0001193125-23-096647 | S-1 | XBRL Viewer

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Cover Page	12 Months Ended
Cover Page	Dec. 31, 2022
Cover [Abstract]
Document Type	S-1
Amendment Flag	false
Entity Registrant Name	Scilex Holding Company
Entity Central Index Key	0001820190
Entity Ex Transition Period	false
Entity Emerging Growth Company	true
Entity Small Business	false
Entity Filer Category	Non-accelerated Filer

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 2,184	$ 4,338
Accounts receivable, net	21,236	14,268
Inventory	1,378	2,562
Prepaid expenses and other	4,810	1,835
Total current assets:	29,608	23,003
Property and equipment, net	772	805
Operating lease right-of-use asset	1,131	1,303
Intangibles, net	40,591	38,802
Goodwill	13,481	13,481
Other long-term assets	944	538
Total assets	86,527	77,932
Current liabilities:
Accounts payable	8,450	4,284
Accrued payroll	1,354	3,733
Accrued rebates and fees	30,893	7,362
Accrued expenses	3,136	3,259
Current portion of deferred consideration	264	0
Current portion of debt	0	37,950
Related party payable	0	92,724
Related party note payable	0	19,608
Current portion of operating lease liabilities	745	500
Total current liabilities:	44,842	169,420
Long-term portion of deferred consideration	3,387	0
Long-term debt, net	0	72,037
Related party note payable, net	0	23,503
Derivative liabilities	1,231	35,700
Operating lease liabilities	665	1,148
Other long-term liabilities	163	0
Total liabilities	50,288	301,808
Commitments and contingencies (See Note 10)
Stockholders' Deficit:
Preferred stock, $0.0001 par value, 45,000,000 shares authorized; 29,057,097 and 0 issued and outstanding at December 31, 2022 and December 31, 2021, respectively	3	0
Common stock, $0.0001 par value, 740,000,000 shares authorized; 141,348,856 and 132,858,484 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively	14	13
Additional paid-in capital	412,136	128,661
Accumulated deficit	(375,914)	(352,550)
Total stockholders' equity/(deficit)	36,239	(223,876)
Total liabilities and stockholders' equity/(deficit)	$ 86,527	$ 77,932

CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares	Dec. 31, 2022	Nov. 10, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.0001		$ 0.0001
Preferred stock, shares authorized	45,000,000		45,000,000
Preferred stock, shares issued	29,057,097		0
Preferred stock, shares outstanding	29,057,097		0
Common stock, par value	$ 0.0001	$ 0.0001	$ 0.0001
Common stock, shares authorized	740,000,000	740,000,000	740,000,000
Common stock, shares issued	141,348,856		132,858,484
Common stock, shares outstanding	141,348,856		132,858,484

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Income Statement [Abstract]
Net revenue	$ 38,034	$ 31,317	$ 23,560
Operating costs and expenses:
Cost of revenue	10,797	3,634	2,149
Research and development	9,054	9,201	9,961
Selling, general and administrative	64,895	50,582	42,970
Intangible amortization	3,922	3,738	3,738
Total operating costs and expenses	88,668	67,155	58,818
Loss from operations	(50,634)	(35,838)	(35,258)
Other (income) expense:
(Gain) loss on derivative liability	(8,310)	300	(800)
(Gain) loss on debt extinguishment, net	(28,634)	12,463	0
Scilex Pharma Notes principal increase	0	28,000	0
Interest expense	9,604	11,764	13,116
Loss (gain) on foreign currency exchange	66	54	(2)
Total other (income) expense	(27,274)	52,581	12,314
Loss before income taxes	(23,360)	(88,419)	(47,572)
Income tax expense (benefit)	4	5	(53)
Net loss	$ (23,364)	$ (88,424)	$ (47,519)
Earnings Per Share [Abstract]
Net loss per share attributable to common stockholders - basic	$ (0.17)	$ (0.67)	$ (0.36)
Net loss per share attributable to common stockholders - diluted	$ (0.17)	$ (0.67)	$ (0.36)
Weighted Average Number of Shares Outstanding, Diluted [Abstract]
Weighted average number of shares during the period-basic	134,226	132,858	132,891
Weighted average number of shares during the period -diluted	134,226	132,858	132,891

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY / (DEFICIT) - USD ($) $ in Thousands	Total	Legacy Common Stock	Common Stock	Preferred Stock Member	Additional Paid-in Capital	Accumulated Deficit
Balance at Dec. 31, 2019	$ (90,029)	$ 20			$ 126,578	$ (216,607)
Balance (in Shares) at Dec. 31, 2019		197,310
Retroactive application of the recapitalization due to the Business Combination Value	20	$ (20)	$ 13		7
Retroactive application of the recapitalization due to the Business Combination Shares		(197,310)	132,888
Effect of business combination in value	(90,009)		$ 13		126,585	(216,607)
Effect of business combination (in Shares)			132,888
Stock options exercised value	$ 50				50
Stock options exercised (In Shares)	38		38
Stock-based compensation	$ 5,395				5,395
Distribution to sorrentos	(9,600)				(9,600)
Cancellation of ordinary shares (in Shares)			(68)
Net income (loss)	(47,519)					(47,519)
Balance at Dec. 31, 2020	$ (141,683)		$ 13		122,430	(264,126)
Balance (in Shares) at Dec. 31, 2020			132,858
Stock options exercised (In Shares)	0
Stock-based compensation	$ 5,822				5,822
Adjustment to shares issued in Semnur Acquisition	409				409
Net income (loss)	(88,424)					(88,424)
Balance at Dec. 31, 2021	(223,876)		$ 13		128,661	(352,550)
Balance (in Shares) at Dec. 31, 2021			132,858
Stock options exercised value	$ 96				96
Stock options exercised (In Shares)	202		202
Stock-based compensation	$ 5,280				5,280
Shares issued pursuant to the terms of the Debt Exchange Agreement, (In shares)			2,906	29,057
Shares issued pursuant to the terms of the Debt Exchange Agreement	289,733			$ 3	289,730
Shares issued as a result of the Business Combination, net of transaction activities	(8,706)		$ 1		(8,707)
Shares issued as a result of the Business Combination, net of transaction activities (In Shares)			5,133
Aardvark SP-104 license transfer from Sorrento, net of discount value	(4,127)				(4,127)
Aardvark SP-104 discount amortization	(35)				(35)
Shares issued to Yorkville pursuant to Yorkville Purchase Agreement	1,238				1,238
Shares issued to Yorkville pursuant to Yorkville Purchase Agreement (In Shares)			250
Net income (loss)	(23,364)					(23,364)
Balance at Dec. 31, 2022	$ 36,239		$ 14	$ 3	$ 412,136	$ (375,914)
Balance (in Shares) at Dec. 31, 2022			141,349	29,057

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Operating activities
Net loss	$ (23,364)	$ (88,424)	$ (47,519)
Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation and amortization	3,961	3,779	3,777
Amortization of debt issuance costs and debt discount	3,142	7,909	10,664
Scilex Pharma Notes principal increase	0	28,000	0
Payment on the Scilex Pharma Notes attributed to accreted interest related to the debt discount	(21,190)	(12,487)	(10,866)
(Gain) loss on debt extinguishment, net	(28,634)	12,463	0
Non-cash operating lease cost	492	372	825
Stock-based compensation expenses	5,280	5,822	5,395
(Gain) loss on derivative liability	(8,310)	300	(800)
Forfeitures of Private Warrants	1,697	0	0
Changes in operating assets and liabilities:
Accounts receivables, net	(6,968)	(1,142)	(598)
Inventory	1,184	(1,417)	2,379
Prepaid expenses and other	(2,629)	1,479	(1,035)
Other long term assets	350	0	2,580
Accounts payable	2,806	(3,836)	(4,062)
Accrued Payroll	(2,379)	(21)	1,247
Accrued expenses	(123)	664	(1,066)
Accrued rebates and fees	23,531	(255)	3,117
Other liabilities	(392)	(80)	(604)
Related party payable	30,125	18,210	5,105
Other long-term liabilities	163	0	0
Net cash used for operating activities	(21,258)	(28,664)	(31,461)
Investing activities
Acquisition consideration paid in cash for Romeg intangible asset acquisition	(2,060)	0	0
Purchase of property and equipment	(7)	0	(25)
Net cash used for investing activities	(2,067)	0	(25)
Financing activities
Proceeds from the Business Combination	3,375	0	0
Transaction costs paid related to the Business Combination	(2,949)	0	0
Repayment of principal on the Scilex Pharma Notes	(84,808)	(33,387)	(58,927)
Repayment on other loans	(18,800)	(48,832)	0
Proceeds from other loans	9,857	47,832	11,007
Proceeds from stock options exercised	96	0	50
Proceeds from related party payable	51,900	47,850	18,400
Proceeds from related party note payable	62,500	14,700	10,300
Net cash provided by financing activities	21,171	28,163	(19,170)
Net change in cash and cash equivalents	(2,154)	(501)	(50,656)
Cash and cash equivalents at beginning of period	4,338	4,839	55,495
Cash and cash equivalents at end of period	2,184	4,338	4,839
Supplemental disclosures of non-cash investing and financing activities
Related party debt converted to equity pursuant to Debt Exchange Agreement	289,733
Deferred consideration for Romeg intangible asset acquisition	3,650	0	0
Non-cash consideration in Semnur acquisition	0	409	0
Other Loan Forgiveness	0	1,536	0
Promissory Note issued to Sorrento in exchange for the SP-104 license, net of discount	4,162	0	0
Fair value adjustment to derivative liability in troubled debt restructuring	30,400	0	0
Acquisition of right-of-use asset	320	0	0
Issuance of shares to Yorkville pursuant to Yorkville Purchase Agreement	1,238
Non-cash distribution to Sorrento	0	0	9,600
Scilex Pharma Notes principal increase	0	28,000	0
Accrual for transaction costs related to the Business Combination	1,372	0	0
Transaction costs obligation assumed by Sorrento	$ 5,148	$ 0	$ 0

Nature of Operations and Basis of Presentation

12 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Nature of Operations and Basis of Presentation

1. Nature of Operations and Basis of Presentation

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”). Vickers was formed on February 21, 2020 as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities. Scilex was originally formed in 2019 and is a majority-owned subsidiary of Sorrento Therapeutics, Inc. (“Sorrento”). Scilex has two wholly owned subsidiaries, Scilex Pharmaceuticals Inc. (“Scilex Pharma”) and Semnur Pharmaceuticals, Inc. (“Semnur”). The Company is a commercial biopharmaceutical company focused on acquiring, developing and commercializing

non-opioid

management products for the treatment of acute and chronic pain. 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, an

FDA-approved

prophylactic treatment for painful gout flares in adults, in the U.S. (see Note 2). The Company is planning to commercialize GLOPERBA in 2023. The Company is currently developing three product candidates,

SP-102

(10 mg, dexamethasone sodium phosphate viscous gel), a Phase 3, novel, viscous gel formulation of a widely used corticosteroid for epidural injections to treat lumbosacral radicular pain, or sciatica

(“SP-102”

or “SEMDEXA”),

SP-103

(lidocaine topical system) 5.4%

(“SP-103”),

for the treatment of acute low back pain, and

SP-104

(4.5 mg,

low-dose

naltrexone hydrochloride delayed-release capsules)

(“SP-104”),

a novel formulation for the treatment of fibromyalgia. Since inception, the Company has devoted substantially all of its efforts to the development of

SP-102,

SP-103,

SP-104,

and the commercialization of ZTlido.

The Business Combination

On March 17, 2022, Scilex entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Vickers and Vantage Merger Sub, Inc., a wholly-owned subsidiary of Vickers (“Vickers Merger Sub”). Pursuant to the terms of the Merger Agreement, Vickers Merger Sub merged with and into Scilex, Inc. (f/k/a Scilex Holding Company and now a wholly owned subsidiary of Scilex) (“Legacy Scilex”), with Legacy Scilex surviving the merger and becoming a wholly-owned subsidiary of Vickers (collectively, the “Business Combination”).

On November 10, 2022, Vickers consummated the Business Combination pursuant to the terms of the Merger Agreement. Vickers acquired all of the outstanding equity interests of Legacy Scilex. As a result of the Business Combination, Scilex received net proceeds of approximately $3.4 million. Additionally, all existing related party indebtedness between Legacy Scilex and Sorrento totaling $290.6 million was converted into equity interests in Vickers in connection with the consummation of the Business Combination and pursuant to the terms of the Debt Exchange Agreement (see Note 12). The Company, as the successor entity of Vickers, will operate as “Scilex Holding Company” and was listed on the Nasdaq Capital Market under the new ticker symbol “SCLX” on November 11, 2022.

At the closing of the Business Combination, 197,566,338 and 25,151,428 shares of Legacy Scilex Common Stock (“Legacy Scilex Common Stock”) and Legacy Scilex stock options, respectively, were converted to 133,060,534 shares of Common Stock (“Common Stock”) as part of the consideration using the 0.673498:1 ratio of the Company Common Stock to Legacy Scilex Common Stock (the “Common Stock Exchange Ratio”) and 16,939,436 shares of Common Stock were reserved for Legacy Scilex optionholders. Pursuant to the terms of the Debt Exchange Agreement (see Note 12), $290.6 million was converted to 29,057,097 shares of Preferred Stock

(“Preferred Stock”) and 2,905,710 shares of Common Stock. In addition, pursuant to the terms of the debt agreement entered between the Vickers Venture Fund VI Pte Ltd, Vickers Venture Fund VI (Plan) Pte Ltd (“Sponsors”) and Vickers (“Vickers Debt Agreement”), the aggregate amount of loans that the Sponsors funded Vickers to finance the transaction costs (“Working Capital Loans”) at the closing of the Business Combination of $5,330,557 was converted to 533,057 shares of Common Stock.

The Business Combination was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, Vickers was treated as the “acquired” company for accounting purposes and the Business Combination was treated as the equivalent of the Company issuing stock for the net assets of Vickers, accompanied by a recapitalization. Upon the closing of the Business Combination, the net assets of Vickers were recorded at historical cost, with no goodwill or other intangible assets recorded.

The Company’s legal, accounting and other fees directly attributable to the Business Combination were initially capitalized within prepaid expenses and other current assets on the consolidated balance sheets, of which $9.1 million has been offset against the equity proceeds in the Business Combination and $0.4 million was attributed to the liability-classified Private Warrants and, as such, were expensed upon the closing of the Business Combination.

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

The accompanying consolidated financial statements include the accounts of the Company as well as its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of these consolidated financial statements in conformity with U.S. GAAP requires management 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. Management believes that these estimates are reasonable; however, actual results may differ from these estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Company minimizes its credit risk associated with cash and cash equivalents by periodically evaluating the credit quality of its primary financial institution. Although the balance at times may exceed federally-insured limits, the Company has not experienced any losses on such accounts.

Fair Value of Financial Instruments

The Company follows accounting guidance on fair value measurements for financial instruments measured on a recurring basis, as well as for certain assets and liabilities that are initially recorded at their estimated fair values. Fair value is defined as the exit price, or the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses the following three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs to value its financial instruments:

•

Level 1: Observable inputs such as unadjusted quoted prices in active markets for identical instruments.

•

Level 2: Quoted prices for similar instruments that are directly or indirectly observable in the marketplace.

•

Level 3: Significant unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.

Financial instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires it to make judgments and consider factors specific to the asset or liability. The use of different assumptions and/or estimation methodologies may have a material effect on estimated fair values. Accordingly, the fair value estimates disclosed or initial amounts recorded may not be indicative of the amount that the Company or holders of the instruments could realize in a current market exchange.

As of December 31, 2022 and 2021, the carrying amount of cash equivalents approximates their fair value based upon quoted market prices. Certain of the Company’s financial instruments are not measured at fair value on a recurring basis, but are recorded at amounts that approximate their fair value due to their liquid or short-term nature, such as cash, prepaid expenses, accounts receivable, and accounts payable.

Accounts Receivable, Net

Accounts receivable are presented net of allowances for expected credit losses and prompt payment discounts. Accounts receivable consists of trade receivables from product sales to customers, which are generally unsecured. Estimated credit losses related to trade accounts receivable are recorded as general and administrative expenses and as an allowance for expected credit losses within accounts receivable, net. The Company reviews reserves and makes adjustments based on historical experience and known collectability issues and disputes. When internal collection efforts on accounts have been exhausted, the accounts are written off by reducing the allowance for expected credit losses.

Inventory

The Company determines inventory cost on a

first-in,

first-out

basis. The Company reduces the carrying value of inventories to a lower of cost or net realizable value for those items that are potentially excess, obsolete or slow- moving. The Company reserves for excess and obsolete inventory based upon historical experience, sales trends, and specific categories of inventory and expiration dates for

on-hand

inventory. 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. As of December 31, 2022 and 2021, the Company’s inventory was primarily comprised of finished goods.

Property and Equipment, Net

Property and equipment are carried at cost less accumulated depreciation. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the assets, which are generally five to seven years. Leasehold improvements are amortized over the lesser of their estimated useful lives or the term of the respective lease on a straight-line basis. The cost of repairs and maintenance is expensed as incurred.

