Scilex Holding Company (Nasdaq: SCLX, “Scilex” or “Company”), an
innovative revenue-generating company focused on acquiring,
developing and commercializing non-opioid pain management products
for the treatment of acute and chronic pain, provides notice to all
lenders of short positions of restricted shares of Scilex common
stock that were part of the previously announced dividend of Scilex
common stock then-held by Sorrento Therapeutics, Inc. (OTC: SRNEQ,
“Sorrento”) to Sorrento equity holders of record as of January 9,
2023.
NOTICE TO ALL LENDERS OF SHORT POSITIONS
IN RESTRICTED DIVIDEND SHARESOF SCILEX HOLDING
COMPANY
On December 30, 2022, Sorrento announced that
its board of directors authorized Sorrento to dividend to Sorrento
equity holders of record as of January 9, 2023 an aggregate of
76,000,000 shares of common stock of Scilex that were then-held by
Sorrento (“Scilex Dividend Stock”). The Scilex Dividend Stock was
distributed on or about January 19, 2023 and since such date has
been subject to restrictions on transfer which are currently in
place through March 31, 2024. The Scilex Dividend Stock was
primarily received by “record holders,” or brokers, dealers, banks
and other nominees acting as agents for shareholders who are the
true “beneficial owners” of the Scilex Dividend Stock.
On February 13, 2023, Sorrento and certain of
its related entities (collectively “Debtors”), which did not
include Scilex, commenced voluntary proceedings under Chapter 11 of
the United States Code in the United States Bankruptcy Court for
the Southern District of Texas (“Bankruptcy Court”). The Chapter 11
proceedings are jointly administered under the caption In re
Sorrento Therapeutics, Inc., et al. (“Bankruptcy Proceedings”).
According to Sorrento’s estimates, approximately
8.4 million or more shares of Scilex Dividend Stock were deemed to
have been sold “short” as of the Payment Date as a result of the
“short” positions of the underlying Sorrento common stock. “Naked
short” sales or “naked short” positions in any Scilex common stock
may constitute a violation of SEC Regulation SHO.
On June 12, 2023, the Official Committee of
Equity Securities Holders of the Debtors (“Equity Committee”)
commenced an adversary proceeding in the Bankruptcy Proceedings by
filing a complaint against certain brokerage firms seeking entry of
a temporary restraining order and preliminary injunction related to
the defendants’ allowance and facilitation of illegal naked short
selling of Scilex Dividend Stock. On June 14, 2023, the Bankruptcy
Court entered a temporary restraining order temporarily suspending
all short sales of Scilex Dividend Stock and ordering the
defendants to provide an accounting of all profits received from
the naked short selling of Scilex Dividend Stock and Scilex common
stock, including all interest charged to short sellers, no later
than five business days after entry of the order. On July 18, 2023,
the Bankruptcy Court then granted the joint emergency motion filed
by the Debtors and the Equity Committee for an order
(i) approving and authorizing the Debtors to consummate an
offering of shares of Scilex common stock held by the Debtors,
(ii) authorizing entry into settlement agreements with
participating record holders of Scilex common stock who opt into a
settlement, and (iii) granting related relief. This emergency
motion was very successful, resulting in settlements reached with
dozens of short sellers and approximately 800,000 Scilex common
stock, purchased from the open market, short positions closed or
covered.
While certain parties with short positions in
the Scilex Dividend Stock (“Short Sellers”) settled with the
Debtors and Scilex in the Bankruptcy Proceedings as described in
the paragraph immediately above, a number of Short Sellers who
engaged in illegal naked short selling or violated the terms of the
transfer restrictions imposed on the Scilex Dividend Stock did not
elect to opt into a settlement. Before taking any further legal
action against such Short Sellers, on October 3, 2023, Scilex
provided a proposal to those Short Sellers who had not yet closed
or covered their respective short positions in Scilex Dividend
Stock (“Short Seller Proposal”). As Scilex noted in its October 3,
2023 press release containing the Short Seller Proposal, Scilex
believed that since the settlements reached with certain Short
Sellers via the emergency motion described above were deemed
successful, with no objections from the participating Short Sellers
and with widespread support and assistance from such Short Sellers’
brokers and/or agents, there should be no further excuses for
continuing to hold the short positions in Scilex. Therefore, the
Short Seller Proposal allowed those Short Sellers to cover their
short positions and avoid any continuing fees, interest, and other
expenses associated with any short positions, as well as one last
opportunity to accept the terms provided in the Bankruptcy
Proceedings in order to obtain a release from Scilex for any claims
and causes of action related to naked short selling or other
similar market manipulative behavior. On October 3, 2023, Scilex
notified all Record Holders of the Short Seller Proposal via email
and express mail.
