Filed Pursuant to Rule 424(b)(3)
Registration No. 333-235970
PROSPECTUS
Sorrento Therapeutics, Inc.
2,000,000 Shares of Common Stock
This prospectus relates
to the resale by the investors listed in the section of this prospectus entitled “Selling Stockholders,” or the Selling
Stockholders, of up to 2,000,000 shares, or the Shares, of our common stock, par value $0.0001 per share, or Common Stock. The
Shares consist solely of shares issuable upon exercise of outstanding warrants to purchase shares of Common Stock, or the Warrants,
issued by us on December 6, 2019, in connection with our entry into that certain Amendment No. 2 to Term Loan Agreement, dated
as of December 6, 2019, with the selling stockholders and Oaktree Fund Administration, LLC, as administrative and collateral agent,
or the Loan Agreement Amendment. The Warrants will become exercisable on June 6, 2020, have a term of ten and a half years from
the date of issuance and have an exercise price of $3.26 per share of Common Stock. We are registering the resale of the Shares
as required by the Registration Rights Agreement, dated November 7, 2018, by and among us and the Selling Stockholders, as amended
by Amendment No. 1 thereto, dated as of May 3, 2019, by and among us and the Selling Stockholders, as amended by Amendment No.
2 thereto, dated as of December 6, 2019, by and among us and the Selling Stockholders, or as so amended, the Registration Rights
Agreement.
Our registration of
the Shares covered by this prospectus does not mean that the Selling Stockholders will offer or sell any of the Shares. The Selling
Stockholders may sell the Shares covered by this prospectus in a number of different ways and at varying prices. For additional
information on the possible methods of sale that may be used by the Selling Stockholders, you should refer to the section of this
prospectus entitled “Plan of Distribution” beginning on page 10 of this prospectus. We will not receive any of the
proceeds from the Shares sold by the Selling Stockholders, other than any proceeds from any cash exercise of the Warrants.
No underwriter or other
person has been engaged to facilitate the sale of the Shares in this offering. The Selling Stockholders may be deemed underwriters
of the Shares that they are offering pursuant to this prospectus. We will bear all costs, expenses and fees in connection with
the registration of the Shares. The Selling Stockholders will bear all commissions and discounts, if any, attributable to their
respective sales of the Shares.
You should read this
prospectus, any applicable prospectus supplement and any related free writing prospectus carefully before you invest.
Investing in
our Common Stock involves a high degree of risk. You should review carefully the risks and uncertainties described under the heading
“Risk Factors” contained on page 4 of this prospectus, any applicable prospectus supplement and in any applicable
free writing prospectuses, and under similar headings in the documents that are incorporated by reference into this prospectus.
Our Common Stock
is currently listed on the Nasdaq Capital Market under the symbol “SRNE”. On January 28, 2020, the last reported sales
price for our Common Stock was $4.05 per share.
Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is January
29, 2020.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
You should rely only
on the information we have provided or incorporated by reference into this prospectus, any applicable prospectus supplement and
any related free writing prospectus. We have not authorized anyone to provide you with information different from that contained
in this prospectus, any applicable prospectus supplement or any related free writing prospectus. No dealer, salesperson or other
person is authorized to give any information or to represent anything not contained in this prospectus, any applicable prospectus
supplement or any related free writing prospectus. You must not rely on any unauthorized information or representation. This prospectus
is an offer to sell only the Shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do
so. You should assume that the information in this prospectus, any applicable prospectus supplement or any related free writing
prospectus is accurate only as of the date on the front of the document and that any information we have incorporated by reference
is accurate only as of the date of the document incorporated by reference, regardless of the time of delivery of this prospectus
or any sale of a security.
The Selling Stockholders
are offering the Shares only in jurisdictions where such issuances are permitted. The distribution of this prospectus and the issuance
of the Shares in certain jurisdictions may be restricted by law. Persons outside the United States who come into possession of
this prospectus must inform themselves about, and observe any restrictions relating to, the issuance of the Shares and the distribution
of this prospectus outside the United States. This prospectus does not constitute, and may not be used in connection with, an offer
to sell, or a solicitation of an offer to buy, the Shares offered by this prospectus by any person in any jurisdiction in which
it is unlawful for such person to make such an offer or solicitation.
This prospectus is part of a registration
statement that we filed with the Securities and Exchange Commission, or the SEC, under which the Selling Stockholders may offer
from time to time up to an aggregate of 2,000,000 shares of our Common Stock in one or more offerings. If required, each time a
Selling Stockholder offers Common Stock, in addition to this prospectus, we will provide you with a prospectus supplement that
will contain specific information about the terms of that offering. We may also authorize one or more free writing prospectuses
to be provided to you that may contain material information relating to that offering. We may also use a prospectus supplement
and any related free writing prospectus to add, update or change any of the information contained in this prospectus or in documents
we have incorporated by reference. This prospectus, together with any applicable prospectus supplements, any related free writing
prospectuses and the documents incorporated by reference into this prospectus, includes all material information relating to this
offering. To the extent that any statement that we make in a prospectus supplement is inconsistent with statements made in this
prospectus, the statements made in this prospectus will be deemed modified or superseded by those made in a prospectus supplement.
Please carefully read both this prospectus and any prospectus supplement together with the additional information described below
under “Important Information Incorporated by Reference”.
SUMMARY
This summary highlights
selected information contained elsewhere in this prospectus or incorporated by reference in this prospectus, and does not contain
all of the information that you need to consider in making your investment decision. You should carefully read the entire prospectus,
any applicable prospectus supplement and any related free writing prospectus, including the risks of investing in our Common Stock
discussed under the heading “Risk Factors” contained in this prospectus, any applicable prospectus supplement and any
related free writing prospectus, and under similar headings in the other documents that are incorporated by reference into this
prospectus. You should also carefully read the information incorporated by reference into this prospectus, including our financial
statements, and the exhibits to the registration statement of which this prospectus forms a part. Unless otherwise mentioned or
unless the context requires otherwise, all references in this prospectus to “Sorrento”, “the Company”,
“we”, “us”, “our” or similar references mean Sorrento Therapeutics, Inc. together with its
consolidated subsidiaries.
Sorrento Therapeutics, Inc.
We are a clinical stage
and commercial biopharma company focused on delivering innovative and clinically meaningful therapies to patients and their families,
globally, to address unmet medical needs. We primarily focus on therapeutic areas in Immuno-Oncology and Non-Opioid Pain Management.
We also have programs assessing the use of our technologies and products in autoimmune, inflammatory and neurodegenerative diseases.
At our core, we are
an antibody-centric company and leverage our proprietary G-MAB™ library and targeted delivery modalities to generate the
next generation of cancer therapeutics. Our fully human antibodies include PD-1, PD-L1, CD38, CD123, CD47, c-MET, VEGFR2, CCR2
and CD137 among others.
Our vision is to leverage
these antibodies in conjunction with proprietary targeted delivery modalities to generate the next generation of cancer therapeutics.
