viewSorrento Therapeutics

Sorrento’s JV with NantWorks is huge validation for G-MAB platform, H.C. Wainwright says


Sorrento Therapeutics (NASDAQ:SRNE) had its “buy” rating and price target reiterated at H.C. Wainwright after the clinical stage biopharmaceutical company announced a global strategic collaboration with NantWorks to establish a joint venture to develop immunotherapies for cancer and autoimmune diseases.

“We believe the JV announced yesterday is a major validation of both the commercial value of G-MAB antibody platform and management's ability to seek meaningful partnerships,” analyst Swayampakula Ramakanth wrote in a research note to investors today.

The two partners plan to establish an independent company with initial joint funding of $20 million.

NantWorks is the brain-child of Dr. Patrick Soon-Shiong, a biotechnology entrepreneur who was the founder of Abraxis Bioscience that developed Abraxane (2nd generation paclitaxel). Abraxane is currently approved for multiple indications: breast cancer; non- small cell lung cancer; and pancreatic cancer. Dr. Soon-Shiong divested Abraxis BioScience to Celgene for nearly $3 billion in June 2010.

NantWorks is an umbrella organization with an aim to develop personalized medicine for cancer in an attempt to convert the terminal disease into a sustainable chronic condition.

“To that end, Dr. Soon-Shiong is believed to have funded nearly 60 companies and numerous University research programs with nearly $800 million,” Ramakanth said.

According to the Securities and Exchange Commission filing, under the collaboration agreement, Dr. Soon-Shiong's entity is expected to purchase company shares for an aggregate purchase price of nearly $42 million, which translates to a 19.9 percent stake in Sorrento.

Additionally, Sorrento also granted a 3-year warrant to purchase 1.7 million shares at an exercise price of $5.80 that amounts to $10 million.

San Diego, California-based Sorrento ended the third quarter with $44 million in cash and long-term debt of approximately $8 million.

HCW said it has previously expected management to raise about $30 million in 3Q15 to fund future operations as the company progresses towards profitability, which is expected in 2018.

“As a result of this agreement, Sorrento may not need to raise funds,” Ramakanth said.

Quick facts: Sorrento Therapeutics

Price: 7.29 USD

Market: NASDAQ
Market Cap: $1.53 billion

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