Scilex is now making a similar offer to the
lenders of the short positions in Scilex Dividend Stock held by the
Short Sellers (“Lender”). Specifically, under this “Lender
Proposal,” (i) any Lender that requires the immediate return
of Scilex Dividend Stock that was loaned to Short Sellers, and
(ii) once the applicable Short Sellers have closed out such
short positions in the Scilex Dividend Stock, Scilex will provide a
release of any claims and causes of action related to naked short
selling or other similar market manipulative behavior. Such release
will be provided after Scilex receives written confirmation of the
above two actions.
Any Lender that wishes to participate in this
Lender Proposal can contact Stephen Ma at Scilex
(SMa@scilexholding.com). In exchange for accepting this Lender
Proposal and engaging in the actions described herein, the Lender
shall receive releases from Scilex for any claims and causes of
action that Scilex may have relating to naked short selling to the
extent of the amount of the short position held by the Short Seller
who borrowed the Lender’s shares of Scilex Dividend
Stock. The Lender should notify the Short Sellers to
follow the same procedures outlined in the October 3, 2023 Short
Seller Proposal. This Lender Proposal shall commence on
October 9, 2023 and continue to and end on October 31, 2023.
THE DEADLINE TO ACCEPT THIS LENDER
PROPOSAL IS OCTOBER 31, 2023.
IN CONNECTION WITH ANY STOCK TRANSACTIONS AND
THE PROVISION OF ANY RELEASE BY SCILEX CONTEMPLATED UNDER THE
LENDER PROPOSAL, THE FOLLOWING RESTRICTIVE LEGEND WILL BE IMPOSED
ON SHARES OF SCILEX COMMON STOCK USED TO CLOSE OR COVER THE SHORT
POSITION: THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED, PLEDGED, HYPOTHECATED, LOANED, ENCUMBERED OR OTHERWISE
DISPOSED OF WITHOUT THE CONSENT OF SCILEX HOLDING COMPANY (THE
“COMPANY”) PRIOR TO MARCH 31, 2024. A TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE SHALL BE DEEMED TO INCLUDE, WITHOUT
LIMITATION, THE (A) SALE OR ASSIGNMENT OF, OFFER TO SELL, CONTRACT
OR AGREEMENT TO SELL, GRANT OF ANY OPTION TO PURCHASE OR OTHERWISE
DISPOSE OF OR AGREEMENT TO DISPOSE OF, DIRECTLY OR INDIRECTLY, OR
ESTABLISHMENT OR INCREASE OF A PUT EQUIVALENT POSITION OR
LIQUIDATION WITH RESPECT TO OR DECREASE OF A CALL EQUIVALENT
POSITION WITHIN THE MEANING OF SECTION 16 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED (THE “EXCHANGE ACT”), WITH RESPECT
TO, ANY SECURITY OF THE COMPANY, (B) ENTRY INTO ANY SWAP OR OTHER
ARRANGEMENT THAT TRANSFERS TO ANOTHER, IN WHOLE OR IN PART, ANY OF
THE ECONOMIC CONSEQUENCES OF OWNERSHIP OF ANY SECURITY OF THE
COMPANY, WHETHER ANY SUCH TRANSACTION IS TO BE SETTLED BY DELIVERY
OF SUCH SECURITIES, IN CASH OR OTHERWISE, AND (C) ENGAGEMENT,
WHETHER DIRECTLY OR INDIRECTLY, IN ANY (I) “SHORT SALE” (AS SUCH
TERM IS DEFINED IN RULE 200 OF REGULATION SHO OF THE EXCHANGE ACT)
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE OR (II) HEDGING
TRANSACTION, WHICH ESTABLISHES A NET SHORT POSITION WITH RESPECT TO
ANY SECURITIES OF THE COMPANY (INCLUDING THE COMMON STOCK OF THE
COMPANY), WITH RESPECT TO EACH OF CLAUSES (I) AND (II) HEREOF,
EITHER FOR THE HOLDER’S OWN PRINCIPAL ACCOUNT OR FOR THE PRINCIPAL
ACCOUNT OF ANY OTHER PERSON.
