Sorrento Therapeutics reaches settlement with Nant via mediation

By Sarah Lizee

Olympia, Wash., June 7 – Sorrento Therapeutics, Inc. has reached a settlement with Immunotherapy NANTibody, LLC, NantCell, Inc., NantPharma, LLC and related parties following mediation, according to a motion filed Tuesday with the U.S. Bankruptcy Court for the Southern District of Texas.

Sorrento has been involved in litigation with some of the Nant parties, and as a result the debtors owe NantCell and NANTibody about $175 million collectively. Those are the largest claims in Sorrento’s Chapter 11 cases.

Meanwhile, NantPharma owes the debtors about $125 million, which the debtors have been unsuccessfully trying to collect, Sorrento said.

The debtors also assert that they have affirmative alter ego, derivative and fraud claims either pending or to be brought shortly against various Nant parties in other causes of action, and the Nant parties dispute all such claims and causes of action.

In March, the court ordered the parties to mediate issues related to the litigation as well as the Chapter 11 cases generally.

The settlement has a toggle framework where the debtors can either raise sufficient funds to irrevocably pay the more than $175 million owed to NantCell and NANTibody, or elect to not make the payments and “walk away” with a full “divorce” from the Nant parties.

In the payment scenario, the debtors have agreed with the debtor-in-possession lender, the official committee of unsecured creditors and the official committee of equity security holders that they will not make the Nant payments unless they have secured committed financing (without material contingencies) to pay each of the DIP facility and all allowed general unsecured claims in full in cash on the effective date of a Chapter 11 plan.

In the walk-away scenario, the debtors and the Nant parties will mutually release their pending litigation matters and all other claims and judgments against each other, including the roughly $175 million owed to NantCell and NANTibody. The debtors will convey all of their ownership in NANTibody, NantCancerStemCell, LLC and NantBio, Inc. to those respective entities, and Sorrento’s membership, directorship, and any other rights in those entities, as applicable, will be canceled. NantBio will pay the debtors $1.5 million, and NantCell and the Nant parties will obtain a full release of the debtors’ royalty rights with respect to the PD-L1 antibody that is the subject of the April 21, 2015 exclusive license agreement between NantCell and Sorrento.

In short, the walk-away would be a full divorce of all relationships between the debtors and the Nant parties so that both sides can continue operating without needing to interact with each other, thereby minimizing the prospect of future litigation, the company said.

“This toggle framework will allow the debtors to preserve optionality in the near term and determine the most value-maximizing path forward, as they continue their ongoing sale and financing marketing process,” the company said in the motion.

The biopharmaceutical company is based in San Diego. The company filed bankruptcy on Feb. 13 under Chapter 11 case number 23-90085.

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