Semnur Pharmaceuticals, Inc., a Wholly Owned Subsidiary of Scilex Holding Company, and Denali Capital Acquisition Corp. (Nasdaq: DECA) Announce Signing of a Merger Agreement for a proposed Business Combination

Rhea-AI Summary

Semnur Pharmaceuticals, a subsidiary of Scilex Holding Company (Nasdaq: SCLX), and Denali Capital Acquisition Corp. (Nasdaq: DECA) have signed a merger agreement for a proposed business combination. The deal values Semnur at $2.5 billion pre-transaction. The merger aims to create a publicly traded biopharma company focused on developing SP-102 (SEMDEXA™), a non-opioid treatment for sciatica with FDA Fast Track status. Projected annual sales for SEMDEXA™ are estimated at $1.5-$2.0 billion by the 5th year of launch. The transaction is expected to close by Q1 2025, with Scilex retaining majority ownership. The combined company will be renamed Semnur Pharmaceuticals, Inc., with its stock and warrants listed on Nasdaq under 'SMNR' and 'SMNRW'.

Positive

• Merger agreement signed with a pre-transaction equity value of $2.5 billion for Semnur
• SP-102 (SEMDEXA™) has FDA Fast Track status and projected annual sales of $1.5-$2.0 billion by 5th year of launch
• Successful Phase 3 trial results for SP-102, meeting primary and key secondary endpoints
• Potential to become the first FDA-approved non-opioid injectable treatment for sciatica
• Scilex to retain majority ownership in the combined company

Negative

• Transaction closure not guaranteed, subject to SPAC shareholder approval and regulatory clearances
• Potential dilution for existing Scilex shareholders due to possible 10% dividend of Semnur ownership
• Merger completion not expected until Q1 2025, introducing a long waiting period and associated risks

Insights

Financial Analyst

This merger agreement represents a significant strategic move for Semnur Pharmaceuticals and Scilex Holding Company. The $2.5 billion pre-transaction equity value indicates substantial market confidence in Semnur's potential. The projected annual sales of $1.5-2.0 billion for SEMDEXA™ by its 5th year post-launch are impressive, suggesting strong revenue potential. However, investors should note that these projections are based on market research and actual performance may vary.

The transaction structure, with Scilex retaining majority ownership, allows for continued control while potentially unlocking value through public markets. The potential dividend of up to 10% of Scilex's ownership in Semnur to existing Scilex shareholders could provide additional value, though its implementation remains uncertain. Investors should monitor the progress of SP-102 (SEMDEXA™) through regulatory approvals, as its success is important for realizing the projected value.

Medical Research Analyst

The development of SP-102 (SEMDEXA™) represents a significant advancement in non-opioid pain management. The FDA Fast Track status and successful Phase 3 trial results are promising indicators of its potential. The study's outcomes, showing decreased pain intensity for over a month and statistically significant improvement in disability index scores, are clinically meaningful. The safety profile comparable to placebo is particularly noteworthy.

The potential impact of SEMDEXA™ on sciatica treatment could be substantial, addressing an unmet medical need. However, investors should be aware that regulatory approval is still pending and market adoption will depend on factors such as pricing, reimbursement and competition from existing off-label treatments. The publication of trial results in a reputable journal (PAIN) adds credibility to the findings, but post-market studies will be important to confirm real-world efficacy and safety.

Market Research Analyst

The merger positions Semnur/Scilex strategically in the growing non-opioid pain management market. The projected $1.5-2.0 billion annual sales for SEMDEXA™ by year 5 indicate significant market potential, but these figures should be viewed cautiously as they are based on independent market research rather than actual sales data. The unmet need in sciatica treatment provides a clear market opportunity, but success will depend on factors such as pricing strategy, market access and competitive landscape.

Investors should consider the broader trend towards non-opioid pain solutions and how this might influence market dynamics. The company's diversified portfolio, including ZTlido®, ELYXYB® and Gloperba®, provides some risk mitigation. However, the heavy focus on SEMDEXA™'s success in the valuation warrants careful monitoring of its progress through final regulatory approvals and initial market performance post-launch.

• Semnur Pharmaceuticals, Inc. (“Semnur”), a wholly owned subsidiary of Scilex Holding Company (Nasdaq: SCLX, “Scilex”), and Denali Capital Acquisition Corp. (Nasdaq: DECA, the “SPAC”) announce the signing of an agreement and plan of merger for a proposed business combination (the “Business Combination Agreement”), which provides for a pre-transaction equity value of Semnur of $2.5 billion.  The Board of Scilex, Semnur, and Denali Capital Acquisition Corp. have approved the proposed transaction.
   
