By Brad Sorensen, CFA

NASDAQ:SCLX

READ THE FULL SCLX RESEARCH REPORT

Scilex Holding Company (NASDAQ:SCLX) is a revenue-generating company that is focused on addressing one of the biggest issues facing humanity today—that of the overuse of opioids. Scilex is focused on developing non-opioid pain management products that provide the relief patients so desperately need, while avoiding the debilitating addiction that often comes with the use of opioids. Roughly 112,000 Americans died in 2023 from overdoses and there we have no doubt that a good number of those involved opioid use at some point to reduce physical pain of various types. And while that is an extremely important therapy, the company is not resting on past successes and continues to attempt to bring relief from various tragic conditions to patients.

The company recently announced its 3Q 2024 financial results that revealed that losses per share had declined substantially, from $0.31/share in 2Q to $0.03/share in the current quarter. Part of this improvement was due to a reduction in costs in the area that we like to see costs reduced—administrative expenses. We believe this is another good signal for company management. We were also pleased to a 54% y/y increase in the sales of ELYXYB and the beginning of sales of GLOPERBA—continuing a string of product and revenue expansion.

As a reminder, the company recently made a deal with NeuroBiogen to be the exclusive developer of KDS2010, an oral tablet product candidate that is currently in Phase 2 trials in obesity and Alzheimer’s disease indications. With the weight loss drug market exploding in the past couple of years and the search for a treatment for Alzheimer's ramping up and becoming more desperate we believe this is a very beneficial move for SCLX. The company has proven, as we have written, that the company has multiple products already in the developmental pipeline and has proven the ability to navigate that process successfully.

These results and plans for the future that we’ve discussed at length reinforce our belief that SCLX is poised to resume its move higher and that investors continue to underestimate the value of the treatments the company currently has and is developing. We appreciate that the company is looking to limit costs and expand revenues and urge investors to take a look at a company that is earning revenue, growing that revenue in a meaningful way, and adding to its portfolio of very important treatments before the rest of the investing community realizes the story developing at Scilex.

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