Sorrento Therapeutics announced on Monday that its subsidiary, Scilex Pharmaceuticals, has received US$140 million in funding.
Gaining new funding can lead to a multitude of business needs for a company’s products and development.
Sorrento Therapeutics’ (NASDAQ:SRNE) announced on Monday that its subsidiary, Scilex Pharmaceuticals, received US$140 million in funding. According to the press release, the financing will be used to fund the commercialization of ZTildo (lidocaine topical system), a pain medication.
The financing is from US$224 million sold in senior secured notes that are due in 2026. Quarterly payments may made that equal a percentage of ZTildo’s net sales. While the financing won’t affect the company’s equity, it is secured by a reserve account and the funds from the drug.
“The structure of this financing also provides us with financial flexibility as we grow the ZTlido franchise to profitability and Scilex into one of the top global pain-focused pharmaceutical companies,” Henry Ji, CEO of Sorrento and Scilex, said in the press release.
ZTildo is a non-opioid pain reliever that was approved in February 2018. The drug approval is indicated to relieve post-shingles pain — also called post-herpetic neuralgia — and comes in the form of a patch. Scilex expects to launch the product next month.
According to IMS Health data, over 110 million prescription lidocaine patches were sold in the US in 2017.
The company believes it’s a major advancement in painkillers due to its 12-hour duration effect, even during exercise. This length of time is result of the company’s proprietary adhesion technology which delivers an adequate amount of medication through the dosing regimen.
The patch technology can also be cut into smaller sizes depending on patient needs and specified dosing regimen.
To support the commercialization of this product, the Scilex curated a team of 11 regional business directors to back up over 100 sales representatives — due to a partnership with Syneos Health — and a team of medical communication experts.
Scilex is developing products for niche areas which have already been developed but may not quite meet the needs of the patients, or be the best products. By creating next generation products, the company can provide its own technology — such as this patch formula — to improve what may be available and challenge the current standard of treatment.
Sorrento is working on new therapies for oncology indications and possibly curable diseases. Its immuno-oncology pipeline has human antibodies and CAR-T cells,among others.
Over the trading period on Monday, Sorrento’s share price increased 11.11 percent to close the trading session at US$5.50.
According to TipRanks, H.C. Wainwright analyst Ram Selvaraju reiterated a “Buy” rating for the company with a US$40 price target.
Aside from ZTildo’s expected launch in October, the company is anticipating approval for the drug in Europe in Q4. Sorrento is also planning new studies for a more concentrated version of lidocaine in 2019.
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Securities Disclosure: I, Gabrielle Lakusta, hold no direct investment interest in any company mentioned in this article.