These modalities include proprietary chimeric antigen receptor T-cell therapy, or CAR-T, dimeric antigen receptor T-cell therapy,
or DAR-T, antibody drug conjugates, or ADC, as well as bispecific antibody approaches. Additionally, we acquired Sofusa®, a
revolutionary drug delivery system, in July 2018, which delivers biologics directly into the lymphatic system to potentially achieve
improved efficacy and fewer adverse effects than standard parenteral immunotherapy.
With each of our clinical
and pre-clinical programs, we aim to tailor our therapies to treat specific stages in the evolution of cancer, from elimination,
to equilibrium and escape. In addition, our objective is to focus on tumors that are resistant to current treatments and where
we can design focused trials based on a genetic signature or biomarker to ensure patients have the best chance of a durable and
significant response. We have several immuno-oncology programs that are in or close to entering the clinic. These include cellular
therapies, an oncolytic virus and a palliative care program targeted to treat intractable cancer pain. Our cellular therapy programs
focus on CAR-T for adoptive cellular immunotherapy to treat both solid and liquid tumors. We have reported early data from Phase
I trials of our carcinoembryonic antigen, or CEA, -directed CAR-T program. We have treated five patients with stage 4, unresectable
adenocarcinoma (four with pancreatic and one with colorectal cancer) and CEA-positive liver metastases with anti-CEA CAR-T and
are currently expanding this study. We successfully submitted an Investigational New Drug application, or IND, for anti-CD38 CAR-T
(autologous) for the treatment of refractory or relapsed multiple myeloma and obtained approval from the U.S. Food and Drug Administration,
or the FDA, to commence a human clinical trial for this indication in early 2018. We have dosed five patients for the Phase I clinical
trial and are continuing the enrollment of additional patients. The data-readout for this Phase I clinical trial is expected during
the first quarter of 2020. We expect to file an IND for CD38 ADC in the second half of 2020 and an IND for CD38/CD3 bispecific
antibody (BsAb) in the second half of 2020.
Broadly speaking, we
are one of the world’s leading CAR-T companies today due to our investments in technology and infrastructure, which have
enabled significant progress in developing our next-generation non-viral, “off-the-shelf” allogeneic CAR-T solutions.
With “off-the-shelf” solutions, CAR-T therapy can truly become a drug product rather than a treatment procedure. One
of the approaches we have taken to develop the “off-the-shelf” allogeneic CAR-T solutions is through Celularity, Inc.,
or Celularity, our joint venture with Celgene, United Therapeutics and others. Celularity focuses on developing cell therapies
with placenta-derived and cord blood T cells, which have natural allogeneic “off-the-shelf” characteristics. We are
the single largest stockholder of Celularity with a stake of approximately 25%.
Outside of immuno-oncology
programs, as part of our global aim to provide a wide range of therapeutic products to meet underserved markets, we have made investments
in non-opioid pain management. These include resiniferatoxin, or RTX, which is a non-opioid-based neurotoxin that specifically
ablates nerves that conduct pain signals while leaving other nerve functions intact and is being studied for chronic pain treatment.
RTX has been granted orphan drug status for the treatment of intractable pain with end-stage cancer. A Phase I trial with the National
Institutes of Health, or the NIH, for intrathecal administration and a Phase I trial for epidural administration are both expected
to conclude in 2020. A Phase Ib trial studying tolerance and efficacy of RTX for the control of osteoarthritis knee pain was initiated
in late 2018 and preliminary results have shown strong efficacy with no significant adverse effects. The Phase Ib trial is expected
to conclude in 2020 and one Phase III pivotal trial in the U.S. and Asia-Pacific is expected to commence in the first half of 2020.
Also in the area of
non-opioid pain management, we have acquired proprietary technologies to responsibly develop next generation, branded pharmaceutical
products to better manage patients’ medical conditions and maximize the quality of life of patients and healthcare providers.
The flagship product of our majority-owned subsidiary, Scilex Holding Company, or Scilex Holding, ZTlido® (lidocaine topical
system) 1.8%, is a next-generation lidocaine delivery system which was approved by the FDA for the treatment of pain associated
with postherpetic neuralgia, a severe neuropathic pain condition, in February 2018, and was commercially launched in late October
2018. Scilex Holding now has built a full commercial organization, which includes sales, marketing, market access and medical affairs.
ZTlido® has demonstrated superior adhesion in head-to-head studies as compared to Lidoderm and is manufactured by our Japanese
partner in their state-of-the-art manufacturing facility. We expect to commence a Phase II clinical trial for ZTlido® (lidocaine
topical system) 5.4%, or SP-103, for chronic low back pain in the first half of 2020.
Scilex Holding’s
other lead compound, SP-102, has been awarded fast track designation by the FDA. It is the first non-opioid corticosteroid formulated
as a viscous gel injection in development for the treatment of lumbar radicular pain/sciatica, containing no neurotoxic preservatives,
surfactants, solvents or particulates. The FDA’s fast track program was implemented to expedite the development and regulatory
review of therapeutic programs that seek to address significant unmet medical needs. SP-102 is currently in a pivotal trial, “Corticosteroid
Lumbar Epidural Analgesia for Radiculopathy (C.L.E.A.R.).” The CLEAR trial is a randomized, double-blind, placebo-controlled
Phase III trial that is expected to enroll 400 patients with lumbar radicular pain at 40+ sites across the U.S. The primary endpoint
is mean change in the Numerical Pain Rating Scale for leg pain in patients receiving SP-102 compared to intramuscular injection
of placebo over four weeks. The secondary endpoints include other measures of pain at 4 and 12 weeks as well as time to repeat
injection of SP-102, safety and function. The trial includes an open-label extension to build the safety database of patients treated
with SP-102. Topline pivotal data for the Phase III trial is expected during the second half of 2020.
For a complete description
of our business, financial condition, results of operations and other important information, we refer you to our filings with
the SEC that are incorporated by reference in this prospectus, including our Annual
Report on Form 10-K for the year ended December 31, 2018, as amended, our Quarterly
Report on Form 10-Q for the quarter ended March 31, 2019, our Quarterly
Report on Form 10-Q for the quarter ended June 30, 2019 and our Quarterly
Report on Form 10-Q for the quarter ended September 30, 2019. For instructions on how to find copies of these documents, see
“Where You Can Find More Information”.
Corporate Information
On September 21, 2009,
QuikByte Software, Inc., a Colorado corporation and shell company, or QuikByte, consummated its acquisition of Sorrento Therapeutics,
Inc., a Delaware corporation and private concern, or STI, in a reverse merger, or the Merger. Pursuant to the Merger, all of the
issued and outstanding shares of STI common stock were converted into an aggregate of 6,775,032 shares of QuikByte common stock
and STI became a wholly owned subsidiary of QuikByte. The holders of QuikByte’s common stock immediately prior to the Merger
held an aggregate of 2,228,333 shares of QuikByte’s common stock immediately following the Merger.
