What changed in this filing

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Item 9A. Controls and Procedures

2025-03-31 compared with 2024-03-12 · 826 added, 422 removed, 1070 unchanged (54% of the section changed)

Controls and Procedures.

Disclosure Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s regulations, rules and forms and that such information is accumulated and communicated to our management, including our principal officers, as appropriate, to allow for timely decisions regarding required disclosure.

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Based on the foregoing, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Annual Report on Form 10-K.

Remediation of Previously Reported Material Weaknesses

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting (“ICFR”), such that a reasonable possibility exists that a material misstatement of our annual or interim financial statements would not be prevented or detected

on a timely basis.

As previously reported in Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, management identified a material weakness in our ICFR.

The material weakness related to a lack of sufficient accounting resources with appropriate experience and technical expertise to effectively execute controls over certain judgmental and technical accounting areas.

As a result, we identified that certain of our control activities in the areas of revenues, debt, business combination and derivative liabilities did not operate effectively and therefore, were deficient and the combination of the aforementioned deficiencies were deemed to represent a material weakness in our ICFR as of December 31, 2022.

In response to the material weaknesses, and as previously disclosed in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2022, we implemented the following additional measures as part of the remediation process:

(i) recruiting and employing personnel with appropriate experience and technical expertise to enhance management’s assessment of judgmental and technical accounting areas,

(ii) conducting additional training for staff involved in judgmental and technical accounting areas, and

(iii) engaging additional independent third-party technical consultants to assist in performing accounting analyses of complex transactions.

The applicable measures have been implemented for a sufficient period of time and management has concluded, through testing, that the enhanced controls are operating effectively, and that the material weakness was remediated as of December 31, 2023.

Management’s Annual Report on Internal Control Over Financial Reporting

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Our ICFR is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.

Under the supervision of and with the participation of our Principal Executive Officer and Principal Financial Officer, our management assessed the effectiveness of our ICFR as of December 31, 2023, based on the criteria set forth in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Under the supervision of and with the participation of our Principal Executive Officer and Principal Financial Officer, our management assessed the effectiveness of our ICFR as of December 31, 2024,

based on the criteria set forth in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, management has concluded that our ICFR was effective as of December 31, 2024.

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Changes in Internal Control over Financial Reporting

As described above, we have taken steps to remediate the material weaknesses in our ICFR.

Other than in connection with the remediation process described above, there were no changes in our ICFR (as defined by Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2023, that have materially affected, or are reasonably likely to materially affect, our ICFR.

There have been no changes in our ICFR (as defined by Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, our ICFR.

Other Information.

49 unchanged sentences

001-39852), filed with the SEC on September 14, 2022).

Agreement and Plan of Merger, dated as of August 30, 2024, by and among Denali Capital Acquisition Corp., Denali Merger Sub Inc.

and Semnur Pharmaceuticals, Inc.

(incorporated by reference to Exhibit 2.1 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on September 3, 2024).

Restated Certificate of Incorporation of Scilex Holding Company (incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K (File No.

2 unchanged sentences

001-39852), filed with the SEC on November 17, 2022).

Certificate of Designation of Preferences, Rights and Limitations of Series 1 Mandatory Exchangeable Preferred Stock of Scilex Holding Company (incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on October 28, 2024).

Bylaws of Scilex Holding Company (incorporated by reference to Exhibit 3.3 of our Current Report on Form 8-K (File No.

15 unchanged sentences

001-39852), filed with the SEC on March 5, 2024).

Form of Common Warrant (incorporated by reference to Exhibit 4.1 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on April 25, 2024).

Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.2 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on April 25, 2024).

Warrant to Purchase Common Stock, issued to FSF 33433 LLC on June 18, 2024 (incorporated by reference to Exhibit 4.8 of our Registration Statement on Form S-3 (File No.

333-280882), filed with the SEC on July 18, 2024).

Form of Tranche B Senior Secured Convertible Note issued by Scilex Holding Company.

(incorporated by reference to Exhibit 4.1 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on October 8, 2024).

Form of Warrant to Purchase Common Stock issued by Scilex Holding Company.

(incorporated by reference to Exhibit 4.2 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on October 8, 2024).

Form of Placement Agent Warrant issued by Scilex Holding Company (incorporated by reference to Exhibit 4.3 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on October 8, 2024).

Form of Pre-Funded Warrant issued by Scilex Holding Company (incorporated by reference to Exhibit 4.1 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on December 13, 2024).

Form of Common Warrant issued by Scilex Holding Company (incorporated by reference to Exhibit 4.2 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on December 13, 2024).

Form of StockBlock Warrant issued by Scilex Holding Company (incorporated by reference to Exhibit 4.3 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on December 13, 2024).

Description of Securities of Scilex Holding Company.

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333-264941), filed with the SEC on June 27, 2022).

Consulting Agreement, dated as of September 20, 2023, by and between Scilex Holding Company and Elizabeth Czerepak (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on September 22, 2023).

Office Lease, dated as of August 8, 2019, by and between Scilex Pharmaceuticals Inc.

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333-271401), filed with the SEC on June 29, 2023).

Sublease Agreement, dated as of May 18, 2022, by and between Scilex Holding Company and Live Action, Inc.

(incorporated by reference to Exhibit 10.61 of Amendment No.

2 of Vickers’s Form S-4 (File No.

333-264941), filed with the SEC on July 21, 2022).

Commercial Supply Agreement, dated as of February 16, 2017, by and among Scilex Pharmaceuticals Inc., Oishi Koseido Co., Ltd.

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Second Addendum to Commercial Supply Agreement, dated as of May 9, 2018, by and among Scilex Pharmaceuticals Inc., Oishi Koseido Co., Ltd.

and Itochu Chemical Frontier Corporation (incorporated by reference to Exhibit 10.24 of Amendment No.

and Itochu Chemical Frontier Corporation (incorporated by

reference to Exhibit 10.24 of Amendment No.

2 of Vickers’s Form S-4 (File No.

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333-264941), filed with the SEC on September 13, 2022).

Supply Agreement, dated as of December 17, 2015, by and between Genzyme Corporation and Semnur Pharmaceuticals, Inc.

(incorporated by reference to Exhibit 10.33 of Amendment No.

2 of Vickers’s Form S-4 (File No.

333-264941), filed with the SEC on July 21, 2022).

Product Development Agreement, dated as of May 11, 2011, by and between Scilex Pharmaceuticals, Inc.

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First Amendment to Product Development Agreement, dated as of April 2, 2013, by and between Scilex Pharmaceuticals Inc., Oishi Koseido Co., Ltd.

and Itochu Chemical Frontier Corporation (incorporated by

reference to Exhibit 10.35 of Amendment No.

and Itochu Chemical Frontier Corporation (incorporated by reference to Exhibit 10.35 of Amendment No.

2 of Vickers’s Form S-4 (File No.

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333-264941), filed with the SEC on June 27, 2022).

Second Amendment to Master Services Agreement, dated as of June 6, 2023, by and between Semnur Pharmaceuticals, Inc.

and Lifecore Biomedical, LLC.

Novation Agreement re Master Services Agreement, dated as of June 15, 2022, by and among Scilex Holding Company, Tulex Pharmaceuticals Inc.

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333-264941), filed with the SEC on June 27, 2022).

Securities Purchase Agreement, dated September 21, 2023, by and between Scilex Holding Company, Oramed Pharmaceuticals Inc.

and Acquiom Agency Services LLC (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on September 26, 2023).

Convertible Debenture, dated as of March 21, 2023, executed by Scilex Holding Company (incorporated by reference to Exhibit 4.1 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on March 21, 2023).

Convertible Debenture, dated as of April 11, 2023, executed by Scilex Holding Company (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on April 11, 2023).

Convertible Debenture, dated as of April 20, 2023, executed by Scilex Holding Company (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on April 20, 2023).

Amendment to Convertible Debenture, dated as of October 11, 2023, by and between Scilex Holding Company and YA II PN, Ltd.

(incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on October 11, 2023).

Credit and Security Agreement, dated as of June 27, 2023, by and between Scilex Pharmaceuticals Inc.

and eCapital Healthcare Corp.

(incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on June 27, 2023).

Guaranty Agreement, dated as of June 27, 2023, executed by Scilex Holding Company (incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on June 27, 2023).

10.37+#^

First Amendment to License and Commercialization Agreement, dated as of January 16, 2025, by and between Scilex Holding Company and RxOmeg Therapeutics LLC, a/k/a Romeg Therapeutics, LLC.

Amended and Restated Registration Rights Agreement, dated as of November 10, 2022, by and among Scilex Holding Company, Vickers Venture Fund VI Pte Ltd, Vickers Venture Fund VI (Plan) Pte Ltd, Sorrento Therapeutics, Inc.

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001-39852), filed with the SEC on November 17, 2022).

Amended and Restated Standby Equity Purchase Agreement, dated as of February 8, 2023, by and between Scilex Holding Company and YA II PN, LTD.

(incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on February 9, 2023).

Registration Rights Agreement, dated as of March 21, 2023, by and between Scilex Holding Company and YA II PN, LTD.

(incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on March 21, 2023).

Settlement Agreement, dated September 15, 2023, by and among Scilex Holding Company, Cove Lane Onshore Fund, LLC, HBC Investments LLC and Hudson Bay Capital Management LP (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No.

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001-39852), filed with the SEC on September 26, 2023).

Amendment No.

1 to Securities Purchase Agreement, dated October 8, 2024, by and between Scilex Holding Company and Oramed Pharmaceuticals, Inc.

(incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on October 8, 2024).

Subsidiary Guarantee, dated September 21, 2023, made by certain of the Company’s subsidiaries in favor of the holders of that certain Senior Secured Promissory Note dated as of the date thereof due March 21, 2025 in the original aggregate principal amount of $101,875,000 (incorporated by reference to Exhibit 10.3 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on September 26, 2023).

Security Agreement, dated September 21, 2023, by and among Scilex Holding Company, the Subsidiaries of the Company party thereto, Oramed Pharmaceuticals Inc.

and Acquiom Agency Services LLC (incorporated by reference to Exhibit 10.4 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on September 26, 2023).

Subordination Agreement, dated September 21, 2023, by and among eCapital Health Corp., Scilex Pharmaceuticals Inc.

Subsidiary Guarantee Amendment, dated October 8, 2024, made by certain of the Company’s subsidiaries in favor of the holders of that certain Tranche A Note (incorporated by reference to Exhibit 10.7 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on October 8, 2024).

Amended and Restated Security Agreement, dated October 8, 2024, by and among Scilex Holding Company, the Subsidiaries of the Company party thereto, Oramed Pharmaceuticals Inc.

and Acquiom Agency Services LLC (incorporated by reference to Exhibit 10.8 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on September 26, 2023).

001-39852), filed with the SEC on October 8, 2024).

Stock Purchase Agreement, dated September 21, 2023, by and between Scilex Holding Company and Sorrento Therapeutics, Inc.

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001-39852), filed with the SEC on November 14, 2023).

Scilex Holding Company Insider Trading Policy.

Settlement Agreement, dated February 29, 2024, by and between Scilex Pharmaceuticals Inc., Sorrento Therapeutics, Inc.

and Virpax Pharmaceuticals, Inc.

(incorporated by reference to Exhibit 10.2 of our Quarterly Report on Form 10-Q (File No.

001-39852), filed with the SEC on May 13, 2024).

Form of Securities Purchase Agreement, dated April 23, 2024, by and between Scilex Holding Company and the purchaser party thereto.

(incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on April 25, 2024).

Commitment Side Letter, dated June 11, 2024, by and between Scilex Holding Company and FSF 33433 LLC.

(incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on June 12, 2024).

Sponsor Support Agreement, dated as of August 30, 2024, by and among Denali Capital Acquisition Corp.

and each of the Persons set forth on Schedule I attached thereto.

(incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on September 3, 2024).

Company Stockholder Support Agreement, dated as of August 30, 2024, by and among Scilex Holding Company, Semnur Pharmaceuticals, Inc.

and Denali Capital Acquisition Corp.

(incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on September 3, 2024).

Sponsor Interest Purchase Agreement, dated as of August 30, 2024, by and between Denali Capital Global Investments LLC and Scilex Holding Company.

(incorporated by reference to Exhibit 10.3 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on September 3, 2024).

Contribution and Satisfaction of Indebtedness Agreement, dated as of August 30, 2024 by and between Scilex Holding Company and Semnur Pharmaceuticals, Inc.

(incorporated by reference to Exhibit 10.4 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on September 3, 2024).

Stockholder Agreement, dated as of August 30, 2024, by and between Denali Capital Acquisition Corp.

and Scilex Holding Company (incorporated by reference to Exhibit 10.5 of our Current Report on Form 8-K (File No.001-39852), filed with the SEC on September 3, 2024).

Satisfaction Agreement, dated as of September 17, 2024, by and among Endeavor Distribution LLC, FSF 33433 LLC and Scilex Holding Company.

(incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on September 18, 2024).

Letter Agreement, dated as of September 20, 2024, by and between Oramed Pharmaceuticals Inc.

and Scilex Holding Company.

(incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on September 23, 2024).

Securities Purchase Agreement, dated October 7, 2024, by and between Scilex Holding Company and the investors signatory thereto (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on October 8, 2024).

Purchase and Sale Agreement, dated October 8, 2024, by and among Scilex Holding Company, Silex Pharmaceuticals Inc.

and the purchasers signatory thereto (incorporated by reference to Exhibit 10.3 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on October 8, 2024).

Amendment No.

1 to Purchase and Sale Agreement, dated February 28, 2025, by and among Scilex Holding Company, Scilex Pharmaceuticals Inc., Oramed Pharmaceuticals Inc.

and the other signatories thereto (incorporated by reference to Exhibit 10.4 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on March 3, 2025).

Security Agreement, dated October 8, 2024, by and among Scilex Pharmaceuticals Inc., and the purchasers signatory thereto (incorporated by reference to Exhibit 10.4 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on October 8, 2024).

Subordination Agreement, dated October 8, 2024, by and among Scilex Pharmaceuticals Inc., Acquiom Agency Services LLC and other signatories thereto (incorporated by reference to Exhibit 10.5 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on October 8, 2024).

License Agreement (ZTlido), dated February 22, 2025, by and between Scilex Pharmaceuticals Inc.

and Royaltyvest Ltd.

(incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on February 27, 2025).

Parent Guarantee for Lidocaine License Agreement, dated February 22, 2025, by and between Scilex Holding Company and Royaltyvest Ltd.

(incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on February 27, 2025).

Consent under Securities Purchase Agreement and Senior Secured Promissory Note, dated December 9, 2024, by and among Scilex Holding Company, Oramed Pharmaceuticals Inc., SCLX Stock Acquisition JV LLC and Acquiom Agency Services LLC (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on December 10.

Consent under Securities Purchase Agreement and Tranche B Senior Secured Convertible Note, dated December 9, 2024, by and among Scilex Holding Company, Nomis Bay Ltd, BPY Limited, SCLX Stock Acquisition JV LLC and Acquiom Agency Services LLC (incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on December 10, 2024).

Consent under Securities Purchase Agreement and Tranche B Senior Secured Convertible Note, dated December 9, 2024, by and among Scilex Holding Company, Oramed Pharmaceuticals Inc., SCLX Stock Acquisition JV LLC and Acquiom Agency Services LLC (incorporated by reference to Exhibit 10.3 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on December 10, 2024).

Consent under Securities Purchase Agreement and Tranche B Senior Secured Convertible Note, dated December 9, 2024, by and among Scilex Holding Company, 3i, LP, SCLX Stock Acquisition JV LLC and Acquiom Agency Services LLC (incorporated by reference to Exhibit 10.4 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on December 10, 2024).

Form of Securities Purchase Agreement, dated December 11, 2024, by and between the Company and the purchasers party thereto (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No.

001-39852), filed with the SEC on December 13, 2024).

Scilex Holding Company Insider Trading Policy (incorporated by reference to Exhibit 19.1 of our Annual Report on Form 10-K (File No.

001-39852), filed with the SEC on March 12, 2024).

List of Subsidiaries of the Registrant (incorporated by reference to Exhibit 21.1 of our Form S-1 (File No.

333-275117), filed with the SEC on October 20, 2023).

Consent of Ernst & Young LLP, independent registered public accounting firm.

Consent of BPM LLP, independent registered public accounting firm.

Power of Attorney (included on the signature page hereto).

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Certification of Jaisim Shah, Principal Executive Officer, and Stephen Ma, Principal Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Scilex Holding Company Clawback Policy.

Scilex Holding Company Clawback Policy (incorporated by reference to Exhibit 97.1 of our Annual Report on Form 10-K (File No.

001-39852), filed with the SEC on March 12, 2024).

Inline XBRL Instance Document.

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Jay Chun, M.D., Ph.D.

/s/ David Lemus

March 11, 2024

/s/ Yue Alexander Wu

1 unchanged sentence

Yue Alexander Wu, Ph.D.

/s/ Annu Navani

March 31, 2025

Annu Navani, M.D.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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Consolidated Balance Sheets as of December 31, 2024 and 2023

Consolidated Statements of Operations for the Years ended December 31, 2023, 2022 and 2021

Consolidated Statements of Stockholders’ (Deficit) / Equity for the Years ended December 31, 2023, 2022 and 2021

Consolidated Statements of Operations and Comprehensive Loss for the Years ended December 31, 2024 and 2023

Consolidated Statements of Stockholders’ Equity / (Deficit) for the Years ended December 31, 2024 and 2023

Consolidated Statements of Cash Flows for the Years ended December 31, 2024 and 2023

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Report of Independent Registered Public Accounting Firm

To the stockholders and the Board of Directors of

To the Board of Directors and stockholders of

Scilex Holding Company

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Scilex Holding Company (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, stockholders’ (deficit)/equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S.

generally accepted accounting principles.

The Company’s Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 2 to the financial statements, the Company has negative working capital, has suffered losses from operations, has recurring negative cash flows from operations, and has stated that substantial doubt exists about the Company’s ability to continue as a going concern.

Management’s evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 2.

We have audited the accompanying consolidated balance sheets of Scilex Holding Company and Subsidiaries (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity/(deficit), and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of their operations and cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the entity will continue as a going concern.

As discussed in Note 2 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern.

Management's plans in regard to these matters are also described in Note 2.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

These consolidated financial statements are the responsibility of the entity’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

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We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company's auditor since 2024.

San Diego, California

Walnut Creek, California

March 31, 2025

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Accounts receivable, net

Prepaid expenses and other

Prepaid expenses and other current assets

Total current assets

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Other long-term assets

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities:

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Debt, current

Purchased revenue liability, current

Current portion of operating lease liabilities

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Debt, net of issuance costs

Purchased revenue liability, net of current portion

Derivative liabilities

Operating lease liabilities

Operating lease liabilities, net of current portion

Other long-term liabilities

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Commitments and contingencies (See Note 11)

Stockholders’ (deficit) equity:

Stockholders’ deficit:

Preferred stock, $ 0.0001 par value, 45,000,000 shares authorized

29,057,097 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively

Series A, 29,057,097 shares issued and outstanding as of each of December 31, 2024 and December 31, 2023

Series 1, 5,000,000 shares declared as a stock dividend, not yet distributed as of December 31, 2024;

no shares authorized, issued and outstanding as of December 31, 2023

Common stock, $ 0.0001 par value, 740,000,000 shares authorized;

243,312,885 shares issued and 183,244,300 shares outstanding as of December 31, 2024;

141,348,856 shares issued and outstanding as of December 31, 2022

160,084,250 shares issued and 100,015,665 shares outstanding as of December 31, 2023

Additional paid-in capital

Accumulated other comprehensive income

Accumulated deficit

Treasury stock, at cost;

60,068,585 shares and nil shares as of December 31, 2023 and December 31, 2022, respectively

Total stockholders’ (deficit) equity

Total liabilities and stockholders’ (deficit) equity

60,068,585 shares as of each of December 31, 2024 and December 31, 2023

Total stockholders’ deficit

Total liabilities and stockholders’ deficit

See accompanying notes to audited consolidated financial statements

SCILEX HOLDING COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except for net loss per share amounts)

Year Ended December 31,

Operating costs and expenses:

Net operating costs and expenses:

Cost of revenue

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Intangible amortization

Total operating costs and expenses

Legal settlements

Total net operating costs and expenses

Loss from operations

Other (income) expense:

Loss (gain) on derivative liability

Other (income) expense, net:

(Gain) loss on derivative liability

Change in fair value of debt and liability instruments

(Gain) loss on debt extinguishment, net

Scilex Pharma Notes principal increase

Interest expense, net

Loss on foreign currency exchange

Total other (income) expense

Total other (income) expense, net

Loss before income taxes

Income tax expense

Net loss per share attributable to common stockholders — basic and diluted

Weighted average number of shares during the period — basic and diluted

Income tax (benefit) expense

Net loss per share attributable to common stockholders — basic

Net loss per share attributable to common stockholders — diluted

Weighted average number of shares during the period — basic

Weighted average number of shares during the period — diluted

Comprehensive loss:

Other comprehensive income:

Changes in fair value attributable to instrument-specific credit risk

Total other comprehensive income

Comprehensive loss

See accompanying notes to audited consolidated financial statements

SCILEX HOLDING COMPANY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) / EQUITY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY / (DEFICIT )

(In thousands)

Preferred Stock

Accumulated Other

Treasury Stock

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Paid-in Capital

(Deficit) Equity

Balance, December 31, 2020

Stock-based compensation

Adjustment to shares issued in Semnur Acquisition

Balance, December 31, 2021

Stock options exercised

Aardvark SP-104 license transfer from Sorrento, net of discount

Aardvark SP-104 discount amortization

Shares issued pursuant to the terms of the Debt Exchange Agreement

Shares issued as a result of the Business Combination, net of transaction activities

Shares issued to Yorkville pursuant to Yorkville Purchase Agreement

Stock-based compensation

Comprehensive Income

Equity (Deficit)

Balance, December 31, 2022

Shares issued under Standby Equity Purchase Agreements

Shares issued under the Standby Equity Purchase Agreements

Disbursement of funds to Sorrento

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Balance, December 31, 2023

Shares issued under the Standby Equity Purchase Agreements and under the ATM Sales Agreement

Shares issued under the February 2024 BDO

Shares issued under the April 2024 RDO

April 2024 RDO Placement Agent Warrants and February 2024 BDO Representative Warrants

