Sorrento Therapeutics Inc (SRNE)

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Insider Financial on Sorrento REASONS TO BE BULLISH ON SORRENTO STOCK
ByAlex Carlson: Posted on September 11 2020

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 stock 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 stock 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 an 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 24% of the float or $1 billion at today’s prices. The short squeeze will continue as the shorts cannot withstand losses in the billions.

Tenth, Chairman, CEO, and President Henry Ji, Ph.D. just 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 stock looks set to continue its bull run.

BOTTOM LINE
These are just eleven reasons off the top of our head that we can think of on why to be bullish on Sorrento stock. However, we left out the biggest one and one which we believe is highly likely – funding from Operation Warp Speed. Funding from the U.S. government would send Sorrento stock flying and put the company on the fast track to commercialization. We believe this is where things are heading and why Chairman, CEO, and President Henry Ji, Ph.D. has no issues taking options at $17.30 a share. He realizes that even with the tremendous run we’ve seen in Sorrento stock so far this year, the rally could just be getting started.

As always, good luck to all (except the shorts)