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Short Sellers Challenge Sorrento's Announcement Of 100% Coronavirus Inhibition: 'Manipulative At The Worst Time'

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Short Sellers Challenge Sorrento's Announcement Of 100% Coronavirus Inhibition: 'Manipulative At The Worst Time'

Sorrento Therapeutics Inc (NASDAQ: SRNE) shares caught fire Friday after the company said it has discovered a coronavirus antibody that 100% inhibits the pathogen. 

Experts Skeptical Of Coronavirus Claims

Short seller Hindenburg Research is questioning the veracity of the company's statement following discussions with ex-Sorrento employees and experts at Mt. Sinai, the NIH and the Rockefeller Foundation, according to a report issued Wednesday by Hindenburg. 

"I would never in my life have put out a press release where I say we have a cure," an unnamed former senior Sorrento executive told Hindenburg, according to the short seller.

The executive suggested there are hundreds of groups with antibodies similar to Sorrento.

The short seller also elicited comments from the industry that suggested skepticism regarding the company's claims.

"I am not aware of any data suggesting Sorrento's single Ab is as good as the many others that had already been previously generated," Hindenburg quoted Regeneron Pharmaceuticals Inc's (NASDAQ: REGN) co-founder as saying. 

Hindenburg also pointed to the fact that Sorrento filed to raise $500 million in common stock just weeks before announcing the anitbody news.

Soon after, the company announced a collaboration with the Mount Sinai Health System to investigate a COVID-19 antibody cocktail dubbed COVI-SHIELD. 

Researchers at Mount Sinai who the short seller said they spoke with with were equally skeptical. One told Hinderburg that Sorrento's announcement was "hyped," while another said "nothing in medicine is 100%."

Benzinga has contacted Sorrento Therapeutics for comment on this story. 

Hindenburg Questions Sorrento's Financing 

Hinderburg said that one of Sorrento's financing agreements is with a one-year-old entity in the British Islands, with industry sources identifying the backer as being the same as the one behind the financing of DryShips. 

"We believe that Sorrento's actions are manipulative at the worst possible time and simply amount to an attempt to shamelessly profiteer off the pandemic," the short seller said.

Hinderburg also said it sees significant downside for the shares from today's levels and believes the company is already in the process of severely diluting a new, unsuspecting investor base.

Hindenburg also called for regulatory action. 

"We believe regulators should closely scrutinize the company's actions over the last several weeks," the short seller said. 

Viceroy Research Says Sorrento Is Stock Pumping

A second short seller said Wednesday Sorrento is deliberately riding the pandemic wave for the sole purpose of "pumping its stock price," with a propaganda machine to match.

Viceroy Research said in a report that company has virtually no revenue and has burned $420 million of cash over the last three years at an increasing rate. Sorrento seems to exist solely to raise billions in capital from equity and debt markets, Viceroy said. 

"Given Sorrento's lengthy history of false promises and bad company, Viceroy doubts management can coerce investors into burning cash once more, and the company will fizzle out of existence," the short report said. 

Sorrento founder and CEO Dr. Henry Ji spoke with Yahoo Finance's "The First Trade" and defended the company. 

“There is a lot of investors suspecting this is another pump and dump, which is typical, which is normal, but we don’t believe that’s the case,” Ji told Yahoo Finance. 

SRNE Stock Swing

From $2.62 Thursday, Sorrento's shares jumped nearly 160% to $6.76 Friday. The rally continued into Monday's session, as the stock hit a 52-week high of $10 before pulling back and ending the session down about 4% at $6.50.

After pulling back about 17% to $5.42 Tuesday, the stock was last seen retreating Wednesday by 2.95% to $5.26. 

Related Links:

A Deep Dive On Coronavirus Vaccine Plays Moderna, Inovio

The Week Ahead In Biotech: Aquestive Awaits FDA Decision, Earnings Flow Slows

 

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