Sorrento Therapeutics, a clinical stage biopharmaceutical company developing new treatments for cancer and autoimmune diseases, has reportedly rejected a takeover proposal from an unnamed private equity fund.

Sorrento, a California based firm, gathered considerable traction during the 2015 biotech boom on the back of an agreement which gave Nanthealth, controlled by Patrick Soon-Shiong, the rights to a nanoparticle drug formulation of paclitaxel. Sorrento rapidly fell from that high and has not come close to recovering the lost ground, kicking off 2020 with a share price of above $3. 

A private equity unit thought that Sorrento was worth considerably more than that. Sorrento, at the start of this month disclosed that it had received a takeover proposal of nearly $7 a share, a price that would have translated into a deal worth $1 billion.

The Sorrento board of directors, however, have declined the offer, stating that it significantly devalues the company and was not in the best interest of the investors. The precise terms of the proposal remain private, thereby making it difficult to determine whether the bid was likely to total $7 a share or a low amount covered by the up to part of the statement of Sorrento.

The rejection came months after Sorrento had knocked back proposals from two biopharmaceutical companies that were willing to pay somewhere between $3 and $5 per share. During that phase, the board also rejected the bids unanimously, stating that they devalued the company.

Shares in Sorrento fell after news of the most recent rejection but remained above the price they were trading at, during the start of the year and beyond the level they declined at before news of the dismissals of the $3 to $5 offers arose. The improvement in the share price of Sorrento, which was less than $2 in November, could also benefit the company if it attempts to accelerate its balance sheet.

The firm ended the month of September with approximately $34.6 million cash as well as equivalents, which is down from the $158.7 million during the start of 2019, along with a $356.5 million of long-standing debt.

The firm could also add to its cash assets by closing one of the several possible strategic transactions and alliances, which it is pursuing, but it equally might need to bring in more capital.

Source credit: https://www.fiercebiotech.com/biotech/sorrento-rejects-1b-buyout-bid-from-unnamed-private-equity-firm