Sorrento Therapeutics has accused billionaire Patrick Soon-Shiong of acquiring a cancer drug that would have competed with the blockbuster drug he invented and preventing it from ever reaching the market, according to a civil complaint filed in Los Angeles Superior Court on Wednesday.
In 2015 NantPharma, a subsidiary in Soon-Shiong’s network of Nant companies, acquired the rights to the cancer drug Cynviloq from Sorrento Therapeutics with a $ 90 million up-front cash payment and agreed to pay an additional $ 1.2 billion if certain regulatory milestones were reached. At the time Cynviloq was undergoing multiple clinical trials to determine its bioequivalence to Abraxane, a cancer drug Soon-Shiong invented. In 2010 Soon-Shiong had sold the manufacturer of Abraxane, Abraxis, to Celgene in a $ 4.5 billion stock and cash deal.
Sorrento’s lawsuit alleges that Soon-Shiong engaged in a “catch and kill” scheme, buying the rights to the drug but then halting the process of bringing Cynviloq to market, thereby keeping competition for Abraxane at bay. Sorrento’s complaint states that Soon-Shiong did not pursue relevant FDA approvals, let “critical patents lapse” and “demonstrated zero interest in reaching the approvals the parties had agreed upon in their sale agreement.”
While Soon-Shiong no longer owned Abraxane at the time of the Cynviloq acquisition, he was still Celgene’s largest individual stockholder. A new competitor in the market would have been “financially devastating” to Soon-Shiong, the lawsuit alleges.
Soon-Shiong has an estimated net worth of $ 7.1 billion, and despite his recent flashy purchases of assets like the Los Angeles Times, Forbes estimates that a significant chunk of his net worth—about $ 1.5 billion—lies in his Celgene shares. On January 3, following news of Bristol-Myers Squibb’s plans to acquire Celgene, Soon-Shiong’s fortune jumped at least $ 194 million in a single day of trading.
The suit also alleges that once Soon-Shiong had gained control of Cynviloq, he arranged a separate scheme to get back the $ 90 million he had paid Sorrento in 2015. At the same time that the Cynviloq deal was being arranged, Sorrento and another one of Soon-Shiong’s companies, NantCell, created a joint venture called NANTibody, focused on cancer immunotherapy treatments. Sorrento put $ 40 million of the $ 90 million it received from NantPharma into this joint venture. Two years later, Soon-Shiong and his chief legal officer, Charles Kim, who is also named as a defendant in this suit, signed a “secret deal” to move nearly all of Sorrento’s $ 40 million out of the NANTibody joint venture and over into NantPharma, without Sorrento’s knowledge.
Separately, according to an 8-K filed with the SEC on Wednesday, Sorrento Therapeutics has also filed an arbitration demand with the American Arbitration Association in Los Angeles against NantPharma and Patrick Soon-Shiong seeking damages of more than $ 1 billion for fraud and breach of contract.
In an emailed statement to Forbes, Soon-Shiong said, “The allegation that we have not developed Cynviloq to protect the sales of Abraxane is false and it ignores the facts.” A spokesperson for Soon-Shiong said that one of Soon-Shiong’s companies is continuing to work on developing the drug.
Soon-Shiong’s web of intertwining business relationships runs deep. In January he appeared at the J.P. Morgan Healthcare investor conference in San Francisco to make a presentation on NantCell, which had issued a statement a few days earlier saying that it had received $ 30 million in funding from Celgene. Sorrento Therapeutics mentions in its complaint that Sorrento is also a 2.8% shareholder in NantCell, claiming its stake is worth $ 105 million.
Years ago Soon-Shiong spelled out a grand vision of how he aimed to unite data, genomics and new drugs to vastly improve cancer care. Reality has yet to catch up with his vision. In January his publicly traded firm NantHealth filed a statement with the SEC noting that it was at risk of being delisted from the Nasdaq. According the filing, Nanthealth has either 180 business days or until July 15 to raise its stock price, or else it will be delisted from the exchange entirely. Since Nanthealth filed that, the company’s stock rose above $ 1 for 11 consecutive trading days between March 7 and March 21, but the stock fell back down to $ 0.93 per share on March 22 and has stayed below $ 1 since then. Late last month Soon-Shiong also injected $ 39 million of his own funds into his firm NantKwest in a private placement to help it further develop a cancer treatment.
April 3, 2019: This post was updated to include a comment from Patrick Soon-Shiong and his spokesperson.
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