Sorrento Therapeutics (NASDAQ: SRNE) is a kind of stocks that is sort of like a lightning rod. That is obvious from the truth that over 22% of the biotech’s excellent shares had been offered quick as of Aug. 14, 2020. Then again, there are additionally many traders who really feel strongly optimistic about Sorrento’s progress prospects.
The corporate has obtained plenty of consideration since CEO Henry Ji introduced in May that Sorrento might have a remedy for COVID-19. Its stock has been an enormous winner, leaping near 150% 12 months thus far. However is Sorrento Therapeutics a very good coronavirus stock to purchase?
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Loads of arrows within the quiver
Each proponents and opponents of Sorrento can agree on one factor: The biotech has loads of arrows in its quiver that focus on COVID-19. Sorrento’s packages cowl the prevention, analysis, and therapy of COVID-19.
In June, the corporate requested emergency use authorization (EUA) from the Meals and Drug Administration for its COVI-TRACK diagnostic take a look at, which detects novel coronavirus antibodies. It additionally plans to file for an EUA for COVI-TRACE, a fast salivary diagnostic take a look at licensed from Columbia College.
Sorrento has been much more energetic in creating potential remedies for COVID-19. The biotech filed for FDA approval earlier this month to start a section 1 research of antibody remedy STI-1499 (COVI-GUARD) in treating hospitalized COVID-19 sufferers. It hopes to shortly advance the candidate via scientific testing and maybe even obtain an EUA for STI-1499 as quickly as the top of 2020.
The corporate lately acquired the rights to abivertinib from ACEA Therapeutics and is evaluating the candidate in a section 2 research for treating COVID-19 sufferers with extreme to average pulmonary signs. It additionally has two different COVID-19 therapeutic candidates in preclinical testing, COVI-SHIELD and COVIDTRAP.
As well as, Sorrento has chosen its lead COVID-19 vaccine candidate after conducting preclinical testing. This candidate, T-VIVA-19, has but to advance into section 1 scientific testing.
Loads of hurdles to leap, too
Sorrento faces loads of obstacles. The apparent challenges embody securing FDA emergency use authorization and finally getting approval for its pipeline candidates.
Sorrento should not have too exhausting a time getting EUAs for its COVID-19 antibody and diagnostics assessments. The FDA has already granted EUAs for a protracted listing of rival merchandise. In fact, this raises yet one more hurdle for Sorrento: competing in an more and more crowded market. Which may not be too problematic for COVI-TRACE, although, because the saliva-based diagnostic take a look at gives a number of key benefits.
The biotech might have a harder time getting its therapeutic candidates and experimental vaccine in the marketplace. The FDA hasn’t given many EUAs to date for therapeutic candidates. The primary COVID-19 vaccine authorization remains to be a minimum of a number of months away.
There’s additionally a cash hurdle. Sorrento had lower than $24.four million in cash and cash equivalents readily available on the finish of June. Even with its restricted cash of $45 million added in (which may solely be used for its designated function, not for basic enterprise operations), the corporate would not have some huge cash to advance its pipeline or commercialize any merchandise that safe EUA or approval.
Certain, Sorrento might elevate extra cash by issuing new shares. However it’s already planning to supply round $19.four million in new shares to fund the acquisition of SmartPharm Therapeutics. Each new share in the marketplace dilutes the value of current shares.
To purchase or to not purchase?
My view is that Sorrento’s pipeline has appreciable potential. It would not shock me if the biotech stock strikes greater, particularly if excellent news sparks a brief squeeze. Some would possibly like these prospects sufficient to scoop up shares.
Nonetheless, I believe that Sorrento is just too dangerous to purchase proper now for many traders. What might change that evaluation? For one factor, it might be nice for the corporate to obtain FDA emergency use authorization for a minimum of certainly one of its merchandise. Stable outcomes from a scientific research (versus preclinical knowledge) would even be an enormous plus. Readability on how Sorrento will fund its a number of packages can be useful as nicely.
Within the meantime, I believe that Sorrento Therapeutics will proceed to be the sort of stock that pulls passionate views each for and towards it.
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Keith Speights has no place in any of the stocks talked about. The Motley Idiot has no place in any of the stocks talked about. The Motley Idiot has a disclosure coverage.
The views and opinions expressed herein are the views and opinions of the writer and don’t essentially replicate these of Nasdaq, Inc.