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Virpax Pharmaceuticals Announces Proposed Settlement of Litigation with Sorrento Therapeutics, Inc. and Scilex Pharmaceuticals, Inc.

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Virpax Pharmaceuticals, Inc. has entered into a term sheet to settle litigation with Sorrento Therapeutics, Inc. and Scilex Pharmaceuticals, Inc. The settlement includes cash payments totaling $6 million and royalties on net sales of certain products.
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The settlement between Virpax Pharmaceuticals and the plaintiffs, Sorrento Therapeutics and Scilex Pharmaceuticals, marks a significant resolution of legal disputes which could have otherwise consumed substantial resources. The agreed cash payments and royalty terms indicate a compromise that allows Virpax to continue its operations without the overhang of litigation. It is essential to understand that such settlements often involve a trade-off between immediate financial burden and the potential for long-term operational clarity.

From a legal perspective, the mutual release and non-admission of liability are standard terms that serve to protect both parties from future claims related to the lawsuit. The conditionality of the plaintiff's release on the initial payment underscores the importance of Virpax meeting its payment obligations to avoid re-escalation of the dispute.

The financial implications of the settlement for Virpax Pharmaceuticals are twofold. Firstly, the upfront cash payment totaling $6 million spread over two dates presents a significant cash outflow that will impact the company's short-term liquidity. Investors should scrutinize Virpax's cash reserves and cash flow projections to assess the impact of these payments on its financial stability.

Secondly, the royalty payments of 6% on annual net sales tie future revenues to the plaintiffs, which could dilute Virpax's profitability in the long run. It will be important to monitor the sales performance of the products involved, as the royalty payments may become a recurring financial obligation that affects the company's bottom line.

The resolution of the litigation allows Virpax Pharmaceuticals to prioritize its pipeline development, particularly the Investigational New Drug Applications (IND) for its two lead programs. The industry places great emphasis on the progress of such applications as they are critical milestones towards bringing new drugs to the market.

Furthermore, the focus on non-addictive pain management and CNS disorders addresses a significant market need, given the ongoing concerns around opioid addiction. The potential success of Virpax's drug candidates Epoladerm™, Probudur™, or Envelta™ in these areas could position the company favorably in a competitive landscape. However, the royalty agreement also suggests that the intellectual property involved is of considerable value and the outcome of these developments will be closely watched by industry stakeholders.

BERWYN, Pa.--(BUSINESS WIRE)-- Virpax® Pharmaceuticals, Inc. (“Virpax” or the “Company”) (NASDAQ: VRPX), a company specializing in developing non-addictive products for pain management, post-traumatic stress disorder, central nervous system (CNS) disorders and anti-viral barrier indications, today announced that it has entered into a term sheet to settle the litigation with the Company and Sorrento Therapeutics, Inc. (Sorrento) and Scilex Pharmaceuticals, Inc. (Scilex and Sorento, collectively, the “Plaintiffs”). The term sheet sets forth the principal terms of a mutual release and settlement agreement to be entered into by the Company and the Plaintiffs. However, if the parties fail to do so by or before March 1, 2024, the term sheet will become binding.

As part of the settlement, the parties have agreed to a cash payment from Virpax to the Plaintiffs of $3.5 million by March 1, 2024, and $2.5 million by July 1, 2024, to settle all claims against Virpax. Additionally, Virpax will pay the plaintiffs royalties of 6% of annual net sales of products developed from drug candidates Epoladerm, Probudur or Envelta until the expiration of the last-to-expire valid patent claim and the expiration of any period of regulatory exclusivity. Each party releases all claims against the other party and neither party admits liability for any claim including those asserted in the lawsuit. Plaintiff’s release of Virpax is conditioned upon Virpax making its initial payment.

“I am pleased that we were able to bring this litigation to a satisfactory conclusion,” stated Gerald Bruce, CEO of Virpax Pharmaceuticals. “We are now able to fully focus all of our efforts on the development of our drug product candidates as well as the Investigational New Drug Applications (IND) for our two lead programs.”

