Scilex Holding Company Announces Closing of $17 Million Registered Direct Offering

Rhea-AI Summary

Scilex Holding Company (SCLX) has completed its previously announced registered direct offering, raising $17.0 million in gross proceeds. The offering included 26,355,347 shares of common stock and 2,401,132 pre-funded warrants, along with common warrants to purchase up to 57,512,958 shares. The common stock and accompanying warrants were sold at $0.59 per share, while pre-funded warrants were priced at $0.5899.

The common warrants, exercisable at $0.6490 per share, will become available six months after issuance, with half expiring in five years and half in two and a half years. The company plans to use the proceeds for working capital, general corporate purposes, including capital expenditures, commercialization, R&D, regulatory affairs, clinical trials, and potential acquisitions or debt repayment.

Positive

• Secured $17.0 million in immediate funding through registered direct offering
• Pre-funded warrants are immediately exercisable at minimal cost ($0.0001)
• Flexible use of proceeds covering various business needs and growth opportunities

Negative

• Significant shareholder dilution with 28.7M new shares/warrants issued
• Additional potential dilution from 57.5M common warrants
• Offering price of $0.59 per share indicates relatively low valuation

Insights

Financial Analyst

This $17 million registered direct offering represents a significant capital raise for Scilex, albeit at a notable discount to market prices. The offering structure, combining common stock at $0.59 per share with warrants, indicates challenging market conditions. The warrant exercise prices and staggered exercisability periods suggest a strategic approach to future funding. The dilutive impact is substantial, with over 28.7M new shares and potential for 57.5M more through warrants. While the funding strengthens the balance sheet for operations and development, the pricing and warrant terms reflect current market skepticism. The company's broad use of proceeds, including potential M&A activities, provides flexibility but lacks specific strategic commitments.

Market Research Analyst

The offering's structure and pricing reveal significant market challenges for Scilex. With a market cap of approximately $66M, this $17M raise represents about 25.8% of the company's value, indicating substantial dilution. The inclusion of both pre-funded warrants and common warrants at a 10% premium suggests a complex financing strategy to attract investors. The delayed exercisability of common warrants and split expiration periods (2.5 and 5 years) demonstrate a balanced approach between immediate capital needs and long-term funding potential. However, the heavy warrant coverage (2:1 ratio) and minimal exercise price premium point to investor skepticism about near-term value appreciation.

PALO ALTO, Calif., Dec. 13, 2024 (GLOBE NEWSWIRE) -- Scilex Holding Company (Nasdaq: SCLX, “Scilex” or the “Company”), an innovative revenue-generating company focused on acquiring, developing and commercializing the treatment for neurodegenerative and cardiometabolic disease, and non-opioid pain management products for the treatment of acute and chronic pain, today announced the closing of its previously announced registered direct offering of an aggregate of 26,355,347 shares of its common stock, par value $0.0001 per share, pre-funded warrants to purchase up to an aggregate of 2,401,132 shares of common stock, and common warrants to purchase up to an aggregate of 57,512,958 shares of common stock. The shares of common stock and accompanying common warrants (for which there will be two accompanying warrants for each share of common stock) were sold at a combined offering price of $0.59 per share, and the pre-funded warrants and accompanying common warrants (for which there will be two accompanying warrants for each pre-funded warrant to purchase one share of common stock) were sold at a combined offering price of $0.5899 per pre-funded warrant. All of the shares of common stock, pre-funded warrants and accompanying common warrants sold in the offering were sold directly by Scilex.

The pre-funded warrants have an exercise price of $0.0001 per share and are immediately exercisable following the closing of the offering. The common warrants have an exercise price of $0.6490 per share. Common warrants to purchase up to an aggregate of 57,512,958 shares of common stock will become exercisable on the six month anniversary from the date of issuance and one-half of such warrants will have a term that expires on the date that is five years after the date of issuance and the remaining one-half of such warrants will have a term that expires on the date that is two and one-half years after the date of issuance.

The gross proceeds for the offering were approximately $17.0 million, prior to deducting the fees and other offering expenses payable by the Company. The Company intends to use the net proceeds from the offering, together with its existing cash and cash equivalents and short-term investments, 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.

The securities described above were offered by the Company pursuant to a “shelf” registration statement on Form S-3 (File No. 333-276245), as amended, which was originally filed with the Securities and Exchange Commission (the “SEC”) on December 22, 2023, and declared effective by the SEC on January 11, 2024. The securities were offered only by means of a prospectus, including a prospectus supplement, forming a part of the effective registration statement. A prospectus supplement and accompanying prospectus relating to, and describing the terms of, the offering have been filed with the SEC and are available on the SEC’s website at http://www.sec.gov.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

About Scilex Holding Company

Scilex Holding Company is an innovative revenue-generating company focused on acquiring, developing and commercializing the treatment for neurodegenerative and cardiometabolic diseases, and non-opioid pain management products for the treatment of acute and chronic pain. Scilex targets indications with high unmet needs and large market opportunities with non-opioid therapies for the treatment of patients with acute and chronic pain and is dedicated to advancing and improving patient outcomes. Scilex’s commercial products include: (i) ZTlido® (lidocaine topical system) 1.8%, a prescription lidocaine topical product approved by the U.S. Food and Drug Administration (the “FDA”) for the relief of neuropathic pain associated with postherpetic neuralgia, which is a form of post-shingles nerve pain; (ii) ELYXYB®, a potential first-line treatment and the only FDA-approved, ready-to-use oral solution for the acute treatment of migraine, with or without aura, in adults; and (iii) Gloperba®, the first and only liquid oral version of the anti-gout medicine colchicine indicated for the prophylaxis of painful gout flares in adults.

