Sorrento Therapeutics Inc. (NASDAQ:SRNE)’s CEO off the Hook

Sorrento Therapeutics Inc. (NASDAQ:SRNE)

Sorrento Therapeutics Inc. (NASDAQ:SRNE) has confirmed the dismissal of claims lodged by Wildcat Capital Management. The investment firm whose clients own 6.5% of the company’s common stock was pushing for the dismissal of Chief Executive Officer, Henry Ji.

Wildcat Management Demands

In a letter sent to Sorrento Therapeutics Inc. (NASDAQ:SRNE) board, Wildcat Management cited destruction of shareholder value as the reason behind their demands. The firm accuses the current CEO of repeatedly transferring assets to newly created subsidiaries and then granting executives and non-employee directors stock options at nominal prices.

“The Wildcat Shareholders believe that the Company’s Chief Executive Officer (“CEO”), Dr. Henry Ji, has consistently acted in a manner that is not in the best interests of shareholders and has destroyed significant shareholder value. Further, the Wildcat Shareholders believe that the Company’s Board of Directors (the “Board”) has failed to act in the best interests of shareholders and that the Directors have breached their fiduciary duties,” Wildcat wrote in a letter to the board.

The firm had also raised concerns about a number of financing transactions that the executive had spearheaded, saying they had significantly diluted shareholders value. Wildcat Capital Management was also pushing for the appointment of its three nominees into the board to oversee the interest of its clients.

ZTildo Positive Results

Separately, Sorrento Therapeutics Inc. (NASDAQ:SRNE) subsidiary SCILEX Pharmaceutics has reported positive results in a head to head adhesion study of lead product ZTildo. The company says the product demonstrated superior adhesion compared to Varsities, a reference product approved in Europe. ZTildo is a non-opioid lidocaine patch being developed for the treatment of post-herpetic neuralgia, a neuropathic condition.

The positive study results, according to Sorrento Therapeutics Inc. (NASDAQ:SRNE), complement previous clinical and adhesion data results that should help support their case for new drug application.

“We are pleased to report our noteworthy data. We believe that the ability of ZTildo™ to outperform Varsities® in this head to head study will translate into better patient compliance and provide us with an important clinical advantage. I look forward to moving ZTildo™ closer to commercialization in the US and the EU,” said president SCILEX, Anthony Mack.

Chief executive officer believes the positive study results not only validate ZTildo but should go a long way in supporting product development efforts. The executive expects the head to head study to help bolster ZTildo prospects as they move to pursue sales opportunities in Europe and the U.S.

Sorrento Therapeutics Inc. (NASDAQ:SRNE) stock was up by 8.11% in Friday trading session to end the week at $2 a share. SRNE shares are unchanged in early Monday trading.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: Monica has an undergraduate degree in Accounting and an MBA she earned – with Honors. She has six years of experience in the financial markets and has been an analyst for the past two years.

Sorrento Therapeutics Inc. (NASDAQ:SRNE) Opens New Manufacturing Plant after Virttu Acquisition

Sorrento Therapeutics Inc. (NASDAQ:SRNE)

Sorrento Therapeutics Inc. (NASDAQ:SRNE)’s new, state of the art, 25,000 sq. ft. Good Manufacturing plant in the city of Suzhou is up and running. The facility is now expected to support the company’ growing antibody drug conjugate pipeline that currently boasts over a dozen pre-clinical cancer-focused Anti-body drug conjugates (ADC’s).

New Plant Impact

Sorrento Therapeutics Inc. (NASDAQ:SRNE) has partnered with a number of biopharmaceutical companies as it continues to work on its cancer treatments that include the likes of HER2. The company is planning to file an Investigational New Drug (IND) Application with Chinese regulators later in the year.

The biopharmaceutical company is also eyeing service revenue and royalty streams with its ADC programs having already progressed two proprietary cancer treatments into IND-enabling studies.

“Our new plant has been designed to provide full analytical support capabilities, GMP production of toxin-linkers based on our proprietary technology and methods, as well as GMP-grade bio conjugation of the antibody to produce ADCs. The launch of this state of the art plant, in addition to our existing ADC research sites in Nanjing, China, and San Diego, demonstrates Sorrento’s commitment to our ADC pharmaceutical partners […],” said CEO, Henry Ji.

Virttu Acquisition

The opening of the new state of the art facility comes on the heels of Sorrento Therapeutics completing the acquisition of Virttu Biologics through its cellular therapy focused subsidiary TNK Therapeutics. The two companies had initially entered into a binding term sheet agreement consequently setting out terms for a merger.

Under the terms of the agreement, TNK acquired all Virttu issued and outstanding equity. Virttu equity holders received an aggregate of 797,081 shares of Sorrento Therapeutics based on a $5.55 price per share. The equity holders are also eligible to receive an additional $20 million in TNK stock should the company close on third-party financing.

Based in Glasgow, Virttu is a privately owned company that specializes in the development of oncolytic virus therapy for the treatment of cancer. The company’s lead product is Seprehvir, derived from a modified version of human herpes simplex virus

The acquisition of Virttu, according to Sorrento Therapeutics Inc. (NASDAQ:SRNE)’s CEO, is part of a plan that seeks to bolster the company’s clinical stage asset. The company is also planning to make good use of Seprehvir which has the potential to be used in various cancer indications.

Sorrento Therapeutics Inc. (NASDAQ:SRNE) stock was down by 8.7% in Tuesday trading session ending the day at lows of $1.58 a share.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading.

