NantCell Inc. v. Sorrento Therapeutics Inc

DOLLAR AMOUNT: $173.5 million

CASE NAME: NantCell Inc. v. Sorrento Therapeutics Inc.

TYPE OF CASE: Fraud and breach of obligations

COURT: Los Angeles County Superior Court

JUDGE(S): Judge Terry Green

PLAINTIFF LAWYERS: Quinn Emanuel Urquhart & Sullivan, LLP, John B. Quinn, William C. Price, Harry A. Olivar Jr., Jeffrey N. Boozell, Scott B. Kidman, David M. Elihu, Jason F. Lake, Thomas P. Parker, James A. Bieber, Karen Bobrow, Rachael McCracken and Andrew Brayton:

DEFENSE LAWYERS: Latham & Watkins LLP, Steven N. Feldman, Sean M. Berkowitz, Daniel S. Schecter, Jamie L. Wine, Jordan D. Cook, Jordan Mundell, Abigail Parr

As the winning attorneys tell the tale, the complicated litigation between their clients and Sorrento Therapeutics Inc. began as "an offensive war campaign" in the press.

Sorrento, a developer of biopharmaceuticals to treat cancer, pain and other conditions, filed a $1 billion arbitration complaint and a separate $90 million lawsuit in April 2019 against some of Dr. Patrick Soon-Shiong's NantWorks companies with which it had drug-development deals. It also issued a press release announcing the actions, according to Harry Olivar, one of the attorneys at Quinn Emanuel representing NantCell Inc. and NANTibody.

"I think a lot of shareholders with Sorrento were banking on their billions," said David Elihu, another Quinn partner.

In response, the two NantWorks companies filed a countersuit alleging Sorrento had breached a pair of drug-development licensing agreements. "Our counterpunch not only parried them, but knocked them out," Elihu said of the now-bankrupt Sorrento.

The agreements granted the companies exclusive rights to Sorrento's G-MAB library of numerous antibodies and antibody materials with which to develop novel anti-cancer immunotherapies. The countersuit alleged Sorrento didn't perform under the agreements.

The matter was sent to arbitration. Then came more than three years of hard-fought litigation, the attorneys said.

WILLIAM C. PRICE

Sorrento's attorneys did not respond to a request seeking comment on this case.

The arbitration took an unusual twist in late 2021 when the arbitrator became ill and died while in the process of writing what would have been his award. A new arbitrator was appointed, who read the transcripts of the hearing and listened to some additional testimony and presentations from both sides, Olivar said.

In early December 2022, the new arbitrator issued his decision to award the NantWorks companies more than $170 million. "It was somewhat of an unprecedented victory," Elihu said. "When we filed it, it was supposed to have a neutralization effect, not a knockout effect."

A superior court judge confirmed the award and entered judgment for the companies on Feb. 7, 2023. NantCell Inc. v. Sorrento Therapeutics Inc., 19STCV11328 (L.A. Super. Ct., filed April 3, 2019).

The victors were "very aggressive in seeking to collect" on the award, Elihu said. "We immediately started hitting their bank account and seeking to levy." They also obtained a TRO and a preliminary injunction to prevent Sorrento leadership from dissipating assets.

HARRY A. OLIVAR JR.

The result was that less than a week after the award was confirmed, Sorrento filed for bankruptcy in Houston. In re: Sorrento Therapeutics Inc., 4:23-bk-90085 (Bankr. S.D. Tex., filed Feb. 13, 2023).

The bankruptcy led to a public settlement, resolving this and other litigation between the two sides. "It resulted in all litigations ending and all awards getting extinguished or satisfied," Olivar said. Soon-Shiong's companies ended up with about $70 million worth of joint venture interests returned to it, he added.

"Which is remarkable for a bankruptcy," Elihu said.

-- Don DeBenedictis