Acquisitions

The Company accounts for business combinations using the acquisition method of accounting, which requires that assets acquired, including

in-process

research and development (“IPR&D”) projects and liabilities assumed

be recorded at their fair values as of the acquisition date on the Company`s consolidated balance sheets. Any excess of purchase price over the fair value of net assets acquired is recorded as goodwill. The determination of estimated fair value requires the Company to make significant estimates and assumptions. As a result, the Company may record adjustments to the fair values of assets acquired and liabilities assumed within the measurement period (up to one year from the acquisition date) with the corresponding offset to goodwill. Transaction costs associated with business combinations are expensed as they are incurred.

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. Intangible assets acquired in a business combination that are used for IPR&D activities are considered indefinite-lived until the completion or abandonment of the associated research and development efforts. Upon commercialization of the relevant research and development project, the Company amortizes the acquired IPR&D over its estimated useful life. Capitalized IPR&D is reviewed annually for impairment or more frequently as changes in circumstance or the occurrence of events suggest that the remaining value may not be recoverable.

Goodwill and Other Long-Lived Assets

Goodwill, which has an indefinite life, represents the excess cost over fair value of net assets acquired. Goodwill is reviewed for impairment at least annually during the fourth quarter, or more frequently if events occur indicating the potential for impairment. The Company has one reporting unit. During its goodwill impairment review, the Company may assess qualitative factors to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount, including goodwill. The qualitative factors include, but are not limited to, macroeconomic conditions, industry and market considerations, and the overall financial performance of the Company. If, after assessing the totality of these qualitative factors, the Company determines that it is not more likely than not that the fair value of its reporting unit is less than its carrying amount, then no additional assessment is deemed necessary. Otherwise, the Company performs a quantitative goodwill impairment test. The Company may also elect to bypass the qualitative assessment in a period and elect to proceed to perform the quantitative goodwill impairment test.

The Company evaluates its long-lived and intangible assets with definite lives, such as property and equipment, patent rights, and acquired technology, for impairment by considering competition by products prescribed for the same indication, the likelihood and estimated future entry of

non-generic

and generic competition with the same or similar indication and other related factors. 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. 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.

Contingent Consideration

The fair value of contingent consideration liabilities assumed in business combinations is recorded as part of the purchase price consideration of the acquisition, and is determined using a discounted cash flow model or Monte Carlo simulation model. 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. 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 Placement Warrants

Upon completion of the Business Combination, the Company assumed public and private placement warrants (“Public Warrants” and “Private 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

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

Debt

The Company may enter financing arrangements, the terms of which involve significant assumptions and estimates. 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.

Derivative Liabilities

Derivative liabilities are recorded on the Company’s consolidated balance sheets at their fair value on the date of issuance and are revalued on each balance sheet date until such instruments are exercised or expire, with changes in the fair value between reporting periods recorded as other income or expense.

Research and Development Costs

The Company expenses the cost of research and development as incurred. Research and development expenses are comprised of costs incurred in performing research and development activities, including clinical trial costs, manufacturing costs for both clinical and preclinical materials as well as other contracted services, license fees and other external costs. Nonrefundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity is performed or when the goods have been received, rather than when payment is made, in accordance with FASB ASC Topic 730,

Research and Development.

Income Taxes

The provisions of the FASB ASC Topic 740,

Income Taxes

addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the 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. The Company has determined that it has uncertain tax positions.

The Company accounts for income taxes using the asset and liability method to compute the differences between the tax basis of assets and liabilities and the related financial amounts, using currently enacted tax rates.

The Company has deferred tax assets, which are subject to periodic recoverability assessments. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that more likely than not will be realized. As of December 31, 2022 and 2021, the Company maintained a full valuation allowance against its deferred tax assets.

Leases

The Company determines if an arrangement is a lease at inception. Operating lease

right-of-use

(“ROU”) assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, it uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any lease payments made and is reduced by lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term in selling, general and administrative expenses.

Revenue Recognition

The Company’s revenue is generated from product sales within the United States. The Company does not incur significant direct costs to obtain contracts with its customers.

Revenue from product sales is fully comprised of sales of ZTlido. The Company’s performance obligation with respect to sales of ZTlido 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. 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, 2022 and 2021 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.

Rebates and Chargebacks

Rebates are discounts which the Company pays under either government or private health care programs. Government rebate programs include state Medicaid drug rebate programs, the Medicare coverage gap discount programs and the Tricare programs. Commercial rebate and fee programs relate to contractual agreements with commercial healthcare providers, under which the Company pays rebates and fees for access to and position on that provider’s patient drug formulary. Rebates and chargebacks paid under government programs are generally mandated under law, whereas private rebates and fees are generally contractually negotiated by the Company with commercial healthcare providers. Both types of rebates vary over time. The Company records a reduction to gross product sales at the time the customer takes title to the product based on estimates of expected rebate

claims. 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.

Prompt Payment Discounts

The Company provides its customers with prompt payment discounts which may result in adjustments to the price that is invoiced for the product transferred, in the case that payments are made within a defined period. The prompt payment discount reserve is based on actual gross sales and contractual discount rates. Reserves for prompt payment discounts are included in accounts receivable, net on the consolidated balance sheets.

Service Fees

The Company compensates its customer and others in the distribution chain for wholesaler and distribution services. 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.

Product Returns

The Company is obligated to accept the return of products sold that are expiring within six months, damaged or do not meet certain specifications. The Company may authorize the return of products sold in accordance with the term of its sales contracts, and estimates allowances for such amounts at the time of sale. The Company estimates the amount of its product sales that may be returned by its customer and record this estimate as a reduction of revenue in the period the related product revenue is recognized.

Co-Payment

Assistance

Patients who have commercial insurance or pay cash and meet certain eligibility requirements may receive

co-payment

assistance. The Company accrues for

co-payment

assistance based on actual program participation and estimates of program redemption using data provided by third-party administrators.

Customer Concentration Risk

Prior to April 2, 2022, sales to the Company’s sole distributor represented 100% of net revenue. On April 2, 2022, the Company announced the expansion of its direct distribution network to national and regional wholesalers and pharmacies. The distributor continued to provide traditional third-party logistics functions for the Company. The Company had four customers during the year ended December 31, 2022, which individually generated 10% or more of the Company’s total revenue. These customers accounted for 83% of the Company’s revenue for the year ended December 31, 2022, individually ranging between 19% to 24%. As of December 31, 2022, these customers represented 90% of the Company’s outstanding accounts receivable, individually ranging between 24% to 36%. Additionally, during the fiscal years ended December 31, 2022 and 2021, the Company purchased inventory from its sole supplier, Itochu. 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 for the years ended December 31, 2022, 2021, and 2020.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with FASB ASC Topic 718,

Compensation—Stock Compensation

which establishes accounting for equity instruments exchanged for employee and consulting services. Under such provisions, stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense, under the straight-line method, over the employee’s requisite service period (generally the vesting period of the equity grant) or

non-employee’s

vesting period. The Company accounts for forfeitures as incurred.

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.

Segments

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. 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.

Net Loss per Share

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.

Recent Accounting Pronouncements

In October 2021, the FASB issued ASU

2021-08,

Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

, 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 and early adoption is permitted. The Company is evaluating the impact the standard will have on its consolidated financial statements.

Liquidity and Going Concern	12 Months Ended
Liquidity and Going Concern	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Liquidity and Going Concern	2. Liquidity and Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. Management has assessed the Company’s ability to continue as a going concern for at least one year after the date the financial statements are issued. On March 18, 2019, Scilex acquired Semnur and the acquisition was accounted for as an asset acquisition (see Note 3). The Company anticipates the cash needed for the development of Semnur’s primary product candidate in development, SP-102, as well in the development of SP-103, will be in excess of the Company’s cash available within one year after the date these consolidated financial statements are issued. Semnur has no historical revenue and the Company will be responsible for funding all development and commercialization efforts and capital funding needs possibly through private or public equity or debt financings, strategic collaborations or other arrangements. On May 12, 2022, the Company entered into a Bill of Sale (see Note 3), with Sorrento to acquire rights, title and interest in the SP-104 Assets (see Note 3). SP-104 has not been approved for commercialization and, as such, no revenues have been generated to date by the asset. The Company will be responsible for funding all development and commercialization efforts. On June 14, 2022, the Company entered into a license and commercialization agreement with Romeg (see Note 3). The transaction was accounted for as an asset acquisition since substantially all the value of the gross assets was concentrated in the single asset, acquired licenses. The Company anticipates incurring costs related to the commercial launch and marketing of GLOPERBA. On September 12, 2022, Scilex and Scilex Pharma entered into a Debt Exchange Agreement (see Note 12) with Sorrento, pursuant to which all related party indebtedness that remained outstanding as of immediately prior to the closing of the Business Combination was converted into equity interests in the Company. In September 2022, the Company exercised the Early Paydown Provision (see Note 7) to fully extinguish the Scilex Pharma Notes (see Note 7). In August 2022 and September 2022, the Company made principal payments towards the outstanding Scilex Pharma Notes totaling $41.4 million. Pursuant to Amendment No. 4 (see Note 7), a principal balance of $28.0 million was forgiven by the Scilex Pharma Note Purchasers (see Note 7) upon the Company’s exercise of the Early Paydown Provision. The Company funded the principal payments with cash-on hand and $34.0 million received from Sorrento on September 28, 2022 (see Note 7). As of December 31, 2022, the Company’s negative working capital was $15.2 million, including cash and cash equivalents of approximately $2.2 million. During the year ended December 31, 2022, the Company had operating losses of $50.6 million and cash flows used for operations of $21.3 million. The Company had an accumulated deficit of approximately $375.9 million as of December 31, 2022. 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 entered into a Standby Equity Purchase Agreement with YA II PN, Ltd. (“Yorkville”) on November 17, 2022 (as amended and restated on February 8, 2023), and a Standby Equity Purchase Agreement with B. Riley Principal Capital II, LLC (“B. Riley”) on January 8, 2023 whereby the Company has the right, but not the obligation, to sell to Yorkville and B. Riley up to $500.0 million each of shares of its 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 has been declared effected by the SEC, subject to certain conditions (see Note 8 and Note 14). The Company’s plans are also dependent upon the success of future sales of ZTlido, which is still in the early stages of commercialization, and are dependent upon, among other things, the success of the Company’s marketing of ZTlido. Should the Company’s sales of ZTlido not materialize at the expected rate contemplated in the Company’s business plan, due to the COVID-19 pandemic or other factors, the Company believes that there are a number of ongoing and potential actions that would maintain its projected cash and projected financial position including but not limited to, additional reductions in general and administrative costs, sales and marketing costs, suspension or winding down of clinical development programs for SP-102, SP-103, and SP-104, and other discretionary costs. 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 such, management cannot conclude that such plans will be effectively implemented within one year after the date that these consolidated financial statements are issued. 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 financial statements are issued.

Acquisitions	12 Months Ended
Acquisitions	Dec. 31, 2022
Disclosure Text Block [Abstract]
Acquisitions	3. Acquisitions SP-104 Acquisition On May 12, 2022, the Company entered into a bill of sale and assignment and assumption agreement (the “Bill of Sale”), with Sorrento. Pursuant to the Bill of Sale, Sorrento sold, conveyed, assigned and transferred to the Company all of its rights, title and interest in and to Sorrento’s Delayed Burst Release Low Dose Naltrexone (“DBR-LDN”) asset and intellectual property rights, for the treatment of chronic pain, fibromyalgia and chronic post-COVID syndrome (collectively, the “SP-104 Assets”). These assets had previously been acquired by Sorrento from Aardvark Therapeutics, Inc. (“Aardvark”) in April 2021 pursuant to an asset purchase agreement (the “Aardvark Asset Purchase Agreement”). Pursuant to the Bill of Sale, the Company assumed all of Sorrento’s rights, liabilities and obligations under the Aardvark Asset Purchase Agreement (the “SP-104 Acquisition”). As consideration for the SP-104 Acquisition, the Company issued a promissory note in the aggregate principal amount of $5.0 million to Sorrento (the “2022 Promissory Note”). Upon issuance of the note, the Company recorded a related party note payable of $4.1 million, net of discount, with an offset to additional paid in capital, given the common control relationship between Sorrento and the Company. The 2022 Promissory Note matures seven years from the date of issuance and bears interest at the rate equal to the lesser of (a) 2.66% simple interest per annum and (b) the maximum interest rate permitted under law. The 2022 Promissory Note is payable in cash, shares of the Company’s common stock or any combination thereof, at the Company’s sole discretion, and may be prepaid in whole or in part at any time without penalty. On November 10, 2022, the 2022 Promissory Note was converted to equity, pursuant to the terms of the Debt Exchange Agreement (See Note 12). As the successor to the Aardvark Asset Purchase Agreement, the Company is obligated to pay Aardvark (i) $3,000,000, upon initial approval by the FDA of a new drug application for the SP-104 Assets (which amount may be paid in shares of the Company’s common stock or cash, in the Company’s sole discretion) (the “Development Milestone Payment”) and (ii) $20,000,000, in cash, upon achievement of certain net sales by the Company of a commercial product that uses the SP-104 Assets (the “Sales Milestone Payment”). The Company will also pay Aardvark certain royalties in the single digits based on percentages of annual net sales by the Company of a commercial product that uses the SP-104 Assets. The transaction was accounted for as an asset acquisition as substantially all the value of the gross assets was concentrated in a single asset, SP-104 Assets. The Sales Milestone Payment and sale volume-based future royalties were determined to meet a scope exception for derivative under ASC Topic 815, Derivatives and Hedging , and will not be recognized until the contingencies are realized in accordance with the Company’s accounting policy for contingent consideration in an asset acquisition. The Development Milestone Payment represents a liability within the scope of ASC Topic 480, Distinguishing Liabilities from Equity , which will be measured at fair value each reporting period. As of December 31, 2022, the contingent consideration of $0.2 million associated with Development Milestones Payment was recognized under other long-term liabilities. GLOPERBA License Agreement On June 14, 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 (1) a transferable license, with the right to sublicense, under the patents and know-how specified therein (with such license to know-how being exclusive for the limited purposes specified therein) 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 of America (including its territories) (the “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 Territory; and (2) an exclusive, transferable license, with 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 Territory. 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 in the mid-single digit to low-double digit percentages based on annual net sales of the Licensed Product 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 Territory or (ii) the tenth anniversary of the effective date of the Romeg License Agreement. The transaction was accounted for as an asset acquisition since substantially all the value of the gross assets was concentrated in a single asset, which is the Initial Licensed Product. 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 a deferred consideration of $3.7 million that is the present value of the future minimum royalty payments and immaterial transaction costs. The contingent sales milestones and sale volume-based future royalties were determined to meet a scope exception for derivative under ASC Topic 815, and will not be recognized until the contingencies are realized. No contingent consideration was recognized as a liability or included in the fair value of the assets as of December 31, 2022. The Company determined the useful life of the intangible asset to be 15 years, which approximates the life of the licensed patents covering the Initial Licensed Product.

Fair Value Measurements

12 Months Ended

Dec. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

4. Fair Value Measurements

The following table presents the Company’s financial assets and liabilities that are measured at fair value (in thousands):


	Fair value measurements at December 31, 2022
	Balance		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and cash equivalents	$	2,184	$	2,184	$	—	$	—

Total assets measured at fair value	$	2,184	$	2,184	$	—	$	—

Liabilities
Derivative liabilities	$	1,231	$	—	$	—	$	1,231
Other long-term liabilities		163		—		—		163

Total liabilities measured at fair value	$	1,394	$	—	$	—	$	1,394


	Fair value measurements at December 31, 2021
	Balance		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and cash equivalents	$	4,338	$	4,338	$	—	$	—

Total assets measured at fair value	$	4,338	$	4,338	$	—	$	—

Liabilities
Derivative liabilities	$	35,700	$	—	$	—	$	35,700

Total liabilities measured at fair value	$	35,700	$	—	$	—	$	35,700

Cash and cash equivalents

The Company’s financial assets carried at fair value are comprised of cash and cash equivalents. Cash and cash equivalents consist of money market accounts and bank deposits which are highly liquid and readily tradable. These assets are valued using inputs observable in active markets for identical securities.

Derivative liabilities

The Company recorded a gain of $8.3 million, loss of $0.3 million, and gain of $0.8 million on derivative liabilities for the years ended December 31, 2022, 2021, and 2020, respectively, which was attributed to compound derivative liabilities associated with the Scilex Pharma Notes (see Note 7) and Private Warrants. 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 (see Note 7) associated with the Scilex Pharma Notes on June 2, 2022. 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. 4. 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 (see Note 7) 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, the Company assumed a derivative warrant liability of $2.5 million related to Private Warrants (See Note 8). The fair value of derivative warrant liability related to Private Warrants was $1.2 million as of December 31, 2022.