Sorrento Therapeutics Inc. (NASDAQ:SRNE) Threatens All-Time Lows

Sorrento Therapeutics Inc. (NASDAQ:SRNE)

Sorrento Therapeutics Inc. (NASDAQ:SRNE) shares are hitting new 52-week lows, and threatening all-time lows, on today’s announcement that the company’s public share offering will be priced at $2.00. The San Diego, CA-based company broke news of the public offering on April 12, 2017 when SRNE shares ended trading just under $3.00. When the market open the next day on April 13, SRNE shares gapped down and opened below $2.00. As of this writing (2:54 PM EST), SRNE shares are sitting on their lows of $1.55. SRNE shares have a 52-week high of $8.35 and a 52-week low of $1.75 prior to today’s price action. Volumes are almost ten times normal.

The micro-cap biopharmaceutical company will be offering the public 23,625,084 shares. Sorrento Therapeutics Inc. (NASDAQ:SRNE) will be granting the underwriters a 30-day option on 3,543,763 additional shares. Cantor Fitzgerald is the lead book-running manager. That firm is joined by FBR Capital Markets, Oppenheimer & Co., Aegis Capital, Joseph Gunnar & co., Rodman & Renshaw, and Roth Capital Partners in supporting roles.

Dilution is commonplace for Sorrento Therapeutics Inc. (NASDAQ:SRNE). In 2012 there were 11.41 million shares of SRNE outstanding. In the subsequent years that number grew to 15.05 million, 26.68 million, 36.91 million, and, in 2016, 50.36 million. However, it should be noted that sales have improved annually. In 2013 reported sales were $0.5 million followed by $3.8 million, $4.6 million, and $8.2 million for 2016. EPS continues to be reported as a loss. In 2013 the EPS loss for SRNE shareholders was -$1.46 and that number improved over the years but never achieved the profit level. In 2016 SRNE had an EPS loss of $1.21.

FBR Capital Markets rates Sorrento Therapeutics Inc. (NASDAQ:SRNE) shares as an “Outperform” and assigns it a price target of $16. Five other firms follow Sorrento Therapeutics Inc. (NASDAQ:SRNE) and all rate the shares as a “Buy” with a consensus price target of $13. SRNE shares have a Relative Strength value of 9.71. A figure below 20 is considered to be an “oversold” signal. They have a Beta of 2.66. Beta is often used as a measure of a stock’s sensitivity to the broader index. A figure of 2.66 is unusually high – even for a small biotech firm.

4/18/2017
Ticker Symbol SRNE
Last Price a/o 3:13 PM EST  $                      1.64
Average Volume                    358,440
Market Cap (mlns)  $                    95.42
Sales (mlns) $8.20
Shares Outstanding (mlns) 50.89
Share Float (mlns) 32.02
Shortable Yes
Optionable Yes
Inside Ownership 0.50%
Short Float 11.92%
Short Interest Ratio 10.65
Quarterly Return -66.81%
YTD Return -61.73%
Year Return -72.06%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.

Sorrento Therapeutics Inc. (NASDAQ:SRNE) Drops on Dilution

Sorrento Therapeutics Inc. (NASDAQ:SRNE)

Sorrento Therapeutics Inc. (NASDAQ:SRNE) announced today the pricing of a public offering of 23,625,084 SRNE shares. In addition to the publicly available shares, Sorrento has granted an option to purchase up to 3,543,763 additional shares for a period of 30 days after the public offering. All shares will be priced at $2.00 per share and all shares will be offered by the company. Importantly, the press release included the information that Sorrento’s President and CEO, Dr. Henry Ji, will be purchasing an undisclosed number of SRNE shares in the offering.

Cantor Fitzgerald & Co. is the lead book-running manager and FBR Capital Markets & Co. is acting as joint book-running manager. Oppenheimer & Co., Aegis Capital, Joseph Gunnar & Co., and Rodman & Renshaw and Roth are also participating in the offering.

The $2 price represents a 50% reduction in value for shares of Sorrento Therapeutics Inc. (NASDAQ:SRNE) from March 31, 2017 when SRNE shares opened at $4.00. The public offering pricing also represents a 75% reduction from the $8 price level SRNE shares achieved in early October.

Few shareholders could have failed to see a dilution sometime in 2017. Sorrento Therapeutics Inc. (NASDAQ:SRNE) has issued shares every year since 2012 when they had 11.41 million shares outstanding. That number grew to 15.05 million in 2013, 26.68 million in 2014, 36.91 million in 2015, and 50.36 million in 2016. The positive aspect was, and is, that Sorrento grows sales. In 2013 sales were reported at $500,000, followed by $3.8 million in 2014, $4.6 million in 2015, and $8.2 million in 2016. However, the growth trends in the number of outstanding shares and sales are not visible in earnings. SRNE EPS has shown losses every year since 2012 when the company reported a -$0.43 EPS loss. That loss expanded to -$1.46 in 2013 then narrowed the next few years and in 2016 the SRNE EPS loss was -$1.21.

Several firms have initiated and dropped coverage of Sorrento Therapeutics Inc. (NASDAQ:SRNE) since 2013. In that time all rated SRNE shares as a “Buy” with the exception of FBR capital Markets who rated the shares an “Outperform” at the end of 2015 with a price target of $22. A little over one year ago they reiterated the “Outperform” rating but lowered their price target to $16.

4/13/2017
Ticker Symbol SRNE
Last Price a/o 12:55 PM EST  $                      1.90
Average Volume                    189,840
Market Cap (mlns)  $                  150.13
Sales (mlns) $8.20
Shares Outstanding (mlns) 50.89
Share Float (mlns) 32.02
Shortable Yes
Optionable Yes
Inside Ownership 0.50%
Short Float 11.12%
Short Interest Ratio 18.76
Quarterly Return -48.25%
YTD Return -39.80%
Year Return -56.43%

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.