Sorrento Therapeutics has made a move to obtain debtor-in-possession (DIP) financing to pay off its $235m debt in a bid to emerge from bankruptcy.
To that end, US Bankruptcy Court in Texas has approved a $105m ‘stalking horse’ bid for stocks and warrants of Sorrento’s wholly owned subsidiary, Scilex Holding Company, setting the lowest bid price for these.
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Israel-based Oramed Pharmaceuticals would own all of Scilex’s common stock, preferred stock, and warrants for $105m unless a higher bid is placed by 11 August. If a higher bid is placed before the deadline, the Scilex stock will go for auction on 14 August 2023.
Furthermore, the US Bankruptcy Court authorised $100m in DIP financing from Oramed. This will allow Sorrento to pay off their existing senior debtor-in-possession financing facility. Sorrento also received $75m in DIP financing from JMB Capital Partners in March 2023.
In February, Sorrento filed for Chapter 11 bankruptcy protection given its short-term liquidity problems. The liquidity issues were exacerbated following the court loss to its partner Soon-Shiong entities, including NantCell and NANTibody. In 2019, Sorrento sued Soon-Shiong entities, alleging that the latter bought Sorrento’s cancer drug Cynviloq in 2015 just to derail it from ever hitting the market. Soon-Shiong’s company developed its own cancer drug Abraxane, a competitor to Cynviloq, which was then sold to Celgene in 2010.
Sorrento demanded more than $1bn in addition to punitive damages, related to an alleged fraud and breach of contract. However, Sorrento ended up with a ruling awarding $156.8m and $17m to NantCell and NANTibody, respectively in December 2022. But the company received some good news after LA County Superior Court ordered NantPharma, another Soon-Shiong entity, to pay $125m in damages to Sorrento for lost drug milestone.
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By GlobalDataSorrento has been continuing its normal operations during the bankruptcy filing. It reported positive data from the Phase Ib clinical trial of its viral protease (Mpro) inhibitor for Covid-19, Ovydso, with plans for Phase II/III trials.
Other drugs in the Sorrento pipeline include immunotherapy drugs such as the anti-PD1 drug, Sofusa, for treating mycosis fungoides, and abivertinib maleate for the treatment of acute respiratory distress syndrome. Both drugs are currently in Phase II clinical trials.
