SCYNEXIS INC

Previous wording

Operating results for the three and six months ended June 30, 2024, are not necessarily indicative of results that may occur in future interim periods or future fiscal years. Some of the statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are forward-looking statements. These forward-looking statements are based on management’s beliefs and assumptions and on information currently available to our management and involve significant elements of subjective judgment and analysis. Words such as “expects,” “will,” “anticipate,” “target,” “goal,” “intend,” “plan,” “seek,” “estimate,” “potential,” “should,” “could,” variations of such words, and similar expressions are intended to identify forward-looking statements. Our actual results and the timing of events may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such a difference include those discussed under the heading “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 28, 2024, and in Part II, Item 1A of this Quarterly Report on Form 10-Q. These and many other factors could affect our future financial and operating results. We undertake no obligation to update any forward-looking statement to reflect events after the date of this Quarterly Report on Form 10-Q. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into or review of, all relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely on these statements.

Current wording

Operating results for the three and nine months ended September 30, 2024, are not necessarily indicative of results that may occur in future interim periods or future fiscal years. Some of the statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are forward-looking statements. These forward-looking statements are based on management’s beliefs and assumptions and on information currently available to our management and involve significant elements of subjective judgment and analysis. Words such as “expects,” “will,” “anticipate,” “target,” “goal,” “intend,” “plan,” “seek,” “estimate,” “potential,” “should,” “could,” variations of such words, and similar expressions are intended to identify forward-looking statements. Our actual results and the timing of events may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such a difference include those discussed under the heading “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 28, 2024, and in Part II, Item 1A of this Quarterly Report on Form 10-Q. These and many other factors could affect our future financial and operating results. We undertake no obligation to update any forward-looking statement to reflect events after the date of this Quarterly Report on Form 10-Q. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into or review of, all relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely on these statements.

Previous wording

In March 2023, we entered into a license agreement (the GSK License Agreement) with GlaxoSmithKline Intellectual Property (No. 3) Limited (GSK) in which we granted GSK an exclusive (even as to us and our affiliates), royalty-bearing, sublicensable license for the development and commercialization of ibrexafungerp, including the approved product BREXAFEMME, for all indications, in all countries other than Greater China and certain other countries already licensed to third parties. In July 2024, we delivered to GSK the final clinical study reports for the completed FURI, CARES, and NATURE clinical studies and we expect to collect a $10.0 million development milestone in the third quarter of 2024. As of June 30, 2024, we have received $115.0 million in upfront and development milestones under the GSK License Agreement. See further details of the GSK License Agreement, including financial terms, as described in Note 11 of Item 1 on this Quarterly Report on Form 10-Q.

Current wording

In March 2023, we entered into a license agreement (the GSK License Agreement) with GlaxoSmithKline Intellectual Property (No. 3) Limited (GSK) in which we granted GSK an exclusive (even as to us and our affiliates), royalty-bearing, sublicensable license for the development and commercialization of ibrexafungerp, including the approved product BREXAFEMME, for all indications, in all countries other than Greater China and certain other countries already licensed to third parties. In July 2024, we delivered to GSK the final clinical study reports for the completed FURI, CARES, and NATURE clinical studies and we received a $10.0 million development milestone in the third quarter of 2024. As of September 30, 2024, we have received $125.0 million in upfront and development milestones under the GSK License Agreement. See further details of the GSK License Agreement, including financial terms, as described in Note 11 of Item 1 on this Quarterly Report on Form 10-Q.

Previous wording

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

Current wording

In response to the hold on clinical studies of ibrexafungerp by the FDA due to possible beta-lactam cross contamination, we have entered into certain new manufacturing agreements with third-party contract manufacturers to begin producing new batches of ibrexafungerp which we believe will allow us to lift the clinical hold and restart our impacted clinical studies, the Phase 3 MARIO study and a Phase 1 lactation study. We are working on the resolution of this issue and we anticipate the restart of the MARIO study, after FDA's lifting of the clinical hold, in the first quarter of 2025.

Previous wording

Following the closing of the transactions under the License Agreement, in May 2023, we received the upfront payment pursuant to the terms of the License Agreement, which triggered the obligation of us to repay the amounts due under the terms of the First Amendment. In connection with the repayment of those amounts due, in May 2023, we and the Lenders executed a payoff letter confirming the amounts due under the First Amendment, and our confirmation that the Loan Agreement, as amended by the First Amendment, was terminated.

