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Why Sorrento Therapeutics Stock Bolted Higher in September

By George Budwell – Oct 7, 2020 at 9:00AM

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Sorrento's stock outperformed the broader biotech industry by a wide margin last month.

What happened

Shares of the clinical-stage biotech Sorrento Therapeutics (SRNE -2.17%) gained a whopping 46.1% during the month of September, according to data provided by S&P Global Market Intelligence. For comparison, the iShares Nasdaq Biotechnology ETF gained only 1.8% last month. 

Why did Sorrento's stock crush the broader biotech industry over the course of September? Investors seemingly piled into this developmental biotech for two underlying reasons:

  1. On Sept. 16, Sorrento announced that the Food and Drug Administration (FDA) had cleared its SARS-CoV-2 neutralizing antibody, STI-1499 (a.k.a COVI-Guard), for a phase 1 trial in hospitalized patients positive for the COVID-19 illness.
  2. On Sept. 28, the biotech released encouraging preclinical data for both STI-1499 and another antibody known as STI-2020, as possible treatments for the SARS-CoV-2 virus. 
A female researcher holding a dropper and a vial.

Image source: Getty Images.

So what

The big deal is that neutralizing antibodies against COVID-19 could become a key part of the treatment paradigm for this deadly infectious disease -- especially among older patients who may not respond particularly well to vaccines. In short, Sorrento might be able to generate several hundred million in sales from these experimental antibodies, if everything goes according to plan. 

Now what

The downside risk here is that Sorrento isn't the only company pursuing a COVID-19 neutralizing antibody. Eli Lilly and Regeneron, in fact, are both further along in the clinical trials process with their respective antibody candidates than Sorrento is with either STI-1499 or STI-2020. On the bright side, Sorrento may be able to overcome its latecomer status within the COVID-19 antibody space. But the biotech will definitely need to move quickly from here on out in order to achieve this lofty goal.   

George Budwell 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.

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Stocks Mentioned

Sorrento Therapeutics Stock Quote
Sorrento Therapeutics
$1.35 (-2.17%) $0.03
Eli Lilly and Company Stock Quote
Eli Lilly and Company
$365.25 (0.98%) $3.53
Regeneron Pharmaceuticals Stock Quote
Regeneron Pharmaceuticals
$736.23 (0.12%) $0.87
iShares NASDAQ Biotechnology Index Stock Quote
iShares NASDAQ Biotechnology Index
$133.82 (0.20%) $0.27

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

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