Scilex Holding Co
For the period ended Sep 30, 2024. Filed Jan 17, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Jan 17, 2025
SCLX$1.700.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-13.
0000950170-24-096199
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2025-01-17.
0000950170-25-006755
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 161 previous paragraphs and 181 current paragraphs.
86 unchanged; 59 reworded; 35 added; 15 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 6 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (35)
Current report
Recent Developments
Current report
Semnur Merger Agreement
Current report
On August 30, 2024, Semnur Pharmaceuticals, Inc. (“Semnur”) entered into an agreement and plan of merger (the “Semnur Merger Agreement”) with Denali Capital Acquisition Corp. (“Denali”) and Denali Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of Denali (“Denali Merger Sub”). The Semnur Merger Agreement provides that, among other things, (i) on the terms and subject to the conditions set forth therein, Denali Merger Sub will merge with and into Semnur, with Semnur surviving as a wholly owned subsidiary of Denali (the “Semnur Merger”), and (ii) prior to the closing of the Semnur Merger, Denali will migrate to and domesticate as a Delaware corporation in accordance with Section 388 of the General Corporation Law of the State of Delaware, as amended (the “DGCL”), and de-register in the Cayman Islands in accordance with Section 206 of the Cayman Companies Act (the “Domestication”). Upon the closing of the Semnur Merger, it is anticipated that Denali will change its name to “Semnur Pharmaceuticals, Inc.” (“New Semnur”). Shares of Denali common stock following the Domestication are hereinafter referred to as “New Semnur Common Shares”. Shares of Denali Series A preferred stock following the Domestication are hereinafter referred to as “New Semnur Preferred Shares”. Warrants to purchase New Semnur Common Shares following the Domestication are hereinafter referred to as “New Semnur Warrants”.
Current report
In accordance with the terms and subject to the conditions of the Semnur Merger Agreement, following the Domestication and at the effective time of the Semnur Merger (the “Effective Time”): (i) each share of common stock, par value $0.00001 per share (the “Semnur Common Stock”), of Semnur, issued and outstanding immediately prior to the Effective Time will be automatically converted into the right to receive, without interest, a number of New Semnur Common Shares equal to the Exchange Ratio (as defined in the Semnur Merger Agreement); (ii) each share of Series A preferred stock of Semnur issued and outstanding immediately prior to the Effective Time will be automatically converted into the right to receive, without interest, (a) one New Semnur Preferred Share and (b) one-tenth of one New Semnur Common Share, and (iii) subject to Denali’s receipt of the Option Exchange Approval (as defined in the Semnur Merger Agreement), each option to purchase a share of Semnur Common Stock that is then outstanding shall be converted into the right to receive an option to purchase a number of New Semnur Common Shares as determined by the Exchange Ratio upon substantially the same terms and conditions as are in effect with respect to such option immediately prior to the Effective Time, with the exercise price thereof adjusted by the Exchange Ratio. For purposes of the Semnur Merger Agreement, Semnur’s equity value is $2,500,000,000.
Current report
Issuance of Tranche B Notes
Current report
On October 7, 2024, we entered into a securities purchase agreement (the “Tranche B Securities Purchase Agreement”) with certain institutional investors (collectively, “Investor”) and Oramed (together with the Investor, the “Tranche B Noteholders”), to refinance a portion of the Oramed Note and pay off certain other indebtedness. Pursuant to the Tranche B Securities Purchase Agreement, we agreed to issue and sell, in a registered offering by us directly to the Tranche B Noteholders: (i) a new tranche B of senior secured convertible notes in the aggregate principal amount of $50,000,000 (the “Tranche B Notes”), which notes will mature on the two-year anniversary of the issuance date and will be convertible into shares of Common Stock at a conversion price equal to $1.09 per share (which was automatically reduced to $1.04 per share of Common Stock subsequent to the December RDO (as defined below) in accordance with the terms of such notes) and (ii) warrants (the “October Common Warrants”) to purchase up to 7,500,000 shares of Common Stock directly to the Tranche B Noteholders. We received in exchange for the issuance of the Tranche B Notes to Investor an aggregate amount in cash of $22,500,000, excluding fees and expenses payable by us. We received from Oramed in consideration for the Tranche B Notes issued to Oramed an exchange and reduction of the principal balance under the Oramed Note of $22,500,000.
Current report
The October Common Warrants are immediately exercisable for cash at an exercise price equal to $1.09 per share of Common Stock (which was automatically reduced to $1.04 per share of Common Stock subsequent to the December RDO (as defined below) in accordance with the terms of such warrants) and will expire five years from the issuance date. The October Common Warrants issued to Investor are initially exercisable for 3,750,000 shares of Common Stock in the aggregate. The October Common Warrants issued to Oramed are initially exercisable for 3,750,000 shares of Common Stock.
Current report
Pursuant to the terms and conditions contained in the Tranche B Securities Purchase Agreement, we also agreed to reimburse Investor for all reasonable costs and expenses incurred by it or its affiliates in connection with the Tranche B Securities Purchase Agreement, the Tranche B Notes, the October Common Warrants, the Royalty Purchase Agreement and certain other transaction documents, and an aggregate amount of $950,000 non-accountable legal fees of outside counsel and special finance and collateral counsel, which shall be withheld by Investor from its purchase price at the closing of the transaction, less $20,000 previously paid by us. We shall also be responsible for the payment of a $2,000,000 fee to the placement agent in addition to the payment of any placement agent’s reasonable fees, financial advisory fees relating to or arising out of the transactions contemplated by the Tranche B Securities Purchase Agreement. In addition, in conjunction with and pursuant to the Letter Agreement, we are also responsible for the payment of legal fees of outside counsel for Oramed relating to or arising out of the transactions contemplated hereby and the payment date extensions described under the Letter Agreement. We shall also be responsible for the payment of any fees of the Agent and the legal fees incurred thereby relating to or arising out of the transactions contemplated by the Tranche B Securities Purchase Agreement.
Current report
In connection with the offering of the Tranche B Notes, we issued to StockBlock Securities LLC (“StockBlock”) and its affiliate, Rodman & Renshaw LLC (the “Placement Agents”) or their respective designees, (i) 2,197,802 shares of Common Stock (the “Placement Agent Shares”) and (ii) Placement Agent Warrants to purchase up to 3,669,724 shares of Common Stock (the “October Placement Agent Warrants”). The Placement Agent Shares are subject to a 120-day lock-up; provided that if the Common Stock is trading at a price per share that is 10% above the $1.09 per share conversion price of the Tranche B Notes during such 120-day period, then the Placement Agents (together) shall be permitted to sell up to 8% of the trading volume of the Common Stock per day. In addition, during such 120-day period, the Placement Agents (whether directly or indirectly through their respective affiliates) shall be prohibited from hedging, pledging or similar transactions and from short-selling our securities, subject to certain exceptions. The October Placement Agent Warrants will have the same terms as the October Common Warrants, except that the Placement Agents have agreed not to exercise the October Placement Agent Warrants for a period of 180 days following the date of issuance.
Current report
In connection with the closing of the transactions contemplated by the Tranche B Securities Purchase Agreement, on October 8, 2024, we and our subsidiary, Scilex Pharmaceuticals Inc. (“Scilex Pharma”), entered into a Purchase and Sale Agreement (the “Royalty Purchase Agreement”) with certain institutional investors (collectively, the “Royalty Investors”) and Oramed (together with the Royalty Investors, the “RPA Purchasers”). Pursuant to the Royalty Purchase Agreement, Scilex Pharma sold to the RPA Purchasers the right to receive 8% of all aggregate net sales worldwide (the “Purchased Receivables”) with respect to ZTlido, SP-103, and any related, improved, successor, replacement or varying dosage forms of the foregoing.
Current report
In full consideration for the sale, transfer, conveyance and granting of the Purchased Receivables, and subject to the terms and conditions set forth in the Royalty Purchase Agreement, the aggregate purchase price for the Purchased Receivables was $5,000,000 (net of expenses of the RPA Purchasers). The Royalty Investors paid to Scilex Pharma an aggregate amount equal to $2,500,000 minus the expenses of the Royalty Investors, and Oramed paid to Scilex Pharma an amount equal to $2,500,000 minus Oramed’s expenses (collectively, the amount so paid by the RPA Purchasers, the “RPA Closing Payment”). Oramed’s portion of the purchase price was paid by exchanging a portion of the outstanding principal balance under the Oramed Note equivalent to its portion of the RPA Closing Payment, which amount extinguished and reduced $2,500,000 of the outstanding balance under the Oramed Note.
