UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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
(Exact Name of Registrant as Specified in Its Charter)
|
||
(State or Other Jurisdiction of Incorporation or Organization) |
|
(I.R.S. Employer Identification Number) |
(Address of Principal Executive Offices)
(
(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: |
|
|
None |
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.
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).
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:
|
☒ |
|
Accelerated filer |
|
☐ |
|
|
|
|
|
|||
Non-accelerated filer |
|
☐ |
|
Smaller reporting company |
|
|
|
|
|
|
|
|
|
Emerging growth company |
|
|
|
|
|
|
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 May 8, 2023 was
Sorrento Therapeutics, Inc.
Form 10-Q for the Quarter Ended March 31, 2023
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements.
SORRENTO THERAPEUTICS, INC.
(DEBTOR-IN-POSSESSION)
CONSOLIDATED BALANCE SHEETS
(In thousands, except for share amounts; unaudited)
3
ASSETS |
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Marketable investments |
|
|
|
|
|
|
||
Accounts receivables, net |
|
|
|
|
|
|
||
Inventory |
|
|
|
|
|
|
||
Prepaid expenses |
|
|
|
|
|
|
||
Other current assets |
|
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
|
||
Property and equipment, net |
|
|
|
|
|
|
||
Operating lease right-of-use assets |
|
|
|
|
|
|
||
Intangibles, net |
|
|
|
|
|
|
||
Goodwill |
|
|
|
|
|
|
||
Equity investments |
|
|
|
|
|
|
||
Other assets, net |
|
|
|
|
|
|
||
Total assets |
|
|
|
|
|
|
||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
|
|
$ |
|
||
Accrued payroll and related benefits |
|
|
|
|
|
|
||
Accrued expenses and other current liabilities |
|
|
|
|
|
|
||
Accrued legal settlements |
|
|
— |
|
|
|
|
|
Current portion of deferred revenue |
|
|
|
|
|
|
||
Current portion of operating lease liabilities |
|
|
|
|
|
|
||
Current portion of contingent consideration |
|
|
|
|
|
|
||
Acquisition consideration |
|
|
|
|
|
|
||
Income tax payable |
|
|
|
|
|
|
||
Current portion of debt |
|
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
|
||
Long-term debt, net of discount |
|
|
|
|
|
|
||
Deferred tax liabilities, net |
|
|
|
|
|
|
||
Deferred revenue |
|
|
|
|
|
|
||
Derivative liabilities |
|
|
|
|
|
|
||
Operating lease liabilities |
|
|
|
|
|
|
||
Contingent consideration |
|
|
|
|
|
|
||
Other long-term liabilities |
|
|
|
|
|
|
||
Total liabilities not subject to compromise |
|
|
|
|
|
|
||
Liabilities subject to compromise |
|
|
|
|
|
— |
|
|
Total liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|||
Equity (Deficit): |
|
|
|
|
|
|
||
Sorrento Therapeutics, Inc. equity (deficit) |
|
|
|
|
|
|
||
Common stock, $ |
|
|
|
|
|
|
||
Additional paid-in capital |
|
|
|
|
|
|
||
Accumulated other comprehensive income |
|
|
|
|
|
|
||
Accumulated deficit |
|
|
( |
) |
|
|
( |
) |
Treasury stock, |
|
|
( |
) |
|
|
( |
) |
Total Sorrento Therapeutics, Inc. stockholders’ equity (deficit) |
|
|
( |
) |
|
|
( |
) |
Noncontrolling interests |
|
|
( |
) |
|
|
( |
) |
Total equity (deficit) |
|
|
( |
) |
|
|
( |
) |
Total liabilities and stockholders’ equity (deficit) |
|
$ |
|
|
$ |
|
||
See accompanying notes to unaudited consolidated financial statements
4
SORRENTO THERAPEUTICS, INC.
