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Analysts See 700% Upside In Sorrento Therapeutics After Unsolicited Takeover Bid

Shanthi Rexaline

Sorrento Therapeutics Inc (NASDAQ: SRNE) shares are on a roller coaster ride after the company turned down an unsolicited, non-binding offer Monday from two biopharma companies to acquire all outstanding stock at $3-$5 per share in cash. 

The actively traded, small-cap biotech's shares were pulling back Tuesday after nearly doubling in the previous session.

Takeout Offer Received And Rejected

The offer rejected by Sorrento represented a roughly 88% to 331% premium to the $1.16 at which the shares closed Friday ahead of the company making the approach public. 

Sorrento said the offer, which was made Nov. 23, signficantly undervalued the company and was not in its best interest, leading the board to reject the proposal. 

Sorrento's Rich Pipeline

Sorrento has one Phase 1 CD38 CART-T asset being developed for multiple myeloma and three other immuno-oncology assets in pre-clinical development.

Its non-opioid pain management portfolio has a commercial product in ZTildo 1.8%, which has been approved for postherpetic neuralgia. ZTildo is in clinical development for additional indications.

The company is also evaluating another pain medication, resiniferatoxin, in clinics for several indications.

The positive stock reaction to the rejection could reflect positive investor sentiment regarding the company's rich and deep pipeline.

Sorrento Analysts See 700% Upside Potential

Even with Monday's gains, the stock is primed for incremental upside, according to sell-side analysts.

The average rating for Sorrento is a Buy and the average price target is $24.50, according to the Yahoo database, with JMP analyst Donald Ellis recently reiterating an Outperform rating and $21 price target. This represents roughly 700% upside on top of Monday's strong gains.

The stock was down 2.41% at $3.04 at the time of publication Tuesday.

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