We were originally
incorporated as San Diego Antibody Company in California in 2006 and were renamed “Sorrento Therapeutics, Inc.” and
reincorporated in Delaware in 2009, prior to the Merger. QuikByte was originally incorporated in Colorado in 1989. Following the
Merger, on December 4, 2009, QuikByte reincorporated under the laws of the State of Delaware, or the Reincorporation. Immediately
following the Reincorporation, on December 4, 2009, we merged with and into QuikByte, the separate corporate existence of STI ceased
and QuikByte continued as the surviving corporation, or the Roll-Up Merger. Pursuant to the certificate of merger filed in connection
with the Roll-Up Merger, QuikByte’s name was changed from “QuikByte Software, Inc.” to “Sorrento Therapeutics,
Inc.”
Risk Factors
An investment in shares
of our Common Stock involves a high degree of risk. You should consider carefully the risk factors beginning on page 4 of this
prospectus before investing in our Common Stock.
Use of Proceeds
Although we will incur
expenses in connection with the registration of the Shares covered by this prospectus, we will not receive any of the proceeds
from the sale of the Shares by the Selling Stockholders.
Principal Executive Offices and Additional
Information
Our principal executive
offices are located at 4955 Directors Place, San Diego, CA 92121, and our telephone number at that address is (858) 203-4100.
Our website is www.sorrentotherapeutics.com. Any information contained on, or that can be accessed through, our website is not
incorporated by reference into, nor is it in any way part of this prospectus and should not be relied upon in connection with making
any decision with respect to an investment in our securities. We are required to file annual, quarterly and current reports, proxy
statements and other information with the SEC. You may obtain any of the documents filed by us with the SEC at no cost from the
SEC’s website at http://www.sec.gov.
Recent Developments
On January 10,
2020, we announced that on January 9, 2020, we received a non-binding proposal from a private equity fund to acquire a majority
or all of our issued and outstanding shares for up to $7.00 per share. On January 27, 2020, we announced that, after reviewing the acquisition proposal in consultation with its advisors, our Board
of Directors determined that the offer significantly undervalues our company and is not in the best interest of our stockholders.
Accordingly, our Board of Directors unanimously rejected the acquisition proposal.
RISK FACTORS
Investing in shares
of our Common Stock involves a high degree of risk. Before making an investment decision, you should carefully consider the risks
described below, under “Risk Factors” in any applicable prospectus supplement and in our most recent Annual Report
on Form 10-K, as amended, or in any updates in our Quarterly Reports on Form 10-Q, together with all of the other information appearing
in or incorporated by reference into this prospectus and any applicable prospectus supplement, before deciding whether to purchase
any of the Common Stock being offered. Our business, financial condition or results of operations could be materially adversely
affected by any of these risks. The trading price of shares of our Common Stock could decline due to any of these risks, and you
may lose all or part of your investment.
Our Amended and
Restated Bylaws provide that the Court of Chancery in the State of Delaware is the sole and exclusive forum for substantially all
disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum
for disputes with us or our directors, officers or employees.
Our Amended and Restated
Bylaws, or our Bylaws, provide that, unless our Board of Directors consents to an alternative forum, the Court of Chancery in the
State of Delaware will be the sole and exclusive forum for: (i) any derivative action or proceeding brought by or on our behalf;
(ii) any direct action asserting a claim against us or any of our directors or officers pursuant to any of the provisions of the
General Corporation Law of the State of Delaware, our Restated Certificate of Incorporation or our Bylaws; (iii) any action asserting
a claim of breach of fiduciary duties owed by any of our directors, officers or other employees to our stockholders; or (iv) any
action asserting a violation of Delaware decisional law relating to our internal affairs. This provision does not apply to (a)
actions in which the Court of Chancery in the State of Delaware concludes that an indispensable party is not subject to the jurisdiction
of Delaware courts, or (b) actions in which a federal court has assumed exclusive jurisdiction to a proceeding. This choice of
forum provision is not intended to apply to any actions brought under the Securities Act of 1933, as amended, or the Securities
Act, or the Securities Exchange Act of 1934, as amended, or the Exchange Act. Section 27 of the Exchange Act creates exclusive
federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations
thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created
by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. However, our Bylaws do not relieve
us of our duties to comply with federal securities laws and the rules and regulations thereunder, and our stockholders will not
be deemed to have waived our compliance with these laws, rules and regulations. Our Bylaws also provide that any person or entity
purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of and consented to
this choice of forum provision.
This choice of forum
provision in our Bylaws may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for
disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors,
officers and other employees. In addition, stockholders who do bring a claim in the Court of Chancery in the State of Delaware
could face additional litigation costs in pursuing any such claim, particularly if they do not reside in or near Delaware. Furthermore,
the enforceability of similar choice of forum provisions in other companies’ governing documents has been challenged in legal
proceedings, and it is possible that a court could find these types of provisions to be inapplicable or unenforceable. If a court
were to find the choice of forum provision in our Bylaws to be inapplicable or unenforceable in an action, we may incur additional
costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.
DISCLOSURE REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus and
the documents incorporated by reference into this prospectus may contain forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as
amended, or the Exchange Act, about us and our subsidiaries. These forward-looking statements are intended to be covered by the
safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements
are not statements of historical fact, and can be identified by the use of forward-looking terminology such as “believes”,
“expects”, “may”, “will”, “could”, “should”, “projects”,
“plans”, “goal”, “targets”, “potential”, “estimates”, “pro forma”,
“seeks”, “intends” or “anticipates” or the negative thereof or comparable terminology. Forward-looking
statements include discussions of strategy, financial projections, guidance and estimates (including their underlying assumptions),
statements regarding plans, objectives, expectations or consequences of various transactions, and statements about the future performance,
operations, products and services of us and our subsidiaries. We caution our stockholders and other readers not to place undue
reliance on such statements.
You should read this
prospectus and the documents incorporated by reference completely and with the understanding that our actual future results may
be materially different from what we currently expect. Our business and operations are and will be subject to a variety of risks,
uncertainties and other factors. Consequently, actual results and experience may materially differ from those contained in any
forward-looking statements. Such risks, uncertainties and other factors that could cause actual results and experience to differ
from those projected include, but are not limited to, the risk factors set forth in Part I - Item 1A, “Risk Factors”,
in our
Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC on March 15, 2019, as amended,
our Quarterly
Report on Form 10-Q for the quarter ended March 31, 2019, as filed with the SEC on May 15, 2019, our
Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, as filed with the SEC on August 9, 2019, and our
Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, as filed with the SEC on November 12, 2019,
and elsewhere in the other documents incorporated by reference into this prospectus.