Current report
The total net proceeds from the Tranche B Securities Purchase Agreement and Royalty Purchase Agreement were approximately $20,800,000, after deducting the placement agents’ fees and other offering expenses payable by us. We used the net proceeds for repayment and satisfaction of $12,500,000 of the outstanding balance under the Oramed Note, payoff of the Revolving Facility with eCapital Healthcare Corp, satisfaction of certain costs, fees and expenses of the purchasers of the notes and the collateral agent, and the remaining proceeds for our working capital and general corporate purposes.
Current report
Declaration of Preferred Stock Dividend
Current report
On October 27, 2024, our board of directors (the “Board”) declared a stock dividend (the “Dividend”) consisting of an aggregate of 5,000,000 shares (the “Dividend Stock”) of our Series 1 Mandatory Exchangeable Preferred Stock, par value $0.0001 per share, to record holders of our following securities as of the close of business on November 7, 2024 (the “Record Date”): (i) the Common Stock (such record holders, the “Record Common Holders”), (ii) certain warrants to purchase shares of Common Stock that have not been exercised prior to the Record Date (and which have the right to participate in the Dividend pursuant to the terms of their respective warrants, other than, for the avoidance of doubt any warrants to purchase shares of Common Stock with an exercise price of $11.50 per share, and any other warrants that by their terms have not vested and are therefore not entitled to participate in the Dividend) (such warrants, the “Participating Warrants” and such record holders, the “Record Warrant Holders”), (iii) Tranche B Notes issued by us (such notes, the “Participating Notes” and such record holders, the “Record Note Holders”), and (iv) the our Preferred Stock (such record holder, the “Record Preferred Holder” and together with the Record Common Holders, the Record Warrant Holders, and the Record Note Holders, the “Record Holders”). On December 30, 2024, we announced a change in the Record Date for the Dividend from November 7, 2024 to January 28, 2025.
Current report
Subject to the Board’s right to change the Record Date and conditioned upon the effectiveness of the filing of the Certificate of Designation (as defined below) with the Secretary of State of the State of Delaware, the Dividend (unless otherwise determined by the Board) shall be paid on such date to be determined by subsequent resolutions of the Board, which payment date shall be within 60 days following the Record Date (i.e., by March 29, 2025) (such date as determined by the Board, the “Payment Date”) and shall be apportioned on a pro rata basis among the Record Holders in accordance with each Record Holder’s ownership percentage of Common Stock (assuming the full exercise of all Participating Warrants to purchase shares of Common Stock held by the Record Warrant Holders, the conversion of all Participating Notes held by the Record Note Holders and deemed conversion of all outstanding Preferred Stock held by the Record Preferred Holder) as of the Record Date as set forth in the records of our transfer agent (with respect to the Record Common Holders and Record Preferred Holder) and our company (with respect to the Record Warrant Holders and the Record Note Holders) as of the Record Date.
Current report
On October 28, 2024, in connection with the Dividend, the Board filed a Certificate of Designation of Preferences, Rights and Limitations of Series 1 Mandatory Exchangeable Preferred Stock (the “Certificate of Designation”) with the Secretary of State of the State of Delaware, designating 5,000,000 shares of our authorized but unissued preferred stock, par value $0.0001 per share, as Series 1 Mandatory Exchangeable Preferred Stock. Pursuant to the Certificate of Designation, the holders of Series 1 Mandatory Exchangeable Preferred Stock may become entitled to a pro rata portion of the number of shares that represents the lesser of (a) 10% of the shares of the Semnur Common Stock (or such other securities into which or for which such stock may be exchanged or converted), held by us as of immediately prior to the Effective Time (as defined below) (taking into account any adjustment for any stock dividend, stock split, reverse stock split or similar transaction) and (b) that number of shares of Semnur Common Stock (or such other securities into which or for which such stock may be exchanged or converted) equal to $200,000,000 divided by the closing price of such Semnur Common Stock (or such other securities into which or for which such stock may be exchanged or converted) on any national securities exchange on which such shares are listed on the date that is 10 trading days prior to the Determination Date (as defined below), which shares shall be paid from the shares of Semnur
Current report
Common Stock (or such other securities into which or for which such stock may be exchanged or converted) held by us as of immediately prior to the Effective Time (taking into account any adjustment for any stock dividend, stock split, reverse stock split or similar transaction). For purposes of the Certificate of Designation, (a) “Effective Time” means the effective time of the Semnur Merger as determined under the terms of the Semnur Merger Agreement, (b) “Determination Date” means, if the Semnur Common Stock (or such other securities into which or for which such stock may be exchanged or converted) is listed for, and trading on, any national securities exchange, the date that is 15 trading days following the Registration Date, (c) “Registration Date” means the earlier of (i) the Effective Time, at which time the shares of Semnur Common Stock (or such other securities into which or for which such stock has been exchanged or converted) are registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and (ii) the time at which the Registration Statement is declared effective by the Securities and Exchange Commission and (d) “Registration Statement” means a registration statement, whether under the Exchange Act, or the Securities Act, that is filed by Semnur or any successor thereto or affiliate thereof with respect to the registration of the Semnur Common Stock or any securities into which or for which such stock may be exchanged or converted.
Current report
December Registered Direct Offering
Current report
On December 11, 2024, we entered into a securities purchase agreement (the “December Purchase Agreement”) with the investors named therein, pursuant to which we agreed to sell and issue, in a registered direct offering (the “December RDO”): (i) an aggregate of 26,355,347 shares of Common Stock, (ii) pre-funded warrants to purchase up to 2,401,132 shares of Common Stock (the “Pre-Funded Warrants”) and (iii) common warrants to purchase up to 57,512,958 shares of Common Stock (the “December Common Warrants” and together with the Pre-Funded Warrants and the warrants to StockBlock pursuant to certain contractual obligations between us and StockBlock (the “StockBlock Warrants”), the “December Warrants”). The combined offering price (a) per share of Common Stock and accompanying December Common Warrants was $0.590 and (b) per Pre-Funded Warrant and accompanying December Common Warrants was $0.5899. The aggregate gross proceeds to us from the December RDO were approximately $17.0 million, before deducting offering fees and expenses. We currently intend to use the net proceeds from the December RDO for working capital and general corporate purposes, which may include capital expenditures, commercialization expenditures, research and development expenditures, regulatory affairs expenditures, clinical trial expenditures, acquisitions of new technologies and investments, business combinations and the repayment, refinancing, redemption or repurchase of indebtedness or capital stock.
Current report
Amendment to Common Stock Purchase Warrant
Current report
On December 11, 2024, we entered into a warrant amendment (the “Warrant Amendment”) with one of the investors to exercise the outstanding amount of certain warrants that we issued to such investor in the Bought Deal Offering on March 5, 2024. Pursuant to the Warrant Amendment, the investor agreed to exercise outstanding warrants to purchase an aggregate of 1,764,706 shares of Common Stock in cash at an amended exercise price of $0.59 per share. The gross proceeds to us from such exercise was approximately $1.041 million.
Current report
Deferral and Consent under Tranche B Senior Secured Convertible Note
Current report
Pursuant to the Tranche B Notes, commencing on January 2, 2025 (the “First Amortization Payment Date”), we are required to redeem in cash (the “First Amortization Payment”) such portion of the principal amount of the Tranche B Notes equal to each Tranche B Noteholder’s Holder Pro Rata Amount (as defined in the Tranche B Notes) of $6,250,000 per fiscal quarter at a redemption price equal to 100% of such Amortization Amount (as defined in the Tranche B Notes).
Current report
On January 2, 2025, we entered into a deferral and consent letter with each of (i) Nomis Bay Ltd and BPY Limited (the “Nomis Bay Consent”), (ii) Oramed (the “Oramed Consent”) and (iii) 3i, LP (the “3i Consent” and, together with the Nomis Bay Consent and the Oramed Consent, the “Tranche B Consents”), respectively, pursuant to which the Tranche B Noteholders agreed to defer our obligation to make the First Amortization Payment until January 31, 2025. In consideration of such deferral, and to limit the Tranche B Noteholders’ right to exercise certain secured creditor remedies (including recourse against the assets of SCLX JV as a grantor under the Security Agreement (as defined in the Tranche B Consents)), SCLX JV delivered to the Tranche B Noteholders (or their designee) by deposit/withdrawal at custodian with the Depository Trust Company an aggregate of 5,000,000 Scilex Shares held by SCLX JV, of which 2,500,000 shares were delivered to Oramed, 720,000 shares were delivered to BPY Limited, 1,280,000 shares were delivered to Nomis Bay Ltd, and 500,000 shares were delivered to 3i, LP.
