SRNE Sorrento Therapeutics Inc

On September 1, 2020, Sorrento Therapeutics, Inc. (the “Company”) completed its previously announced merger (the “Merger”) of SP Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), with and into SmartPharm Therapeutics, Inc., a Delaware corporation (“SmartPharm”), whereby SmartPharm became a wholly owned subsidiary of the Company. The Merger was effected pursuant to that certain Agreement and Plan of Merger (the “Merger Agreement”), dated as of August 20, 2020, by and among the Company, Merger Sub, SmartPharm and John C. Thomas, Jr., as representative of the stockholders of SmartPharm (the “Stockholders’ Representative”).

The total value of the consideration payable to the holders of capital stock of SmartPharm (the “SmartPharm Stockholders”) in the Merger is equal to $19,368,664, subject to certain adjustments for net working capital, indebtedness, transaction expenses and cash (the “Consideration”). At the effective time of the Merger, SmartPharm Stockholders became entitled to receive an aggregate of 1,757,563 shares of common stock of the Company (the “Shares”) based on a price per share equal to $10.60, to be paid in accordance with the terms of the Merger Agreement, of which 204,828 Shares will be placed in escrow to serve as collateral and partial security for working capital adjustments and certain indemnification rights of the Company arising under the Merger Agreement. As provided for in the Merger Agreement, any SmartPharm Stockholder that is not an “accredited investor” as defined in Regulation D under the Securities Act of 1933, as amended (the “Securities Act”), may receive cash in lieu of shares of common stock of the Company pursuant to the terms of the Merger Agreement. A portion of the Consideration otherwise payable to the SmartPharm Stockholders was set aside for expenses incurred by the Stockholders’ Representative.

The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement that was filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 20, 2020, and is incorporated herein by reference.

The information set forth in Item 2.01 of this Current Report on Form 8-K is incorporated herein by reference into this Item 3.02 in its entirety. The Shares were offered and sold on September 1, 2020, in a transaction exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on Section 4(a)(2) thereof and Rule 506 of Regulation D thereunder. Each of the accredited SmartPharm Stockholders represented that such accredited SmartPharm Stockholder was an “accredited investor,” as defined in Regulation D, and was acquiring the Shares for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof. Accordingly, the Shares have not been registered under the Securities Act and the Shares may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws. Neither this Current Report on Form 8-K nor the exhibits attached hereto is an offer to sell or the solicitation of an offer to buy shares of Common Stock or any other securities of the Company.