Institutional Investor’s Pro-Sorrento Therapeutics Inc (NASDAQ:SRNE) Sentiment In Q2 2015
Kenneth EbyKenneth EbyOct 01, 2015Hedge Fund News
Sentiment Ratio for Sorrento Therapeutics Inc (NASDAQ:SRNE)
Sorrento Therapeutics Inc (NASDAQ:SRNE) institutional sentiment decreased to 1.53 in Q2 2015. Its down -0.59, from 2.12 in 2015Q1. The ratio dived, as 52 hedge funds started new and increased holdings, while 34 cut down and sold equity positions in Sorrento Therapeutics Inc. The hedge funds in our partner’s database now possess: 13.05 million shares, up from 10.68 million shares in 2015Q1. Also, the number of hedge funds holding Sorrento Therapeutics Inc in their top 10 holdings increased from 2 to 4 for an increase of 2. Sold All: 17 Reduced: 17 Increased: 15 New Position: 37.
Top Sorrento Therapeutics Inc Holders
Venbio Select Advisor Llc had the biggest stake owing 2.19 million shares as of Q2 2015 for 10.61% of the equity exposure. Cormorant Asset Management Llc is another notably bullish fund who is owning 1.95 million shares of Sorrento Therapeutics Inc or 4.56% of their equity exposure. Furthermore, Aisling Capital Llc have 4.47% of their equity exposure invested in the company for 1.70 million shares. The Texas-based fund Wildcat Capital Management Llc revealed it had purchased a stake worth about 4.44% of the fund’s stock portfolio in Sorrento Therapeutics Inc. The California-based fund Longwood Capital Partners Llc is also positive about the stock, possessing 736,012 shares or 2.31% of their equity exposure.
Sentiment: Strong Sell
OK sky, the theory to explain the madness makes sense. However, what's disturbing then is the execution of the plan. If it is a bunch of indiscriminant buying, then one needs to be very careful and check out what one is buying. That ADC company looks like a clunker. Why did SRNE buy that? Because ADC's used to be all the rage? Now it looks like ADC's are yesterday's news and SRNE doesn't talk about that acquisition anymore. But it's in the K's and Q's. Instead SRNE is now chasing the immunotherapy holy grail because a bunch of companies in this space, well ahead of SRE, got whooping market valuations. Even if SRNE is playing broker, I've learned in business that the acid test is how well you sell, not how you buy. And SRNE has sold very little. The sale of a taxol formulation brought in a tiny upfront and the big number is much later milestones. This doesn't value the success of the one clinical trial they actually conducted. If in fact the "broker" role is the business plan, any successful broker has to learn to sell and this is where SRNE seems to be failing. Why is this the case? Is it a problem with what's being sold? That means SRNE needs to do better being more discriminating in what it buys. But something is wrong here. There's a disconnect with the market cap at a mere 3% of what the CEO said it should be. Who's wrong? The CEO or the market?
In rereading some of the articleS on SRNE, I am thinking that the SRNE business plan is not the typical biotech. I think they are not wanting to spend huge sums on research over a long period of time but more like a Biotech Broker or prospect generator where they buy companies or form companies with the intent of packaging these various companies with parts and technology from their now large portfolio greatly increasing the value and then selling them for a large profit in a relative short period of time. There was an article in Seeking Alpha in July by "Intrepid Investor" that basically said this and here is a portion of this article.
•Sorrento is an oncology company developing new treatments for cancer and associated pain. Sorrento got Cynviloq by acquiring IgDraSol for $27 million. Nantworks 2 years later offers up to $1.3b.
•Sorrento does not have a Chief Scientific or Medical Officer, and has only one Scientific Advisor who is very busy elsewhere.
•Sorrento boasts a bibliography of presentations only, no manuscripts in peer-reviewed journals. Buy Sorrento if you like companies that do smart deals, not if you are looking for great research.
