SEC Filing - Sorrento Therapeutics

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

View:

Download DOC

Download PDF

Download XLS

Download XBRL

10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-36150

SORRENTO THERAPEUTICS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

33-0344842

(State or Other Jurisdiction of
Incorporation or Organization)

(I.R.S. Employer
Identification Number)

4955 Directors Place

San Diego, California 92121

(Address of Principal Executive Offices)

(858) 203-4100

(Registrant’s Telephone Number, Including Area Code)

Securities Registered pursuant to Section 12(b) of the Act:


Title of each class:	Trading Symbol (s)	Name of each exchange on which registered:
Common Stock, $0.0001 par value	SRNE	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒.

The number of shares of the issuer’s common stock, par value $0.0001 per share, outstanding as of August 8, 2022 was 449,952,163.

Sorrento Therapeutics, Inc.

Form 10-Q for the Quarter Ended June 30, 2022

Table of Contents


Part I	Financial Information	3
Item 1.	Consolidated Financial Statements (Unaudited)	3
	Consolidated Balance Sheets (Unaudited) as of June 30, 2022 and December 31, 2021	3
	Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 30, 2022 and 2021	4
	Consolidated Statements of Comprehensive Loss (Unaudited) for the Three and Six Months Ended June 30, 2022 and 2021	5
	Consolidated Statements of Stockholders’ Equity (Unaudited) for the Three and Six Months Ended June 30, 2022 and 2021	6
	Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2022 and 2021	7
	Notes to Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	30

Part II	Other Information	31
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	37
SIGNATURES		40

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements.

SORRENTO THERAPEUTICS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except for share amounts; unaudited)


ASSETS	June 30, 2022			December 31, 2021
Current assets:
Cash and cash equivalents	$	70,345		$	36,665
Marketable investments		63,259			90,217
Accounts receivables, net		24,715			18,715
Inventory		20,697			8,106
Prepaid expenses		8,960			11,804
Other current assets		8,072			7,482
Total current assets		196,048			172,989
Property and equipment, net		42,530			41,325
Operating lease right-of-use assets		86,094			85,173
Intangibles, net		172,566			259,705
Goodwill		81,351			79,525
Equity investments		50,739			51,271
Other assets, net		2,804			4,830
Total assets	$	632,132		$	694,818
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	24,937		$	27,414
Accrued payroll and related benefits		28,394			21,503
Accrued expenses		45,816			37,975
Current portion of deferred revenue		1,018			1,108
Current portion of operating lease liabilities		13,508			11,539
Current portion of contingent consideration		397			397
Acquisition consideration		7,537			7,537
Current portion of debt		23,714			31,980
Total current liabilities		145,321			139,453
Long-term debt, net of discount		83,069			110,627
Deferred tax liabilities, net		2,358			2,426
Deferred revenue		117,445			118,942
Derivative liabilities		500			35,700
Operating lease liabilities		84,316			83,431
Contingent consideration		57,949			124,349
Other long-term liabilities		5,411			1,761
Total liabilities	$	496,369		$	616,689
Commitments and contingencies (See Note 10)
Equity:
Sorrento Therapeutics, Inc. equity
Common stock, $0.0001 par value 750,000,000 shares authorized and 436,418,964 and 314,573,225 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively		18			32
Additional paid-in capital		1,826,810			1,513,758
Accumulated other comprehensive income		837			1,026
Accumulated deficit		(1,646,178	)		(1,386,604	)
Treasury stock, 7,568,182 shares at cost at June 30, 2022, and December 31, 2021		(49,464	)		(49,464	)
Total Sorrento Therapeutics, Inc. stockholders’ equity		132,023			78,748
Noncontrolling interests		3,740			(619	)
Total equity		135,763			78,129
Total liabilities and stockholders’ equity	$	632,132		$	694,818

