Item 1.01. Entry into a Material Definitive
Agreement.
On October 7, 2019, Sorrento Therapeutics,
Inc. (the “Company”) entered into a securities purchase agreement (the “Purchase Agreement”) with certain
institutional investors, pursuant to which the Company agreed to sell and issue, in a registered direct offering, an aggregate
of 10,869,566 shares of its common stock (the “Shares”) and warrants to purchase up to 10,869,566 shares of its common
stock (the “Warrants”), at a combined purchase price of $2.30 per share and related Warrant, for aggregate gross proceeds
to the Company of approximately $25.0 million, before deducting fees payable to the placement agent and other estimated offering
expenses payable by the Company (the “Offering”). The Company currently intends to use the net proceeds from the Offering
for the continued clinical development of its RTX and CD38 CAR-T programs and general research and development, working capital
and general corporate purposes.
Subject to certain
ownership limitations, the Warrants will be exercisable immediately from the date of issuance, will expire on the
seven-year anniversary of the date of issuance and will have an exercise price of $2.40 per share. The exercise price of the
Warrants is subject to certain adjustments, including stock dividends, stock splits, combinations and reclassifications of
the Company’s common stock. In the event of a fundamental transaction, as described in the Warrants, each of the
holders of the Warrants shall have the right to exercise its Warrant and receive the same amount and kind of securities, cash
or property as such holder would have been entitled to receive upon the occurrence of such fundamental transaction if such
holder had been, immediately prior to such fundamental transaction, the holder of shares of the Company’s common stock
issuable upon the exercise of its Warrant. Additionally, in the event of a fundamental transaction within the Company’s
control, as described in the Warrants, each holder of the Warrants will have the right to require the Company to repurchase
the unexercised portion of its Warrant at its fair value using the Black Scholes option pricing formula. In the event of
a fundamental transaction that is not within the Company’s control, each holder of the Warrants will have the right
to require the Company or a successor entity to redeem the unexercised portion of its Warrant for the same consideration paid
to the holders of the Company’s common stock in the fundamental transaction at the unexercised Warrant’s fair
value using the Black Scholes option pricing formula.
Pursuant to the Purchase Agreement, the
Company agreed that, subject to certain exceptions, until October 31, 2019 (inclusive), it will not issue, enter into an agreement
to issue or announce the issuance or proposed issuance of shares of its common stock or any other securities convertible into,
or exercisable or exchangeable for, shares of its common stock.
The Shares, the Warrants and the shares
issuable exercise of the Warrants are being offered by the Company pursuant to an effective shelf registration statement on Form
S-3, which was originally filed with the Securities and Exchange Commission (the “SEC”) on November 9, 2017, as amended,
and was declared effective on December 6, 2017 (File No. 333-221443), a base prospectus dated December 6, 2017 and a prospectus
supplement dated October 7, 2019. The Offering is expected to close on or about October 9, 2019, subject to the satisfaction of
customary closing conditions.
Pursuant to a letter agreement dated
as of October 4, 2019, the Company engaged H.C. Wainwright & Co., LLC (“Wainwright”) to act as its exclusive
placement agent in connection with the Offering. The Company has agreed to pay Wainwright 6.0% of the aggregate gross
proceeds in the Offering. The Company also agreed to reimburse Wainwright for certain expenses in connection with the
Offering in an aggregate amount of $110,000.
The Purchase Agreement contains customary
representations and warranties, agreements and obligations, conditions to closing and termination provisions.
The representations, warranties and covenants
contained in the Purchase Agreement were made only for purposes of such agreement and as of specific dates, were solely for the
benefit of the parties to the Purchase Agreement, and may be subject to limitations agreed upon by the contracting parties. Accordingly,
the Purchase Agreement is incorporated herein by reference only to provide investors with information regarding the terms of the
Purchase Agreement, and not to provide investors with any other factual information regarding the Company or its business, and
should be read in conjunction with the disclosures in the Company’s periodic reports and other filings with the SEC.
The foregoing descriptions of the Purchase
Agreement and the Warrants do not purport to be complete and are qualified in their entirety by reference to the of the forms of
the Purchase Agreement and the Warrant, which are filed as Exhibits 10.1 and 4.1, respectively, to this Current Report on Form
8-K and are incorporated by reference herein.
A copy of the opinion of Paul Hastings
LLP, counsel to the Company relating to the validity of the Shares, the Warrants and the shares issuable upon exercise of the Warrants
to be issued in the Offering is filed with this Current Report on Form 8-K as Exhibit 5.1.
Forward-Looking Statements
This Current Report on Form 8-K contains
forward-looking statements that involve risks and uncertainties, such as statements related to the anticipated closing of the Offering
and the amount of proceeds expected from the Offering. The risks and uncertainties involved include the Company’s ability
to satisfy certain conditions to closing on a timely basis or at all, market conditions, and other risks detailed from time to
time in the Company’s periodic reports and other filings with the SEC. You are cautioned not to place undue reliance on forward-looking
statements, which are based on the Company’s current expectations and assumptions and speak only as of the date of this Current
Report on Form 8-K. The Company does not intend to revise or update any forward-looking statement in this Current Report on Form
8-K as a result of new information, future events or otherwise, except as required by law.