SCYNEXIS INC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Description of Business and Basis of Preparation

Organization

SCYNEXIS, Inc. ("SCYNEXIS" or the “Company”) is a Delaware corporation formed on November 4, 1999. SCYNEXIS is a biotechnology company, headquartered in Jersey City, New Jersey, and is pioneering innovative medicines to overcome and prevent difficult-to-treat and drug-resistant infections. The Company is developing its proprietary class of enfumafungin-derived antifungal compounds (“fungerps") as broad-spectrum, systemic antifungal agents for multiple fungal indications. Ibrexafungerp is the first representative of this novel class of antifungals with additional assets from the “fungerp” family under development, including SCY-247 which is currently in clinical stages of development. In June 2021, the U.S. Food and Drug Administration (“FDA”) approved BREXAFEMME (ibrexafungerp tablets) for treatment of patients with vulvovaginal candidiasis, also known as vaginal yeast infection, and in December 2022, the Company announced that the FDA approved a second indication for BREXAFEMME for the reduction in the incidence of recurrent vulvovaginal candidiasis.

As previously disclosed, the Company and GlaxoSmithKline Intellectual Property (No. 3) Limited (“GSK”) entered into an exclusive license agreement dated March 30, 2023, which was subsequently amended by a binding memorandum of understanding dated December 26, 2023 (collectively, the “GSK License Agreement”).

As previously disclosed, the Phase 3 MARIO study of ibrexafungerp for the treatment of invasive candidiasis was placed on clinical hold in September 2023 following identification of a potential cross-contamination at the facility of the drug substance manufacturer in light of draft FDA guidance recommending that certain drugs be manufactured in separate facilities. One of these drugs, a non-antibiotic beta lactam drug called ezetimibe, was being manufactured at the same facility as ibrexafungerp. The Company has since moved the manufacture of ibrexafungerp to a new facility and has been working on generating new material with a goal of lifting the clinical hold and resuming the MARIO study. New clinical supplies to enable the re-start of the MARIO study have been manufactured and information supporting the use of these supplies to re-start clinical activities was provided to the FDA.

On April 24, 2025, the FDA notified the Company that the clinical hold on ibrexafungerp had been lifted and concluded that the Phase 3 MARIO study could resume. Subsequently, on April 28, 2025, GSK notified the Company of their intention to immediately terminate the study based on its purported rights under the GSK License Agreement to unilaterally terminate the MARIO study. GSK claimed that, as a result, it would have no obligations to pay any further development milestones related to the MARIO study, including $30.0 million tied to the resumption and continuation of the study. The Company does not believe that GSK currently has the right to unilaterally terminate the MARIO study under the GSK License Agreement.

Pursuant to the GSK License Agreement, the Company is responsible for conducting the MARIO study. The GSK License Agreement provides that certain material changes to the study, including termination, require mutual written agreement of both parties. The Company has not provided such agreement. The GSK License Agreement only provides GSK with a unilateral termination right in the event that dosage of the first new patient in MARIO had not occurred by a particular date. The date was set as April 26, 2025, subject to automatic extension of up to two months, or June 26, 2025, if the implementation of additional in process control method validation was included in the amended IND or required by GSK, resulting in additional time in the manufacturing process.

The Company is seeking to resolve this disagreement with GSK. Meanwhile, the Company is reinitiating the MARIO study, with the goal of dosing the first new patient by June 26, 2025, collecting its development milestones from GSK, and ultimately completing the study.

The Company remains committed to developing novel antifungal solutions to the rising threat of deadly fungal infections including invasive candidiasis for which there are limited treatment options and significant concerns for emergence of resistances, as highlighted by the WHO in their call to industry and other parties for research, development and public health action in this area of unmet need.

The Company had an accumulated deficit of$381.9 million at March 31, 2025. The Company's capital resources primarily comprised cash and cash equivalents and investments of$53.8 million at March 31, 2025. While the Company believes its capital resources are sufficient to fund the Company’s on-going operations for a period of at least 12 months subsequent to the issuance of the accompanying unaudited condensed consolidated financial statements, the Company's liquidity could be materially affected over this period by: (1) its ability to raise additional capital through equity offerings, debt financings, or other non-dilutive third-party funding; (2) costs associated with new or existing strategic alliances, or licensing and collaboration arrangements; (3) negative regulatory events or unanticipated costs related to its development of SCY-247 and ibrexafungerp; (4) its ability to successfully achieve the development, regulatory, and commercial milestones under its GSK License Agreement; and (5) any other unanticipated material negative events or costs. One or more of these events or costs could materially affect the Company’s liquidity. If the Company is unable to meet its obligations when they become due, the Company may have to delay expenditures, reduce the scope of its research and development programs, or make significant changes to its operating plan. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. Intercompany balances and transactions are eliminated in consolidation.

