Sorrento Therapeutics, Inc. (Form: 8-K, Received: 02/01/2022 16:05:35)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): February 1, 2022

SORRENTO THERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware

001-36150

33-0344842

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

4955 Directors Place

San Diego, CA 92121

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (858) 203-4100

N/A

(Former Name, or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Title of each class		Trading Symbol		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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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. ¨

Item 2.01. Completion of Acquisition or Disposition of Assets.

On February 1, 2022 (the “Closing Date”), Sorrento Therapeutics, Inc. (the “Company”) completed its previously announced acquisition of Virex Health, Inc., a Delaware corporation (“Virex”), pursuant to that certain Agreement and Plan of Merger (the “Merger Agreement”), dated as of January 14, 2022, among the Company, Virex, VH Merger Sub I, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), VH Merger Sub II, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company (“Merger LLC”), and Fortis Advisors LLC, as representative of the equityholders of Virex (the “Stockholders’ Representative”). Pursuant to the terms of the Merger Agreement, Merger Sub was merged with and into Virex (the “Initial Merger”), with Virex continuing as the surviving corporation in such merger, and subsequent to the Initial Merger, Virex was merged with and into Merger LLC, with Merger LLC surviving as a wholly owned subsidiary of the Company (the “Subsequent Merger” and together with the Initial Merger, the “Merger”). At the effective time of the Subsequent Merger, the name of Merger LLC as the surviving company in the Subsequent Merger was changed to Virex Health, LLC.

Upon completion of the Initial Merger, the equityholders of Virex (the “Virex Equityholders”) became entitled to receive the following amounts (to be paid in cash and stock as further described below): (i) $12,000,000, as such amount was adjusted to $11,566,275 (and may be further adjusted post-closing) pursuant to the terms of the Merger Agreement for indebtedness, transaction expenses and cash (the “Closing Consideration”) and (ii) subject to achievement of certain regulatory milestones, up to $10,000,000 in additional consideration (the “Milestone Payment” and together with the Closing Consideration, the “Merger Consideration”).

Pursuant to the Merger Agreement, the Merger Consideration shall be paid as follows: (i) 59% in cash; and (ii) 41% in shares of common stock of the Company, par value $0.0001 per share (“Common Stock”). Upon completion of the Initial Merger, Virex Equityholders became entitled to receive an aggregate of $6,824,126 in cash and an aggregate of 1,281,662 shares of Common Stock (the “Shares”) based on a price per share equal to $3.70 (representing the volume weighted average closing price per share of the Common Stock, as reported on The Nasdaq Stock Market LLC (“Nasdaq”) for the eleven consecutive trading days ending on the date that is three trading days prior to the Closing Date). As provided for in the Merger Agreement, in the event the Company determines in its reasonable discretion that a Virex Equityholder is not an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”), the Company may pay the portion of the Merger Consideration payable to such Virex Equityholder in the form of cash only and shall be entitled to proportionately decrease the amount of cash, and increase the number of shares of Common Stock, payable to the “accredited investors” so as to maintain the 59% cash and 41% stock allocation referenced above. Ten percent of the Closing Consideration was deposited into an escrow account (in the form of cash and stock) as partial security for the indemnification obligations of the Virex Equityholders under the Merger Agreement and $150,000 was set aside for expenses that may be incurred by the Stockholders’ Representative.

At any time shares of Common Stock are issued in respect of a Milestone Payment, the number of shares to be issued will be based on a price per share equal to the volume weighted average closing price per share of the Common Stock, as reported on Nasdaq for the eleven consecutive trading days ending on the date that is three trading days prior to the applicable issuance date. The aggregate number of shares of Common Stock issuable pursuant to the Merger Agreement as Merger Consideration shall not exceed 19.99% of the total number of shares of Common Stock issued and outstanding at the Closing Date.