Current report
In addition, pursuant to the Tranche B Consents, effective as of the latest of (i) the time of execution and delivery of the Tranche B Consents, (ii) the time of the delivery of the Scilex Shares and (iii) the time of grant of the Royalty and Exclusive Rights (each as defined in, and contemplated pursuant to, the Term Sheet that is an exhibit to the Tranche B Consents (the “Term Sheet”)), the Tranche B Noteholders agreed to further defer our obligation to make the First Amortization Payment until October 8, 2026, provided that, as contemplated in the Term Sheet, we pay an aggregate of $1.11 million in respect of a portion of the First Amortization Payment and related make-whole interest (which amount has been paid).
Current report
The Term Sheet provides that we and the Tranche B Noteholders would enter into an agreement pursuant to which the Tranche B Noteholders shall collectively receive a 10 year, assignable, freely transferable, 4% royalty (the “Royalty”) on the worldwide Net Sales (as defined therein) of GLOPERBA and ELYXYB, excluding sales of ELYXYB in Canada.
Current report
(Gain) Loss on Derivative Liability
Current report
Legal settlements for the three months ended September 30, 2024 and 2023 were $2.5 million and nil, respectively. The increase was attributed to payments received from litigation settlements that were entered into during the first quarter of 2024. See Note 11 titled “Commitments and Contingencies” to our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Current report
Gain on Derivative Liability
Current report
Results of Operations For the Nine Months Ended September 30, 2024 and 2023
Current report
Comparison of the Nine Months Ended September 30, 2024 and 2023
Current report
(Gain) Loss on Derivative Liability
Current report
As of September 30, 2024, the fair value of the FSF Deposit outstanding was $14.7 million (see Note 7 titled “Debt” to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information).
Current report
On September 17, 2024, we entered into the Satisfaction Agreement with FSF Lender and Endeavor, pursuant to which the remaining obligations in respect of the FSF Deposit shall be fully satisfied by our delivery of 28,000 cartons of ZTlido to Endeavor (the “Additional Product”), which delivery shall occur no later than December 31, 2024. Upon satisfaction of such remaining obligations, the Commitment Letter shall be terminated and of no further force or effect and neither FSF Lender nor we shall have any further liability or obligations thereunder. In consideration of Endeavor assuming our payment obligation in respect of the FSF Deposit, Endeavor will not be responsible for making any payment to us for (i) the product already delivered as of the date of such agreement in an amount of approximately $13.2 million and (ii) the Additional Product. Pursuant to the terms of the Satisfaction Agreement, if we fail to fully deliver the Additional Product by December 31, 2024, we shall be liable to Endeavor for liquidated damages in the amount of $20,000,000. In November 2024, we delivered the Additional Product to Endeavor and fully satisfied the remaining obligations in respect of the FSF Deposit.
Current report
For the nine months ended September 30, 2023, net cash used for investing activities was approximately $0.2 million, related to payments of deferred consideration for the Romeg intangible asset acquisition under the Romeg License Agreement.
Removed paragraphs (15)
Previous report
Potential Semnur Merger
Previous report
On July 2, 2024, our wholly owned subsidiary, Semnur Pharmaceuticals, Inc. entered into a letter of intent for a potential business combination with Denali Capital Acquisition Corp., a Cayman Islands corporation (Nasdaq: DECA).
Previous report
Legal Settlements
Previous report
Loss (Gain) on Derivative Liability
Previous report
Interest Expense
Previous report
Loss on Derivative Liability
Previous report
Interest Expense, Net
Previous report
Results of Operations For the Six Months Ended June 30, 2024 and 2023
Previous report
Comparison of the Six Months Ended June 30, 2024 and 2023
Previous report
Legal Settlements
Previous report
Loss on Derivative Liability
Previous report
Interest Expense, Net
Previous report
As of June 30, 2024, we have $10.0 million outstanding under the FSF Deposit (see Note 7 titled “Debt” to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information).
Previous report
For the six months ended June 30, 2024, net cash used for investing activities was approximately $0.3 million,
Previous report
For the six months ended June 30, 2023, net cash used for investing activities was approximately $8.0 thousand.
Reworded paragraphs (59)
Previous wording
We are an innovative revenue-generating company focused on acquiring, developing and commercializing non-opioid management products for the treatment of acute and chronic pain. We believe that our innovative non-opioid product portfolio has the potential to provide effective pain management therapies that can have a transformative impact on patients’ lives. We target indications with high unmet needs and large market opportunities with non-opioid therapies for the treatment of patients with acute and chronic pain and are dedicated to advancing and improving patient outcomes. We launched our first commercial product in October 2018, in-licensed two commercial products in 2022 and 2023, and are developing our late-stage pipeline. Our commercial product, ZTlido, is a prescription lidocaine topical product approved by the U.S. Food and Drug Administration (“FDA”) for the relief of neuropathic pain associated with post-herpetic neuralgia (“PHN”), which is a form of post-shingles nerve pain. ZTlido possesses novel delivery and adhesion technology designed to address many of the limitations of current prescription lidocaine patches by providing significantly improved adhesion and continuous pain relief throughout the 12-hour administration period. We market ZTlido through a dedicated sales force of approximately 65 people, targeting 10,000 primary care physicians, pain specialists, neurologists and palliative care physicians who we believe treat the majority of PHN patients. We in-licensed the exclusive right to commercialize GLOPERBA (colchicine USP) oral solution, an FDA-approved prophylactic treatment for painful gout flares in adults, in the United States of America (“U.S.” or the “United States”). We launched GLOPERBA in June 2024 and believe we are well-positioned to market and distribute the product. In February 2023, we acquired the rights to patents, trademarks, regulatory approvals and other rights related to ELYXYB (celecoxib oral solution) and its commercialization in the U.S. and Canada. In April 2023, we launched ELYXYB in the U.S. for the treatment of acute migraine, with or without aura, in adults. We filed a New Drug Submission (“NDS”) to Health Canada’s Pharmaceutical Drugs Directorate, Bureau of Cardiology, Allergy and Neurological Sciences for the approval of ELYXYB for acute treatment of migraine with or without aura in Canada.
Current wording
We are an innovative revenue-generating company focused on acquiring, developing and commercializing non-opioid management products for the treatment of acute and chronic pain. We believe that our innovative non-opioid product portfolio has the potential to provide effective pain management therapies that can have a transformative impact on patients’ lives. We target indications with high unmet needs and large market opportunities with non-opioid therapies for the treatment of patients with acute and chronic pain and are dedicated to advancing and improving patient outcomes. We launched our first commercial product in October 2018, in-licensed two commercial products in 2022 and 2023, and are developing our late-stage pipeline. Our commercial product, ZTlido (lidocaine topical system) 1.8% (“ZTlido”), is a prescription lidocaine topical product approved by the U.S. Food and Drug Administration (“FDA”) for the relief of neuropathic pain associated with post-herpetic neuralgia (“PHN”), which is a form of post-shingles nerve pain. ZTlido possesses novel delivery and adhesion technology designed to address many of the limitations of current prescription lidocaine patches by providing significantly improved adhesion and continuous pain relief throughout the 12-hour administration period. We market ZTlido through a dedicated sales force of approximately 65 people, targeting 10,000 primary care physicians, pain specialists, neurologists and palliative care physicians who we believe treat the majority of PHN patients. We in-licensed the exclusive right to commercialize GLOPERBA (colchicine USP) oral solution (“GLOPERBA”), an FDA-approved prophylactic treatment for painful gout flares in adults, in the United States of America (“U.S.” or the “United States”). We launched GLOPERBA in June 2024 and believe we are well-positioned to market and distribute the product. In February 2023, we acquired the rights to patents, trademarks, regulatory approvals and other rights related to ELYXYB (celecoxib oral solution) (“ELYXYB”) and its commercialization in the U.S. and Canada. In April 2023, we launched ELYXYB in the U.S. for the treatment of acute migraine, with or without aura, in adults. We filed a New Drug Submission (“NDS”) to Health Canada’s Pharmaceutical Drugs Directorate, Bureau of Cardiology, Allergy and Neurological Sciences for the approval of ELYXYB for acute treatment of migraine with or without aura in Canada.