The following table includes a summary of the derivative liabilities measured at fair value using significant unobservable inputs (Level 3) during the year ended December 31, 2022:


	Fair value
Ending Balance at December 31, 2019	$	33,400
Loan derivative liability		2,800
Re-measurement of fair value		(800	)

Ending Balance at December 31, 2020	$	35,400
Re-measurement of fair value		300

Balance at December 31, 2021	$	35,700
Private Warrant liability acquired as part of the Business Combination		2,545
Forfeiture of Private Warrants		1,696
Change in fair value measurement		(38,710	)

Balance at December 31, 2022	$	1,231

Warrant Liability Measurement

The derivative warrant liability was valued using the Black-Scholes option pricing model, which is considered to be Level 3 fair value measurement. 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. A summary of the inputs used in valuing the derivative warrant liabilities is as follows:


	December 31, 2022			November 10, 2022
	Fair value			Fair Value
Equity Value	$	3.99		$	9.01
Exercise Price	$	11.50		$	11.50
Term (in years)		4.86			5.00
Volatility		35.0	%		10.0	%
Risk-free rate		3.94	%		3.91	%
Dividend yield		0.00	%		0.00	%
Call option value	$	0.30		$	0.62

Contingent Consideration

The Development Milestone Payment represents a liability under the scope of ASC Topic 480,

Distinguishing Liabilities from Equity

, as it pertains to a potential contractual obligation to settle a fixed value in a variable number of shares of Common Stock. Upon the achievement of FDA approval for a new drug application for

SP-104,

the Company will transfer $3.0 million in cash or shares of Common Stock, at the discretion of the Company. The fair value of the contingent consideration liability associated with Development Milestone Payment was estimated using a probability-weighted discounted cash flow method. Significant Level 3 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, 2022, 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, 2022, 2021, and 2020.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Property and Equipment

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

Property and Equipment

5. Property and Equipment, Net

Property and equipment consisted of the following as of December 31, 2022 and 2021 (in thousands):


	December 31,
	2022			2021
Computers & equipment	$	77		$	77
Furniture		118			118
Leasehold improvements		55			48
Construction in progress		689			689

Property and equipment, gross		939			932
Less: Accumulated depreciation		(167	)		(127	)

Property and equipment, net	$	772		$	805

Depreciation expense for each of the years ended December 31, 2022, 2021, and 2020 was $40 thousand, $39 thousand, and $40 thousand, respectively.

Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

6. Goodwill and Intangible Assets

As of December 31, 2022 and December 31, 2021, the Company had recorded goodwill of $13.5 million. The Company performed a qualitative test for goodwill impairment during the fourth quarter of 2022. Based upon the results of the qualitative testing, the Company concluded that it is

more-likely-than-not

that the fair value of the Company’s goodwill was in excess of the carrying value and therefore performing the first step of the

two-step

impairment test was unnecessary. The conclusion has not changed as of December 31, 2022 and no goodwill impairment was recognized for the years ended December 31, 2022 and 2021.

The Company’s intangible assets, excluding goodwill, are composed of patent rights, acquired technology, acquired licenses, and assembled workforce. 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, 2022 and December 31, 2021 is as follows (in thousands):


	December 31, 2022
	Gross carrying amount		Accumulated amortization		Intangibles, net
Patent rights	$	32,630	$	13,415	$	19,215
Acquired technology		21,940		6,216		15,724
Acquired licenses		5,711		184		5,527
Assembled workforce		500		375		125

Total intangible assets	$	60,781	$	20,190	$	40,591


	December 31, 2021
	Gross carrying amount		Accumulated amortization		Intangibles, net
Patent rights	$	32,630	$	11,239	$	21,391
Acquired technology		21,940		4,754		17,186
Assembled workforce		500		275		225

Total intangible assets	$	55,070	$	16,268	$	38,802

On June 14, 2022, the Company entered into Romeg License Agreement to acquire an exclusive license to use GLOPERBA from Romeg (see Note 3). The Company determined the acquisition of licenses to be an asset acquisition. The fair value of consideration transferred of $5.7 million was assigned to acquired licenses with an amortization period of approximately 15 years.

As of December 31, 2022, the weighted average remaining life for identifiable intangible assets was 10.4 years. Aggregate amortization expense was $3.9 million, $3.7 million, and $3.7 million for the years ended December 31, 2022, 2021, and 2020, respectively. Patent rights and acquired technology are amortized over a

15-year

period. Assembled workforce is amortized over a

5-year

period.

Estimated future amortization expense related to intangible assets at December 31, 2022 is as follows (in thousands):


Year Ended December 31,	Amount
2023	$	4,106
2024		4,031
2025		4,006
2026		4,006
2027		4,006
Thereafter		20,436

Total	$	40,591

Debt

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Debt

7. Debt

2018 Purchase Agreements and Indenture

On September 7, 2018, Scilex Pharma and Sorrento entered into Purchase Agreements (the “2018 Purchase Agreements”) with certain investors (collectively, the “Scilex Pharma Note Purchasers”). Pursuant to the 2018 Purchase Agreements, on September 7, 2018, Scilex Pharma, among other things, issued and sold to the Scilex Pharma Note Purchasers senior secured notes due 2026 in an aggregate principal amount of $224.0 million (the “Scilex Pharma Notes”) for an aggregate purchase price of $140.0 million (the “Offering”). The Scilex Pharma Notes were governed by an indenture (as amended, the “Indenture”) with Scilex Pharma, as issuer, U.S. Bank National Association, a national banking association, as trustee (the “Trustee”) and collateral agent (the “Collateral Agent”), and Sorrento, as guarantor. Pursuant to the Indenture, Sorrento agreed to irrevocably and unconditionally guarantee, on a senior unsecured basis, the punctual performance and payment when due of all obligations of Scilex Pharma under the Indenture (the “Guarantee”).

The principal amount of the Scilex Pharma Notes increased by $28.0 million on February 15, 2022 as a result of actual cumulative net sales of ZTlido from the issue date of the Scilex Pharma Notes through December 31, 2021 not equal or exceeding $481.0 million. As a result, the Company recorded the increase of $28.0 million in principal and

non-operating

expense at December 31, 2021.

Effective February 14, 2022, Scilex Pharma issued to Sorrento a draw notice under the Letter of Credit as required under the terms of the Indenture because actual cumulative net sales of ZTlido from the issue date of the Scilex Pharma Notes through December 31, 2021 were less than a specified sales threshold for such period. As a result of the draw notice being issued, Sorrento paid to Scilex Pharma $35.0 million in a single

lump-sum

amount as a subordinated loan and Scilex Pharma became subject to a minimum cash requirement of $10.0 million. In February 2022, Scilex Pharma repurchased Scilex Pharma Notes from the holders thereof on a pro rata basis in an aggregate amount equal to $20.0 million.

On June 2, 2022, Sorrento and Scilex Pharma entered into a Consent Under and Amendment No. 4 to Indenture (the “Amendment No. 4”) with U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association) and the Scilex Note Purchasers. Pursuant to Amendment No. 4, (1) on June 3, 2022, Scilex Pharma repurchased approximately $41.4 million of the aggregate principal amount of the outstanding Scilex Pharma Notes at 100% of the principal amount thereof, (2) the Scilex Note Purchasers agreed that Scilex Pharma can repurchase the remaining principal amount of the Scilex Pharma Notes at any time on or before September 30, 2022 for $41.4 million (subject to reduction for any quarterly royalty payments) and upon such repurchase the Scilex Note Purchasers will forgive and discharge $28.0 million of the aggregate principal amount of the Scilex Pharma Notes (the “Early Paydown Provision”), (3) the minimum cash requirement under the Indenture was reduced to $5.0 million in aggregate unrestricted cash equivalents at the end of each calendar month, and (4) the maximum aggregate principal amount on the promissory note issued by Scilex Pharma to Sorrento on October 5, 2018 was increased from up to $25.0 million to up to $50.0 million. The Company funded the repurchase with

cash-on-hand

and $15.0 million received from Sorrento on June 2, 2022. The Company concluded that the Amendment No. 4 was a troubled debt restructuring for accounting purposes. The future undiscounted cash flows of the Scilex Pharma Notes were higher than the carrying value of the Scilex Pharma Notes at the time of the entry into the Amendment No. 4, and accordingly, no gain was recognized in the quarter ended June 30, 2022. Due to a decrease of $30.4 million in the fair value of the Scilex Notes Derivative caused by the Amendment No. 4, the carrying value of the Scilex Notes was increased by $30.4 million.

In September 2022, the Company exercised the Early Paydown Provision to fully extinguish the Scilex Pharma Notes. In August and September 2022, the Company made principal payments towards the outstanding Scilex Pharma Notes totaling $1.7 million and $39.7 million, respectively. Pursuant to Amendment No. 4, $28.0 million of principal amount on the Scilex Pharma Notes was forgiven by the Scilex Pharma Note Purchasers and the Scilex Pharma Notes were fully extinguished in September 2022. The Company funded the repurchase with

cash-on-hand

and $34.0 million received from Sorrento on September 28, 2022. The Company recorded a gain on debt extinguishment of $28.6 million as a result of the extinguishment.

Borrowings of the Scilex Notes consisted of the following (in thousands):


	December 31, 2021
Principal	$	133,997
Unamortized debt discount		(30,597	)
Unamortized debt issuance costs		(2,228	)

Carrying value		101,172
Current portion		(29,135	)

Long term portion		72,037

Estimated fair value	$	115,400

The Company made principal payments of $106.0 million, $45.9 million, and $69.8 million during the years ended December 31, 2022, 2021, and 2020, respectively. The amount of debt discount and debt issuance costs included in interest expense for the years ended December 31, 2022, 2021, and 2020 was approximately $3.1 million, $7.9 million and $10.7 million, respectively. The Company recorded a gain on debt extinguishment of $28.6 million, a loss on debt extinguishment of $12.5 million, and no gain/loss on debt extinguishment in connection with its repayments of principal made during the years ended December 31, 2022, 2021, and 2020, respectively.

Related Party Notes Payable

On October 5, 2018, Scilex Pharma issued to Sorrento a promissory note (see Note 12). On March 18, 2019, the Company entered into a note payable with Sorrento (see Note 12). On February 14, 2022, Sorrento paid to Scilex Pharma $35.0 million in a single

lump-sum

amount as a subordinated loan (see Note 12). On May 12, 2022, the Company issued Sorrento a promissory note of $5.0 million in exchange for the

SP-104

Assets (see Note 3). On November 10, 2022, all existing related party indebtedness between Scilex, Scilex Pharma, and Sorrento was converted into equity interests in the Company in connection with the consummation of the Business Combination and pursuant to the terms of the Debt Exchange Agreement (see Note 12).

2020 Revolving Credit Facility

On December 14, 2020, Scilex Pharma entered into the Credit and Security Agreement (the “Credit Agreement”) with CNH Finance Fund I, L.P. (“CNH”) which provides Scilex Pharma with the ability to incur indebtedness under an accounts receivable revolving loan facility in an aggregate amount of $10.0 million and the incurrence of liens and the pledge of collateral to CNH in connection with the revolving loan facility. Under the terms of the 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 1.75%. All indebtedness incurred and outstanding will be due and payable in full on January 1, 2024; unless the Credit Agreement is earlier terminated. As of December 31, 2021, the outstanding balance was $8.8 million. On February 16, 2022, the Company notified CNH that it was terminating the Credit Agreement, effective March 18, 2022. Upon termination, all principal balances and interest accrued were settled.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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+ Details

Stockholders' Equity	12 Months Ended
Stockholders' Equity	Dec. 31, 2022
Stockholders' Equity Note [Abstract]
Stockholders' Equity	8. Stockholders’ Equity The consolidated statement of stockholders’ equity has been retroactively adjusted for all periods to reflect the Business Combination and reverse recapitalization described in Note 1. The balances as of December 31, 2022 and 2021 from the consolidated financial statements of the Company as of that date, share activity (Preferred Stock, Common Stock, and additional paid-in-capital) and per share amounts were retroactively adjusted, where applicable, using the Common Stock Exchange Ratio. Common Stock Upon the closing of the Business Combination, pursuant to the terms of the Amended and Restated Certificate of Incorporation, the Company authorized 740,000,000 shares of Common Stock with a par value of $0.0001. As of December 31, 2022 and December 31, 2021, there were 141,348,856 shares issued and 132,858,484 of Common Stock outstanding, respectively. In connection with the closing of the Business Combination, all previously issued and outstanding shares of Legacy Scilex Common Stock and Legacy Scilex stock options were converted into shares of Common Stock pursuant to the Common Stock Exchange Ratio. The Company has retroactively adjusted shares issued and outstanding prior to November 10, 2022 to give effect to the Common Stock Exchange Ratio to determine the number of shares of Common Stock into which they were converted. Voting The holders of the Common Stock are entitled to one vote for each share of the Common Stock held at all meetings of stockholders. Dividends Common stockholders are entitled to receive dividends whenever funds are legally available and when declared by the Company’s board of directors. No dividends have been declared as of December 31, 2022. The Stockholder Agreement, dated as of September 12, 2022, between Vickers and Sorrento (the “Stockholder Agreement”), provides that the Company will be prohibited from taking certain actions without the consent of Sorrento. Such actions include, among other things, the payment of dividends on shares of the Common Stock. Liquidation Rights Subject to the rights of the holders of Preferred Stock, in the event of our liquidation, dissolution or winding-up, holders of Common Stock are entitled to share equally in the assets available for distribution after payment of all creditors. Preferred Stock Upon the closing of the Business Combination, $290.6 million of all existing related party indebtedness between Scilex, Scilex Pharma, and Sorrento were cancelled in exchange for the issuance of preferred shares of Scilex (“Series A Preferred Shares” or “Series A Preferred Stock”). In connection with the closing of the Business Combination, all issued Scilex Series A Preferred Shares were cancelled and converted into the right to receive 1) one share of domesticated parent preferred shares (“New Scilex Preferred Stock” or “Preferred Stock”) par value of $0.0001 per share, and 2) one-tenth of one domesticated parent common stock (“New Scilex Common Stock” or “Common Stock” and such transaction including cancellation of all the existing related party indebtedness in exchange for Preferred Stock and Common Stock, the “Conversion” or “Contribution”). Prior to the Conversion, Legacy Scilex filed a Second Amended Certificate of Incorporation (defined below) to increase the authorized number of shares to 45,000,000 shares and a Certificate of Designation (“Certificate of Designation”) to designate the rights, preferences, and privileges of Scilex Series A Preferred Shares. In connection with the closing of the Business Combination, the Company filed the Certificate of Designation and issued 29,057,097 shares of the Series A Preferred Stock to Sorrento. As of December 31, 2022, there were 29,057,097 shares of Preferred Stock outstanding. There were no Preferred Stock outstanding at December 31, 2021. The Company’s Board of Directors have authority to issue such shares of Preferred Stock in one or more series, to establish, from time to time the number of shares to be included in each such series, and to fix the dividend, voting, and other rights, preferences, and privileges of the shares. Other than the Series A Preferred Stock issued to Sorrento in connection with the closing of the Business Combination, there are no other Preferred Stock outstanding and the Company has no current plans to issue any other shares of preferred stock. Voting The holders of shares of Preferred Stock will be entitled to vote, together with the holders of shares of Common Stock and not separately as a class, on all matters upon which holders of shares of Common Stock have the right to vote. The holders of shares of Preferred Stock will be entitled to one vote for each share of Common Stock that such share of Preferred Stock would otherwise be convertible into pursuant to a deemed conversion on the record date for the determination of the stockholders entitled to vote. Pursuant to the Stockholder Agreement, holders of Series A Preferred Stock have the right to designate each director to be nominated, elected or appointed to the Board of Directors of the Company. The Series A Preferred Stock also has certain protective provisions, such as requiring a written consent of the holders of Series A Preferred Stock to change or amend their rights, powers, privileges, limitations and restrictions. Dividends Holders of the Preferred Stock are not entitled to dividends unless the Company pays dividends to holders of the Common Stock and shall be entitled to receive, when, as and if declared by our Board, such dividends (whether in cash or other property) as are paid to holders of the Common Stock to the same extent as if such holders of Series A Preferred Stock had been deemed to convert their shares of Preferred Stock into Common Stock and had held such shares of Common Stock on the record date for such dividends and distributions. Such payments will be made concurrently with the dividend or distribution to the holders of the Common Stock. Liquidation Rights Subject to the rights of the holders of parity shares (if any), in the event of our liquidation, dissolution or winding-up, holders of Preferred Stock rank senior to the Common Stock and are entitled to share equally in the assets available for distribution after payment of all creditors. Assumed Public Warrants and Private Warrants Following the consummation of the Business Combination, holders of the Public Warrants and Private Warrants are entitled to acquire Common Stock of the Company. The warrants are exercisable on the later of (a) the completion of a Business Combination and (b) 12 months from the closing of Vickers’s Initial Public Offering. The warrants will expire five years after the completion of the Business Combination or earlier upon redemption or liquidation. Each warrant entitles the holder to purchase one share of Common Stock for $11.50 per share. If the reported last sale price of the Common Stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending three business days before the Company sends the notice of redemption to the warrant holders, the Company may redeem all the Public Warrants at a price of $0.01 per warrant upon not less than 30 days’ prior written notice. If the Company calls the Public Warrants for redemption, the Company will have the option to require all holders that wish to exercise the Public Warrants to do so on a cashless basis. The Company will not be required to net cash settle the warrants. As of December 31, 2022, there are 6,899,988 Public Warrants outstanding. In connection with the closing of the Business Combination, 3,104,000 Private Warrants were transferred to Sorrento pursuant to the Warrant Transfer Agreement between Vickers, the Sponsors, Sorrento and Maxim Group, LLC where Sorrento acquired all rights, title and interests to such Private Warrants (“Warrant Transfer Agreement”). As of December 31, 2022, there are 4,104,000 Private Warrants outstanding, of which 3,104,000 Private Warrants are held by Sorrento and 1,000,000 Private Warrants are held by Sponsors. Legacy Scilex Common Stock and Preferred Stock Prior to the Business Combination, Legacy Scilex had the authority to issue 200,000,000 shares of common stock, par value $0.0001 per share and 20,000,000 shares of preferred stock, par value $0.0001 per share per the Certificate of Incorporation dated February 27, 2019. The Certificate of Incorporation was amended and restated on March 4, 2019 (“First Amended Certificate of Incorporation”), in which Legacy Scilex had the authority to issue 350,000,000 shares of common stock, par value $0.0001 per share and 20,000,000 shares of preferred stock, par value $0.0001 per share. The First Amended and Restated Certificate of Incorporation was amended and restated on November 10, 2022 (“Second Amended Certificate of Incorporation”). As a result of the Second Amended Certificate of Incorporation, Legacy Scilex had the authority to issue 785,000,000 shares, consisting of 740,000,000 shares of common stock and 45,000,000 shares of preferred stock. Immediately prior to the Conversion, there were 197,566,338 shares of Legacy Scilex Common Stock outstanding and 29,057,097 shares of Series A Preferred Stock, par value $0.0001 per share, of Legacy Scilex outstanding. Yorkville Standby Equity Purchase Agreement On November 17, 2022, the Company entered into a Standby Equity Purchase Agreement (the “Yorkville Purchase Agreement”) with Yorkville, whereby the Company has the right, but not the obligation, to sell to Yorkville up to $500.0 million of shares of its Common Stock at its request any time during the 36 months following the execution of the Yorkville Purchase Agreement, subject to certain conditions. Pursuant to the 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 (each such sale, a “Yorkville Advance”) will be purchased at a price equal to 98% of the lowest daily volume weighted average price of the Common Stock for any trading day (“VWAP”) during the two consecutive trading days commencing on the date of delivery of a written purchase notice to Yorkville (each, a “Yorkville Advance Notice”). As consideration for Yorkville’s commitment to purchase shares of Common Stock at the Company’s direction upon the terms and subject to the conditions set forth in the Yorkville Purchase Agreement, upon execution of the Yorkville Purchase Agreement, the Company issued 250,000 shares of Common Stock to Yorkville and paid $10.0 thousand in structuring fees. The registration statement on Form S-1 (File No. 333-268607) related to the Yorkville Purchase Agreement was filed with the SEC on November 30, 2022 and was declared effective by the SEC on December 9, 2022. As of December 31, 2022, there were no shares sold to Yorkville under the Yorkville Purchase Agreement. Refer to Note 14 “Subsequent Event” below for a subsequent event related to the Yorkville Purchase Agreement.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

