Updated: Sorrento files for Chapter 11 after losing arbitration to Patrick Soon-Shiong biotech
Sorrento Therapeutics is filing for bankruptcy following a yearslong legal dispute.
The biotech submitted its Chapter 11 paperwork Monday, per an SEC filing, after losing an arbitration battle to billionaire Patrick Soon-Shiong’s NantCell in December. The pair battled over a joint venture called NANTibody in 2015, where Sorrento signed an exclusive licensing deal and accused Soon-Shiong of a “catch-and-kill” scheme in 2019.
The penny stock $SRNE lost nearly 33% of its value following the opening bell.
The arbitrator awarded NantCell, part of Soon-Shiong’s ImmunityBio, nearly $157 million and NANTibody close to $17 million. At the time, Sorrento CEO and chairman Henry Ji disagreed with the award, calling it “wrongly decided” in an SEC filing. For its part, ImmunityBio said it would “pursue vigorously the collection of the award.”
In conjunction with the bankruptcy disclosure on Monday, Sorrento said a court ordered the company to pay the Nant entities, with interest accruing at 10% per year.
While Sorrento was ordered to pay up to ImmunityBio, the biotech also seeks money from Soon-Shiong’s network of biopharma entities. The arbitration centers around “alleged breaches” of a stock sale and purchase agreement between Sorrento and NantPharma in 2015, concerning the cancer drug Cynviloq.
In December, the arbitrator issued an award “granting contractual damages of $125 million to Sorrento, reflecting the value of lost milestone payments for the approval of Cynviloq for the treatment of breast and lung cancers.” Earlier this month, Sorrento petitioned the court to confirm the award.
Both Nant and Sorrento’s leaders have touted a big game during the Covid-19 pandemic. Sorrento’s Ji spoke of an “exceptionally potent antibody” on Fox News and said the crisis would end with the “cure,” even though the antibody had not even been tested in patients or mice at the time. Sorrento’s stock value skyrocketed on the claim.
Meanwhile, Soon-Shiong attempted to talk with White House leaders in the early days of the pandemic to get his company’s vaccine into clinical trials.
Sorrento has multiple programs across Covid-19, immunotherapy and pain. It operates an apparatus of subsidiaries, including Acea Therapeutics, SmartPharm Therapeutics, Ark Animal Health and others. One of them, Scilex Pharmaceuticals, said on Sunday it had acquired the US and Canadian rights to Elyxyb, an oral migraine drug originally developed by Dr. Reddy’s and approved in 2020. The sum of the transaction was not disclosed.
Editor’s note: This story has been updated with additional details on the arbitration.