• The proposed business combination would create a publicly traded biopharma company and further provide investment into Semnur for the development of a non-opioid product, SP-102 (10 mg injectable dexamethasone sodium phosphate viscous gel), or SEMDEXA™, a Phase 3 novel non-opioid, viscous gel formulation of a widely used corticosteroid for epidural injections to treat lumbosacral radicular pain, or sciatica, with FDA Fast Track status.
   
• Based on the independent market research conducted by Syneos Health Consulting in 2020 and 2021, given the potential substantial utilization of SP-102 (SEMDEXA™), by the 5^th year of launch, sales of SEMDEXA™ in sciatica are projected to reach $1.5 billion to $2.0 billion annually.
   
• Scilex is expected to be the majority holder of the combined company following completion of the proposed business combination, which is expected to close by the first quarter of 2025; the combined company will be led by a management team with proven track record in industry experience.
   
• As previously disclosed, the Board of Directors of Scilex approved a resolution to authorize a potential dividend of up to 10% of Scilex’s ownership interest in Semnur in connection with certain transactions, including a merger, subject to the registration of Semnur’s common stock (or such securities, property or other assets into which or for which such stock may be exchanged or converted in such a transaction) with the Securities and Exchange Commission (“SEC”).  No record date has been set for such dividend and the Scilex board of directors may determine not to proceed with such dividend. 

NEW YORK, NEW YORK, Sept. 03, 2024 (GLOBE NEWSWIRE) -- Semnur Pharmaceuticals, Inc. (“Semnur”), a wholly owned subsidiary of Scilex Holding Company (Nasdaq: SCLX, “Scilex”), an innovative revenue-generating company focused on acquiring, developing and commercializing non-opioid pain management products for the treatment of acute and chronic pain, and Denali Capital Acquisition Corp., a Cayman Islands exempted company and special purpose acquisition company (Nasdaq: DECA, the “SPAC”), today announced the signing of an agreement and plan of merger for a proposed business combination , by and among Semnur, the SPAC and Denali Merger Sub Inc., a Delaware Corporation and wholly owned subsidiary of the SPAC, which provides for a pre-transaction equity value of Semnur at $2.5 billion.  Prior to the closing of the transaction, the SPAC will be redomesticated as a Delaware corporation. Upon closing of the transaction, the combined company (the “Combined Company”) will be renamed Semnur Pharmaceuticals, Inc., and its common stock and warrants are expected to be listed on Nasdaq under the ticker symbols “SMNR” and “SMNRW”, respectively. The boards of directors of each of the SPAC, Semnur and Scilex have unanimously approved the proposed transaction. The closing of the transaction, which is expected to occur by the first quarter of 2025, is subject to the approval of the SPAC’s shareholders, any applicable regulatory approval, and the satisfaction or waiver of certain other closing conditions.

Semnur is a clinical-late stage specialty pharmaceutical company focused on the development and commercialization of novel non-opioid pain therapies.  Semnur’s lead program, SP-102 (SEMDEXA™), is the first non-opioid novel injectable corticosteroid gel formulation for patients with moderate to severe chronic radicular pain/sciatica, containing no preservatives, surfactants, solvents, or particulates.  If approved by the FDA, SP-102 (SEMDEXA™) will be available in a pre-filled syringe formulation and will be administered as an epidural injection for the treatment of sciatica.  Semnur has completed a Phase 3 trial for SP-102, which met primary and important key secondary endpoints, with SP-102 (SEMDEXA™) treatment decreasing pain intensity for over a month in sciatica patients and resulting in statistically significant and clinically meaningful improvement in the disability index score while maintaining safety comparable to placebo.  The Phase 3 topline data result was presented at the American Society of Interventional Pain (ASIPP) conference in Las Vegas in May 2022 in an oral presentation by Dr. Nebojsa Nick Knezevic, M.D., Ph.D., Professor of Anesthesiology and Surgery, College of Medicine, University of Illinois at Chicago, President of the Illinois Society of Interventional Pain Physicians, Director-at-Large of the North American Society of Neuromodulation, Vice-Chair for Research and Education, Advocate Illinois Masonic Medical Center, Department of Anesthesiology and Pain Management.  This Phase 3 study represents a potential significant improvement in treatment of adult patients with lumbosacral radicular pain (sciatica), who struggle with the clinical consequences of no currently FDA approved therapies, suboptimal formulations of corticosteroids used off-label and/or excess pain and disability.  Download the presentation by clicking here.

