Scilex Holding (SCLX) Signs $50M Registered Convertible Financing

Scilex Holding Company (Nasdaq: SCLX) today announced that it has entered into a definitive agreement with affiliates of Murchinson, 3i LP and with Oramed for the purchase and sale of new tranche B senior secured convertible notes in the aggregate principal amount of $50 million (the “New Financing”) and warrants to purchase up to 7,500,000 shares of the Company’s common stock in a registered direct offering.

The Notes will have an original issue discount of 10.0% and bear interest at a rate of 5.5% per annum and unless earlier converted or redeemed, the Notes will mature on the two-year anniversary of the issuance date. The Company will receive in exchange for the issuance of the Notes to the affiliates of Murchinson and to 3i LP an aggregate amount in cash equal to $22,500,000, excluding fees and expenses, from such investors. The Company will receive from Oramed in consideration for the Note issued to Oramed an exchange and reduction of the principal balance under the Oramed Note of $22,500,000. All amounts due under the Notes will be convertible at any time, in whole or in part, subject to certain beneficial ownership limitations, at the option of the holder into shares of the Company’s common stock at a conversion price equal to $1.09, subject to adjustment as described in the Notes. The warrants will have an exercise price of $1.09 (subject to adjustment as described in the warrants) and will become exercisable immediately upon issuance and will expire on the date that is five years from the initial exercisability date.

StockBlock Securities LLC and its affiliate, Rodman & Renshaw LLC, are acting as the exclusive placement agents in connection with this offering.

The closing of the offering is expected to occur on or about October 7, 2024, subject to satisfaction of certain closing conditions. The net proceeds from the offering are expected to be approximately $20,500,000, after deducting the placement agents’ fees and other offering expenses payable by the Company. The Company intends to use the net proceeds from the offering for repayment and satisfaction of $12,500,000 of the outstanding balance under the Oramed Note, payoff of the revolving credit facility with eCapital Healthcare Corp, satisfaction of certain costs, fees and expenses of the purchasers of the notes and the collateral agent, and, to the extent there are any remaining proceeds, for working capital and general corporate purposes of the Company.

“Scilex has executed on a series of actions to strengthen the balance sheet and strengthen operations. These steps, which include finalizing and resolving legacy issues, and now, securing this significant refinancing, are critical to strengthening our financial profile. Over the past 12 months, Scilex has aggressively addressed and restructured our debt with payments of more than $80 million. We are thrilled to secure this new facility, which is expected to position Scilex to enter its next phase of our turnaround, enabling future growth and additional investment opportunities with much greater freedom and flexibility to operate under strengthened financial position,” said Jaisim Shah, Chief Executive Officer and President of Scilex.

Separately, the Company anticipates that Oramed and certain other institutional investors will acquire the right to receive an 8% royalty on the net sales of certain of Scilex’s products, including its ZTlido (lidocaine topical system) 1.8%. The aggregate purchase price will be $5.0 million and Oramed’s purchase consideration in such transaction is intended to be satisfied through a reduction of $2.5 million of the outstanding principal balance on the Oramed Note. The closing of the Royalty Transaction is anticipated to occur contemporaneous with the closing of the New Financing.

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 will be filed with the SEC and will be available on the SEC’s website at http://www.sec.gov. Electronic copies of the prospectus supplement and accompanying prospectus may also be obtained by contacting Rodman & Renshaw LLC at 600 Lexington Avenue, 32nd Floor, New York, NY 10022, by telephone at (212) 540-4414, or by email at [email protected]; and StockBlock Securities LLC at 600 Lexington Avenue, 32nd Floor, New York, NY 10022, by telephone at (212) 540-4440, or by email at [email protected].

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