About Scilex Holding
Company
Scilex Holding Company is an innovative
revenue-generating company focused on acquiring, developing and
commercializing non-opioid pain management products for the
treatment of acute and chronic pain. Scilex is uncompromising in
its focus to become the global pain management leader committed to
social, environmental, economic, and ethical principles to
responsibly develop pharmaceutical products to maximize quality of
life. Results from the Phase III Pivotal Trial C.L.E.A.R. Program
for SEMDEXA™, its novel, non-opioid product for the treatment of
lumbosacral radicular pain (sciatica), were announced in March
2022. Scilex participated in the type C meeting for purposes of
pre-NDA discussion with the FDA and is pending official minutes in
writing from the FDA. Scilex targets indications with high unmet
needs and large market opportunities with non-opioid therapies for
the treatment of patients with moderate to severe pain. Scilex
launched its first commercial product ZTlido® in October 2018,
in-licensed a commercial product Gloperba® in June 2022, and
launched its third FDA-approved product Elyxyb™ in April 2023.
It is also developing its late-stage pipeline, which includes a
pivotal Phase 3 candidate, and one Phase 2 and one Phase 1
candidate. Its commercial product, ZTlido® (lidocaine topical
system) 1.8%, or ZTlido®, is a prescription lidocaine topical
product approved by the U.S. Food and Drug Administration for the
relief of pain associated with post-herpetic neuralgia, which is a
form of post-shingles nerve pain. Scilex 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 U.S. Scilex in-licensed the exclusive rights to
commercialize Elyxyb™ (celecoxib oral solution) in the U.S.
and Canada, the only FDA-approved ready-to-use oral solution for
the acute treatment of migraine, with or without aura, in adults.
Scilex launched Elyxyb™ in April 2023, and is planning to
commercialize Gloperba® by 2024, and is well-positioned to market
and distribute those products. Scilex’s three product candidates
are SP-102 (injectable dexamethasone sodium phosphate viscous gel
product containing 10 mg dexamethasone), or SEMDEXA™, a Phase 3,
novel, viscous gel formulation of a widely used corticosteroid for
epidural injections to treat lumbosacral radicular pain, or
sciatica, with FDA Fast Track status; SP-103 (lidocaine topical
system) 5.4%, a Phase 2 study, triple-strength formulation of
ZTlido®, for the treatment of acute low back pain, with FDA Fast
Track status; and SP-104, 4.5 mg Delayed Burst Release Low Dose
Naltrexone Hydrochloride (DBR-LDN) Capsule, for the treatment of
chronic pain, fibromyalgia that has completed multiple Phase 1
trial programs and is expected to initiate Phase 2 trials in
2024.
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 anticipated timing for completion of the Lender Proposal and
procedures for participating in the Lender Proposal and executing a
release agreement, Scilex’s belief that it is well positioned to
continue its growth over the next several years, Scilex’s long-term
objectives and commercialization plans, Scilex’s potential to
attract new capital, future opportunities for Scilex, Scilex’s
future business strategies, the expected cash resources of Scilex
and the expected uses thereof; Scilex’s current and prospective
product candidates, planned clinical trials and preclinical
activities and potential product approvals, as well as the
potential for market acceptance of any approved products and the
related market opportunity; statements regarding ZTlido®,
Gloperba®, ELYXYB®, SP-102 (SEMDEXA™), SP-103 or SP-104, if
approved by the FDA; Scilex’s development and commercialization
plans; and Scilex’s products, technologies and prospects.
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: 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 the ongoing COVID-19 pandemic; 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 for SP-103 or SP-104 may not be
successful; risks that the prior results of the clinical 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 set forth
in Scilex’s filings with the Securities and Exchange Commission.
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 MediaScilex Holding Company 960
San Antonio RoadPalo Alto, CA 94303Office: (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 the subject of an exclusive,
transferable license to use the registered trademark by Scilex
Holding Company.
All other trademarks are the property of their
respective owners.
© 2023 Scilex Holding Company All Rights
Reserved.
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