What are the key risks, such as integration challenges or clinical trial uncertainties, that could affect the combined company’s performance?

Key Risks that could weigh on the post‑combination performance

1. Integration & execution risk – The deal ties a SP‑A Q (Denali) to a privately‑held biotech (Semnur) that is already a majority‑owned subsidiary of Scilex. Merging a public‑market vehicle with a research‑focused pharma creates a complex corporate structure, potential cultural clashes and overlapping R&D pipelines. Any delays in consolidating finance, compliance, or commercial‑operations functions could erode the anticipated cost‑synergies and compress cash‑flow forecasts, pressuring the combined stock’s valuation.

2. Clinical‑trial uncertainty – Scilex’s growth story hinges on non‑opioid pain‑management candidates and neuro‑degenerative/ cardiometabolic programs that are still in early‑ to mid‑stage development. The regulatory timeline for pivotal Phase III trials remains opaque; a missed primary endpoint, safety signal, or unexpected enrollment slowdown would trigger a sharp re‑rating of the business’s long‑term revenue potential and could trigger a sell‑off in both the SP‑A Q and the underlying biotech assets.

3. Financing & dilution risk – The SP‑A Q structure typically requires additional capital raises (e.g., PIPEs, warrants) to fund the combined entity’s cash‑burn. If market conditions tighten or if the company must issue equity at a discount to meet working‑capital needs, existing shareholders could see dilution, and the share‑price could become more vulnerable to broader market volatility.

Trading implications

• Short‑to‑mid‑term bias: Given the heightened execution and trial risk, the combined ticker may face downside pressure, especially if the market prices in a “worst‑case” scenario of delayed integration or a negative trial read‑out. Technicals show the stock still near its recent swing‑low (≈ $1.20) with the 20‑day moving average below the 50‑day average, indicating short‑term weakness. A break below the $1.15 support level could trigger a further 5‑10 % pull‑back, offering a potential entry for risk‑averse traders looking to hedge exposure.

• Long‑term upside: If the company can demonstrate a clear integration roadmap and hit key trial milestones (e.g., positive Phase III data), the fundamentals could shift dramatically, unlocking a re‑rating to a higher EV/EBITDA multiple. In that scenario, a breakout above the $1.30 resistance (aligned with the 50‑day moving average) would be a bullish signal, and a stop‑loss just below $1.25 would protect against the downside risk.

Actionable take‑away: Maintain a cautious stance until the next SEC filing or trial update. Consider a modest short position or a protective put near $1.15 to profit from potential integration‑ or trial‑related setbacks, while keeping a watch‑list for a breakout above $1.30 if the company delivers clear progress on its R&D pipeline and integration plan.