Current wording

Following the closing of the transactions under the GSK License Agreement, in May 2023, we received the upfront payment pursuant to the terms of the GSK License Agreement, which triggered the obligation of us to repay the amounts due under the terms of the First Amendment. In connection with the repayment of those amounts due, in May 2023, we and the Lenders executed a payoff letter confirming the amounts due under the First Amendment, and our confirmation that the Loan Agreement, as amended by the First Amendment, was terminated.

Previous wording

We have operated as a public entity since we completed our initial public offering in May 2014, which we refer to as our IPO. We also completed a follow-on public offering of our common stock in April 2015 and public offerings of our common stock and warrants in June 2016, March 2018, December 2019, December 2020, and April 2022. Our principal source of liquidity is cash, cash equivalents, and investments which totaled $83.7 million as of June 30, 2024.

Current wording

We have operated as a public entity since we completed our initial public offering in May 2014, which we refer to as our IPO. We also completed a follow-on public offering of our common stock in April 2015 and public offerings of our common stock and warrants in June 2016, March 2018, December 2019, December 2020, and April 2022. Our principal source of liquidity is cash, cash equivalents, and investments which totaled $84.9 million as of September 30, 2024.

Previous wording

As of June 30, 2024, our accumulated deficit was $369.3 million. We expect we will continue to incur significant research and development expense as we continue to execute our research and drug development strategy. Consistent with our operating plan, we also expect that we will continue to incur significant selling, general and administrative expenses to support our public reporting company operations and ongoing operations. As a result, we will need additional capital to fund our operations, which we may obtain through one or more of equity offerings, debt financings, other non-dilutive third-party funding (e.g., grants), strategic alliances and licensing or collaboration arrangements. We may offer shares of our common stock pursuant to our effective shelf registration statements.

Current wording

As of September 30, 2024, our accumulated deficit was $372.1 million. We expect we will continue to incur significant research and development expense as we continue to execute our research and drug development strategy. Consistent with our operating plan, we also expect that we will continue to incur significant selling, general and administrative expenses to support our public reporting company operations and ongoing operations. As a result, we will need additional capital to fund our operations, which we may obtain through one or more of equity offerings, debt financings, other non-dilutive third-party funding (e.g., grants), strategic alliances and licensing or collaboration arrangements. We may offer shares of our common stock pursuant to our effective shelf registration statements.

Previous wording

Revenue consists of license agreement revenue associated with GSK and product sales of BREXAFEMME. For the three and six months ended June 30, 2023, our product revenue, net comprised of sales of BREXAFEMME that we sold as principal given we control BREXAFEMME product until delivery to our wholesalers at which point control is transferred.

Current wording

Revenue consists of license agreement revenue associated with GSK and product sales of BREXAFEMME. For the three and nine months ended September 30, 2023, our product (loss) revenue, net comprised of sales of BREXAFEMME that we sold as principal given we control BREXAFEMME product until delivery to our wholesalers at which point control is transferred.

Previous wording

All of our other expense (income) recognized in the three and six months ended June 30, 2024 and 2023, consists of amortization of debt issuance costs and discount, interest income, interest expense, the warrant liabilities fair value adjustment, and the derivative liabilities fair value adjustment.

Current wording

All of our other expense (income) recognized in the three and nine months ended September 30, 2024 and 2023, consists of amortization of debt issuance costs and discount, interest income, interest expense, the warrant liabilities fair value adjustment, and the derivative liabilities fair value adjustment.

Previous wording

For the six months ended June 30, 2024, our income tax expense recognized consists primarily of an expense for U.S. federal income tax.

Current wording

For the three and nine months ended September 30, 2024, our income tax (benefit) expense recognized consists primarily of a (benefit) expense for U.S. federal income tax.

Previous wording

Research and Development. For the six months ended June 30, 2024, research and development expenses increased to $14.0 million compared to $13.9 million for the six months ended June 30, 2023. The increase of $0.1 million, or 1%, for the six months ended June 30, 2024, was primarily driven by an increase of $2.2 million in chemistry, manufacturing, and controls (CMC) expense and an increase of $0.8 million in preclinical expense, offset in part by a decrease of $1.9 million in clinical expense, a decrease of $0.7 million in salaries primarily associated with medical affairs and a $0.3 million decrease in other research and development expense.

