Is Sorrento Therapeutics A Good Investment?

This biopharma has developed the most sensitive, rapid-response COVID-19 test on the market so is Sorrento Therapeutics a good investment?
Jan. 15, 2022
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Sorrento Therapeutics (NASDAQ: SRNE) is responsible for developing cancer treatments, COVID-19 treatments, and non-opiate pain therapies-all valid accomplishments. However, the thing that has caught analysts' attention is the company's COVISTIX product, which can detect the presence of the virus' antibodies within 15 minutes. Not only that, it can detect the various variants of the infection, including the highly contagious Omicron variant, and it can do it better than any other test available. Sorrento has already launched a factory in San Diego to ramp up production. Will this product finally help the company reach profitability and is Sorrento Therapeutics a good investment right now?

The bull case for Sorrento Therapeutics

If the coronavirus proved one thing it's this: it will keep mutating until it has completely run its course and with only 60% of the U.S. population vaccinated, the time for testing has never been more essential. It turns out that the Omicron variant is difficult to detect and a lot of tests report a false negative which can cause quite the nightmare scenario with people walking around thinking they're not infected. This isn't the case for Sorrento's COVISTIX, which was found to be more effective in detecting Omicron than any other test on the market. 

Realizing that the company had a home run on its hands, it quickly started constructing a factory in San Diego that will be capable of producing 6 million test kits per month. Sorrento also signed a deal to supply the Mexican market with 10 million test kits. This is just the beginning as the company is planning on expanding production for up to 100 million test kits per month this year. 

Besides COVID testing, the company also owns the world's largest human antibody library in the world in its G-MAB(tm) product, which holds more than 10 quadrillion distinct sequences used in RNA transcription to amplify treatment. Also, the company has products that target cancer and arthritis pain without the use of debilitating opiates. All of these products are in clinical trials and just one success can spell financial windfall for Sorrento. 

The bear case for Sorrento Therapeutics

Sorrento isn't yet profitable and according to the company's last quarterly report (Q3 2021), revenues are up only a paltry 2.6 percent year-over-year (YoY) while net losses are up nearly 40% in the same time period. While awaiting approval for any of its products to offset losses, the company will no doubt issue shares and dilute investor value. 

So, is Sorrento Therapeutics a good investment?

I've always been a fan of innovation and I feel the stock is cheap enough and has enough potential (with over 60 products in its pipeline) to buy and hold long term. 

Quickfire round:

1. Where is Sorrento Therapeutics' headquarters and who is its CEO?

San Diego; co-founder Henry Ji

2. When did Sorrento Therapeutics go public?

October 25, 2013

3. What percentage of the world population is vaccinated against COVID-19?

50.3%


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