3 Reasons to Inject Your Portfolio with Sorrento Therapeutics

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Easily one of the most viable investment sectors for this year has been biotech and pharmaceutical firms that shifted toward novel coronavirus vaccines or treatments. Initially, people bought into this suddenly hot market because of its extreme relevancy. Likely, in order to move forward, we’ll need an effective portfolio of reliable tests, preventative vaccines, and treatments for when things go awry. And Sorrento Therapeutics (NASDAQ:SRNE) has all three components, explaining the strong interest in SRNE stock.

a number of test tubes and capsules are pictured under a cool blue light

Source: Shutterstock

On a year-to-date basis, shares have jumped over 200%, reflecting intense demand for a comprehensive solution. Indeed, very few organizations have pivoted quite like Sorrento. Under its belt, Sorrento features antibody therapeutics, a coronavirus vaccine and diagnostic and antibody tests. To say that SRNE stock is all-in on Covid-19 would be a gross understatement.

At the same time, I can appreciate why many investors are skeptical about Sorrento Therapeutics. For one thing, the company specializes in oncology. Thus, the throwing of everything at Covid-19 presents a great risk if Sorrento fails to deliver. More worryingly, many of its solutions, such as its T-VIVA-19 vaccine, are still stuck in the preclinical stage.

There’s no getting around it — SRNE stock is a high-risk, high-reward venture. But if you can stomach the volatility and play with money that you can afford to lose, this is speculation with some serious science behind it.

Here are three reasons why you should consider Sorrento if you’ve got the right mindset.

The Overall Narrative for SRNE Stock Has Improved

On the vaccine front, the immediate reaction to SRNE stock is to recoil. At time of writing, the Washington Post reports that 10 vaccines have entered Phase 3 trials. Another 15 vaccines have entered Phase 2 trials while 10 more are in Phase 1.

Granted, this immediately puts Sorrento’s candidate T-VIVA-19 on the back foot. Certainly, it seems counterintuitive to bet on a vaccine that is still stuck in the preclinical stage. However, the key point to note is that no coronavirus vaccines have so far been approved. And in fact, a couple of those in phase 3 trials have had to halt trials due to a participant experiencing an “unexplained illness.”

Of course, this doesn’t immediately help the case for SRNE stock. But what it does do is give Sorrento time. Back when the White House launched Operation Warp Speed, the emphasis really was to deliver a vaccine before the election.

But the election is only a few weeks away, and a vaccine won’t be ready before then. Logically, this means that vaccine platforms that have the advantage of relatively quick development have had their benefit diminished somewhat. Further, this helps Sorrento’s case, which is utilizing a subunit vaccine type for T-VIVA-19.

Unlike some other platforms, subunits have a track record of effectiveness. If Sorrento can forward a safe and viable candidate, management claims it has the scale to produce 100 million doses a month. Just like that, SRNE stock could get the upper hand.

The Pivot Isn’t as Harsh as You Might Think

Many investors have questioned Sorrento and other companies for jumping into the Covid-19 race, seemingly abandoning their core research and products. On the other hand, the pivot can be a very profitable and shrewd maneuver.

Plying your trade in the biotech industry isn’t easy and or cheap. By shifting resources into a hot, relevant topic like the coronavirus, though, participating companies can accrue much interest. Therefore, I don’t mind that Sorrento Therapeutics CEO Henry Ji has been heavily marketing his company.

This is a competition, plain and simple. And you’ve got to do whatever it takes (within reason) to win.

More importantly, Sorrento’s pivot isn’t as severe as it might look to outsiders. For instance, subunits tend to have lower immunogenicity. However, additional research is being conducted “to improve cellular and humoral immune responses” with subunit-based vaccines and therapeutics.

In other words, the subunit research that’s being conducted to address Covid-19 can be repurposed for other diseases and conditions. Don’t think of Sorrento as a biotech firm that’s suddenly in the business of making plant-based hotdogs. Rather, it’s more like an electric motorcycle firm making electric cars. If the car business doesn’t work out, the pivoting company can pivot back to motorcycles but having gleaned new, usable information.

Our New Normal Could Be Uncomfortably Long

Though we will likely see light at the end of the tunnel, there’s much that we don’t know about Covid-19. Further, the social impact of this once-in-a-century (hopefully) pandemic could linger for years.

Interestingly, Thomas A. Garrett, assistant vice president and economist at the Federal Reserve Bank of St. Louis, proposed this very concept back in November 2007. Garrett wrote the following:

“The influenza of 1918 was short-lived and ‘had a permanent influence not on the collectivities but on the atoms of human society – individuals.’ Society as a whole recovered from the 1918 influenza quickly, but individuals who were affected by the influenza had their lives changed forever. Given our highly mobile and connected society, any future influenza pandemic is likely to be more severe in its reach, and perhaps in its virulence, than the 1918 influenza despite improvements in health care over the past 90 years. Perhaps lessons learned from the past can help mitigate the severity of any future pandemic.”

Unfortunately, we didn’t quite learn those lesson from the past. However, in order to get society moving again, we’re going to need robust testing apparatuses. And that’s the final component underlining SRNE stock. Thanks to Sorrento’s diagnostic and antibody testing kits, the company could play a pivotal role in how we manage Covid-19. Later, these testing mechanisms can help restore social trust. Granted, SRNE is a long shot but the science and the business tactics make sense.

On the date of publication, Matthew McCall did not have (either directly or indirectly) any positions in the securities mentioned in this article.

On the date of publication, neither Matt McCall nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.


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