Sorrento Therapeutics activist Wildcat files complaint asserting derivative claims for breach of fiduciary duty, waste of corporate assets, and unjust enrichment
Sorrento Therapeutics (NASDAQ: SRNE) activist Wildcat Capital Management has filed a verified derivative complaint asserting derivative claims for breach of fiduciary duty, waste of corporate assets, and unjust enrichment against Dr. Ji and directors William S. Marth, Kim D. Janda, Douglas Ebersole, Jaisim Shah and David H. Deming.
In a Monday amended 13D filing Wildcat disclosed a share holding of 7%, stating that:
“On May 13, 2016, WLA, on behalf of the Issuer, filed a verified derivative complaint (the “May 13 Complaint”) asserting derivative claims for breach of fiduciary duty, waste of corporate assets, and unjust enrichment against Dr. Ji and directors William S. Marth, Kim D. Janda, Douglas Ebersole, Jaisim Shah and David H. Deming (collectively, the “Defendants”). Pursuant to the May 13 Complaint, WLA, on behalf of the Issuer, seeks to, among other things:
(i) enjoin the three private placements that are part of the Transactions that have not already closed but are expected to close imminently;
(ii) rescind the options and warrants issued by the Issuer’s subsidiaries to Dr. Ji and the Board; and
(iii) be awarded damages resulting from the Defendants’ alleged breaches of fiduciary duties and other alleged misconduct.
A copy of the May 13 Complaint (Exhibit 6) can be read in full here.
Also on May 13, 2016, WLA filed a motion for a temporary restraining order (the “May 13 Motion for TRO”) against the Defendants seeking that the court enter a temporary restraining order pending a preliminary injunction hearing
(i) enjoining the Defendants and the Issuer from taking any further steps to consummate the Transactions or any associated voting agreements; and
(ii) enjoining Defendants and the Issuer from instructing Yuhan Corporation (“Yuhan”), to vote its shares in connection with the voting agreement associated with Yuhan’s investment as part of the Transactions.
Copies of each of the May 13 Motion for TRO and brief in support of the May 13 Motion for TRO are attached as Exhibit 7 and Exhibit 8, respectively.”
Wildcat on 6 May called on the San Diego-based biopharmaceutical company to engage an investment banker and initiate a sale process. Sorrento on 9 May announced it had engaged Guggenheim Securities and PJT Partners to review a number of strategic alternatives.
"As part of the ongoing evaluation of our portfolio of assets we decided to engage industry leading firms to advise us on potential alternatives and strategies," stated Dr. Henry Ji, President and CEO. "Although there are no assurances that the process we commenced will result in a transaction, we believe the expertise of both Guggenheim Securities and PJT Partners will provide us with the best ability to fully evaluate options to enhance shareholder value," added Dr. Ji.
Wildcat was founded in 2011 by Len Potter to manage capital for David Bonderman, the founding partner of TPG Capital.
Sorrento has a market cap of USD 246m.