The results of the pivotal registration trial of SP-102 (SEMDEXA™) were published in PAIN on June 14, 2024, the official journal of the International Association for the Study of Pain, which features original research on the nature, mechanisms and treatment of pain.  Download the publication by clicking here.

“With Semnur on its way to becoming a publicly-traded company, our unique model continues to demonstrate the multiple ways that we can unlock the value of Scilex and enhance our shareholders’ value. I believe this business combination will enable us to advance our growth strategy, which includes gaining access to public markets and exploring potential partnerships and global pharma collaborations for our product candidate, SP-102 (SEMDEXA™).  I am proud of the many landmark milestones achieved by the Scilex team since Scilex made its debut on Nasdaq on November 11, 2022, including continuous revenue growth in ZTlido®, successful launch of ELYXYB® in April 2023 as well as the recent launch of Gloperba® in June 2024, and completion of our pivotal Phase 3 study for SP-102 (SEMDEXA^TM) with a highly successful study results in demonstrating robust efficacy and safety in sciatica patients”, said Jaisim Shah, Chief Executive Officer and President of Scilex.

The description of the transaction contained herein is only a summary and is (qualified in its entirety by reference to the Merger Agreement relating to the transaction. A copy of the Merger Agreement and this press release will be filed by Scilex with the Securities and Exchange Commission (the "SEC") as exhibits to a Current Report on Form 8-K, which can be accessed through the SEC's website at www.sec.gov.  For more information on Semnur Pharmaceuticals, Inc., refer to www.semnurpharma.com

 Paul Hastings LLP is serving as legal counsel to Semnur and Winston & Strawn LLP is serving as legal counsel to the SPAC.

For more information on Scilex Holding Company, refer to www.scilexholding.com

For more information on Semnur Pharmaceuticals, Inc., refer to www.semnurpharma.com

For more information on Scilex Holding Company Sustainability Report, refer to www.scilexholding.com/investors/sustainability

For more information on ZTlido® including Full Prescribing Information, refer to www.ztlido.com.

For more information on ELYXYB®, including Full Prescribing Information, refer to www.elyxyb.com.

For more information on Gloperba®, including Full Prescribing Information, refer to www.gloperba.com.

About Scilex Holding Company 

Scilex Holding Company is an innovative revenue-generating company focused on acquiring, developing and commercializing non-opioid pain management products for the treatment of acute and chronic pain. Scilex targets indications with high unmet needs and large market opportunities with non-opioid therapies for the treatment of patients with acute and chronic pain and are dedicated to advancing and improving patient outcomes.   Scilex’s commercial products include: (i) ZTlido® (lidocaine topical system) 1.8%, a prescription lidocaine topical product approved by the U.S. Food and Drug Administration (the “FDA”) for the relief of neuropathic pain associated with postherpetic neuralgia, which is a form of post-shingles nerve pain; (ii) ELYXYB®, a potential first-line treatment and the only FDA-approved, ready-to-use oral solution for the acute treatment of migraine, with or without aura, in adults; and (iii) Gloperba®, the first and only liquid oral version of the anti-gout medicine colchicine indicated for the prophylaxis of painful gout flares in adults.

In addition, Scilex has three product candidates: (i) SP-102 (10 mg, dexamethasone sodium phosphate viscous gel) (“SEMDEXA^TM” or “SP-102”), which is held through Semnur and is a novel, viscous gel formulation of a widely used corticosteroid for epidural injections to treat lumbosacral radicular pain, or sciatica, for which Scilex has completed a Phase 3 study and was granted Fast Track status from the FDA in 2017; (ii) SP-103 (lidocaine topical system) 5.4%, (“SP-103”), a next-generation, triple-strength formulation of ZTlido, for the treatment of chronic neck pain and for which Scilex has recently completed a Phase 2 trial in low back pain.  SP-103 has been granted Fast Track status from the FDA in low back pain; and (iii) SP-104 (4.5 mg, low-dose naltrexone hydrochloride delayed-release capsules) (“SP-104”), a novel low-dose delayed-release naltrexone hydrochloride being developed for the treatment of fibromyalgia, for which Phase 1 trials were completed in the second quarter of 2022.

Scilex Holding Company is headquartered in Palo Alto, California.

About Semnur Pharmaceuticals, Inc.

Semnur Pharmaceuticals, Inc. (“Semnur”) is a clinical-late stage specialty pharmaceutical company focused on the development and commercialization of novel non-opioid pain therapies.  Semnur’s lead program, SP-102 (SEMDEXA™), is the first non-opioid novel gel formulation administered epidurally in development for patients with moderate to severe chronic radicular pain/sciatica. 