Sorrento Therapeutics (NASDAQ:SRNE) has become a very popular stock, tripling in value over the past 7 months. Its $0.6B market cap is backed by a strengthening balance sheet: net current asset value at the end of 2014 was up 6x YoY. The deal for up to $1.3b with Nantworks for Abraxane-equivalent Cynviloq announced May 15 would be a nice return on the $27.8 million of stock invested in IgDraSol that got it Cynviloq. By comparison, Celgene acquired Abraxis for $2.9b in 2010 to gain control of Abraxane.
Sentiment: Strong Buy
I am not in total agreement with you, but your post obviously shows why the market is valuing SRNE so low. This latest deal is supposedly "groundbreaking technology that is able to target previously undrugable disease by using cell penetrating antibodys. Who are they playing "catch up" with on this deal? I see a lot of scientific papers on the importance of this technology but see no one who has already commercialized it? I assume they would not use the term "previously undrugable" if there is already a company out there that has perfected this? If this works, I would think this deal alone would be worth many $Billions. On the $10 Bil #, it would have been nice if there had been a webcast of his presentation, so we could have heard that # in proper context. An analyst posted it in an e mail to paid subscribers in an outline of his notes. He was at the Rodman Rhenshaw conference and many of the speakers had their presentation rebroadcast on the web. I was not able to find SRNE's presentation, has anyone?
For the life of me, I cannot figure out how S-S or the Nants are beneficial for SRNE. Yes S-S has a lot of money, but so what. One gets billions by not giving it away or helping competitors. The Nant deals seem to be nothing more than name-dropping to me to impress investors with the attention span of a gnat but who don't do any due diligence. I try to read lots of material (including K's and Q's) before I invest and I cannot figure this one out. What is particularly perplexing is the biosimilars deal where I just don't see a market need when many other larger companies also have market entry (like Amgen, Teva and Novartis/Sandoz). What's the point of the biosimilars? Anyone? I also don't understand that old ADC venture when established players (like SGEN) are also in this space. What makes SRNE's ADC venture better? I wasn't aware that the CEO claimed a $10Bil valuation at a NY conference. That's disturbing because he's over-promising and significantly under-delivering, a bad sign for management. I think the problem is deeper than explaining how the parts fit together. I think we have to wonder why SRNE seems to have lost focus with nothing in the clinic. Instead SRNE seems to be always playing catch-up to follow what's hot in the banker universe (which stocks currently command a high market valuation) without playing a leader of something. SRNE seems to always be a late follower, not a leader in anything. The ADC deal was a couple of years ago when ADC's were hot. But now ADC are not. The same think for the NK and cellular immunotherapy deals. With the IPO's of JUNO, KITE, BLUE, etc., this is the current hot area and SRNE is now chasing this space. What happens when cellular immunotherapy is no longer hot? Always a follower, never a leader.
I think part of the reason that SRNE and NK (reached $38+ opening day) have dropped so much more than biotech in general is there is no clear business model on what either entity is trying to accomplish.. We know both want to cure Cancer but so do 100's of others. All of the recent deals that SRNE has 'inked" may fit into some strategic plan but this is a very complex business anyway and you have SRNE closely linked to the PSS "Nants" which has more recent deals than SRNE so you have all of these now confusing interlocking companies that have so many moving parts, no one, not even the seasoned analysts seem to know how to value SRNE or NK.
At one of the NY conferences last month, Dr Ji told the audience that SRNE should be valued at $10BIL, this came from someone in his audience. Somehow, Dr Ji needs to tie all of these moving parts into a clear presentation so that investors have an idea of where that seemingly grossly inflated # is coming from.as the market is valuing SRNE at about 3% of that $10Bil #.
SRNE, NK, MDRX and CELG appear to have interlocking stock ownership and are part of the DR. S-S empire in some way. MDRX has recently formed an alliance with NK. What I think I know is that MDRX has a good reputation with the medical community in my area and that DR S-S has a ton of money.
The recent NK IPO is a disaster. At this point people seem to be investing in NK and SRNE based on DR S-S reputation. If the DR. succeeds in his plans this could be a big winner.
Hope you will post if you know some info to help us out.
Sorrento is attempting to move their pawns into the right spaces on the checkboard to declare checkmate on its competitors. The LA cell is a strategic move in Sorrento’s overall treatment ecosystem. It aspires to be Celgene with perhaps a bit more forethought from the very beginning.
