Sorrento Therapeutics Shares Are Collapsing! What Is the Reason?
Investors aren’t too happy with Sorrento Therapeutics today- the drugmaker’s stock is plummeting by an astounding 56.3% as of 11:22 a.m., and it only worsens from there. An 8-K filing released earlier this morning disclosed that both Sorrento and its subsidiary, Scintilla Pharmaceuticals, have initiated Chapter 11 bankruptcy proceedings in the U.S Bankruptcy Court for Texas’ Southern District; a decision that has investors reeling as they worry about what might happen next to their shares of the commercial-stage biopharma company.
Why Did Sorrento Therapeutics File Bankruptcy?
The Chapter 11 bankruptcy filing of Sorrento Therapeutics appears linked to its ongoing dispute with billionaire biotech investor Dr. Patrick Soon-Shiong, and the entities he controls. This legal battle revolves around a joint venture established in 2015 called NANTibody.
Last year, an arbitrator granted NantCell and its subsidiary NANTibody a hefty award of $156.8 million and 16.7 million, respectively, in contractual damages plus pre-award interest. Nevertheless, the companies were threatened by potential asset seizure as soon as February 7th this year due to the confirmed judgment against them. Thankfully, filing for bankruptcy halted any further attempts at seizing assets while they could continue their usual operations during court proceedings without interruption or risk of disruption caused by creditors.
So, Should You Invest in Sorrento’s Therapeutics Stocks?
Is Sorrento’s stock a wise purchase? Some Wall Street analysts are quite confident that the biotech’s clinical pipeline has been underappreciated by the market. Unfortunately, bankruptcy proceedings often offer no certainty in their outcomes. Although SorrentoTherapeutics can emerge from this reorganization stronger than before, there is still far too much uncertainty surrounding this issue for investors to take on any risks at this time. Until more clarity emerges about this key headwind, investors may want to stay on the sidelines and observe how things unfold.