Previous wording
Our development pipeline consists of three product candidates, (i) SP-102 (“SEMDEXA”) (10 mg, dexamethasone sodium phosphate viscous gel), novel, viscous gel formulation of a widely used corticosteroid for epidural injections to treat lumbosacral radicular pain or sciatica with completed Phase 3 study, (ii) SP-103 (lidocaine topical system) 5.4%, a Phase 2, next-generation, triple-strength formulation of ZTlido, for the treatment of chronic neck pain and for which we have completed a Phase 2 trial in acute low back pain (“LBP”) in the third quarter of 2023, and (iii) SP-104 (4.5 mg, low-dose naltrexone hydrochloride delayed-release capsules), a novel low-dose delayed-release naltrexone hydrochloride formulation for treatment of fibromyalgia, for which Phase 1 trials were completed in the second quarter of 2022.
Current wording
Our development pipeline consists of three product candidates, (i) SP-102 (“SEMDEXA”) (10 mg, dexamethasone sodium phosphate viscous gel), a novel, viscous gel formulation of a widely used corticosteroid for epidural injections to treat lumbosacral radicular pain or sciatica with completed Phase 3 study, (ii) SP-103 (lidocaine topical system) 5.4% (“SP-103”), a Phase 2, next-generation, triple-strength formulation of ZTlido, for the treatment of chronic neck pain associated with muscle spasms and for which we have completed a Phase 2 trial in acute low back pain (“LBP”) in the third quarter of 2023, and (iii) SP-104 (4.5 mg, low-dose naltrexone hydrochloride delayed-release capsules) (“SP-104”), a novel low-dose delayed-release naltrexone hydrochloride formulation for treatment of fibromyalgia, for which Phase 1 trials were completed in the second quarter of 2022.
Previous wording
SEMDEXA has been granted fast track designation by the FDA and, if approved, could become the first FDA-approved alternative to off-label epidural steroid injections, which are administered over 12 million times annually in the United States. We have completed a pivotal Phase 3 study with final results received in March 2022, which results reflected achievement of primary and secondary endpoints. SP-103 has also been granted fast track designation by the FDA for LBP. We received our SP-103 Phase 2 top-line results in August 2023 and the trial achieved its objectives characterizing safety, tolerability and preliminary efficacy of SP-103 in acute LBP associated with muscle spasms. SP-103 was safe and well tolerated. Increase of lidocaine load in topical system by three times, compared with approved ZTlido, 5.4% vs. 1.8%, did not result in signs of systemic toxicity or increased application site reactions with daily applications over one month treatment. We will continue to analyze the SP-103 Phase 2 trial data along with an investigator study of ZTlido in patients with neck pain completed in the second half of 2023, which also has shown promising top-line efficacy and safety results. SP-103, if approved, could become the first FDA-approved lidocaine topical product for the treatment of chronic neck pain. SP-103 is a triple-strength lidocaine topical system designed to deliver a dose of lidocaine three times higher than any lidocaine topical product that we are aware of, either approved or in development. We are examining SP-103 as a treatment for chronic neck pain, a condition with high unmet need which we expect could affect over 20 million patients in the United States as of 2023. Once the data analysis has been completed from both studies, we will request end of Phase 2 meeting with the FDA to discuss next steps to Phase 3.
Current wording
SEMDEXA has been granted fast track designation by the FDA and, if approved, could become the first FDA-approved alternative to off-label epidural steroid injections, which are administered over 12 million times annually in the United States. We have completed a pivotal Phase 3 study with final results received in March 2022, which results reflected achievement of primary and secondary endpoints. SP-103 has also been granted fast track designation by the FDA for LBP. We received our SP-103 Phase 2 top-line results in August 2023 and the trial achieved its objectives characterizing safety, tolerability and preliminary efficacy of SP-103 in acute LBP associated with muscle spasms. SP-103 was safe and well tolerated. Increase of lidocaine load in topical system by three times, compared with approved ZTlido, 5.4% vs. 1.8%, did not result in signs of systemic toxicity or increased application site reactions with daily applications over one month treatment. We will continue to analyze the SP-103 Phase 2 trial data along with an investigator study of ZTlido in patients with neck pain completed in the second half of 2023, which also has shown promising top-line efficacy and safety results. SP-103, if approved, could become the first FDA-approved lidocaine topical product for the treatment of chronic neck pain associated with muscle spasms. SP-103 is a triple-strength lidocaine topical system designed to deliver a dose of lidocaine three times higher than any lidocaine topical product that we are aware of, either approved or in development. We are examining SP-103 as a treatment for chronic neck pain associated with muscle spasms, a condition with high unmet need which we expect could affect over 20 million patients in the United States as of 2023. On October 20, 2024, we announced the successful end of a Phase 2 meeting with the FDA and leading to an agreed path forward to a new drug application (“NDA”) for our product candidate, SP-103.
Previous wording
Since our inception, we have invested substantial efforts and financial resources on acquiring product and technology rights while building our intellectual property portfolio and infrastructure. In June 2022, we in-licensed the exclusive right to commercialize GLOPERBA oral solution, an FDA-approved prophylactic treatment for painful gout flares in adults, in the U.S. In February 2023, we acquired rights to FDA-approved ELYXYB in the U.S. and Canada for the acute treatment of migraine. We intend to continue to explore and evaluate additional opportunities such as these to grow our business. We have incurred significant operating losses as a result of such investment efforts, including the development of SEMDEXA, conducting of Phase 3 trials for SEMDEXA, and the development of SP-103 and SP-104. Our ability to generate revenue sufficient to achieve profitability will depend on the successful commercialization of our products, ZTlido, GLOPERBA and ELYXYB, and the development of our product candidates. We had a net loss of $37.6 million and $26.6 million for the three months ended June 30, 2024 and 2023, and a net loss of $62.0 million and $57.4 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, we had an accumulated deficit of approximately$552.2 million. As of June 30, 2024, we had cash and cash equivalents of approximately $6.9 million. Our management has concluded that there is substantial doubt about our ability to continue as a going concern for one year after the date that the unaudited condensed consolidated financial statements are issued. See Note 2 titled “Liquidity and Going Concern” to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
Current wording
Since our inception, we have invested substantial efforts and financial resources on acquiring product and technology rights while building our intellectual property portfolio and infrastructure. In June 2022, we in-licensed the exclusive right to commercialize GLOPERBA oral solution, an FDA-approved prophylactic treatment for painful gout flares in adults, in the U.S. In February 2023, we acquired rights to FDA-approved ELYXYB in the U.S. and Canada for the acute treatment of migraine. We intend to continue to explore and evaluate additional opportunities such as these to grow our business. We have incurred significant operating losses as a result of such investment efforts, including the development of SEMDEXA, conducting of Phase 3 trials for SEMDEXA, and the development of SP-103 and SP-104. Our ability to generate revenue sufficient to achieve profitability will depend on the successful commercialization of our products, ZTlido, GLOPERBA and ELYXYB, and the development of our product candidates. We had a net loss of $4.4 million and $35.5 million for the three months ended September 30, 2024 and 2023, and a net loss of $66.3 million and $92.9 million for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, we had an accumulated deficit of approximately$556.6 million. As of September 30, 2024, we had cash and cash equivalents of approximately $0.1 million. Our management has concluded that there is substantial doubt about our ability to continue as a going concern for one year after the date that the unaudited condensed consolidated financial statements are issued. See Note 2 titled “Liquidity and Going Concern” to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
Previous wording
On February 13, 2023, Sorrento Therapeutics, Inc. (“Sorrento”), together with its wholly-owned direct subsidiary, Scintilla Pharmaceuticals, Inc., commenced voluntary proceedings under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas. The Chapter 11 proceedings are jointly administered under the caption In re Sorrento Therapeutics, Inc., et al. While we were majority-owned by Sorrento, we were not a debtor in Sorrento’s voluntary Chapter 11 filing. Pursuant to that certain Stock Purchase Agreement that we entered into with Sorrento on September 21, 2023 (the “Sorrento SPA”), we repurchased shares of our Common Stock and Series A Preferred Stock from Sorrento. As a result, Sorrento no longer holds a majority of the voting power of our outstanding capital stock entitled to vote. As of June 30, 2024, we had a $3.2 million receivable from Sorrento, which was fully reserved. We evaluate the collectability of this receivable on a quarterly basis.
