Sorrento Therapeutics – Why Do Analysts Like Sorrento Therapeutics’ (SRNE) Stock So Much? | by Andrew Martin | Jun, 2021
The pharma company is expanding in the midst of much research and development
Pharma stocks can be like ice cream flavors. There are lots of them and a new popular variety practically every week. That also comes with a lot of volatility, as the drugs and treatments they are researching and developing can succeed but can also fail spectacularly. One company in the sector that seems to have widespread attention of analysts is Sorrento Therapeutics (SRNE). What has gained them such positive energy and where are projections indicating this commodity’s stock price might go?
Founded in 2009, according to their website, clinical stage Sorrento Therapeutics applies “cutting-edge science to create innovative therapies that will improve the lives of those who suffer from cancer, intractable pain and COVID-19.”
Furthermore, their “approach to fighting cancer is made possible by a unique immuno-oncology (“I-O”) portfolio, comprised of a wide array of innovative and synergistic assets, such as a broad fully human antibody library (“G-MAB™”) that can be used on their own or incorporated into cancer-targeting approaches.”
SRNE currently trades at $8.87 a share, more than doubling it’s one-year low. Additionally, there are some analysts who have come out in major support of the stock. Three Tipranks analysts have all rated Sorrento as a “Buy” with an average 12-month price target of $25.00, including one who projected as high as $30.
By contrast, the three analysts that have forecasted SRNE for MarketBeat also have a consensus “Buy” rating on it with an average price target of $30.33.
Their aggregated predictions would represent an approximate tripling from the current price. Why are they so bullish?
Simply put, the company has a number of drugs and treatments in the pipeline in various stages of development, along with aggressive growth that makes investors excited about potential.
After revenue increased 48.25% in 2019 and 27.24% in 2020 (despite COVID-19), the company roared out of the gate in Quarter 1 of 2021 with an increase of 84.65%, totaling $14.26 million. They also recently completed the acquisition of ACEA Therapeutics, which also develops treatments for life-threatening diseases. Sorrento CEO Henry Ji explained:
“With broad-spectrum and synergistic infrastructures and expertise in pharmaceutical and biological drug discovery, development and manufacturing, and expanded geographic coverage in China and North America, we envision Sorrento becoming a leading bio pharmaceutical company to develop and commercialize innovative medicines that will save and improve lives globally.”
ACEA President Xiao Xu agreed that the collaboration was a natural fit:
“With perfectly aligned missions, ACEA and Sorrento are both committed to developing innovative drugs and providing therapeutic solutions for unmet medical needs. The successful integration of ACEA small molecule drug pipelines to Sorrento large molecule and cell therapy platforms will significantly strengthen and facilitate the innovative drug development in the field of cancer and autoimmune diseases.”
Sorrento also has a number of other affiliates, including Scilex Pharmaceuticals, Bioserv, Smartpharm Therapeutics and Ark Animal Health. Their continued consolidation is impressive as they simultaneously research and develop treatments for the market.
The number of drugs and therapies Sorrentos has already released or are developing is rather staggering. Their website lists a total of 22 active in their pipeline, including 11 related to COVID and seven for immunotherapy/cancer. Although some are still in the pre-clinical phase, several CVOID products are either in final manufacturing phase or have already been approved by the ADA for emergency use. A number of others have reached Phase 2 and Phase 3; progression which indicates the company will likely to continue stagger-releasing to the market as they complete testing and achieve approval.
As mentioned previously, not all drugs and treatments pan out. Time, money and other resources are poured into the research and development in the hopes for advancement and results but there is never a guarantee that a positive outcome will come to fruition. However, with Sorrento having so many irons in the fire, from a business standpoint it’s a nice hedge to not have to rely on just one or two of their projects becomign successful. They appear to be a well-oiled machine with interests and competencies in multiple sectors of the medical treatment world — specifically ones that have a lot of need and room for innovation.
While we as humans have taken enormous strides over the past century in matters related to health, there is still much work to be done. Sorrento Therapeutics has jumped into this task with both feet and is working to simultaneously produce and expand. There is obvious risk in any investment, but there could also be great reward in this case. The old saying is to go big or go home, and SRNE certainly appears to be going big. Time will tell if it pays off like some believe it may.
DISCLAIMER: The author is not a financial advisor or expert. The opinions expressed in this article are intended for general educational purposes and entertainment only. They are not intended in any way to provide specific advice or recommendations for any individual or on any specific security or investment product. Individual investors are responsible for their own money and investment decisions. Remember there is no guarantee that stocks will fulfill the analysts’ projections or increase in value. Please always do your own due diligence and if you invest, do so with proper caution. The author holds a small position in the holding(s) discussed in the article at the time of this article’s publishing.
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