Business Context and Reporting Period
This Form 8-K Current Report was filed by Oramed Pharmaceuticals Inc. on August 17, 2023 (with events reported through August 21, 2023). The filing details the Company's status as the successful bidder in an auction to acquire equity securities of Scilex Holding Company ("Scilex") from Sorrento Therapeutics, Inc. ("Seller"), which is currently in Chapter 11 bankruptcy proceedings.
Key Financial Metrics
This filing is a current report regarding a material definitive agreement and does not contain periodic financial statements. Consequently, the filing text does not provide clear values for revenue, profit, cash flow, margins, debt, or liquidity metrics for Oramed Pharmaceuticals Inc. or the Seller.
Material Changes and Transaction Details
The filing reports the execution of a Second Amendment to the Stock Purchase Agreement on August 21, 2023, modifying the terms of the acquisition of Scilex equity securities. Key changes include:
- Deadline Extension: The deadline for the entry of the Sale Order was extended from August 21, 2023, to August 25, 2023.
- Reduction in Warrants: The number of Scilex warrants to be acquired was reduced by 50%:
- Public warrants reduced from 1,386,617 shares to 693,309 shares.
- Private warrants reduced from 3,104,000 shares to 1,552,000 shares.
- Junior DIP Compromise: New conditions were added regarding the "Junior Debtor-in-Possession" (DIP) loan between Scilex and the Seller. The Sale Order must include findings that the treatment of this loan is fair to Scilex and its shareholders, and that any recovery on the loan matches the treatment of the Seller's general unsecured creditors, without payment in equity securities without Scilex's consent.
Guidance, Outlook, and Risks
Outlook and Next Steps: A hearing is scheduled for August 25, 2023, before the United States Bankruptcy Court for the Southern District of Texas to consider approval of the Transaction. The transaction remains subject to court approval and the satisfaction of closing conditions.
Risks and Contingencies: The filing highlights several risks that could prevent the transaction from closing or alter its terms, including:
- Failure to obtain required regulatory or court approvals.
- Termination of the Stock Purchase Agreement by either party.
- Uncertainty regarding the outcome and timing of the Seller's Chapter 11 process.
- Potential inability to recover proceeds or collateral under the Replacement DIP Loan Agreement.
- Diversion of management attention and exposure to litigation.
Investor Verification Checklist
- Verify the outcome of the Bankruptcy Court hearing scheduled for August 25, 2023, regarding the approval of the Sale Order.
- Confirm the final terms of the "Junior DIP Compromise" as approved by the court.
- Monitor for any further amendments to the Stock Purchase Agreement or termination notices.
- Review the full text of the Stock Purchase Agreement and its amendments (Exhibits 2.1, 2.2, and 2.3) for detailed legal conditions.