SAN DIEGO, Nov. 8, 2016 /PRNewswire/ -- Sorrento Therapeutics, Inc. (NASDAQ: SRNE; "Sorrento") and Scilex Pharmaceuticals Inc. ("SCILEX") announced today the closing of a transaction by which Sorrento acquired a majority of SCILEX. Sorrento acquired approximately 72% of the outstanding common stock of SCILEX for a net purchase price of up to approximately $47.6 million, payable in a combination of cash and shares of Sorrento common stock. Further, the U.S. Food & Drug Administration ("FDA") recently provided clear feedback related to the resubmission of the new drug application ("NDA") for SCILEX's lead product candidate, ZTlido™ (lidocaine patch 1.8%), a branded lidocaine patch formulation being developed for the treatment of postherpetic neuralgia, the chronic pain that sometimes develops with shingles.
As previously announced by Sorrento on August 8, 2016, Scintilla Pharmaceuticals, Inc., a subsidiary of Sorrento ("Scintilla"), and SCILEX entered into a binding term sheet setting forth the terms and conditions by which Scintilla would purchase all of the issued and outstanding equity of SCILEX. Scintilla and SCILEX agreed to terminate the binding term sheet on November 8, 2016. Scintilla remains committed to combining its lead program, resiniferatoxin ("RTX"), for the treatment of intractable cancer pain, with the products of Semnur Pharmaceuticals, Inc., for which a separate previously announced binding term sheet and acquisition process is moving forward towards closure prior to the end of 2016. The maximum consideration payable by Sorrento for the acquisition of approximately 72% of the outstanding capital stock of SCILEX is approximately $47.6 million. Of this maximum consideration, 10% was paid by Sorrento at closing in Sorrento common stock (for an aggregate issuance of 752,481 shares of Sorrento common stock based on a $6.33 per share price), 10% will be paid in Sorrento common stock upon the resubmission of the NDA for the ZTlido™ product for the treatment of postherpetic neuralgia with the FDA, and the remaining 80% will be paid in either cash or Sorrento common stock or in a combination of cash and Sorrento common stock upon FDA approval of the NDA. The number of shares issuable upon the resubmission of the NDA will be determined using the market price per share of Sorrento common stock on the date of such resubmission and the number of shares issuable upon FDA approval of the NDA will be determined using the market price per share of Sorrento common stock on the date of such approval; however, in either case the calculation of the number of shares issuable will not use a price per share that is less than $6.33 or greater than $25.32. ITOCHU CHEMICAL FRONTIER Corporation ("ICF"), a member of ITOCHU Corporation (ITOCHU), a Fortune Global 500 company and one of the three leading sogo shosha (general trading companies) in Japan, is continuing as an approximate 23% owner of SCILEX. SCILEX filed the initial NDA for ZTlido™ in July 2015. The SCILEX team met with the FDA in late August 2016 and, based on that feedback has a clear plan for NDA re-submission with a potential FDA action date in the second half of 2017. In addition to ZTlido™, the SCILEX pipeline includes line extensions of ZTlido™ as well as the exploration of other novel patch technologies. "The acquisition of a majority of SCILEX significantly enhances Sorrento's late stage pipeline and footprint in the treatment of acute and chronic inflammation and pain. We are very pleased with FDA's recent guidance relating to SCILEX's lead product ZTlido™ and believe that we have been provided a clear path to near term resubmission," said Dr. Henry Ji, President and CEO of Sorrento. Dr. Ji added, "Through this acquisition, we have also fostered a strong relationship with Itochu Corporation, a leading Japanese company with $45 billion in annual revenues. We look forward to working together with our new business partner to drive the future of this franchise." "We believe strongly in the value of SCILEX's cutting edge technology and the commercial potential for ZTlido™," stated Toshinari Hidekuma, Itochu Chemical Frontier Corporation's pharmaceutical division director and managing executive officer. "We are excited to join forces with Sorrento to bring SCILEX's pipeline to the market in the near term."