Sorrento Therapeutics seeks exclusivity extension, closes Scilex stock sale

By Sarah Lizee

Olympia, Wash., Sept. 21 – Sorrento Therapeutics, Inc. is seeking an extension of its exclusive periods to file and solicit votes on a Chapter 11 plan, according to an emergency motion filed Wednesday with the U.S. Bankruptcy Court for the Southern District of Texas.

Specifically, the company asked the court to extend the exclusive plan filing period through Oct. 16 and the exclusive solicitation period through Dec. 15.

The company said emergency consideration is needed as its exclusive filing period is set to expire on Sept. 25.

“Failure to obtain a further extension could result in unnecessary disruption to the debtors’ estates,” the company said in the motion.

The company said the official committee of unsecured creditors supports the extension, but the official committee of equity holders has not responded to the debtors regarding the matter.

Scilex stock sale

On Thursday, Sorrento closed the previously announced sale of its common shares, preferred shares and warrants in Scilex Holding Co. back to Scilex, according to a press release.

The consideration was $110 million, comprised of cash payments of $10 million and the assumption of about $100 million in Sorrento’s debt, plus the assumption of around $12.25 million in legal fees and expenses, plus a credit bid of all amounts owed to Scilex under a junior debtor-in-possession facility provided by Scilex to Sorrento.

Scilex assumed about $100 million in debt of Sorrento owed to Oramed Pharmaceuticals Inc. by entering into a securities purchase agreement with Oramed, through which Scilex issued to Oramed the following:

• A senior secured promissory note in the principal amount of $101.88 million, which is equal to the unpaid principal and accrued interest, fees and expenses under Sorrento’s $100 million senior secured DIP term loan facility with Oramed, secured by a senior lien on substantially all of the company’s and its subsidiaries’ assets, subject to certain exclusions, with an interest rate of SOFR plus 850 basis points; and

• Warrants to purchase up to 13 million shares of common stock, subject to certain terms and conditions (including vesting restrictions on 8.5 million of the warrants), each with an exercise price of $0.01 and each with restrictions on exercisability.

Scilex also caused to be transferred from its wholly owned subsidiary to Oramed outstanding warrants previously held by Sorrento to purchase up to an aggregate of 4 million shares of common stock.

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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