Scilex Holding receives $2.5 million in settlement

In a recent development, Scilex Holding Co, a biopharmaceutical company, announced the receipt of a $2.5 million payment as part of a settlement agreement. The payment, which was due on July 1, 2024, is connected to a legal dispute involving the company's subsidiary, Scilex Pharmaceuticals Inc., and Virpax Pharmaceuticals, Inc.

The legal action, initiated on March 12, 2021, by Scilex Pharmaceuticals and its parent company Sorrento Therapeutics (OTC:SRNE), Inc., was filed against Anthony Mack, the former President of Scilex Pharmaceuticals, and Virpax Pharmaceuticals. The suit alleged breach of a restrictive covenant agreement, tortious interference, breach of fiduciary duties, aiding and abetting such breach, and misappropriation of trade secrets.

As part of the settlement reached on February 29, 2024, Virpax agreed to make several payments to Scilex Holding, including an initial sum of $3.5 million, which has already been paid, and the recent $2.5 million installment.

Moreover, Virpax is obligated to pay royalties on future sales of certain drug candidates, specifically 6% of annual net sales of Epoladerm, Probudur, and Envelta, subject to patent and regulatory exclusivity terms.

While the settlement with Virpax has been fulfilled with this latest payment, the legal proceedings against Anthony Mack are still ongoing, indicating that the company has not released Mack from the claims.

Scilex Holding Co, headquartered in Palo Alto, California, is listed on The Nasdaq Stock Market LLC under the ticker SCLX for its common stock and SCLXW for its warrants. The information regarding the settlement and the ongoing litigation was disclosed in accordance with Regulation FD in a Form 8-K filed with the Securities and Exchange Commission on Monday. This development follows the company's commitment to uphold its proprietary rights and business interests.

In other recent news, Scilex Holding received a $10 million non-refundable deposit from FSF 33433 LLC, enabling the biopharmaceutical company to fulfill its financial obligation to Oramed Pharmaceuticals (NASDAQ:ORMP) Inc.

In addition to this financial arrangement, Scilex announced positive Phase 3 trial results for SP-102, a potential first FDA-approved corticosteroid for epidural injections, indicating significant pain reduction and improvement for sciatica patients.

The company also launched GLOPERBA®, the first oral liquid medication for gout flare prevention in the United States, and received FDA approval for its commercial manufacturing. Following a settlement in a patent lawsuit with Takeda Pharmaceuticals over Gloperba, analysts from H.C. Wainwright adjusted their outlook on Scilex shares, maintaining a Buy rating but reducing the price target.

In other developments, Scilex secured an agreement for a registered direct offering involving the sale of 15 million common stock shares, anticipating gross proceeds of approximately $15 million.

The company reported suspected market manipulation activities affecting its stock to regulatory authorities and addressed concerns of alleged illegal market manipulation to the U.S. House of Representatives. These developments reflect the company's commitment to transparency and shareholder interests.

InvestingPro Insights

As Scilex Holding Co navigates its recent legal settlement and ongoing litigation, financial metrics from InvestingPro provide a snapshot of the company's current financial health. With a market capitalization of $242.24 million and a P/E ratio indicating the company is not currently profitable, investors may be cautious.

The latest data shows a revenue growth of 12.54% over the last twelve months as of Q1 2024, which points to an increasing top-line figure. However, the company's operating income margin during the same period was deeply negative at -226.01%, underscoring operational challenges.

InvestingPro Tips suggest that Scilex may struggle to meet its short-term obligations as they exceed its liquid assets, and analysts are not expecting profitability this year. Moreover, while the company experienced strong returns over the last month and three months, with price total returns of 72.48% and 35.25% respectively, it does not pay dividends, which might affect its attractiveness to income-focused investors.

For those considering an investment in Scilex Holding Co, additional InvestingPro Tips are available to provide deeper insights into the company's financials and projections. To explore these further, visit InvestingPro and consider using the coupon code PRONEWS24 for up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. There are 6 additional tips available that could guide investment decisions regarding SCLX.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.