Biotech hopeful Sorrento Therapeutics (NASDAQ:SRNE) remains behind in the push for novel coronavirus vaccines, but that isn’t swaying those who see potential in SRNE stock.
Many of those in Sorrento’s cheering section are encouraged not only by its vaccine work but also other products the company has under development. To them, the Sorrento pipeline is the glass half full. They bet these products will reward investors who stick with the company after disenchanted vaccine investors sell the stock and move on.
It is possible, but not likely, that both sides are correct. Sorrento may eventually score with another product.
But time is running out for the company to hit Covid-19 vaccine pay dirt.
Allure of SRNE Stock
Sorrento Therapeutics is a small-cap — $2.1 billion — California-based biotechnology company that was formed in 1989 and focused on oncology products prior to the onset of the Covid-19 pandemic.
Under the leadership of charismatic CEO Henry Ji, Sorrento turned much of its energy into responding to the coronavirus outbreak. This effort included an antibody vaccine. The company gained attention from investors seeking alternatives in the vaccine field, pushing up share prices. Sorrento was attractive to these investors because it is smaller and the lower price of SRNE stock made it more accessible.
In addition to a vaccine, Sorrento is pursuing treatments for the effects of Covid-19 as well as a better test to detect the virus.
But the hope for vaccine was the big draw for SRNE stock. Investors dream about the dollar signs if their longshot bet on the stock of an alternative pharma company succeeds with a timely Covid-19 vaccine. Cha-ching!
The Varsity Scores First
The vaccine quest took a major turn when pharma giant Pfizer (NYSE:PFE) and BioNTech (NASDAQ:BNTX) last month cited positive Phase 3 trial results of its Covid-19 vaccine. The 95% protection rate was stunning as it far exceeded the expectations of infectious disease experts.
The pair of announcements by companies with credibility were welcomed by a world suffering from the pandemic’s devastating effects. At the same time, stock in the two companies rose as investors jumped aboard to ride the rising wave.
Yet, as good as the news was, it appears less attention was paid to major hurdles that accompany the two vaccine candidates, especially the Pfizer product. It must be kept very, very cold. How cold? I mean nearly 100 degrees below zero cold. This requirement will pose a logistical and storage nightmare. Since very few health facilities have this kind of equipment, it is difficult to see how this vaccine will be distributed.
Moderna’s vaccine candidate also requires cold storage, but at normal freezer temperatures. It also is more tolerant of storage for longer periods in warmer conditions.
Another key point: both vaccine candidates require two doses, about a month apart.
Obviously, work-arounds will be developed if candidates from Pfizer and Moderna continue to dominate the vaccine candidate field. But the challenges cited above leave openings for other products that are easier to store or require a single dose.
Biotech Volatility Roils Sorrento Therapeutics
The impact of these announcements on SRNE stock was predictable. It spiked. But biotech shares are known for being volatile and Sorrento Therapeutics is no exception.
Yes, the company is behind in developing a Covid-19 vaccine. But that may not matter if it can finish an entry that is easier to store and administer. Sorrento says it will to continue working on its vaccine candidate until it becomes a clearly fruitless endeavor.
Meanwhile, Sorrento has an opportunity with a Covid-19 test to take at home and display the result in minutes. And, the company is working on therapies to treat symptoms of Covid-19. These accessory products offer a way for Sorrento to break through. But, as with the vaccine quest, timing and competition must be overcome. The company must produce, not just promote.
For patient investors who want an alternative Covid-19 play and don’t mind volatility and high risk, SRNE stock is worth a serious look. But it’s not for everyone.
On the date of publication, Larry Sullivan did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Larry Sullivan is a veteran journalist in Florida who has covered banking and finance for several years. He is a former investing editor at U.S. News & World Report in Washington D.C.