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+ Details

Commitments and Contingencies

12 Months Ended

Dec. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

10. Commitments and Contingencies

Product Development Agreement

In February 2013, Scilex Pharma became a party to a product development agreement (as amended, the “Product Development Agreement”) with two parties (the “Developers”), one of which is ITOCHU CHEMICAL FRONTIER Corporation (“Itochu”), pursuant to which the Developers will manufacture and supply lidocaine tape products, including ZTlido and

SP-103

(the “Products”), for Scilex Pharma. The Developers initially developed, and have intellectual property rights relating to, the Products. Pursuant to the Product Development Agreement, Scilex Pharma acquired an exclusive right to develop and commercialize the Products worldwide except for Japan. The Developers are responsible for sourcing and supplying lidocaine for development and commercialization purposes.

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. During the year ended December 31, 2022, Scilex

Pharma made royalty payments in the amount of $2.3 million. As of December 31, 2022, Scilex Pharma had ending balances of accrued royalty payables of $2.2 million. Net profits are defined as net sales, less cost of goods and marketing expenses. Net sales are defined as total gross sales of any Product, less all applicable deductions, to the extent accrued, paid or allowed in the ordinary course of business with respect to the sale of such Product, and to the extent that they are in accordance with U.S. GAAP. If Scilex Pharma were to sublicense the licensed technologies, the Developers will receive the same proportion of any sublicensing fees received therefrom. 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.

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. The Supply Agreement contains standard terms regarding term, termination, payment, product quality and supply. In addition, the agreement provides additional terms regarding the calculation and amount of marketing expenses that may be deducted from net sales for purposes of determining the amount of net profit under the Product Development Agreement.

Exclusive Distribution Agreement

In August 2015, Scilex Pharma entered into an Exclusive Distribution Agreement (the “Distribution Agreement”) to appoint an exclusive third-party logistics distribution provider (the “Distributor”) and as an authorized distributor of record of ZTlido in the United States, its territories, possessions and commonwealths for an agreed schedule of fees, subject to a 3% annual adjustment. The Distribution Agreement has an initial term of three years following the first shipment of

FDA-approved

Product to a commercial customer and shall automatically renew for additional terms of one year each, unless written notice of termination is given by either party at least 30 days prior to the end of the initial term or any renewal term. In the event of Product recalls, Scilex Pharma is solely responsible for all Product recalls, except in the event where the recalls arise from the Distributor’s negligence or willful misconduct. Pursuant to the Distribution Agreement, Scilex Pharma will be responsible for delivery of Product to and from the Distributor’s facility, including all costs, expenses and risk of loss associated with such delivery. From late 2018 to early 2022, ZTlido was sold, and title was transferred, to the Distributor for distribution and sale to wholesalers for a fee of between 1% to 2% which was recorded as a

gross-to-net

sales adjustment. As the Company continues to expand the commercialization of ZTlido, it has expanded its direct distribution network to national and regional distributors and pharmacies since the beginning of April 2022. The Company currently holds all necessary wholesaler licenses and commenced selling directly to the main distributor customers as well as pharmacies in April 2022.

Sales Operations Services

In January 2016, Scilex Pharma entered into a project agreement with a vendor to provide sales operations services and detailing services, which was subsequently superseded by a new project agreement entered into in September 2018 (the “Project Agreement”). In connection with the detailing services, the Project Agreement provides that the vendor will provide Scilex Pharma with full-time sales representatives who shall detail the Product by making calls pursuant to a call plan on targets. These sales representatives are to be managed by field talent managers and a national project director, each of whom will also be provided by the vendor. In connection with the sales operation services, the vendor will provide certain services required for the initial implementation and ongoing operation of the sales force.

On July 1, 2020, Scilex Pharma and the vendor entered into a work order in which the parties agreed to convert substantially all of the sales representatives allocated under the Project Agreement to become employees of Scilex Pharma. The vendor continued to provide sales operations services, fleet management services and sample

accountability services. The work order was in effect until June 30, 2022 and was extended for one year upon the mutual agreement of both parties. Either party may terminate the work order with 90 days’ notice. Scilex Pharma paid an implementation fee of $59.0 thousand and will pay fixed monthly fees of $63.7 thousand to $65.8 thousand for ongoing services.

The Company recognized an expense of $0.9 million, $1.9 million, and $10.5 million within selling, general and administrative expenses for services performed for the years ended December 31, 2022, 2021, and 2020, respectively, including implementation fees, fixed monthly fees and pass-through costs.

Litigation

In the normal course of business, the Company may be named as a defendant in one or more lawsuits. Other than the following three lawsuits, the Company is not a party to any outstanding material litigation and management is not aware of any legal proceedings that, individually or in the aggregate, are deemed to be material to the Company’s financial condition or results of operations.

From time to time the Company may become involved in various legal proceedings, including those that may arise in the ordinary course of business.

Sanofi-Aventis U.S. LLC and Hisamitsu America, Inc. Litigation

On February 23, 2021, the Company filed an action in the U.S. District Court for the Northern District of California against Sanofi-Aventis U.S. LLC and Hisamitsu America, Inc., two manufacturers of OTC lidocaine patch products, alleging, among other things, false and deceptive advertising and unfair competition under the Lanham Act and California state laws by those companies regarding their respective OTC patch products (the “Sanofi-Aventis & Hisamitsu Litigation”). This lawsuit seeks, among other relief, damages and an injunction enjoining the defendants from continuing to make false or misleading statements of fact about their respective OTC lidocaine patch products. The defendants have filed motions to dismiss, which have narrowed slightly the Company’s claims, but which motions the court has largely rejected. Discovery is proceeding. The case is currently scheduled for trial to begin on July 24, 2023. The Company cannot make any predictions about the outcome in this matter or the timing thereof.

Former Employee Litigation

On March 12, 2021, the Company filed an action in the Delaware Court of Chancery against Anthony Mack, former President of Scilex Pharma, and Virpax Pharmaceuticals, Inc. (“Virpax”), a company now headed by Mr. Mack, alleging, among other things, breach by Mr. Mack of his

non-compete

agreement with the Company, breach of fiduciary duty, and tortious interference by Virpax with that

non-compete

agreement (the “Former Employee Litigation”). This lawsuit seeks, among other relief, damages and an injunction enjoining Mr. Mack from further violating his

non-compete

agreement and enjoining Virpax from tortiously interfering with Mr. Mack’s

non-compete

agreement. The case was tried from September 12, 2022 to September 14, 2022. Post-trial briefing and closing arguments have been concluded and the case is under submission to the Court. The Company cannot make any predictions about the outcome in this matter or the timing thereof.

ZTlido Patent Litigation

On June 22, 2022, the Company filed a complaint against Aveva Drug Delivery Systems, Inc., Apotex Corp., and Apotex, Inc. (together, “Apotex”) in the U.S. District Court for the Southern District of Florida (the “ZTlido Patent Litigation”) alleging infringement of certain Orange Book listed patents covering ZTlido (the “ZTlido Patents”). The ZTlido Patent Litigation was initiated following the submission by Apotex, in accordance with the procedures set out in the Hatch-Waxman Act, of an ANDA. Apotex’s ANDA seeks approval to market a generic

version of ZTlido prior to the expiration of the ZTlido Patents and alleges that the ZTlido Patents are invalid, unenforceable, and/or not infringed. 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. Trial in the ZTlido Patent Litigation has not yet been scheduled. The Company cannot make any predictions about the final outcome of this matter or the timing thereof.

Operating Leases

The Company leases administrative and research and development facilities under various

non-cancelable

lease agreements. Facility leases generally provide for periodic rent increases and may include options to extend. As of December 31, 2022, the Company’s leases have remaining lease terms of approximately 1.6 to 1.9 years. The term of the Company’s leases does not include extension options that were not reasonably certain to be exercised from its lease terms, ranging from 3 to 5 years. Many of the Company’s leases are subject to variable lease payments. Variable lease payments are recognized in the period in which the obligation for those payments are incurred, are not included in the measurement of the

right-of-use

assets or lease liabilities and are immaterial. Additionally, the Company subleases certain properties to third parties. Sublease income is recognized on a straight-line basis and is immaterial.

As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Company calculates the associated lease liability and corresponding

right-of-use

asset upon lease commencement using a discount rate based on a credit-adjusted secured borrowing rate commensurate with the term of the lease. As of December 31, 2022, the Company has no finance leases.

The components of lease expense were as follows (in thousands):


	Year Ended December 31,
	2022		2021		2020
Operating lease cost*	$	469	$	623	$	904

*	Inclusive of variable lease costs, sublease income, and impairment, which were immaterial for the periods presented.

Supplemental quantitative information related to leases includes the following:


	Year Ended December 31,
	2022			2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(746	)	$	(654	)
ROU assets obtained in exchange for new operating lease liabilities	$	320		$	—
Weighted average remaining lease term in years—operating leases		1.8			2.8
Weighted average discount rate—operating leases		11.8	%		12.2	%

In June 2022, the Company entered into a new

non-cancelable

lease agreement for an administrative facility in Palo Alto. The lease includes annual rent increases and the option to extend. The term of the new lease is 26 months and the Company does not expect to exercise the extension option at the end of the lease.

Approximate future minimum lease payments under operating leases were as follows (in thousands):


Year Ended December 31,	Amount
2023	$	872
2024		703
2025		—
2026		—
2027		—

Total lease payments		1,575
Less imputed interest		(165	)

Total lease liabilities		1,410
Less current portion of lease liability		745

Lease liability, net of current portion	$	665

Stock Incentive and Employee Benefit Plans

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Stock Incentive and Employee Benefit Plans

9. Stock Incentive and Employee Benefit Plans

The consolidated statements of stockholders’ equity / (deficit) have been retroactively adjusted for all periods to reflect the Business Combination and reverse recapitalization described in Note 1. The balances as of December 31, 2022, 2021, 2020 from the consolidated financial statements of the Company as of that date, share activity (stock options) and per share amounts were retroactively adjusted, where applicable, using the Common Stock Exchange Ratio.

2017 Equity Incentive Plan

In June 2017, Scilex Pharma adopted the Scilex Pharmaceuticals Inc. 2017 Equity Incentive Plan (the “Scilex Pharma 2017 Plan”). The Scilex Pharma 2017 Plan reserved 24.0 million shares of Scilex Pharma common stock.

Stock options granted under the Scilex Pharma 2017 Plan typically vest 1/4th of the shares on the first anniversary of the vesting commencement date and 1/48th of the remaining options vest each month thereafter. The Scilex Pharma 2017 Plan was amended and restated on July 5, 2018.

In connection with the corporate reorganization in March 2019, the Scilex Pharma 2017 Plan was terminated, and each option to purchase Scilex Pharma’s common stock outstanding and unexercised immediately prior to reorganization was cancelled and substituted for that number of options to acquire Legacy Scilex Common Stock.

Scilex Holding Company 2019 Stock Option Plan

The Board of Directors of the Company adopted the Scilex Holding Company 2019 Stock Option Plan (the “2019 Stock Option Plan” or “Prior Plan”) on May 28, 2019. The 2019 Stock Option Plan was approved by the Company’s stockholders on June 7, 2019. As of December 31, 2019, 30.0 million shares of Scilex Common Stock of the Company were reserved for issuance pursuant to the 2019 Stock Option Plan. Stock options granted under the 2019 Stock Option Plan typically vest with respect to 1/4th of the shares on the first anniversary of the vesting commencement date and 1/48th of the remaining shares on each monthly anniversary thereafter.

Upon the consummation of the Business Combination, the 2019 Stock Option Plan was terminated and no further awards were granted under the 2019 Stock Option Plan thereafter. However, the 2019 Stock Option Plan will continue to govern outstanding awards granted under the terms of the Equity Incentive Plan (defined below).

Scilex Holding Company 2022 Equity Incentive Plan

The Board of Directors of the Company adopted the Scilex Holding Company 2022 Equity Incentive Plan (the “Equity Incentive Plan”) on October 17, 2022. The 2022 Equity Incentive Plan was approved by the stockholders and became effective on November 9, 2022.

The total number of common shares for which incentive stock options (“ISOs”) may be granted under the Equity Incentive Plan is not to exceed 14,622,712 shares plus a number of shares of Common Stock equal to the number of shares subject to outstanding stock awards granted under the Prior Plan (“Returning Shares”), if any, as such shares become available from time to time, which the amount will be increased commencing on January 1, 2023 and ending on (and including) January 1, 2032, in an amount equal to the lesser of (i) 4% of the total number of shares of Common Stock outstanding on December 31 of the preceding year, (ii) 7,311,356 shares of Common Stock, and (iii) such number of shares of the Common Stock determined by the Board or the compensation committee of the Board prior to January 1 of a given year.

As of December 31, 2022, there were no options to purchase shares of Common Stock outstanding under the Equity Incentive Plan and options to purchase 16,939,436 shares of the Common Stock were outstanding under previous plans.

Total stock-based compensation recorded within operating expenses was $5.3 million, $5.8 million, and $5.4 million for the years ended December 31, 2022, 2021, and 2020, respectively.

The total unrecognized compensation costs related to unvested employee and

non-employee

stock option grants as of December 31, 2022 was $2.7 million and the weighted average period over which these grants are expected to vest is 1.4 years.

Scilex Holding Company 2022 Employee Stock Purchase Plan

On October 17, 2022, the Board adopted the Scilex Holding Company 2022 Employee Stock Purchase Plan (the “ESPP”). The ESPP was approved by the stockholders and became effective on November 9, 2022. The purpose of the ESPP is to secure and retain the services of new employees, to retain the services of existing employees, and to provide incentives for such individuals to exert maximum efforts toward the success of the Company.

The ESPP includes two components. One component is designed to allow eligible U.S. employees to purchase the Common Stock in a manner that may qualify for favorable tax treatment under Section 423 of the Internal Revenue Code of 1986 (“Code”) (the “423 Component”) and accordingly, it will be construed in a manner that is consistent with the requirements of Section 423 of the Code. The other component will permit the grant of purchase rights that do not qualify for such favorable tax treatment (the

“Non-423

Component”) in order to allow deviations necessary to permit participation by eligible employees who are foreign nationals or employed outside of the U.S. while complying with applicable foreign laws, and except as otherwise provided in the ESPP or determined by the Board, it will operate and be administered in the same manner as the 423 Component.

The Board administers the ESPP and will have the authority to determine how and when purchase rights are granted and the provisions of each offering. Initially, the total number of shares of the Common Stock that may be issued under the ESPP will not exceed 1,462,271 shares of the Common Stock. The number of shares of the Common Stock that will be reserved for issuance will automatically increase on January 1 of each year for a period of up to ten years, commencing on January 1, 2023 and ending on (and including) January 1, 2032, in an amount equal to the lesser of (i) 1% of the total number of shares of the Common Stock outstanding on December 31 of the immediately preceding calendar year; (ii) 1,827,839 shares of the Common Stock; and (iii) such number of shares of the Common Stock determined by the Board or the compensation committee of the Board prior to January 1 of a given year, provided however, that the Board may act prior to January 1 of a given calendar year to provide that there will be no increase for such calendar year or the increase for such year will be a lesser number of shares than the amount set forth in clauses (i) to (iii) above. As of December 31, 2022, there were no shares outstanding under the ESPP.

