Sorrento Therapeutics (SRNE)
Also scoring plenty of headlines recently, Sorrento Therapeutics is developing several potential weapons to aid in the battle against COVID-19. Based on a recent announcement made by the company, the news could get even better for this healthcare name, which has already soared 327% in 2020.
SRNE revealed that it entered into a licensing agreement with Columbia University for the rights to a rapid, one-step diagnostic test that detects SARS-CoV-2 virus in as little as 30 minutes from a saliva sample. According to Dawson James analyst Jason Kolbert, part of what makes the product, COVI-TRACE, so appealing is that it is self-contained, meaning that all of the testing materials are in a single tube and require no specialized laboratory equipment, so it is easily deployable for point of care, on-site, or potentially at-home testing.
On top of this, its COVI-TRACK test could drive substantial upside. In order to conduct analytical validation, sample cohorts from healthy donors and COVID-19 patient samples were tested, with the assay showing specificity of over 97% and diagnostic sensitivity of more than 94%. “Upon issuance of an EUA, the COVI-TRACK test will be available for distribution to clinical testing sites nationwide. Sorrento has secured manufacturing capacity to support the production of up to five million test kits per month,” Kolbert mentioned.
If that wasn’t enough, SRNE inked a deal to acquire SmartPharm Therapeutics, providing it with access to gene-encoded therapeutics. Weighing in on the move, Kolbert stated, “The capability to develop non-viral DNA (and RNA), gene delivery platforms for COVID-19, and rare diseases, has broad potential for application in enhancing antibody-centric therapeutics, including against COVID-19. In other words, it provides the company with the ability to drive the body to produce (continuously) antibodies. Continuous antibodies may be a critical factor in defeating COVID.”
Representing yet another positive, SRNE has evaluated billions of antibodies and identified a small group that can block the S1 protein’s interaction with human angiotensin-converting enzyme 2 (ACE2), the receptor used for viral entrance into human cells. The hope is that the cocktail will remain effective even if the virus mutates.
“Through the U.S.’s Project Warp Speed, it’s possible we could see this cocktail move rapidly to commercialization. Sorrento plans to accelerate the development of multiple candidates for in vivo gene-encoded expression of Sorrento’s antibodies, starting with Sorrento’s previously announced STI-1499, or COVI-GUARD, which is currently moving through preclinical and manufacturing requirements with an IND submission targeted for August 2020,” Kolbert commented.
So far, in vitro results have demonstrated that STI-1499 can completely neutralize SARS-CoV-2 infection at low doses, and therefore, STI-1499 is Sorrento’s lead candidate “for potential cost-effective passive protection against COVID-19.”
Kolbert also points out that if clinical trials are successful, a single dose of STI-1499dpi (DNA plasmid injection) could allow the patient’s own muscle cells to produce the antibody for an extended period of time after a single injection, potentially providing prolonged protection against COVID-19.
In line with his optimistic take, Kolbert left his Buy recommendation and $24 price target unchanged. Should his thesis play out, a potential twelve-month gain of 66% could be in the cards. (To watch Kolbert’s track record, click here)
Looking at the consensus breakdown, it has been relatively quiet when it comes to other analyst activity. Only one other analyst has posted a recent review, but it was also bullish, so the consensus rating is a Moderate Buy. In addition, the $27 average price target is more aggressive than Kolbert’s and indicates upside potential of 87%.