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March News Update Sorrento Therapeutics (SRNE)

|About: Sorrento Therapeutics, Inc. (SRNE)
Summary

Despite a "quiet period" in the past six months, Sorrento has continued to execute their business plan and meet almost all assigned targets.

There is an increasing amount of critical news that is pending from the company that will affect share price.

Expect 2019 to be a big year for Sorrento should it be able to deliver on pending clinical data (CAR and pain programs), an EU partnership and a HK IPO.

Disclaimer

Information on this blog is not an offer to buy or sell, or a solicitation of any offer to buy or sell the securities mentioned herein

Information presented is believed to be factual and up-to-date, but I do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed

All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change

03/13/19 – Siegler v. Sorrento Therapeutics. Original due date for second amended complaint (SAC). It has since been changed to 4/26/19

The bulk of her claims have been dismissed by US District Judge Curiel. Any further SACs that she may file will be against a reduced number of Defendants and will require a much higher level of evidence that she was not able to provide before (pro se allowance since not all the FACs submission were complete in meeting the burdens of proof).

This trial is in its final stages and given the prior evidence provided by the Plaintiff, I would expect all remaining claims to be dismissed in short order. Unknown when final ruling will follow at this time.

Impact: Favorable as it will free up financial resources and allow for a fuller focus on clinical development. I don’t think a full dismissal will affect the company’s share price, as the Plaintiff has never demonstrated sufficient evidence to raise a concern over the IP rights for the anti-CEA CAR-T construct.

03/18/19 – Form 10-K filing due date. As an NT-10K has been filed on 03/01/19, the extended due date is now 4/2/19.

As delay has been attributed to accounting for a number of 4Q18 transactions, there is not anticipated to be any concerns around the NT-10K filing. If the filing extends past the extended deadline however, there are penalties.

Impact: Limited data suggest that NT-10K filings result in an approximately 2% drop in share price and further if the extended filings are communicated to take longer than the grace period or extend past the grace period. Given daily fluctuations, the 2% change is non-significant to Investors and only becomes a concern should the company not file before 4/2/19.

03/20/19 2:45 (NYSE:ET) – 29thAnnual Oppenheimer Healthcare Conference Presentation

Unknown at this time if Sorrento (SRNE) will make its webcast available

Expect Oppenheimer Analyst Mark Breidenbach to issue guidance, stock price target. He is one of the more conservative analysts following Sorrento and has anticipated a 1Q19 Sorrento Anti-CD38 CAR-T data share.

Impact: Unknown if Sorrento will release significant data here

03/29/19 3:00 (ET) – AACR Annual Meeting 2019 Abstract Release

The full text of the Clinical Trial and Late-Breaking Abstracts will be posted online no earlier than this date. This will be the most important planned data to follow this month as Celularity will be presenting two notable P1 studies there:

  1. CT079 / 3 - A Phase I study of PNK-007, allogeneic, off the shelf NK cell in relapsed/refractory AML (NCT02781467)
  2. CT108 / 7 - A Phase I study of PNK-007, allogeneic, off the shelf NK cell, post autologous transplant in multiple myeloma (NCT02955550)

These are the first studies of their kind, marking a significant advance in the clinical application of “off-the-shelf” NK cells and setting the stage for two Phase 2 clinical trials in the 2H19. Given the fact the Phase 2 clinical trials are already planned for later this year, expect positive data from these early studies.

Impact: Highly likely the positive data for these nascent allogeneic programs will garner much interest from analysts. As Celularity has yet to IPO, it is also likely that Sorrento (who owns a 25% equity interest in Celularity) will see an upside in investment, as an increased equity stake will further secure their long term funding and reduce need for dilution.

Outstanding concerns

1Q19 – HKSE/Nasdaq dual listing

There has been no Chairman/CEO corporate update to stockholders since June of last year, so it is unknown if this is still on schedule. Given the mixed market reaction to the initial biotech IPOs under the new rule and the recent trade tensions and global growth headwinds, it is further uncertain if 1Q19 will be opportune time to list.

Impact: at first mixed to then highly favorable impact on stock price. The IPO proceeds will secure further funding allowing the company to fully execute sidelined clinical programs and advance clinical programs into more costly larger pivotal trials.

1Q19 – ImmuneOncia IMC-001, start of Phase 2 Clinical Trial

Sorrento owns 49% of ImmuneOncia so advancements in investigational drugs toward approval will directly increase Sorrento’s equity stake in the company.

Impact: This was just announced yesterday, 3/11/19 and, as expected, the reaction has been muted. That said however, one detail seems to have been lost on investors… the press release indicated that the JV will pursue indications in rare cancers. This is a notable focus point, as the current checkpoint inhibitors already have grasped many indications, here and abroad, and once the rare cancers are identified, will provide a niche and path forward for their anti-PD-L1.

Disclosure: I am/we are long SRNE.