Scilex enters release, settlement agreement with Virpax Pharmaceuticals

Scilex Holding Company (SCLX) announced that the U.S. Bankruptcy Court for the Southern District of Texas, in connection with the bankruptcy proceedings of Sorrento Therapeutics, Scilex’s former controlling stockholder, approved the settlement and mutual release agreement between Scilex’s wholly owned subsidiary, Scilex Pharmaceuticals, and Sorrento, on the one hand, and Virpax Pharmaceuticals (VRPX), on the other hand. The Definitive Settlement Agreement relates to the term sheet previously announced by Scilex on February 26, 2024, regarding a mutual release and settlement agreement between Scilex Pharma, Sorrento and Virpax in respect of the action filed by Scilex Pharma and Sorrento against Anthony Mack, former President of Scilex Pharma and Virpax, a company founded and then headed by Mr. Mack. Pursuant to the Definitive Settlement Agreement, Virpax is obligated to make the following payments to the Company: $3.5 million by March 18, 2024; $2.5 million by July 1, 2024; and to the extent any of the following drug candidates are ever sold, royalty payments of 6% of annual Net Sales of Epoladerm; 6% of annual Net Sales of Probudur; and 6% of annual Net Sales of Envelta. Such royalty payments will end upon the later of expiration of the last-to-expire valid patent claim of Virpax or its licensor covering the manufacture, use or sale of such product in such country; and expiration of any period of regulatory exclusivity for such product in such country. Pursuant to the Definitive Settlement Agreement, each of the Plaintiffs and Virpax provide mutual releases of all claims that exist as of March 14, 2024, whether known or unknown, arising from any allegations set forth in the Action. The Plaintiffs’ release relates to claims against Virpax only, which does not affect their claims against Mr. Mack. Plaintiffs have not released Mr. Mack, and litigation against him remains ongoing. Plaintiffs’ release as to Virpax is conditioned upon Virpax’s Initial Payment.