Investing

Sorrento Rises Sharply On Friday As Subsidiary Scilex Completes SPAC Merger To List On The Nasdaq

Shares of biopharma stock Sorrento Therapeutics (US:SRNE) finished the week with a 23.7% gain as shares gapped 13% higher on Friday on news that its Scilex subsidiary had completed the long awaited SPAC business combination with Vickers Vantage Corp I (US:VCKA).

SRNE has risen 1 rank this week in popularity with retail investors and is now the 18th most widely held security according to platform data. You can access this retail trade data for free by linking your portfolio here.

The two organisations initially started talks about a proposed merger in early December of 2021 by signing a letter of intent. It was not until the middle of March this year, that the two organisations entered a definitive business combination agreement.

Vickers Vantage held the extraordinary shareholder meeting on Wednesday with holders approving the merger. The transaction was finalised and closed on Thursday, sending a wave of renewed excitement among retail investors.

The newly merged entity will trade on the Nasdaq under the ticker SCLX and will be called ‘Scilex Holding Company’. Sorrento will retain ownership of over 96% of the combined entity.

Scilex is described as a revenue-generating company that will be focused on acquiring, developing and commercializing non-opioid pain management products to treat acute and chronic pain. Scilex currently has two FDA-approved products.

Sorrento’s Executive Chairman and CEO Henri Ji commented on the announcement “With Scilex on its way to becoming a publicly-traded entity, our unique model continues to demonstrate the multiple ways in which we are generating value at Sorrento, including equity stakes in public and private entities, royalties and milestone payments due to us from certain proprietary products, pharma collaborations worldwide to advance core programs”

Despite the renewed shareholder optimism, SRNE remains down -62% over 2022 as the stock has sold down with the rest of the sector.

Earlier in the week prior to the news, Sorrento released its third quarter financial update to investors.

For the third quarter, SRNE generated group sales of $17.4 million, rising from $12.1 million in the prior year. The result was ahead of the streets’ forecast of $

Net product revenues made up the bulk of the sales growth, rising 80% over the year to $13.65 million and service revenues which declined -16.7% to $3.75 million.

The total loss from operations widened from -$101.39 million in 2021 to -$109.44 million in 2022.

The firm’s net loss improved from -$119.80 million to -$89.58 million, primarily driven by a $33.43 million gain made on debt extinguishment.

Sorrento ended the quarter with $70.69 million in cash and $47.18 million in marketable securities.

At the beginning of November, Cantor Fitzgerald analyst Brandon Folkes initiated coverage on the stock with an ‘overweight’ rating and bullish $5 price target.

In the initiation report, Folkes highlights that Sorrento has the potential to deliver multiple best-in-class products within high-value areas of oncology, pain and infectious disease areas.

The firm believes the stock is trading at a valuation discount due to the product pipeline and thinks the stock proposes an attractive risk/reward tradeoff at current levels with potential medium-term upside.

Fintels institutional ownership accumulation score of 74.83 is bullish on SRNE, based on higher levels of institutional buying activity in the stock relative to other companies. SRNE ranks in the top 10% when screened against 34,250 other companies.

SRNE has a total of 371 institutions on the register that collectively own 164.7 million shares of the float. Some of the largest institutions include: State Street Corp, Geode Capital, D.E. Shaw & Co and Northern Trust Corp.

The Fintel platform’s insider accumulation score of 80.57 is also bullish on the stock, ranking the company in the top 5% of 14,651 screened companies. The stock has had one net insider that has been acquiring stock over the past 90 days. This insider is founder Henry Ji who acquired new shares on market in several tranches during August and September.

This article originally appeared on Fintel

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