San Diego biotech Sorrento, which spent much of the last 12 months warring with its minority stakeholder Wildcat, won’t be finding many golden eggs this weekend after being the biggest biotech stock loser ahead of today’s market close.
The small cap company, which is working on PD-1 and off-the-shelf CAR-T meds at early stages, as well as on biosimilars, priced its public offering of 23.6 million shares of its common stock at $2 per share, with underwriters able to buy up to 3.5 million and its president and CEO, Henry Ji, also buying up stock.
But 24 hours before the offering, its stock was worth just under $3 a share, and duly plummeted 39% to just $1.80 after the pricing was announced, falling even further after hours to $1.75 a share last night.
At its height last year, in mid-October, the biotech was worth more than $8 a share, but last night its market cap was worth less than $100 million.
Earlier this month the company, a frequent partner of billionaire biotech entrepreneur Patrick Soon-Shiong, posted data from a small, phase 1b trial of its anti-CEA CAR-T, followed by selective internal radiation therapy, in heavily pretreated patients with CEA positive liver metastases.
The company said that the mean overall survival time for all patients as of the end of March cutoff date was 7.5 months (range 15-50 weeks), and the median overall survival time was 6.9 months.
“In comparison, the median overall survival time following [Bayer’s Stivarga (regorafenib)] monotherapy in previously treated, chemotherapy refractory metastatic colorectal cancer patients was 6.4 months vs. 5 months for best supportive care, as reported in the phase 3 CORRECT trial.”
Caveats are aplenty, given that Sorrento’s trial was single arm and only in a handful of patients, and wasn’t geared to beat out Stivarga, with the primary objective being safety.
It had a mixed bag last year: On the positive side, it raised $150 million in the summer and also created a CAR-T joint venture in China, while also nabbing a partnership with France’s Servier to develop products based on Sorrento’s immuno-oncology anti-PD-1 monoclonal antibody STI-A1110.
Sorrento got an upfront payment of €25 million ($28 million) with €710 million ($785 million) in biobucks also up for grabs with its French pact.
But it also spent much of the year engaged in a war of words with Wildcat Capital Management, whose clients hold an ownership stake of 6.5% of the common stock, and who sent a public letter to the biotech’s board last May urging it to “immediately terminate and replace Dr. Henry Ji as CEO” and to stop recently announced financing transactions to “avoid further dilution to the existing shareholders.”
The letter said there are several “serious issues” it has found which reveal that Ji, Sorrento's management team and its board have “engaged in egregious and improper self-dealing and are squandering the company's assets.” It later demanded inspection of documents related to its private placement agreements made in April last year.
After nearly 12 months of squabbles, the pair came to a “resolution” last month, with Wildcat dropping its demands, and said they were both now talking about next steps in generating better shareholder value.
The biotech is one of many connected to billionaire Patrick Soon-Shiong, who in 2014 tapped the company for an immuno-oncology joint venture. In the months after, Sorrento partnered with Soon-Shiong's NantKwest and NantCell, later joining NantBioScience to launch a $100 million joint venture that will develop small-molecule treatments for some of the so-called undruggable targets in LA Cell's crosshairs.
In 2015, the company also bought into biosimilars through a deal with China's Mabtech, acquiring the rights to four undisclosed copies of best-selling treatments.