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates and judgments include: determination of the fair value of stock-based compensation grants; the estimate of services and effort expended by third-party research and development service providers used to recognize research and development expense; and the estimates and assumptions utilized in measuring the fair value of the warrant liability each reporting period.

Unaudited Condensed Consolidated Financial Information

The accompanying unaudited condensed consolidated financial statements and notes have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”), as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (the “Codification” or “ASC”) for interim financial information. In the opinion of management, the interim financial information includes all adjustments of a normal recurring nature necessary for a fair presentation of the results of operations, financial position, and cash flows. The results of operations for the three months ended March 31, 2025, are not necessarily indicative of the results for the full year or the results for any future periods. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and notes set forth in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 12, 2025.

2. Summary of Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements and notes follow the same significant accounting policies as those described in the notes to the audited consolidated financial statements of the Company for the year ended December 31, 2024, except as described below.

Basic and Diluted Net (Loss) Income per Share of Common Stock

The Company calculates net (loss) income per common share in accordance with ASC 260, Earnings Per Share. Basic net (loss) income per common share for the three months ended March 31, 2025 and 2024 was determined by dividing net (loss) income applicable to common stockholders by the weighted average number of common shares outstanding during the period. Per ASC 260, Earnings Per Share, the weighted average number of common shares outstanding utilized for determining the basic net (loss) income per common share for the three months ended March 31, 2025 and 2024 includes the outstanding prefunded warrants to purchase 7,516,267 and 3,200,000 shares of common stock issued in the April 2022 public offering and December 2020 public offering, respectively. Diluted net (loss) income per common share for the three months ended March 31, 2025 and 2024 was determined as follows (in thousands, except share and per share amounts):

The following potentially dilutive shares of common stock and outstanding restricted stock units that contain certain performance contingencies have not been included in the computation of diluted net (loss) income per share for the three months ended March 31, 2025 and 2024, as the result would be anti-dilutive or the performance contingencies have not been met:

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures, which introduced new guidance on disclosures for reportable segments and significant segment expenses, including for entities with asingle reportable segment. This guidance is effective for the Company for annual reporting periods beginning January 1, 2024 and interim periods beginning January 1, 2025. The Company adopted ASU 2023-07 in the prior annual reporting period.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures, which introduced new guidance on disclosures for income taxes, including enhancements to the rate reconciliation and income taxes paid disclosures. This guidance is effective for the Company for annual reporting periods beginning January 1, 2025. ASU 2023-09 didnot have a material impact on the unaudited condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), Disaggregation of Income Statement Expenses, which introduced new guidance on disclosures for specified costs and expenses. This guidance is effective for the Company for annual reporting periods beginning January 1, 2027. The Company is currently evaluating the impact ASU 2024-03 will have on its consolidated financial statements.

3. Investments

The following table summarizes the investments at March 31, 2025 (in thousands):

The Company carries investments at amortized cost. As of March 31, 2025 and December 31, 2024, the fair value of the corporate and agency bonds totals $46.9 million and $59.1 million, respectively, which is determined based on “Level 2” inputs, which consist of quoted prices for similar assets in active markets. The Company has evaluated the unrealized loss position in the corporate and agency bonds as of the balance sheet dates and did not consider it to be indicative of an other-than-temporary impairment as the securities are highly-rated and the Company expects to realize the full principal amount at maturity.

4. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):

5. Accrued Expenses

Accrued expenses consisted of the following (in thousands):

6. Borrowings and Contingencies

March 2019 Note Purchase Agreement

On March 7, 2019, the Company entered into a Senior Convertible Note Purchase Agreement (the “March 2019 Note Purchase Agreement”) with Puissance. Pursuant to the March 2019 Note Purchase Agreement, on March 7, 2019, the Company issued and sold to Puissance $16.0 million aggregate principal amount of its 6.0% Senior Convertible Notes due 2025 (“March 2019 Notes”), resulting in $14.7 million in net proceeds after deducting $1.3 millionfor an advisory fee and other issuance costs. In April 2019, Puissance converted $2.0 million of the March 2019 Notes for 162,600 shares of common stock. The March 2019 Notes matured on March 15, 2025 and the Company repaid the $14.0 million due to Puissance.

As of December 31, 2024, the Company’s March 2019 Notes consist of the convertible debt balance of $13.7 million. For the three months ended March 31, 2025 and 2024, the Company recognized $0.3 million and $0.4 million in amortization of debt issuance costs and discount related to the March 2019 Notes, respectively. The March 2019 Notes bore interest at a rate of 6.0% per annum payable semiannually in arrears on March 15 and September 15 of each year.

