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[Updated: 6/30/2021] SRNE Stock Rise Post COVI-STIX Approval

Earlier this month we discussed that the stock of Sorrento Therapeutics (NASDAQ: SRNE) is best avoided given the large rally it has seen in a short time period. While SRNE stock declined over 8% from levels of $9.46 on June 14 to $8.69 on June 21, it has since rallied 14% to $9.90 now. This recent rise can be attributed to the company’s announcement of its COVI-STIX Covid-19 rapid diagnostic test receiving an Emergency Use Authorization and import license from the Mexican government. The company expects to deliver the tests as early as next month.

Note that Mexico is seeing a third wave of the pandemic, with over 280,000 active cases currently, the highest the country has seen thus far. While there has been a decline in daily new cases, the country’s vaccination rate is low with only 15% of the population fully vaccinated, and 24% of the population being administered with at least one dose. This means that the demand for testing in Mexico is likely to remain high in the near term, boding well for Sorrento.

However, now that SRNE stock has seen a rise of 28% in twenty-one trading days, will it continue its upward trajectory, or is a fall imminent? Going by historical performance, there is a higher chance of a decline in SRNE stock over the next month. Out of 416 instances in the last ten years that SRNE stock saw a twenty-one day rise of 28% or more, 236 of them resulted in SRNE stock declining over the subsequent one month period (twenty-one trading days). This historical pattern reflects 236 out of 416, or about 57% chance of a decline in SRNE stock over the coming month. See our analysis on Sorrento Therapeutics Stock Chances of Decline for more details.

Calculation of ‘Event Probability’ and ‘Chance of Rise’ using last ten year data

  1. After moving 14.0% or more over a five-day period, the stock rose in the next five days only on 45% of the occasions.
  2. After moving 7.5% or more over a ten-day period, the stock rose in the next ten days only on 41% of the occasions
  3. After moving 28.0% or more over a twenty-one-day period, the stock rose in the next twenty-one days only on 43% of the occasions.

In all of the above cases, the chances of a decline in SRNE stock are higher than a rise, and after a large rise seen over the recent weeks, we believe that SRNE stock is best avoided in the near term.

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Predict average return on Sorrento Therapeutics Stock Return: AI Predicts SRNE Average and Excess Return After a Fall or Rise

Sorrento Therapeutics Stock Return (Recent) Comparison With Peers And S&P500

  • Five-Day Return: SRNE highest at 14%; BLUE lowest at -6%
  • Ten-Day Return: PTGX highest at 7.5%; BLUE lowest at -7%
  • Twenty-One Day Return: SRNE highest at 28%; BLUE lowest at -1.7%

[Updated: 6/15/2021] SRNE Stock Rise Post COVI-DROPS Approval

The stock price of Sorrento Therapeutics (NASDAQ: SRNE), a clinical stage biopharma company that develops treatments for cancer and neurodegenerative diseases among others, has seen a solid 49% rise over the last twenty-one trading sessions, led by multiple positive developments. The company last week announced that U.K.’s Medicines and Healthcare Products Regulatory Agency has authorized Sorrento to begin a phase 2 efficacy trial of its COVI-DROPS, an experimental drug to combat Covid-19. Despite a rise in vaccination rates for Covid-19, there is still a need for an approved drug to treat the infection, making this announcement important and positive for Sorrento. If successful, Sorrento will look for regulatory approvals in other countries as well. Earlier this month, the company announced completion of the Acea Therapeutics acquisition. Acea’s Abivertinib is a late stage drug that has shown positive clinical trial results in non-small cell lung cancer and B-Cell Lymphoma.

Now that SRNE stock has seen a rise of 49% in twenty-one trading days, will it continue its upward trajectory, or is a fall imminent? Going by historical performance, there is a higher chance of a decline in SRNE stock over the next month. Out of 260 instances in the last ten years that Sorrento stock saw a twenty-one day rise of 49% or more, 140 of them resulted in SRNE stock falling over the subsequent one month period (twenty-one trading days). This historical pattern reflects 140 out of 260, or about 54% chance of a decline in SRNE stock over the coming month. Also, the stock has seen a large rally in a short period of time, and it may be prudent for long-term investors to wait for a dip to buy SRNE stock. See our analysis on Sorrento Therapeutics Stock Chances of Decline for more details.

Twenty-One Days: SRNE 49%, vs. S&P500 3.7%; Outperformed market

(10% likelihood event; 46% probability of rise over next 21 days)

  • Sorrento Therapeutics stock rose 49% the last twenty-one trading days (one month), compared to the broader market (S&P500) rise of 3.7%
  • A change of 49% or more over twenty-one trading days is a 10% likelihood event, which has occurred 260 times out of 2516 in the last 10 years
  • Of these 260 instances, the stock has seen a positive movement over the next twenty-one trading days on 120 occasions
  • This points to only a 46% probability for the stock rising over the next twenty-one trading days

Ten Days: SRNE 26%, vs. S&P500 1.4%; Outperformed market

(12% likelihood event; 42% probability of rise over next 10 days)

  • Sorrento Therapeutics stock rose 26% over the last ten trading days (two weeks), compared to the broader market (S&P500) rise of 1.4%
  • A change of 26% or more over ten trading days is a 12% likelihood event, which has occurred 292 times out of 2517 in the last 10 years
  • Of these 292 instances, the stock has seen a positive movement over the next ten trading days on 122 occasions
  • This points to only a 42% probability for the stock rising over the next ten trading days

While SRNE stock see a drop, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Johnson & Johnson vs Quest Diagnostics.

See all Trefis Featured Analyses and Download Trefis Data here

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