(DEBTOR-IN-POSSESSION)
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per share amounts; unaudited)
|
|
Three Months Ended March 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Revenues: |
|
|
|
|
|
|
||
Net product revenues |
|
$ |
|
|
$ |
|
||
Service revenues |
|
|
|
|
|
|
||
Total revenues |
|
|
|
|
|
|
||
Operating costs and expenses: |
|
|
|
|
|
|
||
Cost of products sold |
|
|
|
|
|
|
||
Cost of services |
|
|
|
|
|
|
||
Research and development |
|
|
|
|
|
|
||
Acquired in-process research and development |
|
|
— |
|
|
|
|
|
Selling, general and administrative |
|
|
|
|
|
|
||
Intangible amortization |
|
|
|
|
|
|
||
Increase (decrease) on contingent consideration |
|
|
|
|
|
( |
) |
|
Loss on impairment of intangible assets |
|
|
|
|
|
— |
|
|
Legal settlement |
|
|
|
|
|
— |
|
|
Total operating costs and expenses |
|
|
|
|
|
|
||
Loss from operations |
|
|
( |
) |
|
|
( |
) |
(Loss) gain on derivative liabilities |
|
|
( |
) |
|
|
|
|
(Loss) gain on marketable and equity investments |
|
|
( |
) |
|
|
|
|
Loss on debt extinguishment, net |
|
|
( |
) |
|
|
( |
) |
(Gain) loss on foreign currency exchange |
|
|
( |
) |
|
|
|
|
Interest expense, net |
|
|
( |
) |
|
|
( |
) |
Other (loss) income |
|
|
( |
) |
|
|
|
|
Reorganization items, net |
|
|
( |
) |
|
|
— |
|
Loss before income tax |
|
|
( |
) |
|
|
( |
) |
Income tax expense |
|
|
|
|
|
|
||
Loss on equity method investments |
|
|
( |
) |
|
|
( |
) |
Net loss |
|
|
( |
) |
|
|
( |
) |
Net (loss) income attributable to noncontrolling interests |
|
|
( |
) |
|
|
|
|
Net loss attributable to Sorrento |
|
$ |
( |
) |
|
$ |
( |
) |
Net loss per share - basic per share attributable to Sorrento |
|
$ |
( |
) |
|
$ |
( |
) |
Net loss per share - diluted per share attributable to Sorrento |
|
$ |
( |
) |
|
$ |
( |
) |
Weighted-average shares used during period - basic shares attributable to Sorrento |
|
|
|
|
|
|
||
Weighted-average shares used during period - diluted shares attributable to Sorrento |
|
|
|
|
|
|
||
See accompanying notes to unaudited consolidated financial statements
5
SORRENTO THERAPEUTICS, INC.
(DEBTOR-IN-POSSESSION)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands; unaudited)
|
|
Three Months Ended |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive loss: |
|
|
|
|
|
|
||
Foreign currency translation adjustments |
|
|
|
|
|
( |
) |
|
Total other comprehensive loss |
|
|
|
|
|
( |
) |
|
Comprehensive loss |
|
|
( |
) |
|
|
( |
) |
Comprehensive (loss) gain attributable to noncontrolling interests |
|
|
( |
) |
|
|
|
|
Comprehensive loss attributable to Sorrento |
|
$ |
( |
) |
|
$ |
( |
) |
See accompanying notes to unaudited consolidated financial statements
6
SORRENTO THERAPEUTICS, INC.
(DEBTOR-IN-POSSESSION)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(In thousands; unaudited)
|
|
Three Months Ended March 31, 2023 |
|
|||||||||||||||||||||||||||||||||
|
|
Common Stock |
|
|
Treasury Stock |
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Additional |
|
|
Other |
|
|
Accumulated |
|
|
Noncontrolling |
|
|
Total |
|
|||||||||
Balance, December 31, 2022 |
|
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|||||
Issuance of common stock for equity offerings |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Other acquisitions, license agreements and investments paid in equity |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Scilex Holding dividend |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
Scilex Holding equity issuances (Shares issued under Standby Equity Purchase Agreements) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance, March 31, 2023 |
|
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|||||
|
|
Three Months Ended March 31, 2022 |
|
|||||||||||||||||||||||||||||||||
|
|
Common Stock |
|
|
Treasury Stock |
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Additional |
|
|
Other |
|
|
Accumulated |
|
|
Noncontrolling |
|
|
Total |
|
|||||||||
Balance, December 31, 2021 |
|
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||||
Issuance of common stock under equity compensation plans |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Issuance of common stock for equity offerings |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Acquisitions consideration paid in equity |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Balance, March 31, 2022 |
|
|
|
|
$ |
|
|
|
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|||||
See accompanying notes to unaudited consolidated financial statements
7
SORRENTO THERAPEUTICS, INC.
(DEBTOR-IN-POSSESSION)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands; unaudited)
|
|
Three Months Ended March 31, |
|
|||||
Operating activities |
|
2023 |
|
|
2022 |
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash used for operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|||||