Current wording
On February 13, 2023, Sorrento Therapeutics, Inc. (“Sorrento”), together with its wholly-owned direct subsidiary, Scintilla Pharmaceuticals, Inc., commenced voluntary proceedings under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas. The Chapter 11 proceedings are jointly administered under the caption In re Sorrento Therapeutics, Inc., et al, Case Number 23-90085 (DRJ) (the “Chapter 11 Cases”). While we were majority-owned by Sorrento, we were not a debtor in Sorrento’s voluntary Chapter 11 filing. Pursuant to that certain Stock Purchase Agreement that we entered into with Sorrento on September 21, 2023 (the “Sorrento SPA”), we repurchased shares of our Common Stock and Series A Preferred Stock, par value $0.0001 per share, of the Company (the “Preferred Stock”) from Sorrento. As a result, Sorrento no longer holds a majority of the voting power of our outstanding capital stock entitled to vote. As of September 30, 2024, we had a $3.2 million receivable from Sorrento, which was fully reserved. We evaluate the collectability of this receivable on a quarterly basis.
Previous wording
Legal settlements for the six months ended June 30, 2024 consist of gains on litigation settlements that were entered into during the first quarter of 2024. See Note 11 titled “Commitments and Contingencies” to our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Current wording
Legal settlements consist of gains on litigation settlements that were entered into during the first quarter of 2024. See Note 11 titled “Commitments and Contingencies” to our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Previous wording
Loss (Gain) on derivative liability includes the remeasurement of the warrant derivative liability. See Note 4 titled“Fair Value Measurements” to our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Current wording
(Gain) loss on derivative liability includes the remeasurement of the warrant derivative liability. See Note 4 titled“Fair Value Measurements” to our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Previous wording
Change in fair value of debt and liability instruments includes the remeasurement of the convertible debentures (the “Convertible Debentures”) issued to YA II, Ltd. (“Yorkville”) pursuant to that certain securities purchase agreement dated as of March 21, 2023 and amended on October 11, 2023, between Yorkville and us (the “Yorkville SPA”) and a senior secured promissory note to Oramed Pharmaceuticals Inc. (“Oramed”) issued in September 2023 in the principal amount of $101.9 million (the “Oramed Note”). See Note 4 titled“Fair Value Measurements” to our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Current wording
Change in fair value of debt and liability instruments includes the remeasurement of the convertible debentures (the “Convertible Debentures”) issued to YA II, Ltd. (“Yorkville”) pursuant to that certain securities purchase agreement dated as of March 21, 2023 and amended on October 11, 2023, between Yorkville and us, the Oramed Note and a non-refundable deposit in the aggregate principal amount of $10.0 million (the “FSF Deposit”) pursuant to that certain Commitment Side Letter (the “Commitment Letter”) dated as of June 11, 2024, signed with FSF 33433 LLC (“FSF Lender”), and a Satisfaction Agreement (the “Satisfaction Agreement”) dated as of September 17, 2024, signed with FSF Lender and Endeavor Distribution LLC (“Endeavor”), See Note 4 titled“Fair Value Measurements” to our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Previous wording
Interest expense consists of interest related to the loans in an aggregate principal amount of up to $30.0 million (the “Revolving Facility”) made available by eCapital Healthcare Corp. pursuant to a Credit and Security Agreement (the “eCapital Credit Agreement”) that Scilex Pharmaceuticals Inc. (“Scilex Pharma”) entered into on June 27, 2023.
Current wording
Interest expense, net consists of interest related to the loans in an aggregate principal amount of up to $30.0 million (the “Revolving Facility”) made available by eCapital Healthcare Corp. pursuant to a Credit and Security Agreement (the “eCapital Credit Agreement”) that Scilex Pharma entered into on June 27, 2023.
Previous wording
Loss (Gain) on Foreign Currency Exchange
Current wording
Loss on Foreign Currency Exchange
Previous wording
Loss (gain) on foreign currency exchange relates to foreign exchange losses on payments made to our foreign supplier, Itochu Chemical Frontier Corporation (“Itochu”), a manufacturer and supplier of lidocaine tape products, including ZTlido and SP-103.
Current wording
Loss on foreign currency exchange relates to foreign exchange losses on payments made to our foreign supplier, Itochu Chemical Frontier Corporation (“Itochu”), a manufacturer and supplier of lidocaine tape products, including ZTlido and SP-103.
Previous wording
Net revenue for the six months ended June 30, 2024 and 2023 was $27.3 million and $23.2 million, respectively. The increase of $4.1 millionwas driven by the increase in gross product sales of ZTlido and ELYXYB by approximately 21% and 165%, respectively, and sales of GLOPERBA commencing in June 2024, offset by an increase in rebates.
Current wording
Net revenue for the three months ended September 30, 2024 and 2023 was $14.4 million and $10.1 million, respectively. The increase of $4.3 millionwas driven by the increase in gross product sales of ELYXYB by approximately 54% driven by an increase in the sales volume and a standard industry annual price increase, and sales of GLOPERBA commencing in June 2024, partially offset by an increase in rebates.
Previous wording
Cost of revenue for the three months ended June 30, 2024 and 2023 was $4.4 million and $4.2 million, respectively. The increase of $0.2 million was primarily due to an increase in gross revenue of approximately 19% for the three months ended June 30, 2024 compared to the three months ended June 30, 2023.
Current wording
Cost of revenue for the three months ended September 30, 2024 and 2023 was $3.8 million and $3.4 million, respectively. The increase of $0.4 million was primarily due to an increase in gross revenue of ELYXYB and GLOPERBA, partially offset by a decrease in logistics costs due to no air shipments used during the three months ended September 30, 2024 compared to the three months ended September 30, 2023.
Previous wording
Research and development expenses for the six months ended June 30, 2024 and 2023 were $5.1 million and $5.9 million, respectively. The $0.8 million decrease was primarily attributed to reduced costs of SP-103 due to the completion of the Phase 2 clinical study offset by increased CMC costs of SP-102 and ELYXYB regulatory costs.
Current wording
Research and development expenses for the three months ended September 30, 2024 and 2023 were $2.3 million and $4.1 million, respectively. The $1.8 million decrease was primarily attributed to reduced development costs of SP-102 and SP-104.
Previous wording
Selling, general and administrative expenses for the three months ended June 30, 2024 and 2023 were $24.6 million and $27.0 million, respectively. The decrease of approximately $2.4 million was primarily due to a $2.0 million decrease in advisory and financing expenses, a $2.2 million decrease in legal fees, a $0.5 million decrease in insurance costs and a $0.4 million decrease in travel expenses in the three months ended June 30, 2024, offset by a $1.4 million increase in personnel expense due to an increase in headcount and a merit increase starting January 2024, a $0.9 million increase in marketing, a $0.3 million increase in contracted services, and a $0.1 million increase in other expenses.
Current wording
Selling, general and administrative expenses for the three months ended September 30, 2024 and 2023 were $29.7 million and $40.4 million, respectively. The decrease of approximately $10.7 million was primarily due to a $11.6 million decrease in advisory and financing expenses, a $4.6 million decrease in legal fees, a $2.5 million decrease in personnel expense as a result of a $3.2 million decrease in bonus offset by a $0.7 million increase in personnel compensation due to increase in headcount and a merit increase starting January 2024, a $0.2 million decrease in insurance costs, a $0.3 million decrease in marketing, and a $0.1 million decrease in other expenses in the three months ended September 30, 2024, partially offset by a $5.3 million increase in rebate expense related to future shipments of the Additional Product (as defined below) under the Satisfaction Agreement, a $1.8 million increase in contracted services, a $1.2 million increase in allowances for expected credit losses on accounts receivable, and a $0.3 million increase in travel expenses.
Previous wording
Intangible amortization expense for each of the three months ended June 30, 2024 and 2023 was $1.0 million. No changes were observed between the comparable periods.
Current wording
Intangible amortization expense for each of the three months ended September 30, 2024 and 2023 was $1.0 million. No significant changes were observed between the comparable periods.
