Breakout Stocks   Corona Virus Stocks 

Over the past months, plenty of companies working on coronavirus vaccines have come into focus and one of those is Sorrento Therapeutics. Sorrento Therapeutics’ (NYSE:SRNE) stock emerged as an option and many investors backed the stock as a ‘coronavirus play’. However, it is perhaps important to take a closer look at the company before jumping to conclusions.

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Closer Look at the Company

The company had been established back in 2009 and it had been primarily focussed on developing antibody cancer-treating formulations for much of its existence. However, after the start of the coronavirus pandemic, the company shifted its focus on developing medicines and vaccines for the virus.

While there has been significant interest in the stock in these months, that back in 2009 the Sorrento stock was trading at $75 a share and now it is trading around $9 a share. In recent days, the stock sometimes experiences a jump when the company announces any significant news but more often than not drops back to previous levels.

For instance, back in July, the company announced that it had signed an agreement with Columbia University with regards to a COVID 19 test. The shares then jumped to $18 but slumped back soon after.

Thumbs Down from Analysts

It is also necessary for potential investors to keep an eye on what analysts are saying regarding Sorrento. Thomas Yeung, who is a market analyst at InvestorPlace, stated that Sorrento has a track record of ‘puffery’ and hence investors should be wary.  

He went on to state that the pay structure of the company, which incentivizes its executives to bet on risky products, is one of the major reasons behind the state of affairs. Hence, loud announcements can often result in a rally.

Still Not Profitable

At this point, Sorrento is working on two coronavirus related products. One of those is Abivertinib and is currently at an advanced stage of development. The other is STI 1499, for which the company had for the go-ahead for a Phase 1 study from the United States Food and Drug Administration.

Additionally, the company already has a product named ZTildo, which is a pain management medicine of non-opioid nature. Although the product has recorded a steady rise in sales, Sorrento is not yet profitable.

At the end of June this year, the company had a cash balance of $24.4 million and it is likely that Sorrento would need to raise capital in the near future.

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