Option Valuation

The Company calculates the fair value of stock-based compensation awards granted to employees and nonemployees using the Black-Scholes option-pricing method. The Black-Scholes option-pricing method requires the use of subjective assumptions, including stock price volatility, the expected life of stock options, risk free interest rate and the fair value per share of the underlying common stock on the date of grant. The assumptions used in the Black-Scholes option-pricing method related to options issued to employees and nonemployees for the year ended 2020 is set forth below:


	Year Ended December 31,
	2020
Weighted—average grant date fair value	$	1.23
Expected dividend yield		0.00	%
Expected stock-price volatility		90.00	%
Risk-free interest rate		0.53	%
Term of options		5.6
Fair value per share of common stock on date of grant	$	1.72
Exercise price	$	1.72

Expected dividend yield

. The Company bases the expected dividend yield assumption on the fact that the Company has never paid cash dividends and has no present intention to pay cash dividends on the Company’s common stock.

Expected stock-price volatility

. The expected stock-price volatility assumption is based on volatilities of a peer group of similar companies whose share prices are publicly available. The peer group was developed based on companies in the transdermal patch industry. In selecting the peer group, management considered publicly-traded transdermal patch companies with existing clinical stage branded and generic transdermal patches. Management further considered the development stage of the peer group companies.

Risk-free interest rate

. The Company bases the risk-free interest rate assumption on the U.S. Treasury’s rates for U.S. Treasury

zero-coupon

bonds with maturities similar to those of the expected term of the award being valued.

Expected term of options

. The expected term of options represents the period of time when options are expected to be outstanding. Because the Company does not have historic exercise behavior, the Company determines the expected term assumption for options issued to directors and employees using the simplified method, which is an average of the contractual term of the option and its ordinary vesting period.

The following represents a summary of the options outstanding at December 31, 2022, 2021, and 2020 and changes during the years then ended (in thousands, other than weighted-average exercise price):


	Options			Weighted average exercise price		Aggregate Intrinsic Value
Outstanding at December 31, 2019		17,114		$	1.59		2,183
Granted		4,172			1.72
Exercised		(38	)		1.34
Forfeited/Cancelled		(502	)		1.40

Outstanding at December 31, 2020		20,746			1.63		2,172
Granted		—			—
Exercised		—			—
Forfeited/Cancelled		(1,778	)		1.01

Outstanding at December 31, 2021		18,968			1.68		915
Granted		—			—
Exercised		(202	)		0.47
Forfeited/Cancelled		(1,827	)		1.72

Outstanding at December 31, 2022		16,939		$	1.68		38,942
Exercisable at December 31, 2022		14,487		$	1.70

Employee Benefit Plan

The Company maintains a defined contribution 401(k) plan available to eligible employees, which is administered by Sorrento. 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 $0.3 million for each of the years ended December 31, 2022, 2021, and 2020, respectively.

Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

11. Income Taxes

Total loss before income taxes for the years ended December 31, 2022, 2021 and 2020 did not include a foreign component.

The components of the provision expense (benefit) were as follows for the years ended December 31, 2022, 2021, and 2020 (in thousands):


	Year Ended December 31,
	2022			2021			2020
Current income tax expense (benefit):
Federal	$	—		$	—		$	—
State		4			5			(53	)

Total current		4			5			(53	)
Deferred income tax expense (benefit):
Federal		(10,396	)		(12,981	)		(3,970	)
State		(1,851	)		(2,472	)		(130	)

Total deferred		(12,247	)		(15,453	)		(4,100	)
Changes in tax rate		1,347			31			93
Changes in valuation allowance		10,900			15,422			4,007

Total income tax benefit from continuing operations	$	4		$	5		$	(53	)

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.

The components of the Company’s net deferred tax liabilities and related valuation allowance are as follows as of December 31, 2022 and 2021 (in thousands):


	Year Ended December 31,
	2022			2021
Deferred tax assets:
Net operating loss carryforwards	$	48,984		$	39,714
Debt related interest		15,272			12,205
Capitalized research and development		2,014			—
Tax credit carryforwards		1,630			1,630
Stock based compensation		1,602			3,233
Accrued expense and reserves		568			1,517
Operating lease liabilities		315			404
Other		77			236

Total deferred tax assets		70,462			58,939
Less valuation allowance		(67,543	)		(56,643	)

Total deferred tax assets		2,919			2,296

Deferred tax liabilities:
Intangible assets		(2,666	)		(1,975	)
Operating lease right-of-use assets		(253	)		(319	)
Other		—			(2	)

Total deferred tax liabilities		(2,919	)		(2,296	)

Net deferred tax liabilities	$	—		$	—

The reconciliation between U.S. federal income taxes at the statutory rate and the Company’s provision for income taxes are as follows for the years ended December 31, 2022, 2021, and 2020 (in thousands):


	Year Ended December 31,
	2022			2021			2020
Income tax benefit at federal statutory rate	$	(4,905	)	$	(19,150	)	$	(9,408	)
Valuation allowance		10,900			15,422			4,007
Debt discount and interest limitation		(9,293	)		8,954			(806	)
Compensation expense		2,469			224			166
Acquisition related charges		992			75			63
Prior year true-up and carryback		(713	)		(3,968	)		6,955
State, net of federal tax benefit		(174	)		(2,545	)		(1,164	)
Income tax credits and incentives		—			—			(101	)
Other		728			993			235

Income tax benefit	$	4		$	5		$	(53	)

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. Due to such uncertainties surrounding the realization of the deferred tax assets, the Company maintains a valuation allowance of $67.5 million against its deferred tax assets as of December 31, 2022. Realization of the deferred tax assets will be primarily dependent upon the Company’s ability to generate sufficient taxable income prior to the expiration of its net operating losses.

As of December 31, 2022, the Company had $205.6 million and $106.9 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 Company also had federal research and development income tax credits of $2.0 million which will begin to expire in 2035.

Internal Revenue Code Section 382 rules apply to limit a corporation’s ability to utilize existing net operating loss and tax credit carryforwards once the corporation experiences an ownership change as defined in Section 382. For the years ended December 31, 2022 and 2021, there was no impact of such limitations on the Company’s income tax provision.

The Company is subject to taxation in U.S. federal and state tax jurisdictions. All of the Company’s tax years will remain open for three years for examination by the federal and state tax authorities from the date of utilizations of net operating loss. There are no active tax compliance audits as of December 31, 2022.

A reconciliation of the beginning and ending amount of unrecognized tax expense (benefits) is as follows for the years ended December 31, 2022, 2021, and 2020 (in thousands):


	2022		2021		2020
Beginning balance	$	408	$	406	$	385
Increase related to prior year tax positions		—		2		—
Decrease related to prior year tax positions		—		—		(4	)
Increase related to current year tax positions		—		—		25

Ending balance	$	408	$	408	$	406

At December 31, 2022, 2021, and 2020, $0.4 million, $0.4 million and $0.4 million, respectively, of the Company’s total unrecognized tax benefits, if recognized, would impact 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, 2022, 2021, and 2020.

The Company believes that no material amount of the liabilities for uncertain tax positions are expected to reverse within 12 months of December 31, 2022.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI https://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Related Party Transactions	12 Months Ended
Related Party Transactions	Dec. 31, 2022
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	12. Related Party Transactions As of December 31, 2020, approximately 14.7% of the outstanding capital stock of the Company was held by Itochu. On January 13, 2021, 34,889,868 shares of Legacy Scilex representing all outstanding capital stock of Legacy Scilex held by Itochu were acquired by non-related minority shareholders. Thus, Itochu is not a shareholder subsequent to January 13, 2021. During the years ended December 31, 2022, 2021, and 2020 the Company purchased approximately $6.7 million, $5.7 million, and $1.0 million respectively, of inventory from Itochu, a previous minority shareholder of the Company and a Developer in the aforementioned Product Development Agreement. These costs are recorded within cost of revenues and selling, general and administrative expenses in the Company’s statement of operations. Semnur is party to an Assignment Agreement, dated August 6, 2013 (the “Assignment Agreement”), with Shah Investor LP (“Shah Investor”). Mahendra Shah, Ph.D., who has served on the Company’s board of directors since March 2019, is the managing partner of Shah Investor. Pursuant to the Assignment Agreement, Shah Investor assigned certain intellectual property to Semnur and Semnur agreed to pay Shah Investor a contingent quarterly royalty in the low-single digits based on quarterly net sales of any pharmaceutical formulations for local delivery of steroids by injection developed using such intellectual property, which would include SP-102. Through December 31, 2022, the Company has made no royalty payments pursuant to the Assignment Agreement. On January 1, 2017, a Transition Services Agreement (“TSA”) was executed between Scilex Pharma and Sorrento. Pursuant to the TSA, Sorrento agreed, at the Company’s request, to provide directly or indirectly certain administrative, financial, legal, tax, insurance, facility, information technology and other services. In addition to the services provided under the TSA, Sorrento retains insurance coverage on behalf of the Company. During the years ended December 31, 2022, 2021, and 2020 the total cost of services and insurance, including an agreed-upon markup, provided to the Company and recognized in general and administrative expenses was $3.8 million, $4.0 million, and $2.3 million, respectively. On March 18, 2019, the Company entered into a note payable with Sorrento with an initial principal amount of $16.5 million for the acquisition of Semnur. The note is interest bearing at the lesser of (a) 10% simple interest per annum, and (b) the maximum interest rate permitted under law. Interest is due and payable annually. The note payable is payable upon demand and may be prepaid in whole or in part at any time without penalty or premium. During the years ended December 31, 2022, 2021, and 2020 Sorrento made advances to the Company in the amount of $27.5 million, $6.6 million, and $13.7 million respectively, under the note payable. All outstanding related party indebtedness immediately prior to the closing of the Business Combination was converted to equity pursuant to the Debt Exchange Agreement (defined below) and therefore the last day the debt outstanding was November 10, 2022 (see Note 12). The outstanding principal balance of the note on November 10, 2022 and December 31, 2021 was $47.1 million and $19.6 million, respectively, which was recorded under the current related party note payable in the Company’s consolidated balance sheets. As of November 10, 2022 and December 31, 2021, the Company had ending balances resulting from the accrued interest on the note payable of $7.2 million and $3.9 million, respectively, which was recorded under related party payable in the Company’s consolidated balance sheets. The proceeds from the note payable were used to finance the operations of the Company. On October 5, 2018, Scilex Pharma issued to Sorrento a promissory note in the amount of approximately $21.7 million for certain amounts previously advanced to Scilex Pharma by Sorrento (the “Intercompany Note”). Scilex Pharma may borrow up to an aggregate of $25.0 million of principal amount under the note payable. The promissory note is interest bearing at the lesser of (a) 10% simple interest per annum, and (b) the maximum interest rate permitted under law. All outstanding principal amounts and accrued interest was due upon maturity on August 31, 2026. On October 22, 2018, Sorrento purchased from the Legacy Scilex 24,117,608 shares of the Legacy Scilex Common Stock in exchange for the repayment of $21.7 million of indebtedness under this promissory note. During the years ended December 31, 2022, 2021, and 2020, Sorrento made advances to Scilex Pharma in the amount of $0, $8.1 million, and $10.3 million respectively, under the promissory note. As of November 10, 2022 and December 31, 2021, the Company had ending balances resulting from the accrued interest on the note payable of $5.1 million and $3.1 million, respectively, which was recorded under related party payable in the Company’s consolidated balance sheets. As of November 10, 2022 and December 31, 2021, Scilex Pharma’s outstanding principal balance under the promissory note was $23.5 million, which was recorded under the non-current related party note payable in the Company’s consolidated balance sheets. The Company received $35.0 million in February 2022 to fund the payment of Scilex Pharma Notes as described in Note 7. The $35.0 million received in February 2022 was due no earlier than February 2030 and was recorded under the non-current related party note payable in the Company’s consolidated balance sheets as of November 10, 2022. Additional funding received from Sorrento was due on demand and recorded under the related party payable in the Company’s consolidated balance sheets. As of November 10, 2022, related party payables due to Sorrento included $61.7 million to cover working capital requirements, $100.0 million for repurchases of Scilex Pharma Notes, and $18.2 million for litigation fees (see Note 7). As of December 31, 2021, related party payables due to Sorrento consisted of $35.7 million to cover working capital requirements, $51.0 million for repurchases of Scilex Pharma Notes, and $6.0 million to pay litigation fees. As of December 31, 2022, the Company had a $1.8 million related party receivable from Sorrento related to certain invoices paid on behalf of Sorrento, which was fully reserved (see Note 14). On May 12, 2022, the Company entered into the Bill of Sale, with Sorrento (see Note 3). Pursuant to the Bill of Sale, the Company assumed all of Sorrento’s rights, liabilities and obligations under Aardvark Asset Purchase Agreement. The Company issued the 2022 Promissory Note to Sorrento as consideration transferred. The 2022 Promissory Note matures seven years from the date of issuance and bears interest at the rate equal to the lesser of (a) 2.66% simple interest per annum and (b) the maximum interest rate permitted under law. As of November 10, 2022, the outstanding balance, net of discount, under the 2022 Promissory Note was $4.2 million, which was recorded under the non-current related party note payable in the Company’s consolidated balance sheets. Debt Exchange Agreement On September 12, 2022, the Company and Scilex Pharma entered into a Contribution and Satisfaction of Indebtedness Agreement (the “Debt Exchange Agreement”) with Sorrento, pursuant to which (i) Sorrento shall contribute to the Company all amounts (including accrued interest thereon, if any) for certain loans and other amounts provided by Sorrento to the Company that remain outstanding as of immediately prior to the closing of the Business Combination (the “Aggregate Outstanding Amount” or “Outstanding Indebtedness”), including with respect to the Scilex Pharma Notes, an intercompany promissory note issued by Scilex Pharma to Sorrento in the amount of approximately $27.5 million for certain amounts previously advanced to Scilex Pharma by Sorrento, and the other notes payable to Sorrento described above (see Note 7), in exchange for the issuance by the Company to Sorrento of Preferred Stock of the Company, (ii) the Company shall contribute to Scilex Pharma the portion of such Outstanding Indebtedness that is owed by Scilex Pharma to Sorrento as a contribution of capital for no consideration, and (iii) upon the occurrence of the events described in clauses (i) and (ii), the Aggregate Outstanding Amount and the Outstanding Indebtedness shall be satisfied in full. Pursuant to the terms of the Debt Exchange Agreement effective as of immediately prior to, and contingent upo n, the closing of the Business Combination, Sorrento elected to contribute the Outstanding Indebtedness to the Company in exchange for the issuance by the Company to Sorrento of that number of shares of preferred stock, par value $0.0001 per share, of the Company (subject to adjustment for recapitalizations, stock splits, stock dividends and similar transactions) (the “Exchange Shares” and such transaction, the “Debt Contribution”) that is equal to (i) the Aggregate Outstanding Amount plus the amount equal to 10% of the Aggregate Outstanding Amount divided by (ii) $ 11.00 (rounded up to the nearest whole share); provided, that in no event would the Aggregate Outstanding Amount exceed $ 310,000,000. On November 10, 2022, all existing related party indebtedness between Scilex, Scilex Pharma, and Sorrento totaling $290.6 million was converted into equity interests in the Company in connection with the consummation of the Business Combination and pursuant to the terms of the Debt Exchange Agreement. This amount was converted to 29,057,097 shares of Scilex Preferred Stock and 2,905,710 shares of the Company’s Common Stock.

Loss Per Share

12 Months Ended

Dec. 31, 2022

Earnings Per Share [Abstract]

Loss Per Share

13. Loss Per Share

The Company complies with accounting and disclosure requirements of FASB ASC Topic 260,

Earnings Per Share

. The Company has two classes of shares, which are referred to as Common Stock and Preferred Stock.

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. The retroactive adjustment is based on the same number of weighted average shares outstanding in each historical period.

For the years ended December 31, 2022, 2021, and 2020, basic loss per share is computed using the

two-class

method. The

two-class

method is an earnings allocation formula that determines earnings per share for each class of common stock and participating securities according to dividends or dividend equivalents and participation rights in undistributed earnings. Preferred Stock is not contractually required to share in net losses of the Company.

