Company: SCLXW
Filing Date: 2025-01-17
Form Type: 424B3
Source: 0000950170-25-006777
Chunk: 26

Company: Scilex Holding Co
Filing Date: 2025-01-17
Form: 424B3
Chunk 26
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Derivative Liabilities

The Company recorded a gain of $18.1 million and $2.4 million for the three and nine months ended September 30, 2024, respectively, attributed to warrant liabilities consisting of the Private Warrants, the Firm Warrants and the RDO Common Warrants (each as defined below). The Company recorded a gain of $4.2 million and a loss of $1.1 million for the three and nine months ended September 30, 2023, respectively, attributed to warrant liability consisting of the Private Warrants. The Company assumed the private placement warrants from Vickers in November 2022 in connection with the Business Combination (“Private Warrants”). The Company issued the Firm Warrants in March 2024 as part of the Bought Deal Offering (as defined below) and RDO Common Warrants in April 2024 as part of the Registered Direct Offering (as defined below).

As of September 30, 2024, the following warrants to purchase Common Stock that are included in derivative liabilities were outstanding: 1,000,000 Private Warrants, 5,568,153 Firm Warrants and 15,000,000 RDO Common Warrants. As of September 30, 2024, the fair value of derivative warrant liabilities related to these warrants was $11.5 million.

The following table includes a summary of the derivative liabilities measured at fair value during the nine months ended September 30, 2024 (in thousands):

|                                                                                                                                                                                 |     | Fair Value |        |   |
|:--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|:----|:-----------|-------:|:--|
| Ending Balance as of December 31, 2023                                                                                                                                          |     | $          |  1,518 |   |
| Change in fair value measurement                                                                                                                                                |     |            | (2,367 | ) |
| Issuance of Firm Warrants as part of the Bought Deal Offering, RDO Common Warrants as part of the Registered Direct Offering and Private Warrants as part of Oramed Side Letter |     |            | 12,302 |   |
| Ending Balance as of September 30, 2024                                                                                                                                         |     | $          | 11,453 |   |

Warrant Liability Measurement

The derivative warrant liability was valued using the Black-Scholes option pricing model, which is considered to be a Level 3 fair value measurement. The primary unobservable input utilized in determining