Retainer shares issued

Fee Warrant issued in connection with the Commitment Letter

Repurchase of warrants

Common stock issuable under the SIPA

Placement Agent Shares and October 2024 Placement Agent Warrants

Conversion of Tranche B Notes into common stock

Shares issued under December 2024 RDO

StockBlock Warrants issued in connection with the December 2024 RDO

Stock dividend declared, not yet distributed

Issuance of common stock upon warrants exercise

Shares issued under ESPP

Stock options exercised

Stock-based compensation

Other comprehensive income

Balance, December 31, 2024

See accompanying notes to audited consolidated financial statements

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Operating activities

Adjustments to reconcile net loss to net cash used for operating activities:

Adjustments to reconcile net loss to net cash proceeds from (used for) operating activities:

Depreciation and amortization

Amortization of debt issuance costs and debt discount

Scilex Pharma Notes principal increase

Payment on the Scilex Pharma Notes attributed to accreted interest related to the debt discount

(Gain) loss on debt extinguishment, net

Non-cash operating lease cost

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Issuance of shares under Settlement Agreement

Loss (gain) on derivative liability

Forfeitures of private warrants

(Gain) loss on derivative liability

Allocated expense for financial instruments at fair value

Change in fair value of debt and liability instruments

Allowances for expected credit losses

Changes in operating assets and liabilities:

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Accrued rebates and fees

Other liabilities

Related party payable

Operating lease liability

Other long-term liabilities

Net cash used for operating activities

Net cash proceeds from (used for) operating activities

Investing activities

Acquisition consideration paid in cash for Romeg intangible asset acquisition

Purchase of equity securities

Purchase of convertible promissory note from Denali

Purchase of property and equipment

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Financing activities

Proceeds from issuance of shares under Standby Equity Purchase Agreements

Proceeds from issuance of shares under Standby Equity Purchase Agreements and ATM Sales Agreement

Proceeds from issuance of Convertible Debentures

Repayment of Convertible Debentures

Proceeds from issuance of Revolving Facility

Proceeds from issuance of FSF Deposit

Proceeds from issuance of Tranche B Notes and purchased revenue liability

Repayment of Revolving Facility

Repayment of Oramed Note

Cash consideration paid in connection with warrant repurchase

Transaction costs paid related to the Business Combination

Repayment of Convertible Debentures

Repayment of Tranche B Notes

Payments of debt issuance costs

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Transaction costs paid in connection with share repurchase

Proceeds from the Business Combination

Proceeds from stock options and warrants exercised

Proceeds from related party payable

Proceeds from related party note payable

Proceeds from other loans

Repayment of principal on the Scilex Pharma Notes

Repayment on other loans

Net cash proceeds from financing activities

Excise tax paid in connection with share repurchase

Proceeds from issuance of shares under direct offerings

Payments of direct offering issuance costs

Payments of deferred transaction costs related to Semnur Business Combination

Proceeds from stock options and warrants exercised and ESPP

Net cash (used for) proceeds from financing activities

Net change in cash, cash equivalents and restricted cash

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Riley Purchase Agreement

Issuance costs related to direct offerings included in accrued expenses and account payables

Fee Warrants issued and exercised in connection with the Commitment Letter

Settlement of FSF Deposit

Deferred transaction costs related to Semnur Business Combination included in accrued expenses and account payable

Conversion of Oramed Note into Tranche B Notes

Conversion of Tranche B Notes into common stock

Debt issuance costs included in accrued expenses

Placement Agent Shares and October 2024 Placement Agent Warrants

StockBlock Warrants issued in connection with the December 2024 RDO

Conversion of Convertible Debentures into common stock

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Oramed Note issuance at fair value

Year Ended December 31,

Other non-cash consideration in connection with share repurchase

Excise tax in connection with share repurchase included in accrued expenses

Related party debt converted to equity pursuant to Debt Exchange Agreement

Deferred consideration for Romeg intangible asset acquisition

Promissory Note issued to Sorrento in exchange for the SP-104 license

Fair value adjustment to derivative liability in troubled debt restructuring

Scilex Pharma Notes principal increase

Transaction costs obligation assumed by Sorrento

See accompanying notes to audited consolidated financial statements

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Organization and Principal Activities

Scilex Holding Company (“Scilex” and together with its wholly owned subsidiaries, the “Company”) is the successor entity to Vickers Vantage Corp.

I (“Vickers”), a special purpose acquisition company.

The 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 Holding Company (“Scilex” and together with its wholly owned subsidiaries, the “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.

The Company was originally formed in 2019 and currently has five wholly owned subsidiaries, Scilex Inc.

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The Company launched its first commercial product in October 2018, ZTlido (lidocaine topical system) 1.8% (“ZTlido”), a prescription lidocaine topical system that is designed with novel technology to address the limitations of current prescription lidocaine therapies by providing significantly improved adhesion and continuous pain relief throughout the 12-hour administration period.

The Company in-licensed the exclusive right to commercialize GLOPERBA (colchicine USP) oral solution (“GLOPERBA”), a U.S.

In June 2022, the Company in-licensed the exclusive right to commercialize GLOPERBA (colchicine USP) oral solution (“GLOPERBA”), a U.S.

Food and Drug Administration (“FDA”)-approved prophylactic treatment for painful gout flares in adults, in the United States (“U.S.”).

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ELYXYB is a 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.

In April 2023, the Company launched ELYXYB in the U.S.

The Company expects to commercialize GLOPERBA in the U.S.

in the first half of 2024.

The Company is currently developing three product candidates, SP-102 (10 mg, dexamethasone sodium phosphate viscous gel), a novel, viscous gel formulation of a widely used corticosteroid for epidural injections to treat lumbosacral radicular pain, or sciatica for which the Company has completed a Phase 3 study (“SP-102” or “SEMDEXA”), SP-103 (lidocaine topical system) 5.4% (“SP-103”), a next-generation, triple-strength formulation of ZTlido, for the treatment of chronic neck pain and for which the Company has recently completed a Phase 2 trial in low back pain, and SP-104 (4.5 mg, low-dose naltrexone hydrochloride delayed-burst release low dose naltrexone hydrochloride 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 and a Phase 2 clinical trial is expected to commence in 2024.

The Company launched ELYXYB in the U.S.

in April 2023 and commercialized GLOPERBA in the U.S.

in June 2024.

The Company is currently developing three product candidates, SP-102 (10 mg, dexamethasone sodium phosphate viscous gel), a novel, viscous gel formulation of a widely used corticosteroid for epidural injections to treat lumbosacral radicular pain, or sciatica for which the Company has completed a Phase 3 study (“SP-102” or “SEMDEXA”), SP-103 (lidocaine topical system) 5.4% (“SP-103”), a next-generation, triple-strength formulation of ZTlido, for the treatment of chronic neck pain and for which the Company completed a Phase 2 trial in acute low back pain (“LBP”) in the third quarter of 2023, and SP-104 (4.5 mg, low-dose naltrexone hydrochloride delayed-burst release low dose naltrexone hydrochloride 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.

Since inception, the Company has devoted substantially all of its efforts to the development of SP-102, SP-103 and SP-104, and the commercialization of ZTlido.

In 2024, the Company will also devote efforts on the commercialization of GLOPERBA and ELYXYB.

Sorrento Chapter 11 Filing

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While the Company was majority-owned by Sorrento, the Company was not a debtor in the Chapter 11 Cases.

As of December 31, 2023, Sorrento no longer holds a majority of the voting power of the Company’s outstanding capital stock entitled to vote.

Pursuant to that certain Stock Purchase Agreement that the Company entered into with Sorrento on September 21, 2023 (the “Sorrento SPA”), the Company repurchased shares of its Common Stock, par value $ 0.0001 per share (the “Common Stock”), and Series A Preferred Stock, par value $ 0.0001 per share (the “Series A Preferred Stock”), from Sorrento.

As a result, Sorrento no longer holds a majority of the voting power of the Company’s outstanding capital stock entitled to vote.

As of December 31, 2024, the Company had a $ 3.2 million receivable from Sorrento, which was fully reserved.

The Company evaluates the collectability of this receivable on a quarterly basis.

Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) and include all adjustments necessary for the fair presentation of the Company’s financial position for the periods presented.

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All intercompany balances and transactions have been eliminated in consolidation.

Operating segments are identified as components of an entity where separate discrete financial information is available for evaluation by the chief operating decision maker in making decisions on how to allocate resources and assessing performance.

The Company has determined that its chief operating decision maker is its Chief Executive Officer, as he is responsible for making decisions regarding the allocation of resources and assessing performance as well as for strategic operational decisions.

Operating segments are identified as components of an entity where separate discrete financial information is available for evaluation by the chief operating decision maker (the “CODM”) in making decisions on how to allocate resources and assessing performance.

The Company has determined that its CODM is its Chief Executive Officer.

The Company is engaged primarily in the development of non-opioid products focused on pain management based on its platform technologies and all sales are based in the United States.

Accordingly, the Company has determined that it operates its business as a single reportable segment.

The CODM reviews consolidated operating results to make decisions about allocating resources and assessing performance for the entire Company based on consolidated results that are reported on the consolidated statements of operations and comprehensive loss.

The Company has also evaluated the significant segment expenses incurred by the single segment that are regularly provided to the CODM and concluded they are consistent with those reported on the consolidated statements of operations and comprehensive loss and include cost of revenue, research and development, selling, general and administrative.

The Company manages assets on a consolidated basis as reported on the consolidated balance sheets.

Accordingly, the consolidated financial statements and accompanying notes contained herein include the measure of profit or loss, net revenue, categories of expenses, assets and other financial information that is evaluated by the CODM.

Use of Estimates

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GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of these consolidated financial statements and the reported amounts of expenses during the reporting period.

These estimates include, but are not limited to, revenue recognition, fair value of financial instruments and certain assumptions used in estimating stock-based compensation.

Management believes that these estimates are reasonable;

however, actual results may differ from these estimates.

Customer Concentration Risk

Prior to April 2022, sales to the Company’s sole distributor represented 100 % of net revenue.

In April 2022, the Company announced the expansion of its direct distribution network to national and regional wholesalers and pharmacies.

The Company had three and four customers during the years ended December 31, 2023 and 2022 , respectively, each of which individually generated 10 % or more of the Company’s total revenue.

Customer and Supplier Concentration Risk

The Company had three customers during the years ended December 31, 2024 and 2023 , each of which individually generated 10 % or more of the Company’s total revenue.

These customers accounted for 86 % and 85 % of the Company’s revenue for the years ended December 31, 2024 and 2023, respectively, individually ranging from 23 % to 34 % and 22 % to 32 %, respectively.

As of December 31, 2023 and 2022, these customers represented 91 % and 90 % of the Company’s outstanding accounts receivable, respectively, individually ranging between 24 % and 36 % for both periods.

As of December 31, 2024 and 2023, three customers represented 95 % and 91 % of the Company’s outstanding accounts receivable, respectively, individually ranging between 30 % and 33 % and 24 % and 36 % for respective periods.

Additionally, during the years ended December 31, 2024 and 2023, the Company purchased ZTlido inventory from its sole supplier, Itochu Chemical Frontier Corporation (“Itochu”).

In November 2023 and February 2024, respectively, the Company started purchasing ELYXYB and GLOPERBA inventories from its sole suppliers, Contract Pharmaceuticals Ltd Canada (CPL) and Ferndale Laboratories, Inc., respectively.

This exposes the Company to concentration of customer and supplier risk.

The Company monitors the financial condition of its customers, limits its credit exposure by setting credit limits, and has not experienced any credit losses during the years ended December 31, 2023 and 2022 .

The Company monitors the financial condition of its customers and limits its credit exposure by setting credit limits.

During the years ended December 31, 2024 and 2023, the Company had allowances for expected credit losses of $ 1.2 million and nil , respectively.

Fair Value Measurements

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The carrying values of the Company’s financial assets and liabilities, including cash and cash equivalents, restricted cash, prepaid and other current assets, accounts payable and accrued expenses approximate to their fair value due to the short-term nature of these instruments.

The derivative warrant liability associated with the Private Warrants (as defined below) is valued using the Black-Scholes option pricing model, which is further discussed in Note 4.

The Company elected the fair value option to account for the Convertible Debentures (as defined below) in an aggregate principal amount of up to $ 25.0 million that were issued in March and April 2023 and for the Oramed Note (as defined below) in the principal amount of $ 101.9 million that was issued in September 2023 (see Note 7 titled “ Debt” below).

These instruments are measured at fair value on a recurring basis using Level 3 inputs.

The Binomial Lattice Model valuation technique and a discounted cash flow model were employed to measure the fair value of the Convertible Debentures and the Oramed Note, respectively.

The Revolving Facility (as defined below) in an aggregate principal amount of up to $ 30.0 million was issued in June 2023 (see Note 7 titled “ Debt” below).

The Company accounts for the Revolving Facility using the amortized cost basis and recognizes interest expense over the expected term using the effective interest rate method.

The carrying value of the Revolving Facility approximates its fair value.

The valuation of the derivative warrant liability for the Private Warrants, the February 2024 BDO Firm Warrants, the Deposit Warrant, the April RDO Warrants, the October 2024 Noteholder Warrants and the December 2024 RDO Common Warrants (each as defined below) is outlined in Note 4, utilizing the Black-Scholes option pricing model.

The Company has chosen the fair value option for the Convertible Debentures, Oramed Note, FSF Deposit and Tranche B Notes (each as defined below), with the valuation methodologies detailed in Note 7.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date.

Assets and liabilities recorded at fair value are categorized based

upon the level of judgment associated with the inputs used to measure their fair value.

Assets and liabilities recorded at fair

value are categorized based upon the level of judgment associated with the inputs used to measure their fair value.

Hierarchical levels are directly related to the amount of subjectivity with the inputs to the valuation of these assets or liabilities as follows:

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The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents are valued at cost, which approximate their fair value.

Restricted cash as of December 31, 2023 consist of deposits placed in a segregated bank account as required under the terms of the Credit and Security Agreement, dated as of June 27, 2023, between Scilex Pharma and eCapital Healthcare Corp., which is discussed further in Note 7.

Restricted cash is recorded as other long-term assets within the Company’s consolidated balance sheet.

Restricted cash as of December 31, 2023 consisted of deposits placed in a segregated bank account as required under the terms of the eCapital Credit Agreement (as defined below), which is discussed further in Note 7.

Restricted cash was recorded as other long-term assets within the Company’s consolidated balance sheet.

There is no restricted cash as of December 31, 2024, because Scilex Pharma paid off the outstanding amount of all obligations and indebtedness under the eCapital Credit Agreement in October 2024, which agreement was terminated thereafter.

Cash equivalents were immaterial as of December 31, 2024 and 2023.

T he following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that together reflect the same amounts shown in the consolidated statements of cash flows (in thousands):

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When internal collection efforts on accounts have been exhausted, the accounts are written off by reducing the allowance for expected credit losses.

As of December 31, 2024, the Company recorded $ 1.2 million of allowances for credit losses on its accounts receivable.

As of December 31, 2023 , the Company did no t deem any allowances for expected credit losses on its accounts receivable necessary.

The Company determines inventory cost on a first-in, first-out basis.

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Inventory costs resulting from these adjustments are recognized as cost of sales in the period in which they are incurred.

When future commercialization is considered probable and the future economic benefit is expected to be realized, based on management’s judgment, the Company capitalizes pre-launch inventory costs prior to regulatory approval.

When future commercialization

is considered probable and the future economic benefit is expected to be realized, based on management’s judgment, the Company capitalizes pre-launch inventory costs prior to regulatory approval.

As of December 31, 2024 and 2023 , the Company’s inventory was primarily comprised of finished goods.

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When the Company determines net assets acquired do not meet the definition of a business combination under the acquisition method of accounting, the transaction is accounted for as an acquisition of assets and, therefore, no goodwill is recorded and contingent consideration such as payments upon achievement of various developmental, regulatory and commercial milestones generally is not recognized at the acquisition date.

In an asset acquisition, up-front payments allocated to IPR&D projects at the acquisition date and subsequent milestone payments are charged to expense in the Company`s consolidated statements of operations unless there is an alternative future use.

The Company has acquired and may continue to acquire the rights to develop and commercialize new product candidates.

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The factors that drive the estimate of useful life are often uncertain and are reviewed on a periodic basis or when events occur that warrant review.

Recoverability is measured by comparison of the assets’ book value to future net undiscounted cash flows that the assets are expected to generate to determine if a write-down to the recoverable amount is appropriate.

Recoverability is measured by comparison of

the assets’ book value to future net undiscounted cash flows that the assets are expected to generate to determine if a write-down to the recoverable amount is appropriate.

If such assets are written down, an impairment will be recognized as the amount by which the book value of the asset group exceeds the recoverable amount.

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The significant inputs of such models are not observable in the market, such as certain financial metric growth rates, volatility rates, projections associated with applicable milestones, discount rates and the related probabilities and payment structure in the contingent consideration arrangement.

Fair value adjustments to contingent consideration liabilities are recorded through operating expenses in the consolidated statement of operations.

Fair value adjustments to contingent consideration liabilities are recorded through operating expenses in the consolidated statements of operations and comprehensive loss.

Other than contingent consideration that is accounted for in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 480, Distinguishing Liabilities from Equity, and Topic 815, Derivatives and Hedging , contingent consideration arrangements assumed in an asset acquisition will be measured and accrued when such contingency is resolved.

Public Warrants and Private Warrants

Upon completion of the Business Combination, the Company assumed public and private placement warrants to purchase Common Stock, each with an exercise price of $ 11.50 per share (“Public Warrants” and “Private Warrants”, respectively, and collectively, the “SPAC Warrants”) that were issued by Vickers in connection with its initial public offering (declared effective by the Securities and Exchange Commission (“SEC”) on January 11, 2021) whereby holders of the public and private placement warrants are entitled to acquire ordinary shares of Vickers.

Subsequent to the Business Combination, the Public Warrants were accounted for as equity per FASB ASC Subtopic No.

815-40, Contracts on an Entity’s Own Equity.

In accordance with ASC Subtopic No.

815-40, Contracts on an Entity’s Own Equity, the Company determines how to account for warrants either assumed in connection with the Business Combination or issued under various financing arrangements.

Warrants classified as equity are recorded at their issuance cost and are not subject to remeasurement at each subsequent balance sheet date.

Subsequent to the Business Combination, the Private Warrants were accounted for as liabilities per ASC Subtopic 815-40.

The Private Warrants are not considered indexed to the Company’s stock per ASC Subtopic 815-40 as the fair value calculation applicable upon a cashless exercise of a Private Warrant changes based upon the holder of the instrument, which is not an input to a valuation model for a fixed-for-fixed option contract.

Therefore, Private Warrants are recognized as derivative liabilities at their estimated fair value on November 10, 2022, the date of the closing of the Business Combination, and are revalued at each subsequent balance sheet date, with fair value changes recognized in the statement of operations.

The Company records them in additional paid-in capital in the Company’s consolidated balance sheets.

Warrants accounted for as liabilities are recorded at their estimated fair value on the date of issuance and are revalued at each subsequent balance sheet date, with fair value changes recognized in the consolidated statement of operations.

The Company estimates the value of these warrants using a Black-Scholes option pricing formula.

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This involves estimating future net product sales, determining interest expense, determining the amortization period of the debt discount, as well as determining the classification between current and long-term portions.

Convertible Debentures and the Oramed Note

The Company has elected the fair value option to account for the Convertible Debentures (as defined in Note 2 “ Liquidity and Going Concern ” below) that were issued in March and April 2023, as discussed further in Note 7.

The Company has also elected the fair value option to account for the Oramed Note (as defined in Note 4 “ Fair Value Measurements ” below).

The Company recorded the Convertible Debentures and the Oramed Note at fair value upon issuance with changes in fair value recorded as change in fair value of debt and liability instruments in the consolidated statements of operations, with the exception of changes in fair value due to instrument-specific credit risk, if any, which are recorded as a component of other comprehensive income.

Convertible Debentures, the Oramed Note, FSF Deposit and Tranche B Notes

The Company has elected the fair value option to account for the Convertible Debentures, the FSF Deposit, the Tranche B Notes (each as defined in Note 2 “ Liquidity and Going Concern ” below) and the Oramed Note (as defined in Note 4 “ Fair Value Measurements ” below) that were issued in March and April 2023, June 2024, October 2024 and September 2023, respectively, as discussed further in Note 7.

The Company recorded these financial instruments at fair value upon issuance with changes in fair value recorded as change in fair value of debt and liability instruments in the consolidated statements of operations, with the exception of changes in fair value due to instrument-specific credit risk, if any, which are recorded as a component of other comprehensive income.

Interest expense related to these financial instruments is included in the changes in fair value.

As a result of applying the fair value option, direct costs and fees related to the Convertible Debentures and the Oramed Note were expensed as incurred.

The weighted-average interest rates for the short-term loans, including the Convertible Debentures and the Oramed Note, were 13.55 % and nil for the years ended December 31, 2023 and 2022, respectively.

As a result of applying the fair value option, direct costs and fees related to these financial instruments were expensed as incurred.

The weighted-average interest rates for the short-term loans, including these financial instruments, were 6.67 % and 13.55 % for the years ended December 31, 2024 and 2023 , respectively.

Purchased Revenue Liability

The purchased revenue liability is associated with the Purchase and Sale Agreement (the “ZTlido Royalty Purchase Agreement”) that the Company entered into in October 2024 (Note 7).

The Company elected the fair value option to account for the purchased revenue liability (as described in Note 4 “Fair Value Measurements” below).

The Company recorded the ZTlido Royalty Purchase Agreement at fair value upon issuance with changes in fair value recorded as change in fair value of debt and liability instruments in the consolidated statements of operations, with the exception

of changes in fair value due to instrument-specific credit risk, if any, which are recorded as a component of other comprehensive income.

Interest expense related to these financial instruments is included in the changes in fair value.

As a result of applying the fair value option, direct costs and fees related to the purchased revenue liability were expensed as incurred.

Derivative Liabilities

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In come Taxes

The provisions of the FASB ASC Topic 740, Income Taxes, address the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.

The provisions of the FASB ASC Topic 740, Income Taxes , address the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements.

Under ASC Subtopic 740-10, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position.

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The Company does not incur significant direct costs to obtain contracts with its customers.

Revenue from product sales is comprised of sales of ZTlido and ELYXYB.

The Company’s performance obligation with respect to sales of ZTlido and ELYXYB is satisfied at a point in time, when control is transferred upon delivery of product to the customer.

The Company considers control to have transferred upon delivery because the customer has legal title to the product, physical possession of the product has been transferred to the customer, the customer has significant risks and rewards of ownership of the product, and the Company has a present right to payment at that time.

Revenue from product sales is comprised of sales of ZTlido, ELYXYB and GLOPERBA.

The Company’s performance obligation with respect to sales of ZTlido, ELYXYB and GLOPERBA is satisfied at a point-in-time, when control is transferred upon delivery of product to the customer.

Company has a present right to payment at that time.

