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Why Sorrento Therapeutics Stock Is on Fire Today

What happened

Sorrento Therapeutics (NASDAQ: SRNE), a clinical-stage biotech, is off to a strong start this week. The drugmaker's shares are up by a healthy 42.6% in pre-market trading Monday morning.

Last Friday, Sorrento's shares gained an astounding 158% in response to the company's announcement that it may have hit upon a highly effective preventative treatment for the novel coronavirus. This potential game-changer is an experimental antibody known as STI-1499. Today's double-digit move higher appears to be a continuation of last week's sizable rally.

Image source: Getty Images.

So what

Sorrento and partner Mount Sinai Health System are reportedly gearing up to evaluate STI-1499 as both a stand-alone therapy and part of an antibody cocktail designed to inhibit infection by the SARS-CoV-2 virus, which causes COVID-19. If successful, the antibody could be a big money-maker for the company. That's the good news.

The bad news is that Sorrento is far from the only company developing an antibody regimen for COVID-19. Eli Lilly and Regeneron Pharmaceuticals, for instance, are both pursuing similar types of treatments for the respiratory disease.

Now what

Is Sorrento's stock still worth buying on the heels of this news? While it can be tempting to chase high-flying biotech stocks on news, the smart play is arguably to remain on the sidelines. The market seems to be forecasting a major financial windfall for Sorrento, but that's far from a sure thing for a variety of reasons. Chief among them: Sorrento isn't even the front-runner in the race to develop an antibody against COVID-19.

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George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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