Sorrento Therapeutics (NASDAQ:SRNE) is down by more than 60% today following the company’s announcement that it would file for Chapter 11 bankruptcy. Scintilla Pharmaceuticals, a wholly owned subsidiary of Sorrento, will also file for Chapter 11.
The bankruptcy is linked to ongoing litigation against Dr. Patrick Soon-Shiong and his companies, which include NantCell and joint venture NANTibody. Last December, an arbitrator decided that Nantcell should be awarded $156.82 million for contractual damages and pre-award interest, while NANTibody should be awarded $16.68 million. Sorrento had previously alleged that Soon-Shiong had violated his fiduciary duties related to the development of the cancer drug Cynviloq. The company had also claimed that Soon-Shiong acquired Cynviloq in order to halt its progression in the market.
In December, an arbitrator in the Cynviloq Arbitration case also decided to award Sorrento with $125 million in contractual damages. The number was calculated based on lost milestone payments for the approval and progression of Cynviloq.
Last week, a court confirmed the judgement amount and issued a “issued a 70-day stay of enforcement of the judgment beyond $50 million,” which could result in an asset seizure for Sorrento. Sorrento therefore filed for Chapter 11 in order to halt any potential seizures.
Now, Sorrento plans on seeking approval for “first day” motions, which will include customary relief that can assure the company can continue to operate its business as necessary.
5 Investors Betting Big on SRNE Stock
Tracking institutional ownership is important, as these large investors provide liquidity and support for stocks. During Q3, 224 13F filers disclosed ownership of SRNE, an increase of five filers form the prior period. In total, these filers own 162.75 million shares of SRNE stock, up from 150.44 million shares. Meanwhile, the institutional put/call ratio sits at 0.28, down from 0.3. That’s equivalent to 1.55 million puts and 5.54 million calls, implying a bullish options stance.
With that in mind, let’s take a look at the largest shareholders of Sorrento:
- State Street (NYSE:STT): 49.84 million shares. State Street purchased 9.17 million shares during Q4.
- BlackRock (NYSE:BLK): 39.42 million shares. BlackRock purchased 5.24 million shares during Q4.
- Vanguard: 29.53 million shares. Vanguard purchased 7.01 million shares during Q4.
- Geode Capital Management: 7.1 million shares. Geode purchased 215,337 shares during Q3.
- B. Riley (NASDAQ:RILY): 5.21 million shares. B. Riley acquired its entire stake during Q4.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.