Sorrento Therapeutics’ plan draws objection from equity committee

By Sarah Lizee

Olympia, Wash., Nov. 13 – Sorrento Therapeutics, Inc.’s Chapter 11 plan drew an objection from the official committee of equity securities holders, according to documents filed Friday with the U.S. Bankruptcy Court for the Southern District of Texas.

“The debtors’ shareholders are overwhelmingly retail investors – people who believed in this company and its pursuit of cancer immunotherapies and non-opioid pain management treatment – and they deserve better than the proposed plan,” the group said in the objection.

The committee said it is actively in negotiations with the debtors’ chief executive officer, Dr. Henry Ji, in pursuit of a new plan that would allow for equity participation and maximize value for the benefit of all parties in interest in the Chapter 11 cases, including the debtors, their creditors and their stakeholders.

The group said the case has been “grossly mismanaged,” with the debtors failing to implement a robust sale process.

The debtors have incurred over $60 million in professional fees with more fees pending, and around $197 million across three debtor-in-possession facilities that have each been repaid with sale proceeds, with no benefit to creditors or equity, the committee said.

The debtors also sold their majority interest in Scilex for around $145 million, but only following opposition by the equity committee after the debtors initially sought to sell the stock for $100 million.

“The debtors have run out of liquidity,” the group said.

“This could have been avoided – and would have provided more time to monetize the debtors’ assets – had the debtors engaged with the equity committee’s DIP financing party, who was ready to commit $10 million, with others willing to potentially add on another $10 million to help extend the cases with lower professional fee cash burn.”

The plan confirmation hearing is scheduled for Nov. 14.

The biopharmaceutical company is based in San Diego. The company filed bankruptcy on Feb. 13, 2023 under Chapter 11 case number 23-90085.

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