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.
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.
Sorrento 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.