Sorrento Therapeutics (SRNE) Unit to Acquire Semnur Pharmaceuticals

August 16, 2016 5:49 AM EDT

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Scintilla Pharmaceuticals, Inc. ("Scintilla"), a subsidiary of Sorrento Therapeutics, Inc. (Nasdaq: SRNE), has entered into a binding term sheet to acquire Semnur Pharmaceuticals, Inc. ("Semnur"). Scintilla's lead program is resiniferatoxin ("RTX") for the treatment of intractable cancer pain.

Semnur, based in Los Altos, CA, is a specialty pharmaceutical company focused on the clinical and commercial development of innovative products that meet the needs of pain management practitioners and their patients. Semnur's lead product, projected to commence Phase 3 clinical trials in 2017, is a non-opiate epidural steroid injectable to treat chronic back pain. Key members of Semnur's management team are expected to join Scintilla's management team. On August 8, 2016, Scintilla announced it had entered into a binding term sheet to acquire SCILEX Pharmaceuticals, Inc. ("SCILEX"). Following the closing of the announced acquisitions Scintilla will operate as a stand-alone company focused on pain management.

The acquisition is contingent upon customary closing conditions. In consideration for the acquisition, Scintilla will pay Semnur's equity holders an initial payment of $60 million, consisting of $40 million in cash and $20 million in shares of common stock of Sorrento. In addition, additional cash consideration of up to $140 million may be paid by Scintilla to Semnur's equity holders upon achievement of certain development, product approval and commercial milestones. Joseph Gunnar & Co., LLC provided a fairness opinion to Sorrento, as the majority stockholder of Scintilla.

"Semnur represents a unique asset for Scintilla that is highly complementary to its existing assets. Semnur's pipeline of multiple late-stage and near commercialization product opportunities targets some of the largest pain markets available and addresses critical unmet medical needs," said Dr. Henry Ji, President and CEO of Sorrento. Dr. Ji further added, "upon completion of the pending acquisitions and integrations of Semnur and SCILEX, Scintilla will immediately become a truly unique pain management company with a multiple product pipeline and an experienced management team led by Jaisim Shah from Semnur and Anthony Mack from SCILEX."

"The acquisition by Scintilla reflects the strength of Semnur's technology, IP and tremendous potential of our lead product candidate," stated Mahendra Shah, Executive Chairman of Semnur Pharmaceuticals, Inc. and Managing Director of Vivo Capital. "We are excited to join Scintilla and be a part of such a dynamic company that will be a major player in the pain management space," added Mr. Shah.

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