Legal Proceedings

On November 7, 2023, a securities class action was filed by Brian Feldman against the Company and certain of the Company's executives in the United States District Court, District of New Jersey, alleging that, during the period from March 31, 2023 to September 22, 2023, the Company made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company's business, operations, and prospects, alleging specifically that the Company failed to disclose to investors: (1) that the equipment used to manufacture ibrexafungerp was also used to manufacture a non-antibacterial beta-lactam drug substance, presenting a risk of cross-contamination; (2) that the Company did not have effective internal controls and procedures, as well as adequate internal oversight policies to ensure that its vendor complied with current Good Manufacturing Practices ("cGMP"); (3) that, due to the substantial risk of cross-contamination, the Company were reasonably likely to recall its ibrexafungerp tablets and halt its clinical studies; and (4) as a result of the foregoing, the Company's statements about its business, operations, and prospects were materially misleading and/or lacked a reasonable basis. The complaint seeks unspecified damages, interest, fees and costs on behalf of all persons and entities who purchased and/or acquired shares of the Company's common stock between March 31, 2023 to September 22, 2023. The Company has filed a motion to dismiss. On May 1, 2024, and again on June 4, 2024, purported shareholder derivative complaints were filed in the United States District Court, District of New Jersey. The complaints name the Company’s directors and certain of its officers and assert state and federal claims based on the same alleged misstatements as the securities class action complaint. These cases seek unspecified damages, disgorgement, unspecified equitable relief, interest, fees and costs. The complaints have been consolidated and are currently stayed. The Company disagrees with the allegations and intends to defend these litigations vigorously. The Company has not recognized any expense for these contingencies.

7. Stockholders’ Equity

Authorized, Issued, and Outstanding Common Stock

The Company’s authorized common stock has a par value of $0.001 per share and consists of 150,000,000 shares as of March 31, 2025, and December 31, 2024;39,020,274 and 37,973,991 shares were issued and outstanding at March 31, 2025 and December 31, 2024, respectively.

The following table summarizes common stock share activity for the three months ended March 31, 2025 and 2024 (dollars in thousands):

Shares Reserved for Future Issuance

The Company had reserved shares of common stock for future issuance as follows:

Warrants Associated with the April 2022 Public Offering

The fair value of the April 2022 outstanding warrants have been determined using the Black-Scholes valuation model, and the changes in the fair value are recorded in the accompanying unaudited condensed consolidated statements of operations. The outstanding warrants associated with the April 2022 public offering meet the definition of a derivative pursuant to ASC 815, Derivatives and Hedging, and do not meet the derivative scope exception given the warrants do not qualify under the indexation guidance. As a result, the April 2022 public offering warrants were initially recognized as liabilities and measured at fair value using the Black-Scholes valuation model. For the three months ended March 31, 2025 and 2024, the Company recognized gains of $2.9 million and $9.6 million, respectively. As of March 31, 2025 and December 31, 2024, the fair value of the warrant liabilities was $5.1 million and $8.0 million, respectively.

8. Stock-based Compensation

2024 Equity Incentive Plan

In April 2024, the Company’s board of directors adopted the 2024 Equity Incentive Plan (“2024 Plan”), which was subsequently approved by the Company’s stockholders and became effective on June 19, 2024. The 2024 Plan is the successor to the 2014 Plan. The 2014 Plan terminated on February 11, 2024 and no new grants may be made under the 2014 Plan after that date, although all outstanding awards granted under the 2014 Plan will continue to be subject to the terms and conditions as set forth in the agreements evidencing such awards and the terms of the 2014 Plan. As of March 31, 2025, there were 3,903,948 shares of common stock available for future issuance under the 2024 Plan.

2015 Inducement Award Plan

As of March 31, 2025, there were 637,050 shares of common stock available for future issuance under the Company’s 2015 Inducement Award Plan (“2015 Plan”). During both the three months ended March 31, 2025 and 2024, there were options to purchase zero shares of the Company’s common stock granted under the 2015 Plan.

The activity for the Company’s 2024 Plan, 2014 Plan, and 2015 Plan, for the three months ended March 31, 2025, is summarized as follows:

Restricted stock unit (“RSU”) activity under the 2024 Plan, 2014 Plan, and 2015 Plan for the three months ended March 31, 2025, is summarized as follows:

The fair value of RSUs is based on the market price of the Company’s common stock on the date of grant. RSUs generally vest 33% annually over athree-year period from the date of grant. Upon vesting, the RSUs generally are net share settled to cover the required withholding tax with the remaining shares issued to the holder. The Company recognizes compensation expense for such awards ratably over the corresponding vesting period.

