Sorrento Edges Higher On Debt Repayment As Top Analyst Says Buy
Shares in Sorrento Therapeutics (SRNE) edged 5% higher in Friday’s after-hours trading, after the company announced that it has now prepaid in full its outstanding term loans on June 12, 2020.
The debt, comprised of an initial $100 million term loan and an additional $20 million term loan from funds affiliated with Oaktree Capital Management, L.P, was entered into in November 2018.
The news follows the biopharma’s filing of a prospectus supplement dated April 27 for a public offering of up to $250 million of its common stock. Shares are being sold via Alliance Global Partners, alongside a 36-month purchase agreement with Arnaki Ltd, a British Virgin Islands corporation for up to $250 million.
At the same time, Sorrento exited an equity distribution agreement, dated October 1, 2019 with JMP Securities LLC relating to shares worth up to $75 million. During the term of the agreement, the company ultimately raised $7.4 million.
Shares in Sorrento are currently trading up 37% on a year-to-date basis, and analysts have a Moderate Buy consensus on the stock’s outlook. The $24 average analyst price target indicates significant upside potential from current levels. (See SRNE stock analysis on TipRanks).
Sorrento recently disclosed that in preclinical trials, the company’s monoclonal antibody (MaB), STI-4938, code named COVIDTRAP, inhibited SARS-CoV-2 viral infection in vitro.
Sorrento also has another antibody in development, STI-1499 (COVI-SHIELD), which recently demonstrated promising in vitro results as it was able to completely block the SARS-CoV-2 virus.
While it is still early on for both antibodies, H.C. Wainwright analyst Ram Selvaraju is encouraged by the positive results. “We continue to believe that Sorrento may be positioning itself as a leader in addressing the pandemic, with multiple potential therapeutic approaches in its pipeline alongside the COVI-TRACK IVD antibody test,” the analyst said.
Indeed, its COVI-TRACK in vitro diagnostic test kit enables the independent detection of antibodies in patients exposed to the SARS-CoV-2 virus. In eight minutes or less SRNE says its test reveals whether someone has been exposed to or potentially had coronavirus, and subsequently created antibodies to combat the infection.
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