Sorrento Therapeutic Sues Billionaire Soon-Shiong Over Development of Cancer Drug
April 03 2019 - 10:43AM
Dow Jones News
By Jared S. Hopkins
Sorrento Therapeutics Inc. alleges billionaire Patrick
Soon-Shiong and one of his companies stopped development of an
experimental cancer drug because its success would hurt sales of a
rival drug sold by Celgene Corp. that Dr. Soon-Shiong invented,
according to a civil complaint filed Wednesday in Los Angeles
Superior Court.
Sorrento sold the cancer drug Cynviloq to Dr. Soon-Shiong's
NantPharma LLC in a deal valued at up to $1.3 billion in 2015.
Sorrento received more than $90 million in cash, with the remaining
funds tied to regulatory and sales milestones if the drug received
regulatory approval.
The complaint says that Dr. Soon-Shiong promised Sorrento that
he would ensure Cynviloq was approved and launched in the U.S.
Instead, he and his companies stopped development in what the
complaint termed a "catch and kill" scheme because Cynviloq's
success would have hurt sales of the drug he invented, Abraxane.
Dr. Soon-Shiong had sold Abraxane and its manufacturer, Abraxis
BioScience Inc., to Celgene Corp. for $2.9 billion in 2010. First
approved by U.S. regulators in 2005 to treat breast cancer,
Abraxane sold more than $1 billion last year.
When he sold, Abraxis, Dr. Soon-Shiong received a 2% stake in
Celgene. Like other Abraxis shareholders, he also received tradable
contingent value rights tied to future Abraxane sales. Celgene also
has invested in Dr. Soon-Shiong's businesses. Last year it
increased its total in one of his companies called NantCell to $105
million. Celgene has agreed to be acquired by rival Bristol-Myers
Squibb for $74 billion.
A representative for Dr. Soon-Shiong and his companies didn't
immediately have any comment. A Celgene spokesman didn't
immediately respond to a request for comment.
The biotechnology entrepreneur is worth more than $7 billion,
according to Forbes. Born and raised in South Africa, Dr.
Soon-Shiong arrived in the U.S. in the 1980s and was a surgeon at
the University of California, Los Angeles.
His profile has grown in recent years and last year, he acquired
the Los Angeles Times from Tribune Publishing Co. for $500 million.
He also owns a significant chunk of the Los Angeles Lakers
basketball team.
Dr. Soon-Shiong's biotech interests have been challenged before
in court. In 2017, pop star Cher alleged she was duped into selling
her shares in Altor BioScience Corp to Dr. Soon-Shiong at a
fraction of their real value. Records show a judge dismissed the
case at Cher's request in 2018.
The Sorrento suit alleges that Dr. Soon-Shiong initially
suggested facilitating a deal in which Celgene would acquire
Cynviloq. But in early 2015, Celgene's lawyers determined U.S.
authorities would likely prohibit it on antitrust grounds,
according to the complaint. Then Dr. Soon-Shiong told Sorrento's
chief executive that his own experience with Abraxane made him the
right person to ensure Cynviloq reached patients, according to the
complaint.
The companies announced their deal in May 2015. The companies
also made a joint venture for research and development in which
Sorrento invested $40 million, and an entity related to Dr.
Soon-Shiong would contribute $60 million.
Dr. Soon-Shiong agreed with Sorrento's decision to plan to file
for U.S. approval in late 2015 with a launch expected a year later,
according to the complaint. In early 2015, Sorrento had announced
promising clinical-trial data on the drug.
The application was never filed and a key patent for Cynviloq
expired, according to the complaint. Instead, Dr. Soon-Shiong
allegedly had the joint venture in 2017 buy Cynviloq from
NantPharma for $90 million. Those funds included the money Sorrento
had invested in the venture, the complaint says.
"It wasn't until months later, when trying to close their
year-end books, that Sorrento learned of the secret scheme and the
significant loss of capital," according to the complaint.
In the past, promising drugs from other companies have suffered
due to changing commercial interests. For example, Napo
Pharmaceuticals Inc. sued Salix Pharmaceuticals Ltd., now part of
Bausch Health Cos., alleging that Salix breached an agreement to
help develop a diarrhea drug because Salix had a competing
treatment. The companies settled and the drug's rights were
returned to Napo.
Write to Jared Hopkins at jared.hopkins@wsj.com
(END) Dow Jones Newswires
April 03, 2019 11:28 ET (15:28 GMT)
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