What happened

Sorrento Therapeutics (NASDAQ:SRNE) is up 11.2% at 12:38 p.m. EST on no apparent news from the company. Instead, it looks like the anticipation of future news is what's causing shares to rise today.

So what

Sorrento is expecting the Food and Drug Administration to rule on its marketing application for ZTlido, a lidocaine patch to treat post-herpetic neuralgia -- the pain caused by shingles -- on or about Feb. 28. The so-called Prescription Drug User Fee Act (PDUFA) date isn't quite a deadline, so the FDA is allowed to make its decision after then, but a vast majority of marketing application decisions are made on or before their PDUFA dates.

With biotech investors knowing that the decision is coming, many will wait until a few weeks before the PDUFA date before buying shares, hoping for a quick buck. The onslaught of investors can cause the shares to rise ahead of the FDA decision, which is likely what we're seeing with Sorrento today.

A piece of paper with the words Diagnosis and Shingles on it and medication, stethoscope, and glasses on top.

Image source: Getty Images.

It should be noted that Sorrento presented at the Leerink Partners 7th Annual Global Healthcare Conference today, but shares rose well before the presentation started, so it wasn't anything management said at the meeting that created the buying frenzy. Nevertheless, the presentation could have pointed a few more eyeballs to the pending FDA decision, helping keep the rally going.

Now what

Scilex Pharmaceuticals, which Sorrento bought in 2016, submitted an application for ZTlido back in 2015, but the FDA decided it needed more information on the bioequivalence of ZTlido to Lidoderm, a lidocaine patch already on the market, as well as information on the adhesion of the ZTlido patch. Scilex and Sorrento completed those studies successfully, so assuming the FDA doesn't want something new, an approval seems likely.

While ZTlido is Sorrento's quickest way to gain some revenue, the entire market for lidocaine patches in the U.S. and Europe was only about $750 million, and it's unclear how much of that ZTlido can actually take. Sorrento's pipeline of chimeric antigen receptor T-cell therapies that can treat a variety of cancers have much more potential and should be what long-term investors are focused on.

Brian Orelli and The Motley Fool have no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.