Diversification is a tried-and-true strategy when investing in stocks. Drug maker Sorrento Therapeutics (SRNE) is applying the same thought process in its battle against the coronavirus. The multi-pronged approach involving a search for antiviral therapies, a vaccine and the production of testing kits, has paid off handsomely in the market, with the stock appreciating by 115% year-to-date.
Last week, Sorrento revealed more positive details from its COVID-19 vaccine program’s progress. In a pre-clinical trial, the company’s candidate, T-VIVA-19, was able to generate neutralizing antibodies in 80% of mice injected with the vaccine, and thus completely prevent cells from being infected with the virus.
“While we note that these experiments do not constitute evidence of infection prevention under in vivo viral challenge conditions, they are nonetheless encouraging,” said H.C. Wainwright analyst Ram Selvaraju.
Sorrento now plans to apply for regulatory authorization to advance the vaccine to a clinical trial. The biotech estimates that with its current infrastructure, it can manufacture up to 100 million doses per month.
But that’s not all. As mentioned, Sorrento’s approach involves several different paths, and another one in particular has piqued Selvaraju’s interest.
The 5-star analyst believes Sorrento is just weeks away from getting hold of an Emergency Use Authorization (EUA) for COVI-TRACK, its COVID-19 antibody testing solution. The test is expected to be distributed to clinics nationwide, and Sorrento claims it has the means to produce up to 5 million kits per month.
Selvaraju argues COVI-TRACK’s commercial potential could be worth up to $50 million a year, “while the pandemic persists,” and lists several reasons why COVI-TRACK “constitutes a competitive testing solution.”
The analyst said: “(1) the test generates results rapidly (i.e., within eight minutes, vs. other tests that can take up to 30 minutes or even several days) and the readout is readily interpretable; (2) specificity (avoidance of false positives) and sensitivity (avoidance of false negatives) are both above the 95% and 90% thresholds set by the FDA for EUA issuance; (3) Sorrento has documented expertise in the antibody arena; (4) the test detects both IgG and IgM antibodies; and (5) many of the existing antibody tests are woefully inaccurate, as per our prior commentary based on multiple media reports.”
The extensive list keeps Selvaraju on the bulls’ side with a Buy rating. With the price target set at $24, Selvaraju forecasts hefty upside potential of 230% over the next 12 months. (To watch Selvaraju’s track record, click here)
Currently only one other analyst has chimed in with a view on the SRNE’s prospects, also recommending a Buy. At $24, the average price target is identical to Selvaraju’s. (See Sorrento stock analysis on TipRanks)
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