Sorrento Therapeutics' (NASDAQ:SRNE) board of directors unanimously rejected a proposal from a private-equity fund to acquire a majority or all of the company's shares for up to $7 per share. The board concluded that the offer "significantly undervalues the company and is not in the best interest of the shareholders."

Investors didn't come to the same conclusion. Shares of Sorrento closed down 9% to $3.88 on Monday on the news that the company was taking a pass on the buyout offer.

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Sorrento disclosed the bid earlier this month, which caused its shares to shoot as high as $5.09, although they retracted moderately after the company didn't jump to agree to the deal in the days that followed.

This isn't the first time Sorrento has given a pass to an unsolicited buyout bid. Last November, the board rejected a pair of offers to buy the company for between $3 and $5 per share.

The board said it plans to continue the development of its drug pipeline while pursuing strategic alliances and transactions. The biotech is developing immunotherapies for cancer and has a portfolio of pain-management drugs, including ZTlido, a next-generation lidocaine patch that is approved for a neuropathic pain condition called post-herpetic neuralgia.

Despite having a drug on the market, Sorrento lost $229 million in the first nine months of last year because it sold less than $12 million worth of product over that time frame.