Previous wording
Loss on derivative liability for the three months ended June 30, 2024 and 2023 was $15.3 million and $0.1 million, respectively. The loss recognized during the three months ended June 30, 2024 was attributed to the change in the fair value of the derivative warrant liability associated with the private placement warrants that we assumed from Vickers in November 2022 in connection with the Business Combination (the “Private Warrants”), the Firm Warrants and the RDO Common Warrants (each as defined below) that were issued as part of the Bought Deal Offering and the Registered Direct Offering (each as defined below), respectively. The loss recognized during the three months ended June 30, 2023 was attributed to the change in the fair value of the derivative warrant liability associated with the Private Warrants.
Current wording
Gain on derivative liability for the three months ended September 30, 2024 and 2023 was $18.1 million and $4.2 million, respectively. The gain recognized during the three months ended September 30, 2024 was attributed to the change in the fair value of the derivative warrant liability associated with the Private Warrants, the Firm Warrants and the RDO Common Warrants (each as defined below) that were issued as part of the Bought Deal Offering and the Registered Direct Offering (each as defined below), respectively. The gain recognized during the three months ended September 30, 2023 was attributed to the change in the fair value of the derivative warrant liability associated with the Private Warrants.
Previous wording
Change in fair value of debt and liability instruments for the three months ended June 30, 2024 and 2023 was $6.1 million and $3.7 million, respectively. The loss recognized during the three months ended June 30, 2024 was attributed to the Oramed Note and the FSF Deposit. The Oramed Note was issued in September 2023 in the principal amount of $101.9 million, of which the principal amount of $61.9 million remained outstanding as of June 30, 2024. The FSF Deposit was received in June 2024 in the principal amount of $10.0 million, which remained outstanding as of June 30, 2024. The loss recognized during the three months ended June 30, 2023 was attributed to the Convertible Debentures issued in March and April 2023 in an aggregate principal amount of $25.0 million which were fully repaid during the first quarter of 2024.
Current wording
Change in fair value of debt and liability instruments for the three months ended September 30, 2024 and 2023 was $2.0 million and $0.4 million, respectively. The loss recognized during the three months ended September 30, 2024 was attributed to the Oramed Note and the FSF Deposit. The Oramed Note was issued in September 2023 in the principal amount of $101.9 million, of which the principal amount of $60.2 million remained outstanding as of September 30, 2024. The FSF Deposit was received in June 2024 in the principal amount of $10.0 million, which remained outstanding as of September 30, 2024. The loss recognized during the three months ended September 30, 2023 was attributed to the Convertible Debentures issued in March and April 2023 in an aggregate principal amount of $25.0 million which were fully repaid during the first quarter of 2024.
Previous wording
Interest expense for the three months ended June 30, 2024 and 2023 was $0.6 million and $5.0 thousand, respectively. The increase was attributed to $0.6 million of interest related to the Revolving Facility.
Current wording
Interest expense, net for the three months ended September 30, 2024 and 2023 was $0.6 million and $0.5 million, respectively. The increase was attributed to $0.1 million of interest related to the Revolving Facility.
Previous wording
Net revenue for the three months ended June 30, 2024 and 2023 was $16.4 million and $12.6 million, respectively. The increase of $3.8 millionwas driven by the increase in gross product sales of ZTlido and ELYXYB by approximately 16% and 49%, respectively, and sales of GLOPERBA commencing in June 2024, offset by an increase in rebates.
Current wording
Net revenue for the nine months ended September 30, 2024 and 2023 was $41.7 million and $33.3 million, respectively. The increase of $8.4 millionwas driven by the increase in gross product sales of ZTlido and ELYXYB by approximately 12% and 110%, respectively, driven by the increase in the sales volume and a standard industry annual price increase, and sales of GLOPERBA commencing in June 2024, partially offset by an increase in rebates.
Previous wording
Cost of revenue for the six months ended June 30, 2024 and 2023 was $8.2 million and $7.8 million, respectively. The increase of $0.4 million was primarily due to an increase in gross revenue of approximately 25% for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.
Current wording
Cost of revenue for the nine months ended September 30, 2024 and 2023 was $12.0 million and $11.2 million, respectively. The increase of $0.8 million was primarily due to an increase in gross revenue of approximately 16%, partially offset by a decrease in logistics costs due to no air shipments used during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.
Previous wording
The following table summarizes research and development expenses by project for the six months ended June 30, 2024 and 2023 (in thousands):
Current wording
The following table summarizes research and development expenses by project for the nine months ended September 30, 2024 and 2023 (in thousands):
Previous wording
Research and development expenses for the three months ended June 30, 2024 and 2023 were $2.0 million and $3.2 million, respectively. The $1.2 million decrease was primarily attributed to reduced costs of the SP-103 due to the completion of the Phase 2 clinical study and reduced chemistry, manufacturing and controls (“CMC”) costs of SP-104.
Current wording
Research and development expenses for the nine months ended September 30, 2024 and 2023 were $7.5 million and $10.0 million, respectively. The $2.5 million decrease was primarily attributed to reduced costs of SP-103 due to the completion of the Phase 2 clinical study and reduced development cost of SP-104.
Previous wording
Selling, general and administrative expenses for the six months ended June 30, 2024 and 2023 were $53.9 million and $55.7 million, respectively. The decrease of approximately $1.8 million was primarily due to a $4.8 million decrease in legal fees, a $1.4 million decrease related to bad debt reserve that was made in March 2023 for the receivable from Sorrento, a $1.0 million decrease in insurance costs, a $0.4 million decrease in contracted services and a $0.1 million decrease in travel expenses in the six months ended June 30, 2024, offset by a $3.1 million increase in personnel expense due to an increase in headcount and a merit increase starting January 2024, a $1.0 million increase in marketing expenses, a $0.6 million increase in advisory and financing expenses, and a $1.2 million increase in other expenses.
Current wording
Selling, general and administrative expenses for the nine months ended September 30, 2024 and 2023 were $83.6 million and $96.1 million, respectively. The decrease of approximately $12.5 million was primarily due to a $11.1 million decrease in advisory and financing expenses, a $9.4 million decrease in legal fees, a $1.3 million decrease in insurance costs, and a $0.2 million decrease as a result of $1.4 million decrease related to allowance for credit losses that was made in March 2023 for the receivable from Sorrento offset by $1.2 million increase related to allowances for expected credit losses on accounts receivable, partially offset by a $5.3 million increase in rebate expense related to future shipments of the Additional Product (as defined below) under the Satisfaction Agreement, a $1.4 million increase in contracted services, a $0.7 million increase in marketing expenses, a $0.6 million increase in personnel expense due to an increase in headcount and a merit increase starting January 2024, a $0.3 million increase in travel expenses and a $1.2 million increase in other expenses.
Previous wording
Intangible amortization expense for the six months ended June 30, 2024 and 2023 was $2.0 million and $2.1 million, respectively. The decrease of $0.1 million is related to the full amortization of the assembled workforce intangible asset (see Note 6 titled “Goodwill and Intangible Assets” to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information).
Current wording
Intangible amortization expense for the nine months ended September 30, 2024 and 2023 was $3.0 million and $3.1 million, respectively. The decrease of $0.1 million is related to the full amortization of the assembled workforce intangible asset (see Note 6 titled “Goodwill and Intangible Assets” to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information).
Previous wording
Legal settlements for the six months ended June 30, 2024 and 2023 were $6.9 million and nil, respectively. The increase was attributed to litigation settlements that were entered into during the first quarter of 2024. See Note 11 titled “Commitments and Contingencies” to our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Current wording
Legal settlements for the nine months ended September 30, 2024 and 2023 were $9.4 million and nil, respectively. The increase was attributed to litigation settlements that were entered into during the first quarter of 2024. See Note 11 titled “Commitments and Contingencies” to our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Previous wording
Loss on derivative liability for the six months ended June 30, 2024 and 2023 was $15.7 million and $5.3 million, respectively. The loss recognized during the six months ended June 30, 2024 was attributed to the change in the fair value of the derivative warrant liability associated with the Private Warrants, the Firm Warrants and the RDO Common Warrants (each as defined below) that were issued as part of the Bought Deal Offering and the Registered Direct Offering (each as defined below), respectively. The loss recognized during the six months ended June 30, 2023 was attributed to the change in the fair value of the derivative warrant liability associated with the Private Warrants.
