Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Sorrento Therapeutics Soared 134% in March

By Maxx Chatsko - Apr 9, 2019 at 12:59PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The early-stage biotech jumped without any significant news.

What happened

Shares of Sorrento Therapeutics (SRNE 10.00%) jumped a whopping 134% last month, according to data provided by S&P Global Market Intelligence. Despite the impressive gain, the early-stage biotech didn't actually issue any significant news updates, although it did offer several reminders to investors.

For instance, the company's CAR-T pipeline is expected to end 2019 with up to three phase 2 clinical trials and at least two more phase 1 studies under way. Similarly, the monoclonal antibody pipeline could exit the year with one phase 2 trial and two phase 1 clinical trials under way. 

Sorrento Therapeutics also reminded investors that it owns a 25% equity stake in Celularity, a biopharma start-up created with help from Celgene and United Therapeutics, that's valued at approximately $1 billion. Considering Sorrento Therapeutics is worth less than $500 million, the latest valuation of Celularity appears to have made Wall Street sit up and take notice. 

A man in a business suit tossing $100 bills into the air

Image source: Getty Images.

So what

Sorrento Therapeutics owns at least a stake in a tangled web of subsidiaries, joint ventures, and start-ups involved in everything from non-opioid pain management to immuno-oncology. While that makes it difficult for individual investors to track down all of the opportunities -- and distractions -- in front of the company, the equity investment in Celularity could prove to be a winner.

The start-up is seeking to develop novel CAR-T therapies from components of placenta and cord blood. Such medicines could be used "off-the-shelf" rather than being derived from and tuned to each individual patient, as is the standard today. 

Now what

While a sizable equity position in a promising start-up is a unique advantage in terms of financial health, the tried-and-true route to success in biopharma involves favorable outcomes in the clinic. However, it's far too early to tell if Sorrento Therapeutics will find success in its early-stage pipeline. Considering the company lost $150 million from operations in 2018 and started this year with $158 million in cash and cash equivalents, the company's quickly maturing pipeline will need to deliver to ensure the business can raise additional capital at a favorable rate.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Sorrento Therapeutics, Inc. Stock Quote
Sorrento Therapeutics, Inc.
$1.43 (10.00%) $0.13

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.