Sorrento nixes Hundred Gain deal, lines up sale, financing via Oramed

By Sarah Lizee

Olympia, Wash., Aug. 7 – Sorrento Therapeutics, Inc. has pivoted away from a sale and financing deal with Hundred Gain International Holding Ltd. and is instead moving ahead on a new deal with Oramed Pharmaceuticals, Inc., according to documents filed Friday with the U.S. Bankruptcy Court for the Southern District of Texas.

As previously reported, the company had received a $200 million proposal from Hundred Gain International Holding Ltd. to acquire Sorrento’s common shares, but not the preferred shares or warrants, of Scilex Holding Co., and finance the debtors’ post-emergence business.

However, in the days leading up to the hearing on approval of the transactions, the debtors began to have concerns about the deal.

As such, they decided not to seek approval of the transaction and immediately pivoted to a backup transaction that the debtors had been simultaneously negotiating with Oramed, and have since executed a term sheet with Oramed for the sale of substantially all of the debtors’ common stock, preferred stock, and warrants and options for common stock in Scilex for a purchase price of $105 million, subject to the submission of higher or otherwise better offers.

An auction is scheduled to take place on Aug. 14.

The stalking horse term sheet provides for a breakup fee of 3.25% and for reimbursement of costs and expenses of external counsel up to $1 million.

Oramed has also agreed to provide liquidity through a $100 million senior secured post-petition financing facility.

In short, the replacement DIP facility is a bridge to the auction and sale, with Oramed credit bidding the full amount of its DIP claim for the Scilex stock and paying $5 million in additional cash.

The company received approval of the replacement DIP financing and use of cash collateral on Monday.

The facility is set to mature on Oct. 15 and bear interest at 15% per annum.

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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