Shares of Patrick Soon-Shiong’s biotech firm plunged this week after a news report raised questions on whether the Los Angeles billionaire had used a donation to a university to artificially inflate the outlook for the company’s operations.
STAT, a news group affiliated with the Boston Globe, reported Monday that Soon-Shiong and his charitable foundations gave the University of Utah $12 million for genetic disease research in 2014. The university later paid $10 million of that amount to NantHealth, a Culver City company founded by Soon- Shiong.
In November, NantHealth told investors that the company had received 524 orders for one of its key products — a genetic test known as GPS Cancer — during the last three months, according to the Los Angeles Times. One-third of those orders came from the University of Utah deal, Soon-Shiong told investors during a conference call.
In an interview, Soon-Shiong told The Times that the STAT story is “maliciously false.” He said his foundations had given the money to the university out of “a desire to make this knowledge available to scientists throughout the world.”
“I’m befuddled by any other motivation that could be perceived,” he said.
On Tuesday, NantHealth’s stock closed at $4.94 — down 10 percent for the day and down 31 percent since the report was published before the markets opened Monday. The stock is now trading at roughly a third of its initial offering price of $14 in June 2016, according to The Times.
Soon-Shiong is the second-largest shareholder and vice chairman of Tronc Inc., which owns the Los Angeles Times. On Feb. 28, he agreed to buy 950,000 Tronc shares from downtown L.A. investment firm Oaktree Capital Management.
The stock purchase is subject to a waiting period, according to a filing with the Securities and Exchange Commission. When the deal closes, Soon- Shiong would control 6.7 million Tronc shares, representing an 18.5 percent stake in the company, according to The Times.
—City News Service