One of, if not the biggest, winner of the day happened to be a relatively obscure biotech. However, instead of announcing some new clinical trial results, which is the usual reason why a biotech stock surges, this stock received two unexpected buyout offers, both of which it declined.
Sorrento Therapeutics (NASDAQ: SRNE) announced that it had received two, separate all-cash offers. After rejecting these offers, investors were so impressed by this news – and the possibility that further offers might be on the way – that they send shares of Sorrento skyrocketing.
Sorrento is focused mainly on treating oncology and various autoimmune/inflammatory conditions which are difficult to treat. One of its most promising treatments is RTX, a non-opioid pain treatment that’s ready to entire phase 2/3 clinical trials, with early data showing some promising results. It appears that other company’s think RTX is promising as well, as two separate offers were made on Monday to buyout Sorrento and its drug pipeline.
“Sorrento Therapeutics…confirmed today that on November 23, 2019, it received an unsolicited, non-binding term sheet proposal submitted by two biopharmaceutical companies, to acquire all of the issued and outstanding shares of the Company for between $3.00 and $5.00 per share in cash,” read an official press release from the company. “After reviewing the proposal in consultation with its advisors, Sorrento’s Board of Directors (the “Board”) determined that the offer significantly undervalued Sorrento and was not in the best interest of the Company’s stockholders. Accordingly, the Board unanimously rejected the proposal.”
While this is a major deal for such a small biotech stock, these unexpected buyout offers weren’t the only reason why shares of Sorrento surged. The company also received a major vote of confidence from one of the main Wall Street analysts covering the stock. JMP analyst Donald Ellis went on to say that now only is Sorrento a buy, but that he expects prices of the stock to surge by almost 700%. He cites a number of significant, near-term milestones to watch out for in the upcoming months as well.
Shares of Sorrento Therapeutics skyrocketed as much as 94.4% over the course of the day. However, over the past few years, Sorrento has been steadily tumbling, with a few price surges during that time frame. Out of the two analysts covering the relatively obscure stock, both of them have “buy” ratings on the company, with the average price target for the stock sitting at $24.5, or 850% above its previous trading price.
While Sorrento’s supporters certainly aren’t numerous, they are quite passionate about its potential upside. Time will tell whether this proves to be the case, but in the meanwhile, traders should expect a reversal in the next day or two as a correction typically follows these kinds of major upswings.
Sorrento Therapeutics Company Profile
Sorrento Therapeutics Inc is a biotechnology company focused on the development of novel immunotherapies for oncology and autoimmune/inflammation diseases. The antibody technologies target various locations: extracellular, intracellular, and membrane-bound antigens. The product portfolio consists of BioSimilar/BioBetter antibodies, CAR-T programs for treatment of solid tumors, adoptive cellular therapies, immuno-oncology mAbs, and antibody drug conjugates. –Warrior Trading News