Key Points

  • Sorrento has applied for Emergency Use Authorization for one of its coronavirus tests.
  • Half of Sorrento’s 10 coronavirus candidates are in preclinical studies.
  • Sorrento recently reported positive data from two phase 1b studies of its investigational pain therapeutic.

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Sorrento Therapeutics (NASDAQ:SRNE) has gone all in when it comes to coronavirus work. The biotech company has 10 potential coronavirus products in the pipeline, including diagnostics, treatments, and prevention. With such a portfolio of possibilities, we might wonder if Sorrento is the coronavirus stock to buy.

Other companies working in the coronavirus space have surely made some millionaires in the past months. For example, Moderna and Novavax soared more than 354% and more than 2,100%, respectively, this year. Before we decide whether Sorrento may follow in their footsteps, let's have a look at the company's progress so far and the rest of its pipeline.

A woman's hands hold out a handful of hundred dollar bills.

Image source: Getty Images.

Coronavirus detection tests

Sorrento's COVID-19 products that are the closest to hitting the market are two diagnostics. COVI-TRACE is a saliva-based test that detects the presence of the virus in about 30 minutes, and COVI-TRACK is an antibody test to detect whether a person has had the virus. The COVI-TRACK test produces results in about eight minutes. The U.S. Food and Drug Administration (FDA) is considering an Emergency Use Authorization (EUA) application for COVI-TRACK. Sorrento expects to apply for an EUA for COVI-TRACE soon.

Even if the FDA grants authorization for both tests, the problem is that Sorrento lags behind rivals. The company would enter an already crowded playing field. Abbott Laboratories, for example, has already won EUAs for seven tests. And the FDA has granted authorizations for more than 200 COVID-19 tests so far. Most recently, the regulator authorized the first at-home COVID-19 test kit. Amid this kind of competition, it seems unlikely Sorrento can carve out a large market share.

Moving on to other product candidates, the issue is the same: Sorrento remains a few steps behind. The company's investigational antibody cocktail and antiviral are in preclinical studies. In both cases, rival treatments are already on the market. Earlier this month, the FDA granted an EUA to Eli Lilly's neutralizing antibody for recently diagnosed mild-to-moderate COVID-19. And the FDA has approved Gilead Sciences' antiviral Veklury (remdesivir) for hospitalized patients.

Of Sorrento's 10 coronavirus programs, half are in preclinical studies, two are in phase 1, and one is in phase 2. That means that aside from the diagnostics, Sorrento is far from generating revenue from these potential products.

The rest of the pipeline

What about the rest of the pipeline? The closest to commercialization is abivertinib. The company acquired rights outside of China to the candidate for non-small cell lung cancer from ACEA Therapeutics. The non-small cell lung cancer drug market, at a compound annual growth rate of 13%, is expected to reach about $43 billion by 2026, according to Fortune Business Insights. That's a significant market, but competition is significant too.

Sorrento also has three drug candidates in clinical studies for pain indications. The candidate, resiniferatoxin, is a non-opioid toxin that deactivates nerves responsible for chronic or inflammatory pain. This fall Sorrento announced positive phase 1b data for resiniferatoxin in osteoarthritis knee pain and in advanced-stage cancer pain.

Sorrento's pain portfolio looks promising. But again, we'll have to wait a few years for eventual products to possibly reach the market and generate revenue. At the moment, Sorrento's product revenue comes from its Scilex subsidiary, which commercializes ZTlido. The topical product addresses post-shingles nerve pain. ZTlido revenue totaled $7.8 million in the most recent quarter, more than doubling year over year.

Will you make $1 million?

Now, let's come back to our original question: Can Sorrento make you a millionaire? It's unlikely Sorrento's non-coronavirus portfolio would lead to such share gains. Sorrento stock trades at less than $7. For significant share appreciation, the company would have to offer promise of a potential blockbuster or market leadership on the horizon. That isn't likely for Sorrento right now.

Another key to millionaire-maker status would be the commercialization of a coronavirus product that could take significant market share. As mentioned above, Sorrento is lagging behind peers in testing, treatment, and prevention. So it seems unlikely the coronavirus program could trigger major share gains.

There surely will be short-term spikes in the share price in the coming months if Sorrento announces positive news from its coronavirus program. We've seen that happen since the start of this race to develop treatments. But I'm not convinced these gains will be significant in size -- or that they will last. And that's why this biotech company is unlikely to push you into millionaire territory.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.