Most companies don't comment on outside reports. Sorrento Therapeutics' (NASDAQ:SRNE) President and CEO Henry Ji even says that's generally the biotech's policy.
Then he went off on short sellers in an interview posted in a tweet by RagingBull yesterday afternoon.
"I am giving them a fair warning shot. Just cover yourself, don't ruin your family," Ji said of short sellers who he says are trying to manipulate Sorrento's stock.
Investors seem to buy the message. Shares opened up 11.7% today, although the gains have pared back to a gain of just 1.8% at 1:43 p.m. EDT.
Sorrento's share price has been on a roller coaster, ending last year at $3.38, climbing as high as $19.39 on the heels of potential treatments, tests, and a vaccine for COVID-19, only to see shares subsequently cut in half.
On the surface, Ji and long-term investors don't need to worry about people shorting the stock or whether it's being manipulated. In the long run, Sorrento's value will be determined by whether it can bring one or more products to market and ultimately the profits from those products.
But in the short term, Sorrento's valuation is important because the higher the valuation, the more money it can raise through selling its shares in secondary offerings. As the valuation falls, current investors experience more dilution if the company wants to raise the same amount of capital.
Sorrento ended the second quarter with $24.4 million in cash and equivalents, so it seems likely the company will need to raise cash in the not-too-distant future -- which may explain Ji's rant.