotiation (ROFN) to any other enfumafungin-derived compounds or products that we may control.
Added
Under the terms of the updated GSK License Agreement, as amended by the Binding MOU, we are eligible to receive potential: • regulatory approval milestone payments of up to $49 million (revised from up to $70 million as provided in the GSK License Agreement); • commercial milestone payments of up to $57.5 million based on first commercial sale in invasive candidiasis (U.S./EU) (revised from up to $115 million as provided in the GSK License Agreement); and 48 • 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).
Removed
The consummation of the transactions under the License Agreement is subject to the satisfaction of customary closing conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the HSR Act); provided, that either we or GSK may terminate the License Agreement if expiration or termination of the applicable waiting period under the HSR Act has not occurred within nine months of the signing of the License Agreement.
Added
In the case of each of the above milestones, such milestone events are defined in the GSK License Agreement, as amended by the Binding MOU. GSK will also pay royalties based on cumulative annual sales to us in the mid-single digit to mid-teen range. The royalty terms are not amended by the Binding MOU.
Removed
The parties expect the transactions contemplated by the License Agreement to close in the second quarter of 2023. 49 Under the terms of the License Agreement, we will receive an upfront payment of $90 million.

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