On a practical level, we will await the following from LA cell:
1) Which indications will be pursued?
2) How will it complement the existing product development?
3) What is the timeline?
4) How will Sorrento ensure proper staffing to ensure execution?
From Biotech Watcher
How is this important
Number of important targets for disease treatment are intracellular. Let us take STAT3 for an example, STAT3 has shown activity in many human malignancies including hematological malignancies, head and neck cancers, mammary carcinomas, and multiple myeloma. Normal STAT3 proteins are involved many basic cellular functions involving growth and division, movement, and apoptosis. The STAT3 protein is overactive in many common solid tumors and hematological cancers. Overactive and excessive STAT3 proteins enables abnormal cell proliferation and prevents damaged cells from self-destructing.
STAT3 is a nuclear protein that is impossible for antibody targeting, thus, with this cell-penetration technology - mAbs will target various intracellular proteins that were previously inaccessible. This technology is almost like an antibody drug conjugate (ADC) except that its conjugate includes: a) something that can’t penetrate the cell that is attached to b) a special non-digestible backbone. The backbone resists digestion by nuclease enzymes and hence able to complete intracellular delivery of the antibody payload before being destroyed.
Sentiment: Strong Buy
Expansion of Sorrento Therapeutics (SRNE) Announces Collaboration Post
Sorrento’s newly formed company – LA Cell
While we made an earlier post, it was focused on the general concern with Sorrento’s deal-making pace. This post examines the actual substance of the deal with the City of Hope.
On September 28, 2015, Sorrento announced a newly formed subsidiary, LA Cell. LA Cell has the exclusive license to the City of Hope’s cell-penetrating antibody therapy. It enables modified monoclonal antibodies (mAbs) to burrow into cells for previously unreachable intracellular targets. . The City of Hope may receive more than $170M in equity as well as upfront and milestone payments.
Impact on Sorrento
By combining Sorrento’s large antibody portfolio with this cell-penetrating technology; we should see critical cancer targets such as c-MYC, mutated KRAS, STAT3 and FoxP3 be destroyed within cells. In addition, this technology can also treat other indications such as: inflammation, auto-immune disorders, diabetes, central nervous system disease (CNS), cardiovascular diseases and viral infections.
Alongside current mAbs, CAR-T, ADCs and bi-specific antibodies; Sorrento can now add cell-penetrating, intracellular antibodies to its list.
Sentiment: Strong Buy
On September 28, 2015, Sorrento Therapeutics (SRNE) announced an agreement with the City of Hope in Los Angeles regarding a technology that enables monoclonal antibodies (mAbs) to go after intracellular targets. This isn’t an easy accomplishment and Sorrento made an agreement that pays in excess of $170 million for the development of these modified mAbs and includes an equity provision as well as upfront and milestone payments to City of Hope.
Sorrento might be aware that its announcements get an awkward reaction from investors.
With the formation of LA Cell, Sorrento believes it has added the last missing piece in our antibody technology portfolio.
The context of the quote attempts to give a capsule of its recent collaborations, but it really will require a longer, explanation that discusses the underlying themes.
There is apparent logic in its strategy. We have talked to more than one industry analyst that has seen a definite goal in its collaborations. We are fairly convinced that these acquisitions were not totally willy-nilly; it is apparent that at least part of this was mapped out years in advance.
In small pieces, it feels like overload.
Some investors were a bit miffed over Sorrento's announcement to license the NanoVelcro technology for assessing the molecular and genomic snapshots of cancer patients. These "successive snapshots" have been viewed as essential for advancing cancer therapeutics. This license fits the picture for mAbs and cell therapies. We may have questions regarding the specific items, but this specific technology acquisition isn't a concern.
We're more concerned when the announcements stop. The real concern is the torrid pace of licensing and partnering. What are the overall themes? What is the end goal? Can this company execute on these promising technologies? We have noted a few things: the headcount has increased and we expect the hiring to continue.
For these reasons, we’ll be talking to Sorrento management again.
Sentiment: Strong Buy