Semnur Pharmaceuticals, Inc. is headquartered in Palo Alto, California.

About Denali Capital Acquisition Corp.

Denali Capital Acquisition Corp. (Nasdaq: DECA, the “SPAC”) is a blank check company formed 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.

Important Information and Where to Find It

This press release relates to a proposed transaction between Semnur and the SPAC and does not contain all the information that should be considered concerning the potential business combination and is not intended to form the basis of any investment decision or any other decision in respect of the potential business combination.  This press release does not constitute an offer to sell or exchange, or the solicitation of an offer to buy or exchange, any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, sale or exchange would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.  In connection with the transaction described herein, the SPAC will file relevant materials with the SEC, including a registration statement on Form S-4, which will include a proxy statement/prospectus.  Investors and security holders of the SPAC are urged to read these materials (including any amendments or supplements thereto) and any other relevant documents in connection with the transaction that the SPAC files with the SEC when, and if, they become available because they will contain important information about the SPAC, Semnur and the proposed transaction.  The preliminary proxy statement/prospectus, the definitive proxy statement/prospectus and other relevant materials in connection with the transaction (when and if they become available), and any other documents filed by the SPAC with the SEC, may be obtained free of charge at the SEC’s website (www.sec.gov). The documents filed by the SPAC with the SEC also may be obtained free of charge upon written request to:

Denali Capital Acquisition Corp.
437 Madison Avenue, 27th Floor
New York, NY 10022

Participants in the Solicitation

The SPAC and its directors and executive officers may be deemed participants in the solicitation of proxies from the SPAC’s shareholders with respect to the proposed business combination. Information about the SPAC’s directors and executive officers and a description of their interests in the SPAC will be included in the proxy statement/prospectus for the proposed transaction and will be available at the SEC’s website (www.sec.gov).  Additional information regarding the interests of such participants will be contained in the proxy statement/prospectus for the proposed transaction when available.

Semnur and its directors and executive officers may also be deemed to be participants in the solicitation of proxies from the shareholders of the SPAC in connection with the proposed business combination.  Information about Semnur’s directors and executive officers and information regarding their interests in the proposed transaction will be included in the proxy statement/prospectus for the proposed transaction.

Non-Solicitation

This press release is not a proxy statement or solicitation of a proxy, consent or authorization with respect to any securities or in respect of the potential transaction and shall not constitute an offer to sell or a solicitation of an offer to buy the securities of the SPAC, the combined company or Semnur, nor shall there be any sale of any such securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction.  No offer of securities shall be made except by means of a prospectus meeting the requirements of the Securities Act of 1933, as amended.

Forward-Looking Statements

This press release and any statements made for and during any presentation or meeting concerning the matters discussed in this press release contain forward-looking statements related to Scilex and its subsidiaries and the SPAC and are subject to risks and uncertainties that could cause actual results to differ materially from those projected.  Forward‑looking statements include statements regarding the SPAC, Scilex and its subsidiaries, including but not limited to Semnur, statements regarding the proposed business combination between Semnur and the SPAC, including the potential listing of the combined company’s common stock and warrants on Nasdaq, obtaining the approval from the SPAC’s shareholders, the expectation that the SPAC will file a registration statement on Form S-4 with the SEC, which would include a proxy statement/prospectus, the estimated or anticipated future results and benefits of the combined company following the proposed business combination, including the ability of the parties to successfully consummate the proposed business combination, the timing of the closing of the proposed business combination, future opportunities for the combined company, Semnur and the combined company’s proposed business strategies, the estimated pre-transaction equity valuation of Semnur, the estimated sales for SP-102, the Company’s outlook, goals and expectations for 2024, and the Company’s development and commercialization plans. Although each of the SPAC and Scilex and its subsidiaries believes that it has a reasonable basis for each forward-looking statement contained in this press release, each of the SPAC and Scilex and its subsidiaries caution you that these statements are based on a combination of facts and factors currently known and projections of the future, which are inherently uncertain. In addition, there will be risks and uncertainties described in the proxy statement/prospectus included in the registration statement on Form S-4 relating to the proposed transaction, which is expected to be filed by the SPAC with the SEC, and described in other documents filed by the SPAC or Scilex from time to time with the SEC. These filings may identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Neither the SPAC nor Scilex and its subsidiaries can assure you that the forward-looking statements in this communication will prove to be accurate.     

