aibioOramed gives Scilex option to buy back warrants for $27,000,000
Tickers ORMP
Scilex will pay a $1,500,000 option fee in two installments. If the buyback is completed and paid in full, the maturity of the Tranche A Note moves to March 31, 2026.
Key facts
- Company
- Oramed Pharmaceuticals Inc. (NASDAQ: ORMP)
- News type
- Financings
- Primary source
- Oramed Pharmaceuticals Inc. 8-K (2025-07-23)
The option and its timetable
Oramed Pharmaceuticals Inc. (Nasdaq: ORMP) agreed on July 22, 2025 to give Scilex Holding Company an option to buy back warrants that Oramed holds in Scilex for an aggregate purchase price of $27,000,000. The agreement was reported in an 8-K filed July 23, 2025. Scilex pays Oramed $1,500,000 for the option in two equal installments, due on or before August 8, 2025 and December 16, 2025.
Scilex may buy back 3,130,000 warrants for $13,000,000 on or before September 30, 2025, and the other 3,370,000 for $14,000,000 on or before December 31, 2025. Those rights apply only if Scilex has made each option payment on time. If Scilex fails to pay, or does not exercise the option by its date, Oramed may end the agreement by written notice.
The warrants and the note behind them
The warrants come from a September 21, 2023 deal in which Scilex issued Oramed a $101,875,000 senior secured promissory note, called the Tranche A Note, plus penny warrants to buy up to 13,000,000 Scilex shares at $0.01 each. Acquiom Agency Services LLC was the agent under that securities purchase agreement, as amended. The 8-K says the note was due 18 months from its issuance.
Oramed has exercised penny warrants for 6,500,000 Scilex shares and still holds the other 6,500,000, which the 8-K calls the Subject Warrants. Scilex completed a 1-for-35 reverse stock split on April 15, 2025, and the warrant terms do not adjust for it, so the exercise price stays at $0.01 a share.
The option extends the Tranche A Note's maturity to March 31, 2026 and waives any make-whole payment on prepayment, but only if Scilex completes the repurchase and pays in full. The 8-K does not say why the maturity moves to that date. Oramed agreed not to exercise the Subject Warrants while the option is in effect. If the option ends, it may exercise only up to 19.9% of Scilex's shares outstanding before the warrants were first issued, unless Scilex obtains stockholder approval for more.
A correction to the first-quarter report
The 8-K also corrects Oramed's quarterly report for the period ended March 31, 2025. That 10-Q, filed May 15, 2025, said the company owned 185,715 penny warrants with an exercise price of $0.35 a share after the split. The 8-K says the warrants did not adjust, so the price remains $0.01 for 6,500,000 shares. Oramed says the correction has no effect on its financial position, results or cash flows as of March 31, 2025. The 8-K does not explain how the earlier description was reached.
Other holdings and partner risks
The annual report for 2024, filed March 27, 2025, adds to the picture. Oramed holds the Tranche A Note and a Tranche B Note. In return for deferring Scilex's first amortization payment on the Tranche B Note to October 8, 2026, Oramed received 2,500,000 Scilex shares plus a nominal payment. At December 31, 2024, the company held about 1.4% of DNA's ordinary shares, about 0.3% of Entera's and about 15.7% of BioXcel's common stock. The report says the shares of Scilex, DNA and Entera have historically traded in low volume compared with the level Oramed holds, so there is no guarantee it can resell them at prevailing prices.
The oral insulin program also depends on outside parties. Under its distribution license with Medicox, Medicox agreed to buy ORMD-0801 at an agreed transfer price per capsule and to pay up to $15,000,000 in development milestones, of which $2,000,000 has been received. The report says Oramed may not realize that benefit if the two cannot agree to continue after the ORA-D-013-1 Phase 3 trial, or if Medicox cannot advance the oral insulin candidate alone.
What the filing leaves out
The 8-K names no bank, placement agent or counsel for the option, beyond Acquiom Agency Services LLC as agent under the 2023 agreement. It gives no cash balance, net loss or financing plan for Oramed. It does not say whether Scilex has paid the first option installment on time, and the option pays Oramed only if Scilex meets each deadline in full.