The following table sets forth the reconciliation of basic and diluted loss per share for the years ended December 31, 2022, 2021, and 2020 (in thousands except per share data):


	Year Ended December 31,
	2022			2021			2020
Net loss attributable to Scilex	$	(23,364	)	$	(88,424	)	$	(47,519	)
Net loss attributable to participating securities	$	—		$	—		$	—
Net loss attributable to common stockholders	$	(23,364	)	$	(88,424	)	$	(47,519	)
Weighted average common shares outstanding		134,226			132,858			132,891
Effect of Dilutive Securities		—			—			—

Denominator for Diluted Loss per Share—Adjusted for Dilutive Securities		134,226			132,858			132,891
Basic and Diluted Loss Per Share	$	(0.17	)	$	(0.67	)	$	(0.36	)

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:


	Year Ended December 31,
	2022		2021		2020
Stock options		16,939,093		18,967,724		20,746,432
Public Warrants		6,899,988		—		—
Private Warrants		4,104,000		—		—

Subsequent Events	12 Months Ended
Subsequent Events	Dec. 31, 2022
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	14. Subsequent Events The Company has evaluated subsequent events for recognition and disclosure purposes in the audited consolidated financial statements as of December 31, 2022. Except as described below, or as otherwise indicated in the footnotes, the Company has concluded that no events or transactions have occurred that require disclosure. B. Riley Standby Equity Purchase Agreement On January 8, 2023, the Company entered into a Standby Equity Purchase Agreement (the “B. Riley Purchase Agreement”) with B. Riley, whereby the Company shall have the right, but not the obligation, to sell to B. Riley up to $500.0 million of its shares of the Company’s Common Stock at the Company’s request any time during the 36 months following the execution of the B. Riley Purchase Agreement, subject to certain conditions. The Company expects to use the net proceeds received from this for working capital and general corporate purposes. As consideration for B. Riley’s commitment to purchase shares of Common Stock at the Company’s direction upon the terms and subject to the conditions set forth in the B. Riley Purchase Agreement, the Company issued 250,000 shares of Common Stock to B. Riley in connection with the execution of the B. Riley Purchase Agreement on January 12, 2023. Subsequent to the execution of the B. Riley Purchase Agreement, the Company sold an aggregate of 127,241 shares of Common Stock pursuant to the B. Riley Purchase Agreement for aggregate net proceeds to the Company of approximately $1 million. Scilex Holding Company 2023 Inducement Plan On January 17, 2023, the Compensation Committee of the Board of Directors (the “Compensation Committee”) of the Company adopted the Scilex Holding Company 2023 Inducement Plan (the “Plan”). The Plan will serve to advance the interests of the Company by providing a material inducement for the best available individuals to join the Company as employees by affording such individuals an opportunity to acquire a proprietary interest in the Company. The Plan provides for the grant of equity-based awards in the form of non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, and other awards (as set forth under the Plan) solely to prospective employees of the Company or an affiliate of the Company provided that certain criteria are met. The initial maximum number of shares available for grant under the Plan is 1,400,000 shares of the Company’s Common Stock (subject to adjustment for recapitalizations, stock splits, reorganizations and similar transactions). Amendment to the Yorkville Purchase Agreement 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 Yorkville Purchase Agreement dated November 17, 2022. 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 Yorkville Advance will be purchased at a price equal to 98% of the lowest daily volume weighted average price of the Common Stock for any trading day on the date of delivery of a written purchase notice to Yorkville. Subsequent to December 31, 2022, the Company sold an aggregate of 85,000 shares of Common Stock pursuant to the A&R Yorkville Purchase Agreement for aggregate net proceeds to the Company of approximately $0.6 million. Elyxyb License On February 12, 2023, the Company acquired from BioDelivery Sciences International, Inc. (“BSDI”) and Collegium Pharmaceutical, Inc. (“Collegium”, and together with BDSI, the “Collegium Sellers”) the rights to certain patents, trademarks, regulatory approvals, data, contracts, and other rights related to ELYXYB (celecoxib oral solution) (the “Product”) and its commercialization in the United States and Canada (the “Territory”). As consideration for the acquisition, the Company assumed various rights and obligations under that certain asset purchase agreement, dated August 3, 2021 (the “DRL APA”), between BDSI and Dr. Reddy’s Laboratories Limited, a company incorporated under the laws of India (“DRL”), including a license from DRL including an irrevocable, royalty-free, exclusive license to know-how and patents of DRL related to the Product and necessary or used to exploit the Product in the Territory. Additionally, under the Purchase Agreement, the Seller granted the Company an irrevocable, royalty-free, exclusive license to know-how related to the Product and necessary or used to exploit the Product in the Territory. No cash consideration was or will be payable to Collegium Sellers for such acquisition; however, the obligations under the DRL APA that were assumed by the Company include obligations to pay royalties for sales of the Product in the Territory for all indications and additional amounts if certain milestones are achieved. Sorrento Chapter 11 filing On February 13, 2023, Sorrento, together with its wholly-owned direct subsidiary, Scintilla Pharmaceuticals, Inc., commenced voluntary proceedings under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas. While the Company is majority-owned by Sorrento, the Company is not a debtor in Sorrento’s voluntary Chapter 11 filing and management does not expect this will impact the Company and will continue to operate its business as usual. As of December 31, 2022, the Company had a $1.8 million receivable from Sorrento, which was fully reserved.

Nature of Operations and Basis of Presentation (Policies)

12 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Basis of Presentation

Use of Estimates

Cash and Cash Equivalents

Fair Value of Financial Instruments

•

Level 1: Observable inputs such as unadjusted quoted prices in active markets for identical instruments.

•

Level 2: Quoted prices for similar instruments that are directly or indirectly observable in the marketplace.

•

Accounts Receivable, Net

Inventory

The Company determines inventory cost on a

first-in,

first-out

on-hand

pre-launch

inventory costs prior to regulatory approval. As of December 31, 2022 and 2021, the Company’s inventory was primarily comprised of finished goods.

Property and Equipment

Property and Equipment, Net

Acquisitions

The Company accounts for business combinations using the acquisition method of accounting, which requires that assets acquired, including

in-process

research and development (“IPR&D”) projects and liabilities assumed

up-front

Contingent Consideration

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.

Goodwill and Other Long-Lived Assets

non-generic

Public Warrants and Private Placement Warrants

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

. 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

Debt

Derivative Liabilities

Research and Development Costs

Research and Development.

Income Taxes

The provisions of the FASB ASC Topic 740,

Income Taxes

addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC

Subtopic

740-10,

Leases

The Company determines if an arrangement is a lease at inception. Operating lease

right-of-use

Revenue Recognition

The Company’s revenue is generated from product sales within the United States. The Company does not incur significant direct costs to obtain contracts with its customers.

Rebates and Chargebacks

Prompt Payment Discounts

Service Fees

Product Returns

Co-Payment

Assistance

Patients who have commercial insurance or pay cash and meet certain eligibility requirements may receive

co-payment

assistance. The Company accrues for

co-payment

assistance based on actual program participation and estimates of program redemption using data provided by third-party administrators.

Customer Concentration Risk

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with FASB ASC Topic 718,

Compensation—Stock Compensation

non-employee’s

vesting period. The Company accounts for forfeitures as incurred.

Segments

non-opioid

Net Loss per Share

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

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.

Recent Accounting Pronouncements

In October 2021, the FASB issued ASU

2021-08,

Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

, 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 and early adoption is permitted. The Company is evaluating the impact the standard will have on its consolidated financial statements.

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2022

Fair Value Disclosures [Abstract]

Schedule of fair value assets measured on a recurring basis

The following table presents the Company’s financial assets and liabilities that are measured at fair value (in thousands):


	Fair value measurements at December 31, 2022
	Balance		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and cash equivalents	$	2,184	$	2,184	$	—	$	—

Total assets measured at fair value	$	2,184	$	2,184	$	—	$	—

Liabilities
Derivative liabilities	$	1,231	$	—	$	—	$	1,231
Other long-term liabilities		163		—		—		163

Total liabilities measured at fair value	$	1,394	$	—	$	—	$	1,394


	Fair value measurements at December 31, 2021
	Balance		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash and cash equivalents	$	4,338	$	4,338	$	—	$	—

Total assets measured at fair value	$	4,338	$	4,338	$	—	$	—

Liabilities
Derivative liabilities	$	35,700	$	—	$	—	$	35,700

Total liabilities measured at fair value	$	35,700	$	—	$	—	$	35,700

Schedule of the derivative liabilities measured at fair value using significant unobservable inputs Level 3

The following table includes a summary of the derivative liabilities measured at fair value using significant unobservable inputs (Level 3) during the year ended December 31, 2022:


	Fair value
Ending Balance at December 31, 2019	$	33,400
Loan derivative liability		2,800
Re-measurement of fair value		(800	)

Ending Balance at December 31, 2020	$	35,400
Re-measurement of fair value		300

Balance at December 31, 2021	$	35,700
Private Warrant liability acquired as part of the Business Combination		2,545
Forfeiture of Private Warrants		1,696
Change in fair value measurement		(38,710	)

Balance at December 31, 2022	$	1,231

Schedule of quantitative information regarding Level 3 fair value measurements

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


	December 31, 2022			November 10, 2022
	Fair value			Fair Value
Equity Value	$	3.99		$	9.01
Exercise Price	$	11.50		$	11.50
Term (in years)		4.86			5.00
Volatility		35.0	%		10.0	%
Risk-free rate		3.94	%		3.91	%
Dividend yield		0.00	%		0.00	%
Call option value	$	0.30		$	0.62

- Definition

Tabular disclosure of all significant concentrations of risk, including credit risk and market risk, arising from all financial instruments (as defined), whether from an individual counterparty or groups of counterparties. The disclosure concerning concentrations of risk may consist of the following information: (1) for concentrations of credit risk disclosure may include: (a) information about the (shared) activity, region, or economic characteristic that identifies the concentration, (b) the maximum amount of loss due to credit risk that, based on the gross fair value of the financial instrument, the entity would incur if parties to the financial instruments that make up the concentration failed completely to perform according to the terms of the contracts and the collateral or other security, if any, for the amount due proved to be of no value to the entity, (c) the policy of requiring collateral or other security to support financial instruments subject to credit risk, information about the entity's access to that collateral or other security, and the nature and a brief description of the collateral or other security supporting those financial instruments, and (d) the policy of entering into master netting arrangements to mitigate the credit risk of financial instruments, information about the arrangements for which the entity is a party, and a brief description of the terms of those arrangements, including the extent to which they would reduce the entity's maximum amount of loss due to credit risk and (2) for disclosure of quantitative information about the market risks of financial instruments that is consistent with the way the company manages or adjusts those risks, disclosure may include: (a) more details about current positions and perhaps activity during the period, (b) the hypothetical effects on comprehensive income (or net assets), or annual income, of several possible changes in market prices, (c) a gap analysis of interest rate re-pricing or maturity dates, (d) the duration of the financial instruments, (e) the entity's value at risk from derivatives and from other positions at the end of the reporting period and the average value at risk during the year, or (f) other ways of reporting quantitative information as internally developed.

+ References + Details

Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

Schedule of Property and equipment

Property and equipment consisted of the following as of December 31, 2022 and 2021 (in thousands):


	December 31,
	2022			2021
Computers & equipment	$	77		$	77
Furniture		118			118
Leasehold improvements		55			48
Construction in progress		689			689

Property and equipment, gross		939			932
Less: Accumulated depreciation		(167	)		(127	)

Property and equipment, net	$	772		$	805

Goodwill and Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of identifiable intangible assets

A summary of the Company’s identifiable intangible assets as of December 31, 2022 and December 31, 2021 is as follows (in thousands):


	December 31, 2022
	Gross carrying amount		Accumulated amortization		Intangibles, net
Patent rights	$	32,630	$	13,415	$	19,215
Acquired technology		21,940		6,216		15,724
Acquired licenses		5,711		184		5,527
Assembled workforce		500		375		125

Total intangible assets	$	60,781	$	20,190	$	40,591


	December 31, 2021
	Gross carrying amount		Accumulated amortization		Intangibles, net
Patent rights	$	32,630	$	11,239	$	21,391
Acquired technology		21,940		4,754		17,186
Assembled workforce		500		275		225

Total intangible assets	$	55,070	$	16,268	$	38,802

Estimated future amortization expense related to intangible assets

Estimated future amortization expense related to intangible assets at December 31, 2022 is as follows (in thousands):


Year Ended December 31,	Amount
2023	$	4,106
2024		4,031
2025		4,006
2026		4,006
2027		4,006
Thereafter		20,436

Total	$	40,591

Debt (Tables)

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Summary of borrowings of the scilex notes consisted

Borrowings of the Scilex Notes consisted of the following (in thousands):


	December 31, 2021
Principal	$	133,997
Unamortized debt discount		(30,597	)
Unamortized debt issuance costs		(2,228	)

Carrying value		101,172
Current portion		(29,135	)

Long term portion		72,037

Estimated fair value	$	115,400

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
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-Subparagraph (SX 210.12-04(a))
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Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 5: http://www.xbrl.org/2003/role/exampleRef
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Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 7: http://www.xbrl.org/2003/role/exampleRef
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+ Details

Stock Incentive and Employee Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Schedule of Stock Options Valuation Assumption Used

The assumptions used in the Black-Scholes option-pricing method related to options issued to employees and nonemployees for the year ended 2020 is set forth below:


	Year Ended December 31,
	2020
Weighted—average grant date fair value	$	1.23
Expected dividend yield		0.00	%
Expected stock-price volatility		90.00	%
Risk-free interest rate		0.53	%
Term of options		5.6
Fair value per share of common stock on date of grant	$	1.72
Exercise price	$	1.72

Schedule of Stock Options Outstanding Activity

The following represents a summary of the options outstanding at December 31, 2022, 2021, and 2020 and changes during the years then ended (in thousands, other than weighted-average exercise price):


	Options			Weighted average exercise price		Aggregate Intrinsic Value
Outstanding at December 31, 2019		17,114		$	1.59		2,183
Granted		4,172			1.72
Exercised		(38	)		1.34
Forfeited/Cancelled		(502	)		1.40

Outstanding at December 31, 2020		20,746			1.63		2,172
Granted		—			—
Exercised		—			—
Forfeited/Cancelled		(1,778	)		1.01

Outstanding at December 31, 2021		18,968			1.68		915
Granted		—			—
Exercised		(202	)		0.47
Forfeited/Cancelled		(1,827	)		1.72

Outstanding at December 31, 2022		16,939		$	1.68		38,942
Exercisable at December 31, 2022		14,487		$	1.70

Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Schedule of Components of Lease Expense

The components of lease expense were as follows (in thousands):


	Year Ended December 31,
	2022		2021		2020
Operating lease cost*	$	469	$	623	$	904

*	Inclusive of variable lease costs, sublease income, and impairment, which were immaterial for the periods presented.

Schedule of Leases Supplemental Quantitative Information

Supplemental quantitative information related to leases includes the following:


	Year Ended December 31,
	2022			2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(746	)	$	(654	)
ROU assets obtained in exchange for new operating lease liabilities	$	320		$	—
Weighted average remaining lease term in years—operating leases		1.8			2.8
Weighted average discount rate—operating leases		11.8	%		12.2	%

Schedule of Lease Maturities of Lease Liabilities

were as follows (in thousands):


Year Ended December 31,	Amount
2023	$	872
2024		703
2025		—
2026		—
2027		—

Total lease payments		1,575
Less imputed interest		(165	)

Total lease liabilities		1,410
Less current portion of lease liability		745

Lease liability, net of current portion	$	665

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Schedule of Components of Benefit for Income Taxes

The components of the provision expense (benefit) were as follows for the years ended December 31, 2022, 2021, and 2020 (in thousands):


	Year Ended December 31,
	2022			2021			2020
Current income tax expense (benefit):
Federal	$	—		$	—		$	—
State		4			5			(53	)

Total current		4			5			(53	)
Deferred income tax expense (benefit):
Federal		(10,396	)		(12,981	)		(3,970	)
State		(1,851	)		(2,472	)		(130	)

Total deferred		(12,247	)		(15,453	)		(4,100	)
Changes in tax rate		1,347			31			93
Changes in valuation allowance		10,900			15,422			4,007

Total income tax benefit from continuing operations	$	4		$	5		$	(53	)

Schedule of Deferred Tax Liabilities and Related Valuation Allowance

The components of the Company’s net deferred tax liabilities and related valuation allowance are as follows as of December 31, 2022 and 2021 (in thousands):


	Year Ended December 31,
	2022			2021
Deferred tax assets:
Net operating loss carryforwards	$	48,984		$	39,714
Debt related interest		15,272			12,205
Capitalized research and development		2,014			—
Tax credit carryforwards		1,630			1,630
Stock based compensation		1,602			3,233
Accrued expense and reserves		568			1,517
Operating lease liabilities		315			404
Other		77			236

Total deferred tax assets		70,462			58,939
Less valuation allowance		(67,543	)		(56,643	)

Total deferred tax assets		2,919			2,296

Deferred tax liabilities:
Intangible assets		(2,666	)		(1,975	)
Operating lease right-of-use assets		(253	)		(319	)
Other		—			(2	)

Total deferred tax liabilities		(2,919	)		(2,296	)

Net deferred tax liabilities	$	—		$	—

Schedule of Effective Income Tax Rate Reconciliation


	Year Ended December 31,
	2022			2021			2020
Income tax benefit at federal statutory rate	$	(4,905	)	$	(19,150	)	$	(9,408	)
Valuation allowance		10,900			15,422			4,007
Debt discount and interest limitation		(9,293	)		8,954			(806	)
Compensation expense		2,469			224			166
Acquisition related charges		992			75			63
Prior year true-up and carryback		(713	)		(3,968	)		6,955
State, net of federal tax benefit		(174	)		(2,545	)		(1,164	)
Income tax credits and incentives		—			—			(101	)
Other		728			993			235

Income tax benefit	$	4		$	5		$	(53	)

Schedule of Unrecognized Tax Benefits Roll Forward

A reconciliation of the beginning and ending amount of unrecognized tax expense (benefits) is as follows for the years ended December 31, 2022, 2021, and 2020 (in thousands):


	2022		2021		2020
Beginning balance	$	408	$	406	$	385
Increase related to prior year tax positions		—		2		—
Decrease related to prior year tax positions		—		—		(4	)
Increase related to current year tax positions		—		—		25

Ending balance	$	408	$	408	$	406

Loss Per Share (Tables)

12 Months Ended

Dec. 31, 2022

Earnings Per Share [Abstract]

Schedule of the reconciliation of basic and diluted loss per share

The following table sets forth the reconciliation of basic and diluted loss per share for the years ended December 31, 2022, 2021, and 2020 (in thousands except per share data):


