What happened

After jumping as much as 282% from Thursday's closing price to the high yesterday, Sorrento Therapeutics (NASDAQ:SRNE) 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.

So what

On Friday, shares of the company more than doubled as Sorrento reported that it had found an antibody, STI-1499, capable of binding and neutralizing the coronavirus that causes COVID-19.

Scientist working in a laboratory

Image source: Getty Images.

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 (NASDAQ:REGN) and Vir Biotechnology (NASDAQ:VIR) are also developing antibody treatments to attack the coronavirus that leads to COVID-19.

Now what

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.