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Sorrento Therapeutics sues Soon-Shiong, alleging it was shortchanged in cancer drug sale

SAN DIEGO, CA April 4th 2018 | Dr. Patrick Soon-Shiong, the new owner of the San Diego Union Tribune
Dr. Patrick Soon-Shiong, in a statement, called the lawsuit “a cynical attempt to deflect from Sorrento’s own breach of contract.”
(Eduardo Contreras / San Diego Union-Tribune)
San Diego Union-Tribune

A San Diego biopharmaceutical company is accusing its business partner, biotech entrepreneur Dr. Patrick Soon-Shiong, of orchestrating a “catch and kill” plan that ultimately prevented the release of a promising cancer drug.

Sorrento Therapeutics, a publicly traded firm developing pain and cancer drugs, on Wednesday filed two lawsuits against Soon-Shiong — who owns the Los Angeles Times and San Diego Union-Tribune — as well as subsidiaries of Soon-Shiong’s NantWorks empire. It’s seeking damages of more than $1 billion through an arbitration complaint, and $90.05 million through a civil suit. Soon-Shiong denies any wrongdoing and says the suits are without merit.

In the arbitration case, the biotech firm charges that Soon-Shiong purchased and then sought to kill Sorrento’s experimental drug, Cynviloq, before it could reach market. The drug candidate was lauded as a next-generation spin on Abraxane, the anti-cancer drug Soon-Shiong sold to Celgene for $2.9 billion in 2010. Soon-Shiong later “orchestrated a secret, illegal transaction” to recoup the funds he paid for Cynviloq, according to the civil case.

In an emailed statement, Soon-Shiong denied the allegations.

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“The lawsuit is a cynical attempt to deflect from Sorrento’s own breach of contract. The allegation that we have not developed Cynviloq to protect the sales of Abraxane is false and it ignores the facts. Because it is totally without merit, we shall defend ourselves vigorously against this baseless allegation,” Soon-Shiong said.

The legal dispute dates to late 2014, when Cynviloq was supposedly on track to be cleared by the U.S. Food and Drug Administration. Cynviloq was modeled after Abraxane, with a few tweaks to the drug’s design so that it could be administered to patients more efficiently and at a lower cost. Abraxane, according to court documents, sells for $1,378 per dose in the U.S. and has no direct competition. In South Korea, however, the price is $270 per dose because of competition from Cynviloq, which is sold there for $180 per dose under the name Genexol-PM.

The suit says Soon-Shiong approached Sorrento Chief Executive Henry Ji, hoping to broker a deal between Sorrento and Celgene for the drug. When it appeared in early 2015, however, that the Federal Trade Commission would object to the deal, Soon-Shiong, who owns a stake in Celgene, proposed that his own company, NantPharma, acquire the drug instead, the civil suit says.

In May 2015, NantPharma acquired Sorrento’s subsidiary IgDraSol Inc., which held the Cynviloq assets. Soon-Shiong’s company paid $90 million in cash and agreed to $1.2 billion of payments pegged to certain milestones, some contingent on FDA approvals. The latter payments did not materialize.

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Sorrento claimed that by mid-2016 Soon-Shiong hadn’t pushed forward with FDA approval and let critical patents lapse. Soon-Shiong said Sorrento misrepresented the drug’s status with the FDA and failed to deliver on other research commitments.

Then, in July 2017, Sorrento contends that Soon-Shiong defrauded the biotech firm by redirecting money from its research venture, a charge the doctor also disputes.

At the time of Cynviloq’s sale in 2015, the parties formed a $100-million cancer research venture called Immunotherapy NANTibody. The limited liability company’s ownership and funding were divided 60-40 between Soon-Shiong’s NantCell and Sorrento Therapeutics, respectively.

Two years later, Soon-Shiong and his lawyer, Charles Kim, “drained [the joint venture] of nearly all of its contributed capital,” according to the civil case. The suit alleges the pair had the joint venture pay NantPharma $90.05 million for the Cynviloq assets — without notifying NANTibody’s board of directors. In short, the allegation is that the doctor repaid himself for the purchase of IgDraSol.

“Because the drug required a new process, further stability testing, and a complete new Phase 1 clinical study, we sold the drug to our [joint venture] with Sorrento, which had both regulatory and formulation expertise,” Soon-Shiong said of the transaction. “We opened a Phase 1 study and this study is currently open and we are actively trying to recruit patients.”

The civil case, filed in Los Angeles County Superior Court, is seeking to undo the transaction and return $90.5 million to the joint venture. The arbitration demand, filed with the American Arbitration Assn. in Los Angeles, is seeking damages in excess of $1 billion, as well as additional punitive damages.

Van Grove writes for the San Diego Union-Tribune. Union-Tribune staff writer Brittany Meiling contributed to this report.


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