Risks and uncertainties that could cause actual results of Scilex and the SPAC to differ materially and adversely from those expressed in our forward-looking statements, include, but are not limited to: the inability of the parties to consummate any proposed business combination transaction for any reason, including any failure to satisfy or waive any closing conditions; changes in the structure, timing and completion of the proposed transaction between the SPAC and Semnur; the SPAC’s ability to continue its listing on the Nasdaq Capital Market until closing of the proposed transaction; the combined company’s ability to gain approval to list its securities on Nasdaq upon closing of the proposed transaction; the ability of the parties to achieve the benefits of the proposed transaction, including future financial and operating results of the combined company; the ability of the parties to realize the expected synergies from the proposed transaction; risks related to the outcome of any legal proceedings that may be instituted against the parties following the announcement of the proposed business combination; risks associated with the unpredictability of trading markets; general economic, political and business conditions; the risk that the potential product candidates that Scilex develops may not progress through clinical development or receive required regulatory approvals within expected timelines or at all; risks relating to uncertainty regarding the regulatory pathway for Scilex’s product candidates; the risk that Scilex will be unable to successfully market or gain market acceptance of its product candidates; the risk that Scilex’s product candidates may not be beneficial to patients or successfully commercialized; the risk that Scilex has overestimated the size of the target patient population, their willingness to try new therapies and the willingness of physicians to prescribe these therapies; risks that the outcome of the trials and studies for SP-102, SP-103 or SP-104 may not be successful or reflect positive outcomes; risks that the prior results of the clinical and investigator-initiated trials of SP-102 (SEMDEXA™), SP-103 or SP-104 may not be replicated; regulatory and intellectual property risks; and other risks and uncertainties indicated from time to time and other risks described in Scilex’s and the SPAC’s most recent periodic reports filed with the SEC, including their Annual Reports on Form 10-K for the year ended December 31, 2023 and subsequent Quarterly Reports on Form 10-Q that the Company and the SPAC have respectively filed or may file, including the risk factors set forth in those filings.  Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release, and Scilex and the SPAC undertakes no obligation to update any forward-looking statement in this press release except as may be required by law. 

Contacts:

Investors and Media
Scilex Holding Company
960 San Antonio Road
Palo Alto, CA 94303
Office: (650) 516-4310

Email: investorrelations@scilexholding.com

Website: www.scilexholding.com

Investors and Media
Denali Capital Acquisition Corp.
437 Madison Avenue, 27th Floor
New York, NY 10022

# # #

SEMDEXA™ (SP-102) is a trademark owned by Semnur Pharmaceuticals, Inc., a wholly-owned subsidiary of Scilex Holding Company.  A proprietary name review by the FDA is planned.

ZTlido® is a registered trademark owned by Scilex Pharmaceuticals Inc., a wholly-owned subsidiary of Scilex Holding Company.

Gloperba® is the subject of an exclusive, transferable license to Scilex Holding Company to use the registered trademark.

ELYXYB® is a registered trademark owned by Scilex Holding Company. 

All other trademarks are the property of their respective owners. 

© 2024 Scilex Holding Company All Rights Reserved.

FAQ

What is the proposed merger between Semnur Pharmaceuticals and Denali Capital Acquisition Corp (DECA)?

Semnur Pharmaceuticals, a subsidiary of Scilex Holding Company, and Denali Capital Acquisition Corp (DECA) have signed a merger agreement to create a publicly traded biopharma company. The deal values Semnur at $2.5 billion pre-transaction and is expected to close by Q1 2025.

What is the main product being developed by Semnur Pharmaceuticals?

Semnur's lead product is SP-102 (SEMDEXA™), a non-opioid injectable corticosteroid gel formulation for treating sciatica. It has FDA Fast Track status and has completed a successful Phase 3 trial.

What are the projected sales for SEMDEXA™ by Semnur Pharmaceuticals?

Based on independent market research, SEMDEXA™ sales for sciatica treatment are projected to reach $1.5 billion to $2.0 billion annually by the 5th year of launch.

When is the merger between Semnur Pharmaceuticals and DECA expected to close?

The merger between Semnur Pharmaceuticals and Denali Capital Acquisition Corp (DECA) is expected to close by the first quarter of 2025, subject to shareholder and regulatory approvals.

What will be the new stock ticker for Semnur Pharmaceuticals after the merger with DECA?

After the merger, the combined company will be renamed Semnur Pharmaceuticals, Inc., with its common stock and warrants expected to be listed on Nasdaq under the ticker symbols 'SMNR' and 'SMNRW', respectively.