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Sorrento To Buy SmartPharm For Potential Covid-19 Treatment; Top Analyst Says Buy

Sorrento (SRNE) has signed of a letter of intent to buy SmartPharm, to develop a pipeline of gene-encoded antibodies for the potential treatment of COVID-19 and cancer therapeutics.

The biotech company expects that the combination of SmartPharm's DNA gene-encoded in vivo expression technology and its SARS-CoV-2 neutralizing antibodies may potentially provide longer-acting, single injection protection against COVID-19. Financial terms of the deal, which is expected to close in August, were not disclosed.

Sorrento plans to accelerate the development of multiple candidates for in vivo gene-encoded antibodies, starting with its previously announced STI-1499, or COVI-GUARD, which is currently going through preclinical and manufacturing requirements.

In vitro results so far have demonstrated STI-1499's ability to neutralize SARS-CoV-2 infection at low doses, turning it into the company’s lead candidate for potential cost-effective passive protection against COVID-19.

"We are very encouraged by the preclinical data generated thus far by our STI-1499 neutralizing antibody against COVID-19," said Sorrento CEO Henry Ji. "We are excited about the prospect of leveraging SmartPharm's Gene Mab platform in combination with our G-MAB library to produce next-generation gene-encoded antibody candidates against a host of pathogens and cancer cell types. Being able to stimulate the body to produce in vivo our most potent antibodies at optimized manufacturing costs will offer an additional competitive advantage as Sorrento transitions from product development to full scale manufacturing and commercialization."

Sorrento is already working with SmartPharm's gene-encoded monoclonal antibody delivery platform, also known as Gene Mab, to encode and express in vivo proprietary SARS-CoV-2 neutralizing monoclonal antibodies.

If clinical trials are successful, a single administration of STI-1499dpi (DNA plasmid injection) could allow the recipient's own muscle cells to produce the antibody for a prolonged period of time after a single injection, potentially providing extended protection against COVID-19 for periods of time that might provide an alternative to vaccines, the two companies said in the statement. 

The move follows last week’s announcement that the U.S. Food and Drug Administration (FDA) had given Sorrento the go ahead to initiate a Phase 2 trial of abivertinib in COVID-19 patients with moderate to severe lung-related symptoms.

Sorrento is confident abivertinib’s potent effect can help it prevent the "cytokine storm," in which the body attacks its own cells on account of the immune system’s overreaction, in COVID-19 patients.

The FDA approval prompted H.C. Wainwright analyst Ram Selvaraju to reiterate a Buy rating on the stock with a $24 price target saying that he believes that Sorrento may be positioning itself as a leader in addressing the pandemic, with multiple potential therapeutic approaches in its pipeline.

“While the clinical development path for abivertinib in lung cancer and its applicability in COVID-19 patient treatment shall need to be clarified, we believe that an accelerated route to the U.S. market for lung cancer treatment and positive Phase 2 data in COVID-19 patients ought to catalyze substantial strategic interest in abivertinib from established pharmaceutical firms,” Selvaraju wrote in a note to investors last week.

Shares in Sorrento are currently trading up a stellar 118% on a year-to-date basis, and analysts have a Moderate Buy consensus on the stock’s outlook. The $24 average analyst price target indicates a promising 229% upside potential in the shares over the coming year. (See SRNE stock analysis on TipRanks).

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Upcoming Phase 2 COVID-19 Trial Marks Key Milestone for Sorrento (SRNE); Analyst Says ‘Buy’

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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