Once a specialist in oncology drugs and pain management, Sorrento Therapeutics (SRNE) has pivoted to attack COVID-19 head-on in 2020, offering up a smorgasbord of tests to detect the novel coronavirus, vaccines to prevent it, and therapies to combat it. As the President’s illness illustrates, the coronavirus contagion is still very much a threat — and no one is safe.
With this in mind, Dawson James analyst Jason Kolbert released a note focusing in on the President’s doctors’ use of polyclonal “cocktails” of antibodies to fight the virus, and what that might mean for Sorrento Therapeutics — whose treatments haven’t been administered to the President (that we know of), but might soon become available to other patients in need.
Sorrento is gearing up to hold an “R&D Day” event on October 13, reports Kolbert, at which the company will discuss its “comprehensive multi-modal approach to COVID-19” and the progress it has made on its various Covid-fighting endeavors. Two of Sorrento’s projects in particular interest Kolbert, the STI-1499 (which Sorrento has branded “COVI-GUARD”) and STI-2020 antibodies.
As the analyst explains, “both STI-1499 and STI-2020 demonstrated protective activities against SARS-CoV-2 infection in Syrian golden hamsters.”
That’s a curious statement to make, of course, and if it suggests to you that Sorrento isn’t particularly far along in development of this therapy — you’re right. In fact, Kolbert admits that STI-1499 — which the analyst considers Sorrento’s “lead candidate” as a coronavirus therapy — is only in Phase 1 clinical trials at this point. (No mention of how far along STI-2020 might be).
That being said, the analyst notes that a 2,000 micrograms dose of STI-1499 “reduced virus load below the detection limit in 60% of animals tested” — and cut the viral load by at least 10x in the remaining 40%. STI-2020, meanwhile, showed efficacy at just 500 micrograms, reducing evidence of the virus to undetectable levels “in 100% of animals tested.”
Kolbert muses that, should the two antibodies be mixed into a “cocktail,” the likes of the Regeneron cocktail that was administered to President Trump, “the product could remain effective even if virus mutations occur,” wiping out a patient’s infection before it has a chance to mutate and survive.
Indeed, says Kolbert, Sorrento is already working on such a cocktail that it dubs “COVI-SHIELD,” and the analyst assumes that the company will be successful in developing this. Still, as a valuation exercise, he assigns the cocktail only a 50% chance of success (success meaning, in this case both that the cocktail works, and survives the phased process of FDA approval and is ultimately approved). Kolbert believes that this could happen “rapidly,” and argues that over and above Sorrento’s core activities in oncology and pain management, COVID treatments therefore offer a “significant … valuation potential” for the stock.
How much “potential” are we talking here? Working the numbers, Kolbert arrives at the conclusion that Sorrento stock could be worth as much as $21 a share, or roughly twice what the shares cost today. Accordingly, he rates Sorrento stock a “buy.” (To watch Kolbert’s track record, click here)
It has been relatively quiet when it comes to other analyst activity. In the last three months, only 2 analysts have issued ratings. However, as they were both Buys, the word on the Street is that SRNE is a Moderate Buy. Based on the $25.50 average price target, shares could climb 137% higher in the next twelve months. (See SRNE stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