See accompanying notes to unaudited consolidated financial statements

Table of Contents

SORRENTO THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except for per share amounts; unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Revenues:
Net product revenues	$	8,591		$	7,854		$	18,582		$	14,877
Service revenues		2,870			5,657			11,263			12,889
Total revenues		11,461			13,511			29,845			27,766
Operating costs and expenses:
Cost of products sold		3,393			525			6,270			1,377
Cost of services		2,311			2,596			5,191			5,130
Research and development		48,467			54,506			112,193			98,339
Acquired in-process research and development		—			4,971			12,272			12,483
Selling, general and administrative		48,136			50,293			92,714			93,687
Intangible amortization		1,035			1,070			2,069			2,105
Increase (decrease) on contingent consideration		(64,300	)		100			(66,400	)		100
Loss on impairment of intangible assets		90,780			—			90,780			—
Total operating costs and expenses		129,822			114,061			255,089			213,221
Loss from operations		(118,361	)		(100,550	)		(225,244	)		(185,455	)
Gain (Loss) on derivative liabilities		(2,700	)		(300	)		4,800			1,900
Gain (Loss) on marketable investments		(95,492	)		(63,901	)		(26,958	)		30,530
Loss on debt extinguishment		(471	)		(584	)		(5,732	)		(6,695	)
Loss on foreign currency exchange		(561	)		(1	)		(165	)		(541	)
Interest expense, net		(2,314	)		(2,016	)		(5,563	)		(4,382	)
Other income (loss)		(700	)		34			(683	)		(44	)
Loss before income tax		(220,599	)		(167,318	)		(259,545	)		(164,687	)
Income tax expense (benefit)		(1,050	)		(641	)		413			(847	)
Gain (loss) on equity method investments		72			(22	)		(59	)		(441	)
Net loss		(219,477	)		(166,699	)		(260,017	)		(164,281	)
Net loss attributable to noncontrolling interests		(718	)		(84	)		(443	)		(176	)
Net loss attributable to Sorrento	$	(218,759	)	$	(166,615	)	$	(259,574	)	$	(164,105	)
Net loss per share - basic per share attributable to Sorrento	$	(0.54	)	$	(0.57	)	$	(0.70	)	$	(0.58	)
Net loss per share - diluted per share attributable to Sorrento	$	(0.54	)	$	(0.57	)	$	(0.70	)	$	(0.58	)
Weighted-average shares used during period - basic shares attributable to Sorrento		402,801			290,003			370,144			285,330
Weighted-average shares used during period - diluted shares attributable to Sorrento		402,801			290,003			370,144			285,330

See accompanying notes to unaudited consolidated financial statements

Table of Contents

SORRENTO THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands; unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Net loss	$	(219,477	)	$	(166,699	)	$	(260,017	)	$	(164,281	)
Other comprehensive income:
Foreign currency translation adjustments		1,060			688			837			613
Total other comprehensive income		1,060			688			837			613
Comprehensive loss		(218,417	)		(166,011	)		(259,180	)		(163,668	)
Comprehensive loss attributable to noncontrolling interests		(718	)		(84	)		(443	)		(176	)
Comprehensive loss attributable to Sorrento	$	(217,699	)	$	(165,927	)	$	(258,737	)	$	(163,492	)

See accompanying notes to unaudited consolidated financial statements

Table of Contents

SORRENTO THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands; unaudited)


	Six Months Ended June 30, 2022
	Common Stock				Treasury Stock							Accumulated
	Shares		Amount		Shares		Amount			Additional Paid-in Capital		Other Comprehensive Income (Loss)			Accumulated Deficit			Noncontrolling Interest			Total
Balance, December 31, 2021		314,573	$	32		7,568	$	(49,464	)	$	1,513,758	$	1,026		$	(1,386,604	)	$	(619	)	$	78,129
Issuance of common stock under equity compensation plans		438		—		—		—			132		—			—			—			132
Issuance of common stock for equity offerings		58,875		6		—		—			164,431		—			—			—			164,437
Acquisitions consideration paid in equity		1,282		—		—		—			4,435		—			—			—			4,435
Stock-based compensation		—		—		—		—			20,854		—			—			—			20,854
Foreign currency translation adjustment		—		—		—		—			—		(1,249	)		—			—			(1,249	)
Net loss		—		—		—		—			—		—			(40,815	)		275			(40,540	)
Balance, March 31, 2022		375,168	$	38		7,568	$	(49,464	)	$	1,703,610	$	(223	)	$	(1,427,419	)	$	(344	)	$	226,198
Issuance of common stock under equity compensation plans		544		—		—		—			668		—			—			—			668
Issuance of common stock for equity offerings		60,707		6		—		—			104,163		—			—			—			104,169
Stock-based compensation		—		—		—		—			18,369		—			—			—			18,369
Changes to noncontrolling interests		—