Current wording

Research and Development. For the three months ended September 30, 2024, research and development expenses increased to $8.1 million compared to $6.5 million for the three months ended September 30, 2023. The increase of $1.6 million, or 25%, for the three months ended September 30, 2024, was primarily driven by an increase of $2.2 million in chemistry, manufacturing, and controls (CMC) expense, an increase of $0.9 million in preclinical expense, and a net increase in other research and development expense of $0.4 million, offset in part by a decrease of $1.6 million in clinical expense and a decrease of $0.3 million in salaries primarily associated with medical affairs.

Previous wording

The $1.1 million decrease in clinical expense was primarily due to a $0.5 million decrease in clinical expense for the MARIO study and a $0.6 million decrease in clinical expense associated with the FURI, CARES, VANQUISH, and SCYNERGIA studies, which were substantially completed in the third quarter of 2023. The $0.7 million increase in CMC expense is primarily associated with a $0.9 million increase in expense associated with the manufacturing of drug product for SCY-247 and ibrexafungerp. The $0.5 million increase in preclinical expense for the three months ended June 30, 2024 was primarily associated with certain preclinical costs associated with SCY-247.

Current wording

The $2.2 million increase in CMC expense is primarily associated with a $2.1 million increase in expense associated with the manufacturing of drug product for SCY-247 and ibrexafungerp. The $0.9 million increase in preclinical expense was primarily associated with certain preclinical costs associated with the continued development of SCY-247. The $1.6 million decrease in clinical expense was primarily due to a $1.4 million decrease in clinical expense for the Phase 3 MARIO study and a $0.2 million decrease in clinical expense associated with the Phase 1 lactation study.

Previous wording

Selling, General & Administrative. For the three months ended June 30, 2024, selling, general and administrative expenses decreased to $3.2 million from $7.5 million for the three months ended June 30, 2023. The decrease of $4.3 million, or 58%, for the three months ended June 30, 2024, was primarily driven by a decrease of $3.5 million in professional fees and a decrease of $0.3 million in commercial expense due to the costs incurred in the prior comparable period associated with BREXAFEMME. The $3.5 million decrease in professional fees was primarily due to a $3.1 million expense incurred during the prior period for business development associated with the GSK License Agreement.

Current wording

Selling, General & Administrative. For the three months ended September 30, 2024, selling, general and administrative expenses decreased to $2.9 million from $5.0 million for the three months ended September 30, 2023. The decrease of $2.1 million, or 42%, for the three months ended September 30, 2024, was primarily driven by a decrease of $1.5 million in professional fees and a decrease of $0.5 million in commercial expense due to the costs incurred in the prior period associated with BREXAFEMME. The $1.5 million decrease in professional fees was primarily due to a $0.8 million nonrecurring legal expense incurred in the prior period.

Previous wording

Amortization of Debt Issuance Costs and Discount. For the three months ended June 30, 2024 and 2023, we recognized $0.4 million and $2.0 million in amortization of debt issuance costs and discount, respectively. The decrease of $1.6 million, or 79%, was primarily driven by the recognition, in the prior period, of $1.7 million in amortization for the remaining debt issuance costs and discount associated with the Loan Agreement which was fully paid in May 2023. The debt issuance costs and discount for our March 2019 convertible notes primarily consisted of an allocated portion of advisory fees and other issuance costs and the initial fair value of the derivative liability.

Current wording

Amortization of Debt Issuance Costs and Discount. For both the three months ended September 30, 2024 and 2023, we recognized $0.4 million in amortization of debt issuance costs and discount. The debt issuance costs and discount for our March 2019 convertible notes primarily consisted of an allocated portion of advisory fees and other issuance costs and the initial fair value of the derivative liability.

Previous wording

Interest Income. For the six months ended June 30, 2024 and 2023, we recognized $2.4 million and $1.3 million, respectively, in interest income; the increase was primarily due to the increase in the interest rates on our money market funds and investments.