Pursuant to the terms of the Merger Agreement (and subject to the limitations set forth therein), the Company also agreed to prepare and file one or more registration statements with the Securities and Exchange Commission (the “SEC”) for the purpose of registering for resale the shares of Common Stock issued as Merger Consideration. Under the Merger Agreement, the Company is required to file such registration statement with the SEC within 30 days of the issuance of such shares of Common Stock.

The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement that was filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 19, 2022, and is incorporated herein by reference.

Item 3.02. Unregistered Sale of Securities.

The information set forth in Item 2.01 of this Current Report on Form 8-K is incorporated herein by reference into this Item 3.02 in its entirety. The Shares were offered and sold on the Closing Date, and any shares of Common Stock issued to Virex Equityholders in respect of any Milestone Payment will be issued, in a transaction exempt from registration under the Securities Act, in reliance on Section 4(a)(2) thereof and Rule 506 of Regulation D thereunder. Each Virex Equityholder that receives any shares of Common Stock as Merger Consideration shall have represented that such equityholder is an “accredited investor,” as defined in Regulation D, and is acquiring such shares of Common Stock for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof.

Except for the registration rights contemplated by the Merger Agreement, the Shares have not been, and any shares of Common Stock to be issued in respect of any Milestone Payment will not be, at the time of issuance, registered under the Securities Act and such shares of Common Stock may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws. Neither this Current Report on Form 8-K nor the exhibits attached hereto is an offer to sell or the solicitation of an offer to buy shares of Common Stock or any other securities of the Company.

Item 8.01. Other Events.

On February 1, 2022, the Company issued a press release announcing the closing of the Merger. A copy of the press release is filed herewith as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number		Description
99.1		Press Release dated February 1, 2022.
104		Cover Page Interactive Data File, formatted in Inline Extensible Business Reporting Language (iXBRL).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	SORRENTO THERAPEUTICS, INC.

Date: February 1, 2022	By:	/s/ Henry Ji, Ph.D.
		Name: Henry Ji, Ph.D.
		Title: Chairman of the Board, President and Chief Executive Officer

Exhibit 99.1

IMMEDIATE RELEASE

February 1, 2022

SORRENTO COMPLETES ACQUISITION OF VIREX HEALTH, WILL COMMERCIALIZE NEXT-GENERATION AT-HOME DIAGNOSTIC TESTING THAT RIVALS PCR-LEVEL SENSITIVITY FOR DAILY COVID-19 TESTS AND EARLY CANCER DIAGNOSIS

Virex Health, Inc. is a Boston, Massachusetts company that has developed a powerful, broadly applicable at-home diagnostic platform (“Virex Technology”).

Virex Technology, invented and developed by Boston University (BU) Professors Mark Grinstaff and Scott Schaus and Virex scientists, employs widely used electrochemistry found in household diabetes glucometer devices for next generation diagnostics.

Virex Technology has demonstrated extremely high sensitivity for multiple biological analytes including COVID-19 virus detection as sensitive as 10 TCID50, rivalling PCR sensitivity.

Virex’s early liver cancer biomarker test detects a liver cancer biomarker in as little as 2 microliters of blood.

Virex’s diagnostic tests provide qualitative and/or quantitative results in as little as 5 minutes.

Virex’s diagnostic tests leverage existing worldwide manufacturing infrastructure for glucometers and glucose strip tests to provide affordable and highly scalable next-generation diagnostic solutions for COVID-19 tests, early cancer detection and beyond.

SAN DIEGO, February 1, 2022 /GlobeNewswire/ -- Sorrento Therapeutics, Inc. (Nasdaq: SRNE, "Sorrento") announced today that it has completed the acquisition of Virex Health, Inc., a Boston, MA based company (“Virex”), spun out of the labs of Professors Mark Grinstaff and Scott Schaus at BU, on February 1, 2022. The proprietary Virex Technology utilizes enzymatic and electrochemical amplification to detect picogram level biological analytes, such as SARS-CoV-2 and its variants, Flu A/B, as well as markers for liver cancer, inflammation and hormone monitoring.