Current wording
(Gain) loss on derivative liability for the nine months ended September 30, 2024 and 2023 was ($2.4) million and $1.1 million, respectively. The gain recognized during the nine months ended September 30, 2024 was attributed to the change in the fair value of the derivative warrant liability associated with the Private Warrants, the Firm Warrants and the RDO Common Warrants (each as defined below) that were issued as part of the Bought Deal Offering and the Registered Direct Offering (each as defined below), respectively. The loss recognized during the nine months ended September 30, 2023 was attributed to the change in the fair value of the derivative warrant liability associated with the Private Warrants.
Previous wording
Change in fair value of debt and liability instruments for the six months ended June 30, 2024 and 2023 was $10.0 million and $3.7 million, respectively. The loss recognized during the six months ended June 30, 2024 was attributed to the Convertible Debentures, Oramed Note and the FSF Deposit. The Convertible Debentures were issued in March and April 2023 in an aggregate principal amount of $25.0 million which were fully repaid during the first quarter of 2024. The Oramed Note was issued in September 2023 in the principal amount of $101.9 million, of which the principal amount of $61.9 million remained outstanding as of June 30, 2024. The FSF Deposit was received in June 2024 in the principal amount of $10.0 million, which remained outstanding as of June 30, 2024. During the six months ended June 30, 2023, the change in fair value was attributed to the Convertible Debentures.
Current wording
Change in fair value of debt and liability instruments for the nine months ended September 30, 2024 and 2023 was $12.0 million and $4.2 million, respectively. The loss recognized during the nine months ended September 30, 2024 was attributed to the Convertible Debentures, Oramed Note and the FSF Deposit. The Convertible Debentures were issued in March and April 2023 in an aggregate principal amount of $25.0 million which were fully repaid during the first quarter of 2024. The Oramed Note was issued in September 2023 in the principal amount of $101.9 million, of which the principal amount of $60.2 million remained outstanding as of September 30, 2024. The FSF Deposit was received in June 2024 in the principal amount of $10.0 million, which remained outstanding as of September 30, 2024. During the nine months ended September 30, 2023, the change in fair value was attributed to the Convertible Debentures.
Previous wording
Interest expense for the six months ended June 30, 2024 and 2023 was $1.1 million and $4.0 thousand, respectively. The increase was attributed to $1.1 million of interest related to the Revolving Facility.
Current wording
Interest expense, net for the nine months ended September 30, 2024 and 2023 was $1.7 million and $0.5 million, respectively. The increase was attributed to $1.2 million of interest related to the Revolving Facility.
Previous wording
As of June 30, 2024, we had cash and cash equivalents of approximately $6.9 million.
Current wording
As of September 30, 2024, we had cash and cash equivalents of approximately $0.1 million.
Previous wording
We have funded our operations primarily through the Yorkville financing pursuant to the A&R Yorkville Purchase Agreement (as defined below), the B. Riley financing pursuant to the B. Riley Purchase Agreement (as defined below), the Revolving Facility and the issuance of the Convertible Debentures and financing pursuant to the ATM Sales Agreement (as defined below). We also have indebtedness pursuant to the Oramed Note, the FSF Deposit (as defined below), the Revolving Facility as well as deferred consideration related to the GLOPERBA license acquired from Romeg in 2022. The following table summarizes the aggregate indebtedness of these issuances as of June 30, 2024 and December 31, 2023 (in thousands):
Current wording
We have funded our operations primarily through the Yorkville financing pursuant to the A&R Yorkville Purchase Agreement (as defined below), the B. Riley Principal Capital II, LLC (“B. Riley”) financing pursuant to the B. Riley Purchase Agreement (as defined below), the Revolving Facility and the issuance of the Convertible Debentures and financing pursuant to the ATM Sales Agreement (as defined below). We also have indebtedness pursuant to the Oramed Note, the FSF Deposit and the Revolving Facility as well as deferred consideration related to the GLOPERBA license acquired from RxOmeg Therapeutics, LLC (a/k/a Romeg Therapeutics, Inc.) (“Romeg”) in 2022. The following table summarizes the aggregate indebtedness of these issuances as of September 30, 2024 and December 31, 2023 (in thousands):
Previous wording
As of June 30, 2024, we have $75.4 million outstanding under the Oramed Note pursuant to the Scilex-Oramed SPA (see Note 7 titled “Debt” to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information).
Current wording
As of September 30, 2024, the fair value of the Oramed Note outstanding was $69.9 million pursuant to the Scilex-Oramed SPA (see Note 7 titled “Debt” to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information).
Previous wording
The Company fully repaid the Convertible Debentures in March 2024 (see Note 7 titled “Debt” to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information).
Current wording
We fully repaid the Convertible Debentures in March 2024 (see Note 7 titled “Debt” to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information).
Previous wording
As of June 30, 2024, we have $17.3 million outstanding under the Revolving Facility (see Note 7 titled “Debt” to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information).
Current wording
As of September 30, 2024, we have $14.3 million outstanding under the Revolving Facility (see Note 7 titled “Debt” to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information). On October 8, 2024, we paid off the outstanding amount under the Revolving Facility. The eCapital Credit Agreement, the related Loan Documents and the Subordination Agreement (each as defined in the eCapital Credit Agreement) were terminated, canceled and are of no further force and effect.
Previous wording
As of June 30, 2024, we have $3.1 million of deferred consideration related to minimum royalty payments that were included in the initial measurement of consideration transferred for the GLOPERBA license. Deferred consideration minimum royalty payments began in July 2023.
Current wording
As of September 30, 2024, we have $3.0 million of deferred consideration related to minimum royalty payments that were included in the initial measurement of consideration transferred for the GLOPERBA license. Deferred consideration minimum royalty payments began in July 2023.
Previous wording
In February 2013, Scilex Pharma became a party to a product development agreement (as amended, the “Product Development Agreement”) with Itochu and Oishi Koseido Co., Ltd. (“Oishi” and together with Itochu, the “Developers”), pursuant to which the Developers will manufacture and supply lidocaine tape products, including ZTlido and SP-103, for Scilex Pharma. Pursuant to the Product Development Agreement, Scilex Pharma is required to make aggregate royalty payments between 25% and 35% to the Developers based on net profits. During the six months ended June 30, 2024 and 2023, Scilex Pharma made royalty payments in the amount of $2.4 million and $4.3 million, respectively. As of June 30, 2024 and December 31, 2023, Scilex Pharma had ending balances of accrued royalty payables of $2.3 million and $2.4 million, respectively.
Current wording
In February 2013, Scilex Pharma became a party to a product development agreement (as amended, the “Product Development Agreement”) with Itochu and Oishi Koseido Co., Ltd. (“Oishi” and together with Itochu, the “Developers”), pursuant to which the Developers will manufacture and supply lidocaine tape products, including ZTlido and SP-103, for Scilex Pharma. Pursuant to the Product Development Agreement, Scilex Pharma is required to make aggregate royalty payments between 25% and 35% to the Developers based on net profits. During the nine months ended September 30, 2024 and 2023, Scilex Pharma made royalty payments in the amount of $7.2 million and $5.3 million, respectively. As of September 30, 2024 and December 31, 2023, Scilex Pharma had ending balances of accrued royalty payables of $2.2 million and $2.4 million, respectively.
Previous wording
In February 2023, we entered into an asset purchase agreement to acquire the rights to certain patents, trademarks, regulatory approvals, data, contracts, and other rights related to ELYXYB and its commercialization in the United States and Canada (the “ELYXYB Territory”). We are obligated to make quarterly royalty payments on net sales of ELYXYB in the ELYXYB Territory that range from high single digits to the low double digits on net sales based on the volume of sales. In April 2023, we launched ELYXYB in the U.S. During the six months ended June 30, 2024, we made royalty payments in the amount of $4.3 thousand. As of June 30, 2024 and December 31, 2023, we had ending balances of accrued royalty payables of $0.1 million and $5.0 thousand, respectively.
Current wording
In February 2023, we entered into an asset purchase agreement to acquire the rights to certain patents, trademarks, regulatory approvals, data, contracts, and other rights related to ELYXYB and its commercialization in the United States and Canada (the “ELYXYB Territory”). We are obligated to make quarterly royalty payments on net sales of ELYXYB in the ELYXYB Territory that range from high single digits to the low double digits on net sales based on the volume of sales. In April 2023, we launched ELYXYB in the U.S. During the nine months ended September 30, 2024, we made royalty payments in the amount of $0.1 million. As of September 30, 2024 and December 31, 2023, we had ending balances of accrued royalty payables of $0.1 million and $5.0 thousand, respectively.
