Please ensure Javascript is enabled for purposes of website accessibility

Sudden Termination of Sorrento Therapeutics' CFO Pushes Its Stock Lower

By Cory Renauer – Aug 19, 2020 at 2:25PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The biotech stock fell following the abrupt departure of a top executive.

After the market closed on Tuesday, Sorrento Therapeutics (SRNE -0.63%) disclosed in an SEC filing that it fired Executive Vice President and Chief Financial Officer Jiong Shao, effective immediately. Shares of the stock down around 11.7% at 1:29 pm on Wednesday.

Najjam Asghar, formerly Sorrento Therapeutics' chief accounting officer, was tapped to fill the void left by Shao's ouster. Asghar was appointed CFO effective Tuesday, just 14 months after he joined the company.

Person with a box full of stuff from the desk they were just asked to clear out.

Image source: Getty Images.

During the five-month period between March 10 and Aug. 10, investors excited about Sorrento's attempts to address the COVID-19 pandemic drove the stock 818% higher. The stock has tumbled about 42% since Aug. 11, when a short-seller's report accused the company of misleading the public about a saliva-based, rapid COVID-19 diagnostic that it had licensed from Columbia University for just $5 million upfront and potential royalties if the FDA gives it a thumbs up.

The abrupt ousting of a CFO isn't the only reason to be nervous about Sorrento's future. The company finished March with just $21.9 million in cash after its increasingly diverse operations lost $270 million over the previous 12 months. Revenue from contract manufacturing and ZTildo, a lidocaine lotion for post-herpetic neuralgia reached just $7.7 million in the second quarter.

Sorrento could begin running clinical trials with STI-1499, its COVID-19 treatment candidate soon. On Aug. 19, the company submitted an investigational new drug application for STI-1499, the approval of which is a prerequisite to begin giving the treatment to trial volunteers. 

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Sorrento Therapeutics, Inc. Stock Quote
Sorrento Therapeutics, Inc.
$1.57 (-0.63%) $0.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.