	Year Ended December 31,
	2022			2021			2020
Net loss attributable to Scilex	$	(23,364	)	$	(88,424	)	$	(47,519	)
Net loss attributable to participating securities	$	—		$	—		$	—
Net loss attributable to common stockholders	$	(23,364	)	$	(88,424	)	$	(47,519	)
Weighted average common shares outstanding		134,226			132,858			132,891
Effect of Dilutive Securities		—			—			—

Denominator for Diluted Loss per Share—Adjusted for Dilutive Securities		134,226			132,858			132,891
Basic and Diluted Loss Per Share	$	(0.17	)	$	(0.67	)	$	(0.36	)

Schedule of potentially dilutive outstanding securities were excluded from the computation of diluted net loss per share


	Year Ended December 31,
	2022		2021		2020
Stock options		16,939,093		18,967,724		20,746,432
Public Warrants		6,899,988		—		—
Private Warrants		4,104,000		—		—

Nature of Operations and Basis of Presentation (Additional Information) (Details) - USD ($) $ in Thousands			12 Months Ended
	Dec. 31, 2022	Nov. 10, 2022	Dec. 31, 2022	Apr. 02, 2022
Description of Organization and Business Operations (Details) [Line Items]
Transaction costs amount		$ 3,400
Common stock exchange ratio, description			as part of the consideration using the 0.673498:1 ratio of the Company Common Stock to Legacy Scilex Common Stock
Common stock shares reserved for future issuance		16,939,436
Vickers Debt Agreement [Member]
Description of Organization and Business Operations (Details) [Line Items]
Offset against the equity proceeds		$ 9,100
Liability classified private warrants		400
Debt Exchange Agreement [Member]
Description of Organization and Business Operations (Details) [Line Items]
Conversion of stock, amount		$ 290,600
Customer Concentration Risk [Member]
Description of Organization and Business Operations (Details) [Line Items]
Percentage of net revenue, sole distributor				100.00%
Customer Concentration Risk [Member] \| Revenue Benchmark [Member] \| Four Customer [Member]
Description of Organization and Business Operations (Details) [Line Items]
Concentration risk, percentage			83.00%
Customer Concentration Risk [Member] \| Revenue Benchmark [Member] \| Minimum [Member] \| Four Customer [Member]
Description of Organization and Business Operations (Details) [Line Items]
Concentration risk, percentage			19.00%
Customer Concentration Risk [Member] \| Revenue Benchmark [Member] \| Maximum [Member] \| Four Customer [Member]
Description of Organization and Business Operations (Details) [Line Items]
Concentration risk, percentage			24.00%
Customer Concentration Risk [Member] \| Accounts Receivable [Member] \| Four Customer [Member]
Description of Organization and Business Operations (Details) [Line Items]
Concentration risk, percentage	90.00%
Customer Concentration Risk [Member] \| Accounts Receivable [Member] \| Minimum [Member] \| Four Customer [Member]
Description of Organization and Business Operations (Details) [Line Items]
Concentration risk, percentage	24.00%
Customer Concentration Risk [Member] \| Accounts Receivable [Member] \| Maximum [Member] \| Four Customer [Member]
Description of Organization and Business Operations (Details) [Line Items]
Concentration risk, percentage	36.00%
Common Stock [Member]
Description of Organization and Business Operations (Details) [Line Items]
Conversion of stock, shares		133,060,534
Common Stock [Member] \| Vickers Debt Agreement [Member]
Description of Organization and Business Operations (Details) [Line Items]
Conversion of stock, amount		$ 5,330,557
Conversion of stock, shares		533,057
Common Stock [Member] \| Debt Exchange Agreement [Member]
Description of Organization and Business Operations (Details) [Line Items]
Conversion of stock, shares		2,905,710
Preferred Stock [Member] \| Debt Exchange Agreement [Member]
Description of Organization and Business Operations (Details) [Line Items]
Conversion of stock, shares		29,057,097
Legacy Scilex Common Stock [Member]
Description of Organization and Business Operations (Details) [Line Items]
Conversion of common stock		197,566,338
Legacy Scilex Stock Options [Member]
Description of Organization and Business Operations (Details) [Line Items]
Conversion of common stock		25,151,428

Liquidity and Going Concern (Additional Information) (Details) - USD ($) $ in Thousands		2 Months Ended	12 Months Ended
	Sep. 28, 2022	Sep. 30, 2022	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Jan. 08, 2023
Liquidity and Going Concern [Line Items]
Negative working capital			$ 15,200
Cash and cash equivalents			2,184	$ 4,338
Loss from operations			(50,634)	(35,838)	$ (35,258)
Net cash used in operating activities			21,300
Accumulated deficit			(375,914)	(352,550)
Proceeds from related party			$ 51,900	$ 47,850	$ 18,400
Funding Commitment Letter [Member] \| Maximum [Member]
Liquidity and Going Concern [Line Items]
Debt, Maximum Amount During Period						$ 500,000
Sorrento [Member]
Liquidity and Going Concern [Line Items]
Proceeds from related party	$ 34,000
Scilex Pharma Notes [Member]
Liquidity and Going Concern [Line Items]
Repayments of debt		$ 41,400
Debt principal forgive	$ 28,000

Acquisitions (Additional Information) (Details) - USD ($)	Jun. 14, 2022	May 12, 2022	Dec. 31, 2022	Mar. 18, 2019
Sorrento [Member]
Business Acquisition [Line Items]
Initial principal amount				$ 16,500,000
Patents [Member] \| Sorrento [Member]
Business Acquisition [Line Items]
Amount due for New Drug Application		$ 3,000,000
Payment upon the achievement of net sales		20,000,000
License Agreement [Member]
Business Acquisition [Line Items]
Development Milestones Payment was recognized under other long-term liabilities			$ 200,000
Romeg License Agreement [Member] \| License Agreement [Member]
Business Acquisition [Line Items]
Payment upon the achievement of net sales	$ 13,000,000
Contingent consideration, liability			0
Up-front license fee	2,000,000
Intangible asset	5,700,000
Payments for Royalties	$ 7,100,000
Deferred consideration			$ 3,700,000
Intangible asset useful life	15 years
2022 Promissory Note [Member] \| Sorrento [Member]
Business Acquisition [Line Items]
Initial principal amount		5,000,000
Notes Payable, Related Parties		$ 4,100,000
Subordinated Borrowing, Interest Rate		2.66%

Fair Value Measurements (Additional Information) (Details) - USD ($) $ in Thousands				12 Months Ended
	Dec. 31, 2022	Nov. 10, 2022	Jun. 02, 2022	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Jun. 30, 2022
Subsidiary, Sale of Stock [Line Items]
(Gain) loss on derivative liability				$ (8,310)	$ 300	$ (800)
Liabilities, Fair Value Adjustment			$ 30,400
Risk Adjusted Net Sales Forecast							6.10%
Debt Securities, Available-for-Sale, Weighted Average Yield							21.50%
Common stock upon conversation of cash				$ 3,000
Discount rate of FDA	10.00%			10.00%
Development Milestone Payment	$ 200
Derivative warrant liability private warrants	$ 1,200
Private Placement [Member]
Subsidiary, Sale of Stock [Line Items]
Derivative warrant liability private warrants		$ 2,500

Fair Value Measurements (Details) - Schedule of fair value assets measured on a recurring basis - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Assets:
Cash and cash equivalents	$ 2,184	$ 4,338
Total assets measured at fair value	$ 2,184	$ 4,338
Liabilities:
Derivative Liability, Statement of Financial Position [Extensible Enumeration]	Derivative Liability, Noncurrent	Derivative Liability, Noncurrent
Derivative Liability	$ 1,231	$ 35,700	$ 35,400	$ 33,400
Other long-term liabilities	163	0
Total liabilities measured at fair value	1,394	35,700
Level 1 [Member]
Assets:
Cash and cash equivalents	2,184	4,338
Total assets measured at fair value	2,184	4,338
Liabilities:
Derivative Liability	0	0
Other long-term liabilities	0
Total liabilities measured at fair value	0	0
Level 2 [Member]
Assets:
Cash and cash equivalents	0	0
Total assets measured at fair value	0	0
Liabilities:
Derivative Liability	0	0
Other long-term liabilities	0
Total liabilities measured at fair value	0	0
Level 3 [Member]
Assets:
Cash and cash equivalents	0	0
Total assets measured at fair value	0	0
Liabilities:
Derivative Liability	1,231	35,700
Other long-term liabilities	163
Total liabilities measured at fair value	$ 1,394	$ 35,700

Fair Value Measurements (Details) - Schedule of the derivative liabilities measured at fair value using significant unobservable inputs Level 3 - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Fair Value Disclosures [Abstract]
Fair value, Beginning	$ 35,700	$ 35,400	$ 33,400
Loan derivative liability			2,800
Re-measurement of fair value		300	(800)
Private Warrant liability acquired as part of the Business Combination	2,545
Forfeiture of Private Warrants	1,696
Change in fair value measurement	(38,710)
Fair value, Ending	$ 1,231	$ 35,700	$ 35,400

Fair Value Measurements (Details) - Schedule of derivative component of the obligation is initially valued and classified as a derivative liability - $ / shares		12 Months Ended
	Nov. 10, 2022	Dec. 31, 2022
Schedule of derivative component of the obligation is initially valued and classified as a derivative liability [Abstract]
Equity Value	$ 9.01	$ 3.99
Exercise price	$ 11.5	$ 11.5
Term (in years)	5 years	4 years 10 months 9 days
Volatility	10.00%	35.00%
Risk-free rate	3.91%	3.94%
Dividend yield	0.00%	0.00%
Call option value	$ 0.62	$ 0.3

Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 939	$ 932
Less: Accumulated depreciation	(167)	(127)
Property and equipment, net	772	805
Computers & equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	77	77
Furniture [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	118	118
Leasehold improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	55	48
Construction in progress [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 689	$ 689

Property and Equipment (Additional Information) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 40	$ 39	$ 40

Goodwill and Intangible Assets (Additional Information) (Details) - USD ($) $ in Thousands			12 Months Ended
	Dec. 31, 2022	Jun. 14, 2022	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Finite-Lived Intangible Assets [Line Items]
Weighted average remaining life for identifiable intangible assets	10 years 4 months 24 days
Amortization expense			$ 3,922	$ 3,738	$ 3,738
Romeg License Agreement
Finite-Lived Intangible Assets [Line Items]
Asset acquisition consideration transferred amount		$ 5,700
Remaining Amortization Period		15 years
Patent rights
Finite-Lived Intangible Assets [Line Items]
Remaining Amortization Period			15 years
Assembled workforce
Finite-Lived Intangible Assets [Line Items]
Remaining Amortization Period			5 years

Goodwill and Intangible Assets - Summary of identifiable intangible assets (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	$ 60,781	$ 55,070
Accumulated amortization	20,190	16,268
Intangibles, net	40,591	38,802
Patent rights
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	32,630	32,630
Accumulated amortization	13,415	11,239
Intangibles, net	19,215	21,391
Acquired technology
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	21,940	21,940
Accumulated amortization	6,216	4,754
Intangibles, net	15,724	17,186
Acquired licenses
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	5,711
Accumulated amortization	184
Intangibles, net	5,527
Assembled workforce
Finite-Lived Intangible Assets [Line Items]
Gross carrying amount	500	500
Accumulated amortization	375	275
Intangibles, net	$ 125	$ 225

Goodwill and Intangible Assets - Estimated future amortization expense of intangible assets (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Year Ended December 31,
2023	$ 4,106
2024	4,031
2025	4,006
2026	4,006
2027	4,006
Thereafter	20,436
Total	$ 40,591

Debt (Additional Information) (Details) - USD ($) $ in Thousands								1 Months Ended	12 Months Ended
	Jan. 01, 2024	Sep. 30, 2022	Jun. 03, 2022	Jun. 02, 2022	Feb. 15, 2022	Oct. 05, 2018	Sep. 07, 2018	Sep. 30, 2022	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Sep. 28, 2022	Aug. 31, 2022	Jun. 30, 2022	May 12, 2022	Feb. 16, 2022	Feb. 14, 2022	Dec. 14, 2020
Debt Instrument [Line Items]
Actual cumulative net sales										$ 481,000
Increase of Principal Balance					$ 28,000
Principal payments									$ 106,000	45,900	$ 69,800
Debt issuance costs									3,100	7,900	10,700
(Gain) loss on debt extinguishment, net									(28,634)	12,463	$ 0
2018 Purchase Agreements and Indenture
Debt Instrument [Line Items]
Purcahse price							$ 140,000
Increase of Principal Balance										28,000
Subordinated loan										$ 35,000
Note Principal Reduction Amount									20,000
AggregatePrincipalAmount							$ 224,000
Related Party Notes Payable [Member]
Debt Instrument [Line Items]
Promissory note															$ 5,000		$ 35,000
Minimum [Member] \| 2018 Purchase Agreements and Indenture
Debt Instrument [Line Items]
Cash Requirement																	$ 10,000
2020 Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Outstanding principal amount																$ 8,800
Accounts receivable revolving loan facility in an aggregate amount																		$ 10,000
Line Of Credit Facility Interest Rate	1.75%
Amendment Number Four [Member] \| 2018 Purchase Agreements and Indenture
Debt Instrument [Line Items]
Forgiven amount		$ 28,000						$ 28,000
Note Principal Reduction Amount		41,400		$ 41,400
Repurchase Principal In Percentage			100.00%
Cash Received				15,000								$ 34,000
Minimum Cash Requirement		5,000						5,000
Outstanding principal amount		$ 39,700						39,700					$ 1,700
Principal payments								$ 28,000
(Gain) loss on debt extinguishment, net									$ (28,600)
Fair value decrease														$ 30,400
Carrying value increased														$ 30,400
Amendment Number Four [Member] \| Maximum [Member] \| 2018 Purchase Agreements and Indenture
Debt Instrument [Line Items]
AggregatePrincipalAmount				$ 50,000		$ 25,000

Debt - Summary of borrowings of the scilex notes consisted (Details) $ in Thousands	Dec. 31, 2021 USD ($)
Debt Disclosure [Abstract]
Principal	$ 133,997
Unamortized debt discount	(30,597)
Unamortized debt issuance costs	(2,228)
Carrying value	101,172
Current portion	(29,135)
Long term portion	72,037
Estimated fair value	$ 115,400

Stockholders' Equity (Details) - USD ($)			12 Months Ended
Stockholders' Equity (Details) - USD ($)	Nov. 17, 2022	Nov. 10, 2022	Dec. 31, 2022	Dec. 31, 2021	Mar. 04, 2019	Feb. 27, 2019
Shareholders' Equity (Details) [Line Items]
Preference shares, authorized			45,000,000	45,000,000
Preferred stock, par value			$ 0.0001	$ 0.0001
Common stock, shares authorized		740,000,000	740,000,000	740,000,000
Common stock, shares issued			141,348,856	132,858,484
Common stock, shares outstanding			141,348,856	132,858,484
Common stock, par value		$ 0.0001	$ 0.0001	$ 0.0001
Preference shares issue			29,057,097	0
Preference shares outstanding			29,057,097	0
Share price			$ 18
Price per warrant			$ 0.01
Warrants outstanding			6,899,988
Series A Preferred Stock [Member]
Shareholders' Equity (Details) [Line Items]
Preference shares, authorized			45,000,000
Preferred stock, par value			$ 0.0001
Preference shares issue		29,057,097
Preference shares outstanding			29,057,097	0
Common Stock [Member]
Shareholders' Equity (Details) [Line Items]
Share price			$ 11.5
Preferred Stock Member
Shareholders' Equity (Details) [Line Items]
Shares issued, value			$ 290,600,000
First Amended Certificate of Incorporation [Member]
Shareholders' Equity (Details) [Line Items]
Preferred stock, par value					$ 0.0001	$ 0.0001
Common stock, shares issued					350,000,000	200,000,000
Common stock, par value					$ 0.0001	$ 0.0001
Preference shares issue					20,000,000	20,000,000
Second Amended Certificate of Incorporation [Member]
Shareholders' Equity (Details) [Line Items]
Common stock, shares issued		740,000,000
Common stock, shares outstanding		197,566,338
Preference shares issue		45,000,000
Shares issued, shares		785,000,000
Second Amended Certificate of Incorporation [Member] \| Series A Preferred Stock [Member]
Shareholders' Equity (Details) [Line Items]
Preferred stock, par value		$ 0.0001
Preference shares outstanding		29,057,097
Equity Purchase Agreement [Member]
Shareholders' Equity (Details) [Line Items]
Shares issued, value	$ 500,000,000
Purchase of stock, percentage	98.00%
Equity Purchase Agreement [Member] \| Common Stock [Member]
Shareholders' Equity (Details) [Line Items]
Shares issued, shares	250,000
Structuring fees	$ 10,000
Warrants [Member] \| Warrant Transfer Agreement [Member]
Shareholders' Equity (Details) [Line Items]
Warrants outstanding			4,104,000
Warrant to transfer shares		3,104,000
Warrants [Member] \| Warrant Transfer Agreement [Member] \| Sponsor [Member]
Shareholders' Equity (Details) [Line Items]
Warrants outstanding			1,000,000
Warrants [Member] \| Warrant Transfer Agreement [Member] \| Sorrento Therapeutics, Inc. [Member]
Shareholders' Equity (Details) [Line Items]
Warrants outstanding			3,104,000