“One of the most exciting things about this Virex platform is the potential to finally provide an extremely sensitive and affordable detection test which is simple enough to use at home. Similar to a glucose meter, the amplified electrochemistry signal is converted to an electrical current and read in a reusable glucometer,” said Dr. Scott Schaus, Co-Founder and Professor of Chemistry at BU. “Today there are glucose meters in nearly 1 in 10 households in the world. We know the chemistry is broadly adaptable and the supply chain highly scalable.”

The Virex and Sorrento teams have been working together to define the first test with which to pursue commercialization. Key personnel, including Drs. Mark Grinstaff and Scott Schaus and Virex scientists, will assist with further development and commercialization.

“The current sensitivity for at-home testing is just too low, and the price per test is still too high for daily testing. With capabilities both in therapeutics and in diagnostics, Sorrento is an ideal company to take this next-generation Virex platform to the world across a wide range of analytes, including viruses, nucleic acids, proteins, hormones and other biomarkers,” said Dr. Grinstaff, Co-Founder and a Distinguished Professor of Translational Research. Dr. Grinstaff is a Professor of Biomedical Engineering, Chemistry, Materials Sciences, Engineering and Medicine at BU. Dr. Grinstaff is an inventor of Abraxane^® and Adherus Surgical Sealants^®, and he has over 200 patents and patent applications to his name. “Virex seeks to leverage Sorrento’s extensive expertise in producing highly selective and specific monoclonal antibodies for use in at-home diagnostic tests, including tests capable of detecting SARS-CoV-2 nucleocapsid proteins and whole viruses.”

“Sorrento has remarkable vision for impacting diagnostics and other sectors of healthcare,” said Virex co-founder Keith Hearon, a former postdoctoral fellow in Professor Robert Langer’s Group at MIT. “Sorrento’s acquisition of Virex is particularly strategic because of Sorrento’s robust antibody library, which is highly complementary to Virex’s enzymatic amplification diagnostic assay platform. The puzzle pieces fit very nicely together.”

“As Keith’s former postdoctoral advisor at MIT, I’ve continued to follow his career and I’m very proud of what a terrific entrepreneur he has become. He did a great job with his vision for Virex and found a wonderful home for it with Sorrento under the outstanding leadership of Henry Ji,” said Professor Langer, David H. Koch Institute Professor at Massachusetts Institute of Technology.

“We at Sorrento are amazed by the unmatched sensitivity of the Virex tests for detecting the virus that causes COVID-19 and are excited to mass produce and commercialize the rapid at-home tests for daily COVID-19 testing and frequent early cancer detection,” said Dr. Henry Ji, Chairman and CEO of Sorrento.

Virex received funding support in 2021 from the Massachusetts Life Sciences Center under its Accelerating Coronavirus Testing Solutions program.

About Sorrento Therapeutics, Inc.

Sorrento is a clinical and commercial stage biopharmaceutical company developing new therapies to treat cancer, pain (non-opioid treatments), autoimmune disease and COVID-19. Sorrento's multimodal, multipronged approach to fighting cancer is made possible by its extensive immuno-oncology platforms, including key assets such as fully human antibodies (“G-MAB™ library”), immuno-cellular therapies (“DAR-T™”), antibody-drug conjugates (“ADCs”), and oncolytic virus (“Seprehvec™”). Sorrento is also developing potential antiviral therapies and vaccines against coronaviruses, including Abivertinib, COVI-AMG™, COVISHIELD™, COVI-MSC™ and COVIDROPS™; and diagnostic test solutions, including COVITRACK™ and COVISTIX™.

