What happened
Shares of Sorrento Therapeutics (SRNE.Q -16.67%) were up 25.8% Tuesday afternoon, after being up as much as 51.6% earlier in the day. The biopharmaceutical company makes therapies to treat cancer, autoimmune disorders, inflammatory conditions, and viral and neurodegenerative diseases. It has two segments, Sorrento Therapeutics and Scilex. The stock, which plummeted last week after the company said it was filing Chapter 11 bankruptcy proceedings, bounced back after the company clarified that it was protecting Scilex regarding the proceedings. The stock is down more than 55% so far this year.
So what
Sorrento has been embroiled in a legal fight with Dr. Patrick Soon-Shiong regarding the sale by Sorrento of an antibody lung and breast cancer drug to NantPharma, one of Soon-Shiong's companies, in 2015. In December, Sorrento was ordered to pay $173.6 million in contractual damages regarding a license agreement for the drug. In early February, a judge in California issued a stay on most of the arbitration awards for 70 days, but that did not include $50 million in arbitration awards against Sorrento.
Sorrento, to protect its assets, began Chapter 11 proceedings, along with its wholly owned subsidiary Scintilla Pharmaceuticals, and then on Saturday, said it has issued to Sorrento stockholders 0.1410127 shares of Scilex common stock for each share of Sorrento common stock they owned. By doing this, it is protecting Scilex's assets from any bankruptcy proceedings.
Now what
Sorrento isn't profitable and has $235 million in debt and as of Sept. 30, had only $70 million in cash. The looming arbitration awards regarding the company remain a concern. However, the company made it clear that Scilex is not a debtor in the Chapter 11 filing and will continue to do business as normal. Also, the stock probably dropped too far down last week considering that Sorrento's assets are worth $1 billion, according to the company. Look for the shares to still go higher, at least for a while. The company has a pipeline that includes promising cancer drug Fujovee (abivertinib), a tyrosine kinase inhibitor that is in late-stage trials to treat non-small cell lung cancer, prostate cancer, and B cell lymphomas. It also has two marketed drugs, ZTlido, a non-opioid painkiller to treat postherpetic neuralgia, and gout drug Gloperba.
