What happened
Shares of Sorrento Therapeutics (SRNE.Q) 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.
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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.