You should assume that
the information appearing in this prospectus, any accompanying prospectus supplement, any related free writing prospectus and any
document incorporated herein by reference is accurate as of its date only. Because the risk factors referred to above could cause
actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us or on our behalf,
you should not place undue reliance on any forward-looking statements. Further, any forward-looking statement speaks only as of
the date on which it is made. New factors emerge from time to time, and it is not possible for us to predict which factors will
arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination
of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All written or
oral forward-looking statements attributable to us or any person acting on our behalf made after the date of this prospectus are
expressly qualified in their entirety by the risk factors and cautionary statements contained in and incorporated by reference
into this prospectus. Unless legally required, we do not undertake any obligation to release publicly any revisions to such forward-looking
statements to reflect events or circumstances after the date of this prospectus or to reflect the occurrence of unanticipated events.
USE OF PROCEEDS
We will receive no
proceeds from the sale of the Shares by the Selling Stockholders. We may, however, receive cash proceeds equal to up to the total
exercise price of the Warrants to the extent that the Warrants are exercised for cash. The exercise price of the Warrants is $3.26
per share of Common Stock. The exercise price and the number of shares of Common Stock issuable upon exercise of the Warrants may
be adjusted in certain circumstances, including stock splits, dividends or distributions, or other similar transactions. However,
the Warrants contain a “cashless exercise” feature that allows the holders to exercise the Warrants without making
a cash payment to us in the event that there is no registration statement registering the Shares for resale. There can be no assurance
that any of these Warrants will be exercised by the Selling Stockholders at all or that the Warrants will be exercised for cash
rather than pursuant to the “cashless exercise” feature. To the extent we receive proceeds from the cash exercise of
the Warrants, we intend to use such proceeds to provide capital support or for general corporate purposes, which may include, without
limitation, supporting asset growth and engaging in acquisitions or other business combinations. We do not have any specific plans
for acquisitions or other business combinations at this time. Our management will retain broad discretion in the allocation of
the net proceeds from the exercise of the Warrants for cash.
The Selling Stockholders
will pay any underwriting fees, discounts and commissions attributable to the sale of the Shares and any similar expenses they
incur in disposing of the Shares. We will bear all other costs, fees and expenses incurred in effecting the registration of the
Shares covered by this prospectus. These may include, without limitation, all registration and filing fees, printing fees and fees
and expenses of our counsel and accountants in connection with the registration of the Shares covered by this prospectus.
SELLING STOCKHOLDERS
Unless the context
otherwise requires, as used in this prospectus, “Selling Stockholders” includes the selling stockholders listed below
and donees, pledgees, permitted transferees or other successors-in-interest selling shares received after the date of this prospectus
from a selling stockholder as a gift, pledge or other non-sale related transfer.
We have prepared this
prospectus to allow the Selling Stockholders or their successors, assignees or other permitted transferees to sell or otherwise
dispose of, from time to time, up to 2,000,000 shares of our Common Stock. The Shares to be offered hereby are issuable to the
Selling Stockholders upon exercise of the Warrants.
The Warrants will become
exercisable on June 6, 2020, have a term of ten and a half years from the date of issuance and have an exercise price of $3.26
per share of Common Stock, subject to adjustment for stock splits, reverse stock splits, stock dividends and similar transactions.
Pursuant to the terms of the Registration Rights Agreement, we agreed to register for resale the shares of Common Stock issuable
upon exercise of the Warrants. The Shares will be issued to the Selling Stockholders in reliance on the exemption from securities
registration in Section 4(a)(2) under the Securities Act and Rule 506 promulgated thereunder.
The shares of Common
Stock to be offered by the Selling Stockholders are “restricted” securities under applicable federal and state securities
laws and are being registered under the Securities Act to give the Selling Stockholders the opportunity to sell these shares publicly.
The registration of these shares does not require that any of the shares be offered or sold by the Selling Stockholders. Subject
to these resale restrictions, the Selling Stockholders may from time to time offer and sell all or a portion of their shares indicated
below in privately negotiated transactions or on the Nasdaq Capital Market or any other market on which our Common Stock may subsequently
be listed or quoted.
The registered shares
may be sold directly or through brokers or dealers, or in a distribution by one or more underwriters on a firm commitment or best
effort basis. To the extent required, the names of any agent or broker-dealer and applicable commissions or discounts and any other
required information with respect to any particular offering will be set forth in a prospectus supplement. See the section of this
prospectus entitled “Plan of Distribution”. The Selling Stockholders and any agents or broker-dealers that participate
with the Selling Stockholders in the distribution of registered shares may be deemed to be “underwriters” within the
meaning of the Securities Act, and any commissions received by them and any profit on the resale of the registered shares may be
deemed to be underwriting commissions or discounts under the Securities Act.
No estimate can be
given as to the amount or percentage of Common Stock that will be held by the Selling Stockholders after any sales made pursuant
to this prospectus because the Selling Stockholders are not required to sell any of the Shares being registered under the registration
statement of which this prospectus forms a part. The following table assumes that the Selling Stockholders will sell all of the
Shares listed in this prospectus.
Unless otherwise indicated
in the footnotes below, no Selling Stockholder has had any material relationship with us or any of our affiliates within the past
three years other than as a security holder.
We have prepared this
table based on written representations and information furnished to us by or on behalf of the Selling Stockholders. Since the date
on which the Selling Stockholders provided this information, the Selling Stockholders may have sold, transferred or otherwise disposed
of all or a portion of the shares of Common Stock in a transaction exempt from the registration requirements of the Securities
Act. Unless otherwise indicated in the footnotes below, we believe that (1) none of the Selling Stockholders are broker-dealers
or affiliates of broker-dealers, (2) no Selling Stockholder has direct or indirect agreements or understandings with any person
to distribute their Shares, and (3) the Selling Stockholders have sole voting and investment power with respect to all shares beneficially
owned, subject to applicable community property laws. To the extent any Selling Stockholder identified below is, or is affiliated
with, a broker-dealer, it could be deemed to be, under SEC Staff interpretations, an “underwriter” within the meaning
of the Securities Act. Information about the Selling Stockholders may change over time. Any changed information will be set forth
in supplements to this prospectus, if required.
The following table
sets forth information with respect to the beneficial ownership of our Common Stock held, as of December 31, 2019, by the Selling
Stockholders and the number of Shares being offered hereby and information with respect to shares to be beneficially owned by the
Selling Stockholders after completion of this offering. The percentages in the following table reflect the shares beneficially
owned by the Selling Stockholders as a percentage of the total number of shares of Common Stock outstanding as of December 31,
2019. As of such date, 167,798,120 shares of Common Stock were outstanding.
|
|
Shares Beneficially Owned
Prior to the Offering (1)
|
|
|
Maximum
Number of
Shares of
|
|
|
Shares Beneficially Owned
After the
Offering (1)(2)
|
|
Name
|
|
Number
|
|
|
Percentage
|
|
|
Common
Stock to be
Offered
Pursuant to
this
Prospectus
|
|
|
Number
|
|
|
Percentage
|
|
Entities affiliated with Oaktree Capital Management, L.P.
|
|
|
7,622,289
|
(3)
|
|
|
4.35
|
%
|
|
|
2,000,000
|
(4)
|
|
|
7,622,289
|
|
|
|
4.35
|
%
|
TOTAL
|
|
|
7,622,289
|
|
|
|
|
|
|
|
2,000,000
|
|
|
|
7,622,289
|
|
|
|
—
|
|
(1)
|
Beneficial ownership is determined in accordance with Rule 13d-3 under the Exchange Act. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of Common Stock subject to warrants, options and other convertible securities held by that person that are currently exercisable or exercisable within 60 days (of December 31, 2019) are deemed outstanding. Shares subject to warrants, options and other convertible securities, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person.
