Here's Why Sorrento Therapeutics Soared 134% in March

MarketsMotley Fool

What happened

Shares of Sorrento Therapeutics (NASDAQ: SRNE) jumped a whopping 134% last month, according to data provided by S&P Global Market Intelligence. Despite the impressive gain, the early-stage biotech didn't actually issue any significant news updates, although it did offer several reminders to investors.

Continue Reading Below

For instance, the company's CAR-T pipeline is expected to end 2019 with up to three phase 2 clinical trials and at least two more phase 1 studies under way. Similarly, the monoclonal antibody pipeline could exit the year with one phase 2 trial and two phase 1 clinical trials under way.

Sorrento Therapeutics also reminded investors that it owns a 25% equity stake in Celularity, a biopharma start-up created with help from Celgene and United Therapeutics, that's valued at approximately $1 billion. Considering Sorrento Therapeutics is worth less than $500 million, the latest valuation of Celularity appears to have made Wall Street sit up and take notice.

So what

Sorrento Therapeutics owns at least a stake in a tangled web of subsidiaries, joint ventures, and start-ups involved in everything from non-opioid pain management to immuno-oncology. While that makes it difficult for individual investors to track down all of the opportunities -- and distractions -- in front of the company, the equity investment in Celularity could prove to be a winner.

The start-up is seeking to develop novel CAR-T therapies from components of placenta and cord blood. Such medicines could be used "off-the-shelf" rather than being derived from and tuned to each individual patient, as is the standard today.

Now what

While a sizable equity position in a promising start-up is a unique advantage in terms of financial health, the tried-and-true route to success in biopharma involves favorable outcomes in the clinic. However, it's far too early to tell if Sorrento Therapeutics will find success in its early-stage pipeline. Considering the company lost $150 million from operations in 2018 and started this year with $158 million in cash and cash equivalents, the company's quickly maturing pipeline will need to deliver to ensure the business can raise additional capital at a favorable rate.

10 stocks we like better than Sorrento TherapeuticsWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Sorrento Therapeutics wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of March 1, 2019

Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Celgene. The Motley Fool has a disclosure policy.