Scilex loses ZTlido patent appeal as Federal Circuit affirms non-infringement ruling for Aveva

Scilex Holding Company (Nasdaq: SCLX) lost its appeal in the ZTlido patent case when the U.S. Court of Appeals for the Federal Circuit affirmed, on August 4, 2026, a ruling that a generic version of ZTlido does not infringe its patents, its 10-Q filed August 14, 2026 says. Scilex filed the suit on June 22, 2022 in the U.S. District Court for the Southern District of Florida, naming Aveva Drug Delivery Systems, Inc., Apotex Corp. and Apotex, Inc. as defendants. The 10-Q gives no case number.

Aveva received FDA approval for a generic version of ZTlido on March 25, 2025. The two Apotex entities were dismissed without prejudice because, Scilex says, they no longer had an interest in the generic product that Aveva seeks to market.

The case

Scilex sued after Apotex submitted an abbreviated new drug application, or ANDA, under the Hatch-Waxman Act. The ANDA seeks approval to market a generic version of ZTlido before the Orange Book patents covering it expire, and alleges the patents are invalid, unenforceable or not infringed. Scilex alleged infringement of those patents, the latest of which expires on May 10, 2031. Among other relief, it sought an order that FDA approval of Apotex's ANDA take effect no earlier than the expiration of the asserted patents.

Apotex and Aveva were subject to an automatic 30-month stay on selling a generic ZTlido. The 10-Q says the district court's decision extinguished that stay. Before trial, Aveva dropped its challenge to the validity and enforceability of Scilex's patents. The court's August 2024 decision addressed infringement.

Defendants

The defendants are Aveva Drug Delivery Systems, Inc., Apotex Corp. and Apotex, Inc. Scilex refers to the two Apotex entities together as Apotex. They are companies, so no individuals are named. After the Apotex dismissals, the 10-Q refers only to Aveva's product.

Where it stands

The district court held a trial from July 8 to July 11, 2024. Final post-trial briefing was submitted on July 25, 2024. On August 26, 2024 the court issued a decision finding that Aveva's product does not infringe the ZTlido patents. Scilex filed a notice of appeal on September 25, 2024. Briefing was completed, oral argument was held on May 11, 2026, and the Federal Circuit issued its opinion affirming on August 4, 2026.

The 10-Q does not say whether Scilex will ask for rehearing or take any further step. It also does not say what the ruling means for the timing of generic sales.

Why it matters to shareholders

The 10-Q is the only filing reviewed that reports the outcome, and it says little about commercial effects. It says Scilex records an accrual when a loss from a legal proceeding is probable and can be reasonably estimated, and that outcomes are inherently uncertain. In the same filing Scilex reports net revenue of $7.6 million for the three months ended June 30, 2026, against $9.9 million a year earlier. It attributes a $4.0 million decrease in ZTlido net product sales mainly to a delay in an inventory shipment from Japan.

Scilex has also sold part of the ZTlido revenue stream. Under a royalty purchase agreement from October 2024, Scilex Pharma sold royalty purchasers the right to receive 8% of aggregate worldwide net sales of ZTlido, SP-103 and related dosage forms. The 10-Q carries that liability at a fair value of $5.8 million as of June 30, 2026.

Separately, the 10-Q says conditions it describes raise substantial doubt about Scilex's ability to continue as a going concern.

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