Invoicing typically occurs upon shipment and the length of time between invoicing and when payment is due is not significant.

The aggregate dollar value of unfulfilled orders as of December 31, 2024 and 2023 were not material.

Revenues from product sales are recorded net of reserves established for commercial and government rebates, fees and chargebacks, wholesaler and distributor fees, sales returns and prompt payment discounts.

Such variable

consideration is estimated in the period of the sale and is estimated using a most likely amount approach based primarily upon provisions included in the Company’s customer contract, customary industry practices and current government regulations.

Such variable consideration is estimated in the period of the sale and is estimated using a most likely amount approach based primarily upon provisions included in the Company’s customer contract, customary industry practices and current government regulations.

Rebates and Chargebacks

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The Company monitors the sales trends and adjusts for these rebates on a regular basis to reflect the most recent rebate experience and contractual obligations.

Reserves for rebates and chargebacks are now separately presented as accrued rebates and fees under current liabilities within the Company’s consolidated balance sheet.

Reserves for rebates and chargebacks are separately presented as accrued rebates and fees under current liabilities within the Company’s consolidated balance sheets.

Prompt Payment Discounts

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The Company has determined such services received to date are not distinct from the Company’s sale of products to the customer and, therefore, these payments have been recorded as a reduction of revenue.

Service fees are presented as accrued rebates and fees under current liabilities within the Company’s consolidated balance sheets.

Product Returns

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The Company estimates the amount of its product sales that may be returned by its customer and records this estimate as a reduction of revenue in the period the related product revenue is recognized.

Product returns are presented as accrued rebates and fees under current liabilities within the Company’s consolidated balance sheets.

Co-Payment Assistance

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The Company accrues for co-payment assistance based on actual program participation and estimates of program redemption using data provided by third-party administrators.

Co-payment assistance is presented as accrued rebates and fees under current liabilities within the Company’s consolidated balance sheets.

Stock-Based Compensation

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The Company accounts for forfeitures as incurred.

term of the option and its ordinary vesting period since the Company does not have historic exercise behavior.

For purposes of determining the inputs used in the calculation of stock-based compensation, the Company determines the expected life assumption for options issued using the simplified method, which is an average of the contractual term of the option and its ordinary vesting period since the Company does not have historic exercise behavior.

Then the Company determines an estimate of option volatility based on an assessment of historical volatilities of comparable companies whose share prices are publicly available.

The Company uses these estimates as variables in the Black-Scholes option pricing model.

Depending upon the number of stock options granted, any fluctuations in these calculations could have a material effect on the results presented in our consolidated statement of operations.

Depending upon the number of stock options granted, any fluctuations in these calculations could have a material effect on the results presented in our consolidated statements of operations and comprehensive loss.

Treasury Stock

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Basic and diluted net loss per share attributable to common stockholders is presented in conformity with the two-class method required for participating securities.

Net loss per share has been retrospectively adjusted for all periods presented prior to the Business Combination.

Under the two-class method, basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

Diluted earnings per share attributable to common stockholders adjusts basic earnings per share for the potentially dilutive impact of stock options and warrants.

As the Company has reported losses for all periods presented, all potentially dilutive securities are antidilutive and accordingly, basic net loss per share equals diluted net loss per share.

Recently Adopted Accounting Pronouncements

In October 2021, FASB issued Accounting Standards Updates (“ASU”) 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”) , which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with ASC Topic 606.

ASU 2021-08 is effective for fiscal years beginning after December 15, 2022.

ASU 2021-08 should be applied prospectively to business combinations occurring on or after the adoption date.

The Company adopted this guidance as of January 1, 2023 and the adoption did not have a material impact on the Company’s consolidated financial statements.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”), which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered when measuring fair value.

Recognizing such a restriction as a separate unit of account is also not permitted.

ASU 2022-03 is effective for fiscal years beginning after December 15, 2023, with early adoption permitted.

The Company elected to early adopt this guidance as of January 1, 2023 and the adoption did not have a material impact on the Company’s consolidated financial statements.

Diluted earnings per share attributable to common stockholders adjusts basic earnings per share for the potentially dilutive impact of stock options and warrants, which consists of the incremental Common Stock issuable upon the exercise of stock options and warrants (using the treasury stock method or the reverse treasury stock method, as applicable).

In accordance with FASB ASC 260, Earnings Per Share, Penny Warrants are warrants that would be exercised for no or little consideration and therefore should be included in the calculation of weighted average shares outstanding for purposes of calculating basic and diluted net income (loss) per share to the extent all vesting conditions or exercise contingencies are removed except for the passage of time.

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU No.

2023-07, Improvements to Reportable Segment Disclosures (Topic 280), which requires disclosures of significant reportable segment expenses that are regularly provided to the CODM and included within each reported measure of a segment’s profit or loss.

This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources.

The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company adopted this ASU retrospectively on December 31, 2024.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

The update requires a public business entity to disclose, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold.

In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5 % of total income tax payments, net of refunds received.

of the ASU allows for either the prospective or retrospective application of the amendment and is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of this amendment on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures , which will require additional expense disclosures for all public entities.

The amendments require that at each interim and annual reporting period, an entity will disclose certain disaggregated expenses included in each relevant expense caption, as well as the total amount of selling expenses and, in annual periods, an entity’s definition of selling expenses.

ASU 2024-03 is effective for annual reporting periods beginning with the fiscal year ending December 31, 2027, and interim periods thereafter, with early adoption permitted.

The Company is currently evaluating the incremental disclosures that will be required in its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-04, Debt—Debt with Conversion and Other Options , which clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion.

ASU 2024-04 is effective for annual reporting periods beginning after December 15, 2025 and interim reporting periods within those annual reporting periods.

Early adoption is permitted for all entities that have adopted the amendments in ASU 2020-06.

The Company is currently evaluating the impact of this amendment on its consolidated financial statements.

Liquidity and Going Concern

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On February 8, 2023, the Company entered into an amended and restated standby equity purchase agreement with Yorkville (the “A&R Yorkville Purchase Agreement”), amending, restating and superseding the Original Purchase Agreement.

On, and effective as of, March 25, 2024, the Company and Yorkville mutually agreed to terminate the A&R Yorkville Purchase Agreement.

On January 8, 2023, the Company entered into a standby equity purchase agreement (the “B.

Riley Purchase Agreement” and together with A&R Yorkville Purchase Agreement, the “Standby Equity Purchase Agreements”) with B.

Principal Capital II, LLC (“B.

Pursuant to each of the Standby Equity Purchase Agreements, the Company has the right, but not the obligation, to sell to each of Yorkville and B.

Riley Principal Capital II, LLC (“B.

Pursuant to each of the Standby Equity Purchase Agreements, the Company had the right, but not the obligation, to sell to each of Yorkville and B.

Riley up to $ 500.0 million of shares of the Company’s common stock, par value $ 0.0001 per share (the “Common Stock”) at its request any time during the 36 months following the date on which the registration statement related to each such purchase agreement was initially declared effective by the SEC, subject to certain conditions, which are discussed further in Note 9.

On, and effective as of, February 16, 2024, the Company and B.

Riley mutually agreed to terminate the B.

Riley Purchase Agreement.

As consideration for Yorkville’s and B.

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Riley Commitment Shares”).

On March 21, 2023, the Company entered into a securities purchase agreement with Yorkville (the “Yorkville SPA”), pursuant to which the Company would issue and sell to Yorkville convertible debentures in an aggregate principal amount of up to $ 25.0 million (the “Convertible Debentures”).

As of December 31, 2023, Convertible Debentures in the principal amount of $ 25.0 million (for net cash proceeds of $ 24.0 million ) were issued and sold pursuant to the Yorkville SPA, which is discussed further in Note 7.

On, and effective as of, February 16, 2024, the Company and B.

Riley mutually agreed to terminate the B.

Riley Purchase Agreement.

On March 21, 2023, the Company entered into a securities purchase agreement with Yorkville (the “Yorkville SPA”), pursuant to which the Company issued and sold to Yorkville convertible debentures in an aggregate principal amount of up to $ 25.0 million (the “Convertible Debentures”) for net cash proceeds of $ 24.0 million , as discussed further in Note 7.

The Company fully repaid the Convertible Debentures in March 2024.

On June 27, 2023, Scilex Pharma entered into a Credit and Security Agreement (the “eCapital Credit Agreement”) with eCapital Healthcare Corp.

(the “Lender”), pursuant to which the Lender shall make available loans (the “Revolving Facility”) in an aggregate principal amount of up to $ 30.0 million (the “Facility Cap”).

The proceeds of the Revolving Facility will be used for (i) transaction fees incurred in connection with the eCapital Credit Agreement, (ii) working capital needs of Scilex Pharma and (iii) other uses not prohibited under the eCapital Credit Agreement.

As of December 31, 2023, the Company has an outstanding balance of $ 17.0 million under the Revolving Facility.

(the “Lender”), pursuant to which the Lender made available loans (the “Revolving Facility”) in an aggregate principal amount of up to $ 30.0 million (the “Facility Cap”).

The proceeds of the Revolving Facility were used for (i) transaction fees incurred in connection with the eCapital Credit Agreement, (ii) working capital needs of Scilex Pharma and (iii) other uses not prohibited under the eCapital Credit Agreement.

See Note 7 for additional discussion of the terms of the eCapital Credit Agreement.

On October 8, 2024, Scilex Pharma paid off the

outstanding amount of all obligations and indebtedness of Scilex Pharma owing to the Lender under the eCapital Credit Agreement.

Accordingly, the eCapital Credit Agreement, the related Loan Documents and the Subordination Agreement (each as defined in the eCapital Credit Agreement) were terminated, canceled and are of no further force and effect.

On December 22, 2023, the Company entered into a Sales Agreement (the “ATM Sales Agreement”) with B.

Riley Securities, Inc., Cantor Fitzgerald & Co.

Wainwright & Co., LLC (the “Sales Agents”).

Pursuant to the ATM Sales Agreement, the Company may offer and sell (the “Offering”) shares of Common Stock up to $ 170,000,000 (the "ATM Shares"), through or to the Sales Agents as part of the Offering.

The Company has no obligation to sell any shares of Common Stock under the ATM Sales Agreement and may suspend offers thereunder at any time.

The Offering will terminate upon (i) the election of the Sales Agents upon the occurrence of certain adverse events, (ii) three business days’ advance notice from the Company to the Sales Agents or a Sales Agent to the Company, or (iii) the sale of all $ 170,000,000 of shares of Common Stock thereunder.

Wainwright & Co., LLC (the “Sales Agents”), which agreement was voluntarily terminated by us effective as of March 5, 2025.

Pursuant to the ATM Sales Agreement, the Company was able to offer and sell (the “Offering”) shares of Common Stock up to $ 170.0 million (the “ATM Shares”), through or to the Sales Agents as part of the Offering.

The Company had no obligation to sell any shares of Common Stock under the ATM Sales Agreement and could suspend offers thereunder at any time.

As of December 31, 2024 , the Company sold 2,764,187 shares of Common Stock pursuant to the ATM Sales Agreement for net proceeds of approximately $ 2.7 million .

As of December 31, 2023 , no sales of Common Stock had been made under the ATM Sales Agreement.

On June 11, 2024, the Company entered into that certain Commitment Side Letter (the “Commitment Letter”) with FSF 33433 LLC (“FSF Lender”), pursuant to which FSF Lender committed to provide the Company a loan (the “FSF Loan”) in the aggregate amount of $ 100.0 million (the “Commitment Amount”).

The Commitment Amount shall be payable as follows:

(i) $ 85.0 million no later than the date that is 70 days following the date on which the Company receives the FSF Deposit (as defined below) (the “Outside Date” and the funding of the initial $ 85.0 million, the “Initial Closing”) and (ii) the remaining $ 15.0 million within 60 days following the Initial Closing (the funding of the second $ 15.0 million, the “Second Closing”).

Pursuant to the Commitment Letter, FSF Lender was required to provide the Company a non-refundable deposit in immediately available funds in the aggregate principal amount of $ 10.0 million (the “FSF Deposit” and the date on which such funds are fully received, the “Deposit Date”), which amount will be creditable towards the $ 85.0 million required to be funded by FSF Lender at the Initial Closing.

The Company received the FSF Deposit on June 18, 2024 and issued to FSF Lender a warrant to purchase up to an aggregate of 3,250,000 shares of the Common Stock (subject to adjustment for any stock dividend, stock split, reverse stock split or similar transaction) (the “Deposit Warrant”), with an exercise price of $ 1.20 per share.

The Deposit Warrant is immediately exercisable and will expire five years from the date of issuance.

On September 17, 2024, the Company entered into a Satisfaction Agreement (the “Satisfaction Agreement”) with FSF Lender and Endeavor Distribution LLC, a Delaware limited liability company and affiliate of FSF Lender (“Endeavor”), pursuant to which the remaining obligations in respect of the FSF Deposit shall be fully satisfied by the Company’s delivery of 28,000 cartons of ZTlido to Endeavor (the “Additional Product”), which delivery shall occur no later than December 31, 2024.

Upon satisfaction of such remaining obligations, the Commitment Letter shall be terminated and of no further force or effect and neither FSF Lender nor the Company shall have any further liability or obligations thereunder.

In consideration of Endeavor assuming the payment obligation of the Company in respect of the FSF Deposit, Endeavor will not be responsible for making any payment to the Company for (i) the product already delivered as of the date of such agreement in an amount of approximately $ 13.2 million and (ii) the Additional Product.

Pursuant to the terms of the Satisfaction Agreement, if the Company fails to fully deliver the Additional Product by December 31, 2024, the Company shall be liable to Endeavor for liquidated damages in the amount of $ 20,000,000 .

In November 2024, the Company delivered the Additional Product to Endeavor and fully satisfied the remaining obligations in respect of the FSF Deposit.

On October 8, 2024, the Company entered into a securities purchase agreement (the “Tranche B Securities Purchase Agreement”) with certain institutional investors (collectively, the “Tranche B Investors”) and Oramed Pharmaceuticals Inc.

(“Oramed”) (together with the Tranche B Investors, the “Tranche B Noteholders”), to issue and sell, in a registered offering by the Company directly to the Tranche B Noteholders, a new tranche B of senior secured convertible notes of the Company in the aggregate principal amount of $ 50.0 million (the “Tranche B Notes”) which notes will mature on the two-year anniversary of the issuance date and will be convertible into shares of Common Stock at a conversion price equal to $ 1.09 per share (which was automatically reduced to $ 1.04 per share of Common Stock subsequent to the December 2024 RDO (as defined below) in accordance with the terms of such notes).

The Company has received in exchange for the issuance of the Tranche B Notes to the Tranche B Investors an aggregate amount in cash of $ 22,500,000 , excluding fees and expenses payable by the Company.

The Company has received from Oramed in consideration for the Tranche B Notes issued to Oramed an exchange and reduction of the principal balance under the Oramed Note (as defined below) of $ 22,500,000 .

As of December 31, 2024, the Company’s negative working capital was $ 218.1 million , including cash and cash equivalents of approximately $ 3.3 million .

During the year ended December 31, 2023, the Company had operating losses of $ 105.4 million and cash flows used for operations of $ 20.7 million .

During the year ended December 31, 2024, the Company had operating losses of $ 83.4 million and cash flows from operations of $ 19.3 million .

The Company had an accumulated deficit of $ 563.1 million as of December 31, 2024.

The Company has plans to obtain additional resources to fund its currently planned operations and expenditures for at least twelve months from the issuance of these consolidated financial statements through a combination of equity offerings, debt financings, collaborations, government contracts or other strategic transactions.

The Company’s plans are also dependent upon the success of future sales of ZTlido and ELYXYB, among which ELYXYB is still in the early stages of commercialization, and the future commercialization of GLOPERBA.

The Company has plans to obtain additional resources to fund its currently planned operations and expenditures and to service its debt obligations (whether under the Oramed Note, the Tranche B Notes or otherwise) for at least twelve months from the issuance of these consolidated financial statements through a combination of equity offerings, debt financings, collaborations, government contracts or other strategic transactions.

The Company’s plans are also dependent upon the success of future sales of ZTlido, ELYXYB and GLOPERBA, among which GLOPERBA is still in the early stages of commercialization.

Although the Company believes such plans, if executed, should provide the Company with financing to meet its needs, successful completion of such plans is dependent on factors outside the Company’s control.

As a result, management has concluded that the aforementioned conditions, among other things, raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date the consolidated financial statements are issued.

Acquisitions and License Agreements

SP-104 Acquisition

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GLOPERBA License Agreement

In June 2022, the Company entered into a license agreement (the “Romeg License Agreement”) with RxOmeg Therapeutics, LLC (a/k/a Romeg Therapeutics, Inc.) (“Romeg”).

Pursuant to the Romeg License Agreement, among other things, Romeg granted the Company (a) a transferable license, with a right to sublicense, to (i) commercialize the pharmaceutical product comprising liquid formulations of colchicine for the prophylactic treatment of gout in adult humans (the “Initial Licensed Product” or “GLOPERBA”) in the United States (including its territories) (the “GLOPERBA Territory”), (ii) develop other products comprising the Initial Licensed Product as an active pharmaceutical ingredient (the “Licensed Products”) and commercialize any such products and (iii) manufacture Licensed Products anywhere in the world, solely for commercialization in the GLOPERBA Territory;

and (b) an exclusive, transferable license, with a right to sublicense, to use the trademark GLOPERBA and logos, designs, translations, and modifications thereof in connection with the commercialization of the Initial Licensed Product solely in the GLOPERBA Territory.

On June 14, 2022 (the “Original Signing Date”), the Company entered into a License and Commercialization Agreement with RxOmeg Therapeutics LLC (a/k/a Romeg Therapeutics, LLC) (“Romeg”) for the in-licensing of certain intellectual property rights from Romeg with respect to the commercialization of GLOPERBA, which was amended by that First Amendment to License and Commercialization Agreement, dated as of January 16, 2025 (such agreement, as amended, the “Romeg License Agreement”).

Under the Romeg License Agreement, among other things, Romeg granted the Company (1) a license, with the right to sublicense, under the patents and know-how specified therein to (a) commercialize a pharmaceutical product comprising liquid formulations of colchicine for the prophylactic treatment of gout in adult humans (the “Initial Licensed Product”) in the United States (including its territories) (the “Romeg U.S.

Territory”), (b) develop other products comprising the Initial Licensed Product as an active pharmaceutical ingredient (together with the Initial Licensed Product, the “Licensed Products”) and commercialize any such products in the Romeg U.S.

Territory and (c) manufacture Licensed Products anywhere in the world, solely for commercialization in the Romeg U.S.

(2) an exclusive license, with right to sublicense, to use the trademark “GLOPERBA” and logos, designs, translations, and modifications thereof (collectively, the “Licensed Trademark”) in connection with the commercialization of the Initial Licensed Product solely in the Romeg U.S.

and (3) pursuant to the amendment thereto, a license, with the right to (a) sublicense under the know-how and, if any, patents existing worldwide other than the Romeg U.S.

Territory (the “Romeg Ex-U.S.

Territory”), as

specified therein, to develop, manufacture and commercialize Licensed Products in the Romeg Ex-U.S.

Territory and (b) to use the Licensed Trademark in connection with the commercialization of the Licensed Products in the Romeg Ex-U.S.

The Initial Licensed Product, GLOPERBA, was approved and made available in the United States in 2020.

As consideration for the license under the Romeg License Agreement, the Company paid Romeg an up-front license fee of $ 2.0 million , and has agreed to pay Romeg (a) upon the Company’s achievement of certain net sales milestones, certain milestone payments in the aggregate amount of up to $ 13.0 million , (b) certain royalties, at rates that do not exceed ten percent, based on annual net sales of the Licensed Products by the Company during the applicable royalty term under the Romeg License Agreement, and (c) minimum quarterly royalty payments totaling $ 7.1 million commencing on the first year anniversary of the effective date of the Romeg License Agreement and ending on the later of (i) expiration of the last-to-expire of the licensed patents covering the Licensed Products in the GLOPERBA Territory or (ii) the tenth anniversary of the effective date of the Romeg License Agreement.

As consideration for the license under the Romeg License Agreement, the Company agreed to pay Romeg (1) an up-front license fee of $ 2.0 million , (2) upon the Company’s achievement of certain net sales milestones, certain milestone payments in the aggregate amount of up to $ 13.0 million , (3) certain royalties in the mid-single digit percentage based on annual net sales of the Licensed Products attributable to sales of the Licensed Products occurring in the Romeg U.S.

Territory during the Romeg U.S.

Territory Royalty Term, with a quarterly minimum royalty of $ 150,000 , and (4) pursuant to the amendment thereto, (a) certain royalties at rates in the low-single digit percentage, based on annual net sales of the Licensed Products attributable to sales of License Products in the Romeg Ex-U.S.

Territory during the Romeg Ex-U.S.

Territory Royalty Term and (b) a one-time, non-refundable, non-creditable payment of $ 700,000 .

Pursuant to the amendment agreement, we also transferred to Romeg 779,371 shares of our Common Stock.

In connection with the Romeg License Agreement, the Company recorded an intangible asset for acquired licenses of $ 5.7 million , which is comprised of the upfront license fee of $ 2.0 million and deferred consideration of $ 3.7 million that is the present value of the future minimum royalty payments and immaterial transaction costs.

During the years ended December 31, 2024 and 2023, the Company made royalty payments in the amount of $ 0.6 million and $ 0.3 million, respectively.

No contingent consideration was recognized as a liability or included in the fair value of the assets as of December 31, 2024 or December 31, 2023.

ELYXYB Acquisition

On February 12, 2023, the Company entered into an asset purchase agreement (the “ELYXYB APA”) with BioDelivery Sciences International, Inc.

In February 2023, the Company entered into an asset purchase agreement (the “ELYXYB APA”) with BioDelivery Sciences International, Inc.

(“BDSI”) and Collegium Pharmaceutical, Inc.

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In April 2023, the Company launched ELYXYB in the U.S.

As of December 31, 2023, the Company had ending balances of accrued royalty payables of $ 5.0 thousand .

As of December 31, 2024 and 2023, the Company had ending balances of accrued royalty payables of $ 0.1 million and $ 5.0 thousand , respectively, which was recorded as accrued expenses under current liabilities on the consolidated balance sheets.

During the years ended December 31, 2024 and 2023 , the Company made royalty payments in the amount of $ 0.3 million and $ 26.0 thousand, respectively.

As of December 31, 2024 , no sales or regulatory milestone payments had been accrued as there were no potential milestones yet considered probable of achievement.

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Significant Unobservable Inputs (Level 3)

Convertible Debentures

Tranche B Notes

Purchased Revenue Liability

Derivative liabilities

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Inputs (Level 3)

Convertible Debentures

Derivative liabilities

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The Oramed Note

In September 2023, the Company issued a senior secured promissory note to Oramed Pharmaceuticals Inc.

