Takeover bids offering a 245% premium over Sorrento Therapeutics's (NASDAQ:SRNE) $1.45 share price last month might seem like a seize-the-day sort of moment. Especially considering Sorrento's financial situation.

The company's earnings missed analyst estimates for the past four quarters and it reported sales of $5.8 million in the most recent quarter, while its net loss was about $64 million. But the biotech company with a pipeline in immuno-oncology and non-opioid pain management didn't snap up the takeover offers, and instead sent the two unidentified buyers, offering between $3 and $5 per share, on their way.

Scientists research in a lab.

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While it's impossible to peer into the crystal ball and be assured that Sorrento made the right decision (or not), its focus on non-opioid pain treatments supports the idea that the company is better off alone or with another buyer that will pay a higher price.

U.S. struggles with opioid addiction

Non-opioid treatments for pain are a major area of interest as the U.S. faces an epidemic of opioid addiction. The crisis stems from the late 1990s when pharmaceutical companies assured doctors that opioid painkillers wouldn't lead to addiction. In fact, they did, and according to the National Institute on Drug Abuse, more than 47,000 Americans died of opioid overdose just in 2017. The overall pain management market, which includes devices as well as medicines, will reach $52 billion by 2022, according to a BCC Research report.

Sorrento launched the ZTlido lidocaine patch, its first non-opioid pain treatment, in October 2018. Another plus: The patch is destined for a growing market, treating pain from postherpetic neuralgia. The condition affects those with a compromised immune system, and most at risk are the elderly, those who have suffered from shingles, and AIDS patients. A report by Persistence Market Research predicts the market will be valued at $908.4 million by 2026. Although drugs dominate with about 80% share of the treatment market, the patches segment will grow at the highest compound annual growth rate -- 5.6% -- among all other treatment types through this time period, the report showed.

ZTlido sales jump 63%

In an October presentation, Sorrento said sales of ZTlido increased 63% to $4.66 million in the second quarter from the first quarter. (The product  is sold by Sorrento's Scilex subsidiary, which is considering an initial public offering of its own, submitting a draft registration to the SEC in September.)

The big players in the postherpetic neuralgia market are exactly that: big. Companies including Pfizer (NYSE:PFE), Teva (NYSE:TEVA), Mylan (NASDAQ:MYL) and Endo (NASDAQ:ENDP) take in more than half of the revenue globally, the Persistence Market Research report showed. The negative here is that Sorrento, with a market cap of about $600 million, is facing powerhouses. Market capitalizations of Pfizer, Teva, Mylan, and Endo each top $1 billion, with Pfizer the largest at $210 billion. That said, Sorrento, as a smaller player, has an opportunity to get its product noticed and perhaps even attract other takeover offers as competitors seek to expand in the treatment area or new players attempt to enter the market.

Sorrento has a second investigational product in the non-opioid space. Resiniferatoxin, a single injection treatment for terminal cancer pain, works by blocking pain signals from tumor tissue to the spine. That candidate is in Phase 1 studies.

The two analysts covering Sorrento are bullish on the stock and the average price target is $24.50. The idea of a buyer paying a premium of more than 500% over the current price seems a bit too optimistic in light of the company's losses and the string of missed forecasts. Considering the opportunity in pain management, though, Sorrento might have been right when it said last month's takeover offer undervalued its assets. Currently, with aspirin and ibuprofen too weak to handle severe pain, there aren't a lot of options for non-opioid pain management. Therefore, companies like Sorrento that have developed treatments and have gathered positive clinical trial data from products in the pipeline hold a valuable asset. It would seem reasonable to say that between the 245% premium Sorrento rejected and the 500% premium analysts predict, there might be a middle ground.

What does this mean for investors?

At the moment, questions regarding Sorrento's near-term plans make it difficult to put a perfect price tag on the company. Sorrento hasn't released details regarding a possible Scilex IPO, meaning investors can't determine how it might impact the company's financial and product outlook.

In the immuno-oncology treatment area, Sorrento is in licensing discussions with other biopharmaceutical companies. The results of those talks would also have an impact on Sorrento's value. Investors interested in Sorrento should keep an eye on the Scilex IPO news and the licensing discussions as updates about either could be a catalyst for the stock. And at the same time, all eyes will be on Sorrento's progress in the pain market to see whether it can stand out among the big players or attract a higher bid. When it comes to Sorrento, the best strategy right now might be to watch and wait.