CELG Celgene Corporation

By Jared S. Hopkins 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (April 4, 2019).

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 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, filed Wednesday, 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 for $2.9 billion in 2010. First approved by U.S. regulators in 2005 to treat breast cancer, Abraxane sold over $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.

In a statement, Dr. Soon-Shiong said the lawsuit lacked merit and is an attempt by Sorrento to deflect from Sorrento's own violation of an agreement with Dr. Soon-Shiong and his company, including failing to provide drug candidates. He also said that Sorrento misrepresented Cynviloq's scientific data and as a result he and his company are retesting the drug in clinical studies.

A Celgene spokesman declined to comment on the lawsuit.

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 S. Hopkins at jared.hopkins@wsj.com

(END) Dow Jones Newswires

April 04, 2019 02:47 ET (06:47 GMT)

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