Bankrupt Pharma Giant Casts Shadows on Future of Vital Cancer Drug, Leaving Patients in Limbo with $235 Million Debt Legacy

The firm, which makes cancer medications, filed for Chapter 11 bankruptcy in order to sell assets and pay off obligations.

Sorrento Therapeutics entered bankruptcy in February, owing $235 million to a protracted dispute against a competitor.

According to the company’s website, it is “dedicated to the development of life-saving therapeutics to treat cancer.”

Before filing for bankruptcy, Sorrento made the following statement concerning cancer:

Cancer is a genetically diverse, highly adaptable, continually evolving, and immune-invisible disease. Our approach to cancer therapy is founded on the premise that patients will require a multimodal, multipronged strategy—targeting a single or varied group of cellular targets and fighting them on several fronts—concurrently or sequentially, often and ruthlessly.

Our approach to cancer is enabled by a distinct immuno-oncology (“I-O”) portfolio comprised of a diverse set of innovative and synergistic assets, such as a large fully human antibody library (“G-MABTM”) that can be used alone or as part of cancer-targeting approaches such as:

• CAR T (Chimeric Antigen Receptor T Cells) therapy, which modifies a patient’s own T-cells to kill their tumor
• DAR T (Dimeric Antigen Receptor T Cells) therapy, which modifies a healthy donor’s T-cells to be reactive to any patient’s tumor, allows for an “off-the-shelf” treatment of a patient’s tumor
• Antibody-Drug Conjugates (“ADCs”), and
• Oncolytic Virus programs (Seprehvir™, Seprehvec™)

These assets are augmented by a novel lymphatic targeting device (Sofusa®) that delivers antibodies into the lymphatic system, where immune cells are taught to fight cancer.

We have created human antibodies against a variety of cancer-related targets, including PD-1, PD-L1, CD38, CD123, CD47, c-MET, VEGFR2, and many more that are at various phases of development. Our CAR-T efforts include clinical-stage CD38 CAR-T as well as therapies that combine methods for multiple myeloma, lung cancer, and other adult and pediatric malignancies.

Sorrento also manufactures coronavirus tests in other countries and is seeking an emergency use license for its testing in the United States.

The filing represents a setback for the creator of cancer treatments.

However, the firm has no intention to cease operations and continues to research cancer therapies, some of which are being evaluated in collaboration with the famous Mayo Clinic.

Sorrento’s blockade came after a series of heated legal battles.

According to industry publication Fierce Biotech, the business’s debts grew as a result of a lengthy case involving a competitor company, NantCell, which had purchased one of Sorrento’s cancer treatments for $90 million.

The bankruptcy preparations were disclosed in an SEC filing, along with documentation revealing the firm is currently $235 million in debt. Sorrento also issued an update on its continuing lawsuit against billionaire Patrick Soon-Shiong and his immunotherapy firm, NantCell, stating that a jury trial is scheduled for this year.

There was little information provided about the court-managed debt scheme, which is being considered in the Southern District of Texas. However, according to a list of the company’s top 30 debtors, Soon-Shiong’s “nant” subsidiary, NantCell, is due about $160 million. The data are connected to ongoing legal battles between the two corporations, which have gained prominence since they were initially filed in April 2019.

Sorrento said that NantCell, which is controlled by billionaire Patrick Soon-Shiong, purchased the medicine in order to limit competition.

Soon-Shiong’s firm, which also owns the Los Angeles Times and is a minority owner of the Lakers, emerged victorious at the end of a contentious arbitration process in December 2022.

Sorrento is now compelled to pay millions to NantCell, putting the firm in debt.

Murmurs of bankruptcy

Following the difficult case, Sorrento’s financial troubles were exacerbated by a bankruptcy court controversy.

When the corporation filed for Chapter 11 bankruptcy in the Southern District of Texas, its case was heard by Judge David Jones, who has since retired.

His resignation occurred when it was found that he had an unreported intimate involvement with Elizabeth Freeman, Sorrento’s lawyer.

Jones was in charge of several high-profile bankruptcy cases, including JCPenney’s.

Jones approved the fees Freeman charged Sorrento as part of his job.

In October, the judge told the Wall Street Journal that he didn’t think he needed to report the connection because they weren’t married and he wasn’t financially benefiting from it.

As a result of the scandal, several shareholders have asked Jones’ successor to halt the bankruptcy proceedings.

Some investors turned to Reddit to declare Freeman’s fees “outrageous.”

“The court should order a clawback of the outrageous fees,” one commenter suggested. “The [Chapter 11] process should be restarted.”

According to Bloomberg, Sorrento representatives stated that the relationship between the lawyer and the judge is immaterial to the bankruptcy process moving forward.

Last Monday, equity investors who stand to be wiped out by the bankruptcy filed an objection to the company’s proposed Chapter 11 plan. At the same time, their lawyer contacted Sorrento’s lead counsel at Latham & Watkins, asking if Latham or Sorrento were aware of a link between attorney Elizabeth Freeman and David R. Jones, the bankruptcy judge supervising Sorrento’s Chapter 11 case.

Many high-profile firms have declared bankruptcy in recent months.

Following its bankruptcy, the major pharmacy business Rite Aid is shutting down hundreds more outlets.

WeWork, an office space provider, also declared bankruptcy last fall.

The company’s demise is the result of criticisms about the CEO’s managerial style.