Sorrento's commitment to life-enhancing therapies for patients is also demonstrated by our effort to advance a first-in-class (TRPV1 agonist) non-opioid pain management small molecule, resiniferatoxin (“RTX”), and SP-102 (10 mg, dexamethasone sodium phosphate viscous gel) (SEMDEXA™), a novel, viscous gel formulation of a widely used corticosteroid for epidural injections to treat lumbosacral radicular pain, or sciatica, and to commercialize ZTlido® (lidocaine topical system) 1.8% for the treatment of post-herpetic neuralgia (PHN). RTX has cleared for Phase II trial for intractable pain associated with cancer and a Phase II trial in osteoarthritis patients. SEMDEXA announced highly statistically significant positive top-line results from its Phase III Pivotal Trial C.L.E.A.R Program for its novel, non-opioid product for the treatment of lumbosacral radicular pain (sciatica). ZTlido® was approved by the FDA on February 28, 2018.

For more information visit www.sorrentotherapeutics.com

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Forward-Looking Statements

This press release and any statements made for and during any presentation or meeting contain forward-looking statements related to Sorrento Therapeutics, Inc., under the safe harbor provisions of Section 21E of the Private Securities Litigation Reform Act of 1995 and subject to risks and uncertainties that could cause actual results to differ materially from those projected. Forward-looking statements include statements regarding the Virex acquisition; the potential effects that the acquisition of Virex may have on Sorrento’s business and diagnostic capabilities; the performance capabilities of the Virex Technology, including its sensitivity and specificity; the speed at which the Virex Technology provides results or is able to provide results, including the ability to provide quantitative or qualitative results as little as 5 minutes; the Virex Technology’s capability to provide COVID-19 virus detection, including SARS-CoV-2 virus and select variants of concern; the Virex Technology’s capabilities to provide detection for multiple biological analytes, including Flu A/B, as well as markers for liver cancer, inflammation and hormone monitoring; Sorrento’s expectation to leverage existing worldwide infrastructure for glucose testing to commercialize and scale Virex tests; the expected cost and affordability of Virex tests; the expectation that Virex tests will be available for at-home testing; and Sorrento’s potential position in the diagnostics industry. Risks and uncertainties that could cause our actual results to differ materially and adversely from those expressed in our forward-looking statements, include, but are not limited to: risks related to Sorrento's and its subsidiaries', affiliates’ and partners’ technologies and prospects and collaborations with partners, including, but not limited to risks related to Sorrento’s technologies and prospects with to-be-acquired technologies, including the acquisition of Virex and the Virex Technology; risks related to seeking regulatory approvals and conducting clinical studies; clinical development risks, including risks in the progress, timing, cost and results of clinical studies and product development programs; risk of difficulties or delays in obtaining regulatory approvals; risks that prior study results may not be replicated in future studies; risks that clinical study results may not meet any or all endpoints of a clinical study and that any data generated from such studies may not support a regulatory submission or approval; risks of manufacturing and supplying Virex diagnostic tests; risks related to plans for the commercialization and scale-up of Virex tests worldwide; risks related to leveraging the expertise of its employees, subsidiaries, affiliates and partners to assist the company in the execution of its COVID-19 diagnostic product candidates’ strategies; risks related to the global impact of COVID-19; and other risks that are described in Sorrento's most recent periodic reports filed with the Securities and Exchange Commission, including Sorrento's Annual Report on Form 10-K for the year ended December 31, 2020, and subsequent Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission, including the risk factors set forth in those filings. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release, and we undertake no obligation to update any forward-looking statement in this press release except as required by law.

# # #

Media and Investor Relations

Contact: Dorman Followwill

Email: mediarelations@sorrentotherapeutics.com

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Sorrento® and the Sorrento logo are registered trademarks of Sorrento Therapeutics, Inc.

G-MAB™, DAR-T™, Seprehvec™, SOFUSA™, COVI-AMG™, COVISHIELD™, COVIDROPS™, COVI-MSC™, COVITRACK™ and COVISTIX™ are trademarks of Sorrento Therapeutics, Inc.

SEMDEXA™ is a trademark of Semnur Pharmaceuticals, Inc.

ZTlido® is a registered trademark owned by Scilex Pharmaceuticals Inc.

All other trademarks are the property of their respective owners.

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