Current wording

Interest Income. For the three months ended September 30, 2024 and 2023, we recognized $1.0 million and $1.3 million, respectively, in interest income on our money market funds and investments.

Previous wording

Derivative Liabilities Fair Value Adjustment. For the three months ended June 30, 2024 and 2023, we recognized gains of $28,000 and $42,000, respectively, in the fair value adjustment related to the derivative liabilities primarily due to the decreases in our stock price during both the periods.

Current wording

Warrant Liabilities Fair Value Adjustment. For the three months ended September 30, 2024 and 2023, we recognized gains of $6.8 million and $7.5 million, respectively, in the fair value adjustment related to the warrant liabilities primarily due to the decrease in our stock price during the periods.

Previous wording

The following table summarizes our results of operations for the six months ended June 30, 2024 and 2023, together with the changes in those items in dollars and percentage (dollars in thousands):

Current wording

The following table summarizes our results of operations for the nine months ended September 30, 2024 and 2023, together with the changes in those items in dollars and percentage (dollars in thousands):

Previous wording

Revenue. For the three months ended June 30, 2024, revenue consists of the $0.7 million in license agreement revenue associated with the License Agreement with GSK. For the three months ended June 30, 2023, revenue primarily consists of the $130.1 million recognized upon the transfer of the license associated with the License Agreement with GSK in May 2023.

Current wording

Revenue. For the nine months ended September 30, 2024, revenue consists of the $2.8 million in license agreement revenue associated with the GSK License Agreement. For the nine months ended September 30, 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.

Previous wording

Cost of Product Revenue. Cost of product revenue for the six months ended June 30, 2023 consists primarily of distribution, freight, and royalty costs associated with BREXAFEMME.

Current wording

Cost of Product Revenue. Cost of product revenue for the nine months ended September 30, 2023 consists primarily of distribution, freight, and royalty costs associated with BREXAFEMME.

Previous wording

Research and Development. For the three months ended June 30, 2024, research and development expenses decreased to $6.8 million compared to $7.0 million for the three months ended June 30, 2023. The decrease of $0.2 million, or 3%, for the three months ended June 30, 2024, was primarily driven by a decrease of $1.1 million in clinical expense and a decrease of $0.3 million in salaries primarily associated with medical affairs, offset in part by an increase of $0.7 million in chemistry, manufacturing, and controls (CMC) expense and an increase of $0.5 million in preclinical expense.

Current wording

Research and Development. For the nine months ended September 30, 2024, research and development expenses increased to $22.1 million compared to $20.3 million for the nine months ended September 30, 2023. The increase of $1.7 million, or 9%, for the nine months ended September 30, 2024, was primarily driven by an increase of $4.4 million in CMC expense and an increase of $1.8 million in preclinical expense, offset in part by a decrease of $3.5 million in clinical expense and a decrease of $1.0 million in salaries primarily associated with medical affairs.

Previous wording

The $2.2 million increase in CMC expense is primarily associated with a $1.1 million expense for drug product purchased in the current period and a $1.4 million increase in expense associated with manufacturing costs for SCY-247 and ibrexafungerp. The $0.8 million increase in preclinical expense for the three months ended June 30, 2024 was primarily associated with certain preclinical costs associated with SCY-247. The $1.9 million decrease in clinical expense was primarily due to a $0.8 million decrease in expense associated with a Phase 1 study of oral ibrexafungerp that was substantially completed in the prior period and is intended to support the potential NDA filing for the treatment of IC, a $0.8 million decrease in clinical expense for the MARIO study, and a $0.3 million decrease in other clinical expense.

Current wording

The $4.4 million increase in CMC expense is primarily associated with a $1.5 million expense for drug product purchased in the current period and a $2.6 million increase in expense associated with the manufacturing of drug product for SCY-247 and ibrexafungerp. The $1.8 million increase in preclinical expense was primarily associated with certain preclinical costs associated with the continued development of SCY-247. The $3.5 million decrease in clinical expense was primarily due to a $2.2 million decrease in clinical expense for the Phase 3 MARIO study, a $0.8 million decrease in expense associated with a Phase 1 study of oral ibrexafungerp that was substantially completed in the prior period and is intended to support the potential NDA filing for the treatment of IC, and a $0.6 million decrease in clinical expense associated with the Phase 1 lactation study.