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|
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(2)
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Assumes that the Selling Stockholders dispose of all of the shares of Common Stock covered by this prospectus and do not acquire beneficial ownership of any additional shares. The registration of these shares does not necessarily mean that the Selling Stockholders will sell all or any portion of the shares covered by this prospectus.
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|
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(3)
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Consists of (i) 609,783 shares of Common Stock issuable to Oaktree Strategic Income II, Inc., or OSI II, upon exercise of warrants to purchase Common Stock that are currently exercisable, (ii) 1,905,572 shares of Common Stock issuable to OCSL SRNE, LLC upon exercise of warrants to purchase Common Stock that are currently exercisable, (iii) 3,051,035 shares of Common Stock issuable to SC Investments E Holdings, LLC upon exercise of warrants to purchase Common Stock that are currently exercisable, and (iv) 2,055,899 shares of Common Stock issuable to the SC Investments NE Holdings, LLC upon exercise of warrants to purchase Common Stock that are currently exercisable. OSI II is managed by Oaktree Capital Management, L.P. OCSL SRNE, LLC is wholly-owned by its managing member, Oaktree Specialty Lending Corporation, or OCSL. OCSL is managed by Oaktree Capital Management, L.P. Certain of the authorized officers of Oaktree Capital Management, L.P. may be deemed to have direct voting and dispositive power with respect to the Shares held by OSI II and OCSL SRNE, LLC. The manager of SC Investments E Holdings, LLC and SC Investments NE Holdings, LLC is Oaktree Fund GP IIA, LLC, or GP IIA LLC. The managing member of GP IIA LLC is Oaktree Fund GP II, L.P., or GP II. The general partner of GP II is Oaktree Capital II, L.P., or Capital II. The general partner of Capital II is Oaktree Holdings, Inc., or Holdings. The sole shareholder of Holdings is Oaktree Capital Group, LLC, or OCG. The duly elected manager of OCG is Oaktree Capital Group Holdings GP, LLC, which is managed by its executive committee. The members of the executive committee of Oaktree Capital Group Holdings GP, LLC are Howard Marks, Bruce Karsh, Jay Wintrob, John Frank and Sheldon Stone. Each of the managing members, managers, general partners and members described above disclaims beneficial ownership of any Shares beneficially or of record owned by SC Investments E Holdings, LLC and SC Investments NE Holdings, LLC, except to the extent of any pecuniary interest therein. OCM Investments LLC, a direct subsidiary of Oaktree Capital Management, L.P., the investment manager of OSI II, OCSL SRNE, LLC, SC Investments E Holdings, LLC and SC Investments NE Holdings, LLC, is a registered broker-dealer. OCM Investments LLC acts as a broker only for purposes of the placement of interests in Oaktree Capital Management, L.P.’s managed funds. On September 7, 2018, entities affiliated with Oaktree Capital Management, L.P. purchased $80 million aggregate principal amount of senior secured notes due 2026 issued by Scilex Pharmaceuticals Inc., a majority owned subsidiary of the Company. The principal business address for each of the persons and entities named herein is 333 South Grand Avenue, 28th Floor, Los Angeles, CA 90071.
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(4)
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Consists of (i) 160,000 shares of Common Stock issuable to OSI II upon exercise of the Warrants, which will become exercisable on June 6, 2020, (ii) 500,000 shares of Common Stock issuable to OCSL SRNE, LLC upon exercise of the Warrants, which will become exercisable on June 6, 2020, (iii) 800,557 shares of Common Stock issuable to SC Investments E Holdings, LLC upon exercise of the Warrants, which will become exercisable on June 6, 2020, and (iv) 539,443 shares of Common Stock issuable to the SC Investments NE Holdings, LLC upon exercise of the Warrants, which will become exercisable on June 6, 2020. See footnote (3) for additional information about OSI II, OCSL SRNE, LLC, SC Investments E Holdings, LLC and SC Investments NE Holdings, LLC.
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Indemnification
Under the Registration
Rights Agreement, we have agreed to indemnify the Selling Stockholders, their affiliates and permitted transferees against certain
losses, claims, damages, liabilities, settlement costs and expenses, including certain liabilities under the Securities Act and
the Exchange Act.
PLAN OF DISTRIBUTION
We are registering
the shares of Common Stock issuable upon exercise of the Warrants previously issued to the Selling Stockholders to permit the resale
of these shares of Common Stock by the holders of the Warrants and the shares issuable upon exercise thereof from time to time
after the date of this prospectus. We will not receive any of the proceeds from the sale by the Selling Stockholders of the shares
of Common Stock. We will bear all fees and expenses incident to our obligation to register the shares of Common Stock.
The Selling Stockholders
may sell all or a portion of the shares of Common Stock beneficially owned by them and offered hereby from time to time directly
or through one or more underwriters, broker-dealers or agents. If the shares of Common Stock are sold through underwriters or broker-dealers,
the Selling Stockholders will be responsible for underwriting fees, discounts or commissions or agent’s commissions. The
shares of Common Stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the
sale, at varying prices determined at the time of sale, or at negotiated prices. The Selling Stockholders will act independently
of us in making decisions with respect to the timing, manner and size of each sale. These sales may be effected in transactions,
which may involve cross or block transactions:
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•
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on any national securities exchange or quotation service on which the securities may be listed
or quoted at the time of sale;
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•
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in the over-the-counter market;
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•
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in transactions otherwise than on these exchanges or systems or in the over-the-counter market;
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•
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through the writing of options, whether such options are listed on an options exchange or otherwise;
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•
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in ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
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•
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in block trades in which the broker-dealer will attempt to sell the shares as agent but may position
and resell a portion of the block as principal to facilitate the transaction;
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•
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through purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
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•
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in an exchange distribution in accordance with the rules of the applicable exchange;
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•
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in privately negotiated transactions;
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•
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through the distribution of the Common Stock by any Selling Stockholder to its partners, members
or stockholders;
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•
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through one or more underwritten offerings on a firm commitment or best efforts basis;
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|
•
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in sales pursuant to Rule 144;
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|
•
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whereby broker-dealers may agree with the Selling Stockholders to sell a specified number of such
shares at a stipulated price per share;
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•
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in a combination of any such methods of sale; and
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|
•
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in any other method permitted pursuant to applicable law.
