After jumping as much as 282% from Thursday's closing price to the high yesterday, Sorrento Therapeutics (SRNE -2.58%) dropped 16.6% on Tuesday on no apparent news -- other than, of course, that the biotech had jumped a 282% in less than two trading days, followed by a dose of reality as it closed down yesterday and down even more today.
The issue, of course, is that the results were measured in a test tube. Inhibiting the virus in a laboratory is a good first step, but what ultimately matters is whether the drug works in patients, and Sorrento Therapeutics is a way away from having clinical trial data showing STI-1499 can actually help patients that have COVID-19 and eventually gain regulatory approval,
And Sorrento Therapeutics has plenty of competition. Regeneron Pharmaceuticals (REGN -1.61%) and Vir Biotechnology (VIR -1.77%) are also developing antibody treatments to attack the coronavirus that leads to COVID-19.
With vaccines already in clinical trials, it seems very risky to invest in preclincial treatments for COVID-19 that need to get through the clinical trial process and gain regulatory approval before potential patients start getting protected by a vaccine.
Investors would be better off looking at Sorrento Therapeutics' long-term prospects beyond STI-1499, but unfortunately the prospects appear fairly limited. The company has one drug, ZTlido, on the market, but with sales around $5 million per quarter, that's not exactly paying Sorrento's bills. The company has a couple of other drugs in development, but it's hard to justify Sorrento as a long-term value at these inflated price -- even after today's decline.