In addition, Scilex has three product candidates: (i) SP-102 (10 mg, dexamethasone sodium phosphate viscous gel) (“SEMDEXA™” or “SP-102”), a novel, viscous gel formulation of a widely used corticosteroid for epidural injections to treat lumbosacral radicular pain, or sciatica, for which Scilex has completed a Phase 3 study and was granted Fast Track status from the FDA in 2017; (ii) SP-103 (lidocaine topical system) 5.4%, (“SP-103”), a next-generation, triple-strength formulation of ZTlido, for the treatment of acute pain and for which Scilex has recently completed a Phase 2 trial in acute low back pain. SP-103 has been granted Fast Track status from the FDA in low back pain; and (iii) SP-104 (4.5 mg, low-dose naltrexone hydrochloride delayed-release capsules) (“SP-104”), a novel low-dose delayed-release naltrexone hydrochloride being developed for the treatment of fibromyalgia, for which Phase 1 trials were completed in the second quarter of 2022.

Scilex Holding Company is headquartered in Palo Alto, California.

Forward-looking Statements

This press release and any statements made for and during any presentation or meeting concerning the matters discussed in this press release contain forward-looking statements related to Scilex and its subsidiaries under the safe harbor provisions of Section 21E of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Forward-looking statements include statements regarding the amount and the intended use of the net proceeds from the offering, Scilex’s plans to launch GLOPERBA® in 2024 and plans to initiate Phase 2 trial in 2024 for SP-104.

Risks and uncertainties that could cause Scilex’s actual results to differ materially and adversely from those expressed in our forward-looking statements, include, but are not limited to: statements related to the intended use of proceeds from the offering; risks associated with the unpredictability of trading markets and whether a market will be established for Scilex’s common stock; general economic, political and business conditions; risks related to COVID-19 (and other similar disruptions); the risk that the potential product candidates that Scilex develops may not progress through clinical development or receive required regulatory approvals within expected timelines or at all; risks relating to uncertainty regarding the regulatory pathway for Scilex’s product candidates; the risk that Scilex will be unable to successfully market or gain market acceptance of its product candidates; the risk that Scilex’s product candidates may not be beneficial to patients or successfully commercialized; the risk that Scilex has overestimated the size of the target patient population, their willingness to try new therapies and the willingness of physicians to prescribe these therapies; risks that the outcome of the trials and studies for SP-102, SP-103 or SP-104 may not be successful or reflect positive outcomes; risks that the prior results of the clinical and investigator-initiated trials of SP-102 (SEMDEXA™), SP-103 or SP-104 may not be replicated; regulatory and intellectual property risks; and other risks and uncertainties indicated from time to time and other risks described in Scilex’s most recent periodic reports filed with the Securities and Exchange Commission, including Scilex’s Annual Report on Form 10-K for the year ended December 31, 2023 and subsequent Quarterly Reports on Form 10-Q that the Company has filed or may file with the SEC, including the risk factors set forth in those filings. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release, and Scilex undertakes no obligation to update any forward-looking statement in this press release except as may be required by law.

Contacts:

Investors and Media
Scilex Holding Company
960 San Antonio Road
Palo Alto, CA 94303
Office: (650) 516-4310

Email: investorrelations@scilexholding.com

Website: www.scilexholding.com

SEMDEXA™ (SP-102) is a trademark owned by Semnur Pharmaceuticals, Inc., a wholly-owned subsidiary of Scilex Holding Company. A proprietary name review by the FDA is planned.

ZTlido^® is a registered trademark owned by Scilex Pharmaceuticals Inc., a wholly-owned subsidiary of Scilex Holding Company.

Gloperba^® is the subject of an exclusive, transferable license to use the registered trademark by Scilex Holding Company.

ELYXYB^® is a registered trademark owned by Scilex Holding Company.

All other trademarks are the property of their respective owners.

© 2024 Scilex Holding Company All Rights Reserved.

FAQ

How much did Scilex (SCLX) raise in its December 2024 registered direct offering?

Scilex raised $17.0 million in gross proceeds through its registered direct offering of common stock and warrants.

What was the price per share for SCLX's December 2024 offering?

The combined offering price was $0.59 per share for common stock and accompanying warrants, while pre-funded warrants were sold at $0.5899.

How many common warrants were included in SCLX's December 2024 offering?

The offering included common warrants to purchase up to 57,512,958 shares of common stock.

When will SCLX's common warrants from the December 2024 offering become exercisable?

The common warrants will become exercisable six months after issuance, with half expiring in 5 years and half in 2.5 years.

What is the exercise price for SCLX's common warrants from the December 2024 offering?

The common warrants have an exercise price of $0.6490 per share.