Developers of novel coronavirus vaccines are active in terms of delivering good news this month, a trend that’s lifting small-cap clinical stage firm Sorrento Therapeutics (NASDAQ:SRNE). On the back of positive headlines from rival vaccine makers, SRNE stock jumped 17.21% in the week ending Nov. 20.
Here’s a quick overview of the Covid-19 vaccine landscape. Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX) said earlier this month their vaccine was 90% effective in defeating the virus, a percentage that was subsequently boosted to 95%. Moderna (NASDAQ:MRNA) also revealed a 95% efficacy rate on its candidate vaccine. In partnership with Oxford University, AstraZeneca (NASDAQ:AZN) is also making headway with a Covid-19 vaccine.
As of today, these are the treatments that furthest along in the clinical and regulatory processes and stand the most credible chance of coming to market sometime in the next several months.
In this competition, Sorrento is a different beast because it’s not just working on a vaccine, it’s working on Covid-19 testing, neutralizing antibodies and preventive “shields,” among other products. That’s a relevant, robust pipeline, but it hasn’t been enough to prevent SRNE stock from sliding 61% from its 52-week high.
Hard Data Needed to Stoke SRNE Stock
While Sorrento is lagging behind rivals when it comes to providing positive, late-stage trial updates, that doesn’t mean the door isn’t ajar for the company to be a vaccine winner. The aforementioned efficacy rates are undoubtedly impressive, but Sorrento (and other developers) still have opportunities to make moves here.
For example the Pfizer/BioNTech vaccine is a dual-dose product, meaning patients need to take it twice for maximum effectiveness. Additionally, that product needs to be stored at ultra-freezing temperatures, making storage and transportation potentially costly endeavors. Part of the reason for the ebullience toward MRNA stock in recent days is that that company’s vaccine doesn’t need the low storage temperatures of the competing Pfizer/BioNTech product.
Point is there are ways for Sorrento to get its Covid-19 vaccine groove back, although it’s clearly late to the party. Although topping 95% efficacy rates is going to be hard, Sorrento could make headway with a single-dose vaccine, prove its neutralizing antibody cocktail COVI-SHIELD is effective or that its testing offerings – the COVI-TRACE saliva-based diagnostic test and the COVI-TRACK blood-based antibody test – are better or more cost-effective than competing products currently in use.
Problem for Sorrento investors is that the company is long on marketing hype, but short on tangible results and it’s still well behind in the clinical trial process.
For example, the company said earlier this month it filed for a Phase 1 trial for STI-2099 (COVI-DROPS), which is an intra-nasal administration potentially suitable for early stage coronavirus patients that can be delivered in an outpatient environment. It’s an admirable effort, but think about it this way. Sorrento is hyping a Phase 1 trials while companies like Moderna are saying they’re close to bringing a credible vaccine to market.
Better Ideas Available
Last week’s pop by Sorrento is alluring, but investors would do well to not be seduced because the move in the stock appears to be built on the back of other companies’ success, not Sorrento-specific headlines.
At some juncture, markets will again demand that Sorrento deliver the goods and do in a time frame that doesn’t render the company an also ran as Modern, Pfizer and friends bring vaccines to market in the coming weeks or months.
Fortunately, the bottom line for investors is straight forward. If you’ve got a high tolerance for risk and a flair for speculation, SRNE stock is fine to consider for a small position. If you desire a more credible vaccine developer, simply consider one that’s in advanced stage trials, not one bragging about starting Phase 1 efforts nine months into the pandemic.
On the date of publication, Todd Shriber did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Todd Shriber has been an InvestorPlace contributor since 2014.