Company: SCLXW
Filing Date: 2025-01-17
Form Type: 10-Q
Source: 0000950170-25-006755
Chunk: 92

Company: Scilex Holding Co
Filing Date: 2025-01-17
Form: 10-Q
Item: Item 1
Chunk 92
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31, 2023, Scilex Pharma had ending balances of accrued royalty payables of $2.2 million and $2.4 million, respectively. Total royalty expense recorded within cost of revenue was $2.2 million and $1.8 million for the three months ended September 30, 2024 and 2023, respectively, and $6.9 million and $6.1 million for the nine months ended September 30, 2024 and 2023, respectively. 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 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. Litigation In the normal course of business, the Company may be named as a defendant in one or more lawsuits. Other than the following four 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. 

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