Sorrento Therapeutics Inc (NASDAQ:SRNE) is a major runner out of the biotechnology space this week, with the company currently trading in and around $3.70 a share – up more than 100% from the open on Monday at $1.80 apiece.There haven't really been any fresh operational updates hit the press, so what's driving the action and can the company maintain its strength?Let's take a look.For those new to this one, the company is a biotechnology stock that is primarily focused on oncology but that has a pretty diverse pipeline outside of this primary focus. Its lead oncology assets are a CAR-T asset called CEA which the company is investigating in a lead indication of metastatic liver tumors and a secondary immuno-oncology asset (but this time around, not CAR-T) called Seprehvir, which is under investigation as a potential treatment for patients with solid tumors. Both have completed phase II trials and are ready to move into pivotal trials near term. SRNE Daily ChartThese aren’t the focus of this discussion, however, as they aren’t what's driving this company to the upside right now.Instead, we've got to move over to the company's other operational arm, pain management, and specifically, pain management without the use of opioids.Sorrento has been developing an asset called ZTlido, which is a lidocaine patch designed to relieve pain in patients suffering from postherpetic neuralgia (PHN). PHN is a complication of shingles, which is caused by the chickenpox (herpes zoster) virus, and it affects nerve fibers and skin, causing burning pain that lasts long after the rash and blisters of shingles disappear.Right now, the current standard of care treatment for this condition is either opioid therapy or a non-opioid adhesive patch, similar to that of ZTlido. Opioids bring with them obvious addictive potential side effects and major developed nations are attempting to move away from opioid therapy as a go-to standard of care in an attempt to avoid long-term addictive behavior in patients. The current standard of care adhesive product in this space is called Versatis but it is known for relatively weak adhesion, which is a major setback for this sort of asset. In other words, it doesn't stick to the patient very well so pain management can be unpredictable.With ZTlido, Sorrento is attempting to improve the adhesion over the current standard of care and go after pretty much exactly the same market as that of Versatis but with a superior product.And here is the thing – lidocaine patches generate nearly $750 million in revenues in the US and Europe annually right now. If Sorrento can get ZTlido on shelves in these regions, it's product is superior to current standard of care for adhesion (a 90% adhesion rate vs. a 50% adhesion rate for Versatis) and similar in terms of efficacy, meaning it would have a distinct advantage over these products and could quickly snatch up market share from them.So, this brings us to why the company is running right now.An initial application was turned down by the FDA for various reasons, all of which, the company says, has now been rectified. It has resubmitted the application to the agency and the latter quickly accepted the former for review, suggesting that – on the face of it, at least – a claim that concerns be rectified is valid.Further, we now have a PDUFA in place for February 28, 2018. This is a company that is currently valued at just $283 million. If the FDA green lights this product, it will be well on its way towards a market worth two-thirds of $1 billion and, in turn, should pick up a rapid upside revaluation as and when it happens.As ever, this is a binary play, and the company will fall if the FDA doesn't give ZTlido a regulatory thumbs up. Given the upside on offer, however, and for a more risk-tolerant trader, it could be well worth a punt at current prices, even given the recent run.We will be updating our subscribers as soon as we know more. For the latest updates on SRNE, sign up below!Image courtesy of TPATCH via FlickrDisclosure: We have no position in SRNE and have not been compensated for this article.
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