Turns out “catch-and-kill" isn’t just for containing damaging news stories—it can also be used to keep generic competition down. At least, that’s what Sorrento Therapeutics is accusing Patrick Soon-Shiong of doing. The San Diego biotech alleged Soon-Shiong and his NantPharma bought Sorrento's late-phase cancer drug, Cynviloq, to hamstring its development and prevent it from reaching the market in which it would compete with Abraxane, a drug Soon-Shiong invented and sold to Celgene back in 2010.
Sorrento filed two actions in California on Wednesday, according to an SEC filing. These include an arbitration demand against NantPharma seeking more than $1 billion in damages, as well as punitive damages, for fraud and breach of contract; and a lawsuit in Los Angeles Superior Court detailing just what Soon-Shiong got up to in his “catch-and-kill" scheme.
The story starts in 2010, when Celgene struck a $2.9 billion deal to buy Abraxis BioScience—and Abraxane, which had been approved to treat breast cancer five years earlier. That deal put “well over $1 billion in Celgene stock and contingent value rights shares” into Soon-Shiong's pocket, making him Celgene’s largest individual shareholder, according to the complaint.
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A generic rival to Abraxane could have been “financially devastating for Soon-Shiong personally, given the large amount of his wealth that was, and remains, tied up in Celgene,” Sorrento said in the complaint. And that’s not the half of it. The complaint also alleged Soon-Shiong initially proposed facilitating a deal in which Celgene itself would acquire Cynviloq, with the idea that it could recoup any lost sales from Abraxane with sales of Cynviloq, its bioequivalent. But in early 2015, the complaint said, Celgene figured that federal authorities might block the deal for antitrust reasons.
In the end, it was Soon-Shiong's NantPharma that ponied up $90 million up front for Sorrento’s Cynviloq, which was in the midst of a phase 3 trial in breast and lung cancers. The company also promised up to $1.2 billion more in regulatory and sales milestones.
"This major transaction will enhance Sorrento's mission of bringing innovative therapies to patients in need quickly and efficiently," Sorrento CEO Henry Ji said at the time. "It puts our lead program into the hands of a team that has the experience, commitment and resources to develop and launch a major cancer drug."
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Sorrento and Soon-Shiong agreed “to prepare the NDA for Cynviloq no later than late 2015,” with plans for a U.S. launch in 2016, the complaint said.
However, Sorrento’s complaint read, “by mid-2016, it became increasingly clear that Soon-Shiong had defrauded Sorrento. Soon-Shiong did not push forward with FDA approval, let critical patents lapse, and demonstrated zero interest in reaching the approvals the parties had agreed upon in their sale agreement.”
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In addition to “catching and killing” Cynviloq, Soon-Shiong plotted with his chief legal officer, Charles Kim, to drain a joint venture set up with Sorrento of “nearly all of its contributed capital,” including $40 million from Sorrento, according to the complaint. They did so in a deal that transferred the Cynviloq program to to NANTibody in exchange for the funds. Among other things, Ji is seeking an injunction to return the more than $90 million drained from NANTibody so it can “return to the business it was devised to do: research, develop, and bring to market innovative immunotherapies” for cancer.
“As alleged in the complaint, in addition to Sorrento, these actions have harmed patients, healthcare providers and payors, who have been deprived of Cynviloq—a potential treatment alternative that we believe would have been as safe, as efficacious and more affordable than Celgene’s blockbuster cancer drug, Abraxane,” Steven Feldman of Hueston Hennigan LLP, counsel for Sorrento, said in a statement.
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Soon-Shiong has been accused of shady dealings before. Just this week, it came out that NantCell, one of his various “Nants,” could lose its controlling stake in Precision Biologics through the settlement of a case dating back to October 2015. Long story short, NantCell had paid $50 million for that stake in the biotech and the ensuing case alleged Soon-Shiong, NantCell and two related people on the board of Precision Biologics improperly withdrew $47 million within 30 days of the $50 million investment.
NantCell’s 2017 acquisition of Altor BioScience spawned lawsuits, including a case brought by Cher, and accusations of “looting.” And another "Nant," NantHealth, faces lawsuits alleging it made “material misstatements and omissions in violation of the federal securities laws” in relation to its IPO and could be delisted from Nasdaq.