What happened

Shares of Sorrento Therapeutics (SRNE.Q 443.75%), a biotech company that specializes in oncology and pain therapies, dropped 23.4% in September, according to data from S&P Global Intelligence. The stock closed at $2.05 on Aug. 31 then fell to a low of $1.52 on Sept. 29. The stock is down more than 65% so far this year and has a 52-week low of $1.15 and a 52-week high of $7.40.

So what

Sorrento, popular with retail investors, has been struggling financially. Through six months, the biotech company reported that while revenue was up 7% year over year to $29.7 million, the company had a net-income loss of $260 million through six months, compared to a loss of $164.2 million in the same period last year and a $0.70 loss in earnings per share (EPS), compared to a $0.58 EPS loss in the first six months a year ago. The sluggish financials are made worse by the market's decline, particularly in the case of growth companies that haven't shown much growth but have a high debt-to-equities ratio, like Sorrento, which has a long-term debt-to-equity ratio of 62.92. The other concern is Sorrento has only $70.3 million in cash as of June 30.

Sorrento has a handful of marketed products led by ZTlido, a topical system of the painkiller lidocaine, Gloperba for gout, and a COVID-19 rapid antigen test that's been approved in Mexico and Brazil.

The company's lead clinical candidate is Fujovee (abivertinib), which is in phase 3 trials to treat non-small cell lung cancer (NSCLC) as well as to treat severe COVID-19 in ICU patients, and a phase 2 trial to treat castrate-resistant prostate cancer. The company is planning a new drug application (NDA) meeting with the Food and Drug Administration (FDA) regarding Fujovee after a China-based study found a 56.5% response from Fujovee in fighting NSCLC, with an average survival rate of 28.2 months. The company also got Fast Track designation from the FDA for SP-103, a topical lidocaine therapy used as a therapy for lower back pain. That drug is being developed by Scilex Holding Company, a subsidiary of Sorrento's.

Now what

Sorrento has been a volatile stock in search of one blockbuster drug to make the company profitable. It is possible that either Fujovee or SP-103 might be that therapy, but many investors have grown tired of waiting for the company to show more positive news financially. The company has lost more money each of the past four consecutive years, and its cash situation is worrisome. Realistically, though, if Fujovee is approved, many of its problems would go away, so it could be the right stock for a long-term investor who isn't risk adverse.