Stock Incentive and Employee Benefit Plans - Schedule of Stock Options Valuation Assumption Used (Details) - $ / shares		12 Months Ended
	Nov. 10, 2022	Dec. 31, 2022	Dec. 31, 2020	Dec. 31, 2021
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Expected dividend yield	0.00%	0.00%
Term of options	5 years	4 years 10 months 9 days
Fair value per share of common stock on date of grant	$ 0.0001	$ 0.0001		$ 0.0001
Exercise price	$ 11.5	$ 11.5
Black-Scholes Option Pricing Method [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Weighted -average grant date fair value			$ 1.23
Expected dividend yield			0.00%
Expected stock-price volatility, maximum			90.00%
Risk-free interest rate, minimum			0.53%
Term of options			5 years 7 months 6 days
Fair value per share of common stock on date of grant			$ 1.72
Exercise price			$ 1.72

Stock Incentive and Employee Benefit Plans - Schedule of Stock Options Outstanding Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Share-Based Payment Arrangement [Abstract]
Options Outstanding, Beginning Balance	18,968	20,746	17,114
Options Outstanding, Granted	0	0	4,172
Options Outstanding, Exercised	(202)	0	(38)
Options Outstanding, Forfeited/Cancelled	(1,827)	(1,778)	(502)
Options Outstanding, Ending Balance	16,939	18,968	20,746
Options Outstanding, Exercisable	14,487
Weighted Average Exercise Price, Outstanding, Beginning Balance	$ 1.68	$ 1.63	$ 1.59
Weighted Average Exercise Price, Granted	0	0	1.72
Weighted Average Exercise Price, Exercised	0.47	0	1.34
Weighted Average Exercise Price, Forfeited/Cancelled	1.72	1.01	1.4
Weighted Average Exercise Price, Outstanding, Ending Balance	1.68	$ 1.68	$ 1.63
Weighted Average Exercise Price, Exercisable	$ 1.7
Aggregate Intrinsic Value, Outstanding	$ 38,942	$ 915	$ 2,172	$ 2,183

Stock Incentive and Employee Benefit Plans (Additional Information) (Details) - USD ($) $ in Thousands		1 Months Ended	12 Months Ended
	Dec. 31, 2022	Jun. 30, 2017	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Nov. 10, 2022	Nov. 09, 2022	Dec. 31, 2019
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Common stock shares reserved for future issuance						16,939,436
Number of option outstanding to purchase common stock	16,939		16,939	18,968	20,746			17,114
Stock-based compensation expenses			$ 5,280	$ 5,822	$ 5,395
Employee benefit plan contributions by employer			$ 300	300	300
2017 Equity Incentive Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Common stock shares reserved for future issuance	14,622,712	24,000,000	14,622,712
Stock options vesting description		Stock options granted under the Scilex Pharma 2017 Plan typically vest 1/4th of the shares on the first anniversary of the vesting commencement date and 1/48th of the remaining options vest each month thereafter
2019 Stock Option Plan [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Common stock shares reserved for future issuance								30,000,000
Stock options vesting description			Plan. Stock options granted under the 2019 Stock Option Plan typically vest with respect to 1/4th of the shares on the first anniversary of the vesting commencement date and 1/48th of the remaining shares on each monthly anniversary thereafter.
2022 Equity Incentive Plan Member
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Shares of common stock reserved for future issuance, description			if any, as such shares become available from time to time, which the amount will be increased commencing on January 1, 2023 and ending on (and including) January 1, 2032, in an amount equal to the lesser of (i) 4% of the total number of shares of Common Stock outstanding on December 31 of the preceding year, (ii) 7,311,356 shares of Common Stock, and (iii) such number of shares of the Common Stock determined by the Board or the compensation committee of the Board prior to January 1 of a given year.
Percentage of total number of shares of common stock outstanding			4.00%
Common stock capital incremental shares reserved for future issuance each year	7,311,356		7,311,356
Number of option outstanding to purchase common stock	16,939,436		16,939,436
Total unrecognized compensation cost related to unvested stock option grants	$ 2,700		$ 2,700
Weighted average period over grant	1 year 4 months 24 days
Stock-based compensation expenses			$ 5,300	$ 5,800	$ 5,400
2022 Employee Stock Purchase Plan
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Common stock shares reserved for future issuance							1,462,271
Shares of common stock reserved for future issuance, description			The number of shares of the Common Stock that will be reserved for issuance will automatically increase on January 1 of each year for a period of up to ten years, commencing on January 1, 2023 and ending on (and including) January 1, 2032, in an amount equal to the lesser of (i) 1% of the total number of shares of the Common Stock outstanding on December 31 of the immediately preceding calendar year; (ii) 1,827,839 shares of the Common Stock; and (iii) such number of shares of the Common Stock determined by the Board or the compensation committee of the Board prior to January 1 of a given year, provided however, that the Board may act prior to January 1 of a given calendar year to provide that there will be no increase for such calendar year or the increase for such year will be a lesser number of shares than the amount set forth in clauses (i) to (iii) above
Percentage of total number of shares of common stock outstanding			1.00%
Common stock capital incremental shares reserved for future issuance each year	1,827,839		1,827,839
Number of option outstanding to purchase common stock	0		0

Commitments and Contingencies - Schedule of Components of Lease Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Commitments and Contingencies Disclosure [Abstract]
Operating lease cost*	$ 469	$ 623	$ 904

Commitments and Contingencies - Schedule of Leases Supplemental Quantitative Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ (746)	$ (654)
ROU assets obtained in exchange for new operating lease liabilities	$ 320	$ 0
Weighted average remaining lease term in years—operating leases	1 year 9 months 18 days	2 years 9 months 18 days
Weighted average discount rate—operating leases	11.80%	12.20%

Commitments and Contingencies - Schedule of Lease Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
2023	$ 872
2024	703
2025	0
2026	0
2027	0
Total lease payments	1,575
Less imputed interest	(165)
Total lease liabilities	1,410
Less current portion of lease liability	745	$ 500
Lease liability, net of current portion	$ 665

Commitments and Contingencies (Additional Information) (Details) - USD ($)		1 Months Ended		12 Months Ended			60 Months Ended
	Jul. 01, 2020	Aug. 31, 2015	Feb. 28, 2013	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2022	Jun. 30, 2022
Commitments and Contingencies [Line Items]
Finance lease liabilities				$ 0			$ 0
Finance Lease, Liability, Statement of Financial Position [Extensible Enumeration]				Derivative Liability, Noncurrent			Derivative Liability, Noncurrent
Product Development Agreement [Member] \| Developers [Member]
Commitments and Contingencies [Line Items]
Royalty payments				$ 2,300,000
Accrued royalty payables				2,200,000			$ 2,200,000
Agreement maturity date			Oct. 02, 2028
Agreement maturity renewal description			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.
Product Development Agreement [Member] \| Developers [Member] \| Minimum [Member]
Commitments and Contingencies [Line Items]
Royalty payment percentage related to future years			25.00%
Product Development Agreement [Member] \| Developers [Member] \| Maximum [Member]
Commitments and Contingencies [Line Items]
Royalty payment percentage related to future years			35.00%
Exclusive Distribution Agreement [Member]
Commitments and Contingencies [Line Items]
Agreement maturity renewal description		shall automatically renew for additional terms of one year each, unless written notice of termination is given by either party at least 30 days prior to the end of the initial term or any renewal term.
Annual adjustment distribution fee percentage related to future years		3.00%
Agreement initial term		3 years
Exclusive Distribution Agreement [Member] \| Minimum [Member]
Commitments and Contingencies [Line Items]
Distribution fees							1.00%
Exclusive Distribution Agreement [Member] \| Maximum [Member]
Commitments and Contingencies [Line Items]
Distribution fees							2.00%
Project Agreement [Member] \| Vendor [Member]
Commitments and Contingencies [Line Items]
Agreement maturity date	Jun. 30, 2022
Agreement maturity renewal description	extended for one year upon the mutual agreement of both parties. Either party may terminate the work order with 90 days’ notice.
Sales operation implementation fees	$ 59,000
Project Agreement [Member] \| Vendor [Member] \| Selling, General and Administrative Expenses [Member]
Commitments and Contingencies [Line Items]
Sales operation implementation fees				$ 900,000	$ 1,900,000	$ 10,500,000
Project Agreement [Member] \| Vendor [Member] \| Minimum [Member] \| Monthly [Member]
Commitments and Contingencies [Line Items]
Sales operation implementation fees	63,700
Project Agreement [Member] \| Vendor [Member] \| Maximum [Member] \| Monthly [Member]
Commitments and Contingencies [Line Items]
Sales operation implementation fees	$ 65,800
Non-cancelable Lease Agreements [Member] \| Administrative Facility [Member]
Commitments and Contingencies [Line Items]
Operating lease, lease term								26 months
Non-cancelable Lease Agreements [Member] \| Minimum [Member] \| Research and Development Facilities [Member]
Commitments and Contingencies [Line Items]
Operating lease, remaining lease term				1 year 7 months 6 days			1 year 7 months 6 days
Operating lease, lease term				3 years			3 years
Non-cancelable Lease Agreements [Member] \| Maximum [Member] \| Research and Development Facilities [Member]
Commitments and Contingencies [Line Items]
Operating lease, remaining lease term				1 year 10 months 24 days			1 year 10 months 24 days
Operating lease, lease term				5 years			5 years

Income Taxes - Schedule of Components of Benefit for Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Current expense:
Federal	$ 0	$ 0	$ 0
State	4	5	(53)
Total current	4	5	(53)
Deferred
Federal	(10,396)	(12,981)	(3,970)
State	(1,851)	(2,472)	(130)
Total deferred	(12,247)	(15,453)	(4,100)
Changes in tax rate	1,347	31	93
Changes in valuation allowance	10,900	15,422	4,007
Total	$ 4	$ 5	$ (53)

Income Taxes - Schedule of Deferred Tax Liabilities and Related Valuation Allowance (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Deferred tax assets
Net operating loss carryforwards	$ 48,984	$ 39,714
Debt related interest	15,272	12,205
Capitalized research and development	2,014	0
Tax credit carryforwards	1,630	1,630
Stock based compensation	1,602	3,233
Accrued expense and reserves	568	1,517
Operating lease liabilities	315	404
Others	77	236
Total Deferred Tax Assets	70,462	58,939
Valuation allowance	(67,543)	(56,643)
Total Deferred Tax Assets	2,919	2,296
Deferred Tax Liabilities:
Intangible assets	(2,666)	(1,975)
Operating lease right-of-use assets	(253)	(319)
Other	0	(2)
Total Deferred Tax Liabilities	(2,919)	(2,296)
Net deferred tax liabilities	$ 0	$ 0

Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Income Tax Disclosure [Abstract]
Income tax benefit at federal statutory rate	$ (4,905)	$ (19,150)	$ (9,408)
Valuation allowance	10,900	15,422	4,007
Debt discount and interest limitation	(9,293)	8,954	(806)
Compensation expense	2,469	224	166
Acquisition related charges	992	75	63
Prior year true-up and carryback	(713)	(3,968)	6,955
State, net of federal tax benefit	(174)	(2,545)	(1,164)
Income tax credits and incentives	0	0	(101)
Other	728	993	235
Total	$ 4	$ 5	$ (53)

Income Taxes - Schedule of Unrecognized Tax Benefits Roll Forward (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Income Tax Disclosure [Abstract]
Beginning balance	$ 408	$ 406	$ 385
Increase related to prior year tax positions	0	2	0
Decrease related to prior year tax positions	0	0	(4)
Increase related to current year tax positions	0	0	25
Ending Balance	$ 408	$ 408	$ 406

Income Taxes (Additional Information) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Income Tax Disclosure [Line Items]
Deferred tax assets, valuation allowance	$ 67,543	$ 56,643
Research and development income tax credits	$ 2,000
Tax credit carry forwards expiration year	2035
Unrecognized tax benefits that would impact effective tax rate	$ 400	400	$ 400
Income tax expense, interest and penalties	0	$ 0	$ 0
Liabilities for uncertain tax positions	0
Federal [Member]
Income Tax Disclosure [Line Items]
Operating loss carryforwards	$ 205,600
Operating loss carryforwards, expiration year	2035
State [Member]
Income Tax Disclosure [Line Items]
Operating loss carryforwards	$ 106,900
Operating loss carryforwards, expiration year	2034

Related Party Transactions (Additional Information) (Details) - USD ($)					1 Months Ended	12 Months Ended
	Nov. 10, 2022	Sep. 12, 2022	Oct. 22, 2018	Oct. 05, 2018	Feb. 28, 2022	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	May 12, 2022	Jan. 13, 2021	Mar. 18, 2019
Related Party Transaction [Line Items]
Common Stock, Shares, Outstanding						141,348,856	132,858,484
Working Capital						$ 15,200,000
Preferred stock, par value						$ 0.0001	$ 0.0001
Sorrento [Member]
Related Party Transaction [Line Items]
General and administrative expenses						$ 3,800,000	$ 4,000,000	$ 2,300,000
Initial principal amount											$ 16,500,000
Interest rate				10.00%							10.00%
Advances in note payable				$ 25,000,000		27,500,000	6,600,000	13,700,000
Outstanding principal balance	$ 47,100,000						19,600,000
Accrued Interest	7,200,000						3,900,000
Promissory note issued				$ 21,700,000
Debt Instrument, Maturity Date				Aug. 31, 2026
Repayment of indebtedness			$ 21,700,000
Related party note payable, net	23,500,000						23,500,000
Related party receivable						1,800,000
Sorrento [Member] \| Promissory note
Related Party Transaction [Line Items]
Advances in note payable						0	8,100,000	10,300,000
Accrued Interest	5,100,000						3,100,000
Itochu [Member]
Related Party Transaction [Line Items]
Common Stock, Shares, Outstanding										34,889,868
Inventory purchased						$ 6,700,000	5,700,000	$ 1,000,000
Outstanding capital stock, percent								14.70%
Scilex Pharma [Member] \| Sorrento [Member]
Related Party Transaction [Line Items]
Related party note payable, net					$ 35,000,000
Proceeds from Sale of Notes Receivable					$ 35,000,000
Working Capital	61,700,000						35,700,000
Repurchases of Notes	100,000,000						51,000,000
Litigation Fees	18,200,000						$ 6,000,000
Aardvark Asset Purchase Agreement [Member] \| Sorrento [Member]
Related Party Transaction [Line Items]
Interest rate									2.66%
Related party note payable, net	$ 4,200,000
Debt Exchange Agreement [Member] \| Sorrento [Member]
Related Party Transaction [Line Items]
Promissory note issued		$ 27,500,000
Preferred stock, par value		$ 0.0001
Debt Exchange Descriptions						the Aggregate Outstanding Amount plus the amount equal to 10% of the Aggregate Outstanding Amount divided by (ii) $11.00 (rounded up to the nearest whole share); provided, that in no event would the Aggregate Outstanding Amount exceed $ 310,000,000
Related party indebtedness converted into shares	29,057,097
Converted into common stock	2,905,710
Conversion of stock, amount	$ 290,600,000
Aggregate Outstanding Amount						$ 310,000,000
Price per share (in Dollars per share)						$ 11
Aggregate outstanding amount equal percentage						10.00%

Loss Per Share - Schedule of the reconciliation of basic and diluted loss per share (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Earnings Per Share [Abstract]
Net loss attributable to Scilex	$ (23,364)	$ (88,424)	$ (47,519)
Net loss attributable to participating securities	0	0	0
Net loss attributable to common stockholders	$ (23,364)	$ (88,424)	$ (47,519)
Effect of Dilutive Securities	0	0	0
Denominator for Diluted Loss per Share - Adjusted for Dilutive Securities	$ 134,226	$ 132,858	$ 132,891
Weighted Average Number of Shares Outstanding, Diluted	134,226	132,858	132,891
Earnings Per Share, Basic	$ (0.17)	$ (0.67)	$ (0.36)
Diluted Loss Per Share	$ (0.17)	$ (0.67)	$ (0.36)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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+ Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

- Definition

Amount, after deduction of tax, noncontrolling interests, dividends on preferred stock and participating securities, and addition from assumption of issuance of common shares for dilutive potential common shares; of income (loss) available to common shareholders.

+ References + Details

Loss Per Share - potentially dilutive outstanding securities were excluded from the computation of diluted net loss per share (Details) - shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Stock Options
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	16,939,093	18,967,724	20,746,432
Public Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	6,899,988	0	0
Private Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	4,104,000	0	0

Subsequent Events (Additional Information (Details) - USD ($) $ in Thousands	Feb. 08, 2023	Jan. 08, 2023	Jan. 17, 2023	Jan. 12, 2023	Dec. 31, 2022	Dec. 31, 2021
Subsequent Event [Line Items]
Common stock, shares issued					141,348,856	132,858,484
Common Stock, Value, Issued					$ 14	$ 13
Subsequent Event [Member] \| Inducement Plan [Member]
Subsequent Event [Line Items]
Number of shares available for grant			1,400,000
Subsequent Event [Member] \| Purchase Agreement [Member]
Subsequent Event [Line Items]
Common stock, shares issued				250,000
Common Stock, Value, Issued		$ 500,000
Subsequent Event [Member] \| B. Riley Purchase Agreement [Member]
Subsequent Event [Line Items]
Common stock sold		127,241
Proceeds from sale of common stock		$ 1,000
Subsequent Event [Member] \| A&R Yorkville Purchase Agreement [Member]
Subsequent Event [Line Items]
Common stock sold	85,000
Proceeds from sale of common stock	$ 600