San Diego biotech company alleges ‘catch and kill’ scheme to block competitive drug

LOS ANGELES -- Billionaire doctor Patrick Soon-Shiong engaged in a "catch and kill" scheme aimed at blocking the development of a cancer treatment that would compete with a drug he developed, a San Diego biotech company has alleged in state court. Soon-Shiong and his company are fighting back, characterizing the allegations as unfounded.

Sorrento Therapeutics Inc. filed a derivative complaint in Los Angeles County Superior Court Wednesday, claiming Soon-Shiong undertook efforts to purchase the rights to chemotherapy drug Cynviloq that would have competed with a cancer treatment drug on which he has made part of his fortune.

Soon-Shiong, who owns the Los Angeles Times and San Diego Union-Tribune, said Wednesday he and his company are still testing Cynviloq in light of what he described as formulation impurities and are continuing to develop the drug.

"The allegation that we have not developed Cynviloq to protect the sales of Abraxane is false and it ignores the facts," Soon-Shiong said in a statement. "Because it is totally without merit, we shall defend ourselves vigorously against this baseless allegation."

The complaint, which seeks $90.05 million from Soon-Shiong, his company NantCell Inc. and its legal officer Charles Kim, was filed alongside an arbitration demand with the American Arbitration Association in Los Angeles seeking more than $1 billion in damages, according to an 8-K form filed with the Securities and Exchange Commission.

Attorneys for Sorrento Therapeutics said in the lawsuit Soon-Shiong and his company NantPharma LLC purchased the rights to Cynviloq in 2015, promising its previous owner, Sorrento, that he would continue efforts to bring it to market. Instead, the complaint says, Soon-Shiong purposely quashed those plans, effectively prohibiting competition.

He was worried Cynviloq would be a serious competitor to Abraxane, a similar drug he developed in 2010 and sold for nearly $3 billion. Cynviloq's entry into the market could have severely reduced the going rate for a single dose of Abraxane at $1,378, an artificially inflated price, according to the complaint.

"The entry of Cynviloq onto the market would have dramatically changed this situation," the complaint says, noting that Abraxane's overseas equivalent costs between $180 and $270 per dose.

John C. Hueston and Steven N. Feldman of Hueston Hennigan LLP represent the plaintiff company.

"Through this litigation, Sorrento seeks to hold defendants accountable for executing a scheme that kept a promising cancer drug off the market," Feldman told the Daily Journal Wednesday.

"As alleged, not only did this cause over $1 billion in damages to Sorrento, it prevented patients from having access to an affordable alternative to a leading chemotherapy drug," he continued.

Neither Soon-Shiong nor NantCell announced who would defend them in litigation.

Sorrento's suit also includes allegations that Soon-Shiong improperly refunded himself, after spending millions to kill the competitive drug. He established a joint venture with Sorrento charged with further research and development related to chemotherapy procedures.

The plaintiff company said it contributed $40 million to the group, Immunotherapy NANTibody LLC to help jump-start its work.

But Soon-Shiong and Kim signed a secret deal that funneled NANTibody's funds into NantPharma's accounts, effectively refunding Soon-Shiong, the court document says.

"Defendants Soon-Shiong and Kim executed this transaction without notice to the NANTibody board, without convening any NANTibody board meeting, and without any third-party valuation," Hueston wrote in the complaint.