Shares of the diversified biopharma Sorrento Therapeutics (SRNE.Q 2.78%) are racing higher today. Specifically, the drugmaker's shares are up by a healthy 5% on moderate volume as of 11:23 a.m. ET on Thursday.
What's propelling Sorrento's stock northward today? Its shares appear to be getting a boost from a broad-based relief rally in the beaten-down biopharmaceutical space. Speaking to this point, the bellwether iShares Biotechnology ETF and SPDR S&P Biotech ETF are both up by low single digits at the time of this writing.
What's more, Sorrento hasn't released any needle-moving clinical or regulatory updates in well over a month, implying that the company's stock is simply trading higher in sympathy with the broader industry this morning.
Sorrento Therapeutics has been a prime target for short-sellers during this year's brutal bear market. Shorts have pounced on this tiny drugmaker in 2022 because the company is cash flow negative, it doesn't have a major near-term catalyst, and shareholders were probably expecting more of a revenue bump from its varied COVID-19 franchise.
Digging into the specifics, short-sellers held over 13% of the company's float at last count. As a result, today's rally may be nothing more than some bears covering their positions during an industrywide uptick.
Is Sorrento's stock worth owning during this turbulent period for small-cap drugmakers? The company does sport an intriguing portfolio of cancer, pain, and COVID-19 assets. It thus has a real shot at eventually breaking out of this protracted downturn. That being said, investors probably shouldn't own this speculative biopharma stock unless they are willing to play the long game.