Previous wording

Selling, General & Administrative. For the six months ended June 30, 2024, selling, general and administrative expenses decreased to $6.8 million from $12.3 million for the six months ended June 30, 2023. The decrease of $5.5 million, or 44%, for the six months ended June 30, 2024, was primarily driven by a decrease of $4.2 million in professional fees and a decrease of $0.7 million in commercial expense due to the costs incurred in the prior comparable period associated with BREXAFEMME. The $4.2 million decrease in professional fees was primarily due to a $3.1 million expense incurred during the prior period for business development associated with the GSK License Agreement, a $0.7 million decrease in legal costs associated with the GSK License Agreement, and a $0.5 million expense recognized in the prior period to write off a deferred asset for certain commitment fees associated with the Loan Agreement.

Current wording

Selling, General & Administrative. For the nine months ended September 30, 2024, selling, general and administrative expenses decreased to $9.7 million from $17.3 million for the nine months ended September 30, 2023. The decrease of $7.6 million, or 44%, for the nine months ended September 30, 2024, was primarily driven by a decrease of $5.7 million in professional fees, a decrease of $1.2 million in commercial expense due to the costs incurred in the prior period associated with BREXAFEMME, and a net decrease of $0.7 million in other selling, general, and administrative expense. The $5.7 million decrease in professional fees was primarily due to a $3.1 million expense incurred during the prior period for business development associated with the GSK License Agreement, a $0.8 million nonrecurring legal expense incurred in the prior period, a $0.7 million decrease in legal costs associated with the GSK License Agreement, and a $0.5 million expense recognized in the prior period to write off a deferred asset for certain commitment fees associated with the Loan Agreement.

Previous wording

Amortization of Debt Issuance Costs and Discount. For the six months ended June 30, 2024 and 2023, we recognized $0.8 million and $2.3 million in amortization of debt issuance costs and discount. The decrease of $1.4 million, or 64%, was primarily driven by the recognition, in the prior period, of $2.0 million in amortization for the remaining debt issuance costs and discount associated with the Loan Agreement which was fully paid in May 2023. The debt issuance costs and discount for our March 2019 convertible notes primarily consisted of an allocated portion of advisory fees and other issuance costs and the initial fair value of the derivative liability.

Current wording

52%, was primarily driven by the recognition, in the prior period, of $2.0 million in amortization for the remaining debt issuance costs and discount associated with the Loan Agreement which was fully paid in May 2023. The debt issuance costs and discount for our March 2019 convertible notes primarily consisted of an allocated portion of advisory fees and other issuance costs and the initial fair value of the derivative liability.

Previous wording

Interest Income. For the three months ended June 30, 2024 and 2023, we recognized $1.1 million and $0.7 million, respectively, in interest income; the increase was primarily due to the increase in the interest rates on our money market funds and investments.

Current wording

Interest Income. For the nine months ended September 30, 2024 and 2023, we recognized $3.4 million and $2.6 million in interest income, respectively. The increase was primarily due to the interest income being earned on our money market funds and investments for the full period in 2024.

Previous wording

Interest Expense. For the three months ended June 30, 2024 and 2023, we recognized $0.2 million and $1.2 million, respectively. The decrease in interest expense was primarily due to the repayment of the Loan Agreement in May 2023.

Current wording

Interest Expense. For the nine months ended September 30, 2024 and 2023, we recognized $0.6 million and $2.9 million in interest expense, respectively. The decrease in interest expense was primarily due to the repayment of the Loan Agreement in May 2023.

Previous wording

Warrant Liabilities Fair Value Adjustment. For the three months ended June 30, 2024 and 2023, we recognized a loss of $5.8 million and a gain of $8.2 million, respectively, in the fair value adjustment related to the warrant liabilities primarily due to the increase and decrease in our stock price during the periods, respectively.

Current wording

Warrant Liabilities Fair Value Adjustment. For the nine months ended September 30, 2024 and 2023, we recognized a gain of $10.6 million and a loss of $6.0 million, respectively, in the fair value adjustment related to the warrant liabilities primarily due to the decrease and increase in our stock price during the periods, respectively.

