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Sorrento Therapeutics: Insider Buying Alert


  • Sorrento Therapeutics had a wild ride in trading last week.  First rising sharply thanks to FDA approval before succumbing to profit taking.
  • The stock is now below where two insiders just purchase more than $1.5 million in new shares.
  • So is the sell-off a buying opportunity?  We take a look at this biopharma concern below.

What do dogs do on their day off?; Can't lie around – that's their job!” ― George Carlin

Sorrento Therapeutics (SRNE) provided its shareholders with a roller coaster week. The stock initially soared as the company's ZTlido patch was approved by the FDA for treating patients with post-herpetic neuralgia pain.

As is want for these approvals, the initial rally in the stock eventually turned into a huge bout of profit taking to end the week. This is exactly why I sold covered calls on my position in Sorrento on the big rise triggered by the initial approval.

Note: I garnered $2.50 for the September $10 calls in what proved to be a great stroke of timing. Like in golf, sometimes it is better to be lucky than good as my late father would say.

Interestingly around the levels I was selling my covered calls, two insiders were stepping up to the plate with significant purchases earlier in the week. Two officers added just over 150,000 shares in total at a price of $9.95 a share. One of the buyers is listed as the Founder, Chairman and CEO of the company. The other is listed as the Exec. VP, Chief Admin. Officer & Chief Legal Officer.

It was the first insider purchase in the shares since last June. Those were made at under $2.00 a share (the stock has had a huge run up over the past six months).

So what might account for these insiders optimism. ZTlido will go head to head with Lidoderm from Endo Pharmaceuticals (OTCPK:ENDO). As noted in an article by another SA contributor this week, both are equal in efficacy. However, ZTlido does seem to have better adhesion traits which might make it a superior solution.

Ironically, the shares of Endo Pharmaceuticals fell on news of ZTlido's

This article was written by

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We are a team of analysts led by Bret Jensen, Chief Investment Strategist at Simplified Asset Management.

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Analyst’s Disclosure: I am/we are long SRNE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (1)

Thanks for the article.

If company needs to raise cash in the near future, I do not see why the CEO and another Director committed decent amount of money by buying in the open market at $9.95 a share. This is not just a token purchase to please the share holders. This is a fairly serious money. I am able to see the picture (or so I guess).

But the real potential is not ZTlido and that is not the reason I have invested in this company. This is a CAR-T player and ZTlido is just a small revenue generating option to keep the CAR-T moving ahead without big dilutions coming in the path to CAR-T Success.

Good Luck to all the longs.
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