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If the Selling Stockholders
effect such transactions by selling shares of Common Stock to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the Selling Stockholders
or commissions from purchasers of the shares of Common Stock for whom they may act as agent or to whom they may sell as principal
(which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those
customary in the types of transactions involved). In connection with sales of the shares of Common Stock or otherwise, the Selling
Stockholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the shares of
Common Stock in the course of hedging in positions they assume. The Selling Stockholders may also sell shares of Common Stock short
and deliver shares of Common Stock covered by this prospectus to close out short positions and to return borrowed shares in connection
with such short sales. The Selling Stockholders may also loan or pledge shares of Common Stock to broker-dealers that in turn may
sell such shares.
The Selling Stockholders
may pledge or grant a security interest in some or all of the shares of Common Stock or the Warrants owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of Common
Stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable
provision of the Securities Act amending, if necessary, the list of Selling Stockholders to include the pledgee, transferee or
other successors in interest as Selling Stockholders under this prospectus. The Selling Stockholders also may transfer and donate
the shares of Common Stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest
will be the selling beneficial owners for purposes of this prospectus.
The Selling Stockholders,
individually and not severally, and any broker-dealer participating in the distribution of the shares of Common Stock may be deemed
to be “underwriters” within the meaning of the Securities Act, and any commission paid, or any discounts or concessions
allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act. At the time
a particular offering of the shares of Common Stock is made, a prospectus supplement, if required, will be distributed which will
set forth the aggregate amount of shares of Common Stock being offered and the terms of the offering, including the name or names
of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the Selling Stockholders
and any discounts, commissions or concessions allowed or reallowed or paid to broker-dealers. The Selling Stockholders may indemnify
any broker-dealer that participates in transactions involving the sale of the shares of Common Stock against certain liabilities,
including liabilities arising under the Securities Act.
Under the securities
laws of some states, the shares of Common Stock may be sold in such states only through registered or licensed brokers or dealers.
In addition, in some states the shares of Common Stock may not be sold unless such shares have been registered or qualified for
sale in such state or an exemption from registration or qualification is available and is complied with.
The aggregate proceeds
to the Selling Stockholders from the sale of the Common Stock offered will be the purchase price of the Common Stock less discounts
or commissions, if any. The Selling Stockholders reserve the right to accept and, together with their agents from time to time,
to reject, in whole or in part, any proposed purchase of Common Stock to be made directly or through agents. There can be no assurance
that any Selling Stockholder will sell any or all of the shares of Common Stock registered pursuant to the registration statement
of which this prospectus forms a part.
The Selling Stockholders
and any other person participating in such distribution will be subject to applicable provisions of the Exchange Act and the rules
and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which may limit the timing of purchases
and sales of any of the shares of Common Stock by the Selling Stockholders and any other participating person. Regulation M may
also restrict the ability of any person engaged in the distribution of the shares of Common Stock to engage in market-making activities
with respect to the shares of Common Stock. All of the foregoing may affect the marketability of the shares of Common Stock and
the ability of any person or entity to engage in market-making activities with respect to the shares of Common Stock.
We will pay all
expenses of the registration of the shares of Common Stock issuable upon exercise of the Warrants pursuant to the
Registration Rights Agreement, estimated to be $101,067 in total, including, without limitation, SEC filing fees and expenses
of compliance with state securities or “Blue Sky” laws; provided, however, that a Selling
Stockholder will pay all underwriting fees, discounts or commissions attributable to the sale of the Shares or any legal fees
and expenses of counsel to the Selling Stockholder, if any. We will indemnify the Selling Stockholders against certain
liabilities, including certain liabilities arising under the Securities Act or the Exchange Act, or the Selling Stockholders
will be entitled to contribution. We may be indemnified by the Selling Stockholders against certain liabilities, including
certain liabilities under the Securities Act or the Exchange Act, that may arise from any written information furnished to us
by the Selling Stockholder specifically for use in this prospectus, or we may be entitled to contribution in an amount not to
exceed the amount by which the net proceeds received by such Selling Stockholder exceeds the amount of damages that such
Selling Stockholder has otherwise been required to pay.
Once sold under the
registration statement, of which this prospectus forms a part, the shares of Common Stock will be freely tradable in the hands
of persons other than our affiliates.
DESCRIPTION OF CAPITAL STOCK
General Matters
As
of December 31, 2019, our authorized capital stock consisted of 750,000,000 shares
of Common Stock, $0.0001 par value per share, and 100,000,000 shares of preferred
stock, $0.0001 par value per share. Our board of directors, or our Board, may establish the rights and preferences of the preferred
stock from time to time. As of December 31, 2019, there were 167,798,120 shares
of our Common Stock issued and outstanding and no shares of preferred stock issued
and outstanding.
Common Stock
Holders
of our Common Stock are entitled to one vote per share. Our Restated Certificate of
Incorporation, as amended, or our Certificate of Incorporation, does not provide for cumulative voting. Holders of our Common
Stock are entitled to receive ratably such dividends, if any, as may be declared by our Board
out of legally available funds. However, the current policy of our Board is to retain earnings, if any, for our operations and
potential expansion of our business. Upon liquidation, dissolution or winding-up, the holders of our Common Stock are
entitled to share ratably in all of our assets which are legally available for distribution, after payment of or provision for
all liabilities. The holders of our Common Stock have no preemptive, subscription,
redemption or conversion rights.
Preferred Stock
As
of the date of this prospectus, no shares of preferred stock are issued and outstanding. Our Certificate of Incorporation provides
that our Board may by resolution, without further vote or action by the stockholders, establish one or more classes or series of
preferred stock having the number of shares and relative voting rights, designation, dividend rates, liquidation, and other rights,
preferences, and limitations as may be fixed by them without further stockholder approval. Once designated by our Board, each series
of preferred stock will have specific financial and other terms that will be set forth in the applicable certificate of designation
for the series. Prior to the issuance of shares of each series of preferred stock, our Board is required by the General Corporation
Law of the State of Delaware, or the DGCL, and our Certificate of Incorporation to adopt resolutions and file a certificate of
designation with the Secretary of State of the State of Delaware. The certificate of designation fixes for each class or series
the designations, powers, preferences, rights, qualifications, limitations and restrictions, including, but not limited to, some
or all of the following:
(a) The distinctive designation of such
series and the number of shares which shall constitute such series, which number may be increased (except where otherwise provided
by our Board in creating such series) or decreased (but not below the number of shares thereof then outstanding) from time to time
by resolution of our Board;
(b) The rate and manner of payment of dividends
payable on shares of such series, including the dividend rate, date of declaration and payment, whether dividends shall be cumulative,
and the conditions upon which and the date from which such dividends shall be cumulative;
(c) Whether shares of such series shall
be redeemable, the time or times when, and the price or prices at which, shares of such series shall be redeemable, the redemption
price, the terms and conditions of redemption, and the sinking fund provisions, if any, for the purchase or redemption of such
shares;
(d) The amount payable on shares of such
series and the rights of holders of such shares in the event of any voluntary or involuntary liquidation, dissolution or winding
up of the affairs of our Company;
(e) The rights, if any, of the holders
of shares of such series to convert such shares into, or exchange such shares for, shares of Common Stock, other securities, or
shares of any other class or series of preferred stock and the terms and conditions of such conversion or exchange;
(f) The voting rights, if any, and whether
full or limited, of the shares of such series, which may include no voting rights, one vote per share, or such higher or lower
number of votes per share as may be designated by our Board; and
(g) The preemptive or preferential rights,
if any, of the holders of shares of such series to subscribe for, purchase, receive, or otherwise acquire any part of any new or
additional issue of stock of any class, whether now or hereafter authorized, or of any bonds, debentures, notes, or any of our
other securities, whether or not convertible into shares of our Common Stock.
