Item 8.01. Other Events.
Judgment Entered on Antibody Award
As previously disclosed, Sorrento Therapeutics,
Inc. (“Sorrento”) was engaged in arbitration before the American Arbitration Association against NantCell, Inc. (“NantCell”)
and Immunotherapy NANTibody LLC (“NANTibody”, together with NantCell, the “Nant Entities”) relating to alleged
breaches of the April 21, 2015 Exclusive License Agreement entered into between Sorrento and NantCell and the June 11, 2015 Exclusive
License Agreement entered into between Sorrento and NANTibody. On December 2, 2022, the arbitrator in that arbitration issued an award
(the “Antibody Award”) granting contractual damages and pre-award interest in the amounts of $156,829,562 to NantCell and
$16,681,521 to NANTibody, exclusive of post-award, prejudgment interest.
On December 21, 2022, in related actions pending
before the Honorable Terry Green of the Los Angeles Superior Court (the “Court”), the Nant Entities petitioned the Court to
confirm the Antibody Award and enter judgment in conformity therewith. On February 7, 2023, the Court granted the Nant Entities’
petitions, entered judgment upon the Antibody Award, and ordered Sorrento to pay to the Nant Entities the previously disclosed amounts
awarded in the Antibody Award. The Court further ordered that interest shall accrue upon the monetary judgment in the amount of ten percent
per annum, pursuant to California law.
Sorrento’s Request to Enter Judgment
on the Cynviloq Award
As Sorrento also previously disclosed in its Current
Report on Form 8-K filed on December 21, 2022, Sorrento was engaged in arbitration before the American Arbitration Association against
NantPharma, LLC (“NantPharma”) relating to alleged breaches of the May 14, 2015 Stock Sale and Purchase Agreement entered
into between Sorrento and NantPharma related to the development of the cancer drug Cynviloq™ (“Cynviloq Arbitration”).
On December 20, 2022, the arbitrator in the Cynviloq Arbitration issued an award (“Cynviloq Award”) granting contractual damages
of $125 million to Sorrento, reflecting the value of lost milestone payments for the approval of Cynviloq for the treatment of breast
and lung cancers.
On February 2, 2023, Sorrento initiated a new
action against NantPharma that Sorrento has requested be reassigned to Judge Green. In that new action, Sorrento petitioned the Court
to confirm the Cynviloq Award and enter judgment in conformity therewith. A hearing date on Sorrento’s petition is pending the decision
on the reassignment of the new action.
Sorrento’s Request to Stay Enforcement
Of Judgment Entered on the Antibody Award
On February 6, 2023, Sorrento applied ex parte
to the Court for a stay of enforcement of the judgment entered upon the Antibody Award until Sorrento is procedurally able to seek an
offset of the judgment entered upon the Antibody Award by the amount of the Cynviloq Award that Sorrento has petitioned the Court to confirm
and enter judgment upon. The Nant Entities opposed Sorrento’s ex parte application.
On February 7, 2023, the Court granted Sorrento’s
ex parte application in part. The Court stayed enforcement of the Antibody Award judgment for seventy days only to the extent the Antibody
Award judgment exceeds the approximately $50 million offset that Sorrento intends to seek based on the difference of the amounts of the
Antibody Award and the Cynviloq Award. Until April 18, 2023, the Nant Entities are therefore empowered to enforce the judgment entered
on the Antibody Award only up to the amount of $50 million.
The Nant Entities’ Motion for a Preliminary
Injunction
On January 10, 2023, the Nant Entities moved the
Court for a preliminary injunction prohibiting Sorrento from (i) “[t]ransferring, conveying, or disposing of any of its assets to
Sorrento’s officers, executives, or Board members … other than on account of existing compensation rights in such capacities”
and (ii) “[t]ransferring, conveying, or disposing of its assets to any location outside of the United States except as required for the
ordinary course of business.” Sorrento opposed the Nant Entities’ motion for preliminary injunctive relief.
On February 7, 2023, Judge Green granted, in part,
the Nant Entities’ motion. Until the judgment entered upon the Antibody Award is satisfied, the Court enjoined Sorrento from:
(1) Transferring, conveying, or disposing
of any of its assets to Sorrento’s officers, executives or Board members (collectively, “Insiders”) other than (a) on
account of existing compensation rights in such capacities or (b) on account of a dividend issued to all shareholders in proportion to
their respective ownership interests; or
(2) Transferring, conveying, or disposing
of its assets to any location outside of the United States for the purpose of (a) obtaining an ownership interest in another corporation
or (b) purchasing more than 50% of the assets of another corporation, absent prior order of the Court; or
(3) Transferring, conveying, or disposing
of more than $1 million in cash to any single location or corporation outside of the United States in any given month, absent prior order
of the Court.
The Court additionally ordered the Nant Entities
to post, collectively, a bond of $5 million while the injunction remains in effect.
Related Actions Pending Before The Court
As previously disclosed, in April 2019, Sorrento
filed derivatively on behalf of NANTibody an action against NantCell and Patrick Soon-Shiong, among others, related to several breaches
of the June 11, 2015 Limited Liability Company Agreement for NANTibody entered into between Sorrento and NantCell (the “Derivative
Action”). The suit alleges breaches of fiduciary duties and seeks, inter alia, a declaration that the Assignment Agreement entered
into on July 2, 2017, between NantPharma and NANTibody is void and an equitable unwinding of the Assignment Agreement. The Derivative
Action seeks the restoration of $90.05 million to the NANTibody capital account, thereby restoring Sorrento’s equity in NANTibody
to its invested amount as of June 30, 2017 of $40.0 million. The parties anticipate a jury trial will likely take place in 2023.
In 2020, Sorrento additionally filed a legal action
in the Court against Dr. Soon-Shiong, asserting claims for fraudulent inducement and common law fraud alleging that, among other things,
Dr. Soon-Shiong acquired the drug Cynviloq for the purpose of halting its progression to the market. The action pending against Dr. Soon-Shiong
was stayed pending resolution of the Cynviloq Arbitration, and Sorrento expects that the stay will soon be lifted. Sorrento has the right
to pursue these claims before a jury.