About Virpax Pharmaceuticals

Virpax is developing branded, non-addictive pain management products candidates using its proprietary technologies to optimize and target drug delivery. Virpax is initially seeking FDA approval for two prescription drug candidates that employ two different patented drug delivery platforms. Probudur™ is a single injection liposomal bupivacaine formulation being developed to manage post-operative pain and Envelta™ is an intranasal molecular envelope enkephalin formulation being developed to manage acute and chronic pain, including pain associated with cancer. Virpax is also using its intranasal Molecular Envelope Technology (MET) to develop one other prescription product candidate, NobrXiol™, which is being developed for the nasal delivery of a pharmaceutical-grade cannabidiol (CBD) for the management of rare pediatric epilepsy. Virpax has competitive cooperative research and development agreements (CRADAs) for two of its prescription drug candidates, one with the National Institutes of Health (NIH) and one with the Department of Defense (DOD). Virpax is also seeking approval of two nonprescription product candidates: AnQlar, which is being developed to inhibit viral replication caused by influenza or SARS-CoV-2, and Epoladerm™, which is a topical diclofenac spray film formulation being developed to manage pain associated with osteoarthritis. For more information, please visit virpaxpharma.com and follow us on Twitter, LinkedIn and YouTube.

Forward-Looking Statements

This press release contains certain forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995, as amended, including those described below. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and markets in which we operate and management's current beliefs and assumptions.

These statements may be identified by the use of forward-looking expressions, including, but not limited to, "expect," "anticipate," "intend," "plan," "believe," "estimate," "potential,” "predict," "project," "should," "would" and similar expressions and the negatives of those terms and include statements regarding the entry into a definitive agreement, the timing of the payments, each parties releases of claims, and the extent to which any of the noted drug candidates are ever sold and related royalty payments in respect thereof. These statements relate to future events and involve known and unknown risks, uncertainties, and other factors, including the inability of the Company to satisfy the terms of the final settlement agreement, including the payment of amounts owed thereunder the Company’s ability to obtain FDA approval for its prescription drug candidates and nonprescription drug candidates; the Company’s ability to maintain competitive cooperative research and development agreements (CRADAs) for its prescription drug candidates; the Company’s ability to successfully complete research and further development and commercialization of Company drug candidates in current or future indications; the Company’s ability to obtain additional grants to help fund upcoming clinical trials; the Company’s ability to move ahead with remaining confirmational studies for Probudur and Envelta™ as planned; the Company’s ability to manage and successfully complete clinical trials and the research and development efforts for multiple product candidates at varying stages of development; the timing, cost and uncertainty of obtaining regulatory approvals for the Company’s product candidates; the Company’s ability to protect its intellectual property; the Company’s ability to obtain capital to meet its long-term liquidity needs on acceptable terms, or at all, including the additional capital which will be necessary to complete clinical trials that the Company plans to initiate and other factors listed under "Risk Factors" in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q that the Company has filed with the U.S. Securities and Exchange Commission. Prospective investors are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date of this press release. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

Investor Relations:

Betsy Brod

Affinity Growth Advisors

Betsy.brod@affinitygrowth.com

(917) 923-8541

Source: Virpax Pharmaceuticals, Inc.

FAQ

What is the ticker symbol for Virpax Pharmaceuticals, Inc.?

The ticker symbol for Virpax Pharmaceuticals, Inc. is VRPX.

What type of products does Virpax specialize in developing?

Virpax specializes in developing non-addictive products for pain management, post-traumatic stress disorder, central nervous system (CNS) disorders, and anti-viral barrier indications.

What is the total cash payment Virpax will make to the Plaintiffs as part of the settlement?

Virpax will make a total cash payment of $6 million to the Plaintiffs as part of the settlement.

What royalties will the Plaintiffs receive from Virpax?

The Plaintiffs will receive royalties of 6% of annual net sales of products developed from certain drug candidates until the expiration of the last-to-expire valid patent claim and regulatory exclusivity period.

When is the term sheet binding if the parties fail to enter into a settlement agreement?

If the parties fail to enter into a settlement agreement by March 1, 2024, the term sheet will become binding.

Who is the CEO of Virpax Pharmaceuticals, Inc.?

Gerald Bruce is the CEO of Virpax Pharmaceuticals, Inc.

Virpax Pharmaceuticals, Inc.

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