Previous wording

Derivative Liabilities Fair Value Adjustment. For the six months ended June 30, 2024 and 2023, we recognized a gain of $0.2 million and a loss of $0.4 million, respectively, in the fair value adjustment related to the derivative liabilities primarily due to the decrease and increase in our stock price during the periods, respectively.

Current wording

Derivative Liabilities Fair Value Adjustment. For the nine months ended September 30, 2024 and 2023, we recognized a gain of $0.2 million and a loss of $0.2 million, respectively, in the fair value adjustment related to the derivative liabilities primarily due to the decrease and increase in our stock price during the periods, respectively.

Previous wording

As of June 30, 2024, we had cash and cash equivalents and investments of $83.7 million, compared to cash and cash equivalents and short-term investments of $98.0 million as of December 31, 2023. We believe our capital resources are sufficient to fund our on-going operations for a period of at least 12 months subsequent to the issuance of the accompanying unaudited condensed consolidated financial statements. As of June 30, 2024, our accumulated deficit was $369.3 million.

Current wording

As of September 30, 2024, we had cash and cash equivalents and investments of $84.9 million, compared to cash and cash equivalents and short-term investments of $98.0 million as of December 31, 2023. We believe our capital resources are sufficient to fund our on-going operations for a period of at least 12 months subsequent to the issuance of the accompanying unaudited condensed consolidated financial statements. As of September 30, 2024, our accumulated deficit was $372.1 million.

Previous wording

The following table sets forth the significant sources and uses of cash for the six months ended June 30, 2024 and 2023 (in thousands):

Current wording

The following table sets forth the significant sources and uses of cash for the nine months ended September 30, 2024 and 2023 (in thousands):

Previous wording

The $70.3 million decrease in net cash (used in) provided by operating activities for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023 was primarily due to the $90.0 million upfront receipt from the closing of the GSK License Agreement in the prior period, the continued development costs associated with SCY-247 and ibrexafungerp, and the payment of the deferred fees associated with Amplity in the current period.

Current wording

The $82.0 million decrease in net cash (used in) provided by operating activities for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023 was primarily due to the $115.0 million in upfront and development milestones received under the GSK License Agreement in the prior period and the continued development costs associated with SCY-247 and ibrexafungerp in the current period, offset in part by the $10.0 million development milestone received under the GSK License Agreement in the current period.

Previous wording

Net cash used in operating activities of $14.9 million for the six months ended June 30, 2024, primarily consisted of the $14.0 million net loss adjusted for non-cash charges that included the gain on change in fair value of the warrant liabilities of $3.8 million, stock-based compensation expense of $1.5 million, and amortization of debt issuance costs and discount of $0.8 million, partially offset by a net favorable change in operating assets and liabilities of $1.4 million. The net favorable change in operating assets and liabilities was due to a net decrease in operating liabilities of $4.8 million and by a net decrease of $6.2 million in operating assets. The net $6.2 million decrease in operating assets is primarily due to a $2.2 million decrease in the license agreement receivable associated with the License Agreement with GSK which was collected in the current period and a $4.1 million decrease in prepaid expenses, other assets, deferred costs, and other. The $4.1 million decrease in prepaid expenses, other assets, deferred costs, and other was primarily due to the collection of a $4.4 million unbilled receivable in the current period from GSK.

Current wording

Net cash used in operating activities of $14.1 million for the nine months ended September 30, 2024, primarily consisted of the $16.9 million net loss adjusted for non-cash charges that included the gain on change in fair value of the warrant liabilities of $10.6 million, stock-based compensation expense of $2.4 million, and amortization of debt issuance costs and discount of $1.3 million, partially offset by a net favorable change in operating assets and liabilities of $10.8 million. The net favorable change in operating assets and liabilities of $10.8 million is due to a favorable change of $16.2 million due to the decrease in operating assets, offset by an unfavorable change of $5.4 million due to the decrease in operating liabilities The net $16.2 million decrease in operating assets is primarily due to a decrease of $9.9 million in the license agreement contract asset given the receipt of the $10.0 million development milestone associated with the GSK License Agreement in the current period, a $2.3 million decrease in the license agreement receivable associated with the GSK License Agreement which was collected in the current period, and a $4.0 million decrease in prepaid expenses, other assets, deferred costs, and other. The $4.0 million decrease in prepaid expenses, other assets, deferred costs, and other was primarily due to the collection of a $4.4 million unbilled receivable in the current period from GSK. The net unfavorable change of $5.4 million in operating liabilities is primarily due to the $2.2 million decrease in accounts payable and a $2.0 million decrease in accrued expenses primarily due to the $1.0 million decrease in accrued research and development expenses.

