Anyone that has followed us for quite some time knows that we have been bullish on Sorrento stock since the COVID-19 pandemic started. In our last article, which you can read here, we told our readers and subscribers to not get nervous due to the Fear Uncertainty and Doubt (FUD) that Hindenburg Research and the “Night King of Biotech” Adam Feuerstein, were spreading about the company.
While it is disheartening, investors need to stop reacting and instead focus on the science behind these biotechs. This is the case with Sorrento stock and why Feuerstein and Hindenburg need to be ignored.
The science from Sorrento was just validated by the Mayo Clinic. There is perhaps no more prestigious cancer research institution in the US than the Mayo Clinic. In this article, we reiterate our bullish call on Sorrento stock and explain why the Mayo Clinic news is an even bigger deal than Mr. Market realizes.
Sorrento Stock
First up, here’s a little background info for those not familiar with Sorrento stock. 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™”, “Seprehvec™”). Sorrento is also developing potential antiviral therapies and vaccines against coronaviruses, including COVIDTRAP™, ACE-MAB™, COVI-MAB™, COVI-GUARD™, COVI-SHIELD™, and T-VIVA-19™; and diagnostic test solutions, including COVI-TRACK™ and COVI-TRACE™.
Mayo Clinic
Mayo Clinic is an American nonprofit academic medical center currently based in three major locations: Rochester, Minnesota; Jacksonville, Florida; and Scottsdale, Arizona, focused on integrated patient care, education, and research. It employs over 4,500 physicians and scientists, along with another 58,400 administrative and allied health staff. It is home to the top-ten ranked Mayo Clinic Alix School of Medicine in addition to many of the highest regarded residency education programs in the United States. It spends over $660 million a year on research and has more than 3,000 full-time research personnel.
Mayo Clinic was ranked number 1 in the United States for 2019-20 U.S. News & World Report Best Hospitals Honor Roll, maintaining a position at or near the top for more than 27 years. Drawing in patients from around the globe, Mayo Clinic performs near the highest number of transplants in the country, including both solid organ and hematologic transplantation.
Sorrento Stock and Mayo Clinic
The news that finally allowed Sorrento stock to bottom is an exclusive license agreement for a potential breakthrough technology platform that is capable of generating a great diversity of stable antibody-drug-nanoparticle albumin-bound (nab) immune complexes (ADNICs) targeting many types of human diseases including various solid and liquid tumors. The ADNIC is the next generation in antibody-drug conjugate (ADC) technology that potentially addresses limitations of current ADC technology, such as complex manufacturing processes (e.g., antibody-chemotherapy linkers), which can affect drug half-life, stability, and tumor accessibility, and result in the high cost of goods (COGs).
The ADNIC platform is currently generating clinical data at Mayo Clinic through clinical trials with multiple investigational products in a variety of cancers including ovarian, endometrial, and multiple lymphoma subtypes. These trials will continue and are expected to be expanded.
“This stable complex potentially allows for the delivery of higher doses of active drug directly into the tumor as demonstrated in animal studies and in preliminary trials in cancer patients,“ according to Dr. Markovic, the inventor of the ADNIC technology at Mayo Clinic.
This is significant because it is already being used in cancer patient treatment. The platform is currently being tested in clinical trials in a range of cancers. Henry Ji, Ph.D., Chairman and CEO of Sorrento Therapeutics, said:
“The Mayo Clinic-developed ADNIC platform is a perfect fit for our extensive G-MAB antibody products including but not limited to our anti-PD-L1, anti-CD38, anti-BCMA and anti-ROR1 antibodies. We will accelerate the development and commercialization of this amazing technology by generating and developing multiple next-generation ADNIC product candidates for the potential treatment of cancer, COVID-19 and other human diseases.”
Pipeline Highlights
What excites us most about Sorrento stock is how many irons in the fire the company has. In the most recent corporate presentation, Dr. Henry Ji laid out what Sorrento is working on. These include:
- COVID-19: Prevention: Vaccine candidate T-VIVA-19 employs a fusion protein, rS1-Fc, that targets Fc receptor-expressing antigen-presenting cells for induction of neutralizing antibodies and T cell responses.
- Detection: COVI-TRACK test detects IgG and IgM antibodies in peripheral blood in ~eight minutes with sensitivity of 94% and specificity of 97%. COVI-TRACE detects the presence of SARS-CoV-2 in saliva in ~30 minutes. Both are visually interpreted and require no instrumentation.
- Early intervention: COVI-GUARD (STI-1499) neutralizing antibody that binds to the S1 subunit of the SARS-CoV-2 spike protein (Dr. Ji called it a “cure” in May causing shares to rally).
- Rescue intervention: Abivertinib, a tyrosine kinase inhibitor (TKI) exclusively licensed worldwide, except China, from ACEA Therapeutics. A Phase 2 study in hospitalized patients is next up.
