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Sorrento Turns Down Two All-Cash Takeover Bids, Stock Jumps

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Shares of Sorrento Therapeutics, Inc. have soared 85% since Nov 22 after the company rejected an unsolicited acquisition proposal from two unnamed biopharmaceutical companies for an all-cash consideration.

Management stated in a press release that it received a non-binding term sheet proposal on Nov 23, 2019 from two unnamed entities, which were likely to acquire all of the issued and outstanding shares of the company for a price between $3 and $5 per share in cash.

Per the company, the offer was significantly undervalued and was not in the best interest of its stockholders. As a result, the company’s board of directors unanimously rejected this unattractive takeover bid.

Shares of Sorrento have rallied 23.3% so far this year compared with the industry’s increase of 4.6%.

Sorrento is developing several antibody candidates targeting therapeutic areas in immuno-oncology and non-opioid pain management.

In March 2019, Sorrent announced the merger of its wholly-owned subsidiary Scilex Pharmaceuticals with Semnur Pharmaceuticals to create a strong portfolio of pain drugs.

Meanwhile, Scilex’s ZTlido was approved by the FDA in February 2018 for the treatment of pain associated with postherpetic neuralgia, a severe neuropathic pain condition. ZTlido was launched in October 2018. Sorrento plans to begin a phase II study in the first half of 2020 on ZTlido 5.4% for chronic low back pain.

Scilex’s other lead compound SP-102 has been awarded a fast track designation by the FDA. The candidate is currently in a pivotal phase III study, which is likely enroll 400 patients with lumbar radicular pain. Top-line data from the same is expected in the second half of 2020.

Another candidate of the company, resiniferatoxin (RTX), is being studied for chronic pain treatment. Several studies are currently underway on the candidate to address various pain indications including cancer-related pain.

Sorrento’s immuno-oncology platforms include key assets, such as fully human antibodies (G-MAB library), antibody-drug conjugates (ADC) as well as CAR-T and oncolytic virus. Several studies are going on to address various cancer indications.

Management stated that is in advanced stages of licensing and collaboration discussions with some leading biotechs for its immuno-oncology products. The company believes that the potential short and long-term value of these pending transactions is much more than the cash offers made for its buyout.

Zacks Rank & Other Stocks to Consider

Sorrento currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the biotech sector include Anika Therapeutics Inc. (ANIK - Free Report) , NuCana PLC (NCNA - Free Report) and Innoviva, Inc. (INVA - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Anika’s earnings estimates have moved 16% north for 2019 and 17.4% for 2020 over the past 60 days. The stock has soared 71.4% so far this year.

NuCana’s loss per share estimates have narrowed 15.9% for 2019 and 20.8% for 2020 over the past 60 days.

Innoviva earnings estimates have been revised 27.6% upward for 2019 and 9.8% for 2020 over the past 60 days.

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