A large pharmaceutical company engaged in research and development has filed for bankruptcy.
The company, which makes various cancer drugs, filed a Chapter 11 petition to liquidate assets and pay off debts.
Sorrento Therapeutics filed for bankruptcy in February after a protracted legal battle against a competitor contributed to $235 million in debt.
The company describes itself as “dedicated to developing life-saving therapeutics for the treatment of cancer.”
Sorrento also makes coronavirus tests abroad and is seeking emergency use authorization for its tests in the United States.
The filing is a setback for the cancer treatment developer.
However, the company has no apparent plans to cease operations, and it still has a number of cancer treatments in development, some of which are being tested in collaboration with the renowned Mayo Clinic.
The Sorrento roadblock followed a series of dramatic legal battles.
According to industry newspaper Fierce Biotech, the company’s debts mounted after a complex legal battle with rival company NantCell, which had previously purchased one of Sorrento’s cancer drugs for $90 million.
Sorrento claimed that NantCell, owned by billionaire Patrick Soon-Shiong, bought the drug to stifle competition.
Soon-Shiong’s company, which also owns the Los Angeles Times and is part owner of the Lakers, emerged victorious at the end of a messy arbitration process in December 2022.
Now Sorrento has to hand over millions to NantCell, which puts the company in debt.
After the complicated case, Sorrento’s financial problems were further complicated by a scandal in bankruptcy court.
When the company filed for Chapter 11 bankruptcy in the Southern District of Texas, the case was referred to Judge David Jones, who has since resigned.
His resignation came after it was revealed that he had a secret romantic relationship with Sorrento lawyer Elizabeth Freeman.
Jones oversaw a number of high-profile bankruptcy cases, including that of JCPenney.
As part of his role, Jones approved the fees Freeman charged Sorrento.
The judge told The Wall Street Journal in October that he didn’t believe he had to disclose the relationship because they were not married and he had no financial benefit from it.
Because of the controversy, some shareholders have requested that Jones be replaced to prevent bankruptcy proceedings from continuing.
Some investors took to Reddit and called the fees charged by Freeman “outrageous.”
“The court should order a recovery of the outrageous fees,” one poster said. “The [Chapter 11] The process should start over.
However, Sorrento officials said the relationship between the lawyer and the judge was irrelevant to the further course of the bankruptcy proceedings, Bloomberg reported.
MORE BANKRUPTCY CASES
Many corporations have filed high-profile bankruptcies in recent months.
The large drugstore chain Rite Aid is closing dozens of stores after bankruptcy.
The office space company WeWork also filed for bankruptcy in the fall.
The company’s decline is due to criticism of the CEO’s leadership style.
A major Denny’s franchisee recently filed for bankruptcy and closed ten stores in an effort to right the ship.
A Wendy’s franchisee also filed for bankruptcy.