Stock-based Compensation Cost

The stock-based compensation cost that has been charged against income for stock awards was $0.8 million and $0.7 million for the three months ended March 31, 2025 and 2024, respectively. Stock-based compensation expense related to stock awards is included in the following line items in the accompanying unaudited condensed consolidated statements of operations (in thousands):

9. Fair Value Measurements

The carrying amounts of certain financial instruments, including cash and cash equivalents, restricted cash, investments, accounts receivable, prepaid expenses and other current assets, accounts payable, and accrued expenses approximate their respective fair values due to the short-term nature of such instruments.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. This determination requires significant judgments to be made. The following table summarizes the conclusions reached as of March 31, 2025 and December 31, 2024 for financial instruments measured at fair value on a recurring basis (in thousands):

The Company measures cash equivalents at fair value on a recurring basis. The fair value of cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. As of March 31, 2025, the cash and cash equivalents of $6.9 million and the restricted cash balances of $0.4 million and $0.1 million within short and long term on the unaudited condensed consolidated balance sheet, respectively, sum to the total of $7.5 million as shown in the unaudited condensed consolidated statement of cash flows.

Level 3 financial liabilities consist of the warrant liability for which there is no current market such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. The Company uses the Black-Scholes option valuation model to value the Level 3 warrant liability at inception and on subsequent valuation dates. This model incorporates transaction details such as the Company’s stock price, contractual terms, maturity, risk free rates, as well as volatility. The unobservable input for all of the Level 3 warrant liability includes volatility. The historical and implied volatility of the Company, using its closing common stock prices and market data, is utilized to reflect future volatility over the expected term of the warrants. At March 31, 2025 and December 31, 2024, the Level 3 volatilities utilized in the Black-Scholes model to fair value the warrant liability was 82.2% and 83.4%, respectively.

A reconciliation of the beginning and ending balances for liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) is as follows (in thousands):

10. Revenue

GSK License Agreement

On March 30, 2023 (as amended in December 2023), the Company entered into the GSK License Agreement. Pursuant to the terms of the GSK License Agreement, the Company granted GSK an exclusive (even as to the Company and its affiliates), royalty-bearing, sublicensable license for the development, manufacture, and commercialization of ibrexafungerp, including the approved product BREXAFEMME, for all indications, in all countries other than Greater China and certain other countries already licensed to third parties (the “GSK Territory”). If the existing licenses granted to or agreements with third parties are terminated with respect to any country, GSK will have an exclusive first right to negotiate with the Company to add those additional countries to the GSK Territory. The parties closed the transactions contemplated by the GSK License Agreement in May 2023.

The Company evaluated the GSK License Agreement in accordance with ASC 606 as it includes a customer-vendor relationship as defined under ASC 606 and meets the criteria to be considered a contract. The Company 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.

As of both March 31, 2025 and December 31, 2024, the Company maintains a license agreement contract asset of $9.5 million, which is associated with a success-based milestone associated with the ongoing MARIO study. The Company believes that the remaining $9.5 million license agreement contract asset as of March 31, 2025 is collectible and not impaired given the Company's probability assessment of achieving the milestone as defined in the GSK License Agreement, ongoing development activities, and other information available to the Company. If the disagreement with GSK over the MARIO study is not resolved, the Company may need to recognize a reversal of the $9.5 million license agreement contract asset and corresponding revenue and recognize the remaining $2.9 million of total deferred revenue in revenue in future periods which could materially impact the financial statements. It also creates additional uncertainty of the future commercialization of ibrexafungerp associated with the invasive candidiasis indication. See Note 1 for further details.

The Company reassessed the transaction price as of March 31, 2025, including estimated variable consideration included in the transaction price and the remaining milestones continued to be constrained.

The Company recognizes the revenue associated with the MARIO study over time using an input method. The input method is based on the actual costs incurred as a percentage of total budgeted costs towards satisfying the performance obligation as this method provides the most faithful depiction of the Company’s performance in transferring control of the services promised to GSK and represents the Company’s best estimate of the period of the obligation.

For the three months ended March 31, 2025 and 2024, the Company recognized $0.3 million and $1.4 million of license agreement revenue, respectively. As of both March 31, 2025 and December 31, 2024, there was $1.6 million and $1.3 million of current and long-term deferred revenue, respectively, which is expected to be recognized by the end of 2026.

11. Segments

The Company hasone reportable segment which is drug development. The Company primarily derives revenue from its licensing of developed drugs in difficult-to-treat and drug-resistant infections and manages the business activities on a consolidated basis. The Company’s chief operating decision maker ("CODM") is the Chief Executive Officer. The CODM assesses performance for the drug development segment and decides how to allocate resources based on consolidated net (loss) income that also is reported on the consolidated statement of operations. The CODM uses budget, forecast, and actual results of the consolidated net (loss) income in deciding what drug development programs to further progress with its existing and planned capital resources. The measure of segment assets is reported on the balance sheet as consolidated assets.

The table below provides information about the Company's drug development segment and includes the reconciliation to consolidated net (loss) income for the three months ended March 31, 2025 and 2024, respectively (in thousands):

(1) Other segment (income) expense includes other research and development expense, amortization of debt issuance costs and discount, warrant liability fair value adjustment, and the derivative liability fair value adjustment.