Sorrento Therapeutics has been engaged in a bull/bear war for quite some time. The bears have been led by the “Night King of Biotech” Adam Feuerstein, who has bashed the company and its CEO every chance he has gotten. However, SRNE stock has held up. Sorrento stock is now trading at trendline support as the bulls have kept buying the dip. As we take a closer, we believe a major short squeeze is brewing in Sorrento Therapeutics stock.
About Sorrento Therapeutics
First up, here’s a little background info for those that aren’t familiar with the company. Sorrento is a clinical-stage, antibody-centric, biopharmaceutical company developing new therapies to treat cancers. Sorrento’s multimodal multipronged approach to fighting cancer is made possible by its extensive immuno-oncology platforms, including key assets such as fully human antibodies (“G-MAB™ library”), clinical-stage immuno-cellular therapies (“CAR-T”, “DAR-T”), antibody-drug conjugates (“ADCs”), and clinical-stage oncolytic virus (“Seprehvir®”). Sorrento is also developing potential antiviral therapies, and vaccines against coronaviruses, including COVIDTRAP™, ACE-MAB™, COVI-MAB™, COVI-GUARD™, and COVI-SHIELD™.
The key to understanding Sorrento Therapeutics is realizing that at its heart, it’s an antibody company. An antibody is a protective protein produced by the immune system in response to the presence of a foreign substance. Cancer cells, bacteria, and viruses, like the one that causes COVID-19, are foreign substances and therefore, theoretically can be impeded or neutralized by antibodies. A vaccine is meant to safely expose a person’s body to a pathogen to teach it to create these neutralizing antibodies. Sorrento’s approach skips the need to teach the body and introduces the neutralizing antibodies directly in vivo. This allows the approach to be administered to healthy and infected people alike.
The first treatment candidate, branded COVI-GUARD, is a multi-antibody ‘cocktail’ potentially including up to 10 proprietary antibodies, including STI-1499. This therapy would effectively be a limited-duration vaccine and could be administered pre-exposure, conferring temporary immunity to COVID-19 if a person is exposed.
The second drug candidate, COVI-SHIELD, would be based on a single antibody (STI-1499) which Sorrento postulates is 100% effective at preventing cell infection in vitro and can eliminate an active SARS-CoV-2 in 4 days.
An application for Emergency Use Authorization (EUA) is under review at the FDA for its COVI-TRACKTM in vitro diagnostic test kit for the independent detection of IgG and IgM antibodies in sera of patients exposed to the SARS-CoV-2 virus. The rapid antibody test allows for results to be available in eight minutes or less. The easy to use assay develops three clear lines that confirm the assay validity and the qualitative detection and differentiation of IgM and IgG antibodies to the SARS-CoV-2 virus.
Analytical validation was performed by testing sample cohorts from healthy donors and confirmed positive COVID-19 patient samples by RT-PCR testing, and the assay demonstrated a specificity greater than 97% and diagnostic sensitivity of greater than 94%. Upon issuance of a EUA, the COVI-TRACK test will be available for distribution to clinical testing sites nationwide. Sorrento has secured manufacturing capacity to support the production of up to five million test kits per month.
Covidtrap has shown its ability to block coronavirus infection in African green monkey kidney epithelial cells in vitro (in test tubes). Epithelial cells line the surface of our bodies and are the first to come in contact with outside elements. Covidtrap acts by binding to the spike protein — or the protein responsible for infection — of the virus.
Sorrento Therapeutics has discussed Covidtrap with the FDA and received feedback regarding the path forward. The company said it plans on submitting preclinical data on both of its candidates for scientific publication in the coming two to three months and will move forward into animal testing. If all goes well there, clinical trials would follow.
Sorrento Therapeutics Buyout Offers
Sorrento Therapeutics has turned down at least three takeover offers that we are aware of. Reports are that one was in the neighborhood of $7 a share and Ji said no. Obviously, he thinks the company is worth a lot more and is going to hold out for a much, much higher price.
The problem with speculating on small-cap biotechs is that almost all only have one product in the pipeline. Sorrento Therapeutics has multiple irons in the fire. All it takes is one to have positive data and the stock is off and running. In our view, it’s not a matter of if the shorts will be squeezed, but when. Considering that 25% of the float is now short, the coming short squeeze is going to be epic. Buckle up and get ready!
As always, good luck to all (except the shorts)!
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Disclosure: We have NO position in NASDAQ:SRNE and have NOT been compensated for this article.