- Oncology pipeline: Most advanced candidate is Phase 3-stage abivertinib for NSCLC. Three other programs in Phase 1: CD38 CAR T in multiple myeloma, CD38 antibody-drug conjugate in amyloidosis, and seprehvir in solid tumors.
- Resiniferatoxin, an agonist of a protein called transient receptor potential cation channel subfamily V member 1 (TRPV1), in early-stage development for cancer pain and pain associated osteoarthritis of the knee.
Sorrento Stock Bull Thesis
We are going to try and spell into out for the bears on why it’s suicidal to be short Sorrento stock. Unfortunately, we cannot use small words that they would understand with their limited intellect, but we will try.
First, the key to understanding Sorrento stock 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.
Second, Sorrento Therapeutics is acquiring Cambridge, MA-based SmartPharm Therapeutics, a developer of non-viral DNA and RNA gene delivery platforms for COVID-19 and rare diseases. The company plans to accelerate the development of multiple candidates for in vivo gene-encoded expression of Sorrento antibodies, starting with COVID-19 “cure” STI-1499. It says SmartPharm’s Gene Mab platform enables intramuscular delivery of low-immunogenic DNA plasmid-encoded with a therapeutic antibody for long-lasting expression.
Third, Sorrento has a licensing pact with Columbia University for the rights to a rapid one-step diagnostic test that detects the SARS-CoV-2 virus in as little as 30 minutes from a saliva sample. The test developed by Columbia’s team, to be marketed by Sorrento under the COVI-TRACE name, holds all of the testing materials in a single tube and requires no specialized laboratory equipment, making it easily deployable for point-of-care, on-site, or potentially at-home testing.
Fourth, its COVI-TRACK test could drive substantial upside. In order to conduct analytical validation, sample cohorts from healthy donors and COVID-19 patient samples were tested, with the assay showing specificity of over 97% and diagnostic sensitivity of more 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.
Fifth, SRNE has evaluated billions of antibodies and identified a small group that can block the S1 protein’s interaction with human angiotensin-converting enzyme 2 (ACE2), the receptor used for viral entrance into human cells. The hope is that the cocktail will remain effective even if the virus mutates.
Sixth, Sorrento plans to accelerate the development of multiple candidates for in vivo gene-encoded expression of Sorrento’s antibodies, starting with Sorrento’s previously announced STI-1499, or COVI-GUARD, which is currently moving through preclinical and manufacturing requirements with an IND submission targeted for this month.
Seventh, the company’s stake in ImmuneOncia, a clinical-stage immuno-oncology-centric biopharmaceutical company established in 2016 as a joint venture company between Yuhan and Sorrento Therapeutics. Last month, Samsung Biologics (207940.KS) and ImmuneOncia Therapeutics have a partnership to develop and manufacture five candidate molecules, expanding upon the two companies’ existing CDO partnership first established in 2018.
Eighth, Sorrento Therapeutics has turned down at least three takeover offers that we are aware of.
Ninth, the shorts are short 34% of the float. The short squeeze will continue as the shorts cannot withstand losses in the billions.
Tenth, Chairman, CEO, and President Henry Ji, Ph.D. pulled an Elon Musk and is set for a huge payday. He will earn options to purchase up to ~24.9M shares at $17.30 representing a 10% stake in the company if fully exercised. The award vests in 10 equal tranches starting with ~2.5M options if the company’s market cap reaches $5B. The 10th and last tranche vests if the company’s value hits $35B. Assuming full vestment and no further equity offerings, his total award will be potentially worth ~$3.3B.
Eleventh, Wall Street analysts remain bullish. H.C. Wainwright has a price target of $30 on Sorrento stock and Dawson James has a $24 target. We expect these price targets to keep getting raised as Sorrento Therapeutics stock looks set to continue its bull run.
Twelfth, we are expecting numerous PR’s over the coming weeks with updates on Sorrento’s pipeline. The short squeeze is going to be epic and we can’t wait.
Bottom Line
What the Mayo Clinic news did was finally allow Sorrento stock to put in a low. The short-selling has been relentless and the bears have been determined to drive the share price down. For Dr. Ji to get a deal with Mayo Clinic re-affirms the science behind Sorrento stock. For smart investors, the sell-off caused by the shorts is a gift and a discount entry opportunity. New highs are coming in Sorrento stock before the end of the year.
As always, good luck to all (except the shorts)!
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Disclosure: We have no position in NASDAQ:SRNE or any of the securities mentioned. We wrote this article ourselves and it expresses our own opinions. We are not receiving compensation for it. We have no business relationship with any company whose stock is mentioned in this article. Insider Financial is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This article is not a solicitation or recommendation to buy, sell, or hold securities. This article is meant for informational and educational purposes only and does not provide investment advice.
Image by Michal Jarmoluk from Pixabay
