Other Covid-19 therapeutics have only a single drug, or program in their respective product pipelines. So, from that perspective Sorrento has more chances to win, if not a greater chance of winning.
And Sorrento has a robust pipeline of therapeutics targeted to other diseases as well. Yet, investors should focus on this stock based on its Covid-19 therapeutics alone. The company has risen because of Covid-19 and would likely otherwise simply exist in the sea of wild bets that is biotech stocks.
In fact, Sorrento is essentially a bet even at this late stage of the vaccine race. However, it is a bet with many outs, which does make it more tantalizing.
Abivertinib Is Sorrento’s All-Star
A cursory glance at Sorrento’s pipeline should tell investors a lot about its stock’s chances. The company’s Covid-19 approach is likely to live and die by Abivertinib. This doesn’t mean that other Covid-19 programs can’t provide results, but the regulatory timeline is what it is. Abivertinib also has application in immunotherapy in non-small cell lung cancer. Abivertinib is in stage 3 clinical trials for cancer, and has begun stage 2 clinical trials for Covid-19.
Back on July 20 Sorrento was cleared by the FDA to begin phase 2 safety and efficacy studies for Abivertinib against Covid-19. By Aug. 10 its price had risen from $8.36 to $18.82. It now trades below $7. I think there’s a clear explanation for this: time. Time in the sense that the pandemic has dragged on and investors may have expected a quick vaccine. But, as medical authorities continued to remind those among us who aren’t medically qualified, these things take time.
And time in the sense that some investors simply don’t take the time to understand the regulatory requirements involved in the process. Unfortunately too many rush at the latest headline thinking that if they waste any time, they’ll miss out on profits.
Advertinib Begins Phase 2
Investors need to simply do a bit of a deep dive into the facts surrounding Advertinib and the regulatory timeline. Once they do, they’ll discover that there’s a pretty long wait before Phase 2 clinical trials will end. In fact, despite stage 2 clinical trials being announced in both the U.S. and Brazil, that will be Stage 2 with Stage 3 following that.
On Oct. 14 Sorrento announced that it will begin Phase 2 clinical trials of Abivertinib for Covid-19 in Brazil. There will be 400 patients enrolled, and the therapeutic will be tested in mild to moderate cases. The U.S. trials are smaller in scale — 80 patients — and will focus on severe cases.
But the important news is that there are clear end dates for the Brazil and U.S. clinical trials. The ClinicalTrials.gov site shows an expected study completion date of May 2021. The same trial indicates that the U.S. arm of the study will be complete in March 2021.
Investors need to remember that Stage 3 trials will occur if the stage 2 trials are successful. The Moderna (NASDAQ:MRNA) stage 3 trials began July 27 of this year and are scheduled to end Oct. 27, 2022. And no, that isn’t a typo. Perhaps a similar wait exists for Sorrento, or perhaps not. And perhaps some of Moderna’s vaccine will reach the market earlier through expedited approval. In either case, it makes me wary of jumping on board Sorrento.
All investors know regarding Sorrento’s Advertinib therapeutic are study date end points for Phase 2 trials. Phase 3 trials and FDA approval are required if the hurdle of Phase 2 is cleared. Of course, there are no guarantees. Sorrento could simply fail. But if it doesn’t, the timeline is long — at least longer than many might have expected.
For a risk tolerant investor, I could see the logic in investing a small amount in SRNE stock and forgetting about it. Perhaps it will jump early to mid-2021, but I don’t think that’s why most investors are interested in it.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article.