Sorrento Therapeutics gets OK to sell Scilex stock back to Scilex

By Sarah Lizee

Olympia, Wash., Sept. 13 – Sorrento Therapeutics, Inc. received court approval to sell its equity interests in Scilex Holding Co. back to Scilex, according to an order filed Tuesday with the U.S. Bankruptcy Court for the Southern District of Texas.

As previously reported, Sorrento told the court it had moved away from a sale of the equity interests in Scilex to Oramed Pharmaceuticals, Inc. after Oramed claimed certain conditions to closing had not been met.

The company said it is running out of cash and has an urgent need for liquidity to pay administrative expenses and address its senior and junior debtor-in-possession facilities.

As previously reported, Oramed had agreed to buy substantially all of the debtors’ common stock, preferred stock, and warrants and options for common stock in Scilex for a purchase price of $105 million. Oramed also agreed to provide a $100 million replacement DIP facility to the company.

The deal was subject to the submission of higher or otherwise better offers.

The proposed sale drew an objection from Scilex shareholders that said they had submitted an improved bid to purchase the stock for $138 million, with committed funding for the cash portion of the bid and a closing date on or before Sept. 25.

The shareholders had asked the court to reopen the auction. The court denied the motion and approved the sale to Oramed on Aug. 30.

However, as the debtors were preparing to close the sale to Oramed, they learned that Oramed believed the conditions to close the sale were not satisfied, which the debtors disputed.

Following negotiations between the debtors, Oramed, Scilex, the official committee of unsecured creditors and the official committee of equity security holders, as well as mediation with judge Marvin Isgur, the debtors, Oramed and Scilex filed term sheets for a proposed sale to Scilex instead.

Scilex’s term sheet generally provides for a $110 million consideration, assumption of certain legal fees and expenses totaling $12.5 million, and a credit bid of all amounts owed to Scilex under the junior DIP facility. The sale would close by Sept. 19.

The biopharmaceutical company is based in San Diego. The company filed bankruptcy on Feb. 13, 2023 under Chapter 11 case number 23-90085.

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