Previous wording

Net cash provided by operating activities of $55.5 million for the six months ended June 30, 2023, primarily consisted of the $88.4 million net income adjusted for non-cash charges that included the loss on change in fair value of the warrant liabilities of $13.5 million, stock-based compensation expense of $1.4 million, and amortization of debt issuance costs and discount of $2.3 million, partially offset by a net unfavorable change in operating assets and liabilities of $51.7 million. The net unfavorable change in operating assets and liabilities was due to a net decrease in operating liabilities of $2.5 million and by a net increase of $49.2 million in operating assets. The net $49.2 million increase in operating assets is primarily due to a $19.2 million increase in license agreement contract asset associated with the License Agreement with GSK, an increase of $25.0 million in license agreement receivable associated with the License Agreement with GSK, a $4.6 million increase in inventory for raw material purchased in the current period, and a net increase in prepaid expenses, other assets, and other and accounts receivable of $0.4 million. The $2.5 million decrease in accounts payable, accrued expenses, deferred revenue, other liabilities, and other was primarily due to the decrease of $5.8 million in other liabilities associated with the deferred fees due to Amplity that were fully paid as of February 2023, offset by a $4.4 million increase in deferred revenue associated with the License Agreement with GSK.

Current wording

Net cash provided by operating activities of $67.9 million for the nine months ended September 30, 2023, primarily consisted of the $86.6 million net income adjusted for non-cash charges that included the loss on change in fair value of the warrant liabilities of $6.0 million, stock-based compensation expense of $2.1 million, and amortization of debt issuance costs and discount of $2.6 million, partially offset by a net unfavorable change in operating assets and liabilities of $30.3 million. The net unfavorable change in operating assets and liabilities was due to a net decrease in operating liabilities of $0.4 million and by a net increase of $30.0 million in operating assets. The net $30.0 million increase in operating assets is primarily due to a $19.3 million increase in license agreement contract asset associated with the GSK License Agreement, a $7.4 million increase in inventory for raw material purchased in the current period, and an increase in accounts receivable and license agreement receivable of $2.5 million. The $0.4 million decrease in accounts payable, accrued expenses, deferred revenue, other liabilities, and other was primarily due to the decrease of $5.8 million in other liabilities associated with the deferred fees due to Amplity that were fully paid as of February 2023 and a decrease of $2.5 million in accounts payable, offset primarily by a $4.1 million increase in deferred revenue associated with the GSK License Agreement and a $3.9 million increase in accrued expenses due to the $3.5 million increase in expense for product recall.

Previous wording

Net cash provided by investing activities of $6.8 million for the six months ended June 30, 2024 consisted of purchases and maturities of investments of $10.7 million and $17.5 million, respectively.

Current wording

Net cash provided by investing activities of $8.8 million for the nine months ended September 30, 2024 consisted of purchases and maturities of investments of $28.0 million and $36.8 million, respectively.

Previous wording

Net cash used in investing activities of $6.4 million for the six months ended June 30, 2023 consisted of purchases and maturities of short-term investments of $26.9 million and $20.6 million, respectively.

Current wording

Net cash used in investing activities of $32.7 million for the nine months ended September 30, 2023 consisted of purchases and maturities of investments of $73.3 million and $40.6 million, respectively.

Previous wording

Net cash used in financing activities of $36.4 million for the six months ended June 30, 2023, consisted primarily of the full repayment of the Loan Agreement with Hercules and SVB in May 2023.

Current wording

Net cash used in financing activities of $36.6 million for the nine months ended September 30, 2023, consisted primarily of the full repayment of the Loan Agreement with Hercules and SVB in May 2023.

Previous wording

our ability to successfully achieve the development, regulatory, and commercial milestones under our License Agreement with GSK;

Current wording

our ability to successfully achieve the development, regulatory, and commercial milestones under our GSK License Agreement;

Previous wording

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

Current wording

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