Anti-Takeover
Effects of Certain Provisions of our Certificate of Incorporation, Bylaws and the DGCL
Certain provisions of our Certificate of
Incorporation and our Amended and Restated Bylaws, or our Bylaws, which are summarized in the following paragraphs, may have the
effect of discouraging potential acquisition proposals or tender offers or delaying or preventing a change in control, including
changes a stockholder might consider favorable. Such provisions may also prevent or
frustrate attempts by our stockholders to replace or remove our management. In particular, our Certificate of Incorporation and
Bylaws and Delaware law, as applicable, among other things:
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•
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provide our Board with the ability to alter our Bylaws without stockholder approval;
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•
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place limitations on the removal of directors; and
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•
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provide that vacancies on our Board may
be filled by a majority of directors in office, although less than a quorum.
|
These
provisions are expected to discourage certain types of coercive takeover practices and inadequate takeover bids and to encourage
persons seeking to acquire control of our company to first negotiate with our Board.
These provisions may delay or prevent someone from acquiring or merging with us, which may cause the market price of our Common
Stock to decline.
Blank Check Preferred. Our Board
is authorized to create and issue from time to time, without stockholder approval, up to an aggregate of 100,000,000 shares of
preferred stock in one or more series and to establish the number of shares of any series of preferred stock and to fix the designations,
powers, preferences and rights of the shares of each series and any qualifications, limitations or restrictions of the shares of
each series.
The authority to designate preferred stock
may be used to issue a series of preferred stock, or rights to acquire preferred stock, that could dilute the interest of, or impair
the voting power of, holders of the Common Stock or could also be used as a method of determining, delaying or preventing a change
of control.
Advance Notice Bylaws. The Bylaws
contain an advance notice procedure for stockholder proposals to be brought before any meeting of stockholders, including proposed
nominations of persons for election to our Board. Stockholders at any meeting will only be able to consider proposals or nominations
specified in the notice of meeting or brought before the meeting by or at the direction of our Board or by a stockholder who was
a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has given our corporate
secretary timely written notice, in proper form, of the stockholder’s intention to bring that business before the meeting.
Although our Bylaws do not give our Board the power to approve or disapprove of stockholder nominations of candidates or proposals
regarding other business to be conducted at a special or annual meeting, our Bylaws may have the effect of precluding the conduct
of certain business at a meeting if the proper procedures are not followed or may discourage or deter a potential acquiror from
conducting a solicitation of proxies to elect its own slate of directors or otherwise attempting to obtain control of us.
Choice of Forum. The Bylaws provide
that, unless our Board consents to an alternative forum, the Court of Chancery in the State of Delaware will be the sole and exclusive
forum for: (i) any derivative action or proceeding brought by or on our behalf; (ii) any direct action asserting a claim against
us or any of our directors or officers pursuant to any of the provisions of the DGCL, our Certificate of Incorporation or the Bylaws;
(iii) any action asserting a claim of breach of fiduciary duties owed by any of our directors, officers or other employees to our
stockholders; or (iv) any action asserting a violation of Delaware decisional law relating to our internal affairs. This provision
does not apply to (a) actions in which the Court of Chancery in the State of Delaware concludes that an indispensable party is
not subject to the jurisdiction of Delaware courts, or (b) actions in which a federal court has assumed exclusive jurisdiction
to a proceeding. This choice of forum provision is not intended to apply to any actions brought under the Securities Act or the Exchange Act. Section 27 of the Exchange
Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act
or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce
any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
However, the Bylaws do not relieve us of our duties to comply with federal securities laws and the rules and regulations thereunder,
and our stockholders will not be deemed to have waived our compliance with these laws, rules and regulations. The Bylaws also provide
that any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have
notice of and consented to this choice of forum provision.
This choice of forum provision in the Bylaws
may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our
directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees.
In addition, stockholders who do bring a claim in the Court of Chancery in the State of Delaware could face additional litigation
costs in pursuing any such claim, particularly if they do not reside in or near Delaware. Furthermore, the enforceability of similar
choice of forum provisions in other companies’ governing documents has been challenged in legal proceedings, and it is possible
that a court could find these types of provisions to be inapplicable or unenforceable.
Interested Stockholder Transactions.
We are subject to Section 203 of the DGCL, which prohibits “business combinations” between a publicly-held Delaware
corporation and an “interested stockholder,” which is generally defined as a stockholder who is a beneficial owner
of 15% or more of a Delaware corporation’s voting stock for a three-year period following the date that such stockholder
became an interested stockholder, unless: (i) the transaction is approved by the board of
directors before the date the interested stockholder attained that status; (ii) upon consummation of the transaction which resulted
in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced; or (iii) on or after the date of the transaction, the transaction
is approved by the board of directors and authorized at a meeting of stockholders, and not by written consent, by the affirmative
vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder. In general, the DGCL
defines a business combination to include the following: (a) any merger or consolidation involving the corporation and the interested
stockholder; (b) any sale, transfer, pledge or other disposition of 10% or more of
the assets of the corporation involving the interested stockholder; (c) subject to certain exceptions, any transaction that results
in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; (d) any transaction
involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the
corporation beneficially owned by the interested stockholder; or (e) the receipt by the interested stockholder of the benefit of
any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.