(“Oramed”) in the principal amount of $ 101.9 million (the “Oramed Note”) (see Note 7).

The Company elected the fair value option to account for the Oramed Note with any changes in the fair value of the note recorded in the consolidated statements of operations.

In September 2023, the Company issued a senior secured promissory note to Oramed in the principal amount of $ 101.9 million (the “Oramed Note”) (see Note 7).

The Company elected the fair value option to account for the Oramed Note with any changes in the fair value of such note recorded in the consolidated statements of operations, with the exception of changes in fair value due to instrument-specific credit risk, if any, which are recorded as a component of other comprehensive income.

The Company uses a discounted cash flow model to determine the fair value of the Oramed Note based on Level 3 inputs.

This methodology discounts the interest and principal payments using a risk-adjusted discount rate.

The fair value as of December 31, 2023 was determined to be $ 104.1 million by applying a discount

rate of 13.05 % .

For the year ended December 31, 2023, the Company recorded $ 2.8 million in change in fair value of the Oramed Note.

The fair value as of December 31, 2024 and 2023 was determined to be $ 12.2 million and $ 104.1 million, respectively, by applying a discount rate of 128.82 % and 13.05 %, respectively.

For the years ended December 31, 2024 and 2023, the Company recorded a loss of $ 3.6 million and $ 2.8 million in change in fair value of the Oramed Note, respectively.

For the years ended December 31, 2024 and 2023, the change in fair value due to instrument-specific credit risk recorded as a component of other comprehensive income was $ 6.3 million and nil , respectively.

During the year ended December 31, 2024 the Company reclassified $ 5.0 million from accumulated other comprehensive income to the consolidated statement of operations.

This reclassification was related to the principal payments and partial conversion of the Oramed Note balance into the Tranche B Notes (see Note 7).

In June 2024, the Company received the FSF Deposit in the aggregate principal amount of $ 10.0 million from FSF Lender (see Note 2 and Note 7).

The Company elected the fair value option to account for the FSF Deposit with any changes in the fair value of the deposit recorded in the consolidated statements of operations and comprehensive loss.

For the year ended December 31, 2024, the Company recorded a loss of $ 4.7 million in change in fair value of the FSF Deposit in the consolidated statement of operations.

In November 2024, the Company delivered the Additional Product to Endeavor and fully satisfied the remaining obligations in respect of the FSF Deposit.

Upon the satisfaction of the FSF Deposit, the Deposit Warrant became a freestanding instrument under ASC 480 and was included in derivative liabilities on the Company’s consolidated balance sheet.

Tranche B Notes

In October 2024, the Company entered into the Tranche B Securities Purchase Agreement to issue and sell the Tranche B Notes in the principal amount of $ 50.0 million (see Note 7).

The Company elected the fair value option to account for the Tranche B Notes with any changes in the fair value of such notes recorded in the consolidated statements of operations, with the exception of changes in fair value due to instrument-specific credit risk, if any, which are recorded as a component of other comprehensive income.

The Tranche B Notes are measured at fair value on a recurring basis using the Level 3 inputs.

The Company uses the Binomial Lattice Model valuation technique to measure the fair value of the Tranche B Notes.

The fair value as of December 31, 2024, was determined to be $ 23.6 million .

For the year ended December 31, 2024, the Company recorded a gain of $ 6.6 million in change in fair value of the Tranche B Notes in the consolidated statement of operations.

Purchased Revenue Liability

In October 2024, the Company entered into the ZTlido Royalty Purchase Agreement with certain institutional investors (collectively, the “ZTlido Royalty Investors”) and Oramed (see Note 7).

The Company elected the fair value option for the purchased revenue liability with changes in fair value recorded as change in fair value of debt and liability instruments in the consolidated statements of operations, with the exception of changes in fair value due to instrument-specific credit risk, if any, which are recorded as a component of other comprehensive income.

The Company uses a Scenario-Based Method valuation technique to measure the fair value of the purchased revenue liability.

The fair value as of December 31, 2024, was determined to be $ 6.8 million .

For the year ended December 31, 2024, the Company recorded a loss of $ 0.9 million in change in fair value of the purchased revenue liability in the consolidated statement of operations.

Convertible Debentures

In March and April 2023, the Company issued the Convertible Debentures in the principal amount of $ 25.0 million (see Note 7).

The Convertible Debentures are measured at fair value on a recurring basis using Level 3 inputs.

The Company uses the Binomial Lattice Model valuation technique to measure the fair value of the Convertible Debentures with any changes in the fair value of the Convertible Debentures recorded in the consolidated statements of operations.

The Convertible Debentures were measured at fair value on a recurring basis using Level 3 inputs.

The Company used the Binomial Lattice Model valuation technique to measure the fair value of the Convertible Debentures with any changes in the fair value of the Convertible Debentures recorded in the consolidated statements of operations and comprehensive loss.

Interest expense related to the Convertible Debentures is included in the changes in fair value.

For the year ended December 31, 2023, the Company recorded $ 4.4 million in change in fair value of the Convertible Debentures.

A summary of inputs used in valuing the Convertible Debentures is as follows:

Risk -Free Rate

Corporate Bond Yield

Coupon Interest Rate

Dividend Yield

Conversion Price

For the years ended December 31, 2024 and 2023, the Company recorded a loss of $ 35.0 thousand and a loss of $ 4.4 million in change in fair value of the Convertible Debentures, respectively.

The Company fully repaid the Convertible Debentures in March 2024.

Derivative Liabilities

The Company recorded a gain of $ 0.5 million and $ 8.3 million and a loss of $ 0.3 million for the years ended December 31, 2023, 2022 and 2021, respectively, on derivative liabilities which was attributed to the Private Warrants that the Company assumed from Vickers in November 2022 in connection with the Business Combination and compound derivative liabilities associated with the senior secured notes issued by Scilex Pharma in September 2018 (the “Scilex Pharma Notes”), respectively.

The fair value of the derivative liability associated with the Scilex Pharma Notes decreased by $ 30.4 million immediately after entry into Amendment No.

4 to the Scilex Pharma Notes on June 2, 2022 (“Amendment No.

The fair value of the derivative liability associated with the Scilex Pharma Notes was estimated using the discounted cash flow method combined with a Monte Carlo simulation model including consideration of the terms of Amendment No.

Significant Level 3 assumptions used in the measurement included a 6.1 % risk adjusted net sales forecast and an effective debt yield of 21.5 %.

The Scilex Pharma Notes were fully extinguished in September 2022 and, as such, there were no remaining loan derivative liabilities associated with the Scilex Pharma Notes as of December 31, 2022.

At the closing of the Business Combination in November 2022, the Company assumed a derivative warrant liability of $ 2.5 million related to the Private Warrants.

As of December 31, 2023, 3,613,383 Private Warrants were outstanding, and the fair value of derivative warrant liability related to the Private Warrants was $ 1.5 million .

The following table includes a summary of the derivative liabilities measured at fair value during the three years ended December 31, 2023, 2022 and 2021 (in thousands):

Ending Balance as of December 31, 2020

Re-measurement of fair value

The Company recorded a gain of $ 17.4 million for the year ended December 31, 2024 , attributed to warrant liabilities consisting of the Private Warrants, the February 2024 BDO Firm Warrants, the April 2024 RDO Common Warrants, the October 2024 Noteholder Warrants, and December 2024 RDO Common Warrants (each as defined below).

The Company recorded a loss of $ 0.5 million for the year ended December 31, 2023, on derivative liabilities which was attributed to the Private Warrants that the Company assumed from Vickers in November 2022 in connection with the Business Combination (“Private Warrants”).

As of December 31, 2024, the following warrants to purchase Common Stock that are included in derivative liabilities were outstanding:

1,000,000 Private Warrants, 3,803,447 February 2024 BDO Firm Warrants, 15,000,000 April 2024 RDO Common Warrants, 3,250,000 Deposit Warrant, 7,500,000 October 2024 Noteholder Warrants and 57,512,958 December 2024 RDO Common Warrants.

As of December 31, 2024, the fair value of derivative warrant liabilities related to these warrants was $ 18.3 million .

The following table includes a summary of the derivative liabilities measured at fair value during the years ended December 31, 2024 and 2023 (in thousands):

Ending Balance as of December 31, 2022

Private warrant liability acquired as part of the Business Combination

Forfeiture of Private Warrants

Change in fair value measurement

Forfeiture of Private Warrants

Ending Balance as of December 31, 2023

Issuance of February 2024 BDO Firm Warrants as part of February 2024 BDO, April 2024 RDO Common Warrants as part of April 2024 RDO, October 2024 Noteholder Warrants as part of Tranche B Notes, December 2024 RDO Common Warrants as part of December 2024 RDO, and December 2024 RDO Pre-Funded Warrants as part of December 2024 RDO

Reclass of Deposit Warrant liability upon satisfaction of FSF Deposit

Cancellation of Private Warrants as part of Oramed Letter Agreement

Warrant amendment and exercise as part of December 2024 RDO

Settlement of December 2024 RDO Pre-Funded Warrants

Change in fair value measurement

Forfeiture of Private Warrants

Ending Balance as of December 31, 2024

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The primary unobservable input utilized in determining the fair value of the warrant is the expected volatility of the Common Stock.

The expected volatility assumption is based on historical volatilities of comparable companies whose share prices are publicly available as well as the implied volatility of the Public Warrants (see Note 9 ).

The expected volatility assumption is based on the Company's historical volatility, historical volatilities of comparable companies whose share prices are publicly available as well as the implied volatility of the Public Warrants (see Note 9 ).

A summary of the inputs used in valuing the derivative warrant liabilities is as follows:

Private Warrants

February 2024 BDO Firm Warrants

April 2024 RDO Common Warrants

Deposit Warrant

October 2024 Noteholder Warrants

December 2024 RDO Common Warrants (5yr)

December 2024 RDO Common Warrants (2.5yr)

Exercise price

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Call option value

Private Warrants

Exercise price

Term, in years

Risk-free rate

Dividend yield

Call option value

Contingent Consideration Related to SP-104 Acquisition

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Significant unobservable inputs assumptions included the likelihood of receiving FDA approval for SP-104, expected timing for receipt of FDA approval for SP-104, and a discount rate of 10.0 % .

As of December 31, 2023 and December 31, 2022, the fair value of contingent consideration related to the Development Milestone Payment was $ 0.2 million .

As of December 31, 2024 and 2023, the fair value of contingent consideration related to the Development Milestone Payment was $ 0.2 million .

There were no transfers between fair value measurement levels during the years ended December 31, 2024 and 2023 .

Balance Sheet Components

Convertible Promissory Note

On August 9, 2024, Denali Capital Acquisition Corp.

(“Denali”) issued a convertible promissory note (the “Convertible Promissory Note”) in the total principal amount of up to $ 180,000 to the Company.

The Convertible Promissory Note was issued with an initial principal balance of $ 15,063.74 , with the remaining $ 164,936.26 drawable at Denali’s request and upon the consent of the Company prior to the maturity of the Convertible Promissory Note.

The Convertible Promissory Note matures upon the earlier of (i) the effective date of the consummation of Denali’s initial business combination or (ii) the date of the liquidation of Denali.

Any future drawdowns of the remaining $ 164,936.26 principal amount available under the Convertible Promissory Note are expected to fund future one-month extensions as necessary to provide additional time for Denali to complete a business combination.

At the option of the Company, upon consummation of an initial business combination, the Convertible Promissory Note may be converted in whole or in part into additional Class A ordinary shares of Denali, at a conversion price of $ 10.00 per ordinary share (the “Conversion Shares”).

The terms of the Conversion Shares will be identical to those of the private placement shares that were issued to Denali Capital Global Investments, LLC in connection with Denali’s initial public offering (the “IPO”).

In the event that Denali does not consummate an initial business combination, the Convertible Promissory Note will be repaid only from funds held outside of the trust account established in connection with the IPO or will be forfeited, eliminated or otherwise forgiven.

No interest shall accrue on the unpaid principal balance of the Convertible Promissory Note.

As of December 31, 2024, the balance of the Convertible Promissory Note was $ 75.3 thousand as a result of additional draws after the initial amount.

Semnur Business Combination Agreement and Sponsor Interest Purchase Agreement

On August 30, 2024, Semnur entered into an agreement and plan of merger (the “ Semnur Business Combination Agreement ” ) with Denali and Denali Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of Denali (“Denali Merger Sub”).

The Semnur Business Combination Agreement provides that, among other things, (i) on the terms and subject to the conditions set forth therein, Denali Merger Sub will merge with and into Semnur, with Semnur surviving as a wholly owned subsidiary of Denali (the “Semnur Business Combination”), and (ii) prior to the closing of the Semnur Business Combination, Denali will migrate to and domesticate as a Delaware corporation in accordance with Section 388 of the General Corporation Law of the State of Delaware, as amended (the “DGCL”), and de-register in the Cayman Islands in accordance with Section 206 of the Cayman Companies Act (the “Domestication”).

Upon the closing of the Semnur Business Combination, it is anticipated that Denali will change its name to “Semnur Pharmaceuticals, Inc.” (“New Semnur”).

Shares of Denali common stock following the Domestication are hereinafter referred to as "New Semnur Common Shares".

Shares of Denali Series A preferred stock following the Domestication are hereinafter referred to as “New Semnur Preferred Shares”.

Warrants to purchase New Semnur Common Shares following the Domestication are hereinafter referred to as “New Semnur Warrants”.

In accordance with the terms and subject to the conditions of the Semnur Business Combination Agreement, following the Domestication and at the effective time of the Semnur Business Combination (the “Effective Time”):

(i) each share of common stock, par value $ 0.00001 per share (the “Semnur Common Stock”), of Semnur, issued and outstanding immediately prior to the Effective Time, will be automatically converted into the right to receive, without interest, a number of New Semnur Common Shares equal to the Exchange Ratio (as defined in the Semnur Business Combination Agreement);

(ii) each share of Series A preferred stock of Semnur issued and outstanding immediately prior to the Effective Time will be automatically converted into the right to receive, without interest, (a) one New Semnur Preferred Share and (b) one-tenth of one New Semnur Common Share, and (iii) subject to Denali’s receipt of the Option Exchange Approval (as defined in the Semnur Business Combination Agreement), each option to purchase a share of Semnur Common Stock that is then outstanding shall be converted into the right to receive an option to purchase a number of New Semnur Common Shares as determined by the Exchange Ratio upon substantially the same terms and conditions as are in effect with respect to such option immediately prior to the Effective Time, with the exercise price thereof adjusted by the Exchange Ratio.

The Company defers specific incremental costs directly attributable to the Semnur Business Combination, such as legal, accounting and other general and administrative costs.

After the consummation of the Semnur Business Combination, these costs will be classified in stockholders’ deficit as a reduction of additional paid-in capital recorded as a result of the Semnur Business Combination.

In the event the Semnur Business Combination Agreement is terminated, all deferred offering costs will be reclassified to general and administrative expenses in the Company’s consolidated statements of operations and comprehensive loss.

As of December 31, 2024 and 2023, deferred offering costs related to the Semnur Business Combination totaled $ 6.0 million and nil , respectively, and were included in prepaid expenses and other current assets in the Company’s consolidated balance sheet.

In connection with the execution and delivery of the Semnur Business Combination Agreement, Denali Capital Global Investments LLC, a Cayman Islands limited liability company (the “Sponsor”), and the Company entered into a Sponsor Interest Purchase Agreement (the “SIPA”) dated August 30, 2024 (the “Signing Date”).

Pursuant to the SIPA, the Company agreed to purchase 500,000 Class B ordinary shares, par value $ 0.0001 per share (the “Purchased Interests”), of Denali that are currently held by the Sponsor.

The aggregate consideration for the purchase and sale of the Purchased Interests is as follows:

(i) $ 2,000,000 (the “Cash Consideration”) and (ii) 300,000 shares of Common Stock.

Pursuant to the SIPA, the Company has paid the Cash Consideration on the Signing Date and has agreed to issue Common Stock to the Sponsor contingent upon and following the occurrence of the Effective Time.

The Company accounted for this promise to issue shares at a future date as an equity classified instrument as it is indexed to the Company’s own stock and meets the conditions to be classified in equity under FASB ASC 815, Derivatives and Hedging .

The Purchased Interests will convert automatically, on a one-for-one basis, into one New Semnur Common Share at the effective time of the Domestication pursuant to the terms of the Semnur Business Combination Agreement.

The Company determined it does not have significant influence over Denali and accounted for the Purchased Interests as equity securities at the transaction price which consists of the $ 2,000,000 paid by the Company to the Sponsor and the value of the 300,000 shares of the Common Stock at the closing price of $ 1.15 per share on the Signing Date for a total of $ 2.3 million .

The Company elected to subsequently measure the investment at cost less any impairment.

As of December 31, 2024, the Company’s investment in the Purchased Interests had a balance of $ 2.3 million .

No impairment loss was recognized during the year ended December 31, 2024.

Property and Equipment, Net

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Property and equipment, net

The Company recognized depreciation expense of $ 40.0 thousand, $ 40.0 thousand and $ 39.0 thousand for the years ended December 31, 2023, 2022 and 2021, respectively.

The Company recognized depreciation expense of $ 14.0 thousand and $ 40.0 thousand for the years ended December 31, 2024 and 2023, respectively.

Accrued Expenses

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Accrued tax payable

Accrued litigation expenses

Accrued others

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No goodwill impairment was recognized for the years ended December 31, 2024 and 2023.

Amortization of the intangible assets that have finite useful lives is generally recorded on a straight-line basis over their useful lives.

A summary of the Company’s identifiable intangible assets as of December 31, 2023 and December 31, 2022 is as follows (in thousands):

Amortization of the intangible assets that have finite useful lives is generally recorded on a straight-line basis over their useful lives, ranging from 6.8 to 13.0 years.

A summary of the Company’s identifiable intangible assets as of December 31, 2024 and 2023 is as follows (in thousands):

December 31, 2024

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As of December 31, 2024, the weighted average remaining life for identifiable intangible assets was 8.5 years.

Aggregate amortization expense was $ 4.1 million, $ 3.9 million and $ 3.7 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Patent rights and acquired technology are amortized over a 15-year period.

Assembled workforce is amortized over a 5-year period.

Aggregate amortization expense was $ 4.0 million and $ 4.1 million for the years ended December 31, 2024 and 2023 , respectively.

Patent rights, acquired technology and acquired licenses are amortized over a 15-year period.

Assembled workforce is amortized over a five-year period.

Estimated future amortization expense related to intangible assets as of December 31, 2024 is as follows (in thousands):

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On March 21, 2023, the Company entered into the Yorkville SPA, pursuant to which the Company would issue and sell to Yorkville Convertible Debentures in an aggregate principal amount of up to $ 25.0 million.

The Yorkville SPA provides that the Convertible Debentures would be issued and sold at a purchase price equal to 96 % of the applicable principal amount in three tranches as follows:

The Yorkville SPA provided that the Convertible Debentures would be issued and sold at a purchase price equal to 96 % of the applicable principal amount in three tranches as follows:

(i) $ 10.0 million upon the signing of the Yorkville SPA, which was funded on March 21, 2023;

1 unchanged sentence

and (iii) $ 7.5 million at the time such registration statement was declared effective by the SEC, which was funded on April 20, 2023 .

The Convertible Debentures bear interest at an annual rate of 7.00 % and were initially set to mature on December 21, 2023 .

The Convertible Debentures bore interest at an annual rate of 7.00 % and were initially set to mature on December 21, 2023 .

On October 11, 2023, the Company and Yorkville amended the Convertible Debentures.

1 unchanged sentence

The maturity date of the Convertible Debentures was also extended from December 21, 2023 to March 15, 2024 .

The outstanding principal amount is to be repaid in equal installments that are due every 30 days beginning on May 20, 2023, which is 60 days after the date on which the first Convertible Debenture was issued to Yorkville.

The Convertible Debentures provide a conversion right, in which any portion of the outstanding and unpaid principal and any accrued but unpaid interest may be converted into shares of Common Stock, at a conversion price of $ 8.00 per share at the option of the holder of the Convertible Debentures.

The Company has the option to repay either (i) in cash, with premium equal to 5 % in respect of the principal amount of such payment, or (ii) by submitting a notice for an advance under the A&R Yorkville Purchase Agreement , or a series of advances thereunder, or any combination of (i) or (ii) as determined by the Company.

The outstanding principal amount was to be repaid in equal installments that are due every 30 days beginning on May 20, 2023, which is 60 days after the date on which the first Convertible Debenture was issued to Yorkville.

The Convertible Debentures provided a conversion right, in which any portion of the outstanding and unpaid principal and any accrued but unpaid interest, may be converted into shares of Common Stock, at a conversion price of $ 8.00 per share at the option of the holder of the Convertible Debentures.

The Company had the option to repay either (i) in cash, with premium equal to 5 % in respect of the principal amount of such payment, or (ii) by submitting a notice for an advance under the A&R Yorkville Purchase Agreement , or a series of advances thereunder, or any combination of (i) or (ii) as determined by the Company.

In the case of (ii), the proceeds from the shares sold to Yorkville are applied against the outstanding amounts.

The Company has the right, but not the obligation, in its sole discretion, to redeem, upon five business days’ prior written notice to Yorkville (the “Redemption Notice”), all or any portion of the amounts outstanding under the Convertible Debentures;

The Company had the right, but not the obligation, in its sole discretion, to redeem, upon five business days’ prior written notice to Yorkville (the “Redemption Notice”), all or any portion of the amounts outstanding under the Convertible Debentures;

provided that the trading price of the Common Stock is less than the Conversion Price at the time of the Redemption Notice.

The redemption amount shall be equal to the outstanding principal balance being redeemed by the Company, plus the redemption premium of 10 % of the principal amount being redeemed, plus all accrued and unpaid interest in respect of such redeemed principal amount.

The Company has elected the fair value option for the Convertible Debentures and records the changes in the fair value within the consolidated statements of operations at the end of each reporting period.

The Company elected the fair value option for the Convertible Debentures and recorded the changes in the fair value within the consolidated statements of operations and comprehensive loss at the end of each reporting period.

Pursuant to the Yorkville SPA, the Company issued additional Convertible Debentures in an aggregate principal amount of $ 15.0 million in April 2023 for $ 14.4 million in net cash proceeds.

1 unchanged sentence

The Company repaid $ 4.4 million of the Convertible Debentures during the year ended December 31, 2024 .

Interest expense related to the Convertible Debentures and included in the changes in fair value was $ 0.7 million for the year ended December 31, 2023.

