Clinical-stage biopharmaceutical company Sorrento Therapeutics (NASDAQ:SRNE) has been in the financial press recently, and not necessarily in a good way. In fact, a U.S. Food and Drug Administration (FDA) ruling from August undoubtedly made some SRNE stock holders wriggle in their seats.
As it turned out, Sorrento had an unexpected competitor for its Covid-19 saliva test. Specifically, Yale University was granted emergency use authorization from the FDA for its own Covid-19 test. Furthermore, Hindenburg Research reported that Yale’s test would be given away for free.
Likely as a result of this, Sorrento’s stock price declined. Meanwhile, also in August, Sorrento filed an application with the FDA. Yet, this wasn’t for a Covid-19 test, but instead was for the STI-1499 (Covi-Guard) antibody for hospitalized Covid-19 patients.
Also, Sorrento’s application wasn’t for emergency use authorization, but rather for an investigational new drug application. Clearly, in the wake of the Yale surprise, the stakes were high for Sorrento. Was the outcome all that Sorrento’s stock holders would hope for?
A Closer Look at SRNE Stock
Before we delve into the nitty-gritty of the FDA’s ruling, it’s important to examine SRNE itself. What does its stock price tell us about the market’s prevailing sentiment on this company?
We already touched upon the Yale incident’s possible impact on Sorrento’s stock price. After reaching a 52-week high of $19.39 in mid-August, it was all downhill over the next month unfortunately.
Yet, there might still be some hope for the bulls. SRNE bottomed out on Sept. 10 at around $6. Then, over the following trading sessions, Sorrento bounced above $9.
Could that be nothing more than a proverbial “dead-cat bounce”? Or is there an event that might catalyze further upside for Sorrento?
This Round Goes to Sorrento
As described earlier, Sorrento lost the first round in its fight to garner an FDA nod for its Covid-19 saliva test. Evidently, Yale University beat Sorrento to the punch.
But let’s be honest and admit that tests aren’t Sorrento’s most important product. What people want and need in 2020 are treatments more than tests. To that end, Sorrento has a number of clinical-stage programs in the pipeline.
These include Sorrento’s T-VIVA-19 vaccine candidate as well as the company’s Covi-Shield antibody cocktail. Additionally, there’s Sorrento’s Covi-Guard antibody, as previously discussed.
On Sept. 16, investors found out that Sorrento had “received a study may proceed letter from the FDA for its phase 1 clinical trial for Covi-Guard (STI-1499) in hospitalized Covid-19 patients.” So, we can definitely score this round in favor of Sorrento.
A Major Win
This isn’t exactly the same as the investigational new drug status that Sorrento had previously requested from the FDA for STI-1499. However, there’s no point in splitting hairs here. It’s terrific news for Sorrento that the company can take the clinical trials to the next phase.
During the following trading session, SRNE shares leaped 33.49% at one point. The relief and celebration were perfectly justifiable, though. This was a huge and much-needed win for Sorrento and its investors.
Could the next step, an emergency use authorization (EUA) from the FDA, be coming soon for STI-1499? Sorrento seems to be bullish on that possibility, reporting that the company “has initiated cGMP manufacturing to produce 50,000 doses in anticipation of a potential EUA.”
As reported by Sorrento, STI-1499 was demonstrated to be 100% effective against the D614G variant strain of Covid-19 “at similar doses to those observed in experiments with the USA-WA1/2020 strain.”
Unquestionably, then, there’s the potential for progress here in the ongoing battle against Covid-19 in its various forms.
The Bottom Line on SRNE Stock
The Yale incident was undoubtedly a shock to the system for unsuspecting SRNE stock holders. Yet, that was really only round one of a much longer fight.
With a highly encouraging FDA green light for STI-1499, Sorrento is back in the fight and an emergency use authorization could be just around the corner.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.