Warrants
As of December 31,
2019, in addition to the Warrants to purchase 2,000,000 shares of Common Stock issued to the Selling Stockholders in connection
with our entry into the Loan Agreement Amendment, warrants to purchase 55,556,369 shares of Common Stock with a weighted-average
exercise price of $3.13 per share were outstanding. The Warrants to purchase an aggregate of 2,000,000 shares of Common Stock will
become exercisable on June 6, 2020, have a term of ten and a half years from the date of issuance and have an exercise price of
$3.26 per share of Common Stock. We are registering the resale of the shares of Common Stock issuable upon exercise of the Warrants
pursuant to the registration statement of which this prospectus forms a part. All of our other outstanding warrants are currently
exercisable, except for certain series C warrants to purchase up to an aggregate of 6,305,334 shares of Common Stock issued on
July 2, 2019, or the Series C Warrants, which are exercisable only to the extent and in proportion to a holder of the Series C
Warrants exercising series B warrants to purchase shares of Common Stock issued on July 2, 2019. Further, the other outstanding
warrants are currently exercisable, except to the extent that certain of them may be subject to a blocker provision, which restricts
the exercise of a warrant if, as a result of such exercise, the warrant holder, together with its affiliates and any other person
whose beneficial ownership of Common Stock would be aggregated with the warrant holder’s for purposes of Section 13(d) of
the Exchange Act, would beneficially own in excess of 4.99%, 9.99%, 19.99% or 19.9% of our then issued and outstanding shares of
Common Stock (including the shares of Common Stock issuable upon such exercise), as such percentage ownership is determined in
accordance with the terms of such warrant. All of our outstanding warrants contain provisions for the adjustment of the exercise
price in the event of stock dividends, stock splits or similar transactions. In addition, certain of the warrants contain a “cashless
exercise” feature that allows the holders thereof to exercise the warrants without a cash payment to us under certain circumstances.
Transfer Agent and Registrar
The Transfer Agent and Registrar for our
Common Stock is Philadelphia Stock Transfer, Inc., 2320 Haverford Road, Suite 230, Ardmore, PA 19003.
LEGAL MATTERS
Unless otherwise indicated
in the applicable prospectus supplement, the validity of the Common Stock offered by this prospectus, and any supplement thereto,
will be passed upon for us by Paul Hastings LLP, Palo Alto, California.
EXPERTS
The financial statements as of December
31, 2018 and 2017 and for each of the three years in the period ended December 31, 2018, incorporated in this prospectus by reference
from the Sorrento Therapeutics, Inc. and subsidiaries (or the Company) Current
Report on Form 8-K filed on June 17, 2019, and the effectiveness of the Company’s internal control over financial
reporting have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their
reports, which are incorporated herein by reference (which reports (1) express an unqualified opinion on the consolidated financial
statements and include an explanatory paragraph referring to the Company’s ability to continue as a going concern and (2)
express an adverse opinion on the effectiveness of the Company’s internal control over financial reporting because of material
weaknesses). Such financial statements have been so incorporated in reliance upon the reports of such firm given upon their authority
as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We are a reporting
company and file annual, quarterly and current reports, proxy statements and other information with the SEC. We have filed with
the SEC a registration statement on Form S-3 under the Securities Act with respect to the Common Stock being offered under this
prospectus. This prospectus does not contain all of the information set forth in the registration statement and the exhibits to
the registration statement. For further information with respect to us and the shares of Common Stock being offered under this
prospectus, we refer you to the registration statement and the exhibits and schedules filed as a part of the registration statement.
The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers
that file electronically with the SEC, including Sorrento Therapeutics, Inc. The SEC’s Internet site can be found at http://www.sec.gov.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to our directors, officers, and persons controlling us pursuant
to the provisions described in Item 15 of the registration statement of which this prospectus forms a part or otherwise, we have
been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than our payment of expenses
incurred or paid by our directors, officers, or controlling persons in the successful defense of any action, suit, or proceeding)
is asserted by our directors, officers or controlling persons in connection with the Common Stock being registered, we will, unless
in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed
by the final adjudication of the issue.
IMPORTANT INFORMATION INCORPORATED BY
REFERENCE
The SEC allows us to
“incorporate by reference” information into this prospectus, which means that we can disclose important information
to you by referring you to another document filed separately with the SEC. The documents incorporated by reference into this prospectus
contain important information that you should read about us.
The following documents
are incorporated by reference into this prospectus:
(a)
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Our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the SEC on March 15, 2019;
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(b)
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Our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2018, filed with the SEC on April 30, 2019;
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(c)
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Our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019, filed with the SEC on May 15, 2019;
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(d)
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Our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2019, filed with the SEC on August 9, 2019;
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(e)
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Our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2019, filed with the SEC on November 12, 2019;
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(f)
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Our Definitive Proxy Statement on Schedule 14A, filed with the SEC on August 14, 2019;
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(g)
|
Our Current Reports on Form 8-K filed
with the SEC on January
24, 2019, March
22, 2019, May
3, 2019, June
4, 2019, June
5, 2019, June
17, 2019 (filed at 9:22 a.m. Eastern Time), June
17, 2019 (filed at 4:40 p.m. Eastern Time), June
19, 2019 (other than with respect to Item 7.01 thereof and Exhibits 99.1 and 99.2 thereto), June
20, 2019, June
28, 2019, July
2, 2019, August
12, 2019 (filed at 10:07 a.m. Eastern Time), August
12, 2019 (filed at 10:10 a.m. Eastern Time), September
23, 2019 (filed at 6:06 a.m. Eastern Time), September
23, 2019 (filed at 7:00 a.m. Eastern Time), October
1, 2019 (filed at 4:28 p.m. Eastern Time), October
1, 2019 (filed at 4:32 p.m. Eastern Time), October
8, 2019, October
9, 2019, December
9, 2019, December
20, 2019 and January 27, 2020;
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(h)
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Our Current Report on Form 8-K/A filed with the SEC on April 3, 2019; and
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(i)
|
The description of our Common Stock set forth in our Registration Statement on Form 8-A (File No. 001-36150), filed with the SEC on October 23, 2013, including any amendments or reports filed for the purpose of updating such description.
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We also incorporate
by reference any future filings (other than current reports furnished under Item 2.02 or Item 7.01 of Form 8-K and exhibits filed
on such form that are related to such items unless such Form 8-K expressly provides to the contrary) made with the SEC pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, including those made after the date of the initial filing of the registration
statement of which this prospectus forms a part and prior to effectiveness of such registration statement, until we file a post-effective
amendment that indicates the termination of the offering of the Common Stock made by this prospectus and such future filings will
become a part of this prospectus from the respective dates that such documents are filed with the SEC. Any statement contained
herein or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof or of the related prospectus supplement to the extent that a statement contained herein or in any other subsequently
filed document which is also incorporated or deemed to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of
this prospectus.
Documents incorporated
by reference are available from us, without charge. You may obtain documents incorporated by reference in this prospectus by requesting
them in writing or by telephone at the following address:
Sorrento Therapeutics, Inc.
4955 Directors Place
San Diego, CA 92121
Attn: Corporate Secretary
Phone: (858)
203-4100
SORRENTO THERAPEUTICS, INC.
2,000,000 SHARES OF COMMON STOCK
PROSPECTUS
January 29, 2020
Neither we nor the Selling Stockholders
have authorized any dealer, salesperson or other person to give any information or to make any representations not contained in
this prospectus or any prospectus supplement. You must not rely on any unauthorized information. This prospectus is not an offer
to sell these securities in any jurisdiction where an offer or sale is not permitted. The information in this prospectus is current
as of the date of this prospectus. You should not assume that this prospectus is accurate as of any other date.
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