Oramed Pharmaceuticals Announces Debt Restructuring
Oramed Pharmaceuticals Inc. (NASDAQ: ORMP), a clinical-stage pharmaceutical company specializing in developing oral drug delivery systems, has publicly announced a strategic restructuring of its debt obligations with Scilex Holding Company (NASDAQ: SCLX), a leader in non-opioid pain management solutions.
Details of the Partnership
In collaboration with Murchinson and 3i LP, Oramed has entered into definitive agreements to purchase and sell new tranche B senior secured convertible notes. This initiative involves a substantial investment of $50 million, along with warrants granting the right to purchase 7,500,000 shares of Oramed's common stock.
Restructuring Highlights
The restructuring plan includes the conversion of $22.5 million of the existing principal balance from Scilex’s Senior Secured Promissory Note. This note, originally scheduled for repayment between September 2024 and March 2025, will be replaced by a new note of $25 million, subject to a 10% discount and carrying an interest rate of 5.5% per annum. Additionally, the note is convertible into Scilex common stock at a price of $1.09, with a two-year maturity from the date of issuance.
Enhanced Warrants
As part of this strategic union, Oramed will obtain warrants to purchase up to 3.75 million shares of Scilex stock, also set at an exercise price of $1.09. Plus, a portion of $12.5 million from the new financing will directly contribute to repaying the outstanding debt on the Senior Secured Promissory Note to Oramed.
Deferred Payments and Future Plans
In response to ongoing negotiations, Oramed has agreed to extend certain payment deadlines from Scilex. This compromise allows Scilex additional time until October 7, 2024, to satisfy the conditions of the Senior Secured Promissory Note. The anticipated closing of the new financing is projected around the same time, contingent on specific closing conditions being met.
Participation in Future Royalties
Furthermore, Oramed is poised to gain an 8% royalty on the net sales of Scilex’s products, including the topical lidocaine preparation, ZTlido. This arrangement is strategically aligned to bolster Oramed's financial portfolio, with a $2.5 million reduction on the outstanding principal balance due to their engagement in acquiring royalty rights.
CEO’s Perspective on the Restructuring
Nadav Kidron, CEO of Oramed, expressed optimism regarding this restructuring, stating, "We believe that this restructuring significantly enhances the potential value of our investment in Scilex. While slightly extending the payment schedule of a portion of our investment, it offers us substantial potential upside, including through warrants and conversion options. We are excited to contribute to the growth trajectory of ZTlido, which resonates with our goal to maximize shareholder value while supporting innovative healthcare solutions."
About Oramed Pharmaceuticals
Oramed Pharmaceuticals (NASDAQ: ORMP) has emerged as a pioneering force in oral delivery solutions for drugs typically administered via injection. The company’s innovative Protein Oral Delivery (POD™) technology is designed to enhance drug integrity and absorption effectively. With operational offices in the United States and Israel, Oramed remains focused on advancing its delivery technologies to cater to various medical needs.
Company Contact Information
For further inquiries, reach out to Oramed Pharmaceuticals at +1-844-9-ORAMED or email ir@oramed.com.
Frequently Asked Questions
What is the primary aim of Oramed Pharmaceuticals' debt restructuring?
The restructuring aims to enhance the investment value in Scilex, providing Oramed with substantial potential upside through new convertible notes and warrants.
What are the key financial details involved in the restructuring?
Oramed is restructuring $22.5 million in existing debt, while acquiring new notes worth $25 million, along with warrants for shares of Scilex stock.
How will this restructuring benefit Oramed's shareholders?
Shareholders stand to gain from potential upsides related to warrants and conversion options, as well as an 8% royalty on select products from Scilex.
What role does ZTlido play in Oramed's new agreement?
Oramed will receive a royalty from the sales of ZTlido, linking Oramed's financial growth to the performance of Scilex's pain management products.
How can investors learn more about Oramed Pharmaceuticals?
Investors can visit Oramed's official website or contact them directly via the provided email or phone number to get more information on their operations and updates.