Previous wording
On November 17, 2022, we entered into a standby equity purchase agreement (the “Original Purchase Agreement”) with Yorkville. On February 8, 2023, we entered into an amended and restated standby equity purchase agreement with Yorkville (the “A&R Yorkville Purchase Agreement”), amending, restating and superseding the Original Purchase Agreement. Pursuant to the A&R Yorkville Purchase Agreement, we had the right, but not the obligation, to sell to Yorkville up to $500.0 million of shares of Common Stock at our request during the 36 months following the date on which the initial registration statement was filed with respect to the shares of Common Stock issuable pursuant thereto was declared effective by the SEC, subject to the terms therein. The registration statement filed with the SEC in connection with the Original Purchase Agreement was initially declared effective by the SEC on December 9, 2022 and we were able to offer and sell shares of our Common Stock under that agreement, subject to the limitations set forth therein. During the six months ended June 30, 2024, we sold 96,982 shares of Common Stock under the A&R Yorkville Purchase Agreement for aggregate net proceeds of approximately $0.2 million. On, and effective as of, March 25, 2024, we and Yorkville mutually agreed to terminate the A&R Yorkville Purchase Agreement.
Current wording
On November 17, 2022, we entered into a standby equity purchase agreement (the “Original Purchase Agreement”) with Yorkville. On February 8, 2023, we entered into an amended and restated standby equity purchase agreement with Yorkville (the “A&R Yorkville Purchase Agreement”), amending, restating and superseding the Original Purchase Agreement. Pursuant to the A&R Yorkville Purchase Agreement, we had the right, but not the obligation, to sell to Yorkville up to $500.0 million of shares of Common Stock at our request during the 36 months following the date on which the initial registration statement was filed with respect to the shares of Common Stock issuable pursuant thereto was declared effective by the SEC, subject to the terms therein. The registration statement filed with the SEC in connection with the Original Purchase Agreement was initially declared effective by the SEC on December 9, 2022 and we were able to offer and sell shares of our Common Stock under that agreement, subject to the limitations set forth therein. During the nine months ended September 30, 2024, we sold 96,982 shares of Common Stock under the A&R Yorkville Purchase Agreement for aggregate net proceeds of approximately $0.2 million. On, and effective as of, March 25, 2024, we and Yorkville mutually agreed to terminate the A&R Yorkville Purchase Agreement.
Previous wording
On January 8, 2023, we entered into a standby equity purchase agreement (the “B. Riley Purchase Agreement”, together with the A&R Yorkville Purchase Agreement, the “Standby Equity Purchase Agreements”) with B. Riley principal Capital II, LLC (“B. Riley”), pursuant to which we had the right, but not the obligation, to sell to B. Riley up to $500.0 million of shares of Common Stock at our request during the 36 months following the date on which the initial registration statement was filed with respect to the shares of Common Stock issuable pursuant thereto was declared effective by the SEC, subject to the terms therein. The registration statement filed with the SEC in connection with the B. Riley Purchase Agreement was initially declared effective by the SEC on January 20, 2023 and we were able to offer and sell shares of our Common Stock under that agreement, subject to the limitations set forth therein and the limitations set forth in the Convertible Debentures. During the six months ended June 30, 2024, we did not sell any shares of Common Stock under the B. Riley Purchase Agreement. On, and effective as of, February 16, 2024, we and B. Riley mutually agreed to terminate the B. Riley Purchase Agreement.
Current wording
On January 8, 2023, we entered into a standby equity purchase agreement (the “B. Riley Purchase Agreement”, together with the A&R Yorkville Purchase Agreement, the “Standby Equity Purchase Agreements”) with B. Riley, pursuant to which we had the right, but not the obligation, to sell to B. Riley up to $500.0 million of shares of Common Stock at our request during the 36 months following the date on which the initial registration statement was filed with respect to the shares of Common Stock issuable pursuant thereto was declared effective by the SEC, subject to the terms therein. The registration statement filed with the SEC in connection with the B. Riley Purchase Agreement was initially declared effective by the SEC on January 20, 2023 and we were able to offer and sell shares of our Common Stock under that agreement, subject to the limitations set forth therein and the limitations set forth in the Convertible Debentures. During the nine months ended September 30, 2024, we did not sell any shares of Common Stock under the B. Riley Purchase Agreement. On, and effective as of, February 16, 2024, we and B. Riley mutually agreed to terminate the B. Riley Purchase Agreement.
Previous wording
On December 22, 2023, we entered into a Sales Agreement (the “ATM Sales Agreement”) with B. Riley Securities, Inc., Cantor Fitzgerald & Co. and H.C. Wainwright & Co., LLC (the “Sales Agents”). Pursuant to the ATM Sales Agreement, we may offer and sell (the “Offering”) shares of Common Stock up to $170,000,000 (the “ATM Shares”), through or to the Sales Agents as part of the Offering. We have no obligation to sell any shares of Common Stock under the ATM Sales Agreement and may suspend offers at any time. The Offering will be terminated upon (i) the election of the Sales Agents upon the occurrence of certain adverse events, (ii) three business days’ advance notice from us to the Sales Agents or a Sales Agent to us, or (iii) the sale of all $170,000,000 of shares of Common Stock thereunder. The ATM Shares offered and sold in the Offering will be issued pursuant to our Shelf S-3 Registration Statement. The ATM Shares may be offered only by means of a prospectus forming a part of the Shelf S-3 Registration Statement. The Sales Agents are entitled to a commission equal to 3.0% of the gross proceeds from each sale of shares of Common Stock. We will also reimburse the Sales Agents for certain expenses and have agreed to provide indemnification and contribution to the Sales Agents against certain civil liabilities, including liabilities under the Securities Act of 1933, as amended. As of June 30, 2024, we sold 92,295 shares of Common Stock pursuant to the ATM Sales Agreement for net proceeds of approximately $0.1 million.
Current wording
On December 22, 2023, we entered into a Sales Agreement (the “ATM Sales Agreement”) with B. Riley Securities, Inc., Cantor Fitzgerald & Co. and H.C. Wainwright & Co., LLC (the “Sales Agents”). Pursuant to the ATM Sales Agreement, we may offer and sell (the “Offering”) shares of Common Stock up to $170,000,000 (the “ATM Shares”), through or to the Sales Agents as part of the Offering. We have no obligation to sell any shares of Common Stock under the ATM Sales Agreement and may suspend offers at any time. The Offering will be terminated upon (i) the election of the Sales Agents upon the occurrence of certain adverse events, (ii) three business days’ advance notice from us to the Sales Agents or a Sales Agent to us, or (iii) the sale of all $170,000,000 of shares of Common Stock thereunder. The ATM Shares offered and sold in the Offering will be issued pursuant to our Shelf S-3 Registration Statement. The ATM Shares may be offered only by means of a prospectus forming a part of the Shelf S-3 Registration Statement. The Sales Agents are entitled to a commission equal to 3.0% of the gross proceeds from each sale of shares of Common Stock. We will also reimburse the Sales Agents for certain expenses and have agreed to provide indemnification and contribution to the Sales Agents against certain civil liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). As of September 30, 2024, we sold 92,295 shares of Common Stock pursuant to the ATM Sales Agreement for net proceeds of approximately $0.1 million.
Showing the first 40 of 59 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
In addition to the liquidity provided by revenue generating products and the issuance of the Common Stock under the ATM Sales Agreement, the Underwriting Agreement, the RDO Purchase Agreement, the Tranche B Securities Purchase Agreement and the December Purchase Agreement, as of September 30, 2024 we would receive up to an aggregate of approximately $74.4 million from the exercise of the Private Warrants and public warrants to purchase
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Common Stock (the “Placement Agent Warrants”), representing up to 8.0% of the total number of the RDO Shares issued in the Registered Direct Offering. The Placement Agent Warrants have an exercise price of $1.25 per share (which represents 125% of the combined offering price per share of Common Stock and the RDO Common Warrant sold in the Registered Direct Offering), will become exercisable on the six-month anniversary of the date of issuance and expire five years from the commencement of sales in the Registered Direct Offering.