Interest expense related to the Convertible Debentures and included in the changes in fair value was $ 35.0 thousand and $ 0.7 million for the years ended December 31, 2024 and 2023, respectively.

The following table provides a summary of the changes in the balance and the estimated fair value of the Convertible Debentures (in thousands):

Beginning Balance as of January 1, 2023

Issuance of Convertible Debentures

Ending Balance as of December 31, 2023

Repayment of Convertible Debentures

Change in fair value of Convertible Debentures

Conversion of Convertible Debentures into Common Stock

Ending Balance as of December 31, 2024

3 unchanged sentences

The amount available to Scilex Pharma under the Revolving Facility at any one time is the lesser of the Facility Cap and 85 % of the Net Collectible Value of Eligible Receivables (each as defined therein) minus the amount of any reserves or adjustments against receivables required by the Lender, in its discretion.

Under the terms of the eCapital Credit Agreement, interest will accrue daily on the principal amount outstanding at a rate per annum equal to the Wall Street Journal Prime Rate plus 1.5 % , based on a year consisting of 360 days, and which shall be payable by Scilex Pharma monthly in arrears, commencing July 1, 2023.

The eCapital Credit Agreement provides for an early termination fee of 0.5 % of the Facility Cap if Scilex Pharma voluntarily prepays and terminates in full the Revolving Facility prior to the first anniversary of the closing of the Revolving Facility.

In connection with the eCapital Credit Agreement, Scilex Pharma and the Lender entered into blocked account control agreements with respect to Scilex Pharma’s collections and eCapital Credit Agreement funding accounts, which permit the Lender to sweep all funds in the collections account to an account of the Lender for application to the outstanding amounts under the Revolving Facility, and to exercise customary secured party remedies with respect to the eCapital Credit Agreement funding account.

All indebtedness incurred and outstanding under the eCapital Credit Agreement will be due and payable in full on July 1, 2026, unless the eCapital Credit Agreement is earlier terminated.

The eCapital Credit Agreement contains a financial covenant requiring Scilex Pharma to maintain cash on hand of at least $ 1.0 million at all times.

Scilex Pharma’s obligations under the eCapital Credit Agreement are secured by a continuing security interest in Scilex Pharma’s accounts receivable, arising from customers in the ordinary course of business.

The eCapital Credit Agreement contains customary events of default and also provides that an event of default includes a change of control of Scilex Pharma and the failure by the Company to issue at least $ 75.0 million of debt or equity by September 30, 2023, which condition was satisfied by the issuance of the Oramed Note.

As of December 31, 2023, Scilex Pharma has an outstanding balance of $ 17.0 million under the Revolving Facility, which is classified as a long-term liability in the consolidated balance sheet.

Under the terms of the eCapital Credit Agreement, interest would accrue daily on the principal amount outstanding at a rate per annum equal to the Wall Street Journal Prime Rate plus 1.5 % , based on a year consisting of 360 days, and which shall be payable by Scilex Pharma monthly in arrears, commencing July 1, 2023.

The eCapital Credit Agreement provided for an early termination fee of 0.5 % of the Facility Cap if Scilex Pharma voluntarily prepaid and terminated in full the Revolving Facility prior to the first anniversary of the closing of the Revolving Facility.

In connection with the eCapital Credit Agreement, Scilex Pharma and the Lender entered into blocked account control agreements with respect to Scilex Pharma’s collections and eCapital Credit Agreement funding accounts, which permitted the Lender to sweep all funds in the collections account to an account of the Lender for application to the outstanding amounts under the Revolving Facility, and to exercise customary secured party remedies with respect to the eCapital Credit Agreement funding account.

All indebtedness incurred and outstanding under the eCapital Credit Agreement would be due and payable in full on July 1, 2026, unless the eCapital Credit Agreement was earlier terminated.

The eCapital Credit Agreement contained a financial covenant requiring Scilex Pharma to maintain cash on hand of at least $ 1.0 million at all times.

Scilex Pharma’s obligations under the eCapital Credit Agreement were secured by a continuing security interest in Scilex Pharma’s accounts receivable, arising from customers in the ordinary course of business.

The eCapital Credit Agreement contained customary events of default and also provided that an event of default included a change of control of Scilex Pharma and the failure by the Company to issue at least $ 75.0 million of debt or equity by September 30, 2023, which condition was satisfied by the issuance of the Oramed Note.

On September 21, 2023, Scilex Pharma signed a subordination agreement (the “Subordination Agreement”) with the Lender and Acquiom Agency Services LLC (the “Agent”).

Pursuant to the Subordination Agreement, the rights and interests of the Lender under the eCapital Credit Agreement would be secured by first priority liens on the ABL Priority Collateral (as defined therein).

The ABL Priority Collateral consists of all of the Company’s properties identified in the description of collateral in the UCC-1 Financing Statement filed with the Delaware Secretary of State on June 27, 2023.

The Agent’s rights and interests under that certain Subsidiary Guarantee, dated as of September 21, 2023, entered into by us and each of our subsidiaries with Oramed and the Agent (the “Subsidiary Guarantee”), would be secured by first priority liens on certain other collateral and second priority liens on the ABL Priority Collateral.

The Subordination Agreement also includes other standard interlender terms and requires that the Facility Cap (as defined therein) shall not exceed $ 30.0 million.

The ABL Priority Collateral consisted of all of the Company’s properties

identified in the description of collateral in the UCC-1 Financing Statement filed with the Delaware Secretary of State on June 27, 2023.

The Agent’s rights and interests under the Subsidiary Guarantee, dated as of September 21, 2023, entered into by the Company and each of its subsidiaries with Oramed and the Agent (the “Subsidiary Guarantee”), would be secured by first priority liens on certain other collateral and second priority liens on the ABL Priority Collateral.

The Subordination Agreement also included other standard interlender terms and requires that the Facility Cap (as defined therein) shall not exceed $ 30.0 million.

On October 8, 2024, Scilex Pharma paid off the outstanding amount of all obligations and indebtedness of Scilex Pharma owing to the Lender under the eCapital Credit Agreement.

Accordingly, the eCapital Credit Agreement, the related Loan Documents (as defined in the eCapital Credit Agreement) and the Subordination Agreement were terminated, canceled and are of no further force and effect.

As of December 31, 2024 and 2023, the outstanding balance under the Revolving Facility for Scilex Pharma was nil and $ 17.0 million , respectively, which was classified as a long-term liability in the consolidated balance sheet.

The Oramed Note

2 unchanged sentences

It is payable in six principal installments, with the first installment of $ 5.0 million payable on December 21, 2023 , the second installment in the principal amount of $ 15.0 million payable on March 21, 2024 , the next three installments each in the principal amount of $ 20.0 million payable on each of June 21, 2024 , September 21, 2024 and December 21, 2024 and the last installment in the entire remaining principal balance of the Oramed Note payable on March 21, 2025 .

Interest under the Oramed Note accrues at a fluctuating per annum interest rate equal to the sum of (1) greater of (x) 4 % and (y) Term SOFR (as defined in the Oramed Note) and (2) 8.5 %, payable in-kind on a monthly basis.

If the outstanding principal has not been fully repaid by March 21, 2024, an exit fee of approximately $ 3.1 million becomes due upon repayment.

Interest under the Oramed Note accrues at a fluctuating per annum interest rate equal to the sum of (1) the greater of (x) 4 % and (y) Term SOFR (as defined in the Oramed Note) and (2) 8.5 %, payable in-kind on a monthly basis.

Pursuant to the Oramed Note, since the outstanding principal of the Oramed Note was not repaid in full on or prior to March 21, 2024, an exit fee of approximately $ 3.1 million has been earned with respect to the Oramed Note, which shall be due and payable on the date the outstanding principal amount of the Oramed Note is paid in full.

Upon the occurrence and during the continuance of an event of default under the Oramed Note, holders of more than 50 % of the aggregate unpaid principal amount of the Oramed Notes may elect to accrue interest at a default rate equal to the lesser of (i) Term SOFR plus 15 % or (ii) the maximum rate permitted under applicable law.

2 unchanged sentences

The Oramed Note contains mandatory prepayment provisions requiring use of 70 % of net cash proceeds from any Cash Sweep Financing (as defined in the Oramed Note) or advances under the ELOCs (as defined in the Oramed Note) to prepay the outstanding principal after the earlier of April 1, 2024 or full repayment of Acceptable Indebtedness (as defined in the Oramed Note).

Following each of the April 2024 RDO (as defined below and as described under Note 9), the receipt of the FSF Deposit (as described below) and the sale of shares of Common Stock pursuant to the ATM Sales Agreement, the Company made a mandatory prepayment of $ 9,578,835 , $ 7,000,000 and $ 1,760,796, respectively, to Oramed, which equals 70% of the net cash proceeds the Company received from the April 2024 RDO, the FSF Deposit and sale of shares of Common Stock pursuant to the ATM Sales Agreement.

Given such payment was not a voluntary prepayment, such prepayment did not trigger the make-whole amount under the Oramed Note.

The Oramed Note contains affirmative and negative covenants binding on the Company and its subsidiaries, which restrict, among other things, the Company and its subsidiaries from incurring indebtedness or liens, amending charter and organizational documents, repaying or repurchasing stock, repaying, repurchasing, or acquiring indebtedness, paying or declaring cash dividends, assigning, selling, transferring or otherwise disposing of assets, making or holding investments, entering into transactions with affiliates, and entering into settlement agreements, in each case as more fully set forth in, and subject to certain qualifications and exceptions set forth in, the Oramed Note.

The Company was in compliance with all of the covenants as of December 31, 2023.

In connection with the Oramed Note, the Company and each of its subsidiaries (collectively, the “Guarantors”) entered into a security agreement (the “Security Agreement”) with Oramed (together with its successors and permitted assigns, the “Holder”) and the Agent, which acts as the collateral agent for the holders of the Oramed Note.

Under this agreement, the Company and the Guarantors granted to the Agent (on behalf of and for the benefit of the holders of the Oramed Note and any Additional Notes as defined thereunder) a security interest in all or substantially all of the properties of the Company and each of the Guarantors.

agreement, the Company and the Guarantors granted to the Agent (on behalf of and for the benefit of the holders of the Oramed Note and any Additional Notes as defined thereunder) a security interest in all or substantially all of the properties of the Company and each of the Guarantors.

This was done to ensure the timely payment, performance, and full discharge of all obligations under the Oramed Note.

The Security Agreement contains certain customary representations, warranties and covenants regarding the collateral thereunder, all of which are detailed in the Security Agreement.

On September 20, 2024, the Company and Oramed entered into a letter agreement (the “Oramed Letter Agreement”), pursuant to which the Company agreed to pay to Oramed $ 2,000,000 (the “Specified September Payment”) on September 23, 2024, which payment was applied as follows:

(i) $ 1,700,000 was applied to the amortization payment due under the Oramed Note on March 21, 2025 (the “Maturity Date”) and (y) $ 300,000 to purchase an aggregate of 4,000,000 SPAC Warrants (as defined below) owned by Oramed.

The parties further agreed, upon receipt of the Specified September Payment by Oramed, (i) that notwithstanding the minimum Liquidity (as defined therein) requirements set forth in Section 7(b)(x) of the Oramed Note, the Company and its Subsidiaries (as defined therein) shall be required to maintain the following minimum liquidity during the specified time periods instead:

from and after September 19, 2024 until the Maturity Date, $ 0 , and (ii) to extend the due date of the $ 20,000,000 amortization payment from September 23, 2024 to September 30, 2024 .

Oramed further agreed to extend such due date to October 8, 2024, on which date a consent and amendment letter was signed with Oramed (“Oramed Consent and Amendment”) under which:

(i) the Company made a payment of $ 12,500,000 to Oramed in lieu of the payment due on September 23, 2024 , using the proceeds from the issuance of the Tranche B Notes, and (ii) the remaining payments under the Oramed Note were amended as follows:

installment payment of $ 15,000,000 payable on December 21, 2024, which payment was made on December 13, 2024, and the remaining principal balance, accrued interest and fees payable on the Maturity Date.

On January 21, 2025, the Company and Oramed agreed to extend the Maturity Date under and as set forth in the Oramed Note from March 21, 2025 to December 31, 2025 .

At issuance, the Company concluded that certain features of the Oramed Note would be considered derivatives that would require bifurcation.

In lieu of bifurcating such features, the Company has elected the fair value option for this financial instrument and records the changes in the fair value within the consolidated statements of operations at the end of each reporting period.

As of December 31, 2023, the fair value of the Oramed Note was $ 104.1 million , which is classified as a current liability in the consolidated balance sheet.

As of December 31, 2024, the fair value of the Oramed Note was $ 12.2 million , which is classified as debt, current in the consolidated balance sheet.

The following table provides a summary of the changes in the balance and the estimated fair value of the Oramed Note (in thousands):

Beginning Balance as of January 1, 2023

Issuance of Oramed Note

Change in fair value of Oramed Note

Ending Balance as of December 31, 2023

Repayment of Oramed Note

Conversion into Tranche B Notes

Change in fair value of Oramed Note – recorded in the consolidated statements of operations

Change in fair value of Oramed Note – due to instrument-specific credit risk recorded as a component of other comprehensive income

Ending Balance as of December 31, 2024

Commitment Letter

On June 11, 2024, the Company entered into the Commitment Letter with FSF Lender, pursuant to which FSF Lender committed to provide the Company the FSF Loan in the aggregate amount of $ 100.0 million.

The Commitment Amount should be payable as follows:

(i) $ 85.0 million no later than the Outside Date, which is 70 days following the date on which the Company received the FSF Deposit and (ii) the remaining $ 15.0 million within 60 days following the Initial Closing.

Pursuant to the Commitment Letter, FSF Lender provided the Company a non-refundable FSF Deposit in immediately available funds in the aggregate principal amount of $ 10.0 million on the Deposit Date, which amount would be

creditable towards the $ 85.0 million required to be funded by FSF Lender at the Initial Closing.

The Company received the FSF Deposit on June 18, 2024 and issued to FSF Lender the Deposit Warrant to purchase up to an aggregate of 3,250,000 shares of Common Stock (subject to adjustment for any stock dividend, stock split, reverse stock split or similar transaction), with an exercise price of $ 1.20 per share.

The Deposit Warrant was immediately exercisable and would expire five years from the date of issuance.

If the Initial Closing did not occur on or prior to the Outside Date, the FSF Deposit should automatically convert into an unsecured loan on the first day after the Outside Date.

Within five days after such automatic conversion occurs, the Company should issue a promissory note (the “Unsecured Promissory Note”) to FSF Lender to evidence such unsecured loan, which note should be unsecured, had a maturity date of five years after the date of the Unsecured Promissory Note and was prepayable without premium or penalty.

The Unsecured Promissory Note should bear interest, payable quarterly in arrears, in an amount equal to the Unsecured Applicable Interest Amount (as defined in the Commitment Letter) for such period based on the actual number of days elapsed while principal is outstanding.

It was contemplated by the Commitment Letter that the Company and FSF Lender would enter into definitive documents with respect to the FSF Loan on terms to be mutually agreed in good faith.

If such definitive documents were entered into on or before the Outside Date, the Company agreed to issue to FSF Lender (i) at the Initial Closing, a warrant to purchase up to an aggregate of 24,375,000 shares (subject to adjustment for any stock dividend, stock split, reverse stock split or similar transaction) of Common Stock (the “Initial Closing Warrant”), and (ii) at the Second Closing, a warrant to purchase up to an aggregate of 4,875,000 shares (subject to adjustment for any stock dividend, stock split, reverse stock split or similar transaction) of Common Stock (the “Second Closing Warrant”), each to have an exercise price of $ 1.20 per share.

The Initial Closing Warrant and the Second Closing Warrant would expire five years from the date of issuance.

To evidence the FSF Loan, the Company agreed to issue to FSF Lender a Senior Secured Promissory Note (the “Secured Promissory Note”), which shall have a maturity date of five years after the date of issuance.

The Secured Promissory Note shall bear interest, payable quarterly in arrears, in an amount equal to the Secured Applicable Interest Amount (as defined in the Commitment Letter) for such period, based on the actual number of days elapsed, while principal is outstanding, subject to certain conditions.

At issuance, the Company concluded that certain features of the FSF Deposit would be considered derivatives that would require bifurcation.

In connection with the transactions contemplated by the Commitment Letter, the Company also entered into an agreement with FSF Lender and the FSF Lender’s strategic consultant, IVI 66766 LLC (“IVI”), dated July 16, 2024, pursuant to which the Company agreed to reimburse the actual, reasonable and documented consulting fees incurred by FSF Lender in connection with the preparation, negotiation and execution of the Commitment Letter and the definitive documents with respect to the transactions contemplated thereby, which fees were satisfied in full by the Company issuing to IVI a warrant to purchase up to an aggregate of 250,000 shares of Common Stock (the “Fee Warrant”) on July 16, 2024, with an exercise price of $ 1.20 per share.

Subject to certain ownership limitations, the Fee Warrant is immediately exercisable and will expire five years from the date of issuance.

The Company accounted for the Fee Warrant as an equity classified instrument and recognized the Fee Warrant in additional paid-in capital in the Company’s consolidated balance sheets.

The fair value of the Fee Warrant as of the date of issuance was $ 0.3 million.

In October 2024, the Fee Warrant was exercised by IVI.

On September 17, 2024, the Company entered into the Satisfaction Agreement with FSF Lender and Endeavor, pursuant to which the remaining obligations in respect of the FSF Deposit shall be fully satisfied by the Company’s delivery of 28,000 cartons of ZTlido to Endeavor, which delivery shall occur no later than December 31, 2024.

In November 2024, the Company delivered the Additional Product to Endeavor and fully satisfied the remaining obligations in respect of the FSF Deposit.

The following table provides a summary of the changes in the balance and the estimated fair value of the FSF Deposit (in thousands):

Beginning Balance as of June 11, 2024

Change in fair value of FSF Deposit

Reclass of Deposit Warrant liability upon satisfaction of FSF Deposit

Repayment of FSF Deposit

Ending Balance as of December 31, 2024

Tranche B Notes

On October 8, 2024, the Company entered into the Tranche B Securities Purchase Agreement with the Tranche B Investors and Oramed to refinance a portion of the Oramed Note and pay off certain other indebtedness of the Company.

Pursuant to the Tranche B Securities Purchase Agreement, the Company agreed to issue and sell, in a registered offering by the Company directly to the Tranche B Noteholders:

(i) the Tranche B Notes, which notes will mature on the two-year anniversary of the issuance date and will be convertible into shares of Common Stock at a conversion price equal to $ 1.09 per share (which was automatically reduced to $ 1.04 per share of Common Stock subsequent to the December 2024 RDO (as defined below) in accordance with the terms of such notes) and (ii) warrants (the “October 2024 Noteholder Warrants”) to purchase up to 7,500,000 shares of Common Stock directly to the Tranche B Noteholders.

The Company has received from Oramed in consideration for the Tranche B Notes issued to Oramed an exchange and reduction of the principal balance under the Oramed Note of $ 22,500,000 .

The October 2024 Noteholder Warrants are immediately exercisable for cash at an exercise price equal to $ 1.09 per share of Common Stock (which was automatically reduced to $ 1.04 per share of Common Stock subsequent to the December 2024 RDO (as defined below) in accordance with the terms of such warrants) and will expire five years from the issuance date.

The October 2024 Noteholder Warrants issued to the Tranche B Investors are initially exercisable for 3,750,000 shares of Common Stock in the aggregate.

The October 2024 Noteholder Warrants issued to Oramed are initially exercisable for 3,750,000 shares of Common Stock.

In connection with the offering of the Tranche B Notes, the Company issued to StockBlock Securities LLC (“StockBlock”) and its affiliate, Rodman & Renshaw LLC (collectively, the “Placement Agents”) or their respective designees, (i) 2,197,802 shares of Common Stock (the “Placement Agent Shares”) and (ii) warrants to purchase up to 3,669,724 shares of Common Stock (the “October 2024 Placement Agent Warrants”).

The October 2024 Placement Agent Warrants will have the same terms as the October 2024 Noteholder Warrants, except that the Placement Agents have agreed not to exercise the October 2024 Placement Agent Warrants for a period of 180 days following the date of issuance.

In conjunction with the Tranche B Securities Purchase Agreement, the Company entered into the ZTlido Royalty Purchase Agreement (as defined below) for $ 5.0 million of the aggregate purchase price for the ZTlido Purchased Receivables in full consideration for the sale, transfer, conveyance and granting of the ZTlido Purchased Receivables, subject to the terms and conditions set forth in the ZTlido Royalty Purchase Agreement.

The $ 50.0 million of total proceeds received were allocated based on their relative fair value to the Tranche B Notes, the October 2024 Noteholder Warrants, and the ZTlido Royalty Purchase Agreement, with the excess of fair value over the proceeds received in amount of $ 2.6 million recognized as a loss upon issuance in change in fair value of debt and liability instruments in the consolidated statement of operations during the year ended December 31, 2024.

The following table provides a summary of the changes in the balance and the estimated fair value of the Tranche B Notes (in thousands):

Beginning Balance as of October 8, 2024

Conversion of Tranche B notes

Repayment of Tranche B Notes

Change in fair value of Tranche B Notes

Ending Balance as of December 31, 2024

Aggregate principal repayments for the Company's outstanding debt will be $ 47.7 million and $ 19.5 million in 2025 and 2026, respectively.

ZTlido Royalty Purchase Agreement

On October 8, 2024, in connection with the closing of the transactions contemplated by the Tranche B Securities Purchase Agreement, the Company and Scilex Pharma entered into the ZTlido Royalty Purchase Agreement with the ZTlido Royalty Purchasers.

Pursuant to the ZTlido Royalty Purchase Agreement, Scilex Pharma sold to the ZTlido Royalty Purchasers the right to receive 8 % of all aggregate net sales worldwide (the “ZTlido Purchased Receivables”) with respect to ZTlido, SP-103 and any related, improved, successor, replacement or varying dosage forms of the foregoing, which shall be paid within 60 calendar days after the end of each calendar quarter.

In full consideration for the sale, transfer, conveyance and granting of the ZTlido Purchased Receivables, and subject to the terms and conditions set forth in the ZTlido Royalty Purchase Agreement, the aggregate purchase price for the ZTlido Purchased Receivables was $ 5.0 million (net of expenses of the ZTlido Royalty Purchasers).

The ZTlido Royalty Investors paid to Scilex Pharma an aggregate amount equal to $ 2.5 million minus the expenses of the ZTlido Royalty Investors and Oramed paid to Scilex Pharma an amount equal to $ 2.5 million minus Oramed’s expenses (collectively, the amount so paid by the ZTlido Royalty Purchasers, the “ZTlido RPA Closing Payment”).

Oramed’s portion of the purchase price was paid by exchanging a portion of the outstanding principal balance under the Oramed Note equivalent to its portion of the ZTlido RPA Closing Payment, which amount extinguished and reduced $ 2.5 million of the outstanding balance under the Oramed Note.

The Royalty Purchase Agreement terminates six months following receipt by the ZTlido RPA Purchasers of all payments of the ZTlido Purchased Receivables to which each ZTlido RPA Purchaser is entitled during the period commencing on the closing date of the ZTlido Royalty Purchase Agreement and expiring on the tenth anniversary of such closing date.

The Company elected the fair value option for the ZTlido Royalty Purchase Agreement and records the changes in the fair value within the consolidated statements of operations and comprehensive loss at the end of each reporting period.

As of December 31, 2024, the fair value of the ZTlido Royalty Purchase Agreement was $ 6.8 million , recorded as a purchased revenue liability on the consolidated balance sheet.

The Company incurred $ 0.2 million of issuance costs in connection with the ZTlido Royalty Purchase Agreement, which were included in the consolidated statement of operations for the year ended December 31, 2024.

The following table summarizes the purchased revenue liability activity during the year ended December 31, 2024 (in thousands):

Beginning Balance as of October 8, 2024

Change in fair value of purchased revenue liability

Ending Balance as of December 31, 2024

Junior DIP Facility and Sorrento Stock Purchase Agreement

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Sorrento Stock Purchase Agreement

On September 21, 2023, the Company entered into a Stock Purchase Agreement with Sorrento (“Sorrento SPA”), pursuant to which the Company purchased from Sorrento (i) 60,068,585 shares of Common Stock, (ii) 29,057,097 shares of Series A Preferred Stock, par value $ 0.0001 per share, of the Company (the “Preferred Stock”) and (iii) 1,386,617 Public Warrants and 3,104,000 Private Warrants (collectively, the “Purchased Securities”).

On September 21, 2023, the Company entered into the Sorrento SPA, pursuant to which the Company purchased from Sorrento (i) 60,068,585 shares of Common Stock, (ii) 29,057,097 shares of Series A Preferred Stock and (iii) 1,386,617 Public Warrants and 3,104,000 Private Warrants (collectively, the “Purchased Securities”).

On the same day, the Company and Oramed entered into the Scilex-Oramed SPA.

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The remaining consideration for the Purchased Securities was comprised of a credit bid for all amounts of principal and accrued but unpaid interest outstanding under the Junior DIP Facility, a $ 10.0 million cash payment, and the assumption and assignment of certain obligations of Sorrento for legal fees and expenses amounting to approximately $ 12.3 million .

The Company allocated the total consideration between the repurchased instruments by allocating to the repurchased Private Warrants their full value, with the remaining consideration allocated to the Common Stock, Preferred Stock, and Public Warrants based on their relative fair values as of September 21, 2023.

The Company allocated the total consideration between the repurchased instruments by allocating to the repurchased Private Warrants their full value, with the remaining consideration allocated to the Common Stock, Series A Preferred Stock, and Public Warrants based on their relative fair values as of September 21, 2023.

Before the closing of the Sorrento SPA transactions and in connection with the transactions contemplated by the Sorrento SPA, the Company formed two entities:

(a) Scilex DRE Holdings LLC (“Holdco”), a single purpose entity

that is the Company’s direct wholly owned subsidiary and (b) Scilex Stock Acquisition Joint Venture LLC, a single purpose bankruptcy-remote entity that is the Company’s indirect wholly owned subsidiary (“SCLX JV”), which was formed to hold the Purchased Securities.

(a) Scilex DRE Holdings LLC (“Holdco”), a single purpose entity that is the Company’s direct wholly owned subsidiary and (b) Scilex Stock Acquisition Joint Venture LLC, a single purpose bankruptcy-remote entity that is the Company’s indirect wholly owned subsidiary (“SCLX JV”), which was

formed to hold the Purchased Securities.

Holdco was formed to hold all of the equity interests in SCLX JV.

Holdco and SCLX JV are parties to the Security Agreement and Subsidiary Guarantee (see Note 7).

Preferred Stock

Pursuant to the terms of the Sorrento SPA, the Company repurchased all of the outstanding Preferred Stock .

The Preferred Stock is classified in equity and does not have any bifurcated features.

Therefore, the repurchase of the Preferred Stock by the Company is treated as a redemption of shares and viewed as a deemed dividend.

The fair value of Preferred Stock as of the repurchase date of September 21, 2023 was $ 52.6 million .

The Company derecognized the carrying value of the Preferred Stock, with any excess amount allocated as the reduction in additional paid-in capital.

The Preferred Stock is currently held as collateral for the Oramed Note.

Series A Preferred Stock

Pursuant to the terms of the Sorrento SPA, the Company repurchased all of the outstanding Series A Preferred Stock .

The Series A Preferred Stock is classified in permanent equity and does not have any bifurcated features.

Therefore, the repurchase of the Series A Preferred Stock by the Company is treated as a redemption of shares and viewed as a deemed dividend.

The fair value of Series A Preferred Stock as of the repurchase date of September 21, 2023 was $ 52.6 million .

The Company derecognized the carrying value of the Series A Preferred Stock, with any excess amount allocated as the reduction in additional paid-in capital.

The Series A Preferred Stock is currently held as collateral for the Oramed Note.

Treasury Stock

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The Closing Penny Warrant will be exercisable upon the earliest of (i) March 14, 2025 , (ii) the date on which the Oramed Note has been repaid in full and (iii) the Management Sale Trigger Date (as defined therein), if any, and will expire on the date that is the fifth anniversary of the issuance date.

The Company issued four Subsequent Penny Warrants, each for 2,125,000 shares of Common Stock, one of which shall vest and become exercisable on the date that is the later of (i) each of March 19, 2024 , June 17, 2024 , September 15, 2024 or December 14, 2024 (the “Subsequent Penny Warrant Vesting Date”) and (ii) the earliest of (A) March 14, 2025 , (B) the date on which the Oramed Note has been repaid in full and (C) the Management Sale Trigger Date (as defined therein), if any.

The Company issued four Subsequent Penny Warrants, each for 2,125,000 shares of Common Stock, one of which shall vest and become exercisable on the date that is the later of (i) each of March 19, 2024 (the “CS-2 Warrant”), June 17, 2024 (the “CS-3 Warrant”), September 15, 2024 (the “CS-4 Warrant”) or December 14, 2024 (the “CS-5 Warrant”) (each, the “Subsequent Penny Warrant Vesting Date”) and (ii) the earliest of (A) March 14, 2025 , (B) the date on which the Oramed Note has been repaid in full and (C) the Management Sale Trigger Date (as defined therein), if any.

Each Subsequent Penny Warrant will expire on the date that is the fifth anniversary of the issuance date;

provided that, if the Oramed Note is repaid in full prior to the Subsequent Penny Warrant Vesting Date applicable to such Subsequent Penny Warrant, such Subsequent Penny Warrant will expire on the date the Oramed Note is repaid in full.

Pursuant to a letter agreement the Company entered into with Oramed, dated as of August 30, 2024, the parties agreed that:

(i) the CS-4 Warrant shall fully vest on August 30, 2024 and (ii) Oramed may immediately exercise the Oramed Warrants with respect to up to 5,437,500 shares of Common Stock.

Pursuant to the Oramed Letter Agreement the Company entered into with Oramed, dated as of September 20, 2024, the parties agreed that Oramed may immediately exercise the CS-5 Warrant with respect to up to 1,062,500 shares of Common Stock.

The exercise price of the Penny Warrants is $ 0.01 per share, subject to adjustments provided therein.

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The fair value of Penny Warrants as of September 21, 2023, the date of issuance, was $ 10.4 million.

During the year ended December 31, 2024 , there were 6,500,000 Penny Warrants exercised by Oramed for net proceeds of approximately $ 0.1 million.

As of December 31, 2024 , there were 6,500,000 Penny Warrants outstanding that were fully vested and such warrants became exercisable on March 14, 2025 .

In December 2022, the Department of the Treasury and the Internal Revenue Service (the “IRS”) issued guidelines on the implementation of the new code section added by the Inflation Reduction Act of 2022, which imposes a 1% excise tax on the total fair market value of stock repurchases during the tax year, subject to adjustments.

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The total fair market value of the Purchased Securities was offset by the fair market value of the shares issued during the year ended December 31, 2023 .

The Company has accrued $ 1.3 million of the excise tax liability, which is recorded as accrued expenses under current liabilities on the consolidated balance sheet.

The excise tax will be adjusted based on any new guidance that the IRS may release.

Stockholders’ Equity

The Company has accrued $ 1.3 million of the excise tax liability during the year ended December 31, 2023, which was recorded as accrued expenses under current liabilities on the consolidated balance sheet.

During the year ended December 31, 2024, the Company made a total of $ 0.5 million payments for the excise tax.

As of December 31, 2024, the remaining balance of the excise tax liability recorded as accrued expenses was $ 0.8 million .

Stockholders’ Deficit

SPAC Warrants

Upon the completion of the Business Combination, the Company assumed the SPAC Warrants.

Upon the completion of the Business Combination, the Company assumed the Private Warrants and the public warrants to purchase Common Stock, each with an exercise price of $ 11.50 per share (the “Public Warrants”, and together with the Private Warrants, the “SPAC Warrants”).

Holders of the SPAC Warrants are entitled to acquire shares of Common Stock.

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During the year ended December 31, 2023, the SPAC Warrants held by Sorrento were repurchased, and certain of such warrants transferred to Oramed, as a result of the Sorrento SPA (refer to Note 8).

On September 20, 2024, the Company repurchased 4,000,000 of the SPAC Warrants held by Oramed (refer to Note 7).

Following the repurchase, these warrants were cancelled.

As of December 31, 2024 and 2023, there were 5,467,692 and 6,854,309 Public Warrants outstanding, respectively.

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Preferred Stock

As of December 31, 2023 and 2022, there were 29,057,097 shares of Preferred Stock outstanding.

On September 21, 2023, the Preferred Stock was repurchased and derecognized for accounting purposes.

The Preferred Stock is currently held as collateral for the Oramed Note.

The Company is authorized to issue 45,000,000 shares of preferred stock (the “Preferred Stock”) of which there are two series in total.

Series A Preferred Stock

As of December 31, 2024 and 2023, there were 29,057,097 shares of Series A Preferred Stock outstanding.

On September 21, 2023, the Series A Preferred Stock was repurchased and derecognized for accounting purposes.

The Series A Preferred Stock is currently held as collateral for the Oramed Note.

Series 1 Preferred Stock

On October 27, 2024, the Board declared a stock dividend (the “Dividend”) consisting of an aggregate of 5,000,000 shares (the “Dividend Stock”) of Series 1 Mandatory Exchangeable Preferred Stock, par value $ 0.0001 per share (the “Series 1 Preferred Stock”), of the Company to record holders of certain of the Company’s securities as of the close of business on November 7, 2024 (which date was subsequently changed to April 11, 2025).

Pursuant to the Certificate of Designation of Preferences, Rights and Limitations of Series 1 Mandatory Exchangeable Preferred Stock (the “Certificate of Designation”) filed with the Secretary of State of the State of Delaware on October 28, 2024, the Series 1 Preferred Stock ranks senior to the Common Stock but junior to all other series of Preferred Stock with respect to distributions of assets upon voluntary or involuntary liquidation, dissolution, or winding up of the affairs of the Company.

The holders of Series 1 Preferred Stock may become entitled to a pro rata portion of the number of shares that represents the lesser of (a) 10% of the shares of the Semnur Common Stock (or such other securities into which or for which such stock may be exchanged or converted), held by the Company as of immediately prior to the Effective Time (as defined below) (taking into account any adjustment for any stock dividend, stock split, reverse stock split or similar transaction) and (b) that number of shares of Semnur Common Stock (or such other securities into which or for which such stock may be exchanged or converted) equal to $ 200,000,000 divided by the closing price of such Semnur Common Stock (or such other securities into which or for which such stock may be exchanged or converted) on any national securities exchange on which such shares are listed on the date that is 10 trading days prior to the Determination Date (as defined below), which shares shall be paid from the shares of Semnur Common Stock (or such other securities into which or for which such stock may be exchanged or converted) held by the Company as of immediately prior to the Effective Time (taking into account any adjustment for any stock dividend, stock split, reverse stock split or similar transaction).

Furthermore, the holders of Series 1 Preferred Stock shall not be entitled to receive any dividends and shall not have any voting rights by virtue of their ownership of any shares of Series 1 Preferred Stock.

For purposes of the Certificate of Designation, (a) “Effective Time” means the effective time of the Semnur Business Combination as determined under the terms of the Semnur Business Combination Agreement, (b) “Determination Date” means, if the Semnur Common Stock (or such other securities into which or for which such stock may be exchanged or converted) is listed for, and trading on, any national securities exchange, the date that is 15 trading days following the Registration Date, (c) “Registration Date” means the earlier of (i) the Effective Time, at which time the shares of Semnur Common Stock (or such other securities into which or for which such stock has been exchanged or converted) are registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and (ii) the time at which the Registration Statement is declared effective by the Securities and Exchange Commission and (d) “Registration Statement” means a registration statement, whether under the Exchange Act, or the Securities Act, that is filed by Semnur or any successor thereto or affiliate thereof with respect to the registration of the Semnur Common Stock or any securities into which or for which such stock may be exchanged or converted.

The Board has the right to change the Record Date and the right to revoke the Dividend at any time prior to the payment date therefor.

There can be no assurance that the Board will not revoke the Dividend or that, even if such Dividend is paid, the conditions for the mandatory exchange set forth in the Certificate of Designations will ever occur (including that the Registration Date shall have occurred on or before 11:59 p.m.

Eastern time on October 28, 2025).

The Series 1 Preferred Stock does not have any bifurcated features and is classified in equity at par value because the Company had an accumulated deficit position as of Dividend Stock declaration date.

As of December 31, 2024 and as of the date of this filing, none of the Dividend Stock or any shares of the Series 1 Preferred Stock were issued or distributed.

Treasury Stock

As of December 31, 2023, there were 60,068,585 shares of Treasury Stock.

As of December 31, 2024 and 2023, there were 60,068,585 shares of Treasury Stock.

A&R Yorkville Purchase Agreement

Pursuant to the A&R Yorkville Purchase Agreement, the Company has the right, but not the obligation, in its sole and absolute discretion, to sell to Yorkville up to $ 500.0 million of shares of Common Stock at its request and subject to certain conditions by delivering written notice to Yorkville at any time until the first day of the month following the 36-month anniversary of the date on which the Company’s registration statement on Form S-1 registering such shares has been declared effective by the SEC.

Pursuant to the A&R Yorkville Purchase Agreement, the shares of Common Stock, if any, that the Company elects to sell to Yorkville pursuant to a sale of Common Stock will be purchased at a price equal to 98 % of the VWAP (as defined below) during the applicable pricing period for such advance, which shall be the period commencing upon receipt by Yorkville of an advance notice from the Company (or the open of regular trading hours, if later) and ending on 4:00 p.m.

Pursuant to the A&R Yorkville Purchase Agreement, the Company had the right, but not the obligation, in its sole and absolute discretion, to sell to Yorkville up to $ 500.0 million of shares of Common Stock at its request and subject to certain conditions by delivering written notice to Yorkville at any time until the first day of the month following the 36-month anniversary of the date on which the Company’s registration statement on Form S-1 registering such shares was declared effective by the SEC.

Pursuant to the A&R Yorkville Purchase Agreement, the shares of Common Stock, if any, that the Company elected to sell to Yorkville pursuant to a sale of Common Stock will be purchased at a price equal to 98 % of the VWAP (as defined below) during the applicable pricing period for such advance, which shall be the period commencing upon receipt by Yorkville of an advance notice from the Company (or the open of regular trading hours, if later) and ending on 4:00 p.m.

on the same day.

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During the year ended December 31, 2024, the Company sold 96,982 shares of Common Stock pursuant to the A&R Yorkville Purchase Agreement for aggregate net proceeds of $ 0.2 million .

During the year ended December 31, 2023, the Company sold 11,552,074 shares of Common Stock pursuant to the A&R Yorkville Purchase Agreement for aggregate net proceeds of $ 32.3 million .

On, and effective as of, March 25, 2024, the Company and Yorkville mutually agreed to terminate the A&R Yorkville Purchase Agreement.

Riley Purchase Agreement

Pursuant to the B.

Riley Purchase Agreement, the Company has the right, but not the obligation, to sell to B.

Riley Purchase Agreement, the Company had the right, but not the obligation, to sell to B.

Riley up to $ 500.0 million of shares of Common Stock, subject to certain limitations and conditions set forth therein, from time to time at the Company’s sole and absolute discretion, during the term of the B.

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Riley 250,000 shares of Common Stock.

During the year ended December 31, 2024, the Company did not sell any shares of Common Stock pursuant to the B.

Riley Purchase Agreement.

During the year ended December 31, 2023, the Company sold an aggregate of 1,414,554 shares of Common Stock for aggregate net proceeds of $ 3.2 million .

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Riley Securities, Inc., Cantor Fitzgerald & Co.

Wainwright & Co., LLC (the “Sales Agents”).

Pursuant to the ATM Sales Agreement, the Company may offer and sell (the “Offering”) shares of Common Stock up to $ 170,000,000 (the “ATM Shares”), through or to the Sales Agents.

The Company has no obligation to sell any shares of Common Stock under the ATM Sales Agreement and may suspend offers at any time.

The ATM Shares offered and sold in the Offering will be issued pursuant to the Company’s shelf registration statement on Form S-3 (the “Shelf S-3 Registration Statement”), filed with the SEC on December 22, 2023, and declared effective by the SEC on January 11, 2024.

The ATM Shares may be offered only by means of a prospectus forming a part of the Shelf S-3 Registration Statement.

The Sales Agents are entitled to a commission equal to 3.0 % of the gross proceeds from each sale of shares of Common Stock.

The Company will also reimburse the Sales Agents for certain expenses and has agreed to provide indemnification and contribution to the Sales Agents against certain civil liabilities, including liabilities under the Securities Act.

Wainwright & Co., LLC (the “Sales Agents”), which agreement was voluntarily terminated by us effective as of March 5, 2025.

Pursuant to the ATM Sales Agreement, the Company was able to offer and sell (the “Offering”) shares of Common Stock up to $ 170,000,000 (the “ATM Shares”), through or to the Sales Agents.

The Company had no obligation to sell any shares of Common Stock under the ATM Sales Agreement and could suspend offers at any time.

The ATM Shares offered and sold in the Offering were issued pursuant to the Company’s shelf registration statement on Form S-3 (which was initially filed with the SEC on December 22, 2023, as amended, and declared effective on January 11, 2024 (File No.

333-276245)) (the “Shelf S-3 Registration Statement”).

The ATM Shares were offered only by means of a prospectus forming a part of the Shelf S-3 Registration Statement.

The Sales Agents were entitled to a commission equal to 3.0 % of the gross proceeds from each sale of shares of Common Stock.

The Company agreed to reimburse the Sales Agents for certain expenses and has agreed to provide indemnification and contribution to the Sales Agents against certain civil liabilities, including liabilities under the Securities Act.

As of December 31, 2024, the Company sold 2,764,187 shares of Common Stock pursuant to the ATM Sales Agreement for net proceeds of approximately $ 2.7 million .

As of December 31, 2023 , no sales of Common Stock had been made under the ATM Sales Agreement.

February 2024 Bought Deal Offering Underwriting Agreement

On February 29, 2024, the Company entered into an underwriting agreement (the “February 2024 BDO Underwriting Agreement”) with Rodman & Renshaw LLC and StockBlock, acting as representatives of the underwriters, to sell, in an underwritten offering (the “February 2024 BDO”), 5,882,353 shares of Common Stock (the “February 2024 BDO Firm Shares”) and accompanying common warrants to purchase up to an aggregate of 5,882,353 shares of Common Stock (the “February 2024 BDO Firm Warrants”).

The securities in the February 2024 BDO were offered and sold by us pursuant to the Shelf S-3 Registration Statement, a base prospectus dated January 11, 2024, and a final prospectus supplement dated February 29, 2024.

The February 2024 BDO closed on March 5, 2024, and the combined price per Firm Share and accompanying February 2024 BDO Firm Warrant paid by the underwriters was $ 1.564 , which amount reflects the combined public offering price of $ 1.70 , less underwriting discounts and commissions.

Pursuant to the February 2024 BDO Underwriting Agreement, the Company also granted the underwriters a 30-day option to purchase up to 882,352 additional shares of Common Stock and/or common warrants to purchase up to 882,352 shares of Common Stock (the “February 2024 BDO Optional Warrants”, and together with the February 2024 BDO Firm Warrants, the “Common Warrants”).

The underwriters did not exercise this option and it expired on March 30, 2024.

Subject to certain ownership limitations, the Common Warrants are immediately exercisable, set to expire five years later, with an exercise price of $ 1.70 per share, subject to adjustments.

Additionally, the Company issued the representative warrants (the “February 2024 BDO Representative Warrants”) to the underwriters, allowing them to purchase up to 470,588 shares of Common Stock, with these warrants being immediately exercisable at $ 2.125 per share, representing 125 % of the combined public offering price per Firm Share and accompanying February 2024 BDO Firm Warrant.

The Company accounted for the February 2024 BDO Firm Warrants as a liability classified instrument (see Note 4) and the February 2024 BDO Representative Warrants as an equity classified instrument.

The February 2024 BDO Representative Warrants are recognized in additional paid-in capital in the Company’s consolidated balance sheet.

The issuance costs allocated to the equity component are recorded as the reduction of the offering proceeds and the amounts allocated to the liability component are expensed as incurred within the selling, general and administrative expenses in the Company’s consolidated statement of operations.

The fair value of February 2024 BDO Representative Warrants as of the date of issuance was $ 0.3 million .

On December 11, 2024, the Company entered into a warrant amendment (the “Warrant Amendment”) with one of its investors to exercise the outstanding number of the February 2024 BDO Firm Warrants that the Company issued to such investor in the February 2024 BDO.

Pursuant to the Warrant Amendment, the investor agreed to exercise outstanding February 2024 BDO Firm Warrants to purchase an aggregate of 1,764,706 shares of Common Stock in cash at an amended exercise price of $ 0.59 per share.

During the year ended December 31, 2024, there were 2,078,906 February 2024 BDO Firm Warrants exercised for total net proceeds of approximately $ 1.6 million , including the amended February 2024 BDO Firm Warrants.

As of December 31, 2024, there were 3,803,447 February 2024 BDO Firm Warrants and 470,588 February 2024 BDO Representative Warrants outstanding.

April 2024 Registered Direct Offering

On April 23, 2024, the Company entered into a securities purchase agreement (the “April 2024 RDO Purchase Agreement”) with the investor named therein, pursuant to which the Company agreed to sell and issue, in a registered direct offering (the “April 2024 RDO”):

(i) an aggregate of 15,000,000 shares of Common Stock (the “RDO Shares”), and (ii) common warrants to purchase up to 15,000,000 shares of Common Stock (the “April 2024 RDO Common Warrants”).

The offering price per RDO Share and accompanying April 2024 RDO Common Warrant to purchase one share of Common Stock was $ 1.00 , for aggregate gross proceeds to the Company of $ 15,000,000 , before deducting the placement agent fees and other offering expenses.

Subject to certain ownership limitations, the April 2024 RDO Common Warrants are exercisable on the six-month anniversary from the date of issuance, will expire on the five-year anniversary of the date of issuance and have an exercise price of $ 1.10 per share.

The exercise price of the April 2024 RDO Common Warrants is subject to certain adjustments, including stock dividends, stock splits, combinations and reclassifications of the Common Stock.

StockBlock and its affiliate, Rodman & Renshaw LLC, acted as exclusive placement agents (the “Placement Agents”) in connection with the April 2024 RDO.

As compensation for such placement agent services, the Company paid the Placement Agents an aggregate cash fee equal to 8.0 % of the gross proceeds actually received by the Company from the April 2024 RDO.

The Company also reimbursed the Placement Agents $ 100,000 for actual, reasonable and documented fees and expenses, inclusive of fees and expenses of legal counsel and out-of-pocket expenses and $ 15,950 for clearing expenses.

The Company has also agreed to issue to the Placement Agents or their respective designees common warrants, substantially in the form of the April 2024 RDO Common Warrants, to purchase up to 1,200,000 shares of Common Stock (the “April 2024 RDO Placement Agent Warrants”), representing up to 8.0 % of the total number of the April 2024 RDO Shares issued in the April 2024 RDO.

The April 2024 RDO Placement Agent Warrants have an exercise price of $ 1.25 per share (which represents 125 % of the combined offering price per share of Common Stock and the April 2024 RDO Common Warrant sold in the April 2024 RDO), will become exercisable on the six-month anniversary of the date of issuance and expire five years from the commencement of sales in the April 2024 RDO.

The Company accounted for the April 2024 RDO Common Warrants as a liability classified instrument (see Note 4) and the April 2024 RDO Placement Agent Warrants as an equity classified instrument.

The April 2024 RDO Placement Agent Warrants are recognized in additional paid-in capital in the Company’s consolidated balance sheets.

The fair value of April 2024 RDO Placement Agent Warrants as of the date of issuance was $ 0.6 million .

As of December 31, 2024, there were 15,000,000 April 2024 RDO Common Warrants and 1,200,000 April 2024 RDO Placement Agent Warrants outstanding.

December 2024 Registered Direct Offering

On December 11, 2024, the Company entered into a securities purchase agreement (the “December 2024 RDO Purchase Agreement”) with the investors named therein, pursuant to which the Company agreed to sell and issue, in a registered direct offering (the “December 2024 RDO”):

(i) an aggregate of 26,355,347 shares of Common Stock, (ii) pre-funded warrants to purchase up to 2,401,132 shares of Common Stock (the “December 2024 RDO Pre-Funded Warrants”) and (iii) common warrants to purchase up to 57,512,958 shares of Common Stock (the “December 2024 RDO Common Warrants” and together with the December 2024 RDO Pre-Funded Warrants and the warrants issued to StockBlock pursuant to certain contractual obligations between the Company and StockBlock (the “StockBlock Warrants”), the “December 2024 RDO Warrants”).

The combined offering price (a) per share of Common Stock and accompanying December 2024 RDO Common Warrants was $ 0.59 and (b) per December 2024 RDO Pre-Funded Warrant and accompanying December 2024 RDO Common Warrants was $ 0.5899 .

The aggregate gross proceeds to the Company from the December 2024 RDO were approximately $ 17.0 million, before deducting offering fees and expenses.

The Company intends to use the net proceeds from the December 2024 RDO 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 Company accounted for the December 2024 RDO Common Warrants and December 2024 RDO Pre-Funded Warrants as liability classified instruments (see Note 4) and the StockBlock Warrants as an equity classified instrument.

The StockBlock Warrants are recognized in additional paid-in capital in the Company’s consolidated balance sheets.

The fair value of StockBlock Warrants as of the date of issuance was $ 1.3 million .

On December 26, 2024, the December 2024 RDO Pre-Funded Warrants were exercised by the holder for total net proceeds of approximately $ 0.2 million .

As of December 31, 2024, there were 57,512,958 December 2024 RDO Common Warrants and 4,601,036 StockBlock Warrants outstanding.

Stock Incentive and Employee Benefit Plan

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In October 2022, the Board of Directors of the Company adopted the Scilex Holding Company 2022 Equity Incentive Plan (the “Equity Incentive Plan”).

The total number of shares of Common Stock for which incentive stock options (“ISOs”) may be granted under the Equity Incentive Plan is not to exceed 20,276,666 shares, which was increased from 14,622,712 as a result of the automatic annual increase on January 1, 2023 pursuant to the Equity Incentive Plan provisions.

On May 4, 2023, the Company’s stockholders approved the amendment to the Equity Incentive Plan to (i) increase the number of shares authorized for issuance thereunder by 10,000,000 shares from 20,276,666 shares to 30,276,666 shares, (ii) increase the number of shares authorized for issuance thereunder pursuant to the exercise of ISOs to 30,276,666 shares, and (iii) modify the commencement date of the automatic increase in the number of shares authorized for issuance thereunder pursuant to the exercise of ISOs to January 1, 2024.

As of December 31, 2023 , options to purchase 33,123,798 shares of Common Stock were outstanding under all equity incentive plans.

The Company recently determined that the aggregate value of all compensation granted or paid to each non-employee director for the fiscal year ending December 31, 2023 (when aggregated with any remaining compensation payable for the remainder of such fiscal year) would inadvertently exceed the $ 750,000 annual compensation limit for non-employee directors (the “Compensation Limit”) under the Equity Incentive Plan, as a result of the previously disclosed equity grants made thereunder to such non-employee directors in January 2023 (the “Awards”).

As a result, the Company’s current non-employee directors, David Lemus and Dorman Followwill, and the Company’s former non-employee directors, Tien-Li Lee and Laura Hamill, each voluntarily agreed to forfeit (i) a number of shares of Common Stock subject to their Awards or (ii) a combination of shares of Common Stock subject to their Awards and cash compensation payable by the Company for such person’s service as a director for the remainder of 2023, in each case in an amount that would bring each such non-employee director’s aggregate compensation for the fiscal year ending December 31, 2023 below the Compensation Limit.

The non-employee directors forfeited an aggregate of 311,735 shares of Common Stock and an aggregate of approximately $ 107,424 in cash compensation.

As of December 31, 2024 , a total of 20,208,843 shares of Common Stock were available and have been reserved for future issuance under the Equity Incentive Plan, which number of shares accounts for the automatic annual increase on January 1, 2024 pursuant to the Equity Incentive Plan.

Scilex Holding Company 2023 Inducement Plan

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The initial maximum number of shares available for grant under the Inducement Plan is 1,400,000 shares of Common Stock (subject to adjustment for recapitalizations, stock splits, reorganizations and similar transactions).

No awards were granted under the Inducement Plan during the year ended December 31, 2023.

No awards were granted under the Inducement Plan during the years ended December 31, 2024 and 2023.

As of December 31, 2024, options to purchase 35,985,182 shares of Common Stock were outstanding under all equity incentive plans.

The following table summarizes stock option activity during the year ended December 31, 2024 (shares in thousands):

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Outstanding as of December 31, 2024

Vested and expected to vest as of December 31, 2024

Exercisable as of December 31, 2024

Intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of the Common Stock for the options that had exercise prices that were lower than the per share fair value of the Common Stock as of the measurement date of the intrinsic value.

The weighted-average grant date fair value per share of stock options granted during the year ended December 31, 2023 was $ 3.24 per share.

The total intrinsic values of options exercised during the years ended December 31, 2023, 2022, and 2021 were $ 1.1 million , $ 0.3 million , and nil, respectively.

Total stock-based compensation recorded within operating expenses was $ 14.6 million , $ 5.3 million and $ 5.8 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The weighted-average grant date fair value per share of stock options granted during the years ended December 31, 2024 and 2023 was $ 0.67 and $ 3.24 per share, respectively.

The total intrinsic values of options exercised during the years ended December 31, 2024 and 2023 were $ 47.3 thousand and $ 1.1 million, respectively.

The maximum term of options granted under each of the equity incentive plans is ten years.

Total stock-based compensation recorded within operating expenses was $ 15.7 million and $ 14.6 million for the years ended December 31, 2024 and 2023, respectively.

The total unrecognized compensation costs related to unvested employee and non-employee stock option grants as of December 31, 2024 were $ 27.8 million , which the Company expects to recognize over a weighted-average period of approximately 2.3 years.

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The purchase price of the Common Stock is equal to 85 % of the lesser of the market value of such shares at the beginning of an offering period or the date of purchase.

As of December 31, 2023 , the total number of shares of Common Stock that may be issued under the ESPP shall not exceed 2,875,759 , which was increased from 1,462,271 shares as a result of automatic annual increase on January 1, 2023.

Total stock-based compensation recorded as operating expense for the ESPP was $ 21.0 thousand and nil for the year ended December 31, 2023 and 2022, respectively.

As of December 31, 2024 , the total

number of shares of Common Stock that may be issued under the ESPP shall not exceed 4,476,601 , which was increased from 2,875,759 shares as a result of automatic annual increase on January 1, 2024.

Total stock-based compensation recorded as operating expense for the ESPP was $ 242.8 thousand and $ 21.0 thousand for the years ended December 31, 2024 and 2023, respectively.

There were 334,326 and nil shares of Common Stock issued under the ESPP during the years ended December 31, 2024 and 2023, respectively.

Valuation Assumptions

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Expected life (in years)

Semnur 2024 Stock Option Plan

Concurrent with the signing of the Semnur Business Combination Agreement, the Board, the Company (as the sole stockholder of Semnur) and the board of directors of Semnur approved the 2024 Stock Option Plan (“Semnur 2024 Plan”).

Under the Semnur 2024 Plan, 40,000,000 shares of Semnur Common Stock were reserved for future issuance and nonstatutory stock options (“NSOs”) to purchase the same amount of Semnur Common Stock were granted to certain executive officers of Semnur.

The NSOs were granted on August 30, 2024 and expire on August 30, 2034.

No expense was recorded in connection with the NSOs as of December 31, 2024, as until the date on which all payments and all obligations under the Oramed Note have been paid in full in cash, such options will not be or become exercisable, eligible for exchange, redemption or repurchase, eligible to participate in any dividends or distributions or have any voting rights in respect of the Company or any of its current or future subsidiaries of the Company, and following the closing of the transactions contemplated by the Semnur Business Combination Agreement, the Company, Denali or any of their respective current and future subsidiaries, successors and assigns.

Employee Benefit Plan

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Employee contributions are voluntary and are determined on an individual basis, limited to the maximum amount allowable under federal tax regulations.

The Company made matching contributions to the 401(k) plan totaling $ 0.5 million , $ 0.3 million and $ 0.3 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The Company made matching contributions to the 401(k) plan totaling $ 0.6 million and $ 0.5 million for the years ended December 31, 2024 and 2023, respectively.

Retainer Shares

On February 13, 2023, the Company entered into a Stock Issuance Agreement (the “2023 SIA”) with a law firm for the provision of legal services to the Company.

Under the SIA, the Company issued 4,000,000 shares of Common Stock to the law firm (the “Retainer Shares”).

The Retainer Shares are held by the law firm as collateral for the current and future outstanding legal fees due from the Company.

Under the 2023 SIA, the Company issued 4,000,000 shares of Common Stock to the law firm.

On July 1, 2024, the Company entered into another Stock Issuance Agreement (the “2024 SIA”)

with the same law firm for the provision of legal services to the Company.

Under the 2024 SIA, the Company issued 10,000,000 shares of Common Stock to the same law firm.

All such shares are held by the law firm as collateral for current and future outstanding legal fees due from the Company (the “Retainer Shares”).

At the option of the law firm, the Retainer Shares may be sold and the net proceeds may be applied against the outstanding legal fees.

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Pursuant to the Product Development Agreement, Scilex Pharma is required to make aggregate royalty payments between 25 % and 35 % to the Developers based on net profits .

For the years ended December 31, 2023 and 2022, Scilex Pharma made royalty payments in the amount of $ 8.3 million and $ 2.3 million .

For each of the years ended December 31, 2024 and 2023, Scilex Pharma made royalty payments in the amount of $ 8.3 million .

As of December 31, 2024 and 2023, Scilex Pharma had ending balances of accrued royalty payables of $ 4.0 million and $ 2.4 million , respectively.

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The Product Development Agreement will continue in full force and effect until October 2, 2028 , the date that is ten years from the date of the first commercial sale of ZTlido.

The Product Development Agreement will renew automatically for subsequent successive one-year renewal periods unless Scilex Pharma or the Developers terminate it upon 6-month written notice.

The Product Development Agreement will renew automatically for subsequent successive one-year renewal periods unless Scilex Pharma or the Developers terminate it upon six months’ written notice.

On February 16, 2017, Scilex Pharma entered into a Commercial Supply Agreement (as amended, the “Supply Agreement”) with the two Developers to provide commercial supply of ZTlido and SP-103 to Scilex Pharma.

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LLC and Hisamitsu America, Inc.

On February 23, 2021, the Company filed an action (the “Action”) in the U.S.

On February 23, 2021, the Company filed an action (the “OTC Action”) in the U.S.

District Court for the Northern District of California against Sanofi-Aventis U.S.

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The defendants filed motions to dismiss, which narrowed slightly the Company’s claims, but which motions the court largely rejected.

Discovery was proceeding.

On January 26 and February 2, 2024, Scilex Pharma entered into two separate settlement agreements and mutual releases with the two manufacturers that resolve the Action.

Discovery proceeded.

On January 26 and February 2, 2024, Scilex Pharma entered into two separate settlement agreements and mutual releases with the two manufacturers that resolved the OTC Action.

The terms of those agreements are confidential.

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On March 12, 2021, Scilex Pharma and Sorrento (the “Plaintiffs”) filed an action (the “Former Employee Action”) in the Delaware Court of Chancery against the former President of Scilex Pharma, Anthony Mack, and Virpax Pharmaceuticals, Inc.

(“Virpax”, together with Mr.

(“Virpax”, and together with Mr.

Mack, the “Defendants”), a company founded and then headed by Mr.

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On February 26, 2024, the Company and Virpax entered into a term sheet regarding a mutual release and settlement agreement, pursuant to which the parties have agreed to resolve the ongoing disputes.

On February 29, 2024, the Company and Virpax entered into a definitive settlement agreement, which provides for, among other things, that Virpax will be obligated to make the following payments to the Company to settle the Former Employee Action:

(i) $ 3.5 million (the “Initial Payment”) by two business days after the Effective Date (as defined therein);

(ii) $ 2.5 million by July 1, 2024 and (iii) to the extent any of the following drug candidates are ever sold, royalty payments of (a) 6 % of annual Net Sales (as defined therein) of Epoladerm;

On February 29, 2024, the Company and Virpax entered into a definitive settlement agreement, which provides for, among other things, that Virpax would be obligated to make the following payments to the Company to settle the Former Employee Action:

(i) $ 3.5 million (the “Initial Payment”) by two business days after the Effective Date (as defined therein), which payment has been made;

(ii) $ 2.5 million by July 1, 2024, which payment has been made on July 8, 2024 and (iii) to the extent any of the following drug candidates are ever sold, royalty payments of (a) 6 % of annual Net Sales (as defined therein) of Epoladerm;

(b) 6 % of annual Net Sales of Probudur and (c) 6 % of annual Net Sales of Envelta during the Royalty Term (as defined therein).

The Company and Virpax provide mutual releases of all claims that exist as of the Effective Date, whether known or unknown, arising from any allegations set forth in the Former Employee Action.

The Company and Virpax provided mutual releases of all claims that existed as of the Effective Date, whether known or unknown, arising from any allegations set forth in the Former Employee Action.

Plaintiffs’ release relates to claims against Virpax only, which does not affect its claims against Mr.

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Mack, and litigation against him remains ongoing.

Plaintiffs’ release as to Virpax is conditioned upon Virpax’s Initial Payment.

The court has requested additional oral argument on the topic of remedies against Mr.

Mack, which argument occurred on November 15, 2024.

The parties are awaiting a final judgment from the court.

ZTlido Patent Litigation

6 unchanged sentences

The Company is seeking, among other relief, an order that the effective date of any FDA approval of Apotex’s ANDA be no earlier than the expiration of the asserted patents listed in the Orange Book, the latest of which expires on May 10, 2031, and such further and other relief as the court may deem appropriate.

Apotex is subject to a 30-month stay preventing it from selling a generic version of ZTlido during that time.

The stay should expire no earlier than November 11, 2024.

The two Apotex entities were recently dismissed from the litigation without prejudice, as they no longer have an interest in the generic product that Aveva

seeks to market.

Trial in the ZTlido Patent Litigation has been scheduled for July 8, 2024.

The Company cannot make any predictions about the final outcome of this matter or the timing thereof.

Apotex and Aveva were subject to an automatic 30-month stay preventing them from selling a generic version of ZTlido during that time which was extinguished by the U.S.

District Court for the Southern District of Florida decision described below.

However, to our knowledge, Aveva has not received FDA approval for

any generic version of ZTlido.

The two Apotex entities were dismissed from the litigation without prejudice, as they no longer had an interest in the generic product that Aveva seeks to market.

Before trial, Aveva dropped its challenge to the validity and enforceability of the Company’s patents.

Trial in the ZTlido Patent Litigation was held from July 8, 2024 to July 11, 2024.

Final post-trial briefing was submitted by the parties on July 25, 2024, and the case was submitted to the U.S.

District Court for the Southern District of Florida.

On August 26, 2024, that court issued a decision finding that Aveva’s product does not infringe the Company’s ZTlido Patents.

The Company is appealing that decision to the U.S.

Court of Appeals for the Federal Circuit, and it filed a Notice of Appeal with the U.S.

District Court for the Southern District of Florida on September 25, 2024.

GLOPERBA Patent Litigation

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District Court for the District of Delaware (the “GLOPERBA Patent Litigation”) alleging that the Company’s filing with the FDA of an application for approval of a proposed revision to the product label for its GLOPERBA product infringed certain Orange Book listed patents covering Takeda’s colchicine product, Colcrys ® (the “Colcrys Patents”).

Takeda is seeking an order that the effective date of any FDA approval of the Company’s labeling revision be no earlier than the expiration date of the asserted patents listed in the Orange Book, and such further and other relief as the court may deem appropriate.

The filing of the complaint subjects the Company to a 30-month stay, preventing it from selling GLOPERBA under a revised label (but not from selling GLOPERBA under its current label) during that time.

The Company cannot make any predictions about the final outcome of this matter or the timing thereof.

The stay could last as long as until May 6, 2026, unless the litigation is resolved before that time .

As of December 31, 2023, the Company accrued $ 0.5 million with respect to the GLOPERBA Patent Litigation.

Takeda sought an order that the effective date of any FDA approval of the Company’s labeling revision be no earlier than the expiration date of the asserted patents listed in the Orange Book, and such further and other relief as the court may deem appropriate.

The Company had previously accrued $ 0.5 million with respect to the GLOPERBA Patent Litigation.

On March 7, 2024, the Company entered into a Settlement Agreement (the “Settlement Agreement”) with Takeda to resolve the action and entered into a license agreement with Takeda pursuant to which Takeda granted a non-exclusive license to the Company and its affiliates of certain patents owned by Takeda.

The terms of those agreements are confidential.

The Settlement Agreement was subject to review by the Federal Trade Commission and the U.S.

Department of Justice, neither of which objected during the review period.

After the expiration of the review period, the U.S.

District Court for the District of Delaware entered a final consent judgment on May 3, 2024.

Operating Leases

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Facility leases generally provide for periodic rent increases and may include options to extend.

As of December 31, 2023, the Company’s leases have remaining lease terms of approximately 0.7 to 3.8 years.

As of December 31, 2024, the Company’s leases have remaining lease terms of approximately 2.8 years.

Th e terms of the Company’s leases, ranging from 3 to 5 years, include extension options that were not reasonably certain to be exercised.

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As a result of the modification, the Company recognized additional ROU assets and corresponding lease liabilities of $ 2.5 million .

Lease expense was $ 1.1 million , $ 0.5 million and $ 0.6 million for the years ended December 31, 2023, 2022 and 2021, respectively, and was primarily comprised of operating lease costs.

Lease expense was $ 1.0 million and $ 1.1 million for the years ended December 31, 2024 and 2023, respectively, and was primarily comprised of operating lease costs.

The lease expense also included variable lease costs and sublease income, which were immaterial for the periods presented.

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Total loss before income taxes for the years ended December 31, 2024 and 2023 did not include a foreign component.

The components of the provision expense (benefit) were as follows for the years ended December 31, 2023, 2022 and 2021 (in thousands):

The components of the provision (benefit) expense were as follows for the years ended December 31, 2024 and 2023 (in thousands):

Year Ended December 31,

Current income tax expense (benefit):

Total current

Deferred income tax expense (benefit):

Total deferred

Current income tax (benefit) expense:

Total current income tax (benefit) expense

Deferred income tax benefit:

Total deferred income tax benefit

Changes in tax rate

Changes in valuation allowance

Total income tax expense from continuing operations

Total income tax (benefit) expense from continuing operations

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

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Accrued expense and reserves

Purchased revenue liability

Operating lease liabilities

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Valuation allowance

Debt discount and interest limitation

Compensation expense

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Change in tax rates

Income tax expense

Income tax (benefit) expense

The Company has evaluated the available evidence supporting the realization of its gross deferred tax assets, including the amount and timing of future taxable income, and has determined that it is more likely than not that the deferred tax assets will not be realized.

2 unchanged sentences

As of December 31, 2024, the Company had $ 336.5 million and $ 248.2 million of federal and state net operating loss carryforwards, respectively.

The net operating loss carryforwards begin to expire in 2035 and 2034 for federal and state, respectively.

The net operating loss carryforwards begin to expire in 2033 for both federal and state.

As of December 31, 2024, the Company had a total of $ 313.5 million of federal net operating losses that have an indefinite life and will not expire, and had federal research and development income tax credits of $ 3.7 million which will begin to expire in 2034 .

6 unchanged sentences

There are no active tax compliance audits as of December 31, 2024.

A reconciliation of the beginning and ending amount of unrecognized tax expense (benefits) is as follows for the years ended December 31, 2023, 2022 and 2021 (in thousands):

Beginning balance

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows for the years ended December 31, 2024 and 2023 (in thousands):

Gross unrecognized tax benefits at the beginning of the year

Increase related to prior year tax positions

Increases related to current year tax positions

Ending balance

As of December 31, 2023, 2022 and 2021, the Company had $ 1.1 million , $ 0.4 million and $ 0.4 million in total unrecognized tax benefits, respectively.

Increase related to current year tax positions

Gross unrecognized tax benefits at the end of the year

As of December 31, 2024 and 2023 , the Company had $ 1.2 million and $ 1.1 million in total unrecognized tax benefits, respectively, which have been reflected as a reduction in deferred tax assets.

If these were to be recognized, they would affect the effective tax rate, however given the full valuation allowance in the jurisdiction in which the unrecognized tax benefits relate to, the impact on the effective tax rate would be nil.

The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense.

No interest or penalties have been recognized as of and for the periods ended December 31, 2023, 2022 and 2021.

No interest or penalties have been recognized as of and for the years ended December 31, 2024 and 2023.

The Company believes that no material amount of the liabilities for uncertain tax positions are expected to reverse within 12 months of December 31, 2024 .

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Year Ended December 31,

Premium on redemption of Preferred Stock

Net loss for basic and diluted loss per share available to common stockholders

Weighted average number of shares outstanding - basic

Premium on redemption of Series A Preferred Stock

Net loss for basic loss per share available to common stockholders

Reversal of mark-to-market adjustment for liability classified warrants

Net loss for diluted loss per share available to common stockholders

Weighted average number of shares outstanding

Weighted average common stock warrants exercisable for nominal consideration

Weighted average number of shares, basic

Effect of dilutive securities

Weighted average number of shares and assumed conversions - diluted

Weighted average number of shares, diluted

Loss per share

Basic and diluted

Basic net loss per share is computed by dividing net loss by the weighted average number of shares of Common Stock outstanding during the period.

Premium paid on redemption of Preferred Stock was added to the net loss to arrive at loss available for common stockholders as it represents a dividend to the preferred stockholder.

Premium paid on redemption of Series A Preferred Stock was added to the net loss to arrive at loss available for common stockholders as it represents a dividend to the Series A preferred stockholder.

Diluted earnings per share is computed using the weighted average number of Common Stock and, if dilutive, potential Common Stock outstanding during the period.

Potential Common Stock consists of the incremental Common Stock issuable upon the exercise of stock options and warrants (using the treasury stock method).

Potential Common Stock consists of the incremental Common Stock issuable upon the exercise of stock options and warrants (using the treasury stock method or the reverse treasury stock method, as applicable).

In the computation of net loss per share, treasury shares are not included as part of the outstanding shares.

Shares of the Dividend Stock, as declared by the Board of Directors of the Company on October 27, 2024 and not yet distributed

as of December 31, 2024, are also excluded from the computation of net loss per share because the associated Series 1 Preferred Stock is not considered to be a participating security.

The Closing Penny Warrants become exercisable upon the passage of time and are included in basic and diluted net income (loss) per share from the closing date of September 21, 2023.

The Subsequent Penny Warrants to purchase up to an aggregate of 8,500,000 shares of Common Stock are not vested as of the closing date of September 21, 2023 and the vesting is based on the passage of time, the Company’s repayment of the Oramed Note or the occurrence of the Management Sale Trigger Date (as defined

Therefore, these Subsequent Penny Warrants are included in the computation for diluted net income per share once all other exercise contingencies are removed except for the passage of time.

The Subsequent Penny Warrants to purchase up to an aggregate of 8,500,000 shares of Common Stock were not vested as of the closing date of September 21, 2023 and the vesting was based on the passage of time, the Company’s repayment of the Oramed Note or the occurrence of the Management Sale Trigger Date (as defined therein).

The Subsequent Penny Warrants became vested during the year ended December 31, 2024, and therefore are included in the computation for basic and diluted net income per share as of December 31, 2024, since all other exercise contingencies were removed except for the passage of time.

The following potentially dilutive outstanding securities were excluded from the computation of diluted net loss per share because their effect would have been anti-dilutive for the periods presented:

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Public Warrants

Private Warrants

February 2024 BDO Firm Warrants

April 2024 RDO Placement Agent Warrants

Retainer Shares

Shares Issuable pursuant to ESPP

Private Warrants

February 2024 BDO Representative Warrants

Shares Issuable pursuant to the ESPP

Shares issuable under the SIPA

Convertible Debentures

October 2024 Placement Agent Warrants

December 2024 RDO Common Warrants

StockBlock Warrants

Shares issuable under Tranche B Notes

Subsequent Events

Termination of B.

Riley Purchase Agreement

On February 16, 2024, the Company and B.

Riley mutually agreed to terminate the B.

Riley Purchase Agreement.

The termination is effective as of February 16, 2024.

Underwritten Offering

On February 29, 2024, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Rodman & Renshaw LLC and StockBlock Securities LLC, as the representatives (the “Representatives”) of the underwriters named in Schedule A (the “Underwriters”).

Pursuant to the Underwriting Agreement, the Company agreed to sell, in an underwritten offering (the “Bought Deal Offering”), 5,882,353 shares (the “Firm Shares”) of the Common Stock, and accompanying common warrants to purchase up to an aggregate of 5,882,353 shares of Common Stock (the “Firm Warrants”).

Pursuant to the Underwriting Agreement, the Company also granted the Underwriters an option for a period of 30 days from the date of the Underwriting Agreement to purchase up to 882,352 additional shares of Common Stock (the “Optional Shares”, and together with the Firm Shares, the “Shares”) and/or common warrants to purchase up to 882,352 shares of Common Stock (the “Optional Warrants”, and together with the Firm Warrants, the “Common Warrants”) that may be purchased by the Underwriters, at a price per Optional Share of $ 1.5548 and a price per Optional Warrant of $ 0.0092 , which amounts reflect the public offering price of $ 1.69 per Optional Share and $ 0.01 per Optional Warrant, less underwriting discounts and commissions, as applicable (the “Underwriters’ Option”).

Each Firm Share was sold together with a Firm Warrant at a combined public offering price of $ 1.70 .

The combined price per Firm Share and accompanying Firm Warrant paid by the Underwriters was $ 1.564 , which amount reflects the combined public offering price of $ 1.70 , less underwriting discounts and commissions.

Subject to certain ownership limitations, the Common Warrants are exercisable immediately from the date of issuance, will expire on the five-year anniversary of the date of issuance and have an exercise price of $ 1.70 per share.

The exercise price of the Common Warrants is subject to certain adjustments, including (but not limited to) for stock dividends, stock splits, combinations and reclassifications of the Common Stock.

In connection with the Bought Deal Offering, the Company agreed, pursuant to the Underwriting Agreement, to issue the Representatives warrants (the “Representative Warrants”, and together with the Common Warrants, the “Warrants”) to purchase up to an aggregate of 470,588 shares of Common Stock (which represents 8.0 % of the aggregate number of Firm Shares sold in the Bought Deal Offering), or up to an aggregate of 541,176 shares of Common Stock if the Underwriters exercise the Underwriters’ Option in full.

The Representative Warrants are immediately exercisable and have the same terms as the Common Warrants described above, except that the exercise price of the Representative Warrants is $ 2.125 per share, which represents 125 % of the combined public offering price per Firm Share and accompanying Firm Warrant.

The Company also agreed to pay certain expenses of the Representatives in connection with the Bought Deal Offering, including their legal fees and out-of-pocket expenses up to $ 200,000 and up to $ 15,950 for clearing expenses.

The Shares, the Warrants and the shares of Common Stock issuable upon exercise of the Warrants were offered and sold by us pursuant to an effective shelf registration statement on Form S-3, which was originally filed with the Securities and Exchange Commission (the “SEC”) on December 22, 2023, as amended, and was declared effective on January 11, 2024 (File No.

333-276245), a base prospectus dated January 11, 2024, and a final prospectus supplement dated February 29, 2024.

Deferral and Consent under Tranche B Senior Secured Convertible Note

Pursuant to the Tranche B Notes, commencing on January 2, 2025 (the “First Amortization Payment Date”), the Company is required to redeem in cash (the “First Amortization Payment”) such portion of the principal amount of the Tranche B Notes equal to each Tranche B Noteholder’s Holder Pro Rata Amount (as defined in the Tranche B Notes) of $ 6,250,000 per fiscal quarter at a redemption price equal to 100 % of such Amortization Amount (as defined in the Tranche B Notes).

On January 2, 2025, the Company entered into a deferral and consent letter with each of (i) Nomis Bay Ltd and BPY Limited (the “Nomis Bay Consent”), (ii) Oramed (the “Oramed Consent”) and (iii) 3i, LP (the “3i Consent” and, together with the Nomis Bay Consent and the Oramed Consent, the “Tranche B Consents”), respectively, pursuant to which the Tranche B Noteholders agreed to defer the Company’s obligation to make the First Amortization Payment until January 31, 2025.

In consideration of such deferral, and to limit the Tranche B Noteholders’ right to exercise certain secured creditor remedies (including recourse against the assets of SCLX JV as a grantor under the Security Agreement (as defined in the Tranche B Consents)), SCLX JV delivered to the Tranche B Noteholders (or their designee) by deposit/withdrawal at custodian with the Depository Trust Company an aggregate of 5,000,000 Scilex Shares held by SCLX JV, of which 2,500,000 shares were delivered to Oramed, 720,000 shares were delivered to BPY Limited, 1,280,000 shares were delivered to Nomis Bay Ltd, and 500,000 shares were delivered to 3i, LP.

In addition, pursuant to the Tranche B Consents, effective as of the latest of (i) the time of execution and delivery of the Tranche B Consents, (ii) the time of the delivery of the Scilex Shares and (iii) the time of grant of the Royalty and Exclusive Rights (each as defined in, and contemplated pursuant to, the Term Sheet that is an exhibit to the Tranche B Consents (the “Term Sheet”)), the Tranche B Noteholders agreed to further defer the Company’s obligation to make the First Amortization Payment until October 8, 2026, provided that, as contemplated in the Term Sheet, the Company pays an aggregate of $ 1.1 million in respect of a portion of the First Amortization Payment and related make-whole interest (which amount has been paid).

The Term Sheet provides that the Company and the Tranche B Noteholders would enter into an agreement pursuant to which the Tranche B Noteholders shall collectively receive a 10 year, assignable, freely transferable, 4 % royalty on the worldwide Net Sales (as defined therein) of GLOPERBA and ELYXYB, excluding sales of ELYXYB in Canada.

Please see section below titled “Gloperba and Elyxyb Royalty Purchase Agreement” for a description of such royalty agreement entered into by us.

Amendment to Senior Secured Note

On January 21, 2025, the Company entered into an amendment letter with Oramed (the “Oramed Amendment”), pursuant to which, among other things, Oramed agreed to extend the Maturity Date under and as set forth in the Oramed Note from March 21, 2025 to December 31, 2025.

In consideration of such extension, SCLX JV agreed to deliver to Oramed an aggregate of 3,250,000 shares of Common Stock held by SCLX JV.

ZTlido Rest of World License Agreement

On February 22, 2025 (the “ Lido Effective Date ”), Scilex Pharma entered into a License Agreement (the “ Lido License Agreement ”) with RoyaltyVest Ltd.

(the “Licensee”) with respect to services, compositions, products, dosages and formulations comprising lidocaine that have been or are later developed by or on behalf of Scilex Pharma, including the product and any future product defined as a “Product” under Scilex Pharma’s existing (i) Product Development Agreement, dated as of May 11, 2011, with Oishi and Itochu, as amended, and (ii) the associated Commercial Supply Agreement, dated February 16, 2017, between Scilex Pharma, Oishi and Itochu, as amended, which include (a) ZTlido (lidocaine topical system) 1.8 %, including the composition of matter with the NDC 69557-111-30 and (b) SP-103 (collectively, the “ Lido Product ”).

The Lido License Agreement supersedes and replaces the that certain Rest of World License Term Sheet parties entered into on October 8, 2024.

Under the Lido License Agreement, Scilex Pharma granted to the Licensee during the Lido License Term (as defined below) a worldwide (other than the United States and certain territories stated in the Lido License Agreement), exclusive, non-transferable right, license and interest in, to, and under all Product Rights Controlled (each as defined therein) by Scilex Pharma to develop, manufacture, obtain and maintain regulatory approvals for, commercialize and otherwise exploit all Lido Products, in all cases solely for commercialization of the Lido Products outside of the United States and certain territories stated in the Lido License Agreement (the “ Lido Licensee Territory ”).

The Licensee granted to Scilex Pharma a non-exclusive, non-transferable, right and license under the Licensee Non-Blocking Patents (as defined therein) (i) in the Licensor Territory (as defined therein), to develop, manufacture, obtain and maintain regulatory approvals for, commercialize and otherwise exploit Lido Product for commercialization of Lido Products in the Licensor Territory in the Field (each as defined therein), and (ii) worldwide, to develop and manufacture Lido Product for commercialization in the Licensor Territory in the Field (each as defined therein).

Each of the Licensee and Scilex Pharma will receive 50 % of the Net Revenue (as defined therein) generated, and the Licensee shall effect the foregoing by paying to Scilex Pharma its share of the Net Revenue on a quarterly basis.

Pursuant to the Lido License Agreement, the Licensee shall (i) use commercially reasonable efforts to obtain and maintain regulatory approval for the Lido Product in at least one Major Market Country (as defined therein) within 18 months after the Lido Effective Date, and (ii) commit $ 200,000 , or its equivalent in kind, annually towards such efforts until it obtains regulatory approval for the Lido Product in the Lido Licensee Territory.

Scilex Pharma shall use commercially reasonable and diligent efforts to obtain and maintain regulatory approvals for SP-103 and all existing Lido Products in each country or jurisdiction in the Licensor Territory (as defined therein).

Promptly after the Lido Effective Date, Scilex Pharma is required to (i) facilitate an introduction between Oishi, Itochu, and the Licensee, and (ii) use reasonable efforts to cause each of Oishi and Itochu to accept a direct engagement

with the Licensee for the manufacturing or supply of the Lido Product in finished dosage form.

In addition, Scilex Pharma agreed to appoint the Licensee as its exclusive distributor of the Lido Product in the Licensee Territory during the Lido License Term.

The term of the Lido License Agreement commences on the Lido Effective Date and continues until expiration of the last to expire Licensed Patents (as defined therein), unless earlier terminated (the “ Lido License Term ”).

Parent Guarantee for Lido License Agreement

On February 22, 2025, in connection with Lido License Agreement, the Company entered into that certain Parent Guarantee for Lidocaine License Agreement (the “ Parent Guarantee ”) with the Licensee, pursuant to which the Company agreed to guarantee the due and proper performance of Scilex Pharma’s obligations under the Lido License Agreement on the terms and conditions set forth in the Parent Guarantee.

Pursuant to the terms of the Parent Guarantee, the Company shall provide the Licensee with written notice of any Change of Control (as defined therein) of Scilex Pharma within five business days after the consummation of such Change of Control, and the Parent Guarantee and the guarantee obligations shall automatically terminate upon the consummation of such Change of Control.

Gloperba-Elyxyb Royalty Purchase Agreement

As contemplated by the Term Sheet in respect of the Royalty and Exclusive Rights described therein, on February 28, 2025 (the “Gloperba-Elyxyb Closing Date”), the Company entered into a Purchase and Sale Agreement (the “Gloperba-Elyxyb Royalty Purchase Agreement”) with Scilex Pharma, certain institutional investors (collectively, the “Gloperba-Elyxyb Royalty Investors”) and Oramed (together with the Gloperba-Elyxyb Royalty Investors, the “Gloperba-Elyxyb RPA Purchasers”).

Pursuant to the Gloperba-Elyxyb Royalty Purchase Agreement, Scilex Pharma sold to the Gloperba-Elyxyb RPA Purchasers the right to receive 4 % of all aggregate net sales worldwide (the “Gloperba-Elyxyb Purchased Receivables”) with respect to Gloperba, Elyxyb, and any related, improved, successor, replacement and/or varying dosage forms of the foregoing (the “Gloperba-Elyxyb Covered Products”).

In consideration of the Further Deferral and representing the “grant of the Royalty and Exclusive Rights” (as defined in the Term Sheet), during the period commencing on the Gloperba-Elyxyb Closing Date and expiring on the tenth anniversary of the Gloperba-Elyxyb Closing Date (the “Gloperba-Elyxyb Payment Term”), Scilex Pharma shall pay to each Gloperba-Elyxyb RPA Purchaser, by wire transfer of immediately available funds in U.S.

dollars to such Gloperba-Elyxyb RPA Purchaser’s account such Gloperba-Elyxyb RPA Purchaser’s Specified Percentage (as defined in the Gloperba-Elyxyb Royalty Purchase Agreement) of the Covered Product Revenue Payments (each as defined in the Gloperba-Elyxyb Royalty Purchase Agreement) for each calendar quarter (commencing with the calendar quarter beginning January 1, 2025) promptly, but in any event no later than 60 calendar days after the end of each calendar quarter.

The Gloperba-Elyxyb Royalty Purchase Agreement shall terminate six months following receipt by the Gloperba-Elyxyb RPA Purchasers of all payments of the Purchased Receivables to which each Gloperba-Elyxyb RPA Purchaser is entitled during the Payment Term.

Royalty Security Agreement

Pursuant to the terms of the Gloperba-Elyxyb Royalty Purchase Agreement, the Company entered into a Security Agreement with Scilex Pharma and the collateral agent (as identified therein) for the benefit of the Gloperba-Elyxyb RPA Purchasers, dated as of February 28, 2025 (the “Gloperba-Elyxyb Royalty Security Agreement”).

Under the Gloperba-Elyxyb Royalty Security Agreement, each of our and Scilex Pharma’s due performance and payment under the Gloperba-Elyxyb Royalty Purchase Agreement is secured by certain collateral, including a collection account and certain material contracts, intellectual property rights and regulatory approvals, in each case related to the Gloperba-Elyxyb Covered Products.

Subordination Agreement

In connection with the Gloperba-Elyxyb Royalty Purchase Agreement and the Gloperba-Elyxyb Royalty Security Agreement, the Company entered into that certain Subordination Agreement, dated as of February 28, 2025 (the “Gloperba-Elyxyb Subordination Agreement”), by and among the Company, Scilex Pharma the Gloperba-Elyxyb RPA Purchasers and the Note Agent (each as defined in the Subordination Agreement).

Pursuant to the Gloperba-Elyxyb Subordination Agreement, the parties agreed that all obligations, liabilities and indebtedness under the Gloperba-Elyxyb Royalty Purchase Agreement are secured by first priority liens on the collateral under the Gloperba-Elyxyb Royalty Security Agreement (the “Gloperba-Elyxyb Royalty Collateral”) and the Note Agent’s lien on the Gloperba-Elyxyb Royalty Collateral is subordinated and becomes a second priority lien.

Amendment No.

1 to ZTlido Royalty Purchase Agreement

On February 28, 2025, the Company and Scilex Pharma entered into an Amendment No.

1 to Purchase and Sale Agreement (the “ZTlido Royalty Amendment”) with the purchasers (the “ZTlido Royalty Purchasers”) under that certain Purchase and Sale Agreement, dated as of October 8, 2024 (the “ZTlido Royalty Purchase Agreement”).

Pursuant to the Royalty Amendment, the Company and Scilex Pharma may assign their respective rights or delegate their respective obligations under the ZTlido Royalty Purchase Agreement without the prior written consent of the Purchasers if the Company receives a commitment, contingent upon an asset purchase of Covered Products (as defined in the ZTlido Royalty Purchase Agreement), that would allow the Company to pay in full all obligations owed under the Debt Instruments (as defined therein), provided that such purchaser of Covered Products agrees to assume all of the obligations of the Company and Scilex Pharma under the ZTlido Royalty Purchase Agreement.

Gloperba Rest of World License Agreement

On February 28, 2025 (the “Effective Date”), the Company entered into a License Agreement (the “Gloperba License Agreement”) with Scilex Pharma and the Licensee with respect to (i) services, compositions, products, dosages and formulations comprising Gloperba that have been or are later developed by or on behalf of the Company, including the product and any future product defined as a “Licensed Product” under the Romeg License Agreement, as amended and as may be further amended or restated from time to time, and (ii) any related, improved, successor or replacement forms of any such product Controlled (as defined therein) by the Company ((i) and (ii) collectively, the “Gloperba Product”).

Under the Gloperba License Agreement, the Company granted to the Licensee during the Gloperba License Term (as defined below) a worldwide, exclusive, non-transferable (except in connection with a permitted assignment of the Gloperba License Agreement) right, license and interest in, to, and under all Product Rights Controlled (each as defined therein) by the Company to develop, manufacture, obtain and maintain regulatory approvals for, commercialize and otherwise exploit all Gloperba Products, in all cases solely for commercialization of the Gloperba Products outside of the United States in the Field (as defined therein).

The Licensee granted to the Company a non-exclusive, non-transferable (except in connection with a permitted assignment of the Gloperba License Agreement), right and license under the Licensee Non-Blocking Patents (as defined therein) (i) in the United States, to develop, manufacture, obtain and maintain regulatory approvals for, commercialize and otherwise exploit Gloperba Product for commercialization of Gloperba Products in the United States in the Field (as defined therein), and (ii) worldwide, to develop and manufacture Gloperba Product for commercialization in the United States in the Field (as defined therein).

Each of the Licensee and the Company will receive 50 % of the Net Revenue (as defined therein) generated based on Licensee’s sale of the Gloperba Products, and the Licensee shall effect the foregoing by paying to the Company an amount required for the Company to receive its share of the Net Revenue on a quarterly basis.

Pursuant to the Gloperba License Agreement, the Licensee shall obtain and maintain regulatory approval for the Gloperba Product outside of the United States in accordance with its own business judgment and in its sole and absolute discretion.

Promptly after the Effective Date, the Company is required to (i) facilitate an introduction between the Licensee and the Company’s contract manufacturer of the Gloperba Product (the “Gloperba CMO”) as of the Effective Date, and (ii) use reasonable efforts to cause such Gloperba CMO to accept a direct engagement with the Licensee for the manufacturing or supply of the Gloperba Product in finished dosage form.

In addition, the Company agreed to appoint the Licensee as its exclusive distributor of the Gloperba Product in the entire world other than the United States during the Gloperba License Term.

The term of the Gloperba License Agreement commences on the Effective Date and continues until expiration of the last to expire Licensed Patents (as defined therein), unless earlier terminated (the “Gloperba License Term”).

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures