Co. Plans to Make 100M Rapid COVID Tests Monthly

Biopharmaceutical firm Sorrento Therapeutics Inc. plans to mobilize a fully automated assembly line in San Diego, Calif., capable of producing 6 million rapid antigen detection COVISTIX testing units per month starting in Q1/22.

In a Jan. 4 research note, Dawson James Securities Inc. Senior Healthcare Analyst Jason Kolbert commented that clinical and commercial stage biopharmaceutical company Sorrento Therapeutics Inc. (SRNE:NASDAQ) announced that “initial testing of COVISTIX on recombinant N proteins successfully demonstrated its ability to detect the Omicron variant, in addition to detecting the original SARS-CoV-2 virus and its other major variants such as the delta and delta-plus strains.”

Kolbert advised that Dawson James Securities has an optimistic view on Sorrento which is predicated upon the firm’s ability to successfully develop and commercialize both therapeutics and its rapid antigen detection COVISTIX tests for SARS-CoV-2 and prevailing variants of concern and specifically Omicron.

The Dawson James report mentioned that Sorrento has investigated COVISTIX’s capability to detect the Omicron variant in comparison with other approved COVID-19 virus rapid antigen tests. The analyst stated that initial results from studies show that “COVISTIX was able to detect the Omicron N protein at a significantly lower level than other commercially available tests.”

Sorrento is now able to produce 30 million COVISTIX tests per month and is expanding its U.S. manufacturing capacity. The firm expects that its fully automated U.S. facility will be ready to make 6 million COVISTIX units each month in Q1/22. If the demand worldwide warrants it, the company is making plans to produce over 100 million tests per month in 2022.

The analyst noted that on the therapeutics side of the business, Sorrento also announced “the publication of a series of novel SARS-CoV-2 main protease (MPRO) inhibitors for the potential treatment of COVID-19 patients infected with SARS-CoV-2 variants of concern, including omicron.”

In addition, Dawson James stated that Sorrento’s subsidiary Scilex Holding and Vickers Vantage Corp. The firms signed a letter of intent proposing a business combination valuing Scilex at about $1.5 billion on a pre-transaction equity basis. If the deal goes forward, it would provide Sorrento with gross proceeds of up to $140 million.

The report explained that Scilex is focused on developing and commercializing non-opioid medications for acute and chronic pain. The company’s ZTLIDO (lidocaine topical system) 1.8%, is an FDA approved non-opioid prescription lidocaine topical product used for relieving associated with postherpetic neuralgia, a painful condition often brought on by shingles occurrences. The analyst noted that ZTLIDO sales are continuing to grow around 35% annually.

The report from Dawson James Securities, Inc. indicated that its valuation models for Sorrento are based highly upon the company’s success in developing and commercializing COVID tests and therapeutics. The research firm advised that it arrived at its valuation for the firm using equal-weighted averages of its therapeutic, free cash flow, discounted EPS and sum of the parts calculations taking into account estimated fully diluted year-end share count along with expected capital raises.

Dawson James Securities has a “Buy” rating and a $18.00 price target for Sorrento Therapeutics. The company’s shares trade on the Nasdaq Exchange under the symbol “SRNE” and last closed for trading at $4.73 on Tuesday, Jan. 4, 2021.

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Disclosures for Dawson James Securities Inc., Sorrento Therapeutics Inc., Jan. 4, 2022

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