3 years after rejecting $1B buyout, Sorrento files for bankruptcy amid legal battles

Three years ago, Sorrento Therapeutics was swatting away a billion dollar offer from private equity, but now the San Diego-based biotech can’t seem to evade the courtroom. The company has filed for bankruptcy amid mounting debt and ongoing lawsuits, throwing into question the feasibility of continued drug development. 

The bankruptcy plans were included in an SEC disclosure Monday, with associated documents indicating the company currently finds itself saddled with $235 million in debt. Sorrento also provided an update on its ongoing litigation against billionaire Patrick Soon-Shiong and his immunotherapy biotech NantCell, saying that a jury trial is expected this year. 

Few details were included regarding the court-managed debt plan, which is being heard in the Southern District of Texas. But a list of the company’s top 30 creditors indicate that Soon-Shiong’s “nant” subsidiary NantCell is owed almost $160 million. The figures are related to ongoing legal disputes between the two companies that have taken center stage after first being filed in April 2019.  

Sorrento alleges that Soon-Shiong and NantCell bought into Sorrento’s generic rival to Celgene’s Abraxane to squash its development. Abraxane, which was developed by Soon-Shiong, was bought by Celgene in 2010 for nearly $3 billion. Celgene was later bought by Bristol Myers Squibb in 2019 for $74 billion. 

Sorrento contends that Soon-Shiong originally suggested that Celgene buy the generic rival, called Cynviloq, but that the larger pharma rejected the proposal on the grounds that it would likely stir antitrust concerns. NantPharma, the parent company of NantCell, instead bought the rights to Sorrento’s Cynviloq in 2015 for $90 million in upfront cash and $1.2 billion available in biobucks. But Sorrento has alleged that NantCell hasn’t held up its end of the deal, dragging its feet on regulatory submissions and development efforts to run the clock out on patents. 

The messy dispute has ultimately spurred Sorrento’s corporate surrender, after a judgment issued in NantCell’s favor in December 2022 put Sorrento on the hook for more than $170 million, the majority of which is owed to NantCell. Last week, a court affirmed its December decision and issued a 7-day stay on any amount owed above $50 million. But in anticipation of NantCell knocking on the door for the first $50 million, Sorrento filed for bankruptcy. 

As of the end of September 2022, Sorrento reported having just over $70 million in cash on hand. The available funds, combined with the ongoing lawsuits, harken memories of Sorrento’s billion-dollar takeover offer by a private equity firm, which the biotech rejected in January 2020. With its stock now trading at $0.59 per share, down 35 cents pre-market, the board’s decision at the time that the offer was too low seems questionable at best.