Sorrento Therapeutics, Scilex reach settlement with Virpax

By Sarah Lizee

Olympia, Wash., March 4 – Sorrento Therapeutics, Inc. is seeking approval of a settlement between Sorrento, Scilex Pharmaceuticals Inc. and Virpax Pharmaceuticals, Inc., according to a motion filed Friday with the U.S. Bankruptcy Court for the Southern District of Texas.

Sorrento and debtor Scilex filed a lawsuit against Anthony Mack and Virpax, asserting claims for breach of contract against Mack and tortious interference against Virpax. Scilex asserted claims of breach of fiduciary duty against Mack, aiding and abetting against Virpax, and trade secret misappropriation against Mack and Virpax.

Trial was held in September 2022. On Sept. 1, 2023, the Delaware Court of Chancery issued a memorandum opinion finding that, among other things, Mack breached a research collaboration agreement with Sorrento, and Virpax is liable for tortious interference with that contract.

After the court issued the opinion, the parties engaged in settlement negotiations over several months.

Through the settlement, Virpax will pay Sorrento and Scilex $6 million in two payments of $3.5 million and $2.5 million.

Virpax is developing three pain management drugs, Epoladerm, Probudur and Envelta, for which it has forecast billions of dollars in commercial sales, Sorrento said.

Virpax will pay Sorrento and Scilex a 6% royalty on worldwide net sales of the products.

Sorrento, Scilex and Virpax are also providing full mutual releases in the agreement. Sorrento and Scilex are not releasing Anthony Mack, however.

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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