Biopharma shake-up: Semnur Pharmaceuticals to merge with Denali Capital in $2.5bn deal

In a significant development within the biopharmaceutical industry, Semnur Pharmaceuticals, Inc. (“Semnur”), a wholly owned subsidiary of Scilex Holding Company (Nasdaq: SCLX, “Scilex”), and Denali Capital Acquisition Corp. (Nasdaq: DECA, “Denali”), a special purpose acquisition company (SPAC), have announced a definitive merger agreement. This proposed business combination is set to value Semnur at approximately $2.5 billion on a pre-transaction equity basis.

Overview of the Merger

The merger, which has received unanimous approval from the boards of Semnur, Denali, and Scilex, is slated to close by the first quarter of 2025. As part of the transaction, Denali will undergo a redomestication process to become a Delaware corporation. Upon completion of the merger, the combined entity will retain the Semnur Pharmaceuticals, Inc. name and its common stock and warrants will be listed on Nasdaq under the ticker symbols “SMNR” and “SMNRW,” respectively.

The proposed merger aims to create a publicly traded biopharmaceutical company with a robust portfolio focused on non-opioid pain management solutions. This move is expected to enhance Semnur’s visibility in the public markets and accelerate its growth trajectory.

Strategic Rationale and Market Impact

Semnur Pharmaceuticals is recognized for its innovative approach to pain management, particularly through its lead product, SP-102 (SEMDEXA™). SP-102 is a novel, non-opioid injectable corticosteroid gel designed for the treatment of sciatica, a condition characterized by pain radiating along the sciatic nerve. SEMDEXA™ has demonstrated impressive efficacy in Phase 3 clinical trials, showcasing significant pain relief and improvement in disability scores for patients suffering from lumbosacral radicular pain.

The market potential for SEMDEXA™ is substantial. Independent research conducted by Syneos Health Consulting projects that, by the fifth year post-launch, annual sales of SEMDEXA™ could reach between $1.5 billion and $2.0 billion. This projection underscores the significant unmet need in the pain management market and the potential impact of SEMDEXA™ as a groundbreaking non-opioid therapy.

Management and Leadership

Following the merger, Scilex is anticipated to be the majority holder of the combined company. The new entity will benefit from a seasoned management team with extensive industry experience. Jaisim Shah, CEO and President of Scilex, expressed confidence in the merger’s strategic value. “With Semnur transitioning to a publicly traded company, this merger represents a crucial step in unlocking the full potential of our assets and enhancing shareholder value. Our growth strategy includes leveraging public markets and exploring strategic partnerships to advance our product pipeline,” said Shah.

Regulatory and Legal Aspects

The completion of the merger is contingent upon several conditions, including shareholder approval from Denali Capital Acquisition Corp., regulatory clearances, and the satisfaction of other customary closing conditions. Legal counsel for the transaction includes Paul Hastings LLP representing Semnur and Winston & Strawn LLP for Denali.

The merger agreement and related documents will be filed with the Securities and Exchange Commission (SEC) and made available on the SEC’s website. Interested parties can review these documents for a detailed understanding of the transaction’s terms.

Semnur’s Innovation and Market Position

Semnur Pharmaceuticals is a clinical-stage company dedicated to developing and commercializing non-opioid pain therapies. The company’s flagship product, SP-102 (SEMDEXA), is notable for its innovative formulation—an injectable corticosteroid gel administered epidurally without preservatives, surfactants, solvents, or particulates. This formulation is poised to address a significant gap in the current pain management landscape, particularly for patients with chronic radicular pain who lack effective, FDA-approved treatment options.

The success of the Phase 3 trials for SP-102, which were presented at the American Society of Interventional Pain (ASIPP) conference in Las Vegas in May 2022, and the publication of the trial results in the journal PAIN in June 2024, reinforce the therapeutic potential of SEMDEXA. These achievements highlight Semnur’s commitment to advancing innovative pain management solutions and its potential to transform patient care.

Future Outlook

As Semnur prepares to transition to a public company, the merger with Denali Capital Acquisition Corp. is expected to facilitate continued growth and innovation. The access to public capital markets will provide the financial resources necessary to advance Semnur’s research and development efforts, explore new partnerships, and accelerate the commercialization of its products.