Sorrento Therapeutics (NASDAQ:SRNE) Stock Turns Volatile: How to Trade Now?

Over the course of the past months, some companies have been in sharp focus owing to their work in relations to coronavirus related products, and one of those is Sorrento Therapeutics Inc (NASDAQ:SRNE).

Major Move

The company has been working on an experimental vaccine for coronavirus named STI 1499, and this past Friday, the company announced that the product was able to inhibit coronavirus infection 100%. It goes without saying that it was a major development, and the stock soared by 144%. On Monday, the Sorrento stock rose by another 40% in early morning trading but gave up some of its gains eventually.

While the findings from its study are certainly encouraging, there are other factors that need to be taken into consideration. First of all, the findings from studies conducted in Petri dishes do not always translate into success in human testing. It remains to be seen how the product performs in human testing, and hence, the company needs to commence clinical testing soon.

Less than 20% of the products that make it as Phase 1 clinical trial actually manages to win the coveted FDA approval. Hence, despite the optimism around the product, it is safe to say that it is far from a slam dunk for Sorrento.

At this point in time, the company has only one approved product named ZTlido, which meant for treating pain related to shingles. The company has not conducted any clinical trials other than those related to this product. ZTlido has also been a successful revenue generator for Sorrento, and in the fiscal first quarter, Sorrento generated revenues of $5.2 million. That being said, the cash burn is high for the company, and the net loss for the first fiscal quarter stood at a whopping $69.2 million.

The company is also expected to make a share offering at some point, and that is also going to dilute the value of its shares. While it is true that the stock could skyrocket if ST 1499 proves to be a success, there are plenty of things to accomplish before the product gets the approval. In such a situation, investors need to be careful with Sorrento.

About Travis Garlick 1660 Articles
Been writing about and trading stocks since 2013. Manage a group of micro-cap investors on Facebook with over 15,000 members. Turned $8,500 into 185k the first year I started trading stocks and haven't looked back.