PALO ALTO, Calif. - Scilex Holding Company (NASDAQ:SCLX), specializing in non-opioid pain management solutions, announced today that it is considering strategic options to maximize shareholder value for its subsidiary, Scilex Pharmaceuticals (Scilex Pharma). These options include a potential spinoff or public listing on exchanges outside the United States, such as in Hong Kong, or a strategic transaction involving Scilex Pharma's common stock.
The board of directors has authorized the exploration of these avenues based on the belief that Scilex Pharma's value may surpass the current valuation of Scilex Holding. With three FDA-approved products on the market, Scilex Pharma has shown promising growth, particularly with its lead product, ZTlido® (lidocaine topical system) 1.8%, which has experienced an average 50% increase in gross sales over the past two years. Sales for ZTlido® are expected to exceed $180 million in 2024 and expand to markets in the Middle East and North/South Africa with a minimum purchase commitment of $105 million over five years.
The company's other products include ELYXYB® (celecoxib oral solution), the only FDA-approved oral solution for acute migraine treatment, and Gloperba® (colchicine oral solution), the only liquid oral prophylaxis for gout flares. ELYXYB® is currently awaiting approval in Canada, with expectations set for Q1-2025.
Scilex Pharma also has a next-generation product, SP-103 (lidocaine topical system) 5.4%, in development. This triple-strength formulation of ZTlido® is designed to treat acute pain, with market research indicating a potential to reach $1.2 billion in peak sales annually six years after launch.
The company's exploration of strategic options is part of its commitment to enhance stockholder returns and capitalize on Scilex Pharma's market potential. This announcement is based on a press release statement and does not endorse the company's claims. It provides a factual report on Scilex Holding Company's strategic considerations for its subsidiary.
In other recent news, Scilex Holding Company reported a growth in Q3 net sales for its non-opioid pain management products, with the net sales of ZTlido, its lidocaine topical product, reaching between $11.0 million and $13.0 million. Total net sales for the quarter were also up, ranging from $12.0 million to $14.0 million. These figures are preliminary and subject to change.
In financial developments, Scilex recently secured a $50 million convertible note offering with key stakeholders such as Murchinson, 3i (LON:III) LP, and Oramed Pharmaceuticals (NASDAQ:ORMP), Inc. This move is aimed at refinancing existing debt and bolstering long-term growth. The company also extended a payment deadline in its agreement with Oramed Pharmaceuticals and fulfilled a $10 million loan obligation through product delivery to FSF 33433 LLC.
The U.S. Food and Drug Administration approved updates to the labeling of GLOPERBA®, a gout treatment, for precision dosing, potentially improving patient outcomes. Scilex also received Drug Distributor Accreditation from the National Association of Boards of Pharmacy. These developments underline the company's commitment to addressing unmet needs in pain management with non-opioid products.
InvestingPro Insights
As Scilex Holding Company (NASDAQ:SCLX) explores strategic options for its subsidiary Scilex Pharmaceuticals, investors should consider some key financial metrics and insights from InvestingPro.
Despite the company's optimistic outlook on its products, particularly ZTlido®, InvestingPro data reveals that Scilex Holding's revenue for the last twelve months as of Q2 2023 stood at $50.83 million. This figure, while showing a 9.41% growth, is significantly lower than the projected $180 million in sales for ZTlido® alone in 2024. The company's quarterly revenue growth of 30.11% in Q2 2023 suggests a positive trend, but it's important to note that the company is not currently profitable.
An InvestingPro Tip indicates that analysts do not anticipate the company will be profitable this year. This aligns with the reported operating income of -$99.14 million and an EBITDA of -$95.03 million for the last twelve months as of Q2 2023. These figures underscore the challenges Scilex faces in achieving profitability, even as it considers strategic options to maximize shareholder value.
Another relevant InvestingPro Tip points out that the stock's valuation implies a strong free cash flow yield. This could be a positive factor for investors considering the company's future potential, especially if the strategic options being explored lead to improved financial performance.
For readers interested in a more comprehensive analysis, InvestingPro offers additional tips and metrics that could provide deeper insights into Scilex Holding's financial health and market position.
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