May 10, 2016
By Alex Keown, BioSpace.com Breaking News Staff
SAN DIEGO – Embattled Sorrento Therapeutics , which has seen shares of its stock plummet and has had an investor call for the ouster of its leadership, secured the services of Guggenheim Securities and PJT Partners to “review a number of strategic alternatives,” the company announced this morning.
“As part of the ongoing evaluation of our portfolio of assets we decided to engage industry leading firms to advise us on potential alternatives and strategies,” said Henry Ji, Sorrento’s president and chief executive officer. “Although there are no assurances that the process we commenced will result in a transaction, we believe the expertise of both Guggenheim Securities and PJT Partners will provide us with the best ability to fully evaluate options to enhance shareholder value.”
Sorrento did not provide a firm timeline for any result of the alternatives, nor did the company confirm that any evaluation by the two firms it hired will result in any strategic implementation. The company said it does not intend to publicly discuss or disclose any developments from this process unless the board of directors determines it is necessary.
Sorrento stock is down more than 4 percent this morning, trading at $5.92 per share. The stock had rallied somewhat on Monday, climbing to $6.30 per share from its Friday close of $5.51 per share. Despite the stock’s downward trend, multiple analysts have rated it a buy, with expectations the stock could more than double by years end, according to StockzIntelligence Inc.
San Diego-based Sorrento is an antibody-centric, clinical-stage biopharmaceutical company developing treatments for cancer, inflammation and autoimmune diseases. Sorrento’s lead products are multiple late-stage biosimilar and biobetter antibodies, as well as clinical CAR-T therapies targeting solid tumors.
On Monday, Wildcat Capital Management LLC, an activist investor which has a 6.5 percent stake in Sorrento Therapeutics, called for the board to terminate Ji and other members of Sorrento’s management team. Wildcat claims Sorrento leaders have “engaged in egregious and improper self-dealing and are squandering the company’s assets” and “destroyed” shareholder value.
In its letter, Wildcat lays out in detail its complaints against the company leadership, saying the management team’s deal making caused the company to lose the ability to control the development and monetization of its scientific assets. Additionally, Wildcat claims the Sorrento leadership has “repeatedly entered into transactions in which it has acquired scientific assets without the financial ability to either pay for those assets or further develop them to a stage where they can be monetized.” Wildcat was also highly critical of a financing deal that allowed an investor to acquire 45 percent of outstanding shares at a “near 52-week low.” Although not specifically named, Wildcat must have been referencing a private placement deal with South Korea-based Yuhan Corporation for